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What changed in APPIAN CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of APPIAN CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+308 added−314 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-15)

Top changes in APPIAN CORP's 2024 10-K

308 paragraphs added · 314 removed · 249 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

27 edited+27 added−20 removed22 unchanged
Biggest changeThese risks are discussed more fully in the section titled “Risk Factors.” Material risks that may affect our business, financial condition, results of operations, and trading price of our Class A common stock include, but are not necessarily limited to, the following: • Our recent growth may not be indicative of our future growth and, if we continue to grow, we may not be able to manage our growth effectively. • If we are unable to sustain our revenue growth rate, we may not achieve or maintain profitability in the future. • We may not be able to scale our business quickly enough to meet our customers’ growing needs, and if we are not able to grow efficiently, our operating results could be harmed. • We are dependent on a single product, and the lack of continued market acceptance of our platform could cause our operating results to suffer. • We currently face significant competition. • If our security measures are actually or perceived to have been breached, or if unauthorized access to our platform or customer data occurs, our platform may be perceived as not being secure, and customers may reduce the use of or stop using our platform, and we may incur significant liabilities. • We derive a material portion of our revenue from a limited number of customers, and the loss of one or more of these customers could materially and adversely impact our business, results of operations, and financial condition. • We have experienced losses in the past, and we may not achieve or sustain profitability in the future. • AI is a disruptive set of technologies that may affect the markets for our software dramatically and in unpredictable ways. • We rely on the performance of highly skilled personnel, including senior management and our engineering, professional services, sales, and technology professionals, and if we are unable to retain or motivate key personnel or hire, retain, and motivate qualified personnel, our business would be harmed. • If we do not continue to innovate and provide a platform that is useful to our customers, we may not remain competitive, and our revenue and operating results could suffer. • We are substantially dependent upon customer renewals, the addition of new customers, and the continued growth of our subscriptions revenue. • Because we generally recognize revenue from cloud subscriptions ratably over the term of the subscription agreement, near term changes in sales may not be reflected immediately in our operating results. • We may not achieve market acceptance of our pre-built solutions, which may adversely affect our financial results. 11 • If our platform fails to perform properly or there are defects or disruptions in the rollout of our platform updates or enhancements, our reputation could be adversely affected, our market share could decline, and we could be subject to liability claims. • We rely upon Amazon Web Services, or AWS, to operate our cloud offering; any disruption of or interference with our use of AWS would adversely affect our business, results of operations, and financial condition. • Our growth depends in part on the success of our strategic relationships with third parties. • We employ third-party licensed software for use in or with our software, and the inability to maintain these licenses or errors in the software we license could result in increased costs or reduced service levels, which would adversely affect our business. • If we do not or cannot maintain the compatibility of our platform with third-party applications that our customers use in their businesses, our revenue will decline. • Because we collect and store personal information, domestic and international privacy concerns could result in additional costs and liabilities to us or inhibit sales of our software, and subject us to complex and evolving federal, state, and foreign laws and regulations regarding privacy, data protection, and other related matters. • If our platform fails to function in a manner that allows our customers to operate in compliance with regulations and/or industry standards, our revenue and operating results could be harmed. • We are subject to governmental export and import controls and economic and trade sanctions that could impair our ability to conduct business in international markets and subject us to liability if we are not in compliance with applicable laws and regulations. • Any failure to protect our proprietary technology and intellectual property rights could substantially harm our business and operating results. • Portions of our platform utilize open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business. • Our ability to use net operating losses to offset future taxable income may be subject to certain limitations. • The dual class structure of our common stock and the existing ownership of capital stock by Matt Calkins, our founder and Chief Executive Officer, have the effect of concentrating voting control with Mr.
Biggest changeThese risks are discussed more fully in the section titled “Risk Factors.” Material risks that may affect our business, financial condition, results of operations, and trading price of our Class A common stock include, but are not necessarily limited to, the following: • If we are unable to sustain our revenue growth rate, we may not achieve or maintain profitability in the future. • We may not be able to scale our business quickly enough to meet our customers’ growing needs, and if we are not able to grow efficiently, our operating results could be harmed. • We are dependent on a single product, and the lack of continued market acceptance of our platform could cause our operating results to suffer. • We currently face significant competition. • Our recent corporate growth may not be indicative of our future growth and, if we continue to grow, we may not be able to manage our growth effectively. • If our security measures are actually or perceived to have been breached, or if unauthorized access to our platform or customer data occurs, our platform may be perceived as not being secure, and customers may reduce the use of or stop using our platform, and we may incur significant liabilities. • We derive a material portion of our revenue from a limited number of customers, and the loss of one or more of these customers could materially and adversely impact our business, results of operations, and financial condition. • A portion of our revenue is generated from subscriptions sold to governmental entities and heavily regulated organizations, which are subject to a number of challenges and risks. • We have experienced losses in the past, and we may not achieve or sustain profitability in the future. • AI is a disruptive set of technologies that may affect the markets for our software dramatically and in unpredictable ways. • We rely on the performance of highly skilled personnel, including senior management and our engineering, professional services, sales, and technology professionals, and if we are unable to retain or motivate key personnel or hire, retain, and motivate qualified personnel, our business would be harmed. • If we do not continue to innovate and provide a platform that is useful to our customers, we may not remain competitive, and our revenue and operating results could suffer. • We are substantially dependent upon customer renewals, the addition of new customers, and the continued growth of our subscriptions revenue. • Because we generally recognize revenue from cloud subscriptions ratably over the term of the subscription agreement, near term changes in sales may not be reflected immediately in our operating results. • We may not achieve market acceptance of our pre-built solutions, which may adversely affect our financial results. 11 • If our platform fails to perform properly or there are defects or disruptions in the rollout of our platform updates or enhancements, our reputation could be adversely affected, our market share could decline, and we could be subject to liability claims. • We rely upon Amazon Web Services, or AWS, to operate our cloud offering; any disruption of or interference with our use of AWS would adversely affect our business, results of operations, and financial condition. • Our growth depends in part on the success of our strategic relationships with third parties. • We employ third-party licensed software for use in or with our software, and the inability to maintain these licenses or errors in the software we license could result in increased costs or reduced service levels, which would adversely affect our business. • If we do not or cannot maintain the compatibility of our platform with third-party applications that our customers use in their businesses, our revenue will decline. • Because we collect and store personal information, domestic and international privacy concerns could result in additional costs and liabilities to us or inhibit sales of our software, and subject us to complex and evolving federal, state, and foreign laws and regulations regarding privacy, data protection, and other related matters. • If our platform fails to function in a manner that allows our customers to operate in compliance with regulations and/or industry standards, our revenue and operating results could be harmed. • We are subject to governmental export and import controls and economic and trade sanctions that could impair our ability to conduct business in international markets and subject us to liability if we are not in compliance with applicable laws and regulations. • Any failure to protect our proprietary technology and intellectual property rights could substantially harm our business and operating results. • Portions of our platform utilize open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business. • Our ability to use net operating losses to offset future taxable income may be subject to certain limitations. • The dual class structure of our common stock and the existing ownership of capital stock by Matt Calkins, our founder and Chief Executive Officer, have the effect of concentrating voting control with Mr.
The principal competitive factors in our market include: • Platform features, reliability, performance, and effectiveness; • Ease of use and speed; • Data Fabric; • Platform extensibility and ability to integrate with other technology infrastructures; • Deployment flexibility; • Robustness of professional services and customer support; • Price and total cost of ownership; • Strength of platform security and adherence to industry standards and certifications; • Strength of sales and marketing efforts; and • Brand awareness and reputation.
The principal competitive factors in our market include: • Platform features, reliability, performance, and effectiveness; • Ease of use and speed; • Data Fabric; • AI; • Platform extensibility and ability to integrate with other technology infrastructures; • Deployment flexibility; • Robustness of professional services and customer support; • Price and total cost of ownership; • Strength of platform security and adherence to industry standards and certifications; • Strength of sales and marketing efforts; and • Brand awareness and reputation.
We also have a strong ecosystem of strategic partners that help identify new customer opportunities for us. • Grow revenue from key industry verticals. While our platform is industry-agnostic, we continue to make investments to enhance the expertise of our sales and marketing organization within our key industry verticals of financial services, government, life sciences, insurance, and manufacturing.
We also have a strong ecosystem of strategic partners that help identify new customer opportunities for us. • Grow revenue from key industry verticals. While our platform is industry-agnostic, we continue to make investments to enhance the expertise of our sales and marketing organization within our key industry verticals of financial services, government, life sciences, and insurance.
We, along with our partners, offer pre-built solutions in certain of our key industries such as financial services, government acquisition, and insurance to give our customers an even faster start. Every Appian solution is built on our platform and designed to be standardized, upgradeable, and compatible with each other. • Expand our international footprint.
We, along with our partners, offer pre-built solutions in certain of our key industries such as financial services, government, and insurance to give our customers an even faster start. Every Appian solution is built on our platform and designed to be standardized, upgradeable, and compatible with each other. • Expand our international footprint.
We believe our facilities are adequate to meet our ongoing needs, including substantial rights to expand within certain properties we lease. If we require additional space in the future, we believe we will be able to obtain additional facilities on commercially reasonable terms. Seasonality We have historically experienced seasonality in terms of when we enter into agreements with customers.
We believe our facilities are adequate to meet our ongoing needs, including substantial rights to expand within certain properties we lease. If 7 we require additional space in the future, we believe we will be able to obtain additional facilities on commercially reasonable terms. Seasonality We have historically experienced seasonality in terms of when we enter into agreements with customers.
We cannot provide complete assurance that any of our 8 patent applications will result in the issuance of a patent or that the examination process will not require us to narrow our claims. Any patents we may be issued may be contested, circumvented, found unenforceable, or invalidated, and we may not be able to prevent third parties from infringing them.
We cannot provide complete assurance that any of our patent applications will result in the issuance of a patent or that the examination process will not require us to narrow our claims. Any patents we may be issued may be contested, circumvented, found unenforceable, or invalidated, and we may not be able to prevent third parties from infringing them.
These partners work with organizations undergoing digital transformation projects. When they recognize an opportunity for our platform, they introduce us to potential customers. Additionally, they go to market with their own pre-built solutions using our platform, delivering software license revenue to Appian.
These partners work with organizations undergoing digital transformation projects. When they recognize an opportunity for our platform, they introduce us to potential customers. Additionally, they often go to market with their own pre-built solutions using our platform, delivering software license revenue to Appian.
We intend to further leverage our base of partners to provide broader customer coverage and solution delivery capabilities. 6 Human Capital Resources and Management Employees, Culture, and Labor Relations Our distinct culture of innovation is an important contributor to our success as a company.
We intend to further leverage our base of partners to provide broader customer coverage and solution delivery capabilities. Human Capital Resources and Management Employees, Culture, and Labor Relations Our distinct culture of innovation is an important contributor to our success as a company.
Applications built on our platform may be used only on our platform and only while customers have active subscriptions, creating a substantial incentive for customers to avoid the difficulties and costs associated with moving to a different software platform.
Applications built on our platform may be used only on our platform and only while customers have active subscriptions, creating a substantial incentive for customers to avoid the difficulties and costs 5 associated with moving to a different software platform.
We believe we have a significant opportunity to continue to grow our international footprint. We are investing in new geographies through direct and indirect sales channels, professional services and customer support, and implementation partners. • Leverage our partner base. We have strategic partnerships including with Accenture, Capgemini, Deloitte, EY, KPMG, PwC, and TCS.
We believe we have a significant opportunity to continue to grow our international footprint. We are investing in new geographies through direct and indirect sales channels, professional services and customer support, and implementation partners. • Leverage our partner base. We have a number of strategic partnerships with companies, including Accenture, Capgemini, Deloitte, EY, KPMG, PwC, and TCS.
See “Seasonality - Management Discussion and Analysis Financial Condition and Results of Operations” for a discussion of the seasonality of our business. Our Customers Our customers operate in various industries, including financial services, government, life sciences, insurance, manufacturing, energy, healthcare, telecommunications, and transportation. As of December 31, 2023, we had approximately 1,000 customers.
See “Seasonality - Management Discussion and Analysis Financial Condition and Results of Operations” for a discussion of the seasonality of our business. Our Customers Our customers operate in various industries, including financial services, government, life sciences, insurance, manufacturing, energy, healthcare, telecommunications, and transportation. As of December 31, 2024, we had over 1,000 customers.
Facilities As of December 31, 2023, we lease our headquarters office in McLean, Virginia, and we also have five leased offices in cities outside the United States. In addition to our leased offices, we occupied seven flexible workspaces outside of the United States. Our use of flexible workspaces is dependent upon our current business needs.
Facilities As of December 31, 2024, we lease our headquarters office in McLean, Virginia, and we also have five leased offices in cities outside the United States. In addition to our leased offices, we occupied nine flexible workspaces. Our use of flexible workspaces is dependent upon our current business needs.
Generally, our sales team targets its efforts to organizations with over 2,000 employees and $2 billion in annual revenue. The number of customers paying us in excess of $1 million of annual recurring revenue has grown from 94 at the end of 2022 to 110 at the end of 2023.
Generally, our sales team targets its efforts to organizations with over 2,000 employees and $2 billion in annual revenue. The number of customers paying us in excess of $1 million of annual recurring revenue has grown from 110 at the end of 2023 to 126 at the end of 2024.
In 2023, we generated over 76% of our subscriptions revenue from customers in these verticals. We believe focusing on the digital transformation needs of organizations within these industry verticals helps drive adoption of our platform. • Continue to innovate and enhance our platform .
In 2024, we generated over 77% of our subscriptions revenue from customers in these verticals. We believe focusing on the digital transformation needs of organizations within these industry verticals helps drive adoption of our platform. • Continue to innovate and enhance our platform .
We rely on patents, trademarks, copyrights, trade secret laws, confidentiality procedures, and employee disclosure and invention assignment agreements to protect our intellectual property rights. As of December 31, 2023, we had 16 granted patents and nine patents pending related to our platform and its technology. None of our issued patents expire before 2034.
We rely on patents, trademarks, copyrights, trade secret laws, confidentiality procedures, and employee disclosure and invention assignment agreements to protect our intellectual property rights. As of December 31, 2024, we had 21 granted patents and 20 patents pending related to our platform and its technology. None of our issued patents expire before 2034.
Our platform is designed to be natively multilingual to facilitate collaboration and address challenges in multinational organizations. Appian Cloud meets the data residency requirements of our global customers by operating in 16 countries across 33 regions and 105 availability zones. In 2023, approximately 36% of our total revenue was generated from customers outside of the United States.
Our platform is designed to be natively multilingual to facilitate collaboration and address challenges in multinational organizations. Appian Cloud meets the data residency requirements of our global customers by operating in 16 countries across 36 regions and 114 availability zones. In 2024, 37% of our total revenue was generated from customers outside of the United States.
Led by Matt Calkins, one of our founders and our Chief Executive Officer, we have grown our business organically by employing a unified team to maximize the cohesion and simplicity of our platform and our company. As of December 31, 2023, we had a total global workforce of 2,243 full-time employees, 1,518 of which were based in the United States.
Led by Matt Calkins, Founder and Chief Executive Officer, we have grown our business organically by employing a unified team to maximize the cohesion and simplicity of our platform and our company. 6 As of December 31, 2024, we had a total global workforce of 2,033 employees, 1,339 of which were based in the United States.
The information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only. 9 Forward-Looking Statements This Annual Report on Form 10-K, including the sections entitled “Business,” “Risk Factors,” and “Management's Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements.
Gartner Content speaks as of its original publication date (and not as of the date of this 10-K), and the opinions expressed in the Gartner Content are subject to change without notice. 9 Forward-Looking Statements This Annual Report on Form 10-K, including the sections entitled “Business,” “Risk Factors,” and “Management's Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements.
GARTNER and Magic Quadrant are registered trademarks and service marks of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved. The Gartner content described herein, (the "Gartner Content") represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc.
GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and MAGIC QUADRANT is a registered trademark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved.
No single end customer accounted for more than 10% of our total revenue in 2023, 2022, or 2021. 7 Our Competition Our main competitors fall into three categories: (1) providers of custom software solutions that address, or are developed to address, some of the use cases that applications developed on our platform target; (2) providers of low-code development platforms; and (3) providers of one or more automation technologies, including business process management, case management, process mining, and robotic process automation.
Our Competition Our main competitors fall into four categories: (1) providers of custom software solutions that address, or are developed to address, some of the use cases that applications developed on our platform target; (2) providers of low-code development platforms; (3) providers of one or more automation technologies, including business process management, case management, process mining, and robotic process automation; and (4) potential customers using their own internal technology departments to develop, build, and modify their own proprietary systems.
Generally, the development of new applications results in the expansion of our product usage within an organization and a corresponding increase in our revenue due to subscription fees. Every additional application an organization creates on our platform increases the value of our platform for that organization because it further integrates people, processes, and data and facilitates knowledge sharing.
Every additional application an organization creates on our platform increases the value of our platform for that organization because it further integrates people, processes, and data and facilitates knowledge sharing.
We also believe our individual experiences, knowledge, and ways of working enable us to learn from one another and discover creative solutions. We sponsor a number of affinity groups, initiated by employees, that aim to build stronger internal and external networks and partnerships, create a positive lasting impact through social and educational outreach, and create development opportunities for future leaders.
We sponsor a number of affinity groups, initiated by employees, that aim to build stronger internal and external networks and partnerships, create a positive lasting impact through social and educational outreach, and create development opportunities for future leaders. Talent Acquisition and Development We have a robust talent acquisition program to attract, recruit, and retain new talent.
