Q4 2021 Appian Corp Earnings Call
[music].
Chris.
Good day and welcome to the Appian Corporation fourth quarter 2021 earnings call. Today's conference is being recorded at this time I would like to turn the conference over to Mr. Sri Atlanta Director of Investor Relations. Please go ahead Sir.
Thank you operator, good afternoon, and thank you for joining us to review <unk> fourth quarter and full year 2021 financial results with me today are Matt Hawkins, Chairman and Chief Executive Officer, and more planes Chief Financial Officer. After prepared remarks, we will open the call to questions today, you'll want to follow.
Along with our earnings presentation, you can download it from the main page of our Investor site at Investor stopped at P. M. Dot com. 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 Litigation reform.
Act of 1995. These include comments related to our financial results trends and guidance for the first quarter and full year 2022, the impact of Covid on our business and the global economy, the benefits of our platform industry and market trends, our go to market and 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 reflect our views only as of today. They do not represent our views as of any subsequent date.
Object to a 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 2021 10-K and other periodic filings with the SEC. These documents are also available on our investors section for website.
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 reconciliation of these measures to their most widely most directly comparable GAAP financial measures with that I'll turn the call to our CEO , Matt Calkins, Matt.
Thanks, Sri and thanks, everyone for joining us today.
In the fourth quarter of 2021 happens cloud subscription revenue grew 39% year over year to $51 $2 million subscriptions revenue grew by 35% to $75 $8 million.
Total revenue grew 29% year over year to $105.0 million Oh.
One O 5 million makes Q4, our first $100 million quarter.
Our cloud subscription revenue retention rate was 116% as of December 31, 2021, and our adjusted EBITDA was a loss of $10.0 million.
But for the full year happens cloud subscription revenue also grew 39% year over year to 179 $4 million subscriptions.
<unk> revenue grew 33% year over year to $263 $7 million total revenue grew 21% year over year to $369 $3 million. Our adjusted EBITDA was a loss of $37.9 million. These results exceeded our guidance.
That means earnings typically follow a format.
We opened with a few headline metrics like the ones I just mentioned and then we present a theme with some customer stories as validation.
Time will do something completely different I want to.
Take you behind the curtain for a detailed numerical tour of our business.
We will compare our app in today to Appian one year ago.
You'll also see some multiyear history stretching back to our IPO in 2017.
I'll be sharing some information we've never before disclosed incur.
I encourage you to follow along with the slides in our earnings presentation, though it will not be necessary as I will speak to all the key numbers.
Let's begin on slide five.
Talking about Appian revenue over the five years since our IPO.
There's a slight discontinuity at the 605 606 transition of course, that's the vertical line down the Middle chart.
But the trend is still clear growth is strong and steady and it's rising.
Our total revenue growth has accelerated from a 17% rate in 2022 or 21% rate in 2021.
The subscriptions revenue chart on slide six if you go forward. Please is very similar except that the growth rates are steeper because services are excluded.
Once again, we see an acceleration this time from 31% growth in 2020% to 33% growth in 2021, and if we were looking at cloud subscriptions revenue.
The growth rates would be even higher at 36% in 2020 and 39% in 2021.
Subs revenue is now above a quarter billion dollars per year versus less than $100 million. When we went public.
On slide seven.
Reexamine total RPI or remaining performance obligations.
Here, we're just shoved over three years to give you some perspective on a number that we rarely discuss.
We added $79 $3 million in new RPI during the year.
I had a record $38 $8 million in Q4.
Total RPI accelerates to 39% growth in 2021.
And on the next slide is another look at RPM. If you go to slide eight in this case its current subscriptions are P O.
And once again it shows an acceleration, albeit at a more modest one from 33% growth in 2020% to 34% growth in 2021.
Let's look next at our most substantial customers.
See slide nine.
I've been added 20, new customers with greater than a $1 million and they are our last year.
We grew our total of those customers with more than a million dollars and they are our total grew from 55 to 75.
