10q10k10q10k.net

What changed in APPIAN CORP's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of APPIAN CORP's 2024 and 2025 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 2025 report.

+298 added−320 removedSource: 10-K (2026-02-19) vs 10-K (2025-02-19)

Top changes in APPIAN CORP's 2025 10-K

298 paragraphs added · 320 removed · 247 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

31 edited+15 added−24 removed21 unchanged
Biggest changeThese forward-looking statements include, but are not limited to, statements concerning the following: • Our market opportunity and the expansion of our core software markets in general; • The opportunity and competitive impact of AI; • The effects of increased competition as well as innovations by new and existing competitors in our market; • Our ability to adapt to technological change and effectively enhance, innovate, and scale our platform and professional services; • Our ability to effectively manage or sustain our growth and to achieve profitability; • Potential acquisitions and integration of complementary businesses and technologies; • Our ability to maintain, or strengthen awareness of, our brand; • Perceived or actual problems with the integrity, reliability, quality, or compatibility of our platform, including unscheduled downtime or outages; • The anticipated expansion of the usage of partners to perform professional services; • General macroeconomic conditions, including rising interest rates and inflation, slower growth or recession, and geopolitical turmoil; • Future revenue, hiring plans, expenses, capital expenditures, capital requirements, and stock performance; • Our ability to attract and retain qualified employees and key personnel and manage our overall headcount; • The expected benefits to our clients and potential clients of our product and service offerings; • The timing of revenue recognition under license and cloud arrangements; • Our expectation that subscriptions revenue as a percentage of total revenue will continue to increase; • Our expectation that professional services as a percentage of total revenue will continue to decrease; • Our backlog of license, maintenance, cloud, and services agreements and the timing of future cash receipts from committed license and cloud arrangements; • Our expectation that cost of revenue, sales and marketing expenses, research and development expenses, and general and administrative expenses will continue to increase in absolute dollar values; • The fluctuation of subscriptions gross margin and professional services gross margin over time; • Our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business both in the United States and internationally; • Our ability to collect on the judgment against Pegasystems or the judgment preservation insurance; • Our ability to maintain, protect, and enhance our intellectual property; and • Costs associated with defending intellectual property infringement and other claims. 10 These statements represent the beliefs and assumptions of our management based on information currently available to us.
Biggest changeThese forward-looking statements include, but are not limited to, statements concerning the following: • Our market opportunity and the expansion of our core software markets in general; • The opportunity and disruptive impact of AI; • The effects of increased competition as well as innovations by new and existing competitors in our market; • Our ability to adapt to technological change and effectively enhance, innovate, and scale our platform and professional services; • Our ability to effectively manage or sustain our growth and to maintain profitability; • Potential acquisitions and integration of complementary businesses and technologies; • Our ability to maintain, or strengthen awareness of, our brand; • Perceived or actual problems with the integrity, reliability, quality, or compatibility of our platform, including unscheduled downtime or outages; • The anticipated expansion of the usage of partners to perform professional services; • General macroeconomic conditions, including fluctuating interest rates and inflation, slower growth or recession, and geopolitical turmoil; • Future revenue, hiring plans, expenses, capital expenditures, capital requirements, and stock performance; • Our ability to attract and retain qualified employees and key personnel and manage our overall headcount; • The expected benefits to our clients and potential clients of our product and service offerings; • The timing of revenue recognition under license and cloud arrangements; • Our backlog of license, maintenance, cloud, and services agreements and the timing of future cash receipts from committed license and cloud arrangements; • Our expectation that cost of revenue, sales and marketing expenses, research and development expenses, and general and administrative expenses will continue to increase in absolute dollar values; • The fluctuation of subscriptions gross margin and professional services gross margin over time; • Our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business both in the United States and internationally; • Our ability to collect on the judgment preservation insurance; • Our ability to maintain, protect, and enhance our intellectual property; and • Costs associated with defending intellectual property infringement and other claims.
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.
Excellence and Intensity We have two foundational values, the most important qualities that an Appian person must have: Excellence and Intensity. Every hiring decision, promotion, and 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.
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.
The principal competitive factors in our market include: 7 • 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.
These 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.
These 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 be able to 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. • In the past, we have experienced significant corporate growth, which may not be indicative of our future growth and, if we grow in the future, 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 significant 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 be able to 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; 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 continue to 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 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 and security concerns could result in additional costs and liabilities to us, 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 allowing 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, has the effect of concentrating voting control with Mr.
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 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 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 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.
Solely for convenience, trademarks and trade names referred to in this Annual Report on Form 10-K exclude the ® or TM symbols. Available Information Our website address is www.appian.com .
Solely for convenience, trademarks and trade names referred to in this Annual Report on Form 10-K exclude the ® or TM symbols. 8 Available Information Our website address is www.appian.com .
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.
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.
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.
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 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.
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.
Sales and Marketing 6 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.
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.
Our sales organization includes enterprise account executives, solution consultants, and professional services 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 post-sales professional services initiatives to ensure adoption, satisfaction, and expanded use over time.
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.
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, Indra Group, KPMG, and PwC.
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.
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, 2025, we had 28 granted patents and 21 patents pending related to our platform and its technology. None of our issued patents expire before 2034.
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.
These partners work with organizations undergoing process automation projects. When they recognize an opportunity for our platform, they 5 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.
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.
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. As of December 31, 2025, we had a total global workforce of 2,149 employees, 1,383 of which were based in the United States.
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.
Facilities As of December 31, 2025, we lease our headquarters office in McLean, Virginia, and we also have six leased offices in cities outside the United States. In addition to our leased offices, we occupied eight flexible workspaces. Our use of flexible workspaces is dependent upon our current business needs.
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.
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 39 regions and 123 availability zones. In 2025, approximately 38% of our total revenue was generated from customers outside of the United States.
At the same time, our industry-leading Customer Success team helps customers build and deploy applications on our platform to achieve their digital transformation goals more quickly. Our Growth Strategy Key elements of our growth strategy include: • Expand our customer base.
At the same time, our industry-leading professional services team helps customers build and deploy applications on our platform to achieve their process automation goals more quickly. Our Growth Strategy Key elements of our growth strategy include: • Expand our customer base.
We promote an inclusive environment where our employees can contribute their unique perspectives to help create transformative solutions for our customers. Our culture was purposefully cultivated by our four founders, who are still heavily involved in operating our business, including recruiting, interviewing, and educating new employees at Appian.
We promote an inclusive environment where our employees can contribute their unique perspectives to help create transformative solutions for our customers. Our culture was purposefully cultivated by our four founders, who are still heavily involved in operating our business.
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.
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 we continue to increase the functionality of our platform and further reduce the amount of developer skill required to quickly deliver value for our customers, we believe we have the potential to expand the use of our platform. • Offer industry solutions to accelerate customer usage . Our platform enables our customers to build applications quickly.
As we continue to increase the functionality of our platform and further reduce the amount of developer skill required to quickly deliver value for our customers, we believe we have the potential to expand the use of our platform. • Expand our international footprint.
Such forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements.
These statements represent the beliefs and assumptions of our management based on information currently available to us. Such forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or 10 implied by such forward-looking statements.
We believe we generally compete favorably with our peer group with respect to the features, security, and performance of our platform, the ease of integration of our applications, and the relatively low total cost of ownership of our applications.
We believe we generally compete favorably with our peer group with respect to the features, security, and performance of our platform, the ease of integration of our applications, and the relatively low total cost of ownership of our applications. Intellectual Property Our success depends in part upon our ability to protect our core technology and intellectual property.
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.
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.
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.
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.
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.
