According to a recent Market Study Report, the global digital transformation market is expected to grow at 24% CAGR to $2.2 billion by 2025. Digital transformation refers to the application of digital technology across the organization to drive innovation and creativity in specific domains so that organizations can expand market reach and improve customer experiences. Reston, Virginia-based Appian (Nasdaq: APPN) is among the leading players in this space.

Appian’s Offerings

Appian has had an interesting journey so far. It was set up in 1999 by Marc Wilson, Matthew Calkins, Michael Beckley, and Robert Kramer after a series of pivots. I had spoken with Matthew Calkins a few years ago when he talked about the company’s growth. Appian was initially set up to provide Personalization services. It developed Bayesian algorithms to match people with items that corresponded to their profile as demonstrated by their prior selections or interests. But the idea was ahead of its time. In 1999, the idea didn’t succeed, and Appian made its first pivot into portals and managed to get the Army as its client. As an Army service provider, Appian ended up building a portal for a central place for communications.

The portal business didn’t last long either. Soon, the founders realized that they needed to make another pivot out of that market because their portal was a feature and not a complete product. They then decided to shift into business process management (BPM). BPM essentially involves defining a flow chart that automates the progress of work through the organization by rule checks and human decisions towards an outcome. Over the next few years, and through a few recessionary cycles, the company continued to improve its BPM interface and offering. Today, Appian has become a global leader in intelligent business process management systems (iBPMS), dynamic case management (DCM), digital process automation (DPA), and low-code development. It continues to focus on simplifying ideas into powerful business applications that can deliver significant value.

Appian has built a fully unified platform that unites the capabilities required to deliver impactful, end-to-end processes across an organization. Users can build more powerful apps and increase productivity using its Robotic Process Automation capabilities. Its BPM-focused solution allows users to design, execute, manage, and optimize complex processes while allowing to automate collaborative work and exception handling. With AI capabilities integrated from Google, AWS, and Azure, it helps make applications work harder and smarter.

Appian’s Financials

Appian was bootstrapped till 2008 when it finally raised its first round of funding. Overall it raised $47.5 million in venture funding from investors including New Enterprise Associates and Novak Biddle Venture Partners. In 2017, the company went public and raised $75 million at a valuation of $880 million.

Appian recently reported its fourth-quarter results that saw revenues grow 17% to $70.5 million, missing the analyst estimates of $70.8 million. Net loss was $10.8 million or $0.16 per share compared with a loss of $13.9 million or $0.22 per share reported a year ago. On an adjusted basis, net loss was $0.11 per share, marginally better than the Street’s forecast of a loss of $0.12 per share.

By segment, total subscriptions revenue, which includes sales of its SaaS subscriptions, on-premises term license subscriptions and maintenance and support, increased 26% to $44.3 million. Professional services revenue grew from $25.1 million a year ago to $26.2 million for the quarter.

Appian ended the year with revenues growing 17% to $266.3 million. Net loss for the year remained flat at $49.4 million for the year. On an adjusted basis, it reported a net loss per share of $0.50 compared with a net loss of $0.54 per share for the previous year.

Appian expects to end the current quarter with revenues of $71-$71.5 million with an adjusted loss of $0.20-$0.18 per share. It forecast revenues of $296-$298 million for the year with a loss of $0.58-$0.55 a share. The market was looking for revenues of $70.8 million for the quarter with a loss of $0.12 per share and revenues of $308.9 million for the year with a loss of $0.36 per share.

Appian’s Expanding Partnerships

Appian is looking to expand its market reach by growing its tie-ups with tech and consulting leaders. Earlier this year, it announced an expanded technology partnership with Google Cloud to focus on intelligent document processing. As part of the agreement, Appian will be able to improve its AI offering by giving its customers out-of-the-box AI capabilities that have been pre-configured for Intelligent Document Processing (IDP) use cases. It will package Document AI services from Google Cloud into its solution that will allow businesses to accelerate data processing and draw better insights from data.

It also entered into a strategic alliance with Deloitte Consulting to help modernize systems for its clients within commercial, federal, civilian, defense, state, and local government agencies. Deloitte recently established an Appian Solutions Incubator to build application accelerators, templates, and reusable solutions. The tie-up will help accelerate the modernization process to provide clients with a fast and efficient way to revamp business processes and improve workflow. Deloitte and Appian are already collaborating with the Food and Drug Administration (FDA) to upgrade their legacy systems and implement new technologies by leveraging robotic process automation (RPA).

Earlier this year, Appian also made its first-ever acquisition by adding the Spanish firm Novayre Solutions SL to its portfolio. Novayre is the developer of the Jidoka RPA platform that is currently the highest-rated RPA software on Gartner Peer Insights. Through the acquisition, Appian will become a one-stop-shop for Automation for workflow, AI, and RPA. Terms of the acquisition were not disclosed.

Appian’s Platform Strategy

Appian has also been developing a PaaS offering. It was named by Gartner as a leading platform in low-code automation. Its easy-to-use solution allows developers to create apps using a point and click, drag and drop approach. Developers can develop and launch apps immediately. Appian also operates an AppMarket to allow Apps to be offered for free or for a premium. It does not disclose usage statistics about these apps.

Appian’s stock is currently trading at $31.36 with a market cap of $2.1 billion. It had touched a 52-week high of $63.77 in August last year. The recent turbulence has hurt the stock significantly and it hit a 52-week low of $29.07 earlier last month.

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