Q2 2026 Appian Corp Earnings Call

August 6, 2026

Operator: Good morning, and thank you for standing by. Welcome to the Appian Q2 2026 Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Brian Denyeau. Please go ahead.

Raimo Lenschow: Good morning, and thank you for standing by. Welcome to the Appian Q2 2026 Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Brian Denyeau. Please go ahead.

Speaker #1: presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising that your hand is raised.

Speaker #1: press *11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Brian Denyeau. ahead.

Brian Denyeau: Great. Good morning, and thank you for joining us. Today, we'll review Appian's Q2 2026 financial results. With me are Matt Calkins, Chairman and Chief Executive Officer, and Srdjan Tanjga, Chief Financial Officer. After prepared remarks, we'll open the call for questions. During this call, we may make statements related to our business that are considered forward-looking. These include comments related to our financial results, trends, and guidance for the Q3 and full year 2026, 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. These statements reflect our views only as of today and don't represent our views as of any subsequent date. We won't update these statements as a result of new information unless required by law.

Brian Denyeau: Great. Good morning, and thank you for joining us. Today, we'll review Appian's Q2 2026 financial results. With me are Matt Calkins, Chairman and Chief Executive Officer, and Serge Tanjga, Chief Financial Officer. After prepared remarks, we'll open the call for questions. During this call, we may make statements related to our business that are considered forward-looking. These include comments related to our financial results, trends, and guidance for the Q3 and full year 2026, 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. These statements reflect our views only as of today and don't represent our views as of any subsequent date. We won't update these statements as a result of new information unless required by law.

Speaker #2: Good morning, and thank you for joining us. Today we'll review Apian second quarter 2026 financial results. With me are Matt Calkins, Chairman and Chief Executive Officer; and Srdjan Tanjga, Chief Financial Officer.

Brian Denyeau: Actual results may differ materially from expectations due to the risks and uncertainties described in our SEC filings. Additionally, non-GAAP financial measures will be discussed in this conference call. Reconciliations of GAAP to non-GAAP financial measures are provided in our earnings release. With that, I'd like to turn the call over to our CEO, Matt Calkins. Matt?

Matt Calkins: Thanks, Brian. In Q2 2026, Appian's cloud subscriptions revenue grew 23% to $131.7 million. Subscriptions revenue grew 19% to $157.7 million. Total revenue grew 19% to $203.3 million. Adjusted EBITDA was $16.2 million. For the second consecutive quarter, constant currency cloud revenue accelerated and grew over 20%. Our weighted Rule of 40 was 36, and our go-to-market efficiency metric posted its 12th straight quarter of improvement. We're increasing full-year guidance. We now expect our cloud business to grow 20% for the year, and we're raising EBITDA margin by 2 percentage points to 13. Those who've heard our earnings calls or our Investor Day last quarter know what's going on here. For others, I'll offer a brief explanation. Appian is part of the AI stack. Before you can deploy AI in enterprise applications, you need certain supporting functionality.

With that. I'd like to turn the call over to our CEO. Matt Caulkins, Matt, thanks, Brian. In the second quarter of 2026. Aion Cloud, subscriptions Revenue grew 23% to 131.7 million.

Subscriptions Revenue grew 19% to 157.7 million. Total revenue, grew, 19% to 203.3 million.

Adjusted, Evita was 16.2 Million.

For the second consecutive quarter constant currency Cloud. Revenue accelerated and grew over 20%.

Our weighted rule of 40 was 36 and our go to market efficiency metric posted its 12th straight quarter of improvement.

We're increasing fully your guidance.

We now expect our Cloud business to grow 20% for the year, and we're raising EBITDA margin by 2 percentage points to 13%.

Those who've heard our earnings calls or our investor day. Last quarter know what's going on here.

For others, I'll offer a brief explanation.

Aion is part of the AI stack.

Matt Calkins: Some call it a harness, a control plane, or an orchestration layer. Appian provides it. Let's quickly review what that supporting functionality is. First, you need a deterministic layer, since AI is probabilistic. This makes AI reliable enough to run in critical applications. Our process technology fits this need. Second, you need to access information from across the enterprise quickly and securely. Agents need broad access so they can roam for data. Our Data Fabric serves this purpose. Third, you need governance to track AI's actions and outcomes for transparency and for continuous improvement. Fourth, you need to save tokens by allocating work to the right workers. You've got multiple AI models of different costs, plus digital workers and people. AI is expensive, and nobody wants to be locked in, a layer that allocates work is essential. AI in the enterprise needs support.

Before you can deploy AI in Enterprise applications, you need certain supporting functionality.

Some call it a harness, a control plane, or an orchestration layer.

Happy and provides it.

Let's quickly review what that supporting functionality is. First, you need a deterministic layer, since AI is probabilistic.

This makes AI reliable enough to run in critical applications. Our process technology, fits this need

Second.

You need to access information from across the Enterprise quickly and securely agents need broad access so they can roam for data our data fabric. Serves this purpose, third, you need governance to track ai's actions and outcomes for transparency and for continuous Improvement.

Fourth.

You need to save tokens by allocating work to the right workers. You've got multiple AI models of different costs, plus digital workers and people.

AI is expensive and nobody wants to be locked in. So a layer that allocates work is essential.

Matt Calkins: I've just listed four key things it needs. There's growing awareness of these needs. In this emerging space, Appian's capabilities are being validated by our customers. Customers' Appian AI usage is 20 times greater than last Q2, and 85% of our Q2 new logos bought our AI. Appian's approach to AI is distinct and appeals to the high end of the market. Our customers are big organizations in highly regulated industries. Appian is used by two-thirds of the world's largest pharmas, insurers, and non-Chinese banks, plus 20 major governments. The US government is our single largest customer. These organizations cannot afford to make mistakes. They're not willing to throw AI at mission-critical applications and see what happens. They need a reliable framework for AI, and Appian provides it. We are all about reliability, security, and safety.

AI in the Enterprise needs support. I've just listed 4 key. Things it needs.

There's growing awareness of these needs.

In this emerging space API capabilities are being validated by our customers.

Customers. Appion, AI usage is 20 times greater than last Q2 and 85% of our Q2 new logos, bought our AI.

Chinese Banks plus 20. Major governments.

The US government is our single largest customer.

These organizations cannot afford to make mistakes. They're not willing to throw AI at Mission critical applications and see what happens.

Matt Calkins: Next, I'll share a few examples of the value Appian customers are achieving with our AI. First, a leading health insurance provider manages client services and enrollment on our platform. Before Appian, the insurer's template-based document processing system was unable to handle a diverse range of documents. This Q2, it deployed DocCenter, Appian's AI-powered document intake solution, to interpret over 100,000 medical records annually. The organization expects to save more than $10 million in operational costs over the next three years. Next, a top global asset management firm runs dozens of Appian applications, saving hundreds of thousands of labor hours annually. This Q2, it deployed our AI into its existing Appian client services and onboarding processes to optimize them further. Our AI automatically classifies and extracts data from millions of customer forms per month, processing 90% automatically and routing the rest for human review.

We are all about reliability and security, and safety.

Next, I'll share a few examples of the value our app and customers are achieving.

With our AI.

First, a leading health insurance, provider, manages client, services, and enrollment on our platform before appion the insurers template-based. Document processing system was unable to handle a diverse range of documents.

This quarter it deployed doc Center. Appion AI, powered document intake solution to interpret over 100,000 medical records annually.

The organization expects to save more than 10 million dollars in operational costs over the next 3 years.

