Q3 2021 Appian Corp Earnings Call
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Good day, everyone and welcome to the Appian Corporation third quarter 2021 earnings call.
<unk> conference is being recorded.
At this time I'd like to turn the conference over to Sri Anantha Director of Investor Relations. Please go ahead Sir.
Thank you operator, good afternoon, and thank you for joining us to review <unk> third quarter 2021 financial results.
Me today are Matt Hawkins, Chairman, and Chief Executive Officer, and Mark Lynch, Chief Financial Officer. After prepared remarks, we will open the call for questions. During this call. We may make statements related to our business that are forward looking under federal Securities laws and are made pursuant to the safe Harbor provisions of the private securities.
<unk> Litigation Reform Act of 1995. These include comments related to our financial results trends and guidance for the fourth quarter and full year 2021, the impact of COVID-19 on our business and on the global economy, the benefits of our platform industry and market trends our go to market.
Growth strategy, our market opportunity and ability to expand our leadership position, our ability to maintain and upsell existing customers and our ability to acquire new customers. The words anticipate continue estimate expect intend will and similar expressions are intended to identify forward looking statements or.
Similar indications of future expectations. These statements reflects our beliefs only as of today's date.
Do not represent our views as of any subsequent date.
Just to add what variety of risks and uncertainties that could cause actual results to differ materially from expectations for a discussion of the material risks and other important factors that could affect our actual results referred to our 2020 10-K and other periodic filings with the OCC. These documents and the earnings call presentation.
<unk> are available in the investors section of our website Ww Dot Appian dotcom edits.
Additionally, non-GAAP financial measures will be discussed on this conference call refer to the tables in our earnings release and the investors section of our website for a reconciliation of these measures to their most directly comparable GAAP financial measures with that I would like to turn the call to our CEO, Matt Calkins, Matt Thanks, Sri.
Thanks, everyone for joining us today.
Third quarter of 2021.
Subscriptions revenue grew 36% year over year to $46 $7 million.
<unk> revenue grew 32% to $67.2 million.
Total revenue grew 20% year over year to $92 $4 million or cloud subscriptions revenue retention rate was 117% at quarter end and our adjusted EBITDA was a loss of $12.0 billion to $1 billion.
Two years of global tumult have tested every businesses ability to change agility is now a top priority for every organization.
Companies are scrambling to adapt to new customer buying patterns, new health practices and new regulations.
Those kind of changes done with software processes.
Jordan of facilitating change like this falls on the it department and expectations of I T have risen dramatically you can see this in studies like the one that have been sponsored with the economist intelligence unit. This autumn.
The I T Department has finally found the spotlight when I was a consultant in the nineties I visited a lot of it departments to tune their databases and they had the worst real estate satellite buildings low ceilings basement floors.
You got the worst of it because it was considered less important that.
That is changing now after two years of Covid, let's use a hero.
Gordon like marketing or finance.
Without enterprise technology, we couldnt have been productive through the pandemic.
Imagine if we would approach the plague of 2020 with the technology of 'twenty, even what are.
A difference modern technology has made to enable dispersed productivity.
And adopt new processes I T saved the economy. These last two years.
So that's the preamble, but here's my thesis organizations need the ability to change above all and they need.
To deliver.
With that in mind over the past two years.
Happy and has created exactly the product, we think high tea departments need now.
Change in June.
Our goal is to assemble a set of technologies that will enable businesses to create new processes the fastest.
We're close to the heart of it of course, because that's in my opinion, the world's fastest and most intuitive way to program.
But we've gone way beyond workflow now we have a suite.
It begins in discovery finding your next opportunity for process improvement and it ends in automation executing your new processes with a full complement of digital workers.
Appian is change engine starts with process mining process mining is a new industry, it's like an X ray peering inside your business to detect inefficiency and recommend improvements.
This mining by itself is just a diagnostic but when coupled with workflow.
It becomes actionable and powerful.
Now the diagnosis can be followed automatically by the cure.
Cures, creating a workflow to coordinate the inefficient processes you found.
For all the excitement in this emerging consolidated market few firms can claim to be strong in workflow.
<unk> has been a top leader in this technology for more than a decade.