That is both the largest nominal increase and the largest percentage increase since our first full year as a public park.
And a sharp acceleration over the prior year.
You'll see a similar pattern in the second chart on this page, which shows customers with greater than a quarter of million dollars in a R. R.
Again, 2021 delivered both the largest nominal increase and the largest percentage increase.
Since our first full year as a public firm.
Please follow me to slide 10, where we chart revenue per customer for five years.
When we did our IPO, we spoke a lot about our nearly half a million dollar revenue per customer ratio.
I felt that showed we were delivering a lot of value and so I brought it up a lot in the investor meetings.
This chart shows that we've not quite maintained that ratio, but we haven't fallen too far from it either.
Still at more than $450000 per customer in 2021.
And most importantly, the subscriptions revenue per customer is actually up over these five years, it's only the services revenue component that's declining.
And you would expect that in light of our strategy to offer more of our services opportunities to our partners.
Let's put a spotlight on that mix shift for a moment.
Please flip to slide 11.
We're a different company than we were at our IPO back then the mix was nearly even between subscriptions and services now it's almost three quarters one quarter.
Our willingness to let services decline has weighed on the revenue growth rate of course, but this was our strategy, we engage with the partner community to enable better subscriptions growth and deployment capability.
Our platform became more powerful in 2021, you can see this on our simplified architecture slide which is slide number 12.
It shows the three major components to our suite process mining workflow at the center.
And automation.
We have evolved from a single offering at IPO to a suite today.
We have an end to end low code platform that takes customers from discovering new processes to designing them to automating them.
It's done with native technology in a unified feature set purchased as a single item delivered together upgraded together and used together.
The final piece of this puzzle came last month, when we released our process mining functionality based of course on last year's acquisition of <unk> labs.
As our platform grows so grows our customers' use of it.
Let's look at slide 13.
In 2021 customers ran $4 5 billion workflows on Appian cloud.
An increase of 81% over 2020, and an acceleration on the 77% growth between 2020 and 2019.
Customers use appian workflows to unify people processes and data.
And the more technologies, we integrate into Appian workflows, the more they use them.
I think this is in the central slide.
And there's an important connection between the prior slide that showed growing functionality and this one that shows growing usage.
That's we're looking at usage growth here's another angle I feel split please to slide 14, slide 14 charts.
The user log ons on our cloud product.
We're at $64 million last year up 45% over the prior year.
After two big growth years, we're running it for X. The volume we had in 2019.
Changing gears now to customer experience. Please go to slide 15, where you'll see we've depicted the growth in our elite support program.
Our customers use the elite support services offering.
With benefits like high availability and 24 by seven by 365 support.
To ensure the success of their most important deployments you can read it as a rough proxy for how much product is being used in a mission critical way.
Customers subscribing to this elite support program Rose 13, 9% last year.
Revenue generated by this program grows even faster by 63%, indicating that elite support was purchased for larger deployments than before.
Our cloud SLA uptime.
It was 9999, 5% very similar to the year prior and once again exceeding our commitments.
Overall, our customers have demonstrated a high level of satisfaction with the Appian experience you can see the stats on slide 16.
Buyers rank us highly like.
The Gartner peer insights survey based on customer reviews ranked up in a ball if all of our top competitors.
<unk> was singled out in that study as the sole customers choice in the low code industry.
Our clients, whose annual revenue exceeded $1 billion.
Buyers also awarded US top rankings in surveys conducted by trust radius and G tube.
Our cloud subscription renewal rate was 98% in both 2020, and 2021, which ranks us among the elite of SaaS companies.
We finished 2021 with 80% more partner practitioners then we start.
And our overall community membership total appian ecosystem, including developers and students and prospective customers.
More than doubled.
It's not just our customers that are happy.
Please look to slide 17 to see the situation amongst appian employees.
For the eighth year in a row, we were recognized as a top workplace by the Washington Post again, we were ranked the number one software company in the D C area.