We feel this is validated by the fact Gartner ranked Appian #1 for the Business Workflow Automation with Integration Use Case in the 2023 Gartner® Critical Capabilities for Enterprise Low-Code Application Platforms, or LCAP, report as well as positioned as a Leader in the 2023 Gartner® Magic Quadrant for Enterprise LCAP.
We feel this is validated by the fact Gartner ranked Appian #1 for the use case of Complex Internal Applications in the 2024 Gartner ® Critical Capabilities for Enterprise Low-Code Application 8 Platforms (LCAP) as well as positioned Appian as a Leader in the 2024 Gartner Magic Quadrant™ for Enterprise LCAP. 1 Intellectual Property Our success depends in part upon our ability to protect our core technology and intellectual property.
Gartner, Critical Capabilities for Enterprise Low-Code Application Platforms, October 2023 Gartner, Magic Quadrant for Enterprise Low-Code Application Platforms, October 2023 Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation.
The information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only. 1 Gartner, Magic Quadrant for Enterprise Low-Code Application Platforms 16 October 2024, Oleksandr Matvitskyy, Kyle Davis, Akash Jain Gartner, Critical Capabilities for Enterprise Low-Code Application Platforms 21 October 2024, Akash Jain, Kyle Davis, Oleksandr Matvitskyy Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation.
We also provide resources to help our employees grow in their current roles and build new skills, including access to Appian University, a system that houses Appian's in-house learning and development solutions. Inclusion and Diversity We respect all people. We believe diversity of ideas and an inclusive environment are paramount to our continued success.
We utilize an extensive campus recruiting program, provide an employee referral program, and offer opportunities for internal transfers, as well as competitive compensation and benefits programs. We also provide resources to help our employees grow in their current roles and build new skills, including access to Appian University, a system that houses Appian's in-house learning and development solutions.
Our strategic partners work with organizations undergoing digital transformation projects, and when they recognize an opportunity for our platform, they often introduce us to potential customers. 5 Many of our customers begin by building a single application and grow to create dozens of applications on our platform, which implicitly increases their return on investment.
We grow our revenue by adding new customers, increasing the product usage of existing customers, and expanding product usage across new business processes and applications. Our strategic partners work with organizations undergoing digital transformation projects, and when they recognize an opportunity for our platform, they often introduce us to potential customers.
Item 1. Business. Overview Appian Corporation (together with its subsidiaries, “Appian,” “the Company,” “we,” or “our”) is a software company that automates business processes and operationalizes artificial intelligence (“AI”) with low-code design, providing rapid time to value for our customers.
Item 1. Business. Overview Appian Corporation (together with its subsidiaries, “Appian,” “the Company,” “we,” or “our”) is The Process Company. We deliver a software platform that helps organizations run better processes that reduce costs, improve customer experiences, and gain a strategic edge. Committed to client success, we serve many of the world’s largest companies across industries.
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We empower our customers to transform the way they work by using our platform to combine people, technologies, and data in end-to-end processes that can maximize our customers' resources and dramatically improve business results. We believe organizations across all industries face pressure to keep up with a rapid pace of technological innovation, particularly in AI.
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We believe processes define each organization. Processes are how they operate, deliver value, and interact with their customers. Nothing is more transformative for an organization than improving their processes. Appian has both the platform and the expertise to enable enterprise transformation. The Appian Platform Appian is a leading platform for process orchestration, automation, and intelligence.
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The past year has ushered in a whole new economy, in which AI promises to transform workflows to drive efficiency and innovation. As we enter 2024, the focus will shift from exploring these technologies to actively leveraging them to innovate with new products, services, and value creation for customers and employees alike.
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Our unified platform provides everything an organization needs to design, automate, and optimize critical processes. It enables continuous adaptation, allowing organizations to thrive in changing environments. Core Capabilities Appian provides capabilities to tackle any process challenge.
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We believe companies that can quickly incorporate AI's full potential into their business processes will lead the future AI economy. We are dedicated to helping our customers navigate this new AI economy and realize transformational change.
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Appian tightly integrates data fabric; robotic process automation, or RPA; intelligent document processing, or IDP; generative artificial intelligence, or generative AI; artificial intelligence agents, or AI agents; low-code design; application programming interfaces, or APIs; business rules; and process intelligence capabilities in a single platform.
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We see a human-centric future for AI, one of teamwork rather than replacement, where AI adds value to data and employees, and where all customers and businesses—not big tech—are the winners. We recognize AI is not a standalone technology. It is highly dependent on two foundational technologies: data and process.
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These capabilities are unified and scalable, meeting enterprise demands and easy to change as requirements evolve. • Process Orchestration: The Appian platform coordinates tasks between AI, automation, and humans to ensure processes run efficiently and intelligently. RPA enables customers to build bots with low-code to automate repetitive manual tasks.
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Data is the intellectual fuel for AI, empowering it to make smart, informed decisions. The more data AI gets, and the better that data is, the better the AI answers may be. Data was already among the most important assets for leading organizations; now, it’s worth more than ever.
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Appian AI agents extract data, process documents, and initiate processes at scale. API integration easily connects systems with low-code design tools and hundreds of prebuilt connections. • Data Fabric: Appian’s data fabric is an integrated data layer that unifies data across systems without requiring companies to migrate their data.
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Process is the necessary layer for customers to create a mixed autonomy, routing tasks between humans and AI automations. We believe customers will increasingly rely on AI to accelerate common tasks but must ensure humans maintain control and oversight of business processes. We offer leading expertise in all three areas.
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Appian empowers users to explore data in real-time, build reports, and get AI-powered insights for smarter decision-making. Our patented data fabric technology supports both analytical and transactional workloads, which allows users to build applications that create and update enterprise data. It also includes row-level security rules to enforce access controls at every level.
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We have been leveraging AI technologies for many years as part of our automation suite. We have a leading data fabric which powered billions of data fabric queries in 2023, and we offer innovative process platforms, supporting billions of transactions every day.
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Our data fabric functionality powers and secures our AI offering. • Process Intelligence: Process intelligence allows users to gain deep insights into process performance through Appian’s Process HQ. It also preps data for process mining with just a few clicks, even across multiple sources.
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We weave all three elements together in a single product that empowers our customers to achieve rapid value. 4 The Appian Platform The Appian Platform enables customers to easily design, automate, and optimize their mission-critical business processes, driving continuous innovation.
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Companies can use AI to monitor processes, identify issues, and get intelligent recommendations for optimization. • Artificial Intelligence: We believe the key to unlocking AI’s full potential is embedding it inside a business process. Process is where business happens. It’s where companies make decisions, save and spend money, serve customers, and scale business operations.
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Through Appian's unified platform, customers can swiftly develop new digital solutions using a low-code approach, creating applications and workflows tailored to their unique business requirements. We catalyze the AI-driven enterprise by combining AI, data, and process capabilities in a single platform. Our low-code design experience delivers solutions for customers quickly.
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When AI operates within processes, it gains purpose, governance, and accountability—all essential to delivering value from AI. Appian can embed AI into every process, which gives AI the context and actions it needs to accelerate outcomes for the enterprise. 4 Appian delivers six key benefits with our “AI in process” approach: 1. Process makes AI easy.
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It is unified, reduces training times and dependencies on additional tools, and is built for enterprise-grade applications requiring high reliability, security, and scalability. Appian’s architecture is based on our four critical capabilities: process automation, data fabric, total experience, and continuous improvement through process mining. Process Automation We are a long-time innovator in process automation.
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Deploying AI in isolated projects is complex and costly. By embedding AI within a process, enterprises can easily access valuable AI capabilities when and where they need them. 2. Process gives AI structure. AI is only as useful as the structure surrounding it. A process gives AI defined goals in a structured flow of work.
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Our process capabilities are crucial in orchestrating AI alongside humans and systems within business environments. Our business rules technology allows organizations to encode and enforce policies and routing decisions that reduce risk, while our native RPA and AI enable organizations to automate process steps to deliver greater efficiency and increase customer and employee satisfaction.
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AI can work alongside humans and automation tools, escalating issues so humans always maintain oversight and control. 3. Process gives AI data. AI is nothing without data. But most enterprises struggle to feed AI complete data from across systems, while still ensuring privacy and maintaining access privileges.
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We sell our platform as a unified set of automation technologies that accelerates customer implementation times and return on investment. Data Fabric Data is at the heart of AI's transformative power, and we excel in enabling customers to utilize data effectively.
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By integrating AI into processes, enterprises ensure AI receives quality, real-time data from all systems. Organizations can enforce privacy controls to prevent unauthorized access and optimize data governance to comply with regulations (such as GDPR, HIPAA, etc.). 4. Process makes AI safe. AI is powerful, but no one wants to give AI free reign over their enterprises.
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By leveraging our sophisticated data fabric, organizations can unify data across the enterprise into a single virtual data model, empower users to make informed decisions, and train AI models, transforming reservoirs of enterprise data into a source of powerful innovation.
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Processes provide crucial safety mechanisms, including human approval steps for high-risk actions and escalation paths to ensure AI errors don’t cause harm. Additionally, activity logs make auditing and compliance simple for organizations with strict regulatory requirements. 5. Process makes AI measurable. For many enterprises, AI is a black box, which can’t be measured for impact.
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This capability is pivotal in feeding AI algorithms and human workers with quality data and extracting meaningful insights that drive business decisions. In addition, the secure infrastructure of our data fabric architecture is designed to provide a safe environment for storing and handling sensitive information, ensuring confidential data remains protected.
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Appian processes track every AI action, allowing organizations to measure performance, identify bottlenecks, and optimize outcomes. 6. Process makes AI enterprise-grade. A process provides the necessary infrastructure to scale AI use. The right tooling puts AI to work with security certifications, enterprise scalability, and other capabilities such as process orchestration, automation, and intelligence.
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Total Experience Total experience is about creating superior experiences across desktop and mobile devices for every user, uniting customers and employees in a seamless workflow.
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Processes take AI from a collection of disconnected pilots to an enterprise-wide capability. Appian’s unified approach delivers all the capabilities leading organizations need to orchestrate their business processes in one place. It empowers enterprises to transform their processes and improve business outcomes.
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Our patented Self-Assembling Interface Layer, or SAIL, user experience architecture delivers the speed and flexibility to provide new experiences that capture our customers’ brands quickly and instantly work on the latest web browsers and mobile devices. Continuous Improvement Our integrated process mining and process analytics capabilities enable customers to measure and track their process performance accurately.
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Committed to Customer Success At Appian, we do more than deliver a platform; we are invested in our customers’ success. Our Customer Success team partners with enterprises every step of the way. From strategic guidance to hands-on support, we strive to ensure their process transformation delivers measurable, lasting value.
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Customers can gain a deeper understanding of their business operations and pinpoint areas for improvement. Using this data, customers can drive continuous process improvement and optimize their processes for maximum efficiency and effectiveness. These features provide customers with the necessary insights to make informed decisions and optimize their operations to meet the evolving needs of their business.
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The world’s most innovative organizations trust Appian to solve their critical process challenges, achieve operational excellence, and drive sustainable growth. With Appian, we believe businesses are equipped to thrive in a world where process is everything. Go-to-Market Strategy Our go-to-market strategy consists of both direct sales and sales through strategic partners. We sell our software almost exclusively as subscriptions.
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Go-to-Market Strategy Our go-to-market strategy consists of both direct sales and sales through strategic partners. We sell our software almost exclusively as subscriptions. We intend to grow our revenue by adding new customers, increasing the product usage of existing customers, and expanding product usage across new business processes and applications.
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Many of our customers begin by building a single application and grow to create dozens of applications on our platform, which implicitly increases their return on investment. Generally, the development of new applications results in the expansion of our product usage within an organization and a corresponding increase in our revenue due to subscription fees.
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Talent Acquisition and Development We have a robust talent acquisition program to attract, recruit, and retain new talent. We utilize an extensive campus recruiting program, provide an employee referral program, and offer opportunities for internal transfers, as well as competitive compensation and benefits programs.
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Excellence and Intensity We have two foundational values, the most important qualities that an Appian person must have: Excellence and Intensity. Every hiring decision, every promotion, and every public commendation is based on these values. Excellence means we have high standards, and we live up to them. Everything Appian does is done well. Intensity means we’re all-in. We’re ambitious.
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("Gartner"), and are not representations of fact. Gartner Content speaks as of its original publication date (and not as of the date of this 10K) and the opinions expressed in the Gartner Content are subject to change without notice. Intellectual Property Our success depends in part upon our ability to protect our core technology and intellectual property.
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We bring our full self to work and our full commitment. We care about the outcome. We take the results of our work personally. We assert ourselves. We hold people to account, even if it’s uncomfortable, because we take pride in our team’s work. Raising the bar is part of being a leader at Appian. Belonging We respect all people.
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We believe diverse ideas and an inclusive environment are paramount to our continued success. We also believe our individual experiences and knowledge enable us to learn from one another and discover creative solutions.
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Sales and Marketing Our sales and marketing teams work together closely to market and sell our software platform and services. We sell to enterprises across a range of industries, including government, financial services, insurance, and life sciences.
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Our sales organization includes enterprise account executives, solution consultants, and customer success representatives and is supported by a robust partner ecosystem of global systems integrators, technology partners, and resellers. We are dedicated to the success of Appian customers, investing in robust post-sales customer success initiatives to ensure adoption, satisfaction, and expanded use over time.
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To drive awareness and adoption of our platform, we execute a comprehensive marketing strategy that includes digital marketing, customer advocacy programs, industry analyst and press relations, thought leadership initiatives, digital events, industry conferences, tradeshows, and regional events.
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Our flagship annual event, Appian World, brings together customers, partners, and industry leaders to showcase innovations, share best practices, and highlight the business impact of Appian. Additionally, we engage with our developer community through our Appian Community as well as hackathons, user groups, and technical education programs designed to accelerate application development and foster platform expertise.
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No single end customer accounted for more than 10% of our total revenue in 2024, 2023, or 2022.
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The Gartner content described herein (the “Gartner Content”) represents research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and is not a representation of fact.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

116 edited+13 added−23 removed249 unchanged
Biggest changeIn July 2023, the new EU-US Data Privacy Framework (“EU-US DPF”), the replacement for the invalidated EU-US Privacy Shield, came into force, allowing U.S. businesses to become certified as adequate for the purposes of data transfers from the EEA, no longer always necessitating the signature of “Standard Contractual Clauses.” The EU-US DPF, however, still requires parties relying upon that legal mechanism to comply with obligations similar to those required under the Standard Contractual Clauses such as conducting transfer impact assessments to determine whether additional security measures are necessary to protect the at-issue personal data.
Biggest changeWe are currently certified under the EU-US Data Privacy Framework (“EU-US DPF”). The EU-US DPF requires parties relying upon that legal mechanism to comply with obligations similar to those required under GDPR, such as conducting transfer impact assessments to determine whether additional security measures are necessary to protect the at-issue personal data.
Any of the foregoing risks may be heightened by our use of AI, and the use of AI may enhance the effectiveness of any of the foregoing threat actors or their attempts to gain unauthorized access to our platform or our or our customers’ confidential, proprietary, or personal information.
Any of the foregoing risks may be heightened by our use of AI, and the use of AI may enhance the effectiveness of any of the foregoing threat actors or their attempts to gain unauthorized access to our platform or our customers’ confidential, proprietary, or personal information.
Any actual or perceived breach of our security measures or failure to adequately protect our customers’ or our confidential, proprietary, or personal information could negatively affect our ability to attract new customers, cause existing customers to elect to not renew their subscriptions to our software, or result in reputational damage, any of which could adversely affect our operating results.
Any actual or perceived breach of our security measures or failure to adequately protect our customers’ or our confidential, proprietary, or personal information could negatively affect our ability to attract new customers, cause existing customers to elect not to renew their subscriptions to our software, or result in reputational damage, any of which could adversely affect our operating results.
We may be subjected to indemnity demands, regulatory proceedings, audits, penalties, or litigation based on our customers’ misuse of our platform with respect to such sensitive information and defending against such litigation and otherwise addressing such matters may be expensive, cause distraction, and may result in us incurring liability, all of which may affect our operating results.
We may be subjected to indemnity demands, regulatory proceedings, audits, penalties, or litigation based on our customers’ misuse of our platform with respect to such sensitive information. Defending against such litigation and otherwise addressing such matters may be expensive, cause distraction, and may result in us incurring liability, all of which may affect our operating results.
In addition, new laws and regulations, or the interpretation of existing laws and regulations, in any of the jurisdictions we operate in may affect our ability to leverage AI in any of our products and services, and may expose us to government enforcement or civil suits.
In addition, new laws and regulations, or the interpretation of existing laws and regulations, in any of the jurisdictions we operate may affect our ability to leverage AI in any of our products and services and may expose us to government enforcement or civil suits.
Customers of our cloud offering need to be able to access our platform at any time, without interruption or degradation of performance, and we provide them with service level commitments with respect to uptime. AWS runs its own platform we access, and we are, therefore, vulnerable to service interruptions at AWS.
Customers of our cloud offering need to be able to access our platform at any time, without interruption or degradation of performance, and we provide them with service level commitments with respect to uptime. AWS runs its own platform we access; therefore, we are vulnerable to service interruptions at AWS.
