Q1 2022 Appian Corp Earnings Call
Please standby today's conference will begin momentarily we thank you for your patience and ask that you. Please remain on the line.
[music].
Yeah.
Greetings and welcome to the Appian Corporation first quarter 2022 earnings call. During the presentation, all participants will be in a listen only mode.
Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press the one followed by the four on your telephone if at any time during the conference you need to reach an operator. Please press star Zero as a reminder, this conference is being recorded Thursday may five 2022.
I'd now like to turn the conference over to Sri Anantha Senior Director of Investor Relations. Please go ahead.
Thank you.
Good afternoon, and thank you for joining us to review <unk> first quarter 2022 financial results with me today are Matt Caulking is chairman and Chief Executive Officer, Mark Mey terrorists, Chief Financial Officer, and Mark Lynch Farmer, Chief Financial Officer. After prepared remarks, we will open the call for questions.
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 second quarter and full year 2022, the impact of COVID-19, including the emergence of new wary and strains of COVID-19 on our business and on the global economy, the benefits of our platform industry and market trends, our go to market and grow.
The 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 are 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. There are subject to that idea 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 available on our investors section of our 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 already conciliation of these measures.
Do their most recently comparable GAAP financial measures with that I'd like to turn the call to our CEO , Matt Calkins.
Thanks, Sherry and thanks, everyone for joining us today.
In the first quarter of 2022 happening with cloud subscription revenue grew 37% year over year to $54 million.
Subscriptions revenue grew by 31% to $83 $7 billion total revenue grew 29% year over year to $114 3 million.
Our cloud subscription revenue retention rate was 117% as of March 31, and our adjusted EBITDA was a loss of $3 $4.
Last week, we hope hosted our annual conference in person for the first time since 2019 it.
It was hybrid really with equal registrants in person and remote.
It's great to get back to personal meetings I loved all the customer presentations. The onstage hackathon was exciting and I got to interview Malala.
Seeing the enthusiasm in the halls reminds us that we have a great product a market favorite product.
Happy customers no complaints all week at least I didn't hear any.
These are the same customers that are just voted us a customer's choice and Gartner is low code quadrant again this year.
We've been a customer's choice every time.
Gartner started doing this quarter and in fact, we're the only customers choice for large companies with more than $1 billion in revenue two years can a rope.
We're also the only customers choice for medium sized businesses more than $50 million two years in a row. This is important because it shows our success in broadening our appeal to the mid market. We're also the only customers choice two years in a row.
For North America Africa, Middle East and Europe .
Happy customers are the foundation of our company, there's another way to bootstrap with fast growing software company without happy customers.
The other reason, we're here as a public company and on the phone with you today as a result of that customer commitment. Our gross renewal rate is always elite in Q1, it was 99%.
Perhaps because of that high customer satisfaction.
It's been growing at record levels. Our community is all the buyers users and practitioners can be happy in ecosystem. This.
This community has more than doubled year over year, 116% growth to be precise and we've broken our monthly record new community members.
Six months in a row.
We highlighted some important product advancements at Appian World, We released a know your customer <unk> financial services solution. This solution is usable standalone, but designed to be compatible with the rest of our financial services suite.
When using all three parts of the suite do you have a really seamless series of applications that follows the customer lifecycle.
Solutions allow us to attract new logos and expand within existing customers. For example, we sold the two customer lifecycle management solutions. The ones that were available at the time to a leading global investment management firm, making them a new appian customer in Q4.
Happy and with digitize, the firm's manual processes, allowing them to reduce the time it takes to onboard and manage hundreds of institutional clients annually.
When the firm is ready to extend that being to verify new client identities it will be easy.
Adopt our know your customer solution.
Happy and gained a provisional authorization.
At impact level, five known as IL five for department of defense customers in Q1.
This is a major accomplishment and it demonstrates our unusually strong security capability as.
As you May recall, we were one of the first 25 companies in the world to earn the governments earlier fed ramp certification.
IL five goes well beyond fed ramp.
As far as we can tell we are just the 15th the company in the world to achieve IL five authorization.
It says something about the industrial strength of our offering and the seriousness with which we take security.
In achieving this distinction we're ahead of every one of our competitors.
Unless you count Microsoft and I don't.