Matt Calkins: With this deployment, they expect to save additional tens of millions of dollars annually. Finally, a top global bank and longtime customer runs more than 100 mission-critical Appian applications. In Q2, it signed a seven-figure net new software deal for additional licenses and to access our latest AI features. The bank intends to build a host of new apps, starting in its retail and commercial business. It'll deploy DocCenter to process customer-facing documents for onboarding new customers, know your customer checks, and closing accounts. It will use our AI-assisted application development features to create new apps at scale. Appian is an essential part of the bank's plan to use AI to generate over EUR 1 billion of business value by 2028. Appian is seeing a rising tide of legacy modernization requests. AI has ignited demand in this market for two reasons.

Next a top Global asset management firm runs dozens of Appian applications saving hundreds of thousands of labor hours annually. This quarter. It deployed our AI into its existing appion, client services and onboarding processes to optimize them further. Our AI automatically classifies an extracts data from millions of customer forms per month, processing, 90% to automatically, and routing the rest for human review, with this deployment, they expect to save additional tens of millions of dollars annually.

Finally a top global bank and longtime customer runs more than 100 Mission. Critical appion applications in Q2. It signed a 7-figure, net new software deal for additional licenses and to access our latest AI features

The bank intends to build a host of new apps, starting in its Retail and Commercial Business. It will deploy Doc Center to process customer-facing documents for onboarding new customers, Know Your Customer checks, and closing accounts. It will use our AI-assisted application development features to create new apps at scale.

Happy and is an essential part of the bank's plan to use AI to generate over a billion euros of business value by 2028.

Appian is seeing a rising tide of legacy modernization requests.

Matt Calkins: First, AI-driven application development is faster and more efficient than old ways of modernizing. Second, AI can exploit vulnerabilities in legacy systems, making them a liability. Every application built on Appian automatically inherits the latest features and best-in-class security of our platform. I'll share two stories from Q2 that highlight our customers' growing appetite to modernize. First, a European rail operator signed a seven-figure Appian software deal to modernize core operations. Start by unifying its claims process, including injury, baggage loss, and trip cancellations. Before Appian, workers swiveled between decades-old systems to process each claim. Now, Appian will deliver a modern system to reduce processing times by 75%. The customer expects to save millions of dollars in labor costs. Second, a collection of US federal law enforcement agencies aims to reduce transnational crime. Its legacy custom-coded applications are difficult to maintain and can't handle increased workloads.

AI has ignited demand in this market for two reasons. First, AI-driven application development is faster and more efficient than old ways of modernizing.

Second AI can exploit vulnerabilities in Legacy systems making them a liability.

Every application built on app in automatically inherits, the latest features and best-in-class security of our platform.

I'll share 2 stories from Q2 that highlight our customers growing appetite to modernize.

First a European rail operator, signed a 7-figure appion software deal to modernize core operations.

Start by unifying its claims process including injury, baggage loss and trip cancellations before appion workers swiveled between decades old systems to process each claim. Now, epine will deliver a modern system to reduce processing Times by 75%.

Customer expects to save millions of dollars in labor costs.

second a collection of US federal law enforcement agencies aims to reduce transnational crime,

Matt Calkins: This quarter, it signed a seven-figure Appian software deal to replace 10 outdated systems to ingest and advance classified cases. In closing, Appian is accelerating due to our position in the AI stack. We help large organizations make AI reliable enough to use in mission-critical applications. When AI is involved, we are more likely to win new logos, and we enjoy stronger revenue growth rates. With that, I'll hand the call to Srdjan.

Its Legacy custom coded applications are difficult to maintain and can't handle increased workloads.

This quarter, it signed a 7-figure Appian software deal to replace 10 outdoor systems, to ingest and advance classified cases.

In closing.

Aion is accelerating.

Due to our position, in the AI stack.

We help large organizations, make AI reliable enough to use in Mission critical applications.

when AI is involved, we are more likely to win new logos and we enjoy stronger Revenue, growth rates,

Srdjan Tanjga: Thanks, Matt. I'll begin with a detailed review of our Q2 results and then finish with our outlook for the Q3 and full fiscal year 2026. Starting with Q2 results, we had a very strong quarter of new business driven by continued AI traction. We saw strength across all major regions and industry verticals. Appian exceeded the guidance ranges we provided on our key metrics of cloud revenue, total revenue, and adjusted EBITDA. Cloud subscription revenue was $131.7 million, an increase of 23% year over year. On a constant currency basis, cloud subscription revenue increased 22% year over year, our strongest performance in over two years. Total subscription revenue was $157.7 million, an increase of 19% year over year. On a constant currency basis, total subscription revenue grew 18% year over year. Professional services revenue was $45.6 million, up 20% compared to the Q2 2025.

Serge Tanjga: Thanks, Matt. I'll begin with a detailed review of our Q2 results and then finish with our outlook for the Q3 and full fiscal year 2026. Starting with Q2 results, we had a very strong quarter of new business driven by continued AI traction. We saw strength across all major regions and industry verticals. Appian exceeded the guidance ranges we provided on our key metrics of cloud revenue, total revenue, and adjusted EBITDA. Cloud subscription revenue was $131.7 million, an increase of 23% year over year. On a constant currency basis, cloud subscription revenue increased 22% year over year, our strongest performance in over two years. Total subscription revenue was $157.7 million, an increase of 19% year over year. On a constant currency basis, total subscription revenue grew 18% year over year. Professional services revenue was $45.6 million, up 20% compared to the Q2 2025.

With that, I'll hand the call to Serge.

Thanks. Matt. I'll begin with a detailed review of our second quarter results and then finish with our outlook for the third quarter and full fiscal year 2026.

Starting with Q2 results, we had a very strong quarter of new business driven by continued AI traction. We saw strength, across all, major regions, and Industry verticals.

Happy and exceeded the guidance ranges we provided on our key metrics of cloud revenue, total revenue, and adjusted EBITDA.

Cloud, subscription Revenue was 131.7 million and increase of 23% year-over-year.

On a constant currency basis, Cloud, subscription Revenue, increased 22% year-over-year, our strongest performance in over 2 years.

On a constant currency basis, total subscription Revenue, grew 18% year-over-year.

Srdjan Tanjga: Total revenue was $203.3 million, an increase of 19% year over year. On a constant currency basis, total revenue grew 18% year over year. Our cloud net ARR expansion was 115% in Q2, compared to 113% a year ago and 115% in the prior quarter. As a reminder, we present net ARR expansion on a constant currency basis. Now let's turn to profitability. I'll be discussing our results on a non-GAAP basis, unless otherwise noted. Gross margin was 72%, flat year over year and down from 74% in the prior quarter. Our subscription gross margin was 84%, compared to 85% in the year-ago period and down from 86% in the prior quarter. Professional services gross margin was 31%, compared to 29% in the year-ago period and in the prior quarter. Total operating expenses were $133.1 million, up from $117.9 million in the year-ago period.

Serge Tanjga: Total revenue was $203.3 million, an increase of 19% year over year. On a constant currency basis, total revenue grew 18% year over year. Our cloud net ARR expansion was 115% in Q2, compared to 113% a year ago and 115% in the prior quarter. As a reminder, we present net ARR expansion on a constant currency basis. Now let's turn to profitability. I'll be discussing our results on a non-GAAP basis, unless otherwise noted. Gross margin was 72%, flat year over year and down from 74% in the prior quarter. Our subscription gross margin was 84%, compared to 85% in the year-ago period and down from 86% in the prior quarter. Professional services gross margin was 31%, compared to 29% in the year-ago period and in the prior quarter. Total operating expenses were $133.1 million, up from $117.9 million in the year-ago period.

