Greetings and welcome to the Appian Investor Session. At this time, all participants are in listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Srinivas Anantha. Thank you. You may begin.
Oh, thank you, Rob, and good morning. Welcome to Appian's Investor Session in conjunction with Appian World 2022. Our Founder and CEO, Matt Calkins, will kick off the session with some opening comments. This will be followed by a partner panel led by Marc Wilson, Chief Partner Officer and founder. Participating in the partner panel are David Sawyer, Global Lead for Low-Code Practice at Accenture; Himanshu Arora, AVP, Digital Process Automation at Infosys; Arjun Devadas, SVP, Professional Services and Operations at Vuram. Following the partner panel, we will bring back Matt Calkins, Mark Matheos, our new CFO, and Marc Wilson for the final Q&A.
Before we kick off, please be mindful that some of the matters we will be discussing today include forward-looking statements regarding our strategies, operations, or financial items that are based on the information we have as of today and our current beliefs with respect to the future of our business. These statements are subject to risks, uncertainties and assumptions, and our actual results and financial conditions may differ materially from those indicated in the forward-looking statements. Further information on the risks that could affect our results is included in our most recent filings with the SEC, which are available on our Investor Relations webpage. With that out of the way, it's my pleasure to introduce our CEO and Founder, Matt Calkins. Over to you.
Well, I appreciate you all joining us today. Great to have a live crowd. That's a big step up from the couple of virtual quarters. Of course we haven't closed the results yet, so it's a natural time to discuss strategy. What we're doing with product, how the market is shaping up and what we see far ahead. All right. So anyway, let me tell you about where we think this market's going. Right? We think that coming out of the pandemic, the major need we see from our customers, they want agility, they want digital transformation, except this time they mean it. Right? A couple of years ago, we were talking about digital transformation, but they were just supposed to and those projects have to succeed. In the pandemic, we saw how essential transformation literally happened.
With your customers, regulatory changes become mandatory and all organizations now are prioritizing the ability to change. This creates an opportunity. I think there's a market around that. Be a change provider, change enabler. We've created a change, and we've put together products, including our original workflow platform, that together constitute what I call a change engine, and speaks what I think is an emerging need, what is a market itself, this impetus of market scale. Right? Our goal is to start with the workflow we've been good at for years and then expand that to create a suite of functionality, a single stop end-to-end process manufacturing factory.
The idea being that an organization, Appian customer, can discover what processes they need to build in our environment and then proceed to design them, and then proceed to automate them and execute them without leaving the Appian environment, without having to buy another product, without having to go to all the headache of multiple pieces. Just in the current, right, near past, the way to do this would have been to buy one product for process mining, another one for workflow, and a third one for RPA, and maybe a fourth for AI, and perhaps one for document processing, and get your business rules somewhere, stitch this all together and try to make a functional product. I was just in an interview just 30 minutes ago.
I was sitting with an interviewer from from Spain, and he said, "Why is it that digital transformation projects so often fail?" I said, "Well, of course, it's because of all the parts, because it's too complicated." If the world takes this seriously, takes change seriously, takes digital transformation mandate seriously, it's gonna start demanding a no-compromise approach. There's simply too many compromises now. Well, Appian is announcing, in GA last month, we're announcing here today, we've got that no-compromise approach. We've put together process mining, workflow, RPA, business document processing, all of it. Same platform, same price tag, same look and feel, same upgrade cycle, everything. Unified it. This is the turning point of the year for us, but I think it's the turning point of multiple years for our industry as well.
I think that we've taken a turn now that our competitors are gonna have to follow. We've seen a little sort of movement toward it in the recent past, like ServiceNow and Celonis having a partnership, right? There's recognition these components belong together, but having a partnership is not the same as having them as a single SKU, a single contract, a single support line. I don't believe our industry is yet taking this as serious as we have taken it and as serious as we're gonna make them. Right? That's what we're doing right now, putting together the answer to the world's calls. All right. We had a couple of features that we announced recently. You may have heard about IL5. That's the new government security.