92% of our employees right us a great place to work. According to the survey by the same name.
I'm told a typical U S. Based company earned this recognition from 59% of their employees.
Also look at our employee retention rate over the past five years on the chart to the right.
The ways unusually high and dipping only slightly to 85% during the great resignation.
We put a lot of emphasis on our culture and values and I believe we've created a workplace that's more than just a place to work.
The rest of the deck is our typical quarterly data reporting so I'm not going to talk through the remainder of the slides.
Hope this glimpse behind the curtain as been useful gives you a better sense of where our business stands relative to last year and relative to where we were at our IPO I hope. It also serves to explain why appian chooses to make the investments that it makes in our business.
We take the decision to invest very seriously with challenge it on a regular basis, we feel confident based on the dynamics of our industry and our business that the investments are well watch it I Wanna.
To remind our investors that appian grew to its IPO strap.
And we are well familiar with financial discipline and profitability.
Now I'll turn the call over to Mark deeper discussion of our financials Mark.
Thanks, Matt.
A review of the financial highlights for the quarter and then will provide details on our Q1 and full year 2022 guidance we.
We delivered another solid quarter with subscriptions revenue growth of more than 30% year over year. We also saw strong subscriptions growth in key industry verticals and each of our geographical regions our investments in the platform sales and marketing and go to market initiatives are bearing fruit.
We go into the details cloud subscription revenue for the fourth quarter was $51 $2 million, an increase of 39% year over year and above the top end of our guidance. Our total subscriptions revenue was $75 $8 million, an increase of 35% year over year. We are pleased with the continued strength of our revenue growth.
Professional services revenue was $29 $2 million, an increase of 14% from $25 5 million in the prior year period and up 16% from 25 to.
$25 $2 million in the prior quarter, we expect our professional services revenue to continue to decline as a percentage of total revenue subscriptions.
Subscriptions revenue was 72% of total revenue in the fourth quarter and 71% for the full year of 2021 as compared to 69% and 65% respectively. In the prior year periods total revenue in the fourth quarter was $105 million, an increase of 29% year over year and also above our guidance range.
Our cloud subscription revenue retention rate as of December 31, 2021 was 116% as compared to 117% last quarter. As a reminder, we continue to target a cloud subscription revenue retention rate of 110% to 120% on a quarterly basis.
Our international operations contributed 36% of total revenue for Q4, 2021 versus 33% a year ago. The growth in international revenue was driven by continued healthy growth in both APAC and EMEA regions and demonstrates the balance of our business, both domestically and internationally our cloud software.
C V bookings was approximately 75% of the total software bookings during 2021 versus 80% for the full year 2020.
Total remaining performance obligations or RPI was approximately $286 million at the end of the quarter, an increase of 38% from the year ago period. The current portion of our P O, which we expect to recognize as revenue over the next four quarters was $190 million, an increase of 34% year over year.
We're very pleased with the growth in RPI, However, I'd like to note that there is some seasonality with our P. L consistent with prior periods. Our Pea is expected to decline in Q1 on a sequential basis now.
Now I'll turn to our profitability metrics for the fourth quarter 2021 and 2020, our non-GAAP gross profit margin was 74% in each respective period subscriptions non-GAAP gross profit margin was 90% in the fourth quarter 2021, consistent with the year ago period, our non-GAAP professional services professor.
Services gross profit margin was 32% in the fourth quarter compared to 38% in the same quarter of 2020, we continued to expect professional services non-GAAP gross margins to decrease to the mid to low 20% range in 2022 and beyond as we dedicate more customer success resources to support partners.
Total non-GAAP operating expenses in the fourth quarter were $89 5 million, an increase of 36% from $65 $6 million in the year ago period.
Adjusted EBITDA loss was $10 million in the fourth quarter better than our guidance range and compared to an adjusted EBITDA loss of $3 $7 million in the year ago period.