Revenue was 45.6 Million up, 20% compared to the second quarter of 2025.

Total revenue was 203.3 million and increase of 19% year-over-year.

On a constant currency basis, total revenue grew 18% year-over-year.

Are expansion was 115% in Q2 compared to 113% a year ago and 115% in the prior quarter.

As a reminder, we present net ARR expansion on a constant currency basis.

Now, let's turn to profitability. I'll be discussing our results on an all-GAAP basis, unless otherwise noted.

gross margin was 72% flat year-over-year and down from 74% in the prior quarter.

Our subscription grows margin was 84% compared to 85% in the year ago. Period and down from 86% in the prior quarter.

Professional Services, gross margin was 31% compared to 29% in the year ago period And in the prior quarter.

Srdjan Tanjga: Adjusted EBITDA was $16.2 million, ahead of our guidance range of between $5 and $8 million, and compared to adjusted EBITDA of $8.1 million in the year-ago period. This outperformance relative to our guide was driven by greater than expected revenue and timing of certain expenses. Net income was $9.2 million, or $0.13 per diluted share, compared to net income of $0.3 million, or breakeven for Q2 2025. This is based on 73.3 million diluted shares outstanding for Q2 2026 and 74.6 million diluted shares outstanding for Q2 2025. Our stock-based compensation expense was $10.6 million in Q2 2026, or $0.14 per diluted share. In Q2, we purchased approximately 1.8 million shares for $43.9 million, bringing our total buyback to $65.7 million under our current $100 million authorization. Turning to our balance sheet.

Serge Tanjga: Adjusted EBITDA was $16.2 million, ahead of our guidance range of between $5 and $8 million, and compared to adjusted EBITDA of $8.1 million in the year-ago period. This outperformance relative to our guide was driven by greater than expected revenue and timing of certain expenses. Net income was $9.2 million, or $0.13 per diluted share, compared to net income of $0.3 million, or breakeven for Q2 2025. This is based on 73.3 million diluted shares outstanding for Q2 2026 and 74.6 million diluted shares outstanding for Q2 2025. Our stock-based compensation expense was $10.6 million in Q2 2026, or $0.14 per diluted share. In Q2, we purchased approximately 1.8 million shares for $43.9 million, bringing our total buyback to $65.7 million under our current $100 million authorization. Turning to our balance sheet.

Total operating expenses were 133.1 million up from 1, 1 7. 9, 0 0.

Adjusted ebida was 16.2 Million ahead of our guidance, range of between 5 and 8 million and compared to adjusted ibida of 8.1 million in the year ago, period.

This outperformance relative to our guide was driven by greater-than-expected revenue and the timing of certain expenses. Net income was $9.2 million, or $0.13 per diluted share, compared to net income of $0.3 million, or break-even, for the second quarter of 2025. This is based on 73.3 million diluted shares outstanding for the second quarter of 2026 and 74.6 million diluted shares outstanding for the second quarter of 2025.

Our stock-based compensation expense was $10.6 million in Q2 of 2026, or $0.14 per diluted share in the second quarter. We purchased approximately 1.8 million shares for $43.9 million, bringing our total buyback to $65.7 million under our current $100 million authorization.

Srdjan Tanjga: As of 30 June 2026, cash and cash equivalents and investments were $167.9 million, compared to $187.2 million at the end of last year. For Q2, cash provided by operations was $12.1 million, compared to cash used by operations of $1.9 million for the same period last year. Today, we are also announcing that we have refinanced our credit facility on more favorable terms, reflecting our significantly improved profitability. As a result, our interest expense will be lower by approximately $4 million annually. Turning to guidance. Starting with Q3 2026, cloud subscription revenue is expected to be between $133 and $135 million, representing year-over-year growth of 18% at the midpoint of the range. Total revenue is expected to be between $214 and $218 million, representing year-over-year growth of 16% at the midpoint.

Serge Tanjga: As of 30 June 2026, cash and cash equivalents and investments were $167.9 million, compared to $187.2 million at the end of last year. For Q2, cash provided by operations was $12.1 million, compared to cash used by operations of $1.9 million for the same period last year. Today, we are also announcing that we have refinanced our credit facility on more favorable terms, reflecting our significantly improved profitability. As a result, our interest expense will be lower by approximately $4 million annually. Turning to guidance. Starting with Q3 2026, cloud subscription revenue is expected to be between $133 and $135 million, representing year-over-year growth of 18% at the midpoint of the range. Total revenue is expected to be between $214 and $218 million, representing year-over-year growth of 16% at the midpoint.

Turning to our balance sheet, as of June 30th, 2026 cash, and cash, equivalents, and Investments were 167.9 million compared to 187.2 million at the end of last year.

For the second quarter, cash, provided by operations was 12.1 million. Compared to cash used by operations of 1.9 million for the same period last year.

Today. We are also announcing that we have refinanced. Our credit facility on more favorable terms reflecting our significantly improved profitability.

As a result, our interest expense will be lowered by approximately 4 million annually.

Guidance starting with the third quarter of 2026: cloud subscription revenues are expected to be between $100 million and $133 million, and $135 million, representing year-over-year growth of 18% at the midpoint of the range.

Srdjan Tanjga: Adjusted EBITDA for Q3 2026 is expected to be between $30 and $33 million. Non-GAAP earnings per share is expected to be between $0.31 and $0.35. This assumes 72.6 million fully diluted weighted average shares outstanding. For the full year 2026, our cloud subscription revenue is expected to be between $525 and $529 million, representing year-over-year growth of 20% at the midpoint of the range. Total revenue is expected to be between $845 and $853 million, representing year-over-year growth of 17% at the midpoint. Adjusted EBITDA is expected to range between $104 and $110 million, for an approximately 13% margin and 39% year-over-year growth at the midpoint. Non-GAAP earnings per share is expected to be between $1.04 and $1.12, or approximately 77% growth at the midpoint. This assumes 73.2 million fully diluted weighted average shares outstanding. Our guidance assumes the following.

Serge Tanjga: Adjusted EBITDA for Q3 2026 is expected to be between $30 and $33 million. Non-GAAP earnings per share is expected to be between $0.31 and $0.35. This assumes 72.6 million fully diluted weighted average shares outstanding. For the full year 2026, our cloud subscription revenue is expected to be between $525 and $529 million, representing year-over-year growth of 20% at the midpoint of the range. Total revenue is expected to be between $845 and $853 million, representing year-over-year growth of 17% at the midpoint. Adjusted EBITDA is expected to range between $104 and $110 million, for an approximately 13% margin and 39% year-over-year growth at the midpoint. Non-GAAP earnings per share is expected to be between $1.04 and $1.12, or approximately 77% growth at the midpoint. This assumes 73.2 million fully diluted weighted average shares outstanding. Our guidance assumes the following.

Total revenue is expected to be between 214 and 2118 million representing year-over-year growth of 16% at the midpoint.

Adjusted. Evida for, the third quarter of 2026 is expected to be between 30 and 33 million.

Non-GAAP earnings per share is expected to be between $0.31 and $0.35.

This assumes 72.6 million fully diluted weighted, average shares outstanding.

for the full year 2026, our Cloud subscription revenue is expected to be between 525 and 529 million representing year-over-year, growth of 20% at the midpoint of the range,

Total revenue is expected to be between 845 and 853 million representing year-over-year growth of 17% at the midpoint.