<unk> emphasis on security sets us apart a U S intelligence agency became a new Appian customer in Q4 of last year, it'll use our low code platform to automate contract writing processes as it decommission and outdated legacy system.
We won this deal over competitor because our platform is secure organizations built flexible apps with our IL five authorization agencies like this one will be able to quickly deploy apps that require the highest security standards.
Let me tell you about another feature we just launched <unk>.
Happy and support with <unk> in Q1.
Appian applications to external users and high volumes without requiring a logan.
<unk> offers a public facing front door to Appian applications portals are quick to deploy and to develop they connect with all existing appian applications and they scale to handle extreme usages.
There has not been portals example, a fortune 500 oil and gas provider has been an appian customer since 2018, it's operational excellence team uses our platform to oversee the resource management operations and compliance of its oil refinery projects. It is deployed several applications, including one that manages contractor visits.
Before Appian back office employees used email to collaborate with internal stakeholders and external contractors to request field visits complete paperwork approved visits and schedule on sites last year happy and automated the internal review process with our low code platform now we're automating the front end contra.
<unk> submission process with Appian portals.
Tens of thousands of contractors will submit their forms through a portal triggering the internal review process, we already automated.
Happy and portals opens our platform to new user groups.
I'm going to share a few customer stories with you this quarter, especially since the format of last quarter's earnings call left no timeframe.
Many customers who purchased licenses in Q4 have already built and deployed applications by Q1.
That's true for a leading Australian bank that became a new appian customer late last year.
The bank is modernizing the enterprise and wants to standardize its.
It's selected our low code platform to replace a series of inflexible on premises systems with Appian applications deployed in the cloud.
First half was live within eight weeks and allows its retail banking group to refinance mortgages for individual customers.
Next a leading European automotive manufacture became an appian customer to modernize its business and improve efficiencies.
It uses appian to automate supply operations.
The very first half manages the effect of Brexit regulations on supply shipments from Europe . Since then the company has quickly deployed several more apps to thousands of users in Q1. It purchased a seven figure software deal for a new app that will track supply chain risks of global shortages happen.
We'll alert the company when key automotive parts are unavailable. So it can identify alternatives and escalate concern suppliers.
SAP will be delivered in eight weeks.
We won this new project because appian allows the manufacturer to quickly automate the company's workforce.
We saw continued strength in our key verticals this quarter, particularly life Sciences and financial services.
A leading telehealth and insurance provider purchased a seven figure deal for <unk> licenses and became a new customer in Q1.
<unk> selected our low code platform to digitize customer service processes like managing patient claims.
Verifying the in network status of local physicians.
Happy and will replace a costly and flexible solutions, our platform will integrate with over a dozen systems and bring workers across departments together in a single workflow.
A top global asset management company has been a customer for several years, it's built 80 appian applications for over 10000 employees.
Across retail investing investment management data governance and portfolio management.
In Q1, it purchased more appian licenses to replace an institutional investment system.
Front office employees will use appian to initiate customer requests like making investment to reallocating funds and pass them to convert compliance reviewers. These reviewers will then verify the request and complete the transaction.
Okay.
U S insurance regulator bought a seven figure deal in Q1. This group is re platforming it's enterprise.
<unk> selected our low code platform to replace a decades old compliance filing system for private carriers and state regulators before Appian the group.
Appearance filing delays and manual workarounds because its on premise system was too inflexible too costly to maintain now it will deploy up into standardized its filings nationwide, while accommodating regional requirements. The group expects to process filings, 50% faster with Appian.
We won this competitive deal after proving our power and speed during an extensive proof of concept.
We appreciate the loyalty and enthusiasm about being buyers the trust of our customers remains Abience greatest asset.
We've been in the news a few times lately over our policy towards Russia, I will briefly explain it.
Happening that's been in business for 23 years, and we have never done business with Russia, and we never will.
We feel it is not possible to do deals in that country without supporting them. So we've stayed out.
There are a lot of public companies that have declared a temporary moratoriums on business in Russia.
I'm not aware of any others that have made non temporary decisions and have set that policy long before the Ukrainian measure.
Finally.
I'd like to formally introduce mark with iOS as <unk>, New Chief Financial Officer. He has previously served as <unk> controller, and Chief Accounting officer, He's taken up the new position with great confidence.