The government, all right, they do a lot of scrutiny, and they award certain security clearance levels. We've achieved IL5. We got this before our largest competitor. ServiceNow didn't have it. Salesforce didn't have it. We're top of the heap for security. That means a lot to us. Demonstrates our seriousness. Low-code data is probably my favorite feature that we've released in years. The idea being you can treat the data integration as drag-and-drop objects. Data integration is incredibly difficult. I don't know if you've ever probably tried to integrate the data into an application, but it's the hardest thing about making an application. We're making it really easy. We're bringing low-code to data, we call low-code data.
The idea being that the same drag-and-drop, mouse-driven development approach that you can take toward building an application, now you can take it toward integrating data across your enterprise. As a result, the amount of data requests that have gone through the Appian system have multiplied by 25 x the last five years. We now have more than 50 billion data requests going through Appian on an annual basis, and that's just on our cloud side 'cause we can't measure the on-premise side. Just incredible growth. Appian is becoming a data hub. If you saw the keynote this morning, you saw more detail on that. But that's really exciting for us. When we put together the suite and we make it easy to use data from across the enterprise, we are pushing the Appian pyramid in two directions.
If you think of Appian as a pyramid, we do some sales at the top of the pyramid, and then we do some sales down the sides of the pyramid. Then there's some space below the pyramid that we don't bother with, right? The real low end. We are pushing the pyramid up and sideways. By up, I mean, we're appealing to the power demand. We're appealing to organizations that are so serious about change, they will tolerate no compromise. We have put together a set of products that is no-compromise answer to the need for change at the highest level. The other thing we're doing is creating accessibility.
If in the past, you would have had to buy three or four different products and stitch them together in order to create a digital transformation project, well, that's hard, and it's not very accessible. What we're doing is making it accessible. The idea is to bring more users, a more viable buyers into our sphere. We're growing our market. All right, when we push the sides of that pyramid, we're inviting more buyers into our market. We're doing the same thing when we announce, as we did today, the new connected Know Your Customer component in our financial services solution suite. This is another attempt at broadening our applicable market. I just want to be clear, Appian is moving in two directions.
We're satisfying the high-end need for a no-compromises answer to the change demand, and we are broadening our applicable market by emphasizing accessibility, taking away the friction that would have prevented customers from participating in our market. Those are our two primary directions. I'm running out of time. Is that right? Okay. Let me wrap up then. Because I'll be here for Q&A, and so whatever's on your mind, I'll be able to answer it. I wanna say that I think this is a key moment in our industry when it makes the transition from being focused on what it does, being focused on what it's for. I think in any industry in software that has grown to substantial size, there is such a moment. Stop worrying about whether you're this component company or you're that component company.
You start worrying about whether you're providing the net effect that your customers want. They didn't want a component. There's no fundamental human need workflow, right? It's the thing that workflow delivers, the thing that low-code leads to. We're not really about the components anymore, we're about the effect. That's a really big change that we've made recently. We're about change. We're a change engine, and we do that with low-code, with workflow, with process mining, with RPA, with AI, with document processing, business rules, but the effect change. When you start speaking to customers' needs rather than saying, "This is what I'm selling," right? We're not about lemonade anymore, we're about thirst. You see what I'm saying? We're making that switch, and I think that every substantial industry has to make that switch, and this is our moment to do that.
I want to wrap up by introducing to you our new CFO. He's sitting right here. His name is Mark Matheos. Please join me in welcoming Mark. Mark has been the comptroller for Appian. He's been the Chief Accounting Officer for Appian, and we are proud to say he's now the Chief Financial Officer for Appian, and he's gonna do a great job. It's a pleasure working with him. I also wanna say that Mark Lynch, who has been with us for more than a dozen years and done a spectacular job, is not leaving. Mark has been invited to join our Board, nominated to join the Appian Board this summer, and I look forward to working with him for many years in the future. Congratulations. Thank you, Mark and Mark.
I'm gonna hand the microphone over to our panel.
— tell you that we have a big problem in our company, it's too many Chrises. This is the one room I can be in where there's too many Marks. Makes me feel good actually on some level. Good morning. I've had an opportunity to meet many of you. My name is Marc Wilson. Along with Matt, one of the four founders of Appian. I'm Appian's Partner Officer and have been driving our partner strategy for many years. I'm able to be joined this morning by three key partners of Appian. David, Himanshu, Arjun, if you'd like to come up, please, we're going to get going.