Adjusted ibida is expected to range between 104 and 110 million for an approximately, 13% margin and 39% year-over-year. Growth at the midpoint

Non-gaap earnings per share is expected to be between dollar and 4 and 12 cents or approximately 77% growth at the midpoint, this is assumed 73.2 million fully diluted weighted. Average shares outstanding

Srdjan Tanjga: First, we anticipate our non-cloud subscription revenue to grow in the low double digits in Q3 and low to mid-single digits for the full year. Second, we expect professional services revenue to grow in the mid-teens in Q3 and in high teens for the full year, driven by strength in the US public sector. Third, net interest income and interest expense will be approximately $3 million in Q3 and $10 million for the full year 2026. Fourth, our guidance assumes FX rates as of early August. Due to the recent strengthening of the US dollar, we now expect FX to represent a modest headwind to our reported revenue growth in the back half of the year. Finally, we are now forecasting approximately 2 percentage points of EBITDA margin improvement in 2026 as we continue to balance investing for growth and expanding margin.

Serge Tanjga: First, we anticipate our non-cloud subscription revenue to grow in the low double digits in Q3 and low to mid-single digits for the full year. Second, we expect professional services revenue to grow in the mid-teens in Q3 and in high teens for the full year, driven by strength in the US public sector. Third, net interest income and interest expense will be approximately $3 million in Q3 and $10 million for the full year 2026. Fourth, our guidance assumes FX rates as of early August. Due to the recent strengthening of the US dollar, we now expect FX to represent a modest headwind to our reported revenue growth in the back half of the year.

our guidance assumes the following,

First, we are anticipating our non-cloud subscription Revenue to grow in the low double digits in, Q3 and low to mid single digits for the full year.

Second. We expect Professional Services Revenue to grow in the mid teens in Q3 and in High Teens for the full year driven by strengths in the US public sector.

Third, net, interest income, and interest expense will be approximately 3 million in Q3 and 10 million for the full year 2026.

Serge Tanjga: Finally, we are now forecasting approximately 2 percentage points of EBITDA margin improvement in 2026 as we continue to balance investing for growth and expanding margin. In closing, we see our strong Q2 results and increased guidance as continued validation of our AI value proposition. We are excited about the opportunity ahead and will continue to invest responsibly to maximize our long-term value. Now I will turn the call over for questions. Operator?

Fourth, our guidance assumes FX rates as of early August, due to the recent strengthening of the US dollar. We now expect FX to represent a modest headwind to our reported revenue growth in the back half of the year.

Srdjan Tanjga: In closing, we see our strong Q2 results and increased guidance as continued validation of our AI value proposition. We are excited about the opportunity ahead and will continue to invest responsibly to maximize our long-term value. Now I will turn the call over for questions. Operator?

Now forecasting approximately 2 percentage points of ibida margin Improvement in 2026 as we continue to balance investing for growth and expanding margin.

in closing we see our strong Q2 results and increase guidance, as continuous, validation of our AI value proposition,

We are excited about the opportunity ahead and we'll continue to invest responsibly to maximize our long-term value.

Operator: Thank you very much. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Devin Au of KeyBanc Capital Markets. Devin, your line is open.

Now, I will turn the call over for questions, operator.

Thank you very much at this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced to withdraw your question. Please. Press star 1 1 again.

Please stand by while we compile the Q&A roster.

Devin Au: Oh, good morning. Thanks for taking my questions here. Yeah, maybe just to start, you know, really strong results here with cloud subscription accelerating again and the full-year guide going higher, 20% plus. Would love to just hear, you know, what specific strength you saw in cloud subscription, you know, what areas or verticals or product that you saw contributing greater strength than expected. Maybe just quickly comment on pub sector as well, it seems like that's going really well for you guys.

Our first question comes from the line of Devon, awe of keybanc capital markets 7, your line is open

Srdjan Tanjga: Yeah. That is great. Well, it was. The public sector was strong, but we had strength across the board. We showed good outcomes and above expectations in every major region. I think this is more of an across-the-board win than a specific sector win.

Serge Tanjga: Yeah. That is great. Well, it was. The public sector was strong, but we had strength across the board. We showed good outcomes and above expectations in every major region. I think this is more of an across-the-board win than a specific sector win.

Oh good morning, thanks for uh taking my questions here. Um yeah maybe just to start know really strong results here with call subscription accelerating again and until your guide going higher than 20% plus um would love to just share, you know what specific strengths you saw in cost subscription you know what areas or verticals or product that you that you saw you know contributing greater strength and expected and they would just quickly comment uh on Pub stack as well as things like that. Going really well for you guys.

Devin Au: Got it. Okay. Maybe just a quick follow-up on the EBITDA margin guide. Nice to see the guide going up, implying 2 points of expansion year-over-year. You are clearly executing very well here. Maybe the question here is, why not reinvest a little bit more back into the business and expanding sales capacity a little bit more, just given the strong momentum you are seeing? Thank you.

Yeah, that's great. Well it was a public sector was strong, but we had strength across the board. We showed good outcomes and above expectations in every major region. So I, I think this is more of a cross the board win than a specific sector win.

Srdjan Tanjga: Thanks for the question. Yeah, in fact, we are investing in capacity, particularly on the sales side. What we are also doing, and you see this in the back half of our guide, we decided to start hiring earlier for some of the roles that were originally planned for 2027, specifically to get people in the seats earlier and productive faster. Overall, look, I think that our job is to deliver consistent and durable growth as well as continued margin expansion. We believe that that is not just the right thing to do, but the responsible thing to do. We will continue doing both going forward.

Serge Tanjga: Thanks for the question. Yeah, in fact, we are investing in capacity, particularly on the sales side. What we are also doing, and you see this in the back half of our guide, we decided to start hiring earlier for some of the roles that were originally planned for 2027, specifically to get people in the seats earlier and productive faster. Overall, look, I think that our job is to deliver consistent and durable growth as well as continued margin expansion. We believe that that is not just the right thing to do, but the responsible thing to do. We will continue doing both going forward.

Got it. Okay. And then maybe some quick follow-up on the E but I'm Argent guy, you know you know, nice to see the guy going up. You know implying 2 points of expansion year over year, you know you clearly executing very well here, you know, maybe the question here is, you know, why not reinvest a little bit more back into the business and expanding sales, capacity, capacity, a little bit more just giving a strong momentum. You've seen. Thank you.

Devin Au: Great, congrats on the strong results here. Thank you.

Uh, thanks for the question. Yeah. In fact we are uh, investing in capacity, uh, particularly on the sales side and what we're also doing. And you see this in the back half of our guide, we decided to start hiring earlier for some of the roles, uh, that were originally planned for 2027 specifically to get, uh, people in the seats earlier and productive faster. Uh, but overall, look, I think that our job is to deliver consistent and durable growth as well as continued margin expansion. And we believe that that is not just, uh, the the right thing to do, but the responsible thing to do, so we'll continue continue. Doing both going forward.

Operator: Thank you very much. Our next question comes from the line of Pat Walravens of William Blair. Pat, your line is open.

Great. You can zap on the song with all thank you.

Thank you very much.

Our next question comes from the line of Pat McCoy of William. Blair Pat, your line is open.

Pat Walravens: Hi, team. Great results this quarter. Thanks for the questions. Great to see the momentum in cloud growth. Obviously, you raised your guidance nicely as well. It looks like there was maybe a little bit of detail implied in the bookings growth. I just wanted to ask, especially given what we've heard from some other software vendors in the market, what are you seeing in the market from a deal perspective? Has the AI-related noise in the end market had any impact as you speak with customers?