By utilizing our organizational capacity, we will leverage AI to drive increased usage of our platform. 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 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.
Our strategic partners work with organizations undergoing process automation projects, and when they recognize an opportunity for our platform, they often introduce us to potential customers. 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.
No single end customer accounted for more than 10% of our total revenue in 2024, 2023, or 2022.
Under our new methodology, the number of customers paying us in excess of $1 million of annual recurring revenue has grown from 115 at the end of 2024 to 140 at the end of 2025. No single end customer accounted for more than 10% of our total revenue in 2025, 2024, or 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.
Generally, our sales team targets its efforts to organizations with over 2,000 employees and $2 billion in annual revenue. In 2025, we refined our definition of a customer to better align with revenue-generating units.
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.
Our capabilities include business rules engines, pre-built connections, Application Program Interface (API) integrations, intelligent document processing (IDP), robotic process automation (RPA), and artificial intelligence (AI). • Unified Data Fabric.
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 .
In 2025, we generated approximately 80% of our subscriptions revenue from customers in these verticals. In addition, we offer pre-built solutions in certain of these industries to facilitate customer use cases. • Continue to innovate and enhance our platform .
Removed
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.
Added
Item 1. Business. Overview Appian Corporation (together with its subsidiaries, “Appian,” “the Company,” “we,” or “our”) provides process automation technology. For over 25 years, our highly reliable and scalable platform has been leveraged by large enterprises and governments.
Removed
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.
Added
Combining leading edge process orchestration and intelligence, we provide everything an organization needs to design, automate, and optimize critical processes, facilitating continuous adaptation in changing environments. The market for process automation is large and growing. According to IDC, the worldwide Business Automation Platform market was $27.8 billion in 2024 and is expected to grow to approximately $70.2 billion in 2029.
Removed
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.
Added
Core Capabilities Appian provides capabilities to tackle any process challenge. These capabilities are unified and scalable, meeting enterprise demands and easy to change as requirements evolve. • Comprehensive Automation Platform. The Appian platform provides a complete set of features and tools, allowing our customers to apply the right tool to each step of their process.
Removed
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.
Added
Appian’s patented data fabric is an integrated layer that unifies data across the enterprise without requiring companies to migrate their data, eliminating the need for additional systems and tools and accelerating time to insight. Our data fabric allows every worker, system, and agent to have the context it needs to act with confidence. • Enterprise-Grade Controls.
Removed
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.
Added
Appian delivers best-in-class security, auditability, and enterprise guardrails to support even the most mission critical workloads and most sensitive and confidential data. In addition, Appian provides process mining functionality that allows organizations to identify bottlenecks and compliance risks. • Interactive Design.
Removed
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.
Added
Our visual design tools allows business users, technical experts, and implementation specialists to collaborate on the automation, improvement, and streamlining of existing processes, assisted by AI. This iterative process continues after the initial implementation, allowing our customers to seamlessly evolve and optimize their processes over time. • Implementation Excellence.
Removed
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.
Added
Appian has an elite team of implementation and process specialists with a 25-year track record of partnering with our customers to ensure the success of their applications. Approach to AI Advances in AI offer the promise of unprecedented innovation in business productivity.
Removed
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.
Added
Despite this potential, currently most business implementations of AI fail, and the technology is frequently sidelined as an assistant rather than integrated as a digital worker within core business operations. This presents a unique opportunity for Appian, since we provide the process framework that organizations need to drive value from AI investments.
Removed
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.
Added
We believe that in order to fully realize the value of AI, organizations need to embed AI capabilities directly into workflows. To be effective, AI requires strict controls and defined guardrails that eliminate errors and hallucinations, ensuring AI activities are guided by organizational policies and regulations.
Removed
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.
Added
As a leader in process automation, we provide the tools and guardrails necessary for AI to deliver repeatable and scalable business value. The impact of AI also depends on data. Without proprietary data, AI lacks the internal context necessary to help solve specific business problems.
Removed
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.
Added
Most enterprises today struggle to provide AI with relevant data across 4 systems, while still ensuring privacy and maintaining access privileges. Our data fabric is designed to provide the data AI needs, grant secure and performant access to information from across the enterprise, and obviate the need for complex and slow data migrations.
Removed
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.
Added
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 grow our revenue by adding new customers, increasing the user base of existing customers, and expanding product usage across customers through new business processes and applications.
Removed
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.
Added
We intend to further leverage our base of partners to provide broader customer coverage and solution delivery capabilities. • Accelerate adoption of AI. O ur customers are looking to generate tangible business value from their investment in AI and are increasingly turning to Appian to achieve that goal.
Removed
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.
Added
We offer them a range of AI capabilities, ranging from AI-enhanced document processing to autonomous agents capable of acting in dynamic environments. In addition, our professional services organization provides our customers with expertise in AI implementation, in an effort to ensure that their AI applications achieve desired accuracy and security goals.
Removed
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.
Added
Commercial customers are now aggregated at the ultimate parent level, U.S. governmental entities are aggregated at the cabinet plus one level, and non-U.S. governmental entities are aggregated at the cabinet or ministry level. Prior period customer counts have been recasted for consistency purposes.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
Removed
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.
Removed
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

100 edited+16 added−13 removed265 unchanged
Biggest changeThe loss of one or more of our significant customers could materially and adversely affect 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.
Biggest changeSee our risk factor below at “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.” If we were to lose one or more of our significant customers and we were unable to recover the revenue from that customer from other customers, our revenue would significantly decline.
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.
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 represent an improvement over, or serve as a replacement or substitute for, 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.
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.
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; 28 • 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; • 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.
We 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.
We 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 the GDPR, such as conducting transfer impact assessments to determine whether additional security measures are necessary to protect the at-issue personal data.
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.
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; 25 • 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 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.
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 which may occur, 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; 19 • 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; • 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.
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.
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.
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.
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 26 by the California Department of Financial Protection and Innovation, and the FDIC was appointed receiver.
Non-compliance with these laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences.
Non-compliance with these laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil 31 and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences.
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.
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.
In the United States, these include rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the Health Insurance Portability and Accountability Act of 1996, the Gramm Leach Bliley Act, the California Consumer Privacy Act (as modified by the California Privacy Rights Act), or the CCPA, and other state laws relating to privacy and data security.
In the United States, these include rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the Health Insurance 29 Portability and Accountability Act of 1996, the Gramm Leach Bliley Act, the California Consumer Privacy Act (as modified by the California Privacy Rights Act), or the CCPA, and other state laws relating to privacy and data security.
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.
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.
General Risk Factors Unfavorable conditions in the global economy or the vertical markets we serve could limit our ability to grow our business and negatively affect our operating results. General worldwide economic conditions have experienced significant instability due to the global economic uncertainty and financial market conditions caused by the ongoing Russia-Ukraine war and unrest in the Middle East.
General Risk Factors Unfavorable conditions in the global economy or the vertical markets we serve could limit our ability to grow our business and negatively affect our operating results. 38 General worldwide economic conditions have experienced significant instability due to the global economic uncertainty and financial market conditions caused by the ongoing Russia-Ukraine war and unrest in the Middle East.
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.
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 sustain profitability, our stock price may significantly decrease.
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.
For example, the European Union’s 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.
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.
Further, the CCPA expands consumers’ rights with 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.
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.
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.
We expect seasonality will continue to affect our operating results in the future and may reduce our ability to predict cash flow and optimize the timing of our operating expenses. We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which could cause our stock price to decline.
We expect seasonality will continue to affect our operating results in the future and may reduce our ability to predict cash flow and optimize the timing of our operating expenses. 20 We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which could cause our stock price to decline.
