Appian Stock Tumbles as KeyBanc Downgrades Amid Lowered Growth Forecast

KeyBanc downgrades Appian stock amid lowered growth forecast By Investing.com

On Friday, Appian Corp . (NASDAQ:APPN) experienced a change in stock rating as KeyBanc downgraded the company from Overweight to Sector Weight. The shift in rating came after the enterprise software developer reported its second quarter results for 2024, which included a guidance update. The company's guidance suggested a mid-teens percentage growth for its Cloud Subscription revenue, which accounts for approximately 60% of its total revenue. This figure fell short of the approximately 20% or higher growth rate previously anticipated by KeyBanc. Appian also announced the layoff of 150 employees, an action that does not appear to be fully reflected in the cost savings projected in the company's guidance for the second half of 2024, according to KeyBanc's analysis. The firm's assessment indicates that the expected financial benefits from the reduction in force, estimated at around $20 million, are not yet factored into the company's financial outlook. Despite the workforce reduction, Appian has revised its adjusted EBITDA guidance, now aiming for breakeven in the calendar year 2024, as opposed to the calendar year 2025. This adjustment is partly due to the anticipated near-term savings from the layoffs. However, the company finds itself in a challenging position balancing the deceleration in growth with its intentions to continue investing for future growth, a situation reminiscent of that faced by its peer, Pegasystems (NASDAQ:PEGA), a few years prior. The updated guidance from Appian has led to the reassessment by KeyBanc, as the lower growth forecast for the Cloud Subscription line, a key factor in the firm's valuation of the stock, has altered the investment outlook. The downgrade reflects the revised expectations for the company's performance and growth trajectory. In other recent news, Appian Corporation has reported significant growth and progress towards profitability in its Q2 2024 earnings call. The company's cloud subscription revenue increased by 19% year-over-year, reaching $88.4 million, while total revenue rose by 15% to $146.5 million. Subscription revenue represented 77% of the total. Appian also noted the increased adoption of its AI-driven features and success in key market verticals. The company provided guidance for continued growth, with cloud subscription revenue for Q3 2024 expected to be between $89 million and $91 million, and total revenue projected to be between $149 million and $153 million. Adjusted EBITDA for Q3 is forecasted to range from breakeven to a positive $3 million. Despite an adjusted EBITDA loss of $10.5 million, Appian is on track to achieve breakeven adjusted EBITDA by the end of 2024. The company's focus on strategic investments in AI and vertical solutions, such as insurance and pharmaceuticals, indicate a robust growth strategy. This development follows the recent downgrade of Appian's stock rating by KeyBanc, from Overweight to Sector Weight, after the company announced a layoff of 150 employees and issued a guidance update. In light of Appian Corp.'s (NASDAQ:APPN) recent stock rating downgrade and guidance update, it is pertinent to consider the latest InvestingPro data and tips to gain a deeper understanding of the company's financial health and market position. Appian's market capitalization currently stands at $2.13 billion, indicating its size within the software industry. The company's revenue growth over the last twelve months as of Q1 2024 shows a healthy increase of 14.52%, highlighting its ability to expand its business despite broader market challenges. However, the company's non-profitability over the last twelve months is a significant concern, as reflected in a negative P/E ratio of -24.8, adjusted to -20.54 for the same period. This aligns with the InvestingPro Tip that analysts do not anticipate the company will be profitable this year. Additionally, Appian's stock has experienced a notable decline, with a 1-week price total return of -22.05%, which may raise concerns among investors about short-term volatility. With a moderate level of debt and absence of dividend payments, Appian's financial strategy seems focused on reinvestment for growth rather than immediate returns to shareholders. This is further supported by the company's efforts to revise its EBITDA guidance towards breakeven in 2024, indicating a strategic shift to improve financial performance. For investors seeking further insights, there are additional InvestingPro Tips available on https://www.investing.com/pro/APPN, which can provide a more comprehensive analysis of Appian's financial outlook and market potential.