Workflow.
Elegance.
Sources data and routes work, but it doesn't do the work.
It's not done by people. These days is done by automation, which is to say by digital workers.
Digital workers include RPI bots, AI intelligent document processing and business rules.
And they work best in concert.
Each handling those jobs for which they are best suited.
Happy and have spent the last two years assembling a product suite that fits this moment.
Our product is a change engine getting clients from zero to 60 on a new process as fastest technology can enable.
In the same platform.
With all native copy in technology, our clients can go from discovering a new process to designing it to automating.
I'd like to share some examples how our customers use these tools together entirely by coincidence My first two stories feature luxury automakers.
First a leading European car brand.
Name, a new Appian customer earlier this year.
It's modernizing its business to save tens of millions of dollars annually.
It uses appian to digitize supply chain processes, including the movement of car parts across Europe under Brexit regulations.
Our platform coordinates shipping agents in our P. A bots to complete this work in collaboration.
In Q3, it purchased thousands of new licenses to add third party logistics providers to its workflow.
While these projects are underway. The company will also mine processes in its financial and procurement groups to discover future Appian projects. This story has it all the entire suite used together in synergies everywhere.
Our next automotive manufacturer story involves a international luxury car brand that became a new customer this quarter. Its selected our low code too quickly unify its business.
Appian is consolidating enterprise system. So the company can assess inventory and large promotions that incentivize dealerships to sell cars faster before Appian. The company was slow to deliver these incentives. It's incomplete systems required manual workarounds. We won this deal after proving our speed by building complex proof of concepts in just one week.
We're seeing good international growth I'll mention a few notable international deals first we landed a sizable expansion of global elevator manufacturer and logistics provider, making it a multimillion dollar customer.
The company uses our platform to manage customer installations in Q3, it purchased more licenses to manage global installations and quality inspections field installers will use an appian mobile app to report the progress while corporate workers had desktops monitor their locations in.
Inspectors will later visit sites and use Appian to report on installation quality before the company lacked visibility dispatched workers and paid penalty fees for late projects. We won this deal because our low code allows the company to deliver timely projects and meet quality standards.
Second.
A top global back Second example, top global bank and existing Appian customer purchased a seven figure software deal in Q3. The group runs a large Appian center of excellence with hundreds of internal resources apartment developers.
They've built dozens of applications to automate processes across the enterprise, including audit compliance customer management and corporate operations.
This quarter, they bought more licenses to deploy additional applications.
Finally, a restaurant franchise and licensing chain needs to digitize its process for Onboarding and managing international franchisees.
It became an appian customer in Q3.
It bought appian, including a solution written by an Appian partner and I love It when that happens to orchestrate gets franchisee lifecycle before.
Before the company managed to franchise relationships manually because it couldn't unify its systems and data and employees into a single workflow.
Now with Appian.
The company will run its processes, 30% faster and open more than 10000, new restaurants in the next decade.
Our federal sector also performed well this quarter several customers made large software purchases for new applications. My first example is a U S government organization that administers federal funding.
This long term appian customer added licenses multiple times. This year in Q2, it bought licenses to provide process funding requests for constituent groups in accordance with a federal relief mandate.
The Atlas delivered in just weeks in tens of thousands of users have been approved for billions of dollars now in Q3. It again purchased software to approved facilities related funding requests for health care groups.
We won this deal because our low code is flexible and can deliver the customer's new project before the end of the year.
Another federal organization that implements monetary policy became a new appian customer in Q2 of this year.
It's selected our platform to manage its mergers and acquisitions process for banks nationwide.
A quarter later it bought more software to modernize their legacy regulatory system.
And we'll consolidate disparate systems and provide governance for thousands of users in just two quarters. The group became the multimillion dollar Appian.
Our federal vertical did well this quarter, partly due to the popularity of one solution called government acquisition management or G E M or gam.
It's actually a suite of four distinct solutions written by Appian on the Appian platform.
That manage the highly regulated federal procurement lifecycle.
These solutions gather requirements.
Completes under evaluation in source selections.
Award contracts.
And automate contract clause writing processes.
Yeah.
Appian solutions, including game.
Our written to be used together there.