As a result, we may be required or choose to reduce our 21 prices or change our pricing model, which could adversely affect our business, operating results, and financial condition. Our business could be adversely affected if our customers are not satisfied with the deployment services provided by us or our partners.
As a result, we may be required or choose to reduce our prices or change our pricing model, which could adversely affect our business, operating results, and financial condition. Our business could be adversely affected if our customers are not satisfied with the deployment services provided by us or our partners.
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 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 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.
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.
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.
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.
If we are unable to continue offering innovative solutions or if new or enhanced solutions fail to engage our customers, we may be unable to attract additional customers or retain our current customers, which may adversely affect our business, operating results, and financial condition. We may need to reduce or change our pricing model to remain competitive.
If we are unable to continue offering innovative solutions or if new or enhanced solutions fail to engage our customers, we may be unable to attract additional customers or retain our current customers, which may adversely affect our business, operating results, and financial condition. 21 We may continue to need to change or reduce our pricing model to remain competitive.
We may not achieve market acceptance of our pre-built solutions, which may adversely impact our financial results. We have been developing and releasing pre-built solutions on our software platform in order to maximize the value of our platform to our customers and to reduce the sales cycles associated with software sales to new and existing customers.
We may not continue to achieve market acceptance of our pre-built solutions, which may adversely impact our financial results. We have been developing and releasing pre-built solutions on our software platform in order to maximize the value of our platform to our customers and to reduce the sales cycles associated with software sales to new and existing customers.
We cannot 32 provide assurance any current or future applications for registrations for patent or trademark applications will result in the grant of any valid, enforceable intellectual property rights. Further, we cannot provide assurance any granted patent or trademark will provide the protection we seek, will be valid if challenged, or will be sufficiently broad in actions against alleged infringers.
We cannot provide assurance any current or future applications for registrations for patent or trademark applications will result in the grant of any valid, enforceable intellectual property rights. Further, we cannot provide assurance any granted patent or trademark will provide the protection we seek, will be valid if challenged, or will be sufficiently broad in actions against alleged infringers.
Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, may negatively impact the market price of our Class A common stock. In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation.
Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, may negatively impact the market price of our Class A common stock. In the past, companies that have experienced volatility in the market price of their 39 securities have been subject to securities class action litigation.
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.
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. 32 Our success and ability to compete depend in part on our ability to protect our proprietary technology and intellectual property.
Because of the large amount of data we collect and manage, it is possible hardware failures or errors in our systems could result in data loss or corruption or cause the information we collect to be incomplete or contain inaccuracies our customers regard as significant.
Because of the large amount of data we collect and manage, it is possible hardware failures or errors in our systems could result in data loss or corruption or cause the information we collect to be incomplete or contain 23 inaccuracies our customers regard as significant.
We rely on the performance of highly skilled personnel, including senior management and our engineering, professional services, sales, and technology professionals; if we are unable to retain or 20 motivate key personnel or hire, retain, and motivate qualified personnel, our business would be harmed.
We rely on the performance of highly skilled personnel, including senior management and our engineering, professional services, sales, and technology professionals; if we are unable to retain or motivate key personnel or hire, retain, and motivate qualified personnel, our business would be harmed.
Further, to the extent other, larger technology companies with greater resources and market power gain exclusive or advantageous access to large language model providers, our ability to offer competing AI services could be negatively impacted.
Further, to the extent other, larger technology companies with greater resources and market power gain exclusive or advantageous access to large language model or other AI technology providers, our ability to offer competing AI products or services could be negatively impacted.
While we maintain general liability insurance coverage and coverage for errors or omissions, we cannot provide assurance such coverage will be adequate or otherwise protect us from liabilities or damages with respect to claims alleging compromises of personal data or that such coverage will continue to be available on acceptable terms or at all. 16 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.
While we maintain general liability insurance coverage and coverage for errors or omissions, we cannot provide assurance such coverage will be adequate or otherwise protect us from liabilities or damages with respect to claims alleging compromises of personal data or that such coverage will continue to be available on acceptable terms or at all. 16 We derive a significant 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.
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.
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.
Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code.
Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the 34 quality of the code.
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.
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, 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.
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 operations, products, and services and may expose us to government enforcement or civil suits.
Also, any undetected errors or defects in third-party software could prevent the deployment or impair the functionality of our software, delay new updates or enhancements to our platform, or result in a failure of our platform, injuring our reputation.
Also, any undetected errors or defects in third-party 27 software could prevent the deployment or impair the functionality of our software, delay new updates or enhancements to our platform, or result in a failure of our platform, injuring our reputation.
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.
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.
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.
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 an event of default occurs that is not waived by the lenders, and the lenders accelerate any amounts due, we may not be able to make accelerated payments, and the lender could seek to enforce their security interests in the collateral securing such indebtedness, which could have a material adverse effect on our business and results of operations.
If an event of default occurs that is not waived by the lenders, and the lenders accelerate any amounts due, we may not be able to make accelerated payments, we may not be able to refinance our debt, and the lender could seek to enforce their security interests in the collateral securing such indebtedness, which could have a material adverse effect on our business and results of operations.
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.
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, 2025, we have determined we do not expect these limitations to impair our ability to use our NOLs prior to expiration.
In addition, we will need to continue to appropriately scale our internal business operations as well as grow our partner services systems, including our Customer Success organization and operations, to serve our growing customer base, particularly as our customer base expands over time. Any failure of or delay in these efforts could cause impaired system performance and reduced customer satisfaction.
In addition, we will need to continue to appropriately scale our internal business operations as well as grow our partner services systems, including our Professional Services organization and operations, to serve our growing customer base, particularly as our customer base expands over time. Any failure of or delay in these efforts could cause impaired system performance and reduced customer satisfaction.
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.
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 technologies are trained, refined or implemented, and may affect our ability to develop or use products or services using or incorporating AI.
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 main competitors fall into four categories: (1) providers of custom software and 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 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.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. 39 I tem 1B. Unresolved Staff Comments. None.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. 40 I tem 1B. Unresolved Staff Comments. None.
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.
The emerging technologies described as AI, which include machine learning, generative AI, including large language models, 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.
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.
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, 2026.
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.
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 29% of our publicly traded Class A common stock as of December 31, 2025; • Changes in the anticipated future size and growth rate of our market; and • General economic, regulatory, and market conditions.
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.
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, 2025. Further, 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.
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, 2025. Consequently, Mr.
As generative AI and other AI tools are relatively new, sophisticated, and evolving quickly, we cannot predict all of the risks that may arise from our current or future use of AI in our business.
As generative AI and other AI technologies are relatively new, sophisticated, and evolving quickly, we cannot predict all of the risks that may arise from our current or future use of AI in our business.
Such declines, however, would negatively affect our revenue, and to a lesser extent, deferred revenue balance in future periods, and the effect of significant downturns in sales and market acceptance of our platform and potential changes in our rate of renewals may not be fully reflected in our results of operations until future periods.
Such increases or declines, however, would affect our revenue, and to a lesser extent, deferred revenue balance in future periods, and the effect of significant downturns in sales and market acceptance of our platform and potential changes in our rate of renewals may not be fully reflected in our results of operations until future periods.
Finally, as with any insurance policy, our ability to collect judgment preservation insurance proceeds is subject to the financial soundness of the insurers underwriting our policy, as well as any denial of coverage under the policy.
Further, as with any insurance policy, our ability to collect judgment preservation insurance proceeds is subject to the financial soundness of the insurers underwriting our policy, as well as any denial of coverage under the policy.
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.
Should we fail to effectively compete with, adopt, or integrate emerging 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.
