Q3 2020 Appian Corp Earnings Call
Second we have been combines low code with automation.
Automation means using a workload to coordinate people Boston AI and get a job done together.
Global organizations depend on our technology, including nine of the top 10 life Sciences firms six of the top 10 asset managers five of the top 10 banks and more than 100 government groups. These leading organizations rely on <unk> for some of their most important applications.
A recent example from two three and both of the major digital marketing services provider disarming purchased up in software to reengineer its operations and automate 30 business processes that.
The first project automate the creation of client performance reports with our native automation features it uses appian artificial intelligence to ingest documents and Appian R. P O box to gather public data to generate performance reports for the firm's employees to validate before sharing with clients.
We wanted to steal because we provide a one stop shop for their automation needs and we will reduce the operating costs by 50%.
Happening is the only.
A partner let.
Let us to win a million dollars expansion with the UK government Department.
Existing appian customer built a mobile application for its employees to manage the transportation of thousands of prisoners every month and the conduct welfare and safety checks with this quarter's purchase they will expand the application to more users and what territory.
We want this expansion because our app significantly reduces their operating expenses.
Existing department insurance customers, who use our platform for acquisition management.
Overall federal business was a strong contributor.
Federal software bookings doubled and new logos increased by 33% compared to Q3 last year.
Speed and flexibility with a customer demo completed and just five days.
In 2020 demand for low code and automation has.
Has never been stronger happy.
Happiness unique combination of low code automation backed by the power of workflow.
Will give us an edge as more companies seek to quickly build and deploy critical business applications.
Now I'll turn the call over to market for a deeper discussion of our financials Mark.
Thanks, Matt.
Total software ACB bookings for the first nine months of 2020 consistent with the first nine months of 29.
Moving that our cash used in operations was $19.9 million last year further.
Let's turn it over to questions.
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And to do services are to grab new leads but it was hard to be on People's radar because they had other things they were urgently caring about and we succeeded in being relevant and getting that attention I feel good about what we did in the federal government business.
Business, obviously, a very cheap.
Sharp improvement over what we did a year ago.
So we've we've elevated our profile there we've delivered some notable successes in fact, even tried to allude to it in my prepared remarks talking about how one of those successes as our selections with directly derived from experience that we've had before with another customer who recommended us for an acquisition purpose. It.
It's kind of a reputation flywheel, we feel like we are building on our success to gain more.
Actually I feel that with any federal and in partners as well. So what we're seeing here is a number of factors coming online and each one of them.
Is.
Function of a lot of work that's gone into a lot of build up a lot of investment and also a lot of echoes of success that we've already had that's what it takes to get a partner momentum going like we have or federal momentum I think that what you're really seeing is a lagging so.
Signal of a lot of success that's happened over the past a lot of investments that's happened over the past and its good to see it coming online as they add on to that from a financial perspective.
It's too.
Workflow.
We have long been in this business you could say almost 20 years actually not not 10 years like I said in my remarks.
In workflow, but we havent generally use that term.
I believe in general the tech companies should use the simplest terms possible and especially at the moment a market is widening can you get more participants those participants expect to be in dress addressed in terminology. They can understand work flow is and easily understandable word that is it suggests the technology.
She is approachable, that's where I'm going with the use of that word I think also.
Fallen back into some favorable or for a time workflows suggested triviality I believe it no longer does that and it is a good description of what it is that we're doing we're creating process flows in order to specify the way an application will behave so workflow is a very apt description and it's also in the purchase will turn.
Arm and it speaks to the middle of the market and I think it's no longer in disfavor. So for all those reasons I like the word just like I'd like low code I preferred loco than Weve latch on to that early because it is so intuitive simple. It's made of understandable words I'd like simple terminology and I think that as the Tech company, we should get paid.
Institute to find it.
Completely understood congrats on the quarter. Thank you.
Our next question comes from the line of melted gold with Barclays. You May proceed with your question.
Hey, guys. Thanks for taking my question I'll offer my congrats on a really solid quarter here as well.
One question on.
Format, the outflow for Mark.
So Matt I know it's.
Let's visible.
I'm wondering if you are getting that visibility back because it seems like on a cloud subscriptions unusual ahead of your prior guidance at the start of the year and total revenue already there you were planning to be at the beginning of the year. Realizing that comes over to come back then this curious as to how the visibility is trying to me. Thank you guys.
Mean billing into the pandemic all bets are off right I think every company realize that so I feel that right now we had a very solid orders you can see.
And the pipeline, let's really strong so we've got we've got pretty good visibility and you guys know how would guide generally conservative our guys.
