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    APPN
    Earnings call· Jun 2026(Q2 FY26)

    APPIAN Q2 FY26 earnings call APPN

    Aug 6, 2026 Source

    Executive summary

    Appian Q2 FY26 — Strong AI-Driven Growth and App Modernization Momentum

    Appian delivered a strong quarter, driven by its successful upmarket strategy and the tangible impact of AI on its value proposition and pipeline. The company is capitalizing on the emerging app modernization market, leveraging AI to consolidate legacy applications and unify functionality. Management expressed cautious optimism for continued federal business strength and is focused on driving further efficiency and profitability.

    Highlights

    5

    • Cloud subscriptions revenue grew 21% to $106.9 million.

    • Total revenue grew 17% to $170.6 million.

    • Adjusted EBITDA was positive $8.1 million, significantly exceeding guidance of negative $5 million to negative $2 million.

    • Go-to-market productivity ratio reached 3.3, marking its eighth sequential quarterly increase.

    • The U.S. federal business outgrew the global business in cloud revenue, new bookings, and software pipeline.

    Concerns

    2

    • Cloud subscription revenue retention rate decreased to 111% from 118% in the prior year.

    • Subscription gross margin declined to 87% compared to 89% in the year-ago and prior quarters.

    Guidance & targets

    12
    CategoryTargetConfidence
    Cloud subscription revenue
    $109M-$111M
    high materiality
    High
    Total revenue
    $172M-$176M
    high materiality
    High
    Adjusted EBITDA
    $9M-$12M
    high materiality
    High
    Non-GAAP earnings per share
    $0.03-$0.07
    medium materiality
    High
    Cloud subscription revenue
    $429M-$433M
    high materiality
    High
    Total revenue
    $695M-$703M
    high materiality
    High
    Adjusted EBITDA
    $49M-$55M
    high materiality
    High
    Non-GAAP earnings per share
    $0.28-$0.36
    medium materiality
    High
    Professional services revenue growth
    modestly
    low materiality
    Medium
    Term license revenue growth
    flat
    low materiality
    Medium
    Term license revenue growth
    modestly
    low materiality
    Medium
    Total other income and interest expense
    $3.5M
    low materiality
    Medium

    Operational metrics

    17
    Go-to-market productivity ratio
    3.3eighth sequential quarterly increase
    Q2 FY26

    Measures the productivity of sales and marketing expenditure.

    Professional services revenue
    $38Mup 13% YoY
    Q2 FY26

    Services revenue can be variable quarter-to-quarter.

    Subscription revenue as % of total revenue
    78%vs 77% YoY, 81% prior quarter
    Q2 FY26

    Indicates the mix of revenue streams.

    International revenue contribution
    38%unchanged YoY
    Q2 FY26

    Share of total revenue from international operations.

    Non-GAAP Gross margin
    75%unchanged YoY, down from 78% prior quarter
    Q2 FY26

    Overall gross margin on a non-GAAP basis.

    Subscription gross margin
    87%vs 89% YoY and prior quarter
    Q2 FY26

    Gross margin specifically for subscription revenue.

    Professional services gross margin
    33%vs 30% YoY and prior quarter
    Q2 FY26

    Gross margin specifically for professional services revenue.

    Total operating expenses
    $122.7Mflat with $123.2M YoY
    Q2 FY26

    Operating expenses on a non-GAAP basis.

    Adjusted EBITDA
    $8.1Mvs -$10.5M YoY
    Q2 FY26

    Exceeded guidance of -$5M to -$2M, partly due to timing of expenses.

    Net income
    $0.3Mvs -$18.2M YoY
    Q2 FY26

    GAAP net income.

    Diluted EPS
    $0.00vs -$0.25 YoY
    Q2 FY26

    Break-even per diluted share.

    Diluted shares outstanding
    74.6Mvs 72.3M YoY
    Q2 FY26

    Used for EPS calculation.

    Cash equivalents and investments balance
    $184.8Mvs $159.9M end of last year
    Q2 FY26

    Balance sheet cash position.

    Cash used by operations
    $1.9Mvs $17.6M YoY
    Q2 FY26

    Operating cash flow.

    AI upcharge
    25%
    Q2 FY26

    Additional charge for AI-inclusive license tiers.

    US agency expected savings
    $38M
    per year

    Expected savings from using Appian for virtual care operations.

    Spanish bank process speed improvement
    30%
    annually

    Expected faster core processes and millions in annual savings for a leading Spanish bank.

    Industry KPIs

    7
    MetricValueDetails
    Revenue growth$170.6MUSD
    Pricing model mixmigration underway
    Large deal new logo metricsSeven-figure software dealscount
    Multi product platform attach—
    Operating FCF margin rule of 4031
    Ai product adoption monetization25%%
    Net revenue net dollar retention111%%

    Deals & partnerships

    5
    International grocery retailerDeployment of Appian AI into existing field dispatching applicationSeven-figure ARR

    Manages supply chain logistics and insurance claims with Appian. AI automatically reconciles paperwork for shipment issues, improving speed and accuracy.

    Top global asset management firmUpgrade of licenses to deploy Appian AI featuresSeven-figure software deal

    Longtime Appian customer running dozens of applications. AI Agents will accelerate processing of customer requests, classifying forms and extracting data for account management.