As the legal and regulatory framework encompassing AI matures, it may result in increases in our operational and development expenses that impact our ability to develop, earn revenue from, or utilize any products or services incorporating AI.
As the legal and regulatory framework encompassing AI evolves, it may result in increases in our operational, compliance, and development expenses that impact our ability to develop, earn revenue from, or utilize any products or services incorporating AI.
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.
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, incomplete, misleading, biased, or otherwise flawed data produced by any such AI technologies 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.
Additionally, if any of our employees, contractors, vendors or service providers use any third-party software incorporating AI in connection with our business or the services they provide to us, it may lead to the inadvertent disclosure or incorporation of our confidential, sensitive or proprietary information into publicly available training sets which may impact our ability to realize the benefit of, or adequately maintain, protect and enforce our intellectual property or sensitive or confidential information, harming our competitive position and business.
If any of our employees, contractors, vendors, or service providers use any third-party AI technologies in connection with our business or the products or services they provide to us, it may lead to the inadvertent disclosure or incorporation of our confidential, sensitive, or proprietary information into publicly available or other third-party training sets which may impact our ability to realize the benefit of, or adequately maintain, protect and enforce our intellectual property or sensitive or confidential information, harming our competitive position and business.
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.
As of December 31, 2025, we had 28 issued patents and 21 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.
Moreover, given we rely on third party providers for underlying large language model technology, as do many others in the software industry, we do not have full access to the underlying software code to address such issues.
Moreover, given we rely on third-party providers for the underlying large language models and other technology, as do many others in the software industry, we do not have full access to the underlying software code to address such issues.
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.
For example, during the years ended December 31, 2025, 2024, and 2023, revenue from U.S. federal government agencies represented 25.3%, 23.9%, and 21.3% of our total revenue, respectively, and the top three U.S. federal government customers generated 3.9%, 4.0%, and 4.2% of our total revenue for the years ended December 31, 2025, 2024, and 2023, respectively.
We have a Senior Secured Credit Facilities Credit Agreement (as amended from time to time, the “Credit Agreement”) with First Citizens Bank & Trust Company, as administrative agent and collateral agent for the lenders thereto, which as of December 31, 2024, provides for a five-year term loan facility in an aggregate principal amount of $200.0 million and 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).
We have a Senior Secured Credit Facilities Credit Agreement (as amended from time to time, the “Credit Agreement”) with First Citizens Bank & Trust Company, as administrative agent and collateral agent for the lenders thereto, which as of December 31, 2025, provides for a term loan facility with a maturity date of November 3, 2027, in an aggregate principal amount of $200.0 million and 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).
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.
We derive, and expect to increasingly derive in the future, a substantial portion of our revenue from the sale of software subscriptions. For 2025, 2024, and 2023, approximately 79.3%, 79.5%, and 75.6%, respectively, of our total revenue was subscriptions revenue.
Furthermore, our competitors, customers, or other third parties may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively. Given we rely on third party providers for underlying large language model technology, our ability to differentiate our AI offerings from our 18 competitors could be limited.
Furthermore, our competitors, customers, or other third parties may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively. Given we rely on third-party providers for the underlying large language models and other technology, our ability to differentiate our AI products or services from our competitors could be limited.
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 have focused on optimizing 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 in the past several years.
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.
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. Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate existing employees.
If we are unable to maintain consistent revenue or revenue growth, our stock price could be volatile, and it may be difficult to achieve and maintain profitability. Our revenue for any prior quarterly or annual periods should not be relied upon as any indication of our future revenue or revenue growth.
If we are unable to maintain consistent revenue or revenue growth, our stock price could be volatile. Our revenue for any prior quarterly or annual periods should not be relied upon as any indication of our future revenue or revenue growth.
Although we expect we could receive similar services from other third parties if any of our arrangements with AWS are terminated, we could experience interruptions on our platform and in our ability to make our platform available to customers, as well as delays and additional expenses in arranging alternative cloud infrastructure services.
Although we expect we could receive similar services from other third parties if any of our arrangements with AWS are terminated, we could experience interruptions on our platform and in our ability to make our platform available to customers, as well as delays and additional expenses in arranging alternative cloud infrastructure services. 24 Our growth depends in part on the success of our strategic relationships with third parties.
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.
Our ability to use net operating losses to offset future taxable income may be subject to certain limitations. As of December 31, 2025, we had gross U.S. federal and state net operating loss carryforwards, or NOLs, of $325.6 million available to offset future taxable income.
Our growth depends in part on the success of our strategic relationships with third parties. In order to grow our business, we anticipate we will continue to depend on relationships with strategic partners to provide broader customer coverage and solution delivery capabilities. Identifying partners, and negotiating and documenting relationships with them, requires significant time and resources.
In order to grow our business, we anticipate we will continue to depend on relationships with strategic partners to provide broader customer coverage and solution delivery capabilities. Identifying partners, and negotiating and documenting relationships with them, requires significant time and resources.
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.
Risks Related to Our Business and Industry If we are unable to sustain our revenue growth rate, we may not be able to maintain profitability in the future. We have experienced revenue growth with revenue of $726.9 million, $617.0 million, and $545.4 million in 2025, 2024, and 2023, respectively.
Although we make efforts to identify the solutions that will receive 22 favorable market acceptance, there can be no guarantee any solution will become the source of material revenue, and the investment in the solution may not produce a positive return.
Each solution requires an investment in development, marketing, sales, support, finance, and legal resources to bring the solution to market. Although we make efforts to identify the solutions that will receive favorable market acceptance, there can be no guarantee any solution will become the source of material revenue, and the investment in the solution may not produce a positive return.
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.
As of December 31, 2025, we had tax-effected Swiss NOLs of $26.2 million. We also had tax-effected Swiss NOL expirations of $3.0 million in 2025, and some of our foreign NOLs will continue to expire each year if unutilized.
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. 27 The functionality and attractiveness of our platform depends, in part, on our ability to integrate our platform with third-party applications and platforms, including customer relationship management, human resources information, accounting, and enterprise resource planning systems our customers use and from which they obtain data.
The functionality and attractiveness of our platform depends, in part, on our ability to integrate our platform with third-party applications and platforms, including customer relationship management, human resources information, accounting, and enterprise resource planning systems our customers use and from which they obtain data.
The use of generative AI, a technology that has evolved significantly over the years, exposes us to additional risks such as damage to our reputation, competitive position, business, legal, and regulatory risks, and additional costs.
The use of generative AI, a technology that has evolved significantly over recent years, exposes us to additional risks, such as competitive, reputational, operational, legal, regulatory and other risks, including additional costs.
As a result, we may be forced to reduce the prices we charge for software and may be required to offer terms less favorable to us for new and renewing agreements. We generally sell our software on a per-user basis or through non-user-based single application licenses.
In the past, we have changed or reduced the prices we charge for software and may continue to need to do so. In addition, we may be required to offer terms less favorable to us for new and renewing agreements. We generally sell our software on a per-user basis or through non-user-based single application licenses.
A significant portion of our revenue is generated from subscriptions sold to governmental entities, both in the United States and internationally.
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. A significant portion of our revenue is generated from subscriptions sold to governmental entities, both in the United States and internationally.
While we make efforts to implement and use AI products and services to improve the accuracy and reduce the chances of hallucinatory outputs, we cannot completely eliminate the chances of inaccurate or false outputs.
While we make efforts to implement and use AI technologies designed to improve the accuracy and reduce the chances of hallucinatory inferences or outputs, we cannot completely eliminate the foregoing risks.
If we are unsuccessful in establishing or maintaining our relationships with third parties, our ability to compete in the marketplace or to grow our revenue could be impaired and our operating results may suffer.
