Appian ((APPN)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Appian’s recent earnings call was characterized by a positive sentiment, primarily fueled by robust revenue growth and the significant impact of AI on its business operations. The company has successfully secured strategic deals, particularly in the public sector, which further bolsters its optimistic outlook. Despite encountering some challenges, such as a slight decline in retention rate and flat subscription gross margin, Appian remains confident in its continued growth and profitability improvements.
Strong Cloud Subscription Revenue Growth
Appian reported a notable 21% increase in its cloud subscription revenue, reaching $106.9 million, while total revenue grew by 17% to $170.6 million in the second quarter of 2025. This growth underscores the company’s strong market position and its ability to capitalize on the increasing demand for cloud solutions.
AI Impact on Revenue and Pipeline
Artificial Intelligence has become a pivotal component of Appian’s financial success, leading to higher prices with a 25% upcharge. AI has not only expanded Appian’s pipeline but also enhanced its value proposition, demonstrating the transformative effect of AI on its business model.
Significant New Deals in Public Sector
Appian has made significant strides in the public sector, with a notable deal involving a U.S. agency focused on national health care. This partnership is expected to save $38 million annually through virtual care operations. The federal business has outpaced the global business in terms of cloud revenue, new bookings, and software pipeline.
Positive Adjusted EBITDA
The company reported a positive adjusted EBITDA of $8.1 million, surpassing its guidance expectations. This marks a significant improvement from a loss of $10.5 million in the same period last year, highlighting Appian’s enhanced financial performance.
Strong New Customer Acquisition
Appian’s ability to attract new customers has been a key driver of its success, with a higher percentage of new business in the first half of 2025 originating from new clients. This trend indicates the company’s strength in securing large, strategic deals.
Decline in Cloud Subscription Revenue Retention Rate
The cloud subscription revenue retention rate experienced a decline, dropping to 111% from 118% a year ago. This decrease is attributed to down-sells working their way through the system, presenting a challenge that the company is addressing.
Flat Subscription Gross Margin
Appian’s subscription gross margin remained flat at 87%, down from 89% in both the year-ago period and the prior quarter. While this represents a slight dip, the company continues to focus on strategies to enhance its margins.
Forward-Looking Guidance
Looking ahead, Appian projects continued growth in its cloud subscription revenue, expecting it to range between $109 million and $111 million for the third quarter of 2025. Total revenue is anticipated to be between $172 million and $176 million. For the full year, cloud subscription revenue is forecasted to be between $429 million and $433 million, with total revenue expected to range from $695 million to $703 million. The company also projects an adjusted EBITDA of $49 million to $55 million for the full year, reflecting its commitment to sustained profitability.
In conclusion, Appian’s earnings call conveyed a positive sentiment, driven by strong revenue growth and strategic advancements in AI and public sector deals. Despite facing some challenges, the company remains optimistic about its future prospects, with robust guidance indicating continued success in the coming quarters.