Acquisitions involve many risks, including the following: • An acquisition may negatively affect our financial results because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; • We may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel, or operations of any company we acquire, particularly if key personnel of the acquired company decide not to work for us; • An acquisition may disrupt our ongoing business, divert resources, increase our expenses, and distract our management; • An acquisition may result in a delay or reduction of customer purchases for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company; • We may encounter difficulties in successfully selling, or may be unable to successfully sell, any acquired solutions; 28 • An acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions; • Our use of cash to pay for an acquisition would limit other potential uses for our cash; and • If we incur debt to fund such acquisition, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants.
Acquisitions involve many risks, including the following: • An acquisition may negatively affect our financial results because it may require us to incur charges or assume substantial debt or other liabilities, cause adverse tax consequences or unfavorable accounting treatment, expose us to claims and disputes by third parties, including intellectual property claims and disputes, or not generate sufficient financial return to offset additional costs and expenses related to the acquisition; • We may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel, or operations of any company we acquire, particularly if key personnel of the acquired company decide not to work for us; • An acquisition may disrupt our ongoing business, divert resources, increase our expenses, and distract our management; 28 • An acquisition may result in a delay or reduction of customer purchases for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company; • We may encounter difficulties in successfully selling, or may be unable to successfully sell, any acquired solutions; • An acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions; • Our use of cash to pay for an acquisition would limit other potential uses for our cash; and • If we incur debt to fund such acquisition, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants.
In addition, even if the overall economy is robust, we cannot provide assurances that the market for services such as ours will experience growth or that we will experience growth. Our stock price has been volatile and may be volatile in the future.
In addition, even if the overall economy is robust, we cannot provide assurances the market for services such as ours will experience growth or that we will experience growth. Our stock price has been volatile and may be volatile in the future.
Our current international operations and future initiatives will involve a variety of risks, including: • Changes in a specific country’s or region’s political or economic conditions; • Unexpected changes in regulatory requirements, taxes, or trade laws; • More stringent regulations relating to data security and the unauthorized use of, or access to, commercial and personal information, particularly in the European Union; • Differing labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • Challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs; • Difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • Increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; • Currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we choose to do so in the future; • Limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • Laws and business practices favoring local competitors or general preferences for local vendors; • Limited or insufficient levels of protection of our corporate proprietary information and assets, including intellectual property and customer information and records; • Political instability or terrorist activities; • Exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Our current international operations and future initiatives will involve a variety of risks, including: • Changes in a specific country’s or region’s political or economic conditions; • Unexpected changes in regulatory requirements, taxes, tariffs, or trade laws; • More stringent regulations relating to data security and the unauthorized use of, or access to, commercial and personal information, particularly in the European Union; • Differing labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • Challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs; • Difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • Increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; • Currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we choose to do so in the future; • Limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • Laws and business practices favoring local competitors or general preferences for local vendors; • Limited or insufficient levels of protection of our corporate proprietary information and assets, including intellectual property and customer information and records; • Political instability or terrorist activities; • Exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Similarly, if cyber incidents such as phishing 15 attacks, viruses, denial of service attacks, supply chain attacks, malware installation, ransomware attacks, server malfunction, software or hardware failures, loss of data or other computer assets, adware, or other similar issues impair the integrity or availability of our systems by affecting our data or reducing access to or shutting down one or more of our computing systems or our IT network, we may be subject to negative treatment by our customers, our business partners, the press, and the public at large.
Similarly, if cyber incidents such as phishing attacks, viruses, denial of service attacks, supply chain attacks, malware installation, ransomware attacks, server malfunction, software or hardware failures, loss of data or other computer assets, adware, or other similar issues impair the integrity or availability of our systems by affecting our data or reducing access to or shutting down one or more of our computing systems or our IT network, we may be subject to negative treatment by our customers, our business partners, the press, and the public at large.
To the extent that we do not have sufficient rights to use any data or other material or content produced by generative AI in our business, or if we experience cybersecurity incidents in connection with our use of AI, it could adversely affect our reputation and expose us to legal liability or regulatory risk, including with respect to third-party intellectual property, privacy, publicity, contractual or other rights.
To the extent we do not have sufficient rights to use any data or other material or content produced by generative AI in our business, or if we experience cybersecurity incidents in connection with our use of AI, it could adversely affect our reputation and expose us to legal liability or regulatory risk, including with respect to third-party intellectual property, privacy, publicity, contractual, or other rights.
In addition to potential liability, if we experience interruptions in the availability of our cloud offering, our reputation could be adversely affected, and we could lose customers. We also provide frequent incremental releases of software updates and functional enhancements to our platform. Despite extensive pre-release testing, such new versions occasionally contain undetected errors when first 23 introduced or released.
In addition to potential liability, if we experience interruptions in the availability of our cloud offering, our reputation could be adversely affected, and we could lose customers. We also provide frequent incremental releases of software updates and functional enhancements to our platform. Despite extensive pre-release testing, such new versions occasionally contain undetected errors when first introduced or released.
If macroeconomic conditions deteriorate or are characterized by uncertainty or volatility, 38 customers may curtail or freeze spending on software in general and for software such as ours specifically, which could have an adverse impact on our business, financial condition, and operating results. Furthermore, we cannot predict the timing, strength, or duration of any economic slowdown or recovery.
If macroeconomic conditions deteriorate or are characterized by uncertainty or volatility, customers may curtail or freeze spending on software in general and for software such as ours specifically, which could have an adverse impact on our business, financial condition, and operating results. Furthermore, we cannot predict the timing, strength, or duration of any economic slowdown or recovery.
As a result of certain provisions in the Tax Cuts and Jobs Act of 2017, or the TCJA, as modified by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, federal NOLs generated in tax years beginning after December 31, 2017 may be carried forward indefinitely but, in the case of tax years beginning after 2020, may only be used to offset 80% of our taxable income annually.
As a result of certain 35 provisions in the Tax Cuts and Jobs Act of 2017, or the TCJA, as modified by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, federal NOLs generated in tax years beginning after December 31, 2017 may be carried forward indefinitely but, in the case of tax years beginning after 2020, may only be used to offset 80% of our taxable income annually.
Any actual or perceived unauthorized access to, or security incidents affecting, our platform or the information stored on or transmitted by our platform, including through unauthorized and/or malicious activity by one of our employees, could result in the loss of information, litigation, regulatory investigations, penalties, indemnity obligations and other costs, expenses, and liabilities, which could exceed our existing insurance coverage and could result in a substantial financial loss.
Any actual or perceived unauthorized access to, or security incidents affecting, our platform or the information stored on or transmitted by our platform, 15 including through unauthorized and/or malicious activity by one of our employees, could result in the loss of information, litigation, regulatory investigations, penalties, indemnity obligations and other costs, expenses, and liabilities, which could exceed our existing insurance coverage and could result in a substantial financial loss.
Bank failures, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, and the FDIC was appointed receiver of SVB.
Bank failures, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. For example, on March 10, 2023, Silicon Valley Bank, or SVB, was closed by the California Department of Financial Protection and Innovation, and the FDIC was appointed receiver.
There can be no assurance our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. government or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions, or by acquisition in the event of a failure or liquidity crisis.
There can be no assurance our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. government or that any bank or 26 financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions, or by acquisition in the event of a failure or liquidity crisis.
In addition, while Pegasystems has made public assurances that it could raise the funds necessary to pay the judgment, it does not currently have the cash necessary to satisfy the full amount of the final judgment, and we would be at risk of having to collect a substantial judgment as a creditor if Pegasystems is unable to raise the necessary funds when and if the final judgment becomes enforceable.
In addition, while Pegasystems has made public assurances it could raise the funds necessary to pay the judgment, it does not currently have the cash necessary to satisfy the full amount of the final judgment, and we would be at risk of having to collect a substantial judgment as a creditor if Pegasystems is unable to raise the necessary funds when and if the final judgment becomes enforceable.
Our cloud platform holds various security certifications from government agencies and industry organizations, including the Federal Risk and Authorization Management Program, or FedRAMP, compliance and HITRUST certification. It also meets the ISO 27001, Payment Card Industry Data Security Standard, or PCI DSS, and the various United States Health Insurance Portability and Accountability Act, or HIPAA, standards.
Our cloud platform holds various security certifications from government agencies and industry organizations, including the 30 Federal Risk and Authorization Management Program, or FedRAMP, compliance and HITRUST certification. It also meets the ISO 27001, Payment Card Industry Data Security Standard, or PCI DSS, and the various United States Health Insurance Portability and Accountability Act, or HIPAA, standards.
We may incur significant losses in the future for a number of reasons, including the other risks described in this Annual Report on Form 10-K, and unforeseen expenses, difficulties, complications and delays, and other unknown events. If we are unable to achieve and sustain profitability, our stock price may significantly decrease.
We may incur significant losses in the future for a number of reasons, including the other risks described in this Annual Report on Form 10-K, unforeseen expenses, difficulties, complications or delays, and other unknown events. If we are unable to achieve and sustain profitability, our stock price may significantly decrease.
In addition, absent appropriate safeguards or other circumstances, the GDPR generally restricts the transfer of personal data to non-adequate countries and/or organizations outside of the European Economic Area, or EEA, such as India, Australia, and non-certified organizations in the United States, which the European Commission does not consider to provide an adequate level of data privacy and security.
In addition, absent appropriate safeguards or other circumstances, the GDPR generally restricts the transfer of personal data to non-adequate countries and/or organizations outside of the European Economic Area, or EEA, such as India, Australia, Mexico, and non-certified organizations in the United States, which the European Commission does not consider to provide an adequate level of data privacy and security.
Our revenue and results of operations have historically varied from period to period, and we expect they will continue to do so as a result of a number of factors, many of which are outside of our control, including: • The level of demand for our platform and our professional services; • The rate of renewal of subscriptions with, and extent of sales of additional subscriptions to, existing customers; • Large customers failing to renew their subscriptions; • The size, timing, and terms of our subscription agreements with existing and new customers, including revenue recognition issues; • Variations in the revenue mix of our professional services and growth rates of our cloud subscription and professional services offerings, including the timing of subscriptions and sales offerings that include an on-premises software element for which the revenue allocated to that deliverable is recognized upfront; • The timing and growth of our business, in particular through our hiring of new employees and international expansion; • The timing of our adoption of new or revised accounting pronouncements applicable to public companies and the impact on our results of operations; • The introduction of new products and product enhancements by existing competitors or new entrants into our market and changes in pricing for solutions offered by us or our competitors; 19 • Network outages, security breaches, technical difficulties, or interruptions with our platform; • Changes in the growth rate of the markets in which we compete; • The mix of subscriptions to our platform and professional services sold during a period; • Customers delaying purchasing decisions in anticipation of new developments or enhancements by us or our competitors or otherwise; • Changes in customers’ budgets; • Lapses of federal appropriations in the United States for our government customers; • Seasonal variations related to sales and marketing and other activities such as expenses related to our customers; • Our ability to increase, retain, and incentivize the strategic partners that market and sell our platform; • Our ability to control costs, including our operating expenses; • Our ability to hire, train, and maintain our direct sales team; • Unforeseen litigation and intellectual property infringement; • Fluctuations in our effective tax rate; and • General economic and political conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers operate.
Our revenue and results of operations have historically varied from period to period, and we expect they will continue to do so as a result of a number of factors, many of which are outside of our control, including: • The level of demand for our platform and our professional services; • The rate of renewal of subscriptions with, and extent of sales of additional subscriptions to, existing customers; • Large customers failing to renew their subscriptions; • The size, timing, and terms of our subscription agreements with existing and new customers, including revenue recognition issues; • Variations in the revenue mix of our professional services and growth rates of our cloud subscription and professional services offerings, as well as the timing of subscriptions and sales offerings that include an on-premises software element for which the revenue allocated to that deliverable is recognized upfront; • The timing and growth of our business, in particular through our hiring of new employees and international expansion; • The timing of our adoption of new or revised accounting pronouncements applicable to public companies and the impact on our results of operations; • The introduction of new products and product enhancements by existing competitors or new entrants into our market and changes in pricing for solutions offered by us or our competitors; • Network outages, security breaches, technical difficulties, or interruptions with our platform; • Changes in the growth rate of the markets in which we compete; • The mix of subscriptions to our platform and professional services sold during a period; 19 • Customers delaying purchasing decisions in anticipation of new developments or enhancements by us or our competitors or otherwise; • Changes in customers’ budgets; • Changes in the administration and their priorities in terms of public sector budgets and funding; • Lapses of federal appropriations in the United States for our government customers; • Seasonal variations related to sales and marketing and other activities such as expenses related to our customers; • Our ability to increase, retain, and incentivize the strategic partners that market and sell our platform; • Our ability to control costs, including our operating expenses; • Our ability to hire, train, and maintain our direct sales team; • Unforeseen litigation and intellectual property infringement; • Fluctuations in our effective tax rate; and • General economic and political conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers operate.
In the U.S., a number of civil lawsuits have been initiated related to the foregoing and other concerns, any one of which may, amongst other things, require us to limit the ways in which our AI tools and technologies are trained, refined or implemented, and may affect our ability to develop products or services using or incorporating AI.
In the U.S., a number of civil lawsuits have been initiated related to the foregoing and other concerns, any of which may, amongst other things, require us to limit the ways in which AI tools and technologies are trained, refined or implemented, and may affect our ability to develop products or services using or incorporating AI.
Even if we are successful, we cannot be sure these relationships will result in increased customer usage of our platform or increased revenue. Because our long-term growth strategy involves further expansion of our sales to customers outside the United States, our business will be susceptible to risks associated with international operations.
Even if we are successful, we cannot be sure these relationships will result in increased customer usage of our platform or increased revenue. 24 Because our long-term growth strategy involves further expansion of our sales to customers outside the United States, our business will be susceptible to risks associated with international operations.
The increasing use of generative AI by third parties may also negatively impact the integrity of our own proprietary data, data sets and content databases if and to the extent that any invalid, inaccurate, biased or otherwise flawed data produced by any such AI systems may inadvertently be incorporated in our proprietary data, data sets or content databases, negatively affecting our reputation, and the value of our proprietary data, data sets or content databases.
The increasing use of generative AI by third parties may also negatively impact the integrity of our own proprietary data, data sets, and content databases if and to the extent any invalid, inaccurate, biased, or otherwise flawed data produced by any such AI systems may inadvertently be incorporated in our proprietary data, data sets, or content databases, negatively affecting our reputation, and the value of our proprietary data, data sets, or content databases.
If we invest substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner, our business and operating results will suffer. 25 We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.
If we invest substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner, our business and operating results will suffer. We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.
Risks Related to Our Class A Common Stock The dual class structure of our common stock and the existing ownership of capital stock by Matt Calkins, our founder and Chief Executive Officer, has the effect of concentrating voting control with Mr. Calkins for the foreseeable future, which will limit the ability of others to influence corporate matters.
Risks Related to Our Class A Common Stock The dual class structure of our common stock and the existing ownership of capital stock by Matt Calkins, our founder and Chief Executive Officer, has the effect of concentrating voting control with 36 Mr. Calkins for the foreseeable future, which will limit the ability of others to influence corporate matters.
We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new features or enhance our platform, improve our operating infrastructure, or acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds.
We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new features or enhance our platform, improve our 25 operating infrastructure, or acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds.
We may not be able to remediate any future material weaknesses or to complete our evaluation, testing, and any required remediation in a timely fashion. 36 Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations.
We may not be able to remediate any future material weaknesses or to complete our evaluation, testing, and any required remediation in a timely fashion. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations.
Any of the foregoing provisions could limit the price investors might be willing to pay in the future for shares of our Class A common stock, and they could deter potential acquirers of our company, thereby reducing the likelihood a stockholder would receive a premium for its shares of our Class A common stock in an acquisition.
Any of the foregoing provisions could limit the price investors might be willing to pay in the future for shares of our Class A common stock, and they could deter potential acquirers of our company, 37 thereby reducing the likelihood a stockholder would receive a premium for its shares of our Class A common stock in an acquisition.
We also expect our costs to increase in future periods, which could negatively affect our future operating results if our revenue does not increase commensurately. For example, we intend to continue to expend significant funds to expand our sales and marketing operations, develop and enhance our platform, and expand into new markets.
We also expect our costs to increase in future periods, which could negatively affect our future operating results if our revenue does not increase commensurately. For example, we intend to continue to expend funds to expand our sales and marketing operations, develop and enhance our platform, and expand into new markets.
The United States and other countries maintain and administer export and import laws and regulations, including various economic and trade sanctions such as those administered by the Office of Foreign Assets Control (“OFAC”), which apply to our business. We are required to comply with these laws and regulations.
The United States and other countries maintain and administer export and import laws and regulations, including various economic and trade sanctions such as those administered by the Office of Foreign Assets Control, which apply to our business. We are required to comply with these laws and regulations.
Any such shipment could have negative consequences, including government investigations, penalties, and reputational harm. 32 Risks Related to Our Intellectual Property Any failure to protect our proprietary technology and intellectual property rights could substantially harm our business and operating results. Our success and ability to compete depend in part on our ability to protect our proprietary technology and intellectual property.
Any such shipment could have negative consequences, including government investigations, penalties, and reputational harm. Risks Related to Our Intellectual Property Any failure to protect our proprietary technology and intellectual property rights could substantially harm our business and operating results. Our success and ability to compete depend in part on our ability to protect our proprietary technology and intellectual property.
While we have security measures in place designed to protect customer information and prevent data loss and other security breaches, there can be no assurance these measures will be effective in protecting against malicious unauthorized access to our platform or our customers’ information.
