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Appian (APPN) to Report Q4 Earnings: What's in the Cards?

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Appian Corporation (APPN - Free Report) is set to report fourth-quarter fiscal 2019 results on Feb 20.

For the quarter, the company projects total revenues between $69.1 million and $70.1 million.

The Zacks Consensus Estimate for revenues is pegged at $69.7 million, indicating an increase of 15.7% from the year-ago quarter’s reported figure.

Moreover, Appian expects non-GAAP net loss per share in the range of 14-15 cents. The consensus mark has remained unchanged at a loss of 14 cents over the past 30 days.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 15.09%.

Let’s see how things have shaped up for this announcement.

Appian Corporation Price and EPS Surprise

Appian Corporation Price and EPS Surprise

Appian Corporation price-eps-surprise | Appian Corporation Quote

Factors to Watch

Subscription revenues are projected in the range of $42.0 million to $42.5 million, indicating year-over-year growth of between 24% and 26%. Management expects subscription revenues to increase as historical trends suggest higher percentage of agreements with new customers and renewal agreements with existing customers in the fourth quarter.

Notably, as of Sep 30, the company’s subscription revenue retention remained strong at 119%.

Additionally, financial services remains Appian’s largest and one of the fastest growing industries. Notably, subscription revenues for this industry grew 48% year over year in the third quarter. Increased adoption of the company’s solutions is likely to have driven subscription revenues in the fourth quarter as well.

Appian’s investment in new geographies, including through investment in direct and indirect sales channels, professional services and customer support and implementation partners drove top-line growth both domestically and internationally in the third quarter.

International operations contributed 32% of total revenues in the third quarter compared with 29% in the prior-year period.  This trend is likely to have continued, aiding the company’s expansion in international markets in the to-be reported quarter.

Moreover, Appian’s low-code platform employs intuitive, visual interface and pre-built development modules that reduce the time required to build powerful and unique applications.

For instance, Anglian Water, the largest water and water recycling company in England and Wales, selected Appian to accelerate the development of new digital business applications at the end of the third quarter.

In October 2019, Naturgy, a leading multinational energy provider in Spain, chose Appian’s low code platform to digitize innovation management operations and accelerate the company’s transformation process.

These client wins are expected to have aided the company’s top-line growth in the fourth-quarter. Notably, Appian generated revenues of $69.4 million in third-quarter 2019, up 26% from the year-ago quarter.

Moreover, Appian Guarantee program has been witnessing solid traction. The company expanded the program to other partners besides KPMG.

However, Appian has been facing stiff competition from other providers of low-code development platforms, such as, ServiceNow and Outsystems and from companies that provide business process management and case management software, including OpenText Corporation, Oracle, Pegasystems and SAP. The bottom-line is expected to have reflected rising competition.

What Our Model Says

According to the Zacks model, the combination of two key ingredients — a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — increases the odds of a positive earnings surprise. But that’s not the case here.

Appian has an Earnings ESP of 0.00% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming release.

Builders FirstSource, Inc. (BLDR - Free Report) has an Earnings ESP of +1.45% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here

Casa Systems, Inc. (CASA - Free Report) has an Earnings ESP of +83.34% and a Zacks Rank of 2. Holdings, Inc. (ALRM - Free Report) has an Earnings ESP of +1.15% and a Zacks Rank #2.

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