Pat McIlwee: Hi, team. Great results this quarter. Thanks for the questions. Great to see the momentum in cloud growth. Obviously, you raised your guidance nicely as well. It looks like there was maybe a little bit of detail implied in the bookings growth. I just wanted to ask, especially given what we've heard from some other software vendors in the market, what are you seeing in the market from a deal perspective? Has the AI-related noise in the end market had any impact as you speak with customers?

Matt Calkins: Yeah, I realize that's been an issue in some recent calls. We have found AI to be an accelerant in our business. If AI is involved in a deal, it means that we're in good position to win it and to grow it. We are moving faster when AI is a factor. For us, it is an accelerant, not a decelerant.

Hi team. Uh, great results, this quarter, thanks for the questions. So great to see the momentum and Cloud growth. Uh, obviously you raised your your guidance nicely as well. Um, but it looks like there was maybe a little bit of diesel implied in the bookings growth. So I just wanted to ask especially given what we've heard from some other software vendors in the market. What, what are you seeing in the market? For me to deal perspective? And, you know, has the, um, the the AI related noise and the End Market had any impact as as you speak with customers.

Srdjan Tanjga: The only thing I would maybe add, Pat, is, as you think about the guidance for the rest of the year, keep in mind that the FX has flipped from a tailwind to a headwind in the back half of the year. As you think about constant currency, I think it tells you more of a stable picture.

Serge Tanjga: The only thing I would maybe add, Pat, is, as you think about the guidance for the rest of the year, keep in mind that the FX has flipped from a tailwind to a headwind in the back half of the year. As you think about constant currency, I think it tells you more of a stable picture.

Yeah, I realized that's been an issue in some recent calls. We have found AI to be an accelerant in our business. If AI is involved in a deal, it means that we're in good position to win it and to grow it, we are moving faster when AI is a factor. So for us, it is an accelerant not a decelerate. And the only thing I would maybe add that is uh, as you think about the guidance for the rest of the year, keep in mind that um, the FX Has flipped from, uh, Tailwind to a headwind in the back half of the year. So as you think about constant currency, I think it tells you more of a more of a stable picture.

Pat Walravens: Okay, great. Thanks. I think you launched the Appian Composer functionality late last year, for GA. I guess the question is, has that represented a material change for you all as you've gone to market this year? With that, are you seeing customers bring modernization products to Appian that historically they may not have? Or is the primary benefit so far reduced implementation and faster time to value?

Pat McIlwee: Okay, great. Thanks. I think you launched the Appian Composer functionality late last year, for GA. I guess the question is, has that represented a material change for you all as you've gone to market this year? With that, are you seeing customers bring modernization products to Appian that historically they may not have? Or is the primary benefit so far reduced implementation and faster time to value?

Matt Calkins: Right. Okay, I do think that this market, this modernization market that we have been present in for a decade, is gaining momentum and becoming larger due to the factors I mentioned in the prepared remarks. We are seeing more such opportunities. We are executing more such opportunities. I would not call that change, which is still preliminary, a material change. I think there's a lot yet to do in this space. I think that as it becomes proven and as people are more motivated in the light of recent AI hacks, there's going to be more momentum to come. At the moment, I don't consider it a material factor. We do have a long-standing presence and success rate track record in that industry, and we stand to benefit as and if it grows.

Okay. Great thanks. And I think you launched the composer functionality late last year. Uh, for GA. So I, I mean, I guess the question is has that represented a material change for you all as as you've got a market this year? Um, and and with that are you seeing customers bring modernization products to appium that? Historically, they may not have or is the is the primary benefit so far, reduced implementation and and faster time to value.

To do in this space. And I think that as it becomes proven and as people are more motivated in the light of uh a recent AI hacks, there's going to be more momentum to come, but I at the moment I don't consider it a material Factor but uh, we do have a long-standing presence and success rate track record in that industry and we stand to benefit as and if it grows

Pat Walravens: Okay. Thanks, Matt. Thank you, Serge.

Pat McIlwee: Okay. Thanks, Matt. Thank you, Serge.

Operator: Thank you very much. Our next question comes from the line of Steve Enders of Citi. Steve, your line is open.

Okay, thanks, Matt. Thank you, sir.

Thank you very much our next question.

Comes from the line of Steve Anders of City. Steve, your line is open.

Steve Enders: Okay, great. Thanks for taking the questions this morning. Maybe just to start on, would want to dig in a little bit on the pipeline opportunity and what you're seeing there for new opportunities coming through and emerging. What are you seeing there from either net new customer opportunities or the expansion path with existing customers? On top of that, it seems like the pulling forward investments in sales capacity maybe is an indication of what you're seeing on the pipeline side. It would be great to hear how you're thinking about the investments needed to execute on that as well.

Uh, okay, great. Thanks for, uh, thanks for taking the questions this morning. Um,

Maybe just to to, to start um, on.

Matt Calkins: I think it might be an indication of strong pipeline. It's unusually strong, and also our confidence of being able to win in the current environment.

You know, I guess want to dig in a little bit on to just the the pipeline opportunity and and and what you're seeing there for, uh, New Opportunities coming through and emerging just, you know, what are you seeing there from either? Net, new customer opportunities or the expansion path and uh, or with with existing customers. And I guess on top of that, it seems like the, um, you know, pulling forward investments in sales capacity. Maybe as an indication of, of of, you know, what you're seeing on the pipeline side. But, um, yeah, it would be great to kind of hear how you're thinking about the Investments needed to to execute on that as well.

Srdjan Tanjga: The other thing that I would add, Steve, is that's absolutely part of the reason why we feel comfortable starting earlier some of the investments for 2027. It is both the pipeline, so we feel like we have stuff to give our new people to work on, and our continued increases in confidence in our sales execution because it's been very strong.

Serge Tanjga: The other thing that I would add, Steve, is that's absolutely part of the reason why we feel comfortable starting earlier some of the investments for 2027. It is both the pipeline, so we feel like we have stuff to give our new people to work on, and our continued increases in confidence in our sales execution because it's been very strong.

Yeah, I think it might be an indication of strong pipeline. It's unusually, strong. And uh, and also our confidence of being able to win in the current environment.

Yeah. And and the other thing that I would add uh, Steve is um, that's absolutely part of the reason why we feel comfortable starting earlier, some of the Investments for 2027 it is both the pipelines that we feel like we have stuff to give our new people to work on and our increased continued increases in confidence, in our sales execution, because it's been very strong.

Steve Enders: Okay, great. That's good to hear. Maybe just in terms of sales productivity rates, it looks like it's starting to see less expansion on the metrics coming through there. Is that a reflection of the incremental hiring that you have done starting to impact that? Or would you say that the ramped rep productivity rates, are those starting to maybe slow down a little bit just given the strong expansion over the past few years?

Uh, okay, great, uh, it's, it's, it's good to, uh, it's good to hear. Um,

and then maybe just in, in terms of, um,

You know, I guess sales productivity rates. I mean it looks like it's starting to um

Yeah, I guess seeing less expansion on, uh, on the metrics coming coming through. There is that a reflection of the incremental hiring that you have done? Starting to impact that? Or, you know, would you say that the rep? The, the ramp rep, um, productivity rates, are those starting to

Srdjan Tanjga: Yeah. Rep productivity is very strong and continues to improve across all major theaters. As you think about the sales and marketing investment versus the new business, that's looking like it's going to be another year of improvement in 2026. We showed you that history in the Investor Day. As you think about the go-to-market efficiency that we report, that's versus total revenue. Yes, that's reflected of the fact that we're investing more into growth. As you look underlying on our ability to invest for winning new business, it continues going up into the right.