In the fourth quarter, we had approximately $500000 of foreign exchange gains compared to $3 $9 million and gains in the same period, a year ago, we don't forecast movements in FX rates. Therefore, they arent considered in our guidance.
non-GAAP net loss was $11 $6 million for the fourth quarter of 2021 were a loss of 16 cents per basic and diluted share compared to non-GAAP net loss of $1 $8 million or <unk> per basic and diluted share for the fourth quarter of 2020.
This is based on $71 3 million basic and diluted shares outstanding for the fourth quarter, 2021, and $70 4 million basic and diluted shares outstanding for the fourth quarter of 2020.
Turning to our balance sheet as of December 31, 2021, cash and cash equivalents and investments were $168 million compared with $258 $4 million as of December 31, 2020 for the fourth quarter cash used by operations was $19 $4 million versus cash provided by operations of $5.
$8 million for the same period last year compared to the year ago period operating cash flow was negatively impacted by higher litigation expenses higher sales commissions due to quarter over achievement and deferred payroll taxes.
Total deferred revenue was $152 $6 million as of December 31, 2021 an increase of 22% from the prior year quarter and 27% 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 quarter.
Or monthly due to the variability of our billing terms changes in our deferred revenue are generally not indicative of the momentum in our business now I'll recap our full year 2021 results cloud subscription revenue was $179 $4 million representing growth of 39% year over year. Our total subscriptions revenue for the year was 206.
$3 $7 million, an increase of 33%.
Professional services revenue for 'twenty, and 'twenty, one was $105 $5 million down 3% compared to 2020 total revenue for 2021 was $369 $3 million up 21% compared to 2020.
Adjusted EBITDA loss was $37 $9 million in 'twenty, and 'twenty, one compared to $16 $8 million. In 2020. This is above the top end of our guidance non-GAAP net loss was $48 $3 million in 2021 where he was 68 cents per basic and diluted share compared to non-GAAP net loss of $18 $2 million.
Or a loss of 26 cents per basic and diluted share for 2020.
This is based on 71 million and $69 1 million basic and diluted shares outstanding for 2020, 2021 and 2020, respectively.
For the year ended December 31, 2021 cash used in operations was $53 $9 million versus $7 6 million for the same period last year. In addition, we paid $37 million in cash with a lot of labs acquisition during Q3, along with an equity component that's over time.
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 it all subscription revenue regardless of whether the customer deploys appian in the cloud or on Prem for the first quarter 2022 cloud subscription revenue.
It is expected to be in the range of $52 1 million to $52 $6 million representing year over year growth of 33 and 35%.
Total revenue is expected to be in the range of $106 million to $108 million representing year over year growth between 19 and 22%.
Adjusted EBITDA loss for the first quarter 2022 is expected to be in the range of $9 million to $7 million.
non-GAAP net loss per share is expected to be between 15 to 12 cents. This assumes 72 point million basic and diluted common shares outstanding for the full year 2022 cloud subscription revenue is expected to be in the range of $234 million to $236 million representing year over year growth of approximately.
<unk> 30, and 32% total revenue is expected to be in the range of 440.
444 million to $446 million, representing year over year growth of approximately 20 and 21% adjust.
Adjusted EBITDA loss is expected to be in the range of 53 and $51 million non-GAAP net loss per share is expected to be between 83 and 80 cents. This assumes 72 5 million basic and diluted common shares outstanding.
Our guidance assumes the following professional services revenue will decline in Q1 2022 from Q4 2021 as our partners continue to perform more of the services work.
Term license revenue seasonality will make Q1, our strongest quarter in Q2, our weakest quarter of the year. Hence you should expect term license revenue to be up sequentially in Q1 and down sequentially. In Q2, we expect Q2, adjusted EBITDA loss to be significantly higher than Q1 adjusted EBITDA loss. This is due to the combination of term license.