These gentlemen represent, with David here representing Accenture, Arjun representing Vuram, and Himanshu representing Infosys. These three companies have all expanded their practices in Appian significantly. All three of these organizations work with Appian globally. Two of these companies, of course, are massive. Vuram probably has a higher growth percentage than the other two, but we welcome them all here. I have a few questions prepared for them, but this, more than anything, is your opportunity to talk directly to some of Appian partners in this forum. Maybe ask a question. We'll see if there are others. We'll go from there.
Really, to start off, my first question, start off with you, David, on the end as Himanshu gets ready. If you could introduce yourself and tell us a little bit about your perspective on low-code, your perspective on Appian, its low-code structure.
Yeah. No, first of all, great to be here today in person. Thanks for having me. As Marc said, David Sawyer, I run the low-code practice for Accenture globally. Maybe just I'll start off with one of the things we're seeing. Accenture did a recent study in the marketplace, and we found that close to 90% of C-level executives said that their employees and their customers are changing faster than their business. Right? To Matt's point, agility is a necessity. It is not an option, especially post-pandemic, right? What we did is we accelerated what we're driving digital. If you look at the low...
If you look at agility and you look at technology and how you have to use technology to drive agility, what are your choices? Well, you could go, and you could buy yourself a package solution, right? A package solution is really just gonna be good enough for a commodity product like finance, accounting, payroll. You want payroll, right? But essentially, payroll is payroll, right? You can, you could solve that with a package. The challenge is there are very few things you can solve anymore through a package. Can we solve order management that well? Lots of processes you can't solve with a package. What's your other solution? Solution number two is, well, let's go and let's custom develop, right? That's certainly something that we're seeing. There's a lot of custom development that's going on.
A platform like Appian, a low-code platform, what it allows you to do is it allows you to accelerate that custom development. It gives you a platform so that you don't have to recreate work automation. It's there for you. It's providing it, providing the data level of data integration. That's what we're seeing in the marketplace starting to take off. We're considering low-code to be an emerging market, but we're also considering it's going to be a key area.
Arjun?
I think I'll kind of start from there. First of all, introduction. Arjun Devdas. I run the Americas region for Vuram. We are a global hyperautomation services provider, predominantly work with Appian. Been an Appian partner for 11 years now and grew and evolved with Appian. So, our perspective, actually what pandemic has done is kind of acted as a catalyst. Low-code has been there and but pandemic has really acted as a catalyst and increased the urge of companies and our customers to go digital. 'Cause it showed us data has to be in cloud. We needed a unified platform, and we all had to work from a workplace remote as well as get the work done with minimum workforce.
All this together kind of acted as a catalyst, and we are seeing an increased demand in the last few years. One more change which we have started seeing recently is low-code automation cannot be solved by one piece of technology. There are multiple components which needed to come together, business tools, low-code platform, RPA, AI. What our customers is kind of expecting from a partner like us and all of us sitting here is kind of being the advocate to select the platform, and they don't wanna worry about what technology to use. They want us to solve the problem.
How a technology like Appian is helping us is we don't have to depend on these multiple technology stacks when we have a unified platform which can solve multiple of these technology problems and kind of tackle the hyperautomation as a holistic system. We are seeing an increased spend, and especially with unified platform rather than siloed technology stack.
My name is Himanshu Arora, and I run the low-code practice for Infosys. We've been also an Appian partner for quite a number of years. Standard practice. We also did research with a couple of firms, went to some of our customers and asked them fundamental questions, entire fundamental of code. We figured out that more than 42% of the customers already adopted. But on top of it, 53% incremental customers have been doing a lot of trials that cater to 95% market. There's hardly some 5% who are saying, "Yeah, I don't need it." 95% today. Then we ask them some fundamental questions around why do you... so on and so forth. We realized 45% of that market said, "I want low- code modern.
Not just transform for good, not just to the innovation, but modernize my. And the rest of 40% came back and said, "I need it. Go ahead and a lot of it." When we started putting this all together, we realized potential of why low-code is needed. How could Appian be the right tool as a platform which could help us, thanks to the process mining part, not just solve problems, more importantly, also help find the right. We put it all together with all our space, exactly where we thought of top.
Yeah. As I mentioned, I have other questions for them, but this is your time. I brought three of my partners here. The particular questions that you have for them. Oh, great. Okay, no problem. Go ahead.