I think our outgoing CFO Mark Lynch for his work and friendship over more than a dozen years.
For taking us public in 2017.
For his outstanding capability integrity, and wisdom, such as our regard for market. So reluctant are we to be without his good counsel that he has been nominated to be a director on the <unk> Board.
You can find more information on our proxy statements filed with the SEC.
Mark is there anything you'd like to say before we hand the call Mr. Matthias Yes.
Thanks, Matt it's been an amazing run.
I'm incredibly appreciative to you the board.
The founders forgive me the opportunity to join the company over 13 years ago and to help grow it from 25 million of revenues in 2008 to over $450 million.
Just on our updated guidance for 2022 I'm also excited to be nominated to the <unk> Board and look forward to continuing our working relationship for years to come.
I'd also like to take a moment to thank everyone within our finance HR facilities IR in admin functions. It's been an honor to work with such an amazing dedicated group of professionals I'm very excited with Mark's Mark Let's say this is well deserved promotion to CFO . He's a very talented professional with qualifications required to take the company.
To the next level.
And with that I'll turn the call over to Mark for a deeper discussion of our financials.
Thanks, Matt and Mark Good afternoon, everyone. It's great to be here I'm looking forward to partnering with Matt Our executive team and all of our employees to support our continued growth.
I will review the financial highlights for the quarter and then we'll provide guidance for Q2 and full year 2022.
We delivered another strong quarter, driven by cloud subscription revenue growth of more than 30% year over year. We also saw healthy cloud subscription growth in key industry verticals and each of our geographical regions.
Our investments in platform sales and marketing and go to market initiatives are beginning to bear fruit and this gives us confidence to continue to drive 30% plus cloud subscription growth going forward.
Let's get into the details.
Subscription revenue for the first quarter was $53 $4 million, an increase of 37% year over year and above the top end of our guidance.
Our total subscriptions revenue was $83 7 million.
An increase of 31% year over year.
Professional services revenue was $30 5 million, an increase of 22% from $25 1 million in the prior year period.
Despite the growth in services revenue this quarter partners will continue to be a larger part of our growth strategy as you heard at Appian World. Some of our partners are expected to double the number of Appian practitioners that their respective firms over the next 12 months.
Appian partners not only help us sell software, but also performed professional services work for new services contracts if they sign.
We continue to believe over time professional services revenue will decline as a percentage of total revenue.
Yeah.
Subscriptions revenue was 73% of total revenue in the first quarter as compared to 72% in the prior year period.
This period and in the prior quarter.
Total revenue in the first quarter was $114 3 million, an increase of 29% year over year and also above our guidance range.
Our cloud subscription revenue retention rate as of March 31 was 117% as compared to 116% last quarter.
We are pleased with our customers' expanded use of our platform.
As a reminder, we continue to target a cloud subscription revenue retention rate of 110% to 120%.
Our international operations contributed 33% of total revenue for Q1 2022.
Versus 32% 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 ACB bookings was approximately 73% of the total software bookings during the first quarter of 2022, which is similar to the cloud bookings as a percent of total software bookings during 2021.
So now I'll turn the profit to our profitability metrics.
For the first quarter of 2022, our non-GAAP gross profit margin was 74% compared to 75% in the year ago period.
Descriptions non-GAAP gross profit margin was 90% in the first quarter of 2022 compared to 91% in the year ago period.
Our non-GAAP professional services gross profit margin was 29% in the first quarter compared to 32% in the same quarter of 2021.
We continue to expect professional services non-GAAP gross margins to decrease to the mid 20% range in 2022 and beyond as we dedicate more customer success resources to support partners.
Total non-GAAP operating expenses in the first quarter were $89 7 million, an increase of 34% from $67 2 million in the year ago period.
Adjusted EBITDA loss was $3 4 million in the first quarter better than our guidance range and compared to an adjusted EBITDA of approximately $400000 in a year ago period.
In the first quarter, we had approximately $1 9 million of foreign exchange losses compared to $3 million in losses in the same period a year ago.
We don't forecast movements in FX rates, therefore, they aren't considered in our guidance.
non-GAAP net loss was $4 4 million for the first quarter of 2022 or a loss of six per basic and diluted share compared to non-GAAP net loss of $4 million or <unk> <unk> per basic and diluted share for the first quarter of 2021.