And so right now we feel pretty good about that line of business. If he has a little bit different because we've got a lot more partner involvement and there's headwind with that as well as headwinds from covid, but.
But from the software perspective, we've got pretty pretty decent visibility.
Thanks, guys started this morning.
Our next question comes from the line of Bobbins carry with William Blair. You May proceed what's your question.
Thank you for answering my question.
<unk> My congrats really really nice job is your acceleration I've seen that partner channel I think Matt you and I were talking about it for awhile now actually start to deliver so that's that's really cool I guess I'm gonna talk a little bit about new customers because they are a big part of the story got really healthy sort of grocery existing customers, but you've got this idea to capture new customers, especially with some of.
The new products you created represent how you think you're attractive relative to expectations on the new customer adds.
Partner is starting to contribute to that or the partners sort of.
Or is it mostly soap direct through you how how should we think about the new customers addition to the expectations it and kind of what's driving my partner's wishes you a direct sales force.
We're trying to align evermore with partners.
As a part of our.
As part of our standard operating procedure. So when we approach a new logo.
We would like to do it arm in arm with a partner you'd.
You'd like to have a partner at our side influencing the sail all the way through and if they didn't find us we might have to find them.
In order to do that and so it's gonna be hard to separate where the new logos come from because of this doctrine that we are pursuing right now.
Relative to my expectations on acquiring new logos, we are doing well.
Have worked well and many of the firms I mentioned do not many approaches to low code are simply a tool box for developers and where we draw your application environment. So thats going to give us one difference. Another is that we've been in this space long time longer than any of them.
Any of the vendors I, just mentioned anyway, and so we've thought about workflow process and look for longer.
So thats can be an advantage and then third advantage is.
We had this commitment to open this.
We have a commitment to being a best of breed vehicle.
And that is an attractive alternative for organizations seek the benefits that low code has always traditionally thought which is the freedom to pick the products you want the strength in negotiations of knowing that every time you negotiate for the price and one product either you're not held hostage by every other product here and the non.
I think that it's a very appealing proposition local generally as a philosophy for an enterprise, making purchases of software I think low code as a lot of compelling things to offer and I believe many organizations would prefer to be a low codes pile buyer than to adopt a stack top to bottom which gives them rather less.
Freedom and on average generally lower quality software because they probably wouldn't have picked every one of those.
Element in software suite as their favorite product so.
There are some downsides to buying a full stack theres, some upsides to buying best of breed and I believe that the market.
Would benefit from an organization that focused on enabling best of breed and Thats. Another edge that we're going to have against our largest competitors, who are tech giants and who will have a long stack it and agenda essentially of of products and many buyers may not want to get in tangled in on that.
Got you got you got you very helpful. Thanks again.
Okay.
Our next question comes from the line of Alex Kurtz with Keybanc. You May proceed with your question.
Thanks, I have a clarification on that last question, which is a good one and then a separate separate question. So.
So Matt you see a lot of larger software companies.
Like service now offering low code I think what you're.
We are trying to stay in your answer was.
Being independent of the scaling of the licensing rate is good because that ultimately will drive.
Better ROI than being.
Finally, low could from procure core vertical apps so.
And.
I love the confluence that we're offering by the way where.
What we're bringing together important things that customers need we're uniting disparate assets, we're uniting functionality.
Functionality slow code and automation.
I think that the business is gelling in addition to having a few strong system inspiring.
It's tough to rank it really is I mean, I could I could ranked by dollar value and and then I can drank bye bye visibility like heck, Here's Wanna like solutions drove a lot of visibility for us it's not really a dollar generator, but at this point, it's not really supposed to be one dollar dollar generator the purpose of solutions.
In <unk>, two and three especially this year was to keep us relevant and they did and so I could say solutions, where a great thing about this business, though you wouldn't see much of it on the income statement, but they they kept us in the game. They kept us front of mind. They meant they showed that we had something to say and they demonstrated our value proposition to people, who wouldn't otherwise have known it.
So solutions were big wind for US Europe, absolutely came through I'm delighted with federal on the momentum that has been shown in federal.
I've long felt that that we are capable of big growth. There. So that that was a fulfillment of some.
Some expectation very pleased with it.
Go ahead, and just to clarify on the solution sale.
Something that you're driving with.
Accelerators, and they're Gonna channel accelerators.
Your own reps, if there's something that you're doing differently now that you work doing a year ago.
Well these things do need to mature over time, it's not just a product it's a new business model for us. So we've had to teach ourselves and our partners some new tricks.