Hi guys, I'm Jeff Nevins. I work for Silvercrest. The question I have is, low-code four years ago was only a term kind of you guys. Now everybody Duck Creek talks about it. Smartsheet talks about it. You know, ServiceNow has something, and then they do process mining with Celonis. Obviously, Microsoft has something, and I can't remember the product. But how as investors can we distinguish what you're doing from what they're saying they're doing? There's always this Wall Street versus Main Street thing that always confuses everybody. I don't know how to really ask it other than that, but it gets confusing, but it feels like you're doing something different. I'd like to understand how, why you're doing this different.
Maybe it's a good question for the partner. Okay.
Sure. Yeah, I think you're right. It sort of reminds me of automation, right? 'Cause everybody says they did automation as well. Every software company that they spoke of. The way I would differentiate it from an investment perspective is there are companies, software companies that will use low-code to enable how they do development. Pick your favorite one, whether it's SAP, whether it's Salesforce. You know, they're all using low-code as a way to enable what they do. Salesforce automation, SAP. There are a group of solutions that are showing up within the hyperscalers, right? AWS has Honeycode, Google has Sheets. Microsoft has Power Platform, right? Their Power Platform, Power Apps platform. Those.
Most of those platforms are focused really around accelerating a lot of what the citizens can do. Citizens meaning you and I. You know, it's almost like Excel on steroids, right? It's going to get better and better, and so it advances more and more. Instead of me using an Excel spreadsheet on a small amount of data, you use a Google Sheets as an example, and you'll be using a Google Sheets on terabytes of data. Fantastic, right? Where the third area where the low-code pure plays like Appian come in is they are providing a way to do development that crosses across all boundaries, right? It's enabling you to use a GUI-type interface to build all sorts of different processes, all sorts of different innovations.
It's low-code in and of itself to really help drive that custom process.
[Raj]?
Sure. Just building on top of what David said. A lot of existing comps, those comps are all getting on. The Appian is what it was born to. Hence the maturity curve of what customers feel comfortable with kind of app. It also, as an example, just to answer that direct question, it also ServiceNow part. What ServiceNow is sort of smaller scope of low-code. I would still play with ServiceNow, maybe HR onboarding there. Would I do customer onboarding for a critical mission application? I would say Appian. Again, building on top of why would I need to use Appian for that? Just because of all the stuff that Appian put together as a product architecture.
Second, the way it was architectured and born versus the rest of the ecosystem players adding on that capability. I think they still have a lot more years to add.
[David Ashton from Credit Suisse]. Could you talk a little bit about the persona that you're using Appian from a developer perspective the most, and how that's shifting, if shifting over time? In particular, you know, I could think about a developer. You could be way more powerful rather than like a Python library building something in Appian and having the development time speed up. I could see it coming from the other side, from someone who maybe has experience in logic or philosophy, so has that kind of thinking tool set but not a coding tool set going down. Or you could just be kind of native Appian. Kind of curious what you're seeing there and how you're seeing that shift.
Arjun?
Sure. Ten years ago, I was doing, maybe seven years ago, doing Java development, high code, right? Coming to world of Appian that time, it's again. Right. I thought we needed some programming skills at that time. Sitting here today, with the latest launch of Low-Code for All today, I think I've seen the evolution of the whole platform and how it has gone from a kind of little bit of programming needed to where we are now with all the drag and drops, integration drag and drops. As a company, we don't mandate any computer degrees these days to hire. We are going across hiring. We are certainly seeing much success across the verticals where we are hiring with the minimum training that we are doing. People are able to pick up development in Appian pretty quick.
Not only from our side, even from our customer side, most of the customers who use Appian these days wanna be self-sufficient at some point in time and start building applications on their own, not depending too much on IT, but some, with some COE and IT governance. That's another change we are able to see, that we are able to upskill our customers pretty tremendously with a very short timeframe, picking up development.
Hi, this is Jake Roberge from William Blair. Just curious, Dave, obviously, Appian has pieced together this puzzle of workflow over the last few years on RPA and process mining and low-code. I'm just curious how initial customer reception has been for that unified platform. Are they understanding the value proposition of combining those three technologies? I'm just really trying to get at how evangelistic is that sale still for you to educate those customers that they need all three of these different resources.