While we have security measures in place designed to protect customer information and prevent data loss and other security breaches, there can be no assurance these measures will be completely effective in protecting against malicious unauthorized access to our platform or our customers’ information.
Moreover, as an issuer of securities, we also are subject to the accounting and internal controls provisions of the FCPA. These provisions require us to maintain accurate books and records and a system of internal controls sufficient to detect and prevent corrupt conduct.
Moreover, as an issuer of securities, we also are subject to the accounting and internal controls provisions of the FCPA. These provisions require us to maintain accurate books and records and a system of internal controls sufficient to detect 31 and prevent corrupt conduct.
In addition, we have in the past, and may in the future, be subject to claims that our employees, contractors, or we ourselves have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of our competitors or other parties.
In addition, we have in the past, and may in the future, be subject to claims that our employees, contractors, or we 33 ourselves have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of our competitors or other parties.
Third-party providers of applications and application programming interfaces, or APIs, may change the features of their applications and platforms, restrict our access to their applications and platforms, or alter the 27 terms governing use of their applications and APIs and access to those applications and platforms in an adverse manner.
Third-party providers of applications and application programming interfaces, or APIs, may change the features of their applications and platforms, restrict our access to their applications and platforms, or alter the terms governing use of their applications and APIs and access to those applications and platforms in an adverse manner.
By the terms of certain open source licenses, we could be required to release the source code of our software and to make our software available under open source licenses, if we combine or distribute our software with open source software in a certain manner.
By the terms of certain open source licenses, we could be required to release the source code of our 34 software and to make our software available under open source licenses, if we combine or distribute our software with open source software in a certain manner.
If that occurs, our customers may delay or withhold payment to us, elect not to renew, or make service credit claims, warranty claims, or other claims against us, and we could lose future sales.
If that occurs, our customers may delay or 23 withhold payment to us, elect not to renew, or make service credit claims, warranty claims, or other claims against us, and we could lose future sales.
Selling subscriptions to these entities can be highly competitive, expensive, and time-consuming, often requiring significant 16 upfront time and expense without any assurance we will successfully complete a sale.
Selling subscriptions to these entities can be highly competitive, expensive, and time-consuming, often requiring significant upfront time and expense without any assurance we will successfully complete a sale.
Section 382 of the Internal Revenue Code imposes limitations on a company’s ability to use NOLs if a company experiences a more-than-50-percent ownership change over a three-year testing period. Based upon our analysis as of December 31, 2023, we have determined we do not expect these limitations to impair our ability to use our NOLs prior to expiration.
Section 382 of the Internal Revenue Code imposes limitations on a company’s ability to use NOLs if a company experiences a more-than-50-percent ownership change over a three-year testing period. Based upon our analysis as of December 31, 2024, we have determined we do not expect these limitations to impair our ability to use our NOLs prior to expiration.
Our efforts to grow our business may be more costly than we expect, and we may not be able to increase our revenue enough to offset our higher operating expenses.
Our efforts to 17 grow our business may be more costly than we expect, and we may not be able to increase our revenue enough to offset our higher operating expenses.
As a result, our operating results or revenue growth rates could suffer due to: • Any decline or lower than expected growth in demand for our platform; • The failure of our platform to achieve continued market acceptance; • The market for low-code solutions not continuing to grow or growing more slowly than we expect; • The introduction of products and technologies (including AI technologies) that serve as a replacement or substitute for, or represent an improvement over, our platform; • Technological innovations or new standards that our platform does not address; • Sensitivity to current or future prices offered by us or competing solutions; • The inability to further penetrate our existing industry verticals or expand our customer base; and • Our inability to release enhanced versions of our platform on a timely basis.
As a result, our operating results or revenue growth rates could suffer due to: • Any decline or lower than expected growth in demand for our platform; • The failure of our platform to achieve continued market acceptance; • The market for process automation solutions not continuing to grow or growing more slowly than we expect; • The introduction of products and technologies (including AI technologies) that serve as a replacement or substitute for, or represent an improvement over, our platform; • Technological innovations or new standards that our platform does not address; • Sensitivity to current or future prices offered by us or competing solutions; • The inability to further penetrate our existing industry verticals or expand our customer base; and • Our inability to release enhanced versions of our platform on a timely basis.
The emerging technologies described as AI, which include machine learning, application of large language models, generative AI, machine learning models, and similar means of algorithm self-generation and other AI tools have the ability to affect the market for our software by directing what are now human-orchestrated processes into machine-orchestrated processes.
The emerging technologies described as AI, which include machine learning, application of large language models, generative AI, and similar means of algorithm self-generation have the ability to affect the market for our software by directing what are now human-orchestrated processes into machine-orchestrated processes.
Failure to effectively manage our growth could result in difficulty or delays in deploying our platform to customers, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new features, or other operational difficulties. Any of these difficulties could adversely impact our business performance and results of operations.
Failure to effectively manage our growth could result in difficulty or delays in deploying our platform to customers, decreased efficiency, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new features, or other operational difficulties. Any of these difficulties could adversely impact our business performance and results of operations.
Our business results may vary significantly from such guidance or that consensus due to a number of factors, many of which are outside of our control, including due to the global economic uncertainty and financial market conditions which could adversely affect our operations and operating results.
Our business results may vary significantly from such guidance or consensus due to a number of factors, many of which are outside of our control, including due to global economic uncertainty and financial market conditions which could adversely affect our operations and operating results.
Factors that may affect the market price of our Class A common stock and our ability to raise capital through the sale of additional equity securities include: • Actual or anticipated fluctuations in our financial condition and operating results; • Variance in our financial performance from expectations of securities analysts; • Changes in the prices of subscriptions to our platform; • Changes in our projected operating and financial results; • Changes in laws or regulations applicable to our platform; • Announcements by us or our competitors of significant business developments, acquisitions, or new offerings; • Our involvement in any litigation; • Our sale of our Class A common stock or other securities in the future; • Changes in senior management or key personnel; • The trading volume of our Class A common stock; • Trading activity by any of our four large stockholders who collectively owned approximately 37% of our publicly traded Class A common stock as of December 31, 2023; • Changes in the anticipated future size and growth rate of our market; and • General economic, regulatory, and market conditions.
Factors that may affect the market price of our Class A common stock and our ability to raise capital through the sale of additional equity securities include: • Actual or anticipated fluctuations in our financial condition and operating results; • Variance in our financial performance from expectations of securities analysts; 38 • Changes in the prices of subscriptions to our platform; • Changes in our projected operating and financial results; • Changes in laws or regulations applicable to our platform; • Announcements by us or our competitors of significant business developments, acquisitions, or new offerings; • Our involvement in any litigation; • Our sale of our Class A common stock or other securities in the future; • Changes in senior management or key personnel; • The trading volume of our Class A common stock; • Trading activity by any of our four large stockholders who collectively owned approximately 50% of our publicly traded Class A common stock as of December 31, 2024; • Changes in the anticipated future size and growth rate of our market; and • General economic, regulatory, and market conditions.
Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance. We regularly maintain domestic cash deposits in banks insured by the Federal Deposit Insurance Corporation (the “FDIC”) that exceed the FDIC insurance limits.
Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance. We regularly maintain domestic cash deposits in banks insured by the Federal Deposit Insurance Corporation, or the FDIC, that exceed the FDIC insurance limits.
Given the greater number of votes per share attributed to our Class B common stock, our Class B stockholders collectively beneficially owned shares representing approximately 88% of the voting power of our outstanding capital stock as of December 31, 2023. Further, Mr.
Given the greater number of votes per share attributed to our Class B common stock, our Class B stockholders collectively beneficially owned shares representing approximately 88% of the voting power of our outstanding capital stock as of December 31, 2024. Further, Mr.
Since shares of our Class A common stock were sold in our initial public offering, or IPO, in May 2017 at a price of $12.00 per share, our stock price has ranged from an intraday low of $14.60 to an intraday high of $260.00 through February 12, 2024.
Since shares of our Class A common stock were sold in our initial public offering, or IPO, in May 2017 at a price of $12.00 per share, our stock price has ranged from an intraday low of $14.60 to an intraday high of $260.00 through February 17, 2025.
The markets for low-code platforms, business process management, case management software, and custom software are highly competitive, rapidly evolving, and have relatively low barriers to entry.
The markets for process automation platforms, business process management, case management software, and custom software are highly competitive, rapidly evolving, and have relatively low barriers to entry.
If our platform does not achieve widespread adoption or there is a reduction in demand for low-code solutions caused by these factors, it could result in reduced customer purchases, reduced renewal rates, and decreased revenue, any of which will adversely affect our business, operating results, and financial condition. We currently face significant competition.
If our platform does not achieve widespread adoption or there is a reduction in demand for process automation solutions caused by these factors, it could result in reduced customer purchases, reduced renewal rates, and decreased revenue, any of which will adversely affect our business, operating results, and financial condition. 14 We currently face significant competition.
In addition, if our software does not meet the standards of new or existing regulations, we may be in breach of our contracts with our customers, allowing them to terminate their agreements.
In addition, if our software or personnel do not meet the standards of new or existing regulations, we may be in breach of our contracts with our customers, allowing them to terminate their agreements.
A judge entered a final judgment on that verdict on September 15, 2022 and further granted us $23.6 million in attorney’s fees as well as statutory post-judgment interest at an annual rate of 6%, or approximately $122.0 million per year. Pegasystems has appealed the final judgment to the Virginia Court of Appeals, and the appeal is pending.
A judge entered a final judgment on that verdict on September 15, 2022 and further granted us $23.6 million in attorney’s fees as well as statutory post-judgment interest at an annual rate of 6%, or approximately $122.0 million per year. On September 15, 2022, Pegasystems filed a notice of appeal to the Court of Appeals of Virginia.
Calkins, our founder and Chief Executive Officer, together with his affiliates, collectively beneficially owned shares representing approximately 81% of the voting power of our outstanding capital stock as of December 31, 2023. Consequently, Mr.
Calkins, our founder and Chief Executive Officer, together with his affiliates, collectively beneficially owned shares representing approximately 77% of the voting power of our outstanding capital stock as of December 31, 2024. Consequently, Mr.
Any expansion in our addressable market depends on a number of factors, including businesses continuing to desire to differentiate themselves through software-enabled digital transformation, increasing their reliance on low-code solutions, changes in the competitive landscape, technological changes, including due to advancements in AI, budgetary constraints of our customers, and changes in economic conditions.
Any expansion in our addressable market depends on a number of factors, including businesses continuing to desire to differentiate themselves through software-enabled process automation, increasing their reliance on process automation solutions, changes in the competitive landscape, technological changes, including due to advancements in AI, budgetary constraints of our customers, and changes in economic conditions.
As of December 31, 2023, we had 16 issued patents and nine pending patent applications related to our platform and its technology. We have registered the “Appian” name and logo in the United States and certain other countries. We have registrations and/or pending applications for additional marks in the United States.
As of December 31, 2024, we had 21 issued patents and 20 pending patent applications related to our platform and its technology. We have registered the “Appian” name and logo in the United States and certain other countries. We have registrations and/or pending applications for additional marks in the United States.
For example, during the years ended December 31, 2023, 2022, and 2021, revenue from U.S. federal government agencies represented 21.3%, 19.2%, and 19.6% of our total revenue, respectively, and the top three U.S. federal government customers generated 4.2%, 4.5%, and 5.6% of our total revenue for the years ended December 31, 2023, 2022, and 2021, respectively.
For example, during the years ended December 31, 2024, 2023, and 2022, revenue from U.S. federal government agencies represented 23.9%, 21.3%, and 19.2% of our total revenue, respectively, and the top three U.S. federal government customers generated 4.0%, 4.2%, and 4.5% of our total revenue for the years ended December 31, 2024, 2023, and 2022, respectively.
We have obtained a substantial judgment against our competitor, Pegasystems, for willful and malicious trade secret misappropriation, and elements of our ability to obtain payment with respect to that judgment are subject to risk.
We are seeking to reinstate a substantial judgment against our competitor, Pegasystems, for willful and malicious trade secret misappropriation, and elements of our ability to reinstate and ultimately obtain payment with respect to that judgment are subject to risk.
A component of our growth strategy involves the further expansion of our operations and customer base internationally. In 2023, 2022, and 2021, revenue generated from customers outside the United States was 35.8%, 33.5%, and 34.0%, respectively, of our total revenue.
A component of our growth strategy involves the further expansion of our operations and customer base internationally. In 2024, 2023, and 2022, revenue generated from customers outside the United States was 36.6%, 35.8%, and 33.5%, respectively, of our total revenue.
Bribery Act, and other similar statutory requirements prohibiting bribery and corruption in the jurisdictions in which we operate. We have experienced losses in the past, and we may not achieve or sustain profitability in the future. We generated net losses of $111.4 million, $150.9 million, and $88.6 million in 2023, 2022, and 2021, respectively.
Bribery Act, and other similar statutory requirements prohibiting bribery and corruption in the jurisdictions in which we operate. We have experienced losses in the past, and we may not achieve or sustain profitability in the future. We generated GAAP net losses of $92.3 million, $111.4 million, and $150.9 million in 2024, 2023, and 2022, respectively.
We have focused on scaling our operations and growing our headcount in line with our growth plan and size of our customer base, which we have significantly increased over the last several years.
We have focused on scaling our operations and headcount to ensure they remain in line with our growth plan and the size of our customer base, which we have significantly increased over the last several years.
We derive, and expect to increasingly derive in the future, a substantial portion of our revenue from the sale of software subscriptions. For 2023, 2022, and 2021, approximately 75.6%, 72.7%, and 71.4%, respectively, of our total revenue was subscriptions revenue.
We derive, and expect to increasingly derive in the future, a substantial portion of our revenue from the sale of software subscriptions. For 2024, 2023, and 2022, approximately 79.5%, 75.6%, and 72.7%, respectively, of our total revenue was subscriptions revenue.
Some state laws may be more stringent or broader in scope or offer greater individual rights with respect to confidential, sensitive, and personal information than federal, international, or other state laws, and such laws may differ from each other, which may complicate compliance efforts.
Further, the CCPA expands consumers’ rights with 29 respect to certain sensitive personal information. Some state laws may be more stringent or broader in scope or offer greater individual rights with respect to confidential, sensitive, and personal information than federal, international, or other state laws, and such laws may differ from each other, which may complicate compliance efforts.
As a result of these factors, it is difficult for us to forecast our revenue accurately in any quarter, and our quarterly results may fluctuate substantially. Market adoption of low-code platforms to drive digital transformation is new and unproven and may not grow as we expect, which may harm our business and prospects.
As a result of these factors, it is difficult for us to forecast our revenue accurately in any quarter, and our quarterly results may fluctuate substantially. Market adoption of process automation platforms to drive process automation may not grow as we expect, which may harm our business and prospects.
As of December 31, 2023, we had an accumulated deficit of $519.9 million. We will need to generate and sustain increased revenue levels in future periods in order to achieve or sustain profitability in the future.
As of December 31, 2024, we had an accumulated deficit of $612.2 million. We will need to generate and sustain increased revenue levels in future periods in order to achieve or sustain profitability in the future.
For example, the European Union’s proposed Artificial Intelligence Act, if enacted in its current form or any similar form, would have a material impact on the way AI is regulated in the EU, including significant fines for violations related to offering prohibited AI systems or data governance, high-risk AI systems and for supplying incorrect, incomplete, or misleading information to EU and member state authorities.
For example, the European Union’s proposed Artificial Intelligence Act will likely have a material impact on the way AI is regulated in the EU, including significant fines for violations related to offering prohibited AI systems or data governance, high-risk AI systems and for supplying incorrect, incomplete, or misleading information to EU and member-state authorities.
We currently operate in Canada, Switzerland, the United Kingdom, France, Germany, the Netherlands, Italy, Australia, Spain, Singapore, Sweden, Japan, Mexico, India, and Portugal. In the future, we may expand to other international locations.
We currently operate in Canada, Switzerland, the United Kingdom, France, Germany, the Netherlands, Italy, Australia, Spain, Singapore, Sweden, Japan, Mexico, India, and Portugal and sell through resellers into many additional countries. In the future, we may expand to other international locations.
We also had tax-effected Swiss NOL expirations of $1.1 million in 2023, and a piece of our foreign NOLs will continue to expire each year if unutilized.
We also had tax-effected Swiss NOL expirations of $1.0 million in 2024, and some of our foreign NOLs will continue to expire each year if unutilized.
Our ability to use net operating losses to offset future taxable income may be subject to certain limitations. As of December 31, 2023, we had gross U.S. federal and state net operating loss carryforwards, or NOLs, of $295.9 million and $306.8 million, respectively, available to offset future taxable income.
Our ability to use net operating losses to offset future taxable income may be subject to certain limitations. As of December 31, 2024, we had gross U.S. federal and state net operating loss carryforwards, or NOLs, of $287.5 million and $297.5 million, respectively, available to offset future taxable income.
If we are unable to sustain our revenue growth rate, we may not achieve or maintain profitability in the future. We have experienced revenue growth with revenue of $545.4 million, $468.0 million, and $369.3 million in 2023, 2022, and 2021, respectively.
Risks Related to Our Business and Industry If we are unable to sustain our revenue growth rate, we may not achieve or maintain profitability in the future. We have experienced revenue growth with revenue of $617.0 million, $545.4 million, and $468.0 million in 2024, 2023, and 2022, respectively.
As a result, while generative AI may help provide more tailored or personalized experiences or output, if the content, analyses, or recommendations produced by any of our products or services that use or incorporate generative AI are, or are perceived to be, deficient, inaccurate, biased, unethical or otherwise flawed, our reputation, competitive position and business may be materially and adversely affected.