They are standardized and they upgrade with our platform.
They share common data definitions and public reports and they feature built in calls that talk to each other.
It is traditional amongst our customers and our competitors to view these applications in silos, but appian brings them together.
Integration and compatibility as a theme for US it was true for the components in our change engine and it's true for our solutions customers love being able to run their end to end procurement cycle on one platform.
It can give them faster throughput.
Better data visibility and better decision, making.
So appian customers by all four gamma solutions at once others start with just one and later expand by purchasing the remaining solutions.
For example, a federal Defense agency purchased our full Gan solutions suite and became a new Appian customer in Q3. The agency chose appian to modernize its costly and inflexible legacy system, it'll deploy up into over 1000 users who will process billions of dollars in awards annually. We won this deal after automating the procurement lifecycle.
All of other federal agencies, who serve as happy references for us.
Another federal Defense command overseeing national Cyber security needs, an enterprise grade procurement system gets selected Appian and became a new customer last year. It started by purchasing one of our Gam solutions requirements management.
Now in Q3, it purchased a second Gam solution Awards management to automate the next phase of its build out.
Appian is a low code pioneer.
We were the first to go public is a low code vendor several years ago now we're realizing the next generation of this technology.
It's more than just workflow now it's a change engine.
With the power of process mining workflow and automation combined in a single platform.
Now I'll turn the call over to Mark for a deeper discussion of our financials Mark.
Thanks, Matt.
I'll review the financial highlights for the quarter, and then will provide details on our Q4 and full year 2021 guidance.
Cloud subscription revenue for the third quarter was $46 $7 million, an increase of 36% year over year and above the top end of our guidance. Our total subscriptions revenue was 67 $2 million an increase of 32% year over year. We're pleased with the continued strength of cloud subscription revenue and overall subscriptions revenue.
Professional services revenue was $25 $2 million down 5% from $26 5 million in the prior year period and down 3% from $26 1 million in the prior quarter as noted in the past partners continue to be a larger part of our ecosystem. They help us sell software and they performed the professional services work with respect to.
Any new services contracts they sign.
As the usage of partners expands over time, we expect subscriptions revenue as a proportion of total revenue to increase relative to professional services subscriptions revenue was 73% of total revenue in the third quarter and 71% for the first nine months of 2021 as compared to 66 and 64% respectively.
<unk> in the prior year periods total revenue in the third quarter was $92.4 million, an increase of 20% year over year and also above our guidance range. Our cloud subscription revenue retention rate as of September 30th was 117% as compared to 150% in the year ago period, we were pleased with it.
Customers expanded use of our platform.
As a reminder, we continue to target the cloud subscription for the retention rate of 110% to 120% on a quarterly basis.
Our international operations contributed 32% until revenue for Q3, 2021 which is consistent with the year ago period and demonstrates the balance of our business both domestically and internationally our cloud software E. C. V bookings was approximately 80% of total software bookings in the first nine months of 2021 which was consistent with our full year two.
20.
Now I'll turn to our profitability metrics for the third quarter 2021 'twenty 'twenty, our non-GAAP gross profit margin was 73% in each respective period.
Subscriptions non-GAAP gross profit margin was 90% in the third quarter 2021 consistent with the year ago period.
Non-GAAP professional services gross profit margin was 26% in the third quarter compared to 40% in the same quarter of 2020. The services gross profit margin last year was positively impacted by a reduction in services performed by subcontractors and decreased travel and entertainment costs moving forward, we expect our surf.
<unk> gross margins to decrease to the low 20% range as we dedicate more customer success resources to support partners.
Total non-GAAP operating expenses in the third quarter were $80 5 million, an increase of 33% from $60 3 million in the year ago period.
Adjusted EBITDA loss was $12 million in the third quarter within our guidance range and compared to an adjusted EBITDA loss of $2 4 million in the year ago period.
In the third quarter, we had approximately $2 $3 million of foreign exchange losses, compared to a gain of $3 $3 million in the year ago period, we don't forecast movements in FX rates. Therefore, they arent considered in our guidance non-GAAP net loss was $15 9 million for the third quarter 2021 or a loss of 22.