Serge Tanjga: Yeah. Rep productivity is very strong and continues to improve across all major theaters. As you think about the sales and marketing investment versus the new business, that's looking like it's going to be another year of improvement in 2026. We showed you that history in the Investor Day. As you think about the go-to-market efficiency that we report, that's versus total revenue. Yes, that's reflected of the fact that we're investing more into growth. As you look underlying on our ability to invest for winning new business, it continues going up into the right.

You know, maybe slow down a little bit, just given the strong expansion of the past few years.

Steve Enders: Okay, perfect. Thanks. Taking the questions.

Yeah. So uh right before activity is very strong and continues to improve across all major theaters. Uh, as you think about the sales and marketing investment versus the new business that's looking like, it's going to be another quarter of another year of improvement in, uh, 2026. We showed you that history in the investor day. Um, and then as you think about the go to market efficiency that we report, that's versus total revenue. So, yes, that's reflected of the fact that we're investing more into growth, but as you look, underlying on our ability to invest for winning new business, it continues going up into the right.

Okay. Perfect. Thanks a second to questions.

Operator: Thank you very much. Our next question comes from the line of Sanjit Singh of Morgan Stanley. Sanjit, your line is open.

Sanjit Singh: Yeah. Thank you for taking the questions. Congrats on the cloud acceleration once again this quarter. Matt, I think you kind of alluded to it before, your primary customer in the market talked about some headwinds from customers sort of getting more hesitant on their software budgets given their token spend. Other players in software have also talked about that dynamic. Clearly, from the results that you guys put up year to date, I would say that doesn't seem to be a dynamic. I guess, in some sense, why have you guys have been sort of able to avoid that budget scrutiny, if you will, and continue to put up these strong results?

Thank you very much. Our next question comes from the line of sanjit Singh of Morgan Stanley, Sanji. Your line is open.

Matt Calkins: Yeah. You mean our primary competitor, not our primary customer, but I understood the question perfectly. I think there's an elephant in the room, right? AI is affecting everybody's win rate, speed of closure, competitiveness, and I think it's going to help some and hurt some, and for us, it is clearly an accelerant, not a decelerant, as I was just mentioning. We are benefiting from AI. We're part of the AI stack.

Yeah, thank you for taking the questions, congrats, uh, on the, uh, on the cloud acceleration. Once again, this quarter. Um, Matt, I think you kind of alluded to before. But like, your primary customer in the market, talked about, uh, some headwinds from customers, sort of, uh, getting more hesitant on their software budgets, uh, give them a token, spend, uh, other players and softwares also to, uh, talked about that Dynamic clearly from the results of these guys put up year to date. I would say, um, that doesn't seem to be a dynamic. And so, I guess, you know, in some sense why have you guys have been sort of uh, able to avoid that budget scrutiny if you will and continue to put up these uh, these strong results?

Yeah, you you mean our primary competitor, not our primary customer, but I understand the question perfectly and I think it just comes. I mean, there's a, there's an elephant in the room, right? AI is affecting, everybody's win rate speed of closure, competitiveness. And I think it's going to

Srdjan Tanjga: Yeah, I think, Sanjit, that goes to the fact that we've been consistent and credible on our AI message, which is that AI needs process, that AI needs a framework. 12 or 18 months ago, that wasn't the consensus view. Now it increasingly is. We've been kind of first to start explaining this and having this conversation with the customer, and that also helps when it comes time to shepherd deals across the finish line, and we've seen strong win rates. They're stronger when AI is a factor, and we've seen no change in our deal cycles.

Serge Tanjga: Yeah, I think, Sanjit, that goes to the fact that we've been consistent and credible on our AI message, which is that AI needs process, that AI needs a framework. 12 or 18 months ago, that wasn't the consensus view. Now it increasingly is. We've been kind of first to start explaining this and having this conversation with the customer, and that also helps when it comes time to shepherd deals across the finish line, and we've seen strong win rates. They're stronger when AI is a factor, and we've seen no change in our deal cycles.

Sanjit Singh: Great. Then just one follow-up. I think, Matt, you mentioned that the strength was broad-based across industries, and you guys have always been strong in healthcare, financial services, other verticals. Have you seen any sort of broadening out of the demand outside of your core three or four verticals?

Matt Calkins: I would say that our top verticals, whether you call them three or five, depends on whether insurance is part of FS or not and whether you bundle all health together. It's still the center of our business. We have not seen a sector diversification, but we have seen all of those industries grow and all geos grow. Terrific on both sides of the Atlantic, public and private this quarter.

To start explaining this and having this conversation with the customer. And that also helps, uh, when it comes time to Shepherd deals, across the finish line, and we've seen strong, win rates, they're stronger. When AI is a factor and we've seen no change in our deal Cycles. Great. And then just 1 follow up. I think, Matt, you mentioned that the strength was broad-based across Industries. I mean, you guys have always been strong in healthcare Financial Services. Um, other verticals, have you seen any sort of broadening out of the demand outside of your core 3 or 4 verticals?

Uh, I would say that our top verticals, whether you call them 3 or 5, depends on whether insurance is put, you know, part of that FS or not. And whether you know, whether you bundle all Health together, uh, it's it's still the center of our business. It we have not seen a sector diversification, uh, but we have seen

All of those.

Sanjit Singh: Appreciate the thoughts, Matt. Thank you.

Industries grow and all GEOS grow uh, terrific on both sides of the Atlantic public and private, this quarter.

Operator: Thank you very much. Our next question comes from the line of Raimo Lenschow of Barclays. Raimo, your line is open.

Appreciate the thought. Thank you.

Thank you very much.

Raimo Lenschow: Perfect. Thank you. Congrats from me as well. I have two quick questions. First, if I look at the public sector US, there's like this, you guys are very strong, and there's a company that's also doing a lot more custom projects for them that is also doing very well there. What's the learning for you, Matt, in terms of how you interact with the government and do AI for them versus how others are doing it? Is there anything where you would consider maybe changing the approach there a little bit? The second question was on app modernization. That's obviously a very nice big opportunity. Where are we on that kind of practical part of that journey? AI can really help there, obviously, in the long run, but are we there yet to kind of really see projects kicking off properly? Thank you, and congrats.

Our next question comes from the line of Ramo lynchell of Barclays, Ramo. Your line is open.

Thank you. Uh, congrats from me as well. Um, I had 2 quick questions, uh, first on the um,

Um, if I look at the public sector us, there's like this, you guys are very strong. And there's a there's a company that is also doing a lot more custom products for them. That is also doing very well there. Um, what's the learning for you, Matt, in terms of like,

Matt Calkins: Okay, great. We are benefiting from a change in the priorities of the US government. It's more willing to see technology as an answer, as a solution to problems. It's more focused on benefits other than mere efficiency out of technology. It's more willing to do business directly with a software vendor instead of through a prime. This is all beneficial to us. As you point out, there's also another firm, maybe multiple firms, who are pioneering a new business model, and those lessons are not lost on us. We see what they're doing, and we can play that game, too. I think that we have drawn some inspiration and direction from seeing business plans that are succeeding in a big way in the federal space. You also talk about legacy modernization momentum. We do see more such business. We are well-positioned for such business.

You know how how you interact with the government and do AI for them versus how others are doing it? And is there anything where you kind of would consider maybe changing the approach there a little bit. And then the second question was on, on the app modernization. Um, that's obviously a very, very nice big opportunity. Where are we on that? Kind of practical, part of that Journey, you know, AI can really help there obviously in the long run, but like, Are We There Yet? To kind of really see projects kicking off properly. Thank you. And congrats.