If the content, analyses, or recommendations produced by any of our products or services that use or incorporate generative AI are, or are perceived to be, deficient, inaccurate, biased, unethical or otherwise flawed, our reputation, competitive position and business may be materially and adversely affected.
We believe our future success will depend in large part on growth in the demand for low-code platforms to drive software-enabled digital transformation.
We believe our future success will depend in large part on growth in the demand for process automation platforms to drive software-enabled process automation.
Governments and industry organizations may also adopt new laws, regulations, or requirements or make changes to existing laws or regulations that could impact the demand for, or value of, our applications such as the European Banking Authority's regulations updated in September 2019 and the CCPA that took effect January 1, 2020.
Governments and industry organizations may also adopt new laws, regulations, or requirements or make changes to existing laws or regulations that could impact the demand for, or value of, our applications such as the European Banking Authority's regulations.
Our main competitors fall into three categories: (1) providers of custom software and customer software solutions that address, or are developed to address, some of the use cases that can be addressed by applications developed on our platform; (2) providers of low-code development platforms; and (3) providers of one or more automation technologies, including BPM, case management, process mining, and RPA.
Our main competitors fall into four categories: (1) providers of custom software and customer software solutions that address, or are developed to address, some of the use cases that can be addressed by applications developed on our platform; (2) providers of low-code development platforms; and (3) providers of one or more automation technologies, including BPM, case management, process mining, and RPA and (4) potential customers using their own internal technology departments to develop, build, and modify their own proprietary systems.
Our ability to successfully pursue our growth strategy also depends on our ability to attract, motivate, and retain our personnel. Competition for highly-qualified employees in all aspects of our business, including sales personnel, professional services personnel, cloud engineering and support personnel, and software engineers, is intense.
Our ability to successfully pursue our growth strategy also depends on our ability to attract, motivate, and retain our personnel. Competition for highly-qualified employees in all aspects of our business is intense.
While we believe strongly the final judgment should be upheld, we cannot guarantee it will be upheld in its entirety or in part.
While we believe strongly the final judgment should be reinstated by the Virginia Supreme Court, we cannot guarantee it will be reinstated in its entirety or in part.
On the other hand, should we either fail to adopt or integrate with AI technologies that show benefits to our customers, or should AI technologies for code generation or application development reduce the demand for our process automation platform, we could struggle to continue to grow our business or lose business with existing customers to such technologies, and this could negatively impact our business performance and results of operations.
Should we either fail to adopt or integrate with emerging AI technologies that show benefits to our customers or AI technologies for code generation or application development reduce the demand for our process automation platform, we could struggle to continue to grow our business or lose business with existing customers to such technologies.
It is difficult to predict customer demand for our platform, renewal rates, the rate at which existing customers expand their subscriptions, the size and growth rate of the market for 14 our platform, the entry of competitive products, or the success of existing competitive products. The utilization of low-code software to drive digital transformation is still relatively new.
It is difficult to predict customer demand for our platform, renewal rates, the rate at which existing customers expand their subscriptions, the size and growth rate of the market for our platform, the entry of competitive products, or the success of existing competitive products.
Our failure to secure, protect, and enforce our intellectual property rights could seriously adversely affect our brand and impact our business. 33 We may be subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages, and could limit our ability to use certain technologies.
We may be subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages, and could limit our ability to use certain technologies.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur CISO, who joined Appian in May 2021, brings over 17 years’ experience in security and compliance initiatives, including experience in the software-as-a-service and platform-as-a-service cloud industries.
Biggest changeOur CISO, who joined Appian in May 2021, brings over 18 years’ experience in security and compliance initiatives, including experience in the software-as-a-service and platform-as-a-service cloud industries.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. As of December 31, 2023, our corporate headquarters occupies approximately 300,000 square feet in McLean, Virginia under an operating lease that expires in October 2031. Approximately 32,000 square feet of headquarters space is subleased. We also lease space in Australia, Italy, India, Spain, and the United Kingdom under operating lease agreements with various expiration dates through 2028.
Biggest changeItem 2. Properties. As of December 31, 2024, our corporate headquarters occupies approximately 300,000 square feet in McLean, Virginia under an operating lease that expires in October 2031. Approximately 32,000 square feet of headquarters space is subleased. We also lease space in Australia, Italy, India, Spain, and the United Kingdom under operating lease agreements with various expiration dates through 2028.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeDefendant Youyong Zou has satisfied the judgment of $5,000 (plus interest) against him in lieu of appealing that judgment. On September 15, 2022, Pegasystems filed a notice of appeal to the Court of Appeals of Virginia.
Biggest changeDefendant Youyong Zou has satisfied the judgment of $5,000 (plus interest) against him in lieu of appealing that judgment. On September 15, 2022, Pegasystems filed a notice of appeal to the Court of Appeals of Virginia. On July 30, 2024, the Court of Appeals of Virginia issued a decision reversing the judgment against Pegasystems and remanding for a new trial.
Other than as disclosed elsewhere in this Annual Report, we are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows.
Other than as disclosed elsewhere in this Annual Report on Form 10-K, we are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows.
Other Matters From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business.
The timeline for rendering a decision is solely in the control of the Supreme Court. Other Matters From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business.
Removed
Both sides have submitted their respective appeal briefs to the Court of Appeals, and the Court held a hearing on the appeal on November 15, 2023. The timeline of the case is solely within the control of the Court of Appeals until it rules.
Added
The decision rejected Pegasystems’ argument that Appian had not presented evidence that trade secrets were misappropriated but reversed the judgment on the basis of evidentiary and damages rulings made by the trial court.
Removed
Pegasystems is not required to pay us the judgment, attorney’s fees, or post-judgment interest until all appeals are exhausted. We cannot predict the outcome of any appeals or the exact time it will take to resolve them. Consistent with other judgments, there is no guarantee we will be able to collect all or any portion of the judgment.
Added
On August 29, 2024, Appian submitted a petition to the Supreme Court of Virginia seeking to reverse the Court of Appeals decision and reinstate the full judgment against Pegasystems. Pegasystems filed an opposition to the petition and cross-issues for appeal on October 21, 2024. Appian's petition was heard on February 11, 2025.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeComparison of Cumulative Five Year Total Return Among Appian Corporation, the Nasdaq Global Market Composite Index, and the Nasdaq Computer Index As of December 31, 2018 2019 2020 2021 2022 2023 Appian Corporation $ 100.00 $ 143.06 $ 606.85 $ 244.14 $ 121.90 $ 141.00 Nasdaq Global Market Composite $ 100.00 $ 137.87 $ 227.32 $ 192.85 $ 106.73 $ 113.60 Nasdaq Computer $ 100.00 $ 150.34 $ 225.48 $ 310.84 $ 199.64 $ 332.34 43 Purchase of Equity Securities by the Issuer and Affiliated Purchases Period Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plan Maximum number of shares that may yet be purchased under the plan (2) October 1 to October 31, 2023 5,182 $ 44.05 5,182 876,206 November 1 to November 30, 2023 5,370 $ 41.70 5,370 870,836 December 1 to December 31, 2023 5,657 $ 38.51 5,657 865,179 Total 16,209 $ 41.34 16,209 865,179 (1) Shares purchased represent shares purchased on the open market pursuant to the Appian Corporation Employee Stock Purchase Plan (“ESPP”), which was approved by the Company’s stockholders on June 11, 2021.
Biggest changeComparison of Cumulative Five Year Total Return Among Appian Corporation, the Nasdaq Global Market Composite Index, and the Nasdaq Computer Index As of December 31, 2019 2020 2021 2022 2023 2024 Appian Corporation $ 100.00 $ 424.21 $ 170.66 $ 85.21 $ 98.56 $ 85.82 Nasdaq Global Market Composite $ 100.00 $ 164.88 $ 139.88 $ 77.41 $ 82.40 $ 88.91 Nasdaq Computer $ 100.00 $ 149.98 $ 206.76 $ 132.79 $ 221.06 $ 304.86 43 Purchase of Equity Securities by the Issuer and Affiliated Purchases Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plan Maximum number of shares that may yet be purchased under the plan (2) October 1 to October 31, 2024 6,030 $ 34.05 6,030 796,828 November 1 to November 30, 2024 5,088 $ 37.82 5,088 791,740 December 1 to December 31, 2024 4,344 $ 40.48 4,344 787,396 Total 15,462 $ 37.10 15,462 787,396 (1) Shares purchased represent shares purchased on the open market pursuant to the Appian Corporation Employee Stock Purchase Plan, or ESPP, which was approved by the Company’s stockholders on June 11, 2021.
Any future determination as to the declaration and payment of dividends or share repurchase program, if any, will be at the discretion of our Board of Directors, subject to applicable laws, and will depend on then existing conditions, including our financial condition, operating results, contractual restrictions pursuant to our outstanding Credit Agreement, capital requirements, business prospects, and other factors our Board of Directors may deem relevant. 42 Stock Performance Graph This section is not deemed “filed” with the SEC and shall not be deemed incorporated by reference into any of our other filings under the Exchange Act or the Securities Act, irrespective of any general incorporation language in any such filing.
Any future determination as to the declaration and payment of dividends or share repurchase program, if any, will be at the discretion of our Board of Directors, subject to applicable laws, and depend on then existing conditions, including our financial condition, operating results, contractual restrictions pursuant to our outstanding Credit Agreement, capital requirements, business prospects, and other factors our Board of Directors may deem relevant. 42 Stock Performance Graph This section is not deemed “filed” with the SEC and shall not be deemed incorporated by reference into any of our other filings under the Exchange Act or the Securities Act, irrespective of any general incorporation language in any such filing.
(2) Because the number of shares that may be purchased under the ESPP depends on each employee’s voluntary election to participate and contribution elections and on the fair market value of our Class A Common Stock at various future dates, the actual number of shares that may be purchased under the plan cannot be determined in advance.
(2) Because the number of shares that may be purchased under the ESPP depends on each employee’s voluntary election to participate, individual contribution elections, and the fair market value of our Class A common stock at various future dates, the actual number of shares that may be purchased under the plan cannot be determined in advance.
The following graph shows a comparison from December 31, 2018 through December 31, 2023, of the cumulative five year total return for an investment of $100 in our Class A common stock, the Nasdaq Global Market Composite Index, and the Nasdaq Computer Index.
The following graph shows a comparison from December 31, 2019 through December 31, 2024, of the cumulative five year total return for an investment of $100 in our Class A common stock, the Nasdaq Global Market Composite Index, and the Nasdaq Computer Index.
As of February 12, 2024, there were 18 holders of record of our Class A common stock and 32 holders of record of our Class B common stock.
As of February 17, 2025, there were 16 holders of record of our Class A common stock and 29 holders of record of our Class B common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to the financial information prepared and presented in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies. 57 The following tables reconcile our non-GAAP measures to their nearest comparable GAAP measures (in thousands, except per share data): GAAP Measure Stock-Based Compensation Litigation Expense JPI Amortization Severance Costs Non-GAAP Measure Year Ended December 31, 2023 Subscriptions cost of revenue $ 43,563 $ (925) $ — $ — $ (30) $ 42,608 Professional services cost of revenue 99,759 (6,055) — — (158) 93,546 Total cost of revenue 143,322 (6,980) — — (188) 136,154 Total operating expense 510,014 (36,407) 2,064 (6,038) (6,111) 463,522 Operating loss (107,973) 43,387 (2,064) 6,038 6,299 (54,313) Income tax expense 3,209 1,302 — — 139 4,650 Net loss (111,441) 42,085 (2,064) 6,038 6,160 (59,222) Net loss per share, basic and diluted $ (1.52) $ 0.58 $ (0.03) $ 0.08 $ 0.08 $ (0.81) Year Ended December 31, 2022 Subscriptions cost of revenue $ 36,005 $ (996) $ — $ — $ — $ 35,009 Professional services cost of revenue 97,301 (5,309) — — — 91,992 Total cost of revenue 133,306 (6,305) — — — 127,001 Total operating expense 479,695 (32,525) (22,886) — — 424,284 Operating loss (145,010) 38,830 22,886 — — (83,294) Net loss (150,920) 38,830 22,886 — — (89,204) Net loss per share, basic and diluted $ (2.08) $ 0.54 $ 0.32 $ — $ — $ (1.23) Year Ended December 31, 2021 Subscriptions cost of revenue $ 27,330 $ (1,199) $ — $ — $ — $ 26,131 Professional services cost of revenue 76,763 (3,131) — — — 73,632 Total cost of revenue 104,093 (4,330) — — — 99,763 Total operating expense 349,073 (19,514) (16,400) — — 313,159 Operating loss (83,907) 23,844 16,400 — — (43,663) Net loss (88,641) 23,844 16,400 — — (48,397) Net loss per share, basic and diluted $ (1.25) $ 0.34 $ 0.23 $ — $ — $ (0.68) 58 The following table reconciles GAAP net loss to adjusted EBITDA for the years ended December 31, 2023, 2022, and 2021 (in thousands): Year Ended December 31, 2023 2022 2021 GAAP net loss $ (111,441) $ (150,920) $ (88,641) Other (income) expense, net (17,603) 3,545 3,584 Interest expense 17,862 1,673 372 Income tax expense 3,209 692 778 Depreciation expense and amortization of intangible assets 9,473 7,297 5,743 Stock-based compensation expense 43,387 38,830 23,844 Litigation Expense (2,064) 22,886 16,400 JPI Amortization 6,038 — — Severance Costs 6,299 — — Adjusted EBITDA $ (44,840) $ (75,997) $ (37,920) Liquidity and Capital Resources The following table presents selected financial information and statistics pertaining to liquidity and capital resources as of December 31, 2023 and 2022 (in thousands): As of December 31, 2023 2022 Cash and cash equivalents $ 149,351 $ 148,132 Short-term investments and marketable securities 9,653 47,863 Property and equipment, net 42,682 41,855 Working capital * 43,183 149,996 * Defined as current assets net of current liabilities, excluding the current portion of restricted cash As of December 31, 2023, we had $149.4 million of cash and cash equivalents and $9.7 million of short-term investments and marketable securities.
Biggest changeThe following tables reconcile our non-GAAP measures to their nearest comparable GAAP measures (in thousands, except per share data): 57 GAAP Measure Stock-Based Compensation Litigation Expense JPI Amortization Severance Costs Lease Impairment and Lease-Related Charges Short-Swing Profit Payment Non-GAAP Measure Year Ended December 31, 2024 Subscriptions cost of revenue $ 53,487 $ (848) $ — $ — $ — $ — $ — $ 52,639 Professional services cost of revenue 96,692 (5,674) — — (1,398) — — 89,620 Total cost of revenue 150,179 (6,522) — — (1,398) — — 142,259 Total operating expense 527,696 (32,523) (4,602) (15,795) (4,136) (6,104) — 464,536 Operating (loss) income (60,853) 39,045 4,602 15,795 5,534 6,104 — 10,227 Income tax expense 1,054 1,499 — — 1,096 — — 3,649 Net (loss) income (92,262) 37,546 4,602 15,795 4,438 6,104 (1,799) (25,576) Net (loss) income per share, basic and diluted $ (1.26) $ 0.51 $ 0.06 $ 0.22 $ 0.06 $ 0.08 $ (0.02) $ (0.35) Year Ended December 31, 2023 Subscriptions cost of revenue $ 43,563 $ (925) $ — $ — $ (30) $ — $ — $ 42,608 Professional services cost of revenue 99,759 (6,055) — — (158) — — 93,546 Total cost of revenue 143,322 (6,980) — — (188) — — 136,154 Total operating expense 510,014 (36,407) 2,064 (6,038) (6,111) — — 463,522 Operating (loss) income (107,973) 43,387 (2,064) 6,038 6,299 — — (54,313) Income tax expense 3,209 1,302 — — 139 — — 4,650 Net (loss) income (111,441) 42,085 (2,064) 6,038 6,160 — — (59,222) Net (loss) income per share, basic and diluted $ (1.52) $ 0.58 $ (0.03) $ 0.08 $ 0.08 $ — $ — $ (0.81) Year Ended December 31, 2022 Subscriptions cost of revenue $ 36,005 $ (996) $ — $ — $ — $ — $ — $ 35,009 Professional services cost of revenue 97,301 (5,309) — — — — — 91,992 Total cost of revenue 133,306 (6,305) — — — — — 127,001 Total operating expense 479,695 (32,525) (22,886) — — — — 424,284 Operating (loss) income (145,010) 38,830 22,886 — — — — (83,294) Net (loss) income (150,920) 38,830 22,886 — — — — (89,204) Net (loss) income per share, basic and diluted (a) $ (2.08) $ 0.54 $ 0.32 $ — $ — $ — $ — $ (1.23) (a) Per share amounts do not foot due to rounding. 58 The following table reconciles GAAP net loss to adjusted EBITDA for the years ended December 31, 2024, 2023, and 2022 (in thousands): Year Ended December 31, 2024 2023 2022 GAAP net loss $ (92,262) $ (111,441) $ (150,920) Other expense (income), net 6,773 (17,603) 3,545 Interest expense 23,582 17,862 1,673 Income tax expense 1,054 3,209 692 Depreciation expense and amortization of intangible assets 10,030 9,473 7,297 Stock-based compensation expense 39,045 43,387 38,830 Litigation Expense 4,602 (2,064) 22,886 JPI Amortization 15,795 6,038 — Severance Costs 5,534 6,299 — Lease Impairment and Lease-Related Charges 6,104 — — Adjusted EBITDA $ 20,257 $ (44,840) $ (75,997) Liquidity and Capital Resources The following table presents selected financial information and statistics pertaining to liquidity and capital resources as of December 31, 2024 and 2023 (in thousands): As of December 31, 2024 2023 Cash and cash equivalents $ 118,552 $ 149,351 Short-term investments and marketable securities 41,308 9,653 Property and equipment, net 37,109 42,682 Working capital * 80,787 43,183 * Defined as current assets net of current liabilities.