This is based on $72 2 million basic and diluted shares outstanding for the first quarter of 2022, and $70 7 million basic and diluted shares outstanding for the first quarter of 2021.
Turning to our balance sheet as of March 31, cash and cash equivalents and investments were $168 4 million compared with $168 million as of December 31, 2021.
For the first quarter cash used in operations was $26 million versus cash used in operations of $2 8 million in the same period last year.
Compared to the year ago period operating cash flow was negatively impacted by higher litigation expenses and higher personnel expenses.
Total deferred revenue was $148 million as of March 31, an increase of 34, 34% from the year ago period.
As we have 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 variability of our billing terms changes in our deferred revenue are generally not indicative of the momentum in our business.
We continue to believe cloud subscription revenue is a better indicator of our business trends in billings for remaining performance obligations or rps as they can.
Can fluctuate relative to revenue based on the timing of invoicing seasonality of term license revenue and the duration of customer contracts.
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 and all subscription revenue regardless of whether the customer deploys appian in the cloud or on Prem.
For the second quarter of 2022 cloud subscription revenue is expected to be in the range of $55 8 million to $56 3 million representing year over year growth of 31% to 32%.
Total revenue is as such.
To be in the range of $402 $8 million to $104 8 million.
Representing year over year growth of 24% to 26%.
Adjusted EBITDA loss for the second quarter is expected to be in the range of 25 million to $22 million non.
non-GAAP net loss per share to be between 37 and 33 cents.
This assumes $72 4 million basic and diluted common shares outstanding.
For the full year 2022, we are increasing cloud subscription revenue to the range of $236 million to 238 million.
Representing year over year growth of 32% to 33%, we're increasing total revenue to the range of $153 million to $457 million.
And a year over year growth of 23% to 24%.
Adjusted EBITDA loss is expected to be in the range of 53 million to $50 million.
non-GAAP net loss per share is expected to be between <unk> 82.
And 77, this assumes $72 5 million basic and diluted common shares outstanding.
Our guidance assumes the following.
First based on current rates, we expect FX related headwinds of approximately 2% to cloud subscription revenue.
Second there will be a sequential decline in term license revenue largely due to seasonality.
Q2 is also expected to be the weakest quarter of the year, which is consistent with past performance and third we expect a decline in the professional services revenue from Q1 to Q2 2022 as our partners continue to perform the more of the services work.
Fourth there will be significantly higher adjusted EBITDA losses in Q2 compared to Q1. This is largely driven by the seasonality and term license revenue and higher expenses associated with in person events and <unk>.
For example, our annual user conference was in person. This year for the same event was held virtually for the past two years.
Finally, our guidance assumes that build out of additional office space as we returned to the office.
Capital expenditures will be approximately $2 million to $3 million in Q2 2022.
In summary, we're excited about the growth opportunities ahead of us, we're making disciplined investments to improve go to market success and continue to expand our platform to address the large and growing market opportunity.
With that let's turn it over to questions.
Thank you if you'd like to register a question. Please press the one followed by the four on your telephone you'll hear three Tom prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration. Please press the one followed by the spring.
One moment please for the first question.
Our first question comes from the line of Kevin Kumar with Goldman Sachs. Please go ahead.
Hi, Thanks for taking my question, Matt can you comment on what Youre seeing from an overall demand environment perspective for local solutions.
Particularly in this inflationary environment.
And also can you comment on what you're hearing from customers in Europe . Thank you.
Yeah, I figured I'd get a question on inflation to nobody the first one but.
Look.
I think that the economy could be in for a rocky ride in Appian has proven resilient in <unk>.
Economic.
Turmoil.
We've been around for 23 years, and we've seen how this business responds.
And if there is a disruption and let me say I don't see it yet.
I don't see any disruption, but if it develops into a disruption if the if the inflation becomes a problem if we run into a recession.
Think caffeine may prove to be more resilient.
This business is about creating efficiencies finding efficiencies pivoting the organization according to.
Two circumstance and.
And saving money and so I believe that we may prove to be resilient.
That's great and then I wanted to double click on partners the commentary.
From some of the conference has been very positive.
