Appian Corp at Citi Global TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Steve Ender - Citigroup - Analyst : Yes. Maybe just to start, Bob, I don't know how many people know you from Appian. I think Matt tends to be pretty out there front and vocal on it. So maybe you can just tell us a little bit about yourself and what it is that you do at Appian?

Question: Steve Ender - Citigroup - Analyst : Okay. And then, Jack, are you going to intro yourself?

Question: Steve Ender - Citigroup - Analyst : Well, very happy to have you both here. Maybe for those not familiar with Appian, can you just provide a quick overview of the company, and what it is that Appian does?

Question: Steve Ender - Citigroup - Analyst : I think 1 of the things that talking to investors and people in general maybe struggle with Appian a little bit is fully understanding how customers actually use a platform like Appian. So maybe could you provide some examples of recent customer wins, or maybe we can dig into some of the key use cases that the customers are using option for?

Question: Steve Ender - Citigroup - Analyst : Okay. I guess maybe asked a little bit differently, like of a customer or like let's call the Air Force example if they weren't using Appian, how would they maybe go about trying to do that process? Like what is it that daily went in and replace and build out -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 1:10PM, APPN.OQ - Appian Corp at Citi Global TMT Conference

Question: Steve Ender - Citigroup - Analyst : All right. No, that's great to hear. I do want to keep this interactive. So if there are questions in the room, we will make sure to get there. But I think before we get into that, I want to touch on other topics here. As you mentioned earlier, you were the Head of Engineering for the first decade or so at Appian. Can you maybe just talk about the core technology that you built that underlies the Appian platform? Maybe how has this kind of evolved over the past 25 years now? And what is it that really differentiates Appian versus maybe some of the competitors in the space?

Question: Steve Ender - Citigroup - Analyst : You mentioned AI in there. So maybe this is a good segue into that topic area. Maybe just to start, can you just give an overview of kind of what Appian's strategy is today with AI, where you're kind of baking it into the platform? And how do you kind of view the opportunity with AI?

Question: Steve Ender - Citigroup - Analyst : Yes. I guess maybe the way I'll ask it is, like what is the business opportunity that you see with AI? Like how do you actually begin to monetize it? I guess, are there like specific capabilities that you embed into Appian, or is it --

Question: Steve Ender - Citigroup - Analyst : Okay. So in your view, the way to go about it is it drives more Appian adoption, it drives more use cases and drives more usage of Appian, and that's how you kind of monetize that AI.

Question: Steve Ender - Citigroup - Analyst : Okay. All right. That makes sense. Maybe taking the other side of the question, where do you kind of see the risks of what AI could do to Appian. Maybe it's something in the competitive landscape or just yes, how would you kind of view the impact that AI could potentially have?

Question: Steve Ender - Citigroup - Analyst : Okay. All right. That makes sense. I think I have 1 more question on the AI angle and then we'll pick it unless there's some questions in the room on AI, but I think last earnings call in you mentioned that the usage of Appian AI doubled in the past quarter or so. Maybe can you just walk through some of like the use cases that customers are leveraging Appian AI for -- like how does that actually translate into customer outcomes of how they're using AI? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 1:10PM, APPN.OQ - Appian Corp at Citi Global TMT Conference

Question: Steve Ender - Citigroup - Analyst : Okay. All right. Makes sense. I'm going to pause for a second to see if there's anything in the room here before we continue. I'm going to pivot a little bit towards some of the recent restructuring efforts that you've gone through and called out on the 2Q call, maybe just to start, maybe just run through what the changes were. What's the significance of that? And I guess, what's new kind of moving forward here?

Question: Steve Ender - Citigroup - Analyst : Okay. I guess maybe why is now the right time to go through this restructuring initiative? Like what were you may be seeing in the market that ultimately led to you making this decision now?

Question: Steve Ender - Citigroup - Analyst : Okay. I guess from -- I guess, maybe provide a little bit more, I guess, color on the decision to then reduce the revenue guide for the year. I guess, are you anticipating any disruptions coming in the second half?

Question: Steve Ender - Citigroup - Analyst : Okay. So it's just, I guess, the way to think about it is kind of assuming lower rep productivity or just kind of baking in some potential disruption?

Question: Steve Ender - Citigroup - Analyst : Okay. All right. Makes sense. And I guess maybe just thinking about what this means for the sales strategy moving forward, what kind of changes here? What are kind of the things that maybe are tactically being augmented, or just how are things kind of changing?

Question: Steve Ender - Citigroup - Analyst : Okay. I do want to touch a little bit more on public sector. I mean I think you have GAM, the government acquisition solution within that focuses specifically on that vertical. So maybe just talk a little bit about how that product set evolved? What led you to making a prepackaged solution specifically for that use case? And then I guess I have some follow-ups. Unidentified_1 Yes. So government procurement is complicated, many, many different rules. And this again cries out for a kind of a complex, or there's a solution to a complex enterprise problem. In many cases, customers lead you to the right solution. And so we have been doing work in the procurement area with a variety of different primarily defense groups for a long time. Ultimately saw that there was a real opportunity here for Appian to do something kind of more productized, which we call a solution, the government acquisition management suite is actually a collection of different solutions, things like requirements management, which is how a federal agency would collect requirements and vendor management, which is how they manage (inaudible) variety of these kinds of things. Variety of these different kind of point solutions, which all connect to each other. And it's been a big success for us. This was an area of the software market that needed a more mature and innovative solution existing solutions were just frankly outdated and not modern and folks loved what we were doing. And we've built on that success now. I alluded earlier to our success at the US Air Force, but many other large branches have also purchased our procurement solutions. And we've also begun to actually move into the data side of this. We have something called Procure Site, which is narrow website that is available to federal agencies and have seen really good growth. We're giving away for free at this moment. But agencies can use AI to kind of search for past purchases and understand buying behavior at other agencies, and we've now tied this into our requirements management product. So there's a lot of opportunities. This is just a singular point market, like I said, Appian tends to focus on a broad set of markets. But it's an example of where we can go when we go very deep in a given market. It's good.