If we are unsuccessful in establishing or maintaining our relationships with third parties, our ability to compete in the marketplace or to grow our revenue could be impaired and our operating results may suffer. Even if we are successful, we cannot be sure these relationships will result in increased customer usage of our platform or increased revenue.
While we have expanded our operations and headcount in prior periods, such measures are not indicative of our future growth, and are subject to reversal in the other direction, as we have done at various times in the past. Our growth has placed, and any future growth will place, a significant strain on our management, administrative, operational, and financial infrastructure.
While we have expanded our operations and headcount in prior periods, such measures are not indicative of our future growth, and are subject to reversal in the other direction, as we have done at various times in the past.
In addition, as a multinational organization, we may be subject to taxation in several jurisdictions around the world with increasingly complex tax laws and the amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws, or revised interpretations of existing tax laws and precedents.
Any increased tax burden may decrease our ability or willingness to compete in relatively burdensome tax jurisdictions, result in substantial tax liabilities related to past sales, or otherwise harm our business and operating results. 35 In addition, as a multinational organization, we may be subject to taxation in several jurisdictions around the world with increasingly complex tax laws and the amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws, or revised interpretations of existing tax laws and precedents.
On May 9, 2022, a jury returned a verdict that Pegasystems, Inc., willfully and maliciously misappropriated trade secrets from us and awarded us $2.036 billion in damages for Pegasystems’ unjust enrichment for usage of our trade secrets.
On May 9, 2022, a jury returned a verdict that Pegasystems, Inc., willfully and maliciously misappropriated trade secrets from us and awarded us $2.036 billion in damages for Pegasystems’ unjust enrichment for usage of our trade secrets. On January 8, 2026, the Supreme Court of Virginia issued a decision reversing the judgment against Pegasystems and remanding for a new trial.

… 49 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed7 unchanged
Biggest changeOur cybersecurity risk management system is designed to align with industry best practices, including International Organization for Standardization, or ISO, standards, provide a framework for handling cybersecurity threats and incidents, and facilitate coordination across different departments of our company.
Biggest changeOur cybersecurity risk management system is designed to align with industry best practices, including with the National Institute of Standards & Technology’s Cyber Security Framework (“NIST”) and other applicable industry standards, provide a framework for handling cybersecurity threats and incidents, and facilitate coordination across different departments of our company.
Our 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.
Our CISO, who joined Appian in May 2021, brings over 20 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

2 edited+0 added−0 removed0 unchanged
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.
Biggest changeItem 2. Properties. As of December 31, 2025, 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 2030.
In addition, we utilize flexible workspaces depending on the occupancy needs in each of the countries we operate in. We believe our facilities are suitable and adequate to meet our needs. 40
In addition, we utilize flexible workspaces depending on the occupancy needs in each of the countries we operate in. We believe our facilities are suitable and adequate to meet our needs. 41

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+1 added−0 removed8 unchanged
Biggest changeThe 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.
Biggest changeOther 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.
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management time and resources, and other factors. Item 4. Mine Safety Disclosures. Not applicable. 41 PART II
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management time and resources, and other factors. Item 4. Mine Safety Disclosures. Not applicable. 42 PART II
Added
On January 6, 2026, the Supreme Court of Virginia issued an opinion affirming the opinion rendered by the Court of Appeals on both sides and remanding the case for a retrial. The timeline for any further appeals or any retrial will be in the control of the courts of Virginia.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed6 unchanged
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.
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, 2020 2021 2022 2023 2024 2025 Appian Corporation $ 100.00 $ 40.23 $ 20.09 $ 23.23 $ 20.23 $ 21.85 Nasdaq Global Market Composite $ 100.00 $ 84.84 $ 46.95 $ 49.97 $ 53.93 $ 52.41 Nasdaq Computer $ 100.00 $ 137.86 $ 88.54 $ 147.39 $ 203.26 $ 258.44 44 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, 2025 6,406 $ 30.39 6,406 723,518 November 1 to November 30, 2025 7,077 $ 29.46 7,077 716,441 December 1 to December 31, 2025 5,026 $ 39.33 5,026 711,415 Total 18,509 $ 32.46 18,509 711,415 (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 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. 43 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.
We have filed a registration statement on S-8 that covers 1,000,000 shares. Item 6. [Reserved] 44
We have filed a registration statement on S-8 that covers 1,000,000 shares. Item 6. [Reserved] 45
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.
The following graph shows a comparison from December 31, 2020 through December 31, 2025, 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 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.
As of February 17, 2026, there were 15 holders of record of our Class A common stock and 28 holders of record of our Class B common stock.

Item 7. Management's Discussion & Analysis

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

95 edited+19 added−36 removed29 unchanged
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.
Biggest changeGAAP Measure Stock-Based Compensation Litigation Expense JPI Amortization Severance Costs Lease Impairment and Lease-Related Charges Short-Swing Profit Payment Unrealized Foreign Exchange Rate Gains and Losses Non-GAAP Measure Year Ended December 31, 2024 Subscriptions cost of revenue $ 65,680 $ (1,638) $ — $ — $ — $ — $ — $ — $ 64,042 Professional services cost of revenue 102,560 (5,925) — — (1,398) — — — 95,237 Total cost of revenue 168,240 (7,563) — — (1,398) — — — 159,279 Sales and marketing expense 238,454 (8,526) — — (3,937) — — — 225,991 Research and development expense 163,400 (12,077) — — (5) — — — 151,318 General and administrative expense 107,781 (10,879) (4,602) (15,795) (194) (6,104) — — 70,207 Total operating expense 509,635 (31,482) (4,602) (15,795) (4,136) (6,104) — — 447,516 Operating (loss) income (60,853) 39,045 4,602 15,795 5,534 6,104 — — 10,227 Non-operating expense (income) 30,355 — — — — 1,799 (16,697) 15,457 Income tax impact of above items 1,054 1,499 — — 1,096 — — 479 4,128 Net (loss) income (92,262) 37,546 4,602 15,795 4,438 6,104 (1,799) 16,218 (9,358) Net (loss) income per share, basic and diluted $ (1.26) $ 0.51 $ 0.06 $ 0.22 $ 0.06 $ 0.08 $ (0.02) $ 0.22 $ (0.13) 58 GAAP Measure Stock-Based Compensation Litigation Expense JPI Amortization Severance Costs Unrealized Foreign Exchange Rate Gains and Losses Non-GAAP Measure Year Ended December 31, 2023 Subscriptions cost of revenue $ 54,900 $ (1,690) $ — $ — $ (30) $ — $ 53,180 Professional services cost of revenue 105,442 (6,354) — — (158) — 98,930 Total cost of revenue 160,342 (8,044) — — (188) — 152,110 Sales and marketing expense 249,968 (11,247) — — (4,737) — 233,984 Research and development expense 160,420 (12,864) — — (1,022) — 146,534 General and administrative expense 82,606 (11,232) 2,064 (6,038) (352) — 67,048 Total operating expense 492,994 (35,343) 2,064 (6,038) (6,111) — 447,566 Operating (loss) income (107,973) 43,387 (2,064) 6,038 6,299 — (54,313) Non-operating expense (income) 259 — — — — 12,267 12,526 Income tax impact of above items 3,209 1,302 — — 139 (812) 3,838 Net (loss) income (111,441) 42,085 (2,064) 6,038 6,160 (11,455) (70,677) Net (loss) income per share, basic and diluted $ (1.52) $ 0.58 $ (0.03) $ 0.08 $ 0.08 $ (0.16) $ (0.97) The following table reconciles GAAP net income (loss) to adjusted EBITDA for the years ended December 31, 2025, 2024, and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 GAAP net income (loss) $ 1,233 $ (92,262) $ (111,441) Other (income) expense, net (26,685) 6,773 (17,603) Interest expense 20,850 23,582 17,862 Income tax expense 5,211 1,054 3,209 Depreciation expense and amortization of intangible assets 9,706 10,030 9,473 Stock-based compensation expense 41,540 39,045 43,387 Litigation Expense 10,407 4,602 (2,064) JPI Amortization 12,508 15,795 6,038 Severance Costs — 5,534 6,299 Lease Impairment and Lease-Related Charges 2,032 6,104 — Adjusted EBITDA $ 76,802 $ 20,257 $ (44,840) Liquidity and Capital Resources The following table presents selected financial information and statistics pertaining to liquidity and capital resources as of December 31, 2025 and 2024 (in thousands): As of December 31, 2025 2024 Cash and cash equivalents $ 135,810 $ 118,552 Short-term investments and marketable securities 51,415 41,308 Property and equipment, net 32,087 37,109 Working capital 67,317 80,787 59 We believe our existing cash and cash equivalents and short-term investments and marketable securities, together with any positive cash flows from operations and available borrowings under our revolving credit facility, will be sufficient to support working capital and capital expenditure requirements for at least the next twelve months.
