Appian tumbles 11% after earnings as outlook disappoints (APPN)
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The firm said its cloud-subscription business will see sales growth of 30% to 31%, which would mark a year-over-year decline from last year's 36% expansion.
The company also said it anticipates a non-GAAP loss per share of between $0.64 and $0.60 for the fiscal year 2021 on revenues of between $353 million and $355 million.
Goldman analysts, led by Christopher D. Merwin, CFA, said Appian did turn in "another strong quarter" on Thursday as low code adoption continues to pave the way for "30% sustainable growth."
However, they also reiterated their "neutral" rating on Appian and issued a $180 price target for the firm due to its lofty valuation — Appian currently trades at roughly 47-times trailing-twelve-month sales.
Merwin and company said they "believe APPN deserves a terminal value in line with other 30%+ growers in our coverage," but not above. Goldman's price target represents a potential 15% drop in share prices from current levels.
Mclean, Virginia-based Appian has seen its shares jump over 40% in 2021 amid a boom for cloud computing companies and in particular low-code platforms.
According to data from Gartner, enterprises are increasingly using low-code platforms for improved scalability and agility, and the low code market is expected to total $11.3 billion in 2021, a 23% increase year-over-year.
Additionally, a study out of Research and Markets found that by 2030 the low-code market could be worth $187 billion.
In a statement to Insider, Matt Calkins, the CEO and Founder of Appian, said he "feels good about the quarter and the full year" despite the stock falling post-earnings.
The CEO added, "this is a moment of great change and great opportunity for low-code technology – and Appian is the pioneer in the middle of it. 2020 was the year that low-code went from a slow revolution to a fast revolution. The technology is here is stay and will continue to transform the future of work."
Still, the booming low code sector hasn't been enough to bring profitability to Appian. The company turned in a GAAP operating loss of $9.7 million in the fourth quarter on revenues of $81.6 million. And as discussed, guidance showed Appian expects to continue to struggle to turn a profit in 2021.
Despite the lack of profitability, Goldman saw the quarter as a net positive due to a "strengthening demand environment, growing partner ecosystem, and improving sales cycles."
Matt Calkins wasn't concerned with the losses either and instead focused on increasing cloud subscription and low-code revenue in the earnings conference call.
"For the full year, we exceeded our guidance and grew cloud subscription revenue by 36% to $129.2 million. Appian is leading this market because our low-code platform is more than 10x faster, our partner ecosystem is growing, and our customers are happy," the CEO said.
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