What Happened?
Shares of low code software development platform provider Appian (Nasdaq: APPN) jumped 21.1% in the afternoon session after the company reported strong fourth quarter results that beat analysts' revenue, EPS, and adjusted operating income expectations. Cloud subscription revenue, its key growth driver, increased 19% y/y, fueling a 15% rise in total sales. In addition, its full-year EPS and EBITDA guidance topped Wall Street's estimates. Margins improved significantly, with GAAP operating income swinging to profitability compared to losses in the prior year. Looking ahead, full-year sales guidance came in line with expectations, while EBITDA and earnings exceeded consensus estimates. Overall, this was a solid quarter.
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What The Market Is Telling Us
Appian’s shares are quite volatile and have had 16 moves greater than 5% over the last year. But moves this big are rare even for Appian and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 22 days ago when the stock gained 7.8% as the debate around the future of AI continued following the unveiling of DeepSeek. The market was recalibrating and rotating to stocks that are not only more insulated if DeepSeek prevails in the AI arms race but to stocks that may actually benefit no matter who wins that race. The proliferation of AI will be a general tailwind to demand for cybersecurity, big data, and automation software. For example, AI can make bad actors better and make the search for vulnerabilities faster. This means that enterprises will need more of what CrowdStrike, Zscaler or Cloudflare offer.
Additionally, more data is only valuable if the mountains of numbers, text, and videos can lead to actionable insights. AI can do exactly that, meaning that enterprises will get more value from platforms like Snowflake and MongoDB. Similarly, AI can make automation software more valuable by making it more adaptive, which means that customers can extract more value from platforms like ServiceNow and Appian.
Appian is up 15.6% since the beginning of the year, and at $38.38 per share, it is trading close to its 52-week high of $41.56 from November 2024. Investors who bought $1,000 worth of Appian’s shares 5 years ago would now be looking at an investment worth $618.35.
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