Question: Steve Ender - Citigroup - Analyst : Okay. Maybe building off of that, you've talked about trying to become a solutions company and trying to find these or kind of building off of the success of GAM and building on that solution area. I guess how do you think about incremental use cases or what kind of use cases would make sense to eventually support as a stand-alone solution?

Question: Steve Ender - Citigroup - Analyst : Yes, just in general.

Question: Steve Ender - Citigroup - Analyst : Okay. That makes sense. Maybe sticking on the product side a little bit more. I think you've been pretty innovative come out with a lot of products. Can you maybe just talk about some of the newer product investment areas. Maybe why are they relevant to your customers? And how does it maybe support your ability to expand within the customer base? Unidentified_1 Yes. Well, first, we made an acquisition a few years ago of a firm in Berlin that was doing process mining and processes. I think that is a good way to think about Appian is think of us as a process company. That's what we're focused on enterprise process. And we have the ability to design process and the ability to automate process. This acquisition was intended to add a capability, which we call optimization. So customers want to build process and then they want to understand how those processes are improving. That's what the heart of process mining is. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 1:10PM, APPN.OQ - Appian Corp at Citi Global TMT Conference For Appian, the unique value proposition, we believe, is that you can now build on Appian, and then you can get feedback loop, which shows you how you're performing and then that can be fed back into your process to make it better. The vast majority of companies out there who build processes don't actually understand how the process actually works. It doesn't work the way the software set up. It works in other ways. And so you need these kinds of insights to understand what's actually happening. So ProcesaQ is a new feature that kind of, in our mind, really fills out our suite and reinforces this idea that we're a process company and you buy Appian to build process and also make process better. The second thing that we've been doing recently, which I think is very important. There's a lot of talk about no code and low code. I consider the no-code market often to be very limited. It's too limiting for our customers to use. And yet Appian sees an opportunity to make some capabilities more available to business users to configure. We have a very interesting approach. We call it case management. A lot of business process problems look a lot like cases. You have something you need to work on. There's a group of people who need to collaborate on working on it until they get it done or moves on from one state to another. So case management is a new capability Appian -- its extra charge to get it. And this, we believe, is going to help us expand in clients where they may not even want to do additional logo development, but they know they want to continue to kind of augment their business processes with these cases. So we're excited about that. And we're doing other stuff and some more technical stuff, but there's an exciting product road map we have we have ahead of us. Of course, the most notable item there probably is artificial intelligence, which we talked about earlier.

Question: Steve Ender - Citigroup - Analyst : We've got about five minutes left here, so I just want to take a second to pause and see if there's any questions in the room. Maybe shifting gears a little bit. Just as we think about well, maybe we'll talk a little bit about the AI side again, just on the product side. it does feel like it is a bigger part of the road map and kind of the future of Appian and what that looks like. Maybe how do you think about what makes sense for Appian to own and for you to kind of include in the platform versus maybe leveraging some other vendors outside areas. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 1:10PM, APPN.OQ - Appian Corp at Citi Global TMT Conference

Question: Steve Ender - Citigroup - Analyst : Okay. That makes sense. Maybe just shifting gears slightly. Do you want to talk about financials a little bit and maybe we'll pull Jack in here on some of these questions as well. But I think I understand, I think we already kind of talked about the revenue guide and kind of what's being accounted for in there. But I think we did see a pretty good raise on the EBITDA side and on the margin trajectory here. So maybe can we talk a bit about the path to reaching breakeven and maybe how you're kind of thinking about kind of the go-forward growth versus profitability debate?

Question: Steve Ender - Citigroup - Analyst : Okay. And then I guess just in general, as we're thinking about free cash flow conversion and I think EBITDA to free cash flow conversion has maybe been kind of a typical way that has been talked about or thought about in the past. Maybe how should we be thinking about what that looks like in getting over that free cash flow generation?

Question: Steve Ender - Citigroup - Analyst : Okay. I know we've talked a lot about the product side, I talked a lot about what things look like here. I guess as you think about the multiyear opportunity with Appian I guess, what areas are you kind of most excited about? Where do you kind of see the most potential for the business and to drive more of that adoption within customers?

Question: Steve Ender - Citigroup - Analyst : Okay. Maybe on that point, I think we've heard from a lot of companies this week about AI, and I think everyone has kind of an AI message, how does Appian maybe kind of cut through the noise and really show the success there or enable that success for customers?

Question: Steve Ender - Citigroup - Analyst : Okay. That sounds great. I think we're running up against against time here, but Bob, Jack want to thank you so much for being here and talking about the Appian story and want to thank everybody in the room for being here as well.