Partners are growing their practices fairly rapidly I guess has anything changed in terms of partner enablement go to market, that's driving that level of growth across the partner ecosystem.
There is we are focused on making it easier than ever before to learn our platform.
We do that partly so that the most demanding customers can have an absolutely no compromises experiences quickly achieved the changes they need in the patterns and processes that they run but it has the intended side effect of broadening our market and inviting more participants to be Appian practitioners. We are encouraged.
Bye bye, creating free scholarships by allowing for usage, creating a an environment in which people can experiment with our product and build intellectual property that can then be ported into a H <unk> environment.
We've done all we can to make it easier to get our community larger I think that's got a lot to do with the community growth and one of the biggest takeaways that I had from our user conference last week was the enthusiasm of the partners. We've never made more money at a partner sponsorships, even though this is not our largest in person conference coming out of Covid, it's not the biggest we still.
Got more sponsorship money than we've ever gotten.
And.
The plan so the partners have to grow the size of their Appian trained workforce are.
Particularly impressive thousands of new.
Practitioners are being trained by partners. This year, some cases without being support in some cases, not but theyre responding to substantial market demand I talk about it wherever I go with partners.
And they see the demand and are reacting to it that's probably my favorite single takeaway from last week's conference actually was the tangible plans that I saw on our partner's behalf to increase their appian trained workforce.
That's great and congrats on the quarter.
Thank you.
Our next question comes from the line of Bob Huang with Morgan Stanley . Please go ahead.
Hi, This is Bob filling in for Sanjay just similar line of question at the previous one.
Assuming the macro condition remains volatile.
Can you maybe talk about.
The potential headwind that could impact your margins, especially in the second half we do understand the second quarter. We will have some seasonality, but are there any potential weakness or do you see that could potentially deteriorate.
Impact your margin on the second half and also are there any levers that you could pull to sort of offset that assuming the macro conditions remain the way it is.
Alright, now I will talk about second half of the second but I first want to say.
There is a little bit of macro turmoil right now and yet we've delivered a typical solid at the end of quarter. Our growth is over 30. The revenue surprisingly strong at 29, we've got elite margins Conservative spend Conservative guide right. This is just typical playbook appian and we're doing that even though you're seeing a little bit of.
Macro volatility so I.
I feel we're steady on even though that <unk> picked up a little bit.
And in the second half of this year.
I don't anticipate any disruption to our expectations.
And we as for levers we can pull having is having got here as a bootstrap company. We know what it is to batten down the hatches we had to grow on our own revenue we were customer funded not investor funded and so we understand what it is like to run lean and if we need to we can do that.
Okay. Thanks, that's very helpful.
Second question on trying to have a better understanding of your customer base.
<unk> your prepared remarks, you mentioned about additional customer adds and especially some of the on premise examples right in terms of your new logos.
Can you give us a sense of.
What percentage of that are cloud customers and what percentage of that are on premise customers and generally do you like do you expect the on premise customers to eventually shift to the cloud and if so what is the pace of that shift.
Got it.
Our equilibrium at this point is roughly four to one which is to say, 80% cloud, 20% on Prem Im not saying Thats last quarter I'm, saying, that's a broad consensus over quarters that that pattern has continued in the first quarter of 2022 and I expect that it will continue for.
All the other quarters and 22 also we're not seeing a mix shift from on premise to cloud and I don't anticipate one.
Once in a while a business has a reason for a preference for on premise Appian encourages cloud, but customers have their choice.
And if they do have such a preference they are unlikely to unwind. It. Furthermore, the.
Remnants of our legacy customer base that is committed to on Prem if they were going to switch they would have switched and so I don't expect a migration.
Thank you congrats on a quarter.
Thank you.
Our next question comes from the line of Jacob Bearish with William Blair. Please go ahead.
Hey, guys. Thanks for taking my questions. So just wanted to touch on pricing. So customers are clearly seeing the value of the platform, which can be evidenced by 99% gross retention, which is best in class strong enter are and then also accelerating platform usage that you've disclosed over the last few quarters. So given these.
Dynamics I'm, just curious how youre thinking about the potential pricing lever over the next few years.
Yeah absolutely.
We've got a lot of ways too.
To capture higher prices, but that is our intention.
As we add pieces to our suite, we raise the sweet price.