Seasonality and the cost of running our global user conference Appian World, which will occur in Q2. This year, there will be greater expenses related to travel and in person events. As we continue to grow we will need to build out additional office space capital expenditures will be approximately $2 million to $3 million in Q1, 2022 .
As Matt mentioned and consistent with our prior comments, we plan to make incremental strategic investments in 2022, given the large market opportunity are and our healthy customer unit economics, we plan to invest in R&D, including a full year's worth of expenses from our recent acquisition.
Go to market.
Strategy and sales and marketing.
In addition, we expect some expenses to normalize as we return to the office.
When modeling out the quarterly losses, I would assume the first half of the year as adjusted EBITDA losses will be somewhat higher than the second half of the year's losses, we remain confident about the operating leverage in the business model.
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.
Yeah.
Thank you Mr. Speaker, if you would like to ask a question. Please see note by pressing star one on your phone and keep that if youre using a speakerphone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
First I wanted to ask a question.
We will take the first question from.
Our June but yeah from William Blair.
Your line is open. Please go ahead.
Yes. Thank you.
Congrats guys on a great quarter and great engineer.
I wanted to start with the seven figure customer are saying it gets close and in the <unk>.
The deck. It seems like you added 20, new customers in that 1 million plus cohort, which is more than double the adds that you had last year in this cohort. So I was hoping you could just maybe on unwrap perhaps.
Expansion drivers that are getting customers to be that large aside is it more apps that customers are building are happy and more modules more complexity or is it just the partners that are that are helping customers scale their deployments.
Yeah, I'd like to say, it's all of the above we're offering more value, we're showing reliability and uptime, we're expanding the industry into what is effectively a larger industry. We exist at the top end of that industry. So we are differentiated from the from our rivals who serve the lower of lower priced and lower value Mark.
I believe that we are realizing are correct place in the market.
The expectations of that place and developing the market pioneering it now by putting together the the architecture that we showed on slide 12, I believe it was.
Our partners are also helping us absolutely Ed.
Edge is the experience, we have establishing value with existing clients. After all a client could have been already a client and bought more in order to cross that threshold. So it's not merely that were selling fresh million dollar deals. It could also just be promoting expanded an existing customers, but I.
Like we're realizing our value proposition that's the most important thing I can tell you on this question.
Oh perfect.
Very helpful and I know that we've been talking about this holistic platform that you're building or have built apples quiet with locale of RPI and profits mining and we've talked about that value proposition quite a bit I'm, just curious where our customers in understanding what your bill by bringing all of that.
These components together in one place or are you still educating customers.
And for those that have adopted and have deployed all three of these what's the early feedback you're hearing from them.
As opposed to the alternative approach would be to make such together.
These parts through several different vendors.
Yeah, and innovators always doing some degree of education that this market is not entirely knowledgeable about what they could expect or should expect.
But I can tell you that when they hear the message when they see the demo. It makes sense quickly. That's the difference between an innovation that is going to be straightforward and one that's going to be a hard fight is whether it makes sense to people when they hear it and it does I also see some noise around the market for us.
There are other firms putting together something similar to this perhaps without the same degree of integration and synergy and I believe that that noise is helping to substantiate legitimize our message.
Yeah.
Alright, I will I'll leave it there congrats again guys.
We will take our next question from Mr. Sandeep Singh from Morgan Stanley . Your line is open. Please go ahead.
Thank you for taking the question and congrats al.
You said plus everywhere [laughter], 30% subscription growth cloud growth big customers, 30% seem to be like the theme of your presentation not go.
So to that end.
Where do you think the company is getting better at if you sort of look at me sort of go to the narratives since IPO, but if you just looked over the last year or two.
Where is the business getting better from your perspective is it sort of on landing new customers is expanding new customers is it on the pricing side, where would you where would you say that most improve it has been.
Yeah well.
Well the one easy answer would be I think we are advancing on all fronts, but I want to speak to one transformative inflection point that we're going through right now.
And the same is true for everybody else in this industry in any software industry that matures.