Two cents per basic and diluted share compared to non-GAAP net loss of $34000 or breakeven per basic and diluted share for the third quarter 'twenty. 'twenty. This is based on $71 1 million basic and diluted shares outstanding for the third quarter 2021 and $69 9 million basic and diluted shares outstanding for the third quarter of 'twenty 'twenty.
It is important to note that our non-GAAP net loss was negatively impacted by the $2 $3 million of foreign exchange losses were a loss of three cents per share which was not included in our original guidance.
Turning to our balance sheet as of September 30th 'twenty, 'twenty, one cash and cash equivalents and investments were $188 $5 million compared with $258 $4 million as of December 31, 2020.
For the third quarter cash used by operations was $25 $1 million versus $6 5 million for the same period last year for the nine months ended September 30th 2021 cash used in operations was $34 $5 million versus $13 $5 million for the same period last year the increase in cash used by operations during Q3.
Was program predominantly due to slower collections in the quarter, we expect to have strong collections in Q4, which should significantly reduce the cash used in operations for the quarter. As a reminder, we paid $37 million in cash for the lot of labs acquisition during Q3, along with an equity component that vests over time.
As we return to the office will need to build out additional office space capital expenditures will be approximately $3 million to $4 million in Q4, 2021.
Total deferred revenue was $124 9 million as of September 30th 2021 an increase of 7% from the prior quarter and 23% from the year ago period. As we've stated on past calls the majority of our customers are invoiced on an annual upfront basis, but we also have large customers that are billed quarterly or monthly due to the <unk>.
The ability of our building terms changes in deferred revenue are not generally indicative of the momentum in our business.
Now I'll turn to guidance as a reminder, we believe cloud subscription revenue measures the growth of our subscription business. The true scale of the business is represented by total subscriptions revenue, which includes support in all subscription revenue regardless of whether the customer deploys appian in the cloud or on Prem.
For the fourth quarter 2021 cloud subscription revenue is expected to be in the range of $48 $8 million to $49 $3 million representing year over year growth of 32, and 33% to a revenue is expected to be in the range of 95 to $95 $5 million representing year over year growth between 16 and 17% is.
<unk> continued to perform more services work, we expect a portion of professional services revenue within our total revenue to continue to decline. This is implicit in our total revenue guidance and situations where partners when partners help us win in new logo. They generally perform the services.
Adjusted EBITDA loss is expected to be in the range of $15 million to $13 million non-GAAP net loss per share is expected to be between 24 and 21 cents. This assumes 71.2 million basic and diluted common shares outstanding are operating expenses forecast includes incremental investments in a lot of labs go to market strategy.
Sales and marketing and some expenses normalizing as we return to the office for the full year 2021 cloud subscription revenue expected to be in the range of 177% to $177 $5 million representing year over year growth of approximately 37%. This compares to prior guidance of 174 to 100.
The $75 million.
Total revenue is expected to be in the range of $359.3 million to $359.8 million versus prior guidance of $355 million to $357 million adjusted.
Adjusted EBITDA loss is expected to be in the range of $43 million to $41 million and compared to prior guidance of 40% and $38 million.
Non-GAAP <unk>.
Net loss per share is expected to be between 75 and 73 cents.
Compared to prior guidance of 68 to 65 sets. This assumes $71 1 million basic and diluted common shares outstanding.
Given the large market opportunity in front of us in the healthy customer unit economics. We expect these higher levels are forecasted investments in Q4, 2021 to continue going forward.
So in summary, we are excited about the growth opportunities ahead of us, we're making disciplined investments to accelerate go to market success and continue to expand our platform to address the large and growing market opportunity with.
With that let's turn it over to questions.
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Okay.
And our first question will come from the voluntary with William Blair.
Yeah.
Your line is open if youre using a speakerphone check your mute function or pick up your handset.
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Hello.
Can you hear me now.
We can't again. Please go ahead.
Hey, sorry this is.
This is the origin for Covanta.
Thanks, guys sorry about the.
Technical difficulties there.
Maybe to start off with Matt.
I know you talked about.
Becoming a change agent can you maybe just you know I understand how the technology will play into that.
What else do you need to do.
To help you to help guide your customers to become.