Now, we do that while saying that Rps free and process mining is free but only a nominal amount of it is actually free and if a customer becomes a serious user one of those functionalities.
Also IDP also.
Bob.
Also portals.
Any one of those trigger cost increases if they use it in a substantial manner. So we have overall price raises we have triggers on heavy usage for any of those nominally free components.
So those would be the primary ways, but we're also using the leverage we get from the other components of the suite to upsize the existing application customers that we have sold so are other level lever it doesn't have anything to do with it.
Raising prices it has to do with discovering new business and sparking new demand process mining in particular is great for that but also just to be able to say if you've got a system why don't you add our RP a instead of someone else's. It's more convenient right. It's already compatible that will upgrade together I think we have we have a footprint expansion plan.
Even as we have a price increase plant and we continue to see strong pricing power and we watch for that.
Great. Thanks, and then I'm just curious how initial customer conversations have been tracking for some of those new products. You mentioned earlier like portals and cable I see when we were at Appian World last week. There is so much buzz around portals. So I'd love to hear if you could dive into that a little deeper on how that differentiates your platform.
Versus some of your other competitors.
I'm glad you felt the buzz around portals last week at our conference.
I would say portals may be the most anticipated feature we've ever shipped.
Which is funny because I don't think it's the most amazing feature we've ever shipped it's pretty straightforward and yet it's exceptionally popular who's a simple thing to create a simple thing to deploy and yet customers really want this in order to expose their applications to external users, who don't have log ons and who might almog on and the same five minutes one day.
And so we put this together and we've got we've got exceptional interest in it which is why we've put a price on it.
Yeah, I think we're going to get a good deal of uptake on that product. It's not the only thing that people are excited about.
Theres interest around our growing solutions portfolio. There are now 75 solutions written by our partners. In addition to that the solutions are written by Appian and though those partner driven solutions are up in revenue, 265% year over year. So there is interest in other features as well.
Code data has seen extreme usage over the past year, we've released that a year ago. When it was G. A year ago, but to have more than a third of our customers actually or a third of our customers actually using it right. It's 37% of our customers are using low code data, that's an enormous uptake on a deployment feature not ever customers at all.
Deployments, even but they love. This feature it makes data integration intuitive makes it low code drag and drop with your mouse the way, we make workflow low code.
So.
We've got a few features that I feel like they're there.
Racing across the user base is great deal of interest for these.
Great. Thanks for taking my questions and congrats on the great quarter.
Thank you.
Our next question comes from the line of Joe Meares with Truest. Please go ahead.
Great. Thanks for taking the questions.
Just to go back to the partners topic.
It was great to hear at Appian World, how how much your partners are growing their predictions practitioner base I'm just curious if you have any quantitative.
Numbers behind now how many how partners were involved in the pipeline this quarter and do you think that that can accelerate through the year.
Anecdotally I could say that I heard multiple partners, saying that they've planned to double.
Their practitioner base in 'twenty two.
But I want to emphasize that that is anecdotal and I don't have official numbers. These are just promises and plans anyway. So.
But take that with an asterisk, but I came away very encouraged about the commitments that partners are making.
As for the partner contribution to our pipeline I would say it is in line with the contribution to our pipeline that it has been percentage wise I mean, thats still a roughly equivalent engaged to our total pipeline.
Contribution.
I think it's been consistent quarter on quarter.
Yeah.
Got it and then.
And breakout sessions at Appian World I was surprised and pleasantly surprised to see how many customers we're talking about adding products that they either didn't know about really yet or just you had heard about from talks with partners. So I'm just curious if you're if you've never added another logo, what's the what's the revenue runway within the current installed base like what's the.
Current penetration of revenue you think within the current installed base. Thanks, so much.
Yeah, I actually think we have a fantastic run.
Runway ahead of us even if we never added a new logo, but the real beauty of our position is we're going to add new logos and every one of them will also have that beautiful runway ahead. It's one of my favorite things about this business that we generate so much value with each application that we'd put down the customers are delighted the usage is.
It grows faster than revenue growth.
And that's our challenge is just to monetize all the value we're creating.
I take care not to offer true enterprise licenses for this reason because the value the value. We can create keeps going up with every new application with every new users. There is always more you can do with this platform.