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.
Other Non-Operating (Income) Expense Other (Income) Expense, 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.
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 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 income (loss), non-GAAP income tax expense, non-GAAP net income (loss), and non-GAAP net income (loss) per share, basic and diluted.
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.
We define adjusted EBITDA as net income (loss) before (1) other (income) expense, 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.
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.
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 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.
We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to measures used by management in its financial and operational decision-making and (2) they are used by institutional investors and the analyst community to help them analyze the health of our business.
We believe these non-GAAP financial 56 measures are useful to investors both because (1) they allow for greater transparency with respect to measures used by management in its financial and operational decision-making and (2) they are used by institutional investors and the analyst community to help them analyze the health of our business.
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 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.
Revenue Recognition We generate subscriptions revenue primarily through the sale of cloud subscriptions bundled with maintenance and support and hosting services and term license subscriptions bundled with maintenance and support. We generate professional services revenue from fees for our consulting services, including application development and deployment assistance and training related to our platform.
Revenue Recognition We generate subscriptions revenue primarily through the sale of cloud subscriptions bundled with maintenance and support and hosting services, license subscriptions, and maintenance and support for license subscriptions. We generate professional services revenue from fees for our consulting services, including application development and deployment assistance and training related to our platform.
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.
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 cash on hand.
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 income (loss) as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.
As a result, a substantial portion of the subscriptions revenue we report in each period will be derived from the recognition of deferred revenue relating to agreements entered into during previous periods. Consequently, a decline in new sales or renewals in any one period may not be immediately reflected in our revenue results for that period.
As a result, a substantial portion of the subscriptions revenue we report in each period will be derived from the recognition of deferred revenue relating to agreements entered into during previous periods. Consequently, an increase or decline in new sales or renewals in any one period may not be immediately reflected in our revenue results for that period.
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 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 as well as increase market awareness of our platform.
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.
We have 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.
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.
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 license subscription agreements due to the upfront revenue recognition.
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.
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, customer support and information security teams, amortization of acquired technology, and allocated overhead costs.
Maintenance and support is sold on a standalone basis with renewals of our legacy perpetual software licenses and within a narrow range of the net license fee, resulting in a defined economic relationship existing between the license and maintenance and support. 3.
Maintenance and support for license subscriptions is sold on a standalone basis with renewals of our legacy perpetual software licenses and within a narrow range of the net license fee, resulting in a defined economic relationship existing between the license and maintenance and support. 3.
The most directly comparable GAAP financial measure to adjusted EBITDA is net loss. Users should consider the limitations of using adjusted EBITDA, including the fact this measure does not provide a complete measure of our operating performance.
The most directly comparable GAAP financial measure to adjusted EBITDA is net income (loss). Users should consider the limitations of using adjusted EBITDA, including the fact this measure does not provide a complete depiction of our operating performance.
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.
Our gross margin may fluctuate from period to period based on the aforementioned 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.
However, the amount of backlog relative to the total value of our contracts can change from quarter to quarter and year to year for several reasons, including the specific timing and duration of cloud and on-premises term license subscription agreements with large customers, the specific timing of customer renewals, changes in customer financial circumstances, and foreign currency fluctuations.
However, the amount of backlog relative to the total value of our contracts can change from quarter to quarter and year to year for several reasons, including the specific timing and duration of cloud and license subscription agreements with large customers, the specific timing of customer renewals, changes in customer financial circumstances, and foreign currency fluctuations.
The degree to which prospective customers recognize the need for our software platform and its ability to enable their organizations to digitally transform, and subsequently allocate budget dollars to purchase our software, will drive our ability to acquire new customers and increase sales to existing customers, which, in turn, will affect our future financial performance. • Growth of Our Customer Base - We believe we have a substantial opportunity to grow our customer base.
The degree to which prospective customers recognize the need for our software platform and its ability to enable their organizations to automate processes, and subsequently allocate budget dollars to purchase our software, will drive our ability to acquire new customers and increase sales to existing customers, which, in turn, will affect our future financial performance. • Growth of Our Customer Base - We believe we have a substantial opportunity to grow our customer base.
Our subscription contracts are priced based primarily on the number of users who access and utilize the applications built on our platform or, alternatively, non-user-based single application licenses. Our subscription contract terms generally vary from one to three years with most providing for payment in advance on an annual, quarterly, or monthly basis.
Our subscription contracts are priced based on the number of users who access and utilize the applications built on our platform, non-user-based single application licenses, or consumption-based pricing. Our subscription contract terms generally vary from one to three years with most providing for payment in advance on an annual, quarterly, or monthly basis.
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.
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).
Such a decline, however, will negatively affect our revenue in future periods. Accordingly, the effect of significant downturns in sales, the market acceptance of our platform, or potential changes in our rate of renewals may not be fully reflected in our results of operations until future periods.
Such changes, however, will affect our revenue in future periods. Accordingly, the effect of significant downturns in sales, the market acceptance of our platform, or potential changes in our rate of renewals may not be fully reflected in our results of operations until future periods.
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.
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 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 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. License subscriptions are offered when the customer prefers to self-manage the deployment of our platform within their own infrastructure.
Our ability to continue to grow our customer base is dependent, in part, upon our ability to differentiate ourselves within the increasingly competitive markets in which we participate. • Further Penetration of Existing Customers - Our sales team seeks to generate additional revenue from existing customers by adding new users to our platform.
Our ability to continue to grow our customer base is dependent, in part, upon our ability to differentiate ourselves within the increasingly competitive markets in which we participate. • Further Penetration of Existing Customers - Our sales team seeks to generate additional revenue from existing customers by adding new users or application licenses.
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.
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 $726.9 million, $617.0 million, and $545.4 million in 2025, 2024, and 2023, respectively.
Maintenance and support - We establish the SSP of maintenance and support as a percentage of the stated net subscription fee based on observable pricing of maintenance and support renewals from our legacy perpetual software licenses. 4.
Maintenance and support - We establish the SSP of maintenance and support for license subscriptions as a percentage of the stated net subscription fee based on observable pricing of maintenance and support renewals from our legacy perpetual software licenses. 4.
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.
Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 For a discussion and analysis of changes in financial condition and results of operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 19, 2025.
Although we believe the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. We believe the following accounting estimates embedded in our revenue recognition involve a high degree of judgment and complexity.
