Why Appian Stock Sank 25.2% in November

What happened

Shares of Appian (NASDAQ: APPN) fell 25.2% in November, according to data from S&P Global Market Intelligence. The stock lost ground after the low-code software specialist published its third-quarter results, and it continued to move lower as bearish pressures seized the market.

APPN Chart

APPN data by YCharts

Appian published its Q3 results on Nov. 4, posting a non-GAAP (adjusted) loss of $0.22 on revenue of $92.42 million. Meanwhile, the average analyst estimate had called for an adjusted loss of $0.19 per share on revenue of $91.06 million. The company's GAAP loss for the period came in at $0.36, which was significantly worse than the average analyst estimate's target for a loss of $0.21 per share.

People looking at a computer.

Image source: Getty Images.

So what

Appian's revenue climbed 19.6% year over year in Q3, and its cloud subscription revenue rose 36% compared to the prior-year period to reach $46.7 million. However, losses on both a GAAP and non-GAAP basis came in significantly worse than the market anticipated, and the company widened its full-year EBITDA loss target in conjunction with the earnings release. With rising Treasury bond yields and the spread of the coronavirus omicron variant creating additional uncertainty as the month progressed, investors moved out of Appian stock.

Now what

Appian stock has continued to fall early in December's trading. The company's share price is down roughly 6.6% in the month so far.

APPN Chart

APPN data by YCharts

For the fourth quarter, Appian expects that cloud subscription revenue will come in between $48.8 million and $49.3 million, representing growth of roughly 32.5% year over year at the midpoint. Overall sales for the quarter are projected to come in between $95 million and $95.5 million, good for growth of roughly 16.5% year over year at the midpoint of the target. Management is guiding for an adjusted per share loss between $0.21 and $0.24 in the period.

For the full year, Appian is targeting sales between $177 million and $177.5 million, suggesting growth of 37% year over year. The company is targeting an EBITDA loss between $41 million and $43 million, and its adjusted loss is expected to be between $0.73 and $0.75 per share. The company had previously targeted an EBITDA loss between $38 million and $40 million for the year.

Appian now has a market capitalization of roughly $4.9 billion and trades at approximately 14 times this year's expected earnings. Even after recent sell-offs, the company has a growth-dependent valuation and remains a high-risk investment. However, I own the stock in my portfolio and continue to like the company's low-code software solutions playing a winning role in the overall digital transformation trend.

10 stocks we like better than Appian
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Appian wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of November 10, 2021

Keith Noonan owns shares of Appian. The Motley Fool owns shares of and recommends Appian. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.