We are transitioning from being a company that's about.
What it what it offers to.
It's about what it's for.
But we're gonna be less about the technology and more about the experience of using the technology less about the features we provide then the effect we convey I think thats, an essential transition and as you go through that transition you become a mainstream I got a company that that our customers rely on for our need rather than for a feature.
I believe that that he has a lot to do with what we're experiencing as well, but we're better at the blocking and tackling we're better at.
You bet.
Better at the operational things, we continue to improve not only are we scaling up but I think that we're just a little more dialed in and we had been before.
I'd say, it's partly execution, therefore and partly.
Realizing.
The market and maturing.
How about the next question I take the next question. The next question from Steve Enders from Keybanc.
Your line is open. Please go ahead.
Hi, This is George on for Steve. Thanks for taking my question Congrats on the quarter and the 100 million dollar revenue quarter great to see.
My question was about.
The great resignation and whether that's come up income customer conversations as a potential tailwind to demand is there sort of grappling with these are they turning to low code and automation to sort of alleviate some of those pressures.
I actually think there are tailwind I don't know that they have manifested themselves or that theyre measurable, but in theory I like to I like to think that there is going to be tailwind is maybe not yet, but the great resignation first of all it stems from a situation people, which people and assets are extremely dispersed theres never been a time.
In business, where your employees your customers your data and your facilities have all been so far apart from each other as they are today.
And when your assets are dispersed and you still want them to work together coherently of workflow would be an ideal way to make them work well together, so our technology fits the moment in that regards.
But also I think a lot of people are switching to new roles.
Because they don't like the maybe the drudgery or the the robotic work they have to do and if you were to automate some of that work you would elevate the humanity or the human side of People's tasks and make the work more gratifying.
That was spelled out nicely in an economist article about low code about our low code industry from two to three weeks ago I thought that was a nice article they they explained how it was both fulfilling for people to work in an automated environment.
And also empowered for them, so they could get better jobs and promotions and add more value in and realize their capabilities. So I think that our low code has something to say in terms of elevating human talent at a moment like this.
Great answer. Thank you one quick follow up I wanted to ask about process mining.
How's the roll up and going I know there was a lot of customer excitement following the acquisition.
Now if there's been any impact on top of funnel are you able to get into some of these engagements sort of earlier on in the cycle.
Well it feels great I loved the initial feedback it's too soon to declare victory on process mining because only been out there for a couple of weeks, but but right now eight eight.
It appears to be getting.
A lot of applause from the customer base a lot of understanding a lot of lot of people think well of course. This is the natural thing you should be doing next and for that matter everyone. In your industry should be doing and I, particularly think that we're going to.
To get good use out of process mining as a means of inspiring new demand. It's just perfect for that we can use this as an existing customer site. For example to explore processes that may be too slow maybe too expensive, maybe keeping your customers waiting for too long analyze that and then uniquely convert to <unk>.
<unk> into a workflow so I'm very excited about both the diagnostic effect of process mining, but also the low friction convergence from process mining into workflow.
Great. Thank you and congrats again on the quarter.
The next question came from Derrick Wood of Cowen <unk> Company. Your line is open. Please go ahead Sir.
Hey, guys. Thanks for taking my question just a follow up I guess on that line of thinking.
Can you, maybe just give us a little more color on the strategy of how you're thinking about.
Selling the new process Marine operating this year, and and and driving more cross selling.
Uptake in 2022 and how that may impact net revenue retention rate.
Oh, yes, we will sell it to existing customers, who don't have a license for it but the main impact that it's going to have is going to be a demand generator. That's that's the purpose that you can do other things with it it's great for monitoring the return on investment for applications, you've already deployed and that might be the ideal way to get the camel's nose under the tent is to use it as an ROI.
Measuring tool or even to give it to partners and let them use it for free anywhere they're doing services deployments, which is also something we're doing but the main thing that we're going to get out of this is discovery of new demand, which we will easily be able to satisfy intact, which will have a unique advantage in satisfying because of the ease of conversion.