More agile is there anything that you need to do from a change management perspective from a process perspective that will help them really guy help guide them through this journey.
Outside of just providing them the workflow the process mining et cetera, how do you think about that aspect of it.
Yeah, absolutely if it would be one thing to just have these different sets of functionality has a portfolio and it's quite another to integrate them deeply and present them as a unified suite. If if we focus and we are we are focusing on the synergy not merely on the breadth of.
Sweet, but on the synergy between the pieces, we can smooth out all the corners and take out all the the friction slows down our customer as they proceed through the steps from discovering their process to designing their process to automating the process, we want that to flow incredibly easily and so we're.
Targeting any step that would have caused them confusion or delay, we're making those as easy as possible to draw the user through the sequence. So it's not enough merely to provide the technology you have to streamline the sequence and that that's the other thing we're focusing on we're also providing education that allows people to see.
How it can work we've got demos that showcase it we've got a a community addition, with with training videos that that teaches our users for free.
Even our prospective users how this technology can help them and how each part of it can can be brought to bear in an easy way.
The technology alone is not enough you have to facilitate it educate it and then popularize it we're working all of those elements as well.
Very helpful. And then I would I would love to hear or maybe just some.
Oh about some some commentary on what you're seeing in the pipeline I know the guidance does imply a little bit of a step down in.
Growth we.
We saw a bit of a sequential tick down in net retention.
Can you just talk about how customer expansions are trending what you're seeing in terms of Q.
Q4 demand both from a net new perspective, and an expansion project.
That would be super helpful.
Yeah, I feel good about the pipeline about the expansion.
International maturation is one of those trends another one which crosses my mind just earlier today is that the great resignation, you've probably heard of it how employees are leaving their employers more frequently now.
And you know this puts pressure on organizations that need to create new processes, new applications with perhaps less expertise on hand, or yeah, or maybe just newer expertise on hand. So it's got to be intuitive you see that the bar has to be lowered for how difficult. It is to make a new application make a new process.
Volatility of labor scarcity of Labor is another reason why low code is important so yeah, I see a number of trends.
Hunting in our way.
Perfect. That's very helpful. Thank you guys for the color.
And we'll take our next question from Sandy.
With Morgan Stanley.
Hi, This is Elizabeth on for Sanjay could you provide some color on the uptake or adoption of RPM and how it has changed year over year and also any early feedback on the process mining application would be really helpful.
Yeah, Yeah, that's right. Thanks for the question so.
RPI is being.
It is being adopted as a complement to workflow. So when it's used in confluence in partnership with workflow. We see strong adoption, we don't see Standalone RPI and we're not going for it so for us to be blunt about it RPI is a feature or pay is not a product.
See strong interest in <unk>.
As a feature as part of our suite, but but we are not pursuing it as a standalone market.
Yes.
Got it and then from.
As Marty I'm, sorry, I'll speak to that as well.
In both cases lots of data interests right lots of.
Lots of enthusiasm.
I think that the process mining functionality.
I have.
Every last person months worth out of the contracts they sign and I like that partners like it because it means that our customers want expertise.
This model has been popular we have not shifted our entire.
User base over to this model.
Don't expect that we ever will in my opinion. This model works better for the second sale. The first sale because what you must have in order to make a sale based on that your productivity.
Is you have to establish in the mind of the buyer that Appian is a means to efficient production, if it's not clear to the customer how fast they can develop a new application on Appian then they won't be impressed by by the price relative to what they think they can accomplish in that frame of time.
So what I prefer to do is sell one application based on old methods, maybe an appian guarantee eight week drop in or or perhaps a per user license something like that.
And then the second application now that they see how efficient we are and how we multiply the speed of development now, we let loose their creativity and and offer them an appian unlimited license. So that's typically how it is going to go which I think means that it's going to take a little time to reach its full potential. It is still a minority of our customers who are using an app in unlimited.
License, but I like its simplicity I like how it's shortened sales cycles.
How it's not really matched by what our competitors are doing.
And how customers can can intuitively understand what they'll pay for what they get.
Great. Thank you so much.
And we'll take our next question from Fred <unk> with Macquarie.