Appian Stock Sinks After Q2 Performance - Here's Why - Appian (NASDAQ:APPN)

Appian Q2 revenue grew 15% to $146.45 million, beating estimates.Adjusted EPS loss of 26 cents beat the consensus loss of 31 cents. Appian Corp APPN reported fiscal second-quarter 2024 revenue growth of 15% year-on-year to $146.45 million, beating the analyst consensus estimate of $142.95 million. Adjusted EPS loss of 26 cents beat the analyst consensus loss of 31 cents. The stock price plunged after the results. Total subscription revenue increased 15% year over year to $113.5 million. Professional services revenue was $33.5 million, down 1% year over year. "Due to enhanced functionality launched this quarter, Appian AI usage nearly doubled," said Matt Calkins, CEO & Founder. "Looking ahead, we are accelerating our path to profitability. We now expect to achieve adjusted EBITDA breakeven for the full year 2024." Appian ended the quarter with cash and equivalents of $149.1 million. It used 17.6 million in operating cash flow compared to using $11.9 million last year. Outlook: Appian expects third-quarter revenue of $149.00 million-$153.00 million, up by 9%-12% Y/Y against the consensus of $155.56 million. It projects an adjusted EPS loss of 10 cents-6 cents versus the 18 cents consensus loss. The company expects fiscal 2024 revenue of $610.0 million-$615.0 million (prior $615.00 million-$617.00 million), up by 12%-13% Y/Y, below the consensus of $615.69 million. It projects adjusted EPS loss of $(0.61)-$(0.52) (prior $(0.85)-$(0.79)), against the consensus loss of $(0.80). Appian stock has lost 36% in the last 12 months. On July 30, DA Davidson downgraded the stock's rating from Buy to Neutral, with a price target of $33, down from $48. Price Action: APPN shares traded lower by 12.30% at $32.10 at the last check on Thursday. Read Next: Bank Of England Reduces 16-Year High Interest Rates In Divided Decision As Inflation Hits 2% Market News and Data brought to you by Benzinga APIs

Why Appian Stock Was Sliding Today | The Motley Fool

Shares of Appian (APPN -15.11%), a cloud software focused on business process automation, were falling today, even as the company beat estimates in its second-quarter earnings report. It pulled forward guidance to reach break-even on an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) basis. Despite that, investors seemed underwhelmed by weaker-than-expected revenue guidance for the third quarter and full year. As a result, the stock was down 11.7% as of 11:05 a.m. ET. Appian had a number of positive updates to share in the earnings report. The company said usage of Appian AI, a comprehensive platform that includes generative AI, data fabric, and automation, doubled quarter-over-quarter in the period, and it saw bookings from a key government vertical double. Cloud subscription revenue, the company's primary focus, rose 19% to $88.4 million, and overall revenue was up 15% to $146.5 million, beating the consensus at $143 million. Its gross renewal rate remained strong at 99%, and its subscription gross margin was 88.5%, showing that customers are highly profitable once the company lands them. On the bottom line, the company narrowed its adjusted EBITDA loss from $24.7 million to $10.5 million, and it reported a per-share loss of $0.26, improving from a per-share loss of $0.39 and beating the consensus at a per-share loss of $0.31. Following a little-publicized round of layoffs in July, which let go of 170 employees, Appian pulled its target for break-even adjusted EBITDA forward from 2025 to 2024. For the third quarter, the company now sees adjusted EBITDA of break-even to $3 million and forecast total revenue of $149 million-$153 million, up 9%-12% from a year ago but below the consensus of $155.6 million. For the full year, the company expects adjusted EBITDA of -$3 million to $3 million and total revenue up 12%-13% to $610 million-$615 million, compared to revenue estimates at $615.7 million. While the accelerated move to profitability is a positive sign, investors seem worried that the layoffs could lead to slower revenue growth.