At the same time, many of our customers have historically purchased subscriptions only for a limited set of their total potential end users. As a result of these factors, the proportion of total revenue for a customer associated with professional services is relatively high during the initial deployment period.
At the same time, many of our customers have historically purchased subscriptions for only a limited set of their total potential end users. As a result of these factors, the proportion of total revenue for a customer associated with professional services is relatively high during the initial deployment period.
Other Non-Operating Expense Other Expense (Income), Net Other (income) expense, net, consists primarily of gains and losses related to changes in foreign currency exchange rates, interest income on our cash and cash equivalents and investments, and other sources of income or expense not related to our core business operations.
Other Non-Operating Expense Other Expense (Income), Net Other expense (income), net, consists primarily of gains and losses related to changes in foreign currency exchange rates, interest income on our cash and cash equivalents and investments, and other sources of income or expense not related to our core business operations.
We incur significant customer acquisition costs, including expenses associated with hiring new sales representatives, who can take anywhere from six months to a year to become productive given the length of our sales cycle, and marketing costs which, with the exception of certain types of sales commissions, are expensed as incurred.
We incur significant customer acquisition costs, including expenses associated with hiring new sales representatives, who can take anywhere from six months to a year to become productive given the length of our sales cycle, sales commissions, and marketing costs, all of which, with the exception of certain types of sales commissions, are expensed as incurred.
We often sign multiple-year cloud subscription agreements. Backlog may vary based on changes in the average non-cancellable term of our cloud and on-premises term license subscription agreements. Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we provide investors with certain non-GAAP financial performance measures.
Additionally, we often sign multiple-year subscription agreements, and backlog may vary based on changes in the average non-cancellable term of our cloud and on-premises term license subscription agreements. Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we provide investors with certain non-GAAP financial performance measures.
See Note 3 to the consolidated financial statements for further details on our revenue recognition policies. 47 Key Metrics We monitor the following metrics to help us measure and evaluate the effectiveness of our operations. All dollar amounts are presented in thousands.
See Note 3 to the consolidated financial statements for further details on our revenue recognition policies. Key Metrics We monitor the following metrics to help us measure and evaluate the effectiveness of our operations. All dollar amounts are presented in thousands.
We believe both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to historical performance as well as comparisons to competitors’ operating results.
We believe both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing 56 future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to historical performance as well as comparisons to competitors’ operating results.
We have aggressively invested, and intend to continue to invest, in our sales team in order to drive sales to new customers. We continue to make investments to enhance the expertise of our sales and marketing organization within our key industry verticals of financial services, government, life sciences, insurance, and manufacturing.
We have aggressively invested, and intend to continue to invest, in our sales team in order to drive sales to new customers. We continue to make investments to enhance the expertise of our sales and marketing organization within our key industry verticals of financial services, government, life sciences, and insurance.
While we will continue to recognize the majority of our subscriptions revenue ratably over the terms of our subscription agreements, we may experience greater variability and reduced comparability of our quarterly revenue and results with respect to the timing and nature of our term license subscription agreements due to the upfront revenue recognition.
While we will continue to recognize the majority of our subscriptions revenue ratably over the terms of our subscription agreements, we may experience greater variability and reduced comparability of our quarterly revenue 47 and results with respect to the timing and nature of our term license subscription agreements due to the upfront revenue recognition.
Many of our customers begin by building a 46 single application and then grow to build dozens of applications on our platform. Generally, the development of new applications on our platform results in the expansion of our user base within an organization and a corresponding increase in revenue.
Many of our customers begin by building a single application and then grow to build dozens of applications on our platform. Generally, the development of new applications on our platform results in the expansion of our user base within an organization and a corresponding increase in revenue.
Our non-GAAP financial performance measures include the following: non-GAAP subscriptions cost of revenue, non-GAAP professional services costs of revenue, non-GAAP total cost of revenue, non-GAAP total operating expense, non-GAAP operating loss, non-GAAP income tax expense, non-GAAP net loss, and non-GAAP net loss per share, basic and diluted.
Our non-GAAP financial performance measures include the following: non-GAAP subscriptions cost of revenue, non-GAAP professional services cost of revenue, non-GAAP total cost of revenue, non-GAAP total operating expense, non-GAAP operating loss, non-GAAP income tax expense, non-GAAP net loss, and non-GAAP net loss per share, basic and diluted.
Our cloud subscriptions revenue retention rate can fluctuate from period to period due to large customer contracts in any given period. Key Components of Results of Operations Revenue We generate revenue primarily through sales of subscriptions to our platform as well as professional services. We generally sell our software on a per-user basis or through non-user-based single application licenses.
Our cloud subscriptions revenue retention rate can fluctuate from period to period due to large customer contracts in any given period. Key Components of Results of Operations Revenue We generate revenue primarily through sales of subscriptions to our platform as well as professional services. We typically sell our software on a per-user basis or through non-user-based single application licenses.
Most of this increase was attributable to expansion at our product development center in India that we opened in August 2022.
Most of this increase was attributable to continued expansion at our product development center in India that we opened in August 2022.
We recently have, and in the future may, enter into investments in or acquisitions of complementary businesses, products, or technologies, which could also require us to seek additional equity financing, incur indebtedness, or use cash resources. We have no present binding agreements or commitments to enter into any such acquisitions.
We have in the past, and may in the future, enter into investments in or acquisitions of complementary businesses, products, or technologies, which could also require us to seek additional equity financing, incur indebtedness, or use cash resources. We have no present binding agreements or commitments to enter into any such acquisitions.
On a rolling 12-month basis, we estimate that for each of the past five fiscal years, the average lifetime value of a customer has been at least seven times greater than the associated average cost of acquiring them, including the year ended December 31, 2023.
On a rolling 12-month basis, we estimate that for each of the past five fiscal years, the average lifetime value of a customer has been at least seven times greater than the associated average cost of acquiring them, including the year ended December 31, 2024.
The amount of variable consideration excluded from the transaction price for the years ended December 31, 2023, 2022, and 2021 was immaterial. Allocating the Transaction Price Based on Standalone Selling Prices We allocate the transaction price to each performance obligation in a contract based on its relative standalone selling price, or SSP.
The amount of variable consideration excluded from the transaction price for the years ended December 31, 2024, 2023, and 2022 was immaterial. Allocating the Transaction Price Based on Standalone Selling Prices We allocate the transaction price to each performance obligation in a contract based on its relative standalone selling price, or SSP.
Cost of Revenue Subscriptions Cost of subscriptions revenue consists primarily of fees paid to our third-party managed hosting providers and other third-party service providers, personnel costs, including payroll and benefits for our technology operations and customer support teams, amortization of developed technology, and allocated overhead costs.
Cost of Revenue Subscriptions Cost of subscriptions revenue consists primarily of fees paid to our third-party managed hosting providers and other third-party service providers, personnel costs, including payroll and benefits for our technology operations and customer support teams, amortization of acquired technology, and allocated overhead costs.
Cloud Subscriptions Revenue Retention Rate As of December 31, 2023 2022 2021 Cloud subscriptions revenue retention rate 119 % 115 % 116 % A key factor to our success is the renewal and expansion of subscription agreements with our existing customers.
Cloud Subscriptions Revenue Retention Rate As of December 31, 2024 2023 2022 Cloud subscriptions revenue retention rate 116 % 119 % 115 % A key factor to our success is the renewal and expansion of subscription agreements with our existing customers.
This effectively represents recurring dollars we should expect in the current trailing 12-month period from the cohort of customers from the previous trailing 12-month period without any expansion or contraction. We subsequently measure the recurring cloud subscriptions revenue in the current trailing 12-month period from the cohort of customers from the previous trailing 12-month period.
This effectively represents recurring dollars we should expect in the current trailing 12-month period from the cohort of customers from the previous trailing 12-month period without accounting for any expansion or contraction. We subsequently measure the recurring cloud subscriptions revenue in the current trailing 12-month period from the cohort of customers from the previous trailing 12-month period.
Our maintenance and support agreements provide customers with the right to unspecified software upgrades, maintenance releases and patches released during the term of the maintenance and support agreement on a when-and-if-available basis, and rights to technical support. On-premises term license subscriptions are offered when the customer prefers to self-manage the deployment of our platform within their own infrastructure.
Our maintenance and support agreements provide customers with the right to unspecified software upgrades, maintenance updates, patches released during the term of the maintenance and support agreement on a when-and-if-available basis, and technical support. On-premises term license subscriptions are offered when the customer prefers to self-manage the deployment of our platform within their own infrastructure.
Our gross margin may fluctuate from period to period based on the above factors. Subscriptions Gross Margin Subscriptions gross margin is primarily affected by the growth in our subscriptions revenue as compared to the growth in, and timing of, costs to support such revenue.
Our gross margin may fluctuate from period to period based on the preceding factors. Subscriptions Gross Margin Subscriptions gross margin is primarily affected by the growth in our subscriptions revenue as compared to the growth in, and timing of, costs to support such revenue.
Gross Profit and Gross Margin Gross profit and gross margin (defined as gross profit as a percentage of total revenue), have been, and will continue to be, affected by various factors, including the mix of cloud subscriptions and on-premises term license subscriptions, the mix of total subscriptions revenue and professional services revenue, subscription pricing, the costs associated with third-party hosting providers, and the extent to which we expand our professional services to support future growth.
Gross Profit and Gross Margin Gross profit and gross margin (defined as gross profit as a percentage of total revenue), have been, and will continue to be, affected by various factors, including the mix of cloud subscriptions and on-premises term license subscriptions, the mix of total subscriptions revenue and professional services revenue, subscription pricing, the costs associated with third-party hosting providers, and the extent to which we expand or reduce our professional services to support future changes in our growth.
Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, particularly internationally, the introduction of new and enhanced products and functions as well as platform enhancements and professional services offerings, and the level of market acceptance of our product.
Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product solutions and functions as well as platform enhancements and professional services offerings, and the level of market acceptance of our product.
As of December 31, 2023, we had approximately 1,000 customers. Our customers primarily include financial services, government, life sciences, insurance, manufacturing, energy, healthcare, telecommunications, and transportation organizations. Generally, our sales team targets its efforts to organizations with over 2,000 employees and $2 billion in annual revenue.
As of December 31, 2024, we had over 1,000 customers. Our customers primarily include financial services, government, life sciences, insurance, manufacturing, energy, healthcare, telecommunications, and transportation organizations. Generally, our sales team targets its efforts to organizations with over 2,000 employees and $2.0 billion in annual revenue.
Research and Development Expense Research and development expense consists primarily of personnel costs for our employees who develop and enhance our platform, including salaries, bonuses, stock-based compensation, and other personnel costs. Also included are non-personnel costs such as subcontracting, consulting, professional fees to third party development resources, and allocated overhead costs.
Research and Development Expense Research and development expense consists primarily of personnel costs for our employees who develop and enhance our platform, including salaries, bonuses, stock-based compensation, and other personnel costs. Also included are non-personnel costs such as subcontracting, consulting, professional fees to third party development resources, certain information technology expenses, and allocated overhead costs.
Contractor costs decreased in 2023 compared to 2022 due to a decrease in the usage of subcontractors for professional service engagements. Subscriptions gross margin was 89.4% in 2023, consistent with the prior year as increases in subscriptions revenue were offset by a corresponding increase in hosting costs.
Contractor costs decreased in 2024 compared to 2023 due to a decrease in the usage of subcontractors for professional service engagements. Subscriptions gross margin was 89.1% in 2024, consistent with an 89.4% margin in the prior year as increases in subscriptions revenue were offset by a corresponding increase in hosting costs.
We believe we have a significant opportunity to continue to grow our international footprint, and we are investing in new geographies, including through investment in direct and indirect sales channels, professional services, and customer support and implementation partners. We have experienced strong revenue growth, with revenue of $545.4 million, $468.0 million, and $369.3 million in 2023, 2022, and 2021, respectively.
We believe we have a significant opportunity to continue to grow our international footprint, and we are investing in new geographies, including through investment in direct and indirect sales channels, professional services, and customer support and implementation partners. We have experienced strong revenue growth, with revenue of $617.0 million, $545.4 million, and $468.0 million in 2024, 2023, and 2022, respectively.
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 For a discussion and analysis of changes in financial condition and results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 16, 2023.
Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 For a discussion and analysis of changes in financial condition and results of operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 15, 2024.
In 2023, 2022, and 2021, 75.6%, 72.7%, and 71.4% of our revenue, respectively, was derived from sales of subscriptions, while the remaining 24.4%, 27.3%, and 28.6%, respectively, was derived from the sale of professional services. • Investments in Growth - We have made, and plan to continue to make, investments for long-term growth, including investing in our platform and infrastructure to continuously maximize their power and speed, meet the evolving needs of our customers, and take advantage of our market opportunity.
In 2024, 2023, and 2022, 79.5%, 75.6%, and 72.7% of our revenue, respectively, was derived from sales of subscriptions, while the remaining 20.5%, 24.4%, and 27.3%, respectively, was derived from the sale of professional services. • Investments in Growth - We have made, and plan to continue to make, investments for long-term growth, including investing in our platform and infrastructure to continuously maximize their power and speed, meet the evolving needs of our customers, and take advantage of our market opportunity.
We expect sales and marketing expense to increase in absolute dollars as we continue to invest to acquire new customers and further expand usage of our platform within our existing customer base. We will continue our efforts to build on our brand reputation and increase market awareness of our platform.
Furthermore, we expect sales and marketing expense to increase in absolute dollars as we continue to invest in acquiring new customers, further expand usage of our platform within our existing customer base, and broaden our efforts to build on our brand reputation and increase market awareness of our platform.
We have several strategic partnerships, including with Accenture, Capgemini, Deloitte, EY, KPMG, PwC, and TCS, which allow them to refer customers to us in order to purchase subscriptions. Our partners then provide professional services directly to the customers using our platform. We intend to continue focusing on adding new customers with our strategic partners.
We have several strategic partnerships, including with Accenture, Capgemini, Deloitte, EY, KPMG, PwC, and TCS, which allow them to refer customers to us in order to purchase subscriptions. Our partners then provide professional services directly to the customers using our platform.
Our cloud subscriptions revenue was $304.5 million, $236.9 million, and $179.4 million in 2023, 2022, and 2021, respectively. 45 We have invested in developing our platform, expanding our sales and marketing and research and development capabilities, and providing general and administrative resources to support our growth.
Our cloud subscriptions revenue was $368.0 million, $304.5 million, and $236.9 million in 2024, 2023, and 2022, respectively. 45 We have invested in developing our platform, expanding our sales and marketing and research and development capabilities, and providing general and administrative resources to support our growth.
Backlog Backlog represents non-cancellable future amounts to be recognized under cloud and on-premises term license subscription agreements and is representative of our remaining performance obligations. As of December 31, 2023 and 2022, we had backlog of $489.7 million and $376.5 million, respectively. Approximately 37% of our backlog as of December 31, 2023 is not expected to be recognized in 2024.
Backlog Backlog represents non-cancellable future amounts to be recognized under cloud and on-premises term license subscription agreements and is representative of our remaining performance obligations. As of December 31, 2024 and 2023, we had backlog of $546.0 million and $489.7 million, respectively. Approximately 34% of our backlog as of December 31, 2024 is not expected to be recognized in 2025.
In 2023, 2022, and 2021, 35.8%, 33.5%, and 34.0%, respectively, of our total revenue was generated from customers outside of the United States. As of December 31, 2023, we operated in 16 countries.
In 2024, 2023, and 2022, 36.6%, 35.8%, and 33.5%, respectively, of our total revenue was generated from customers outside of the United States. As of December 31, 2024, we operated in 16 countries.
Our research and development efforts are focused on enhancing the capabilities, speed, and power of our software platform. The number of employees in research and development functions grew from 652 at December 31, 2022 to 681 at December 31, 2023.
Our research and development efforts are focused on enhancing the capabilities, speed, and power of our software platform. The number of employees in research and development functions increased from 681 at December 31, 2023 to 702 at December 31, 2024.
To further help strengthen our financial position and support our growth initiatives, in November 2022 we entered into a Senior Secured Credit Facilities Credit Agreement, or the Credit Agreement, which provides for a five-year term loan facility in an aggregate principal amount of $150.0 million and, in addition, up to $75.0 million for a revolving credit facility, including a letter of credit sub-facility in the aggregate availability amount of $15.0 million 59 and a swingline sub-facility in the aggregate availability amount of $10.0 million (as a sublimit of the revolving loan facility).
To further help strengthen our financial position and support our growth initiatives, in November 2022 we entered into a Senior Secured Credit Facilities Credit Agreement, or the Credit Agreement, which, as amended to date, provides for a five-year term loan facility in an aggregate principal amount of $200.0 million and, in addition, up to $100.0 million for a revolving credit facility, including a letter of credit sub-facility in the aggregate availability amount of $20.0 million and a swingline sub-facility in the aggregate availability amount of $10.0 million (as a sublimit of the revolving loan facility). 59 The Credit Agreement matures on November 3, 2027.