Although we believe the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. We believe the following accounting estimates embedded in our revenue recognition involve judgment and complexity.
Key Factors Affecting Our Performance The following are several key factors that affect our performance: • Market Adoption of Our Platform - Our ability to grow our customer base and drive market adoption of our platform is affected by the pace at which organizations digitally transform.
Key Factors Affecting Our Performance The following are several key factors that affect our performance: • Market Adoption of Our Platform - Our ability to grow our customer base and drive market adoption of our platform is affected by the pace at which organizations automate processes.
We expect our revenue growth will be primarily driven by the pace of adoption and penetration of our platform. We offer a leading custom software platform and intend to continue to invest to expand our customer base.
We expect our revenue growth will be primarily driven by the pace of adoption and penetration of our platform. We offer a leading process automation platform and intend to continue to invest to expand our customer base.
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.
These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, unrealized foreign exchange rate gains and losses, 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 impairments 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 an investor, or Short-Swing Profit Payment.
On-premises term license subscriptions - Given the highly variable selling price of our term license subscriptions, we have established the SSP of term license subscriptions using a residual approach after first determining the SSP of maintenance and support.
License subscriptions - Given the highly variable selling price of our license subscriptions, we have established the SSP of license subscriptions using a residual approach after first determining the SSP of the related maintenance and support.
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.
Research and Development Expense 50 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, cloud computing and software expenses, and allocated overhead costs.
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.
In 2025, 2024, and 2023, 37.6%, 36.6%, and 35.8%, respectively, of our total revenue was generated from customers outside of the United States. As of December 31, 2025, we operated in 16 countries.
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.
With respect to new versus existing customers, $77.0 million of the increase in subscriptions revenue was derived from expanded deployments and corresponding sales of additional subscriptions to existing customers while $8.9 million was driven from sales of subscriptions to new 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.
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.
This change was primarily driven by decreased pre-tax book income in certain international subsidiaries in 2024. The change in pre-tax book income was primarily attributable to increases in unrealized foreign exchange losses.
This change was primarily driven by increased pre-tax book income in certain international subsidiaries in 2025. The change in pre-tax book income was primarily attributable to increases in unrealized foreign exchange gains.
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.
Backlog Backlog represents non-cancellable future amounts to be recognized under cloud and license subscription agreements and is representative of our remaining performance obligations. As of December 31, 2025 and 2024, we had backlog of $661.8 million and $546.0 million, respectively. Approximately 33% of our backlog as of December 31, 2025 is not expected to be recognized in 2026.
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.
Cloud Subscriptions Revenue Year Ended December 31, 2025 2024 2023 Cloud subscriptions revenue $ 437,361 $ 368,030 $ 304,481 Cloud subscriptions revenue includes cloud subscriptions bundled with maintenance and support and hosting services. In 2025, 2024, and 2023, 75.9%, 75.0%, and 73.8%, respectively, of subscriptions revenue was cloud subscriptions revenue.
Cloud subscriptions - Given the highly variable selling price of our could subscriptions, we establish the SSP of our cloud subscriptions using a residual approach after first determining the SSP of consulting and training services. 2.
We establish SSP as follows: 62 1. Cloud subscriptions - Given the highly variable selling price of our cloud subscriptions and the related maintenance and support, we establish the SSP of our cloud subscriptions using a residual approach after first determining the SSP of consulting and training services. 2.
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.
Other (Income) Expense, Net Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Other (income) expense, net $ (26,685) $ 6,773 $ (33,458) *** % of revenue (3.7) % 1.1 % *** Indicates a percentage change that is not meaningful Other income, net was $26.7 million in 2025 compared to other expense, net of $6.8 million in 2024.
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.
The unpredictability of the timing of providing services related to significant professional services agreements sold on a standalone basis may cause significant fluctuations in our cost of professional services which, in turn, may impact our financial results. 49 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 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.
We have been using the proceeds to fund the growth of our business and support our working capital requirements.
The Credit Agreement matures on November 3, 2027. We have been using the proceeds to fund the growth of our business and support our working capital requirements.
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.
Revenue from U.S. federal government agencies represented 25.3%, 23.9%, and 21.3% of our total revenue in 2025, 2024, and 2023, respectively. No single end-customer accounted for more than 10% of our total revenue in 2025, 2024, and 2023. We offer our platform globally. Our platform supports multiple languages to facilitate collaboration and address challenges in multinational organizations.
Furthermore, we have a non-cancellable cloud hosting arrangement with Amazon Web Services that contains provisions for minimum purchase commitments. Specifically, purchase commitments under the agreement total $220.0 million over five years. The agreement, which was originated in July 2021 and amended in October 2024, currently contains minimum annual spending requirements of $44.0 million from November 2024 to October 2029.
Specifically, purchase commitments under the agreement total $220.0 million over five years. The agreement, which was originated in July 2021 and amended in October 2024, currently contains minimum annual spending requirements of $44.0 million from November 2024 to October 2029.
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.
In 2025, we generated approximately 80% of our subscriptions revenue from customers in these verticals. In addition, we have established relationships with strategic partners who work with organizations undergoing process automations.
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 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.
Income Tax Expense Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Income tax expense $ 1,054 $ 3,209 $ (2,155) (67.2)% % of revenue 0.2 % 0.6 % Income tax expense decreased by $2.2 million in 2024 as compared to the corresponding period in 2023.
Income Tax Expense Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Income tax expense $ 5,211 $ 1,054 $ 4,157 *** % of revenue 0.7 % 0.2 % Income tax expense increased by $4.2 million in 2025 as compared to the corresponding period in 2024.
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.
Professional services and product support personnel costs increased due to an 11.5% increase in headcount and a $5.0 million increase in bonus expense from December 31, 2024 to December 31, 2025, both of which were partially offset by a $1.1 million decrease in severance costs.
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.
Additional expenses included in this category are non-personnel costs such as travel-related expenses, information security costs related to the protection of our internal systems, 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.
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.
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.
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.
We believe our investment in professional services, including strategic partners building their practices around Appian, will drive increased adoption of our platform. 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.
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.
Our subscriptions revenue was $576.5 million, $490.6 million, and $412.3 million in 2025, 2024, and 2023, respectively, and includes sales of our cloud subscriptions, license subscriptions, and maintenance and support. Our cloud subscriptions revenue was $437.4 million, $368.0 million, and $304.5 million in 2025, 2024, and 2023, respectively.
Hosting costs increased due to an increase in sales of our cloud offering during 2024.
Hosting costs increased due to an increase in sales of our cloud offering during 2025. Contractor costs increased in 2025 compared to 2024 due to an increase in the usage of subcontractors for professional service engagements.
In addition, in February 2024 our Board of Directors authorized a share repurchase program, under which we repurchased approximately 1.3 million shares of our common stock for approximately $50.0 million during the first quarter of 2024.
Over the past two years, we have also initiated several share repurchase programs as follows: • In February 2024, our Board of Directors authorized a share repurchase program, under which we repurchased approximately 1.3 million shares of our common stock for approximately $50.0 million during the first quarter of 2024. • In May 2025, our Board of Directors authorized a second program to repurchase up to $10.0 million of our common stock from May 2025 to December 2025.
Travel and entertainment expenses rose due to increases in airfare and lodging associated with a higher number of in-person events and engagements relative to the prior year. 54 Research and Development Expense Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Research and development $ 154,977 $ 153,098 $ 1,879 1.2% % of revenue 25.1 % 28.1 % Research and development expense increased $1.9 million, or 1.2%, in 2024 compared to 2023, primarily due to a $1.9 million increase in employee medical benefits and a $1.8 million increase in information technology costs.