Okay, great, we are benefiting from a change in the priorities of the US government. It's more willing to see technology as a as an answer as a solution to problems. It's uh more focused on benefits other than mere efficiency out of Technology. It's more willing to do business directly with a software vendor instead of through a prime. This is all beneficial to us, but as you point out, there's also another firm maybe multiple firms who are pioneering a new business model. And

Matt Calkins: We see what they're doing, and we can play that game, too. I think that we have drawn some inspiration and direction from seeing business plans that are succeeding in a big way in the federal space. You also talk about legacy modernization momentum. We do see more such business. We are well-positioned for such business. I have great hopes for what this may become in years ahead. It is today still a minor factor.

That those lessons are not lost on us. We see what they're doing and we can play that game too and I think that we have drawn some inspiration and direction from seeing business plans that are uh succeeding in a big way in the in the federal space. You also talk about Legacy modernization uh momentum

Matt Calkins: I have great hopes for what this may become in years ahead. It is today still a minor factor.

Raimo Lenschow: Okay, perfect.

Srdjan Tanjga: Just, Raimo, on that shouldn't be a surprise to you, as you know. This is a big step for enterprises to take. We're having initial conversations. We're doing first deployments, but the prize is large, exceptionally large, but it will be a multi-year journey and an additional driver of our growth, if you will.

We're we do see more such business. We are well, positioned for such business. Uh, I have great hopes for what this may become in years ahead. It is today still, uh, a minor Factor.

Serge Tanjga: Just, Raimo, on that shouldn't be a surprise to you, as you know. This is a big step for enterprises to take. We're having initial conversations. We're doing first deployments, but the prize is large, exceptionally large, but it will be a multi-year journey and an additional driver of our growth, if you will.

Raimo Lenschow: Yep. Makes very clear. Thank you.

Okay, perfect and just Rio on that like, that shouldn't be a surprise to you as you know, like and this is a big step for Enterprises to take, we're having initial conversations, we're doing first deployments, but the the prize is large, exceptionally large, but it will be a multi-year journey in Excel and additional driver of our growth if you will.

Yep. Yep. Makes it very clear. Thank you.

Operator: Thank you very much. Our next question comes from the line of Jake Schreier of D.A. Davidson. Lucky, your line is open.

Operator: Thank you very much. Our next question comes from the line of Lucky Schreiner of D.A. Davidson. Lucky, your line is open.

Thank you very much.

Jake Schreier: Great. Thanks for taking my questions, congrats on the results. Nice to hear the strong AI traction and enterprises becoming more AI-ready. I wanted to ask on pricing. You guys have been thoughtful about how you price your AI capabilities, so maybe any update on the customer's reaction to your pricing methods and any early reads on customers who have adopted the enterprise growth plan and have maybe reached the end of their pilots and how growth there has trended for them moving forward. Thanks.

Lucky Schreiner: Great. Thanks for taking my questions, congrats on the results. Nice to hear the strong AI traction and enterprises becoming more AI-ready. I wanted to ask on pricing. You guys have been thoughtful about how you price your AI capabilities, so maybe any update on the customer's reaction to your pricing methods and any early reads on customers who have adopted the enterprise growth plan and have maybe reached the end of their pilots and how growth there has trended for them moving forward. Thanks.

Our next question comes from the line of Lucky Shriner of Da Davidson lucky your line is open.

Great. Thanks for taking my questions and congrats on the results. Um, nice to hear the, the strong AI traction and, and under presence is becoming more AI ready. I wanted to ask on pricing, um, you guys have been thoughtful about how you price your AI capability. So maybe any update on on the customer's reaction to um your pricing methods and and any early reads on on customers who

Srdjan Tanjga: I'll start with that. Let me take the enterprise growth part first. We're continuing to see strong traction. It's a product or a pricing scheme best suited for our largest and most enthusiastic customer because it removes variables for adoption. We've seen some big new deals this quarter, we'll expect to see more from that. When it comes to AI, I think that the answer is the same as it has been generally, you've been hearing from us for the last couple of years, which is, you need to start by selling value. If you successfully sell value, convince customer and align with customer on what the value that you're delivering to them, the pricing conversation is a relatively easy one.

Have adopted the Enterprise growth plan and have made reach the end of their pilots. And and how growth there has trended for them moving forward. Thanks.

Serge Tanjga: I'll start with that. Let me take the enterprise growth part first. We're continuing to see strong traction. It's a product or a pricing scheme best suited for our largest and most enthusiastic customer because it removes variables for adoption. We've seen some big new deals this quarter, we'll expect to see more from that. When it comes to AI, I think that the answer is the same as it has been generally, you've been hearing from us for the last couple of years, which is, you need to start by selling value. If you successfully sell value, convince customer and align with customer on what the value that you're delivering to them, the pricing conversation is a relatively easy one.

Srdjan Tanjga: That's not to suggest that it's without any friction because of course everybody wants to pay less, once you establish the pie, the share of the pie is much more easier to have the conversation around. We're early in terms of AI monetization. The first step in that monetization is, of course, getting more customers onto our AI-enabled tiers. We talked about having nearly 40% of our customers having some of our ARR on the advanced tiers and other AI tiers in Q1, we mentioned this quarter that 85% of our new customers are buying at those levels, which is actually really encouraging and speaks to the fact that our AI message resonates even with customers who don't have a prior relationship with us. The next step will be selling more of the ARR at the advanced tier.

Serge Tanjga: That's not to suggest that it's without any friction because of course everybody wants to pay less, once you establish the pie, the share of the pie is much more easier to have the conversation around. We're early in terms of AI monetization. The first step in that monetization is, of course, getting more customers onto our AI-enabled tiers. We talked about having nearly 40% of our customers having some of our ARR on the advanced tiers and other AI tiers in Q1, we mentioned this quarter that 85% of our new customers are buying at those levels, which is actually really encouraging and speaks to the fact that our AI message resonates even with customers who don't have a prior relationship with us. The next step will be selling more of the ARR at the advanced tier.

Srdjan Tanjga: Obviously ARR percentage follows behind customer percentage, but it will move in the same direction. The next step is AI usage. As customer exceed their AI usage allotments, they will come and negotiate and buy more from us. We're starting to see that for the most successful AI use cases. Again, it comes down to value. Since they're seeing value, those conversations are going well.

Serge Tanjga: Obviously ARR percentage follows behind customer percentage, but it will move in the same direction. The next step is AI usage. As customer exceed their AI usage allotments, they will come and negotiate and buy more from us. We're starting to see that for the most successful AI use cases. Again, it comes down to value. Since they're seeing value, those conversations are going well.

You, uh, and convince customer and aligned with customer on what the value that you're delivering to them. And the pricing conversation, um, is a relatively easy 1. That's not to suggest that it's, you know, uh, without any friction because of course everybody wants to pay less, but once you establish the the pi, then the share of the pie is much more easier to to have the conversation around. So we're early in terms of AI Mo. Uh monetization uh the first step in that modernization is of course, getting more customers onto our AI enabled tears. We talked about having nearly 40% of our customers, having some of our ARR on uh the advanced tiers and other AI tears in q1. And we mentioned this quarter, that 85% of our new customers are buying at those levels, which is actually really encouraging is Peaks to the fact that our AI message resonates, even with customers who don't have a prior relationship with us. And then then the next step will be, will be selling more of the ARR at the advanced tier. So, uh, obviously our percent

Percentage tracks, you know, as follows behind customer percentage but it will move in the same direction. And then, uh, the next step is, uh, AI usage as customer exceed, their AI usage allotments. Uh, then they will come and negotiate and buy more from us. We're starting to see that, uh, for the most successful AI use cases and again, it comes down to value. And since they're seeing value, those conversations are going well.