Are there to get this to market.
And that takes some working through.
Partners are now offering a lot of solutions and so a lot of our solutions successes through our partners, they're they're not only providing a solution that providing the lead they're selling aleve.
That's a great new thing and it's it is novel for us.
Also we have more sanctions before we launched run Q3, we launched the workforce safety in queue to each of those that had Ross.
Also we have more sanctions before we launched run Q3, we launched the workforce safety in queue to each of those that had a neat little contribution better coordination and it's getting our game once again.
Thank you.
Our next question comes from the line of Jack Andrea Needham Cow you May proceed with your question.
Oh, Thanks, good afternoon, and congratulations on the results I just wanted to maybe follow up on the last question a little bit I was wondering if you're seeing some sort of cultural change around low code I mean, some of these solutions like work for safety in campus pask. It in the hands of more decision makers across organizations are people, saying.
Basically what is the art of the possible and is this really having a potentially an impact on your business.
I do believe that low code is becoming democratized.
Truly located is a big tent very big 10, 10, and we occupy the high end.
Of the low code space, which by the way to address a previous questions separates us somewhat from the primary hunting grounds of service now or salesforce or or even recent entrance into the space the who are smaller.
We are in a niche in the space in this market, where we are very.
Very strong very strong and then we can contest from that base. We can can test the big center of the market, but we have a base right and that's important to note.
At the same time low code is democratizing more people are being exposed to low code. This year by far than have ever been exposed to it before and low code is coming to mean a lot of things to a lot of different people. This is fine I love the elevation of the terminology and and for some of those people who learn about low code have been is going to be the best choice.
So we continue to be more intuitive empowering and appealing to the middle of the local market and at the same time the local market continues to grow high Midland Park.
Everywhere, it's growing and I think that this these trends augur well for us.
I appreciate your perspective, and just as a quick follow up.
Are there any specific trends you can call out in terms of what's happening on the life sciences vertical in particular.
No life Sciences continues to be one of our strongest verticals as you know financial services life Sciences. Those are are tough too I didn't count government governors about as big as life Sciences for us.
We are very well adopted I think I mentioned in my prepared remarks that nine of the top 10 largest life sciences companies are now happy and customers what.
What I didn't mentioned in those prepared remarks was that.
Their customers in a big way like the average annual dollar commitment.
Cross all those customers has multiple millions of dollars.
So we are we are an organization that life sciences as an industry has come to really rely upon.
This is our goal and a lot of industries and it's terrific to see it achieved here, we've and then Furthermore, we're very fortunate of course that our largest industries have been relatively immune to the effects of.
The downturn in 2020.
So the fact that life sciences avoided that downturn. The fact that they have come to rely very much an app in and are near ubiquity across the world's top firms means it's a it's a really good picture for us.
Great. Thank you very much.
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Questions.
Our next question comes from the line of Garrick Ledwith piloting comfortable you May proceed with your question.
Thanks, Hey, Andrew on for Derek.
Congrats on the corner.
For my I wanted to wanted to ask about yourselves rough hiring how do you feel that it's going to take care of an update on the street heading into next year and his work from home opened up their talent pool at all in any color on ourselves for our productivity is trying to.
Well I feel solid about sales rep productivity as for the number of them, we want more we keep wanting more we're hiring more.
We definitely need more next year.
And we got plans for it.
<unk>.
But but the ones we have there.
They're doing well.
Great and.
International you covered a strong MBA.
Giving some of the new Lockdown fair or should we think about that impact in Q4, and then on your conference Barry Charlotte attendance double or did you see them ever Malik Jen perspective.
First of all Ah, you're right you're going into second Lockdowns anything could happen, but I will say that we have been able to stay relevant.
Through the first Lockdown in Europe, and North America.
We maintained.
Place in the customer's mind, and we had something I needed we were able to adapt to the circumstance, we were able to deliver our services at a distance have our meetings at a distance.
We we can adapt to such situations like this we we've shown it and I feel confident about that.
Organizations see how important it is.
To be agile.
And whether it's your second lockdown under your first locked down the message is the same you've gotta be able to change your business in the face of external shocks you've got to be able to adapt in the shop, Chuck doesn't have to be a pandemic. It could be a new regulation that could be a change in customer attitudes or desires, but you got to be able to change and.
We as an organization are going to enable that change so the more people are reminded.
That changes essential and the more they come to demand change in their software the more it's going to direct their eyes toward technology like ours.
Great. Thank you.
Ladies and gentlemen, we have reached the end of today's question answer session. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation have a great rest of your evening.
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