Our subscriptions revenue was $412.3 million, $340.2 million, and $263.7 million in 2023, 2022, and 2021, respectively, and includes sales of our cloud subscriptions, on-premises term license subscriptions, and maintenance and support.
Our subscriptions revenue was $490.6 million, $412.3 million, and $340.2 million in 2024, 2023, and 2022, respectively, and includes sales of our cloud subscriptions, on-premises term license subscriptions, and maintenance and support.
We were in compliance with all covenants as of December 31, 2023. As of December 31, 2023, we had used borrowing capacity of $62.0 million under our $75.0 million revolving credit facility, and we had outstanding letters of credit totaling $11.8 million in connection with securing our leased office space.
As of December 31, 2024, we were in compliance with all covenants, had used borrowing capacity of $62.0 million under our $100.0 million revolving credit facility, and had outstanding letters of credit totaling $14.6 million in connection with securing our leased office space.
If we are unable to raise additional capital when desired, our business, operating results, and financial condition could be adversely affected. Sources of Funds We have historically financed our operations in large part with equity financing arrangements. Our last public offering was completed in June 2020, which was our fourth round of public offerings.
If we are unable to raise additional capital when desired, our business, operating results, and financial condition could be adversely affected. Sources of Funds We have historically financed our operations in large part with equity financing arrangements. Our last public offering was completed in June 2020. Through these public offerings, we received net proceeds of $344.8 million.
Cloud Subscriptions Revenue Year Ended December 31, 2023 2022 2021 Cloud subscriptions revenue $ 304,481 $ 236,922 $ 179,415 Cloud subscriptions revenue includes cloud subscriptions bundled with maintenance and support and hosting services. In 2023, 2022, and 2021, 73.8%, 69.7%, and 68.0%, respectively, of subscriptions revenue was cloud subscriptions revenue.
Cloud Subscriptions Revenue Year Ended December 31, 2024 2023 2022 Cloud subscriptions revenue $ 368,030 $ 304,481 $ 236,922 Cloud subscriptions revenue includes cloud subscriptions bundled with maintenance and support and hosting services. In 2024, 2023, and 2022, 75.0%, 73.8%, and 69.7%, respectively, of subscriptions revenue was cloud subscriptions revenue.
Operating Activities Net cash used by operating activities was $110.4 million for 2023 as compared to $106.6 million used by operating activities for 2022. The increase in net cash used by operating activities was primarily due to the $57.3 million payment for the premium of our judgment preservation insurance policy.
Operating Activities Net cash provided by operating activities was $6.9 million for 2024 as compared to net cash used by operating activities of $110.4 million for 2023. The increase in net cash provided by operating activities was primarily due to the prior year payment of $57.3 million for our judgment preservation insurance policy.
Revenue from government agencies represented 21.3%, 19.2%, and 19.6% of our total revenue in 2023, 2022, and 2021, respectively. No single end-customer accounted for more than 10% of our total revenue in 2023, 2022, and 2021. We offer our platform globally. Our platform supports multiple languages to facilitate collaboration and address challenges in multinational organizations.
Revenue from government agencies represented 32.2%, 29.1%, and 26.1% of our total revenue in 2024, 2023, and 2022, respectively. No single end-customer accounted for more than 10% of our total revenue in 2024, 2023, and 2022. We offer our platform globally. Our platform supports multiple languages to facilitate collaboration and address challenges in multinational organizations.
In addition, we may pursue strategic acquisitions that enhance our product offerings. We also intend to continue to invest in sales and marketing as we further expand our sales teams, increase our marketing activities, and grow our international operations. Seasonality We have historically experienced seasonality in terms of when we enter into agreements with customers.
We also intend to continue to invest in sales and marketing as we further expand our sales teams, increase our marketing activities, and grow our international operations. Seasonality We have historically experienced seasonality in terms of when we enter into agreements with customers.
With respect to new versus existing customers, $53.8 million of the increase in subscriptions revenue was derived from expanded deployments and corresponding sales of additional subscriptions to existing customers while $18.4 million was driven from sales of subscriptions to new customers.
With respect to new versus existing customers, $63.3 million of the increase in subscriptions revenue was derived from expanded deployments and corresponding sales of additional subscriptions to existing customers while $14.9 million was driven from sales of subscriptions to new customers.
Factors that could cause or contribute to these differences include those under “Risk Factors” included in Part I, Item 1A or in other parts of this Annual Report on Form 10-K. Overview Appian is a software company that automates business processes.
Factors that could cause or contribute to these differences include those under “Risk Factors” included in Part I, Item 1A or in other parts of this Annual Report on Form 10-K. Overview Appian is a software company that orchestrates business processes. The Appian Platform empowers leaders to design, automate, and optimize important processes from start to finish.
Our ability to increase sales to existing customers will depend on a number of factors, including the size of our sales and professional services teams, customers’ level of satisfaction with our platform and professional services, pricing, economic conditions, and our customers’ overall spending levels. We have also re-focused some of our professional services personnel to become customer success managers.
Our ability to increase sales to existing customers will depend on a number of factors, including the size of our sales and professional services teams, customers’ level of satisfaction with our platform and professional services, pricing, economic conditions, and our customers’ overall spending levels. • Mix of Subscriptions and Professional Services Revenue - We believe our professional services have driven customer success and facilitated the adoption of our platform by customers.
Over the past several years, revenue has increased significantly from year to year and, as a result, cash flows from customer collections have also grown. However, as we continue to invest in growing our business, operating expenses have also increased.
Over the past several years, revenue has increased significantly from year to year and, as a result, cash flows from customer collections have also grown. However, as we continue to invest in growing our business, operating expenses have also increased. In 2023, we entered into a Judgment Preservation Insurance policy in connection with our $2.036 billion judgment against Pegasystems.
The increase in subscriptions revenue was driven by a $67.6 million increase in cloud subscriptions revenue, a $2.5 million increase in on-premises software revenue, and a $2.1 million increase in maintenance and support revenue.
The increase in subscriptions revenue was driven by a $63.5 million increase in cloud subscriptions revenue, a $9.9 million increase in on-premises software revenue, and a $4.8 million increase in maintenance and support revenue.
The increase in professional services revenue was due to a $12.5 million increase in sales to new customers, which was partially offset by a $7.3 million decrease in revenue from existing customers. 53 Cost of Revenue Year Ended December 31, 2023 2022 $ Change % Change (dollars in thousands) Cost of revenue: Subscriptions $ 43,563 $ 36,005 $ 7,558 21.0% Professional services 99,759 97,301 2,458 2.5% Total cost of revenue $ 143,322 $ 133,306 $ 10,016 7.5% Subscriptions gross margin 89.4 % 89.4 % Professional services gross margin 25.0 % 23.9 % Total gross margin 73.7 % 71.5 % Cost of revenue increased $10.0 million, or 7.5%, in 2023 compared to 2022, primarily due to a $5.9 million increase in hosting costs, a $2.8 million increase in professional services and product support personnel costs, and a $1.7 million increase in overhead costs.
The decrease in professional services revenue was due to an $18.7 million decrease in revenue from existing customers, which was partially offset by a $12.1 million increase in sales to new customers. 53 Cost of Revenue Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Cost of revenue: Subscriptions $ 53,487 $ 43,563 $ 9,924 22.8% Professional services 96,692 99,759 (3,067) (3.1)% Total cost of revenue $ 150,179 $ 143,322 $ 6,857 4.8% Subscriptions gross margin 89.1 % 89.4 % Professional services gross margin 23.5 % 25.0 % Total gross margin 75.7 % 73.7 % Cost of revenue increased $6.9 million, or 4.8%, in 2024 compared to 2023, primarily due to an $8.5 million increase in hosting costs and a $0.2 million increase in professional services and product support personnel costs, both of which were partially offset by a $1.5 million decrease in contractor costs.
We expect to continue to invest in customer support and cloud operations to support growth in our business, and the timing of those investments is expected to cause subscriptions gross margin to fluctuate on a quarterly basis.
We expect to continue to invest in customer support and cloud operations to support growth in our business, and the timing of those investments is expected to cause subscriptions gross margin to fluctuate on a quarterly basis. 49 Professional Services Gross Margin Professional services gross margin is affected by the growth in our professional services revenue as compared to the growth in, and timing of, the costs of our Customer Success organization as well as by consultant utilization rates.
We define adjusted EBITDA as net loss before (1) other non-operating (income) expenses, net, (2) interest expense, (3) income tax expense, (4) depreciation expense and amortization of intangible assets, (5) stock-based compensation expense, (6) Litigation Expense, (7) JPI Amortization, and (8) Severance Costs. The most directly comparable GAAP financial measure to adjusted EBITDA is net loss.
We define adjusted EBITDA as net loss before (1) other expense (income), net, (2) interest expense, (3) income tax expense, (4) depreciation expense and amortization of intangible assets, (5) stock-based compensation expense, (6) Litigation Expense, (7) JPI Amortization, (8) Severance Costs, and (9) Lease Impairment and Lease-Related Charges.
The number of employees in sales and marketing functions decreased from 730 at December 31, 2022 to 666 at December 31, 2023. While headcount declined in 2023, we expect to grow sales and marketing headcount during 2024 in our principal markets and strategic growth areas.
The number of employees in sales and marketing functions decreased from 666 at December 31, 2023 to 509 at December 31, 2024. While headcount declined in 2024 due to changes in our go-to-market functions, we expect sales and marketing headcount to marginally increase from current levels in 2025 due to expected growth in our principal markets and strategic growth areas.
Users should consider the limitations of using adjusted EBITDA, including the fact this measure does not provide a complete measure of our operating performance. Adjusted EBITDA is not intended to purport to be an alternative to net loss as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.
Adjusted EBITDA is not intended to purport to be an alternative to net loss as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.
These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, certain non-ordinary litigation-related expenses consisting of legal and other professional fees associated with the Pegasystems cases (net of insurance reimbursements), or Litigation Expense, amortization of the judgment preservation insurance policy, or JPI Amortization, and severance costs related to an involuntary 56 reduction in our workforce in 2023, or Severance Costs.
These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, certain non-ordinary litigation-related expenses consisting of legal and other professional fees associated with the Pegasystems cases (net of insurance reimbursements), or Litigation Expense, amortization of the judgment preservation insurance policy, or JPI Amortization, severance costs related to involuntary reductions in our workforce, or Severance Costs, lease impairment and lease-related charges associated with actions taken to reduce the footprint of our leased office spaces, or Lease Impairment and Lease-Related Charges, and a short-swing profit disgorgement paid to us by a shareholder, or Short-Swing Profit Payment.
Additional expenses included in this category are non-personnel costs such as travel-related expenses, contracting and professional fees for such 50 services as audits, taxation, and legal, insurance and other corporate expenses, including allocated overhead costs, and bad debt expenses.
Additional expenses included in this category are non-personnel costs such as travel-related expenses, contracting and professional fees for such services as audits, taxation, and legal, insurance and other corporate expenses, including allocated overhead costs, and bad debt expenses. The number of employees in general and administrative functions decreased from 280 at December 31, 2023 to 267 at December 31, 2024.
In 2023, we generated over 76% of our subscriptions revenue from customers in these verticals. In addition, we have established relationships with strategic partners who work with organizations undergoing digital transformations. As of December 31, 2023 our total customer count was approximately 1,000.
In 2024, we generated over 77% of our subscriptions revenue from customers in these verticals. In addition, we have established relationships 46 with strategic partners who work with organizations undergoing digital transformations.
Interest Expense Interest expense consists primarily of interest on our debt, amortization of deferred financing fees, unused credit facility fees, and commitment fees on our letters of credit. 51 Results of Operations The following table sets forth our consolidated statements of operations (in thousands): Year Ended December 31, 2023 2022 2021 Revenue Subscriptions $ 412,337 $ 340,152 $ 263,738 Professional services 133,026 127,839 105,521 Total revenue 545,363 467,991 369,259 Cost of revenue Subscriptions (1) 43,563 36,005 27,330 Professional services (1) 99,759 97,301 76,763 Total cost of revenue 143,322 133,306 104,093 Gross profit 402,041 334,685 265,166 Operating expenses Sales and marketing (1) 242,381 220,374 167,852 Research and development (1) 153,098 139,210 97,517 General and administrative (1) 114,535 120,111 83,704 Total operating expenses 510,014 479,695 349,073 Operating loss (107,973) (145,010) (83,907) Other non-operating expense Other (income) expense, net (17,603) 3,545 3,584 Interest expense 17,862 1,673 372 Total other non-operating expense 259 5,218 3,956 Loss before income taxes (108,232) (150,228) (87,863) Income tax expense 3,209 692 778 Net loss $ (111,441) $ (150,920) $ (88,641) (1) Stock-based compensation as a component of these line items is as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Cost of revenue Subscriptions $ 925 $ 996 $ 1,199 Professional services 6,055 5,309 3,131 Operating expenses Sales and marketing 10,842 9,152 5,426 Research and development 12,486 12,523 5,224 General and administrative 13,079 10,850 8,864 Total stock-based compensation expense $ 43,387 $ 38,830 $ 23,844 52 The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue: Year Ended December 31, 2023 2022 2021 Revenue Subscriptions 75.6 % 72.7 % 71.4 % Professional services 24.4 27.3 28.6 Total revenue 100.0 100.0 100.0 Cost of revenue Subscriptions 8.0 7.7 7.4 Professional services 18.3 20.8 20.8 Total cost of revenue 26.3 28.5 28.2 Gross profit 73.7 71.5 71.8 Operating expenses Sales and marketing 44.4 47.1 45.5 Research and development 28.1 29.7 26.4 General and administrative 21.0 25.7 22.7 Total operating expenses 93.5 102.5 94.6 Operating loss (19.8) (31.0) (22.8) Other non-operating expense Other (income) expense, net (3.2) 0.8 1.0 Interest expense 3.3 0.4 0.1 Total other non-operating expense 0.1 1.2 1.1 Loss before income taxes (19.9) (32.2) (23.9) Income tax expense 0.6 0.1 0.2 Net loss (20.5) % (32.3) % (24.1) % Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Revenue Year Ended December 31, 2023 2022 $ Change % Change (dollars in thousands) Revenue: Subscriptions $ 412,337 $ 340,152 $ 72,185 21.2% Professional services 133,026 127,839 5,187 4.1% Total revenue $ 545,363 $ 467,991 $ 77,372 16.5% Total revenue increased $77.4 million, or 16.5%, in 2023 compared to 2022 due to an increase in our subscriptions revenue of $72.2 million and an increase in our professional services revenue of $5.2 million.
Interest Expense Interest expense consists primarily of interest on our debt, amortization of deferred financing fees, unused credit facility fees, and commitment fees on our letters of credit. 51 Results of Operations The following table sets forth our consolidated statements of operations (in thousands): Year Ended December 31, 2024 2023 2022 Revenue Subscriptions $ 490,568 $ 412,337 $ 340,152 Professional services 126,454 133,026 127,839 Total revenue 617,022 545,363 467,991 Cost of revenue Subscriptions 53,487 43,563 36,005 Professional services 96,692 99,759 97,301 Total cost of revenue 150,179 143,322 133,306 Gross profit 466,843 402,041 334,685 Operating expenses Sales and marketing 230,885 242,381 220,374 Research and development 154,977 153,098 139,210 General and administrative 141,834 114,535 120,111 Total operating expenses 527,696 510,014 479,695 Operating loss (60,853) (107,973) (145,010) Other non-operating expense Other expense (income), net 6,773 (17,603) 3,545 Interest expense 23,582 17,862 1,673 Total other non-operating expense 30,355 259 5,218 Loss before income taxes (91,208) (108,232) (150,228) Income tax expense 1,054 3,209 692 Net loss $ (92,262) $ (111,441) $ (150,920) 52 The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue: Year Ended December 31, 2024 2023 2022 Revenue Subscriptions 79.5 % 75.6 % 72.7 % Professional services 20.5 24.4 27.3 Total revenue 100.0 100.0 100.0 Cost of revenue Subscriptions 8.7 8.0 7.7 Professional services 15.7 18.3 20.8 Total cost of revenue 24.4 26.3 28.5 Gross profit 75.6 73.7 71.5 Operating expenses Sales and marketing 37.4 44.4 47.1 Research and development 25.1 28.1 29.7 General and administrative 23.0 21.0 25.7 Total operating expenses 85.5 93.5 102.5 Operating loss (9.9) (19.8) (31.0) Other non-operating expense Other expense (income), net 1.1 (3.2) 0.8 Interest expense 3.8 3.3 0.4 Total other non-operating expense 4.9 0.1 1.2 Loss before income taxes (14.8) (19.9) (32.2) Income tax expense 0.2 0.6 0.1 Net loss (15.0) % (20.5) % (32.3) % Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 Revenue Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Revenue: Subscriptions $ 490,568 $ 412,337 $ 78,231 19.0% Professional services 126,454 133,026 (6,572) (4.9)% Total revenue $ 617,022 $ 545,363 $ 71,659 13.1% Total revenue increased $71.7 million, or 13.1%, in 2024 compared to 2023 due to an increase in our subscriptions revenue of $78.2 million, which was partially offset by a decrease in our professional services revenue of $6.6 million.
We have generated the majority of our revenue from sales of subscriptions, which include (1) cloud subscriptions bundled with maintenance and support and hosting services and (2) term license subscriptions bundled with maintenance and support.
With our industry-leading platform and commitment to customer success, Appian is trusted by top organizations to drive transformational process change. We have generated the majority of our revenue from sales of subscriptions, which include (1) cloud subscriptions bundled with maintenance and support and hosting services and (2) term license subscriptions bundled with maintenance and support.