Creation to make it so the next purchases a no brainer and just just moving along through the procurement cycle. So yeah. That's a great trend I feel like we posted solid results.
Into government this quarter.
And Fred District clarify most of the revenue in the government vertical the subscription there is more term license.
The vast majority of the bookings this quarter were cloud.
And the last thing is all subscription.
All helpful. There, especially the callout of proserv in the mix I think of the revenue last year.
As a separate follow up question could you also talk about your competitive landscape with more low and no code startups in the market and larger software vendors talking a lot about low code lately.
You touched on this in your prepared remarks, a bit but are you seeing any different faces in your deal cycle at this point and how are your win rates when rates progressing overall.
Yeah, Let me talk about both of those individually both the.
The startups and the established players who are starting to talk about low code and before I get into it let me start by saying that our win rates are rising and we were very pleased with our win this quarter.
The startups they.
They are not a concern right now we don't see them theyre not serious competition because appian is at the top of the pyramid.
In this market, where the the the high end industrial scale.
The version of low code and the startups are going to come in at the bottom.
So we don't see direct competition from them.
And as for the large firms the stack vendors the big Tech firms that are talking about low code.
There's certainly going to get their piece they've got their captive customers theyre going to sell low code into a lot of them, but their product is not competitive in my opinion not competitive and so theyre also letting a lot of appetite that they cannot associate.
And so I think part of what Theyre doing is beneficial for us for us even while they are going to claim their fair share so to speak of the local demand.
Thank you.
And our next question will come from Derrick Wood with Cowen <unk> Company.
Hey, guys, it's Andrew on for Derik. Thanks.
Yes.
It marks but our goal is an organization is to collect and combine those technologies that allow a company to create change the fastest.
And so I'm delighted to see a.
A big win outside of our traditional industries that just shows how the value of changes arising in other industries I think the reason why we did so well early on financial services, because the value of a great process was already so high and financial services because it was a matter of a lot of money was a matter of abiding by the law right because so much money flowed.
Do those processes that was the natural first place, where we would we would get a real foothold.
And then government with another natural one in pharmaceutical you can see why our major industries were intuitively our major industries at the beginning but over time, you see the value of change and agility rising in other in other fields.
And so I think it's a trend I think we're going to see more major deals in non-core industries.
Because every business needs to change now.
That's great.
And maybe just any commentary on how sales rep hiring is trending versus your plans and you feel like you have it ourselves capacity heading into next year.
I think we have enough sales capacity and and yes. We are hiring we are removing as fast as we can.
Great. Thanks, guys.
And now we'll take a question from Perry terminally curious.
Hey, guys. This is Joe mirrors on for Terry Thanks for taking the questions I. Appreciate it you recently talked about involving the company's marketing strategy. I think there are three three pillars of that.
Getting the message building, a pipeline and increasing market awareness. So I'm just wondering if there were any concrete steps you guys took this quarter aside from the analyst day and what's the game plan for 2022 to to knock on these pillars.
Yep well.
Well, we're working hard on build.
Building our community.
That's that's an area of investments lately.
Cause you've talked about it you're analysts day with the expansion of your Tam beyond the the global 2000, and so what do you think is going to be the same and maybe what might be different as you potentially expand it to smaller organizations.
Yeah, I think that's a big opportunity beyond the global 2000, and we are seeing momentum there. So we mean to invest and pursue.
I think that typically the smaller the organization the less it insists on.
Affection and a new process.
The less it wants to invest.
They're <unk>, they're willing to take 80% instead of investing to get 95 or 100 per cent they want something simple.
Our platform has become radically simpler over the past year.
With the education videos the for the free training the community additional allows people to test it out and migrate the things they create into G. A later on we're making our technology much more accessible that's part of the outreach to these fires another is to have.
Education amongst partners, they've probably got a partner they trust they don't want a new one we want to be sure that the partner They trust as a partner that knows asking that can get them to success quickly and then third.
Spend that they were going to make for the next year. He said they've already decided that they've got they've got a license to build every new application and so for the next 12 months whatever they build its already covered but that they're much more likely to build more in the second year. So I think that post first theory could have an impact on net revenue retention and I think as Matt had mentioned.
We just rolled it out recently so it is too early to tell how that's going to impact the NR.