Travel and entertainment expenses increased due to increases in airfare and lodging associated with a higher number of in-person events and engagements relative to the prior year. 54 Research and Development Expense Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Research and development $ 172,188 $ 163,400 $ 8,788 5.4% % of revenue 23.7 % 26.5 % Research and development expense increased $8.8 million, or 5.4%, in 2025 compared to 2024, primarily due to a $5.7 million increase in personnel costs and a $1.3 million increase in cloud computing costs.
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.
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 information technology costs.
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.
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. We generally bill customers and collect payment for subscriptions to our platform in advance on an annual, quarterly, or monthly basis.
Additionally, they often go to market with their own pre-built solutions using our platform, delivering software license revenue to us. We intend to continue focusing on adding new customers with our strategic partners.
Our partners then provide professional services directly to the customers using our software. Additionally, they often go to market with their own pre-built solutions using our platform, delivering software license revenue to us. We intend to continue to invest in both our professional services group and strategic partnerships to drive increased adoption of our platform.
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.
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.
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.
Professional services gross margin is also impacted by the amount of services performed by subcontractors and partners as opposed to internal resources. The professional services margins are 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.
Variable consideration is also included in the transaction price only to the extent it is probable a significant reversal will not occur.
Variable consideration is included in the transaction price to the extent it is probable a significant reversal will not occur and is subject to subsequent true-up adjustments, although such true-up adjustments are not expected to be material.
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 have invested in our professional services organization to help ensure customers are able to build and deploy applications on our platform. We also have several strategic partnerships, including with Accenture, Capgemini, Deloitte, Indra Group, KPMG, and PwC, which allow them to refer customers to us in order to purchase software subscriptions.
The variable components of our contracts, which have been nominal to date, include performance penalties, extended payment terms or implied price concessions, and warranty refunds. If necessary, we estimate these components using the expected value method, which estimates variable consideration as the sum of probability-weighted amounts in a range of possible consideration amounts.
The variable components of our contracts, which have been nominal to date, include performance penalties, extended payment terms or implied price concessions, and warranty refunds.
Although research and development personnel headcount increased 3.1% from December 31, 2023 to December 31, 2024, personnel costs decreased due to realized cost savings from our product development center in India, a $1.0 million decrease in severance expense, and a $0.8 million decrease in stock compensation expense.
Although research and development headcount was relatively flat from December 31, 2024 to December 31, 2025, personnel costs increased due to a $4.8 million increase in bonus expense and a $0.3 million increase in stock compensation expense.
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.
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) license subscriptions, and (3) maintenance and support for license subscriptions.
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.
We are currently 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 $14.7 million in connection with securing our leased office space. We expect future sources of funds to consist primarily of cash generated from sales of subscriptions and the related professional services.
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 subscriptions revenue was driven by a $69.3 million increase in cloud subscriptions revenue, a $13.7 million increase in license subscriptions revenue, and a $2.9 million increase in maintenance and support revenue.
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.
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, contractors, and cloud computing services.
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.
These increases were partially offset by a $1.7 million decrease in cloud computing costs. Marketing costs increased due to higher spending on marketing materials and advertising, both of which were partially offset by lower spending on marketing events.
We expect future sources of funds to consist primarily of cash generated from sales of subscriptions and the related professional services. We may also elect to raise additional sources of funding through draws on our revolving credit facility, entering into new debt financing arrangements or conducting additional public offerings.
We may also elect to raise additional sources of funding through entering into new debt financing arrangements or conducting additional public offerings.
The SSP is the observable price at which we sell the product or service separately. In the absence of observable pricing, we estimate SSP using the residual approach. We establish SSP as follows: 62 1.
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 SSP is the observable price at which we sell the product or service separately. In the absence of observable pricing, we estimate SSP using the residual approach.
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.
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. • 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 47 speed, meet the evolving needs of our customers, and take advantage of our market opportunity.
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.
This increase was partially offset by a $3.2 million decrease in other income related to a non-recurring local government incentive payment and short-swing profit disgorgement payments to us from a public stockholder of our Class A common stock that were both recognized in the prior year. 55 Interest Expense Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Interest expense $ 20,850 $ 23,582 $ (2,732) (11.6)% % of revenue 2.9 % 3.8 % Interest expense decreased $2.7 million in 2025 as compared to the corresponding period in 2024, primarily due to a lower effective interest rate and lower outstanding principal compared to the prior year period.
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.
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 provides process automation technology. For over 25 years, our highly reliable and scalable platform has been leveraged by large enterprises and governments.
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.
Historical Cash Flows Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Beginning cash and cash equivalents $ 118,552 $ 149,351 $ (30,799) (20.6) % Operating activities: Net income (loss) 1,233 (92,262) 93,495 *** Stock-based compensation and other non-cash adjustments 31,776 72,732 (40,956) (56.3) Changes in working capital 29,865 26,408 3,457 13.1 Net cash provided by operating activities 62,874 6,878 55,996 *** Investing activities: Net cash used by investing activities (12,826) (35,390) 22,564 (63.8) Financing activities: Net cash used by financing activities (36,278) (258) (36,020) *** Effect of exchange rates 3,488 (2,029) 5,517 *** Net increase (decrease) in cash and cash equivalents 17,258 (30,799) 48,057 *** Ending cash and cash equivalents $ 135,810 $ 118,552 $ 17,258 14.6 % *** Indicates a percentage that is not meaningful.
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.
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. In 2025, we 46 recorded net income of $1.2 million while in 2024 and 2023, we incurred net losses of $92.3 million and $111.4 million, respectively.
This decrease was partially offset by a $5.8 million decrease in capital expenditures and a $1.8 million decrease in purchases of investments. Financing Activities Net cash used by financing activities was $0.3 million for 2024 as compared to $79.2 million in net cash provided by financing activities for 2023.
This change was primarily driven by an increase of $32.5 million in proceeds from the maturity of investments, partially offset by a $10.4 million increase in purchases of short-term investments. Financing Activities Net cash used by financing activities was $36.3 million for 2025 as compared to $0.3 million in net cash used by financing activities for 2024.

… 70 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+0 added−0 removed4 unchanged
Biggest changeBased 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.
Biggest changeBased on a sensitivity analysis, a 10% change in the foreign currency exchange rates for the year ended December 31, 2025 would have impacted our total revenue by approximately $25.0 million and net income by approximately $3.7 million. This calculation assumes all currencies change in the same direction and proportion relative to 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.
While we do not believe inflation has had a material impact on our results of operations to date, a continued high rate of 63 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.
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.
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.
We have experienced, and will continue to experience, fluctuations in net loss as a result of transaction gains or losses related to remeasuring certain current asset and current liability balances denominated in currencies other than the functional currency of the entities in which they are recorded.
We have experienced, and will continue to experience, fluctuations in net income (loss) as a result of transaction gains or losses related to remeasuring certain current asset and current liability balances denominated in currencies other than the functional currency of the entities in which they are recorded.
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.
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, 2025. 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.
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.
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, 2025 would increase our interest expense by approximately $2.4 million annually.
In 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, as of December 31, 2025, we held $51.4 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.
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.
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. 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, 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.
We do not enter into investments for trading or speculative purposes. As of December 31, 2025, we had outstanding principal debt of $240.8 million, which carries interest as defined in our Credit Agreement. Refer to Note 8 of the consolidated financial statements 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 $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.
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 $135.8 million as of December 31, 2025, which consisted of investments in money market funds, cash in readily available checking accounts, and overnight repurchase investments.

Other APPN 10-K year-over-year comparisons