Jake Schreier: Great to hear. To follow up on application modernization opportunity, how were partner contributions in the quarter? You guys have increased your investments with partners. Wondering if you're seeing more opportunities for application modernization with new customers or existing customers. Any difference in demand there for application modernization? Thanks.

Lucky Schreiner: Great to hear. To follow up on application modernization opportunity, how were partner contributions in the quarter? You guys have increased your investments with partners. Wondering if you're seeing more opportunities for application modernization with new customers or existing customers. Any difference in demand there for application modernization? Thanks.

Matt Calkins: Yeah. Okay. I think it's easier with existing customers because there's a bond of trust, and this is a big leap. When you're going to modernize your enterprise, you're talking about dozens, maybe hundreds, even thousands of applications. It's got to be a vendor that you trust. We tend to build high-trust relationships with our customers. That's where we've seen the first blossoming of enterprise transformation work, is where we've got that bridge already built. Of course, everybody's thinking about vibe coding or natural language development and whether that could replace or create new applications. Though we've not spoken about it much today, I do think we've got a distinct approach to that market and a different insight.

Great to hear. Um, and then to follow up on the application modernization opportunity. You know how we're a partner contributions in the quarter. You guys have increased, your, your Investments with partners and and wondering if if you're seeing more opportunities for application modernization with new customers or existing. Customers. Any any difference in demand there um for application modernization? Thanks. Yeah. Okay, I think it's easier with the existing customers because there's a bond of trust and this is a big leap. When you're going to modernize your Enterprise, you're talking about dozens, maybe hundreds, even thousands of applications, it's got to be a vendor that you trust. We tend to build High trust relationships with our customers and so that's where we've seen the first. Uh, blossoming of Enterprise transformation. Work is is where we've got that bridge already built. I do think, of course everybody's thinking about Vibe coding or natural language development and whether that could replace or create new applications and though we've not spoken about it much today, I do think we've got a distinct, uh, approach.

Matt Calkins: We believe that though many applications which are AI authored will be code applications, there is also going to be a substantial segment of this market where you use AI to build a platform application. The reason is that you want it to be supported by a community, by a support line, by an organization you can have a commitment with. That's a necessary component of an important application. I don't believe that all natural language development will end up with a stack of code. Sometimes it will end up with a platform application, and we're well-positioned to handle that demand.

To that market and a different Insight. We believe that though many applications which are AI authored will be code applications. There is also going to be a substantial segment of this Market where you use AI to build a platform application. And the reason is that you want it to be supported by a community, by a, a support line by an A, A, an organization. You can have a commitment with, that's a necessary.

Necessary component of an important application. And so I don't believe that all natural language development will end up with a stack of code, sometimes it will end up with a platform application and we're well positioned to uh to handle that demand.

Jake Schreier: Appreciate it.

Lucky Schreiner: Appreciate it.

Appreciate it.

Operator: Thank you very much. Our next question comes from the line of Derrick Wood of TD Cowen. Derrick, your line is open.

Thank you very much.

Derrick Wood: Great. Thanks. Matt, there's a lot more talk about sovereign AI and enterprises figuring out the best ways to protect their data IP. This has also brought up a debate around using closed source versus open source or open weight models. First, how do you play into that sovereign AI discussion? Are you seeing enterprises wanting to adopt more open source models? If so, how are you guys enabling that for end customers?

Our next question comes from the line of Derek wood of TD Cohen. Derek. Your line is open.

Matt Calkins: That's right. I think we've got a great play in the sovereign AI market because we allow our customers to operate our software on premise, which puts us in a different category as some of our competitors who require the cloud. We've always offered that flexibility. We give the customer greater degrees of control. We are also agnostic about the layout of the customer's enterprise, whether that be the use of open source software or the location in which they place their data or a list of other things. We are an enabler for an open enterprise. As such, customers with diverse or idiosyncratic enterprise requests and configurations are more likely to choose Appian. We are more likely to be able to satisfy their needs.

Great thanks uh M. There's a lot of a lot more talk about Sovereign Ai and Enterprises figuring out the best ways to protect their data IP. Um and this is also brought up a debate around using closed doors versus open source or openweight models. The first, how do you play into that Sovereign, AI discussion and and then are you seeing Enterprises wanting to adopt more open source models? And if so how how are you guys enabling that for end customers?

Yeah, that's right. I think we've got a great play in The, Sovereign a market. Because we allow our customers to operate our software on premise, which puts us in a different category as some of our competitors, who require the cloud. We've always offered that flexibility, we give the customer greater degrees of control. Uh, we are also agnostic about the layout of the customers Enterprise, whether that be the use of Open Source,

Srdjan Tanjga: Derek, just to add specifically on various LLMs that customers can use, we allow considerable choice, not just on a workload level, but components on a workload level, so that the customers can have great input in terms of what is done by latest models versus what perhaps can be handled by a less advanced model. That can also, of course, also be changed over time. We think that optionality is valuable today and will become more valuable as the market matures.

Serge Tanjga: Derek, just to add specifically on various LLMs that customers can use, we allow considerable choice, not just on a workload level, but components on a workload level, so that the customers can have great input in terms of what is done by latest models versus what perhaps can be handled by a less advanced model. That can also, of course, also be changed over time. We think that optionality is valuable today and will become more valuable as the market matures.

Not just on a workload level but components on a workload level, uh, so that the customers can uh, have great input in terms of, what is the, what is done by, you know? Um,

Derrick Wood: Great. Thanks. Srdjan, one follow-up for you. I think last quarter you talked about charging for API calls from third-party agents that tap into data fabric. Is this off the ground yet? What's the initial feedback? Is third-party agent access something happening frequently yet, or is this more about positioning longer term?

Latest models versus what perhaps can be handled by a less Advanced model and uh, that can also, of course, also be changed over time. And we think that optionality, uh, is valuable today and will become more valuable. Um, as the market matures,

Srdjan Tanjga: The feature is in the market. It's early days. To your point, we think it'll be popular for certain portions of the market. I think it's incremental revenue for us. Early feedback on the feature is good, but it's a bit of a medium to long-term play.

Serge Tanjga: The feature is in the market. It's early days. To your point, we think it'll be popular for certain portions of the market. I think it's incremental revenue for us. Early feedback on the feature is good, but it's a bit of a medium to long-term play.

Great, thanks in church. Um, 1 follow up for you. I think last quarter, you talked about charging for API calls from third-party agents that tap into Data fabric is this off the ground yet and and and, and what, what's the initial feedback I guess and, and and, and this third party agent access something happening frequently yet. Or is this more about positioning longer term? Uh, the the feature is in the market,

it's early days, uh, and to your point, um, we think you'll be popular for certain portions of the use of of the market. I think it's incremental revenue for us, uh, but um, and the early feedback on the feature is good. But, you know, it's it's a bit of a, a medium to long-term play.

Derrick Wood: Okay. Thank you.

Okay, thank you.

Operator: Thank you. At this time, I am showing no further questions. Thank you for your participation in today's conference. This does conclude our program, and you may now disconnect.

Thank you at this time. I'm showing no further questions. Thank you for your participation. In today's conference, this does conclude our program and you may now disconnect

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