Our revenue is comprised of the following: 48 Subscriptions Subscriptions revenue is primarily derived from cloud subscriptions bundled with maintenance and support and hosting services and on-premises term license subscriptions bundled with maintenance and support.
We generally bill customers and collect payment for subscriptions to our platform in advance on an annual, quarterly, or monthly basis. 48 Our revenue is comprised of the following: Subscriptions Subscriptions revenue is primarily derived from cloud subscriptions bundled with maintenance and support and hosting services and on-premises term license subscriptions bundled with maintenance and support.
Other (Income) Expense, Net Year Ended December 31, 2023 2022 $ Change % Change (dollars in thousands) Other (income) expense, net $ (17,603) $ 3,545 $ (21,148) *** % of revenue (3.2) % 0.8 % Other income, net was $17.6 million in 2023 compared to other expense, net of $3.5 million in 2022.
Other Expense (Income), Net Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Other expense (income), net $ 6,773 $ (17,603) $ 24,376 *** % of revenue 1.1 % (3.2) % *** - Indicates a percentage change that is not meaningful Other expense, net was $6.8 million in 2024 compared to other income, net of $17.6 million in 2023.
Although we expect research and development expense to continue to increase in absolute dollars as such costs are critical to maintain and improve the quality of applications and our competitive position, we believe our product development center will result in cost savings over time.
Although we expect research and development expense to continue to increase in absolute dollars as such costs are critical to maintain and improve the quality of applications and our competitive position, we believe our product development center will result in cost efficiencies over time. 50 General and Administrative Expense General and administrative expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, and other personnel costs for our administrative, legal, information technology, human resources, finance and accounting teams as well as our senior executives.
There were $8.7 million in foreign exchange gains in 2023 compared to $6.1 million in foreign exchange losses in 2022. Additionally, there was a $7.7 million increase in interest income stemming from increased investments.
There were $16.8 million in foreign exchange losses in 2024 compared to $8.7 million in foreign exchange gains in 2023. Additionally, there was a $2.1 million decrease in interest income across the comparative periods.
The policy provides up to $500.0 million of coverage. See Note 13 to the consolidated financial statements for additional details. The total cost of the policy was $57.3 million, which we paid with operating cash on hand. Furthermore, we have a non-cancellable cloud hosting arrangement with Amazon Web Services that contains provisions for minimum purchase commitments.
See Note 13 to the consolidated financial statements for additional details. The total cost of the policy was $57.3 million, which we paid with operating cash on hand.
These increases were partially offset by a $3.6 million decrease in marketing costs.
These decreases were partially offset by a $3.6 million increase in marketing costs and a $1.7 million increase in travel and entertainment expenses.
Although there was a 8.8% decrease in sales and marketing personnel headcount from December 31, 2022 to December 31, 2023, personnel costs overall increased due to increased wages, a $7.4 million increase in sales commissions driven by both contracts with new customers and renewals with existing customers, a $4.7 million increase in severance expense, and a $1.7 million increase in stock-based compensation expense.
Personnel costs decreased due to a 23.6% decrease in sales and marketing personnel headcount from December 31, 2023 to December 31, 2024 and a $2.6 million decrease in stock compensation expense, both of which were partially offset by a $3.5 million increase in sales commissions driven by both contracts with new customers and renewals with existing customers.
Personnel-related costs such as salaries, bonuses, commissions, payroll tax payments, and stock-based compensation expense are the most significant components of each of these expense categories. Other components of each category include professional fees for third-party services such as legal, software development resources, and contractors.
Operating Expenses Operating expenses consist of sales and marketing, research and development, and general and administrative expenses. Personnel-related costs such as salaries, bonuses, commissions, payroll tax payments, severance costs, and stock-based compensation expense are the most significant components of each of these expense categories.
These decreases were partially offset by a $1.7 million decrease in payments for debt issuance costs. 61 For a discussion and analysis of net cash used in or provided by operating, investing, and financing activities for the year ended December 31, 2021, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 16, 2023.
This change was primarily due to a $50.0 million increase in share repurchases, a $42.0 million decrease in proceeds from borrowings, and a $2.7 million increase in principal payments on the term loan, partially offset by a $13.7 million increase in proceeds received from the exercise of stock options and a $1.8 million decrease in payments for employee tax withholdings associated with the net settlement of stock awards. 61 For a discussion and analysis of net cash used by or provided by operating, investing, and financing activities for the year ended December 31, 2022, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 15, 2024.
In addition, operating expenses include allocated overhead costs, which are primarily comprised of facility costs, employee medical benefits, employee relations expense, and certain information technology costs for such items as infrastructure, software, and cloud computing services. In general, our operating expenses are expected to continue to increase in absolute dollars as we invest resources in growing our various teams.
Other components of each category include professional fees for third-party services such as legal, software development resources, contractors, and cloud computing services. In addition, operating expenses include allocated overhead costs, which are primarily comprised of facility costs such as rent, employee medical benefits, employee relations expense, and certain information technology costs.
Total gross margin increased to 73.7% in 2023 as compared to 71.5% in 2022 driven largely by the increases in revenue and the improved professional services gross margin as compared to the prior year.
Total gross margin increased to 75.7% in 2024 as compared to 73.7% in 2023 driven largely by the increase in subscriptions revenue.
In 2024, we expect general and administrative expense to increase in absolute dollars largely due to amortization expense associated with the judgment preservation insurance as discussed in Note 13 to the consolidated financial statements and investments in our information technology team.
In 2025, we expect general and administrative expense to increase in absolute dollars largely due to investments in our information technology team.
Sales and Marketing Expense Year Ended December 31, 2023 2022 $ Change % Change (dollars in thousands) Sales and marketing $ 242,381 $ 220,374 $ 22,007 10.0% % of revenue 44.4 % 47.1 % Sales and marketing expense increased $22.0 million, or 10.0%, in 2023 compared to 2022, primarily due to a $25.1 million increase in sales and marketing personnel costs and a $1.0 million increase in overhead costs.
Sales and Marketing Expense Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Sales and marketing $ 230,885 $ 242,381 $ (11,496) (4.7)% % of revenue 37.4 % 44.4 % Sales and marketing expense decreased $11.5 million, or 4.7%, in 2024 compared to 2023, primarily due to a $15.3 million decrease in sales and marketing personnel costs and a $1.5 million decrease in information technology costs.
Professional services gross margin increased to 25.0% in 2023 as compared to 23.9% in 2022 due to higher professional services revenue, which was partially offset by higher personnel costs in 2023.
Professional services gross margin decreased to 23.5% in 2024 as compared to 25.0% in 2023 due to a decline in professional services revenue and a marginal increase in personnel costs, both of which were partially offset by lower contractor costs.
These increases were partially offset by a $1.2 million decrease in other income attributable to a payment received in 2022 from a local government as a result of achieving certain economic development criteria. 55 Interest Expense Year Ended December 31, 2023 2022 $ Change % Change (dollars in thousands) Interest expense $ 17,862 $ 1,673 $ 16,189 *** % of revenue 3.3 % 0.4 % *** - Indicates a percentage change that is not meaningful Interest expense increased $16.2 million in 2023 compared to the same period in 2022, primarily due to interest expense on the new term loan facility we entered into during the fourth quarter of 2022.
These decreases were partially offset by a $3.2 million increase in other income attributable to payments received in 2024, including a payment from a local government as a result of achieving certain economic development criteria and payments related to a short-swing profit disgorgement paid to us by a public shareholder of our Class A common stock. 55 Interest Expense Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Interest expense $ 23,582 $ 17,862 $ 5,720 32.0% % of revenue 3.8 % 3.3 % Interest expense increased $5.7 million in 2024 as compared to the corresponding period in 2023, primarily due to interest expense attributable to higher outstanding balances on our credit facility related to amendments we entered into during the fourth quarter of 2023 and first quarter of 2024.
We intend to continue to invest in our business to take advantage of our market opportunity. As a result, we incurred net losses of $111.4 million, $150.9 million, and $88.6 million in 2023, 2022, and 2021, respectively. We also used cash in operations of $110.4 million, $106.6 million, and $53.9 million in 2023, 2022, and 2021, respectively.
As a result, we incurred net losses of $92.3 million, $111.4 million, and $150.9 million in 2024, 2023, and 2022, respectively. In 2024, cash provided by operations was $6.9 million, while cash used by operations totaled $110.4 million and $106.6 million in 2023 and 2022, respectively.
These increases were partially offset by a $0.8 million decrease in contractor costs. Hosting costs increased due to an increase in sales of our cloud offering during 2023.
Hosting costs increased due to an increase in sales of our cloud offering during 2024.
Spending under this agreement for the years ended December 31, 2023, 2022, and 2021 totaled $36.6 million, $33.1 million, and $11.8 million, respectively.
Spending under this agreement for the years ended December 31, 2024, 2023, and 2022 totaled $41.2 million, $36.6 million, and $33.1 million, respectively. The timing of payments under the agreement may vary, and the total amount of payments may exceed the minimum depending on the volume of services utilized.
These increases were partially offset by a $0.6 million decrease in professional fees. Personnel costs increased due to an increase in research and development personnel headcount of 4.4% from December 31, 2022 to December 31, 2023 in addition to increased wages and a $1.0 million increase in severance expense.
These increases were partially offset by a $1.6 million decrease in research and development personnel costs. Information technology costs increased primarily due to higher cloud computing expense.
The timing of payments under the agreement may vary, and the total amount of payments may exceed the minimum depending on the volume of services utilized. 60 Historical Cash Flows Year Ended December 31, 2023 2022 $ Change % Change (dollars in thousands) Beginning cash, cash equivalents, and restricted cash $ 150,381 $ 103,960 $ 46,421 44.7 % Operating activities: Net loss (111,441) (150,920) 39,479 (26.2) Stock-based compensation and other non-cash adjustments 40,591 46,382 (5,791) (12.5) Changes in working capital (39,592) (2,013) (37,579) *** Net cash used by operating activities (110,442) (106,551) (3,891) 3.7 Investing activities: Net cash provided by investing activities 28,590 10,264 18,326 *** Financing activities: Net cash provided by financing activities 79,165 142,867 (63,702) (44.6) Effect of exchange rates 1,657 (159) 1,816 *** Net (decrease) increase in cash, cash equivalents, and restricted cash (1,030) 46,421 (47,451) *** Ending cash, cash equivalents, and restricted cash $ 149,351 $ 150,381 $ (1,030) (0.7) % *** Indicates a percentage that is not meaningful.
We expect to meet our minimum annual spending requirement during the term of the arrangement. 60 Historical Cash Flows Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Beginning cash, cash equivalents, and restricted cash $ 149,351 $ 150,381 $ (1,030) (0.7) % Operating activities: Net loss (92,262) (111,441) 19,179 17.2 Stock-based compensation and other non-cash adjustments 72,732 40,591 32,141 79.2 Changes in working capital 26,408 (39,592) 66,000 *** Net cash provided by (used by) operating activities 6,878 (110,442) 117,320 *** Investing activities: Net cash (used by) provided by investing activities (35,390) 28,590 (63,980) *** Financing activities: Net cash (used by) provided by financing activities (258) 79,165 (79,423) *** Effect of exchange rates (2,029) 1,657 (3,686) *** Net decrease in cash, cash equivalents, and restricted cash (30,799) (1,030) (29,769) *** Ending cash, cash equivalents, and restricted cash $ 118,552 $ 149,351 $ (30,799) (20.6) % *** Indicates a percentage that is not meaningful.
In 2023, these margins began to decline. In 2024, we expect professional services gross margin to be consistent with 2023; however, the margin remains subject to fluctuation based on the factors discussed above. Operating Expenses Operating expenses consist of sales and marketing, research and development, and general and administrative expenses.
Professional services gross margin is also impacted by the amount of services performed by subcontractors and partners as opposed to internal resources. In 2025, we expect professional services gross margin to be consistent with 2024; however, the margin remains subject to fluctuation based on the factors discussed above.
Although there was a decrease in general and administrative personnel headcount of 11.4% from December 31, 2022 to December 31, 2023, personnel costs increased due to increased wages, a $2.2 million increase in stock compensation expense, and a $0.4 million increase in severance expense.
Although professional services and product support personnel headcount decreased 11.9% from December 31, 2023 to December 31, 2024, personnel costs increased due to a $1.2 million increase in severance costs and slightly higher salaries and benefits, which were substantially offset by a $0.7 million decrease in bonus expense and a $0.5 million decrease in stock compensation expense.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThese securities are subject to market risk due to fluctuations in interest rates, which may affect our interest income and the fair value of our investments. We classify investments as available-for-sale, including those with stated maturities beyond 12 months.
Biggest changeIn addition, as of December 31, 2024, we held $41.3 million of fixed income securities such as U.S. treasury bonds, commercial paper, and corporate bonds. These securities are subject to market risk due to fluctuations in interest rates, which may affect our interest income and the fair value of our investments.
In addition, portions of operating expenses are incurred outside the United States and are denominated in foreign currencies. An increase in the relative value of the U.S. dollar to other currencies will negatively affect revenue and other operating results as expressed in U.S. dollars.
In addition, portions of operating expenses are incurred outside the United States and denominated in foreign currencies. An increase in the relative value of the U.S. dollar to other currencies will negatively affect revenue and other operating results as expressed in U.S. dollars.
While we do not believe inflation has had a material impact on our results of operations to date, a continued high rate of inflation in the future may have an adverse effect on our ability to maintain operating costs and adversely affect our gross profit margin. Foreign Currency Exchange Risk Our reporting currency is the U.S. dollar.
While we do not believe inflation has had a material 63 impact on our results of operations to date, a continued high rate of inflation in the future may have an adverse effect on our ability to maintain operating costs and adversely affect our gross profit margin. Foreign Currency Exchange Risk Our reporting currency is the U.S. dollar.
A hypothetical 100 basis point change in interest rates would not have had a material effect on the fair market value of our investment portfolio as of December 31, 2023. To date, fluctuations in interest income have also not been significant. Our investments are made for the purpose of preserving capital, fulfilling liquidity needs, and maximizing total return.
A hypothetical 100 basis point change in interest rates would not have had a material effect on the fair market value of our investment portfolio as of December 31, 2024. To date, fluctuations in interest income have also not been significant. Our investments are made for the purpose of preserving capital, fulfilling liquidity needs, and maximizing total return.
Based on a sensitivity analysis, a 10% change in the foreign currency exchange rates would have impacted our total revenue by approximately 4% and our operating loss by approximately 2%. This calculation assumes all currencies change in the same direction and proportion relative to the U.S. dollar.
Based on a sensitivity analysis, a 10% change in the foreign currency exchange rates would have impacted our total revenue by approximately 4% and our operating loss by approximately 8%. This calculation assumes all currencies change in the same direction and proportion relative to the U.S. dollar.
We assessed our exposure to changes in interest rates by analyzing sensitivity to our operating results assuming various changes in market interest rates. A hypothetical increase of one percentage point in the interest rate as of December 31, 2023 would increase our interest expense by approximately $2.1 million annually.
We assessed our exposure to changes in interest rates by analyzing sensitivity to our operating results assuming various changes in market interest rates. A hypothetical increase of one percentage point in the interest rate as of December 31, 2024 would increase our interest expense by approximately $2.5 million annually.
Inflation Risk We are exposed to market risks related to inflation in personnel costs, third-party service providers, subcontracting costs, professional fees, and general overhead expenses. Although inflation has decreased from the 63 relative highs experienced in 2022, if inflation pressures increase in severity, we may not be able to fully offset such higher costs through price increases and productivity initiatives.
Inflation Risk We are exposed to market risks related to inflation in personnel costs, third-party service providers, subcontracting costs, professional fees, and general overhead expenses. Although inflation has decreased from the relative highs experienced in 2023, if inflation pressure increases in severity, we may not be able to fully offset such higher costs through price increases and productivity initiatives.
We do not enter into investments for trading or speculative purposes. As of December 31, 2023, we had outstanding debt of $206.6 million, which carries interest as defined in our Credit Agreement. Refer to Note 8 of the consolidated financial statements in this 2023 Annual Report for additional details.
We do not enter into investments for trading or speculative purposes. As of December 31, 2024, we had outstanding debt of $250.4 million, which carries interest as defined in our Credit Agreement. Refer to Note 8 of the consolidated financial statements in this 2024 Annual Report for additional details.
Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates. Interest Rate Risk We had cash and cash equivalents of $149.4 million as of December 31, 2023, which consisted of investments in a money market fund, cash in readily available checking accounts, and overnight repurchase investments.
Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates. Interest Rate Risk We had cash and cash equivalents of $118.6 million as of December 31, 2024, which consisted of investments in a money market fund, cash in readily available checking accounts, and overnight repurchase investments.
As such, no gains or losses due to changes in interest rates are recognized in our consolidated statements of operations unless such securities are sold prior to maturity or due to expected credit losses.
We classify investments as available-for-sale, including those with stated maturities beyond 12 months. As such, no gains or losses due to changes in interest rates are recognized in our consolidated statements of operations unless such securities are sold prior to maturity or due to expected credit losses.
Removed
These securities, which are not dependent on interest rate fluctuations that may cause principal amounts to fluctuate, are held for reinvestment and working capital purposes. In addition, as of December 31, 2023, we held $9.7 million of fixed income securities such as U.S. treasury bonds, commercial paper, corporate bonds, agency bonds, and asset-backed securities.

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