    U.S. agency supporting national healthcareSelection of Appian as backbone for virtual care operationsSeven-figure software deal

    Millions of patients will use the platform to engage with clinicians, coordinating virtual appointments and sharing health data.

    Leading Spanish bankPurchase of Appian software licenses for large-scale modernization campaignThousands of licenses

    New customer migrating all back office workflows from legacy tools and consolidating them on Appian's platform to decommission inflexible technology.

    Prominent U.S. health insurerSoftware expansion deal to deploy Appian across businessSeven-figure software expansion deal

    Selected Appian two years ago to modernize core applications and unify approval processes. Expansion starts with Medicare and Medicaid enrollment as part of a company-wide initiative to save $1 billion.

    Risks & headwinds

    5
    Cloud subscription revenue retention rate declineQ2 FY26

    111% as of June 30, 2025, down from 118% a year ago and 112% in prior quarter

    Mitigation: Attributed to ongoing effect of past downsells working through the system; company focuses on total new business rather than NRR as a primary operational metric.

    Subscription gross margin compressionQ2 FY26

    87% in Q2 FY26, down from 89% in year-ago and prior quarters

    Macro environment uncertaintyOngoing

    Qualitative

    Mitigation: Company maintains cautious optimism and strong performance despite uncertainty.

    DOGE volatility impacting federal businessOngoing

    Qualitative

    Mitigation: While DOGE volatility exists, underlying trends like government preference for direct business and efficiency prioritization are positive for Appian's federal pipeline.

    Timing of expenses impacting EBITDAQ2 FY26, expenses expected in H2 FY26

    Greater than expected revenue and timing of certain expenses contributed to Q2 EBITDA outperformance

    Mitigation: Expenses are expected to be incurred in the second half of the year, indicating a shift rather than a permanent saving.

    What to watch in Q3 FY26

    5

    Federal Business Momentum

    next quarter
    CurrentOutgrew global business in cloud revenue, new bookings, and software pipeline in H1 FY26
    TargetContinued outperformance of global business

    Why it matters

    Sustained growth in the federal sector, driven by efficiency priorities and direct engagement, is a key indicator of Appian's ability to capitalize on structural market changes.

    Our federal business outgrew the global business in cloud revenue, in new bookings, and in software pipeline.

    Q&A highlights

    5

    How is AI changing the app modernization market, and what is Appian's competitive stance? Also, what's driving the NRR decline and where is it stabilizing?

    Matt explained that app modernization will be a complex market with AI assisting in both extraction and instantiation, where Appian has a strong leadership position. Serge attributed the NRR downtick to past downsells and emphasized that the company focuses on total new business rather than NRR as a primary operational metric.

    “NRR is a helpful metric, but it has certain limitations. In my mind, most importantly, it's backward-looking, sort of averages growth across quarters, and obviously only reflects subsidence of the business.”

    asked by Raimo Lenschao · answered by Unknown Speaker

    2 min read5 chapters

    Detailed Narrative

    01

    Upmarket Strategy Success

    Appian's upmarket strategy is proving successful, with strong sales organization and execution enabling the company to secure high-value transactions. This internal factor is contributing significantly to the positive financial results, demonstrating the effectiveness of focusing on larger deals where Appian's platform provides substantial value. The company's go-to-market productivity ratio of 3.3 reflects this efficiency, marking an eighth consecutive quarterly increase.

    02

    AI Impact and Monetization

    Artificial intelligence is having a tangible effect on Appian's financial results, driving higher prices, new deals, and entry into new industries. The platform provides AI with necessary data access, structure, guardrails, and tracking, enabling it to solve complex business problems. Appian is applying a 25% upcharge for AI-inclusive license tiers, and AI's impact on the pipeline and overall value proposition is expected to be a strong growth factor in the future. Examples include an international grocery retailer deploying Appian AI for supply chain logistics and a global asset management firm upgrading licenses for client investment operations.

    03

    App Modernization Opportunity

    The app modernization market is poised for significant growth, with AI lowering the cost of extracting and translating old applications into new formats. Appian is well-positioned to capitalize on this, offering a platform that serves as a robust destination for translated applications, facilitates AI-driven design dialogues, and consolidates multiple legacy apps into fewer, more coherent ones. This market addresses the universal need for organizations to reduce costs, eliminate technical debt, and unify data from hundreds or thousands of existing applications. Recent wins with a leading Spanish bank and a prominent U.S. health insurer highlight this trend.

    04

    US Public Sector Strength

    Appian's U.S. public sector business demonstrated strong performance in the first half of the year, outgrowing the global business in cloud revenue, new bookings, and software pipeline. This success is attributed to the government's increased prioritization of efficiency and a preference for direct engagement with software providers. A U.S. agency supporting national healthcare selected Appian as the backbone for its virtual care operations, expecting to save $38 million annually, underscoring the platform's value in this sector.

    05

    CFO's Perspective and Efficiency Focus

    The new CFO, Serge Tonga, highlighted Appian's strong product, compelling AI value proposition, and focus on efficiency as key reasons for joining. He noted significant improvements in profitability over the past 18 months and outlined three key drivers for continued efficiency: enhanced sales productivity through improved go-to-market processes, cost-efficient R&D expansion (particularly in India), and internal adoption of AI across various functions. This balanced approach aims to drive growth while expanding margins.

    AI-generated summary of the company’s earnings call. Not investment advice.