From the diagnostic findings into the into the workflow prescription.
That is the primary way in which I expect to use process mining to lead to raise revenue.
Great. Thanks, Mark I mean, you guys are guiding for a little bit higher EBITDA losses, this year versus last year.
I guess, you're expecting some more tea any and.
And then also the call out in terms of where those incremental investments this year versus last year and how should we be thinking about the growth versus margin leverage framework are you know medium term over the next few years.
Yeah, I think over time, you can see that if you look at the customer unit economics. There are they are exceptional so over time, we're going to get leverage in the model. We're just choosing to invest a little bit more this year.
And it's not much more than what we did in 2021 and it's based on the results that we've achieved I think we had a great great quarter, great finish to the year and we're pretty excited about where we're headed going into 2022. So we're doing some incremental investments in the sales go to market our partner our partner folks as well as the R&D.
R&D functions as well to kind of build out the suite.
It's incremental it's not it's not crazy and it's I think it's well well warranted right now.
Great Thanks, and congrats on a good quarter.
Thanks.
The next question is from Mr. V Srinivasan Galvan from Barclays. Your line is open. Please go ahead Sir.
Hi, Thanks for taking my question I just saw that you guys are.
The government cloud got provisional authorization and the other day can you maybe talk about some of the federal engagements that you could be pulled into now where you couldn't do before and can this be an incremental contributor for you in that 2022.
I'm. So glad you mentioned the IL five certification, which we got two days ago I'm pretty excited about it actually around here at the office I think it's a big step for US. It is a frequent requirement in in contracts that we feel.
Very qualified to bid on and we think that we're gonna be able to deliver value.
Many of the projects that require that threshold.
It's too soon obviously to speak of any financial impact, but this is something that we've invested in for a long time I want to note that we are ahead of all of our direct competitors in this regards.
And it's similar to the way we were ahead on fed ramp we were one of the first two dozen companies in the world to get fed ramp back when that was a new thing.
We also had an IL five that demonstrates our commitment to security to protecting sensitive data and it's in line with Appian.
As long term focused on the top of the market, which is to say the largest organizations with the most critical needs.
<unk> always been.
Focused on providing.
To that customer the level of reliability that they need.
Great. Thanks, and then.
The analyst day, you also mentioned that you were aggressively hiring sales reps for different verticals. In accounts are you happy where you have your progress over the last year.
It's kind of a step up in Opex in your guide mostly relate to you I mean hiring more quota carrying reps or would you say, it's more equally divided between sales.
Investments thank you.
I would say that sales is one of the very central places and rep, specifically that that money is going to be placed and we're doing that the out of confidence in the market confidence in our success in the market win rate our growth rate our customer satisfaction our.
Our leverage in an account.
We see the proposition and we like it we want to we want to increase our participation in this proposition and so yes to sales. It is not the only place that will invest or investing in other high impact areas and I won't highlight engineering, that's one of those.
But sales Yeah center of the Bullseye for Us right now.
Great and congrats again on the quarter.
Thank you.
The next question is Mr from Mr. Fred <unk> from Macquarie. Your line is open. Please go ahead Sir.
Okay.
Hi, Thank you firstly I just wanted to say thank you to the team for the additional disclosures this quarter I think that the walk through of the financials is quite helpful to better understand and model and your business.
I wanted to ask about <unk>.
Both customer adds and also subscription revenue per customer as well I think.
Hello, Miss now every year, but.
It's nice to see the subscription revenue per customer is rising although it looks like your total net adds actually declined year over year in comparison with 2020.
When I'm thinking about your growth algorithm and how you consider your.
Go to market going into 2022 and beyond what do you think of the interplay is between accelerating net adds consistently versus driving more subscription revenue per customer.
Yeah.
Okay.
Mr. <unk>, please standby for a while we're waiting for the speakers to answer your question.