So I'm reluctant to sell the future at today's prices when it comes to usage licenses.
Tom.
So could we grow we didn't add new logos, we couldn't we'd probably pretty well too but.
But I think we're going to get the best of both worlds, we're going to radiate and and we have a lot of logos, we haven't touched out there.
Great to hear thank you.
Our next question comes from the line of Derrick Wood with Cowen and company. Please go ahead.
Hey, guys, it's Andrew on for Derrick.
Thanks for the question.
I'll shift to Mark actually.
Rats, Mark Lynch on your retirement and best wishes.
Congrats.
<unk> on your promotion.
Was there any impact to close in Q1 from from FX and secondly, what drove the strength in <unk>.
Was there anything.
One time unusual in that.
So when we talked about the headwinds in our diet, it's really.
Since our initial guidance that we made in Q1 I'm sorry in February with our full.
Full year results the movement in the currencies represents that headwind so.
That's the only thing where we're at.
Mentioning I mean.
There is no other kind of bumps on that.
In terms of impact to the guide.
On the professional services piece.
You know we have limited visibility on that.
And we're kind of.
Conservative with respect to what what we forecast.
With respect to that visibility.
So we don't we don't actually.
Have any specific.
We're not necessarily surprised when we see it tick up because of.
Large project or two that may have spilled over from.
From Q4 to Q1.
But it's not something that we necessarily expect to happen as 22 goes on.
If I could say just a little bit to that <unk> question as well we note that it was a strong quarter.
For services.
And I believe we can attribute that to our success in creating packaged services, which is to say a a defined behavior set that is package to be complementary to our players.
We've changed our services from Appian does all the deployment to Appian counsels and assists our partners in doing the deployment and I think we've had some success in nailing that new model.
And so I attribute our.
Our improved services picture to the fact that we are working hand in hand, with our partners more successfully than we had in the past, which is also great for our customers because it ensures the best outcomes.
That is not to say that we have any predictions.
I just wanted to explain as best I can.
What the strength is in the first quarter.
Yeah, Thanks, and then not for you.
How is your sales rep hiring plan and trend versus versus the planned and maybe give us a feel for what sales capacity growth could.
Could be this year.
And what overall productivity was like in the quarter.
That's right.
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We never comment on our AE hiring except to say general things like we're hiring aggressively.
So I'm gonna have to settle for that in response to your question about Aes.
With regards to productivity.
It has been on the upswing.
It was better last year than it had been the year before that I'm feeling good about productivity and that's not a mirror tweaking. The numbers. That's also the fact that we've instituted a new sales methodology last year with more formality and rigor than we ever did before and I believe that that is driving greater productivity.
Tiffany.
Great one more for you, Matt if I can squeeze in.
How big of a lead generator events is Appian world and how does this compare with prior years and can that help accelerate your pipeline growth.
I think Appian World is a good lead generator in terms of expansion within existing accounts.
And they moderate to knock impressive lead generator with regards to prospects.
So I think it's great for conspiring our existing customers to meet each other see what theyre doing but if you've got a prospect that's already so excited about the company that they are willing to travel to go to a conference than they were pretty much going to buy it anyway is my experience.
Great. Thanks, guys.
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Our next question comes from the line of.
Sweeney Vocera Gavin with Barclays. Please go ahead.
Hi, Thanks for taking my question I just wanted to go back to the cloud versus on premise customers you mentioned earlier.
What's the typical size of a cloud versus on premise customer now versus maybe two years ago.
Yeah, Okay, you mean, the size relative to each other or just the.
You see our average size is not too far down from what it was when we went public. Despite the fact that we have many more logos and we brought on a batch of customers with a COVID-19.
Health response solution.
On average smaller than our other customers so.
So I'd say our price our average revenue footprint has held up really well in light of the growth that we have been too but.
But it's the other dimension there of your question was is there a divergence or a change in trend between the cloud users and the cloud deployments and the on premise deployments in there I would say no not to my knowledge.
Got it and you mentioned a packaged services earlier.
Over to the presenters.
Well, we don't have any further comments other than to say, we appreciate your interest and your questions. Thank you and good evening.
Yeah.
Thank you that does conclude today's conference call. We thank you all for your participation and ask that you. Please disconnect your lines.
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