The thing I like about it is you get a customer and they're basically building multiple applications. So they do a one year unlimited. They think they can build southern apps, they're going to be incredibly sticky once they get done with the southern accent I probably want to do more so it's just another way to license that we're trying to remove the frictions shorten the sales cycle and you know, we'll see what happens as it relates to the expansion.
But it's as you guys know we try different novel licensing technique techniques every year and this is the newest latest and greatest but it's actually gaining traction. So you know there's another good thing you can do with it definitely one thing and what I. What I. Originally intended most of all to be used for was that a customer would buy a year's worth of development time and then they would.
Just develop as much as they could and they train up and they'd hire our consultants or partners consultants and they would go to work building maximum amounts of Appian licenses I mean, that's the that's the ideal usage pattern, but it's also been a pretty useful framework to have in place for pricing small introductory deals.
If a client wants a deal in the past we would have tried to appraise the value of that new application and give it an application price and that's a pretty subjective discipline.
And now we can just guests something like Hey, this will probably take two months to write how about we just give you the two month price and and it's short circuits or shortcuts, what would've otherwise been a long.
Dialogue on exactly how important this application is I like it just as a shortcut to our pricing outcome. So its also been useful for that.
That's great color, thanks very much.
Next we'll hear from Steve Enders with Keybanc.
Alright, great. Thanks for thanks for taking my questions.
You made a comment earlier about Gan and how it's driving.
A an easier adoption and expansion trends within your customers since they can land with some specific use cases.
Wondering kind of what you can.
You can apply in this kind of same idea to kind of a general enterprise General enterprises out there and kind of.
Really drive a further expansion opportunity within within those accounts.
Yes. This solutions model that we're working on that.
That allows solutions for the same industry to be built compatible pre integrated.
And even with a common look and feel I mean, we are creating them like.
Like puzzle pieces to snap into each other.
Is good in any industry.
And this will also help the expansion by the way.
It makes it such an easy decision and if you've got one of them first year you found Appian because you had one problem you bought the solution solves that problem and then a year later you find that we can help you expand into a contiguous area or take that data and just flow. It forward and solve the next problem, it's such an easy decision.
This is this is the strategy I want to run everywhere, we do solutions that I'm encouraging our partners, who build solutions on the Appian platform to do it too.
I think it's a winning model in fact I think.
That.
We as software consumers like the the universe of enterprise software consumers.
<unk> expect enough of integration and compatibility we've become.
And the sales rep around but I I think the other piece that was a clearly stated in my my prepared remarks was the.
We're focusing I've taken a customer success folks and that's where the margins are coming down and where helping.
Enable the part Trinidad trying to get the a partner partner Jamel enable quicker.
That we're making concerted investments, making taken global people and making them Nonbillable and obviously, that's that's a double whammy investments, but I think from our perspective, it's a no brainer, what we've noticed is that where our customer success folks are involved in projects Vienna ours 20 per cent higher so we wanted to get get out there unable to partners but.
Also be be in a position to help touch those project as well.
Perfect very helpful. I appreciate you taking the questions.
Our next question will come from Kingsley Crane with bearing Berg.
Alright, Thanks for fitting me and so with some of your newer offerings like RPI in process mining did you feel like your customers are constrained all terms of adopting goes and then how much are you funneling that enthusiasm for those products into the work flow management side of things.
And our next question will come from then onshoring of off the rack Gabon from Barclays.
Hi, Thanks for taking my question just wanted to get an update on our I think community edition, which you launched in July can you just talk about the interest you're seeing in that so far and how do you kind of encourage you know conversion was to play paid plans and what what's kind of the lever that pushes a customer to potentially go to a pay for play plan.
Thanks.
Yeah. The interesting that is sharply up and the reason they want to pay us because you can't run it until you pay you can play around with it. It's a sandbox you can build some objects, but you can't do anything in production until you pay.
So it's an exceptional place to learn a lot of free education, It's got some free content loaded in that you can play with.
We tried to make it as intuitive and engaging and inviting as possible.
But to do anything of business value. They will they will have to pay.
Got it and by the way because I think it's been terrific and a lot of growth in the <unk> environment.
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