I still connected to the line.
Yes, so youre still connected to the line I'm sure checking witness speakers please hold on for Lisa.
Okay.
Yeah.
Mr. <unk> can you hear me.
Yes, I can.
Alright, Mr. First are you still on the line.
Yes, I'm still here.
Alright, Thank you Paul good question.
Please go ahead.
Okay.
Run back through that no problem there.
I'm not sure, which part began which part ended until just cut right to the question here.
What I was curious about is I want to understand how I should think about rpm's growth algorithm in 2022 and beyond in terms of the.
Interplay between driving growth in subscription revenue per customer versus driving volume through net new ads I'm curious because it was nice to see subscription revenue per customer rising materially year over year in 2021, although it looks like the number of net adds also declined year over year. So I'm just trying to think I'm I'm, hoping to get some.
Additional context about how you and happy and are thinking about this growth algorithm. Thank you.
Yeah.
Thanks, Brett our intention is to push on both of those dimensions, we've been successful at increasing the value of our deployments and I believe that we're doing a lot to increase the value of the product and the usage of the product and monetizing that usage would lead to more dollars per customer and per deployment.
Also have however, like to empower our partners and solutions.
To gather many more customers.
We've put focus on both of these dimensions and in 2022, our goal is to pursue both of them.
Okay. Thank you for the sake of time I'll jump back into the queue.
Okay.
We will take the next question from Mr. Joe mirrors from <unk>. Your line is open. Please go ahead Sir.
Great. Thanks for taking the question I would also like to thank you for the increased transparency and slide deck like how simple. It was so I had a question about.
In lieu of getting the new customer deals you guys have I was just wondering if you had any deals in the quarter that you.
You were happy with in terms of maybe new verticals like last I know last quarter, you had like a franchise deal with the restaurant.
I'm just wondering if there are any deals like that that you'd call out as.
A new or exciting.
There's actually a really strong quarter for new deals and good logos and we're saving those stories for next quarter generally we talk a lot about our customer success stories, we detailed them in the prepared remarks, and this time, we decided to break entirely away from it.
Tune in next quarter, we'll be talking about the low the new customer acquisitions.
From both Q4 and Q1 and yeah. There is some good news.
Alright, cool I'll be here for that so far.
A follow up I think in the past you've said that where your customer success teams are involved in projects. The NR is can be as much as 20% higher than without them. So my question is can you quantify what percentage of projects are currently being served by customer success reps and then do you expect that percentage to change.
Over the course of 2022 as you continue to hire throughout the year. Thanks, so much.
That statistic is a powerful testament to the quality of our customer success team and they are terrific.
However, it doesn't mean that they've got to do the implementation of themselves. It merely means they've got to be involved in some way and so our goal is to find new means by which they can work alongside our partners as advisors as strategists as occasional.
A reference points.
And and thereby touch as many customers as we possibly can and so I think I agree with you that its an important statistic and I agree with you that its determinants of whether we can do this in more places and I want to point out that that 20% boost is.
Roughly equivalent whether we did the deployment ourselves or we would did the deployment as an advisor to our partners equivalent boost.
And so we just need to do more of the latter we're creating packaged offerings and new selling strategies to be sure that we spread to more customers by focusing on the second model, which is more efficient for us and one of the things. We guide it is a lower professional services margins because we're taking some.
Customer success folks and working side by side with the partners in that billing because we see that benefit as it relates to the MLR and so we wanted to be there preferably billings from my perspective, but regardless, we wanted to be involved in some form or fashion.
Great. Thanks, Neil.
Okay.
It appears that there is no further question at this time, Mr. Speaker I'd like to turn the conference back to you for any additional or closing remarks.
Great I just wanted to say thank you for your attention. This evening I appreciate you're waiting while they were that havey difficulty and we look forward to speaking to you in 13 that 90 days.
Thank you. This concludes today's call. Thank you for your participation you may now disconnect.
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