[Arjun].
Sure, Marc. I think more than the technologies, the question of what problems are you trying to solve. Helping them understand the right problem, the right solve, and the right benefits that they'll get out of solving the problem. Once you give that lens to the customer, technology pieces behind the products or workflow can start, and process mining starts falling in place. That's where I come to build together fairly quickly some of the proof of value for our customers, help them understand why certain technologies fit in and solve the right problems. That's how we.
I'll just add that there are two types of buyers, right? There are some buyers out there that are buying low-code, right? But there are a lot of buyers out there, and I actually think the majority that aren't necessarily buying low-code. They are buying an answer to a business problem. They're trying to create a business solution, right? When they're looking at creating that business solution back to, well, do I custom code that? How do I solve that? Where I think Appian differentiates themselves in the marketplace amongst the other low-code platforms, it comes in and it elevates the ability to quickly build that work or orchestration business support.
Also having the ability to do RPA and the ability to do process mining is something that combination is something that the other low-code vendors haven't yet adopted. Maybe they'll copy Appian doing that, but they haven't yet gone in that direction. I think those three things do differentiate Appian in the marketplace to enable the building of a business.
Great. Steve Enders with Citi. I guess kind of following up on that last point there. When your customers are thinking about the automation space broadly, are they thinking about it as they want a best-of-breed kind of solution? Or are they thinking about it as they want the platform approach that really does everything? Just however your customers are thinking about that. Secondarily, how much training is needed to get customers up and running on using the platform approach? Or are they thinking about it as they're really looking for a solution and are less, you know, concerned around, you know, building on top of the platform?
Let me start. I wasn't sure if you were directing it back at me. I do have some clients who have built automation COEs, and those automation COEs have started off with RPA. RPA was a hot area. It's still a hot area. It was very good at getting at low-hanging fruit, and a lot of that fruit was kind of near the ground, you could say. They solved that getting at that low-hanging fruit. Now they're starting to realize, well, in order to go beyond that, it's really about automating the work that needs to go across that.
Folks that have that mindset around kind of expanding my automation COE into low- code, that is out there, and that is expanding, but I think that is the minority. I think the majority of what we're seeing in the Appian space, and when I say majority, maybe it's like a 30/70 split. That's exact, right? It's growing in that. I think more and more companies will expand their automation COEs to lock in on low- code. The majority I see is it's just solving the solution for a business problem, as I was before. Now, your question on training and building up the training, that's where I see that what Appian does is it's not a question of low-code or pro-code. You could do both, right?
What low- code allows you to do is it allows you to better leverage your pro- code developers. Because we all know, I mean, it's hard to find them, right? It takes years, and it's difficult to find folks who are very skilled in Python as. So if you can have low- code enable you to kind of jumpstart that, enable you to build up, just have some initial training. I like the video that Matt showed during the initial keynote session where they showed kind of this, these university folks who were of different backgrounds learning Appian or using Appian's low- code platform. I think low- code is an enabler to really create coding to be more inclusive, right? More pervasive, not just the technical folks that do coding.
Depending on the question, Arjun, Vuram has done quite a good job of pipeline developing for—
Mm-hmm.
Talk about it.
No. As I said, we do have internal servicing. We have worked around 50+ Appian products. I think compared to few other technologies, what we have done, the turnaround time for people to be up and running in seven, but there we can employ the team with the growing demand. That kind of answers that. To come to one of your earlier points about how we are kind of getting the customers, I think they want us to solve the problem. They don't care a lot about what we use. How a unified platform like Appian is helping for a consulting company like us is we don't have to go back and say that, "Oh, we need this to solve this problem. We need another one to solve this problem." Right?
We have this unified platform which can talk to each other very well. One more plus point we've seen with a platform like Appian is it's a Lego piece which will fit into any shape. You don't have to kind of shake the waters for adopting Appian into any organization. We don't have to ask them to tremendously change how they're working. It is more about improving how they're working. That's been a value add for us on kind of deploying Appian to an existing environment where they have multiple technologies.
If I may just add to that. In the last, I think two to three years, there's another change starting to happen, at least in what we are seeing in customers, from Appian being used primarily for workflows and automations and so on and so forth in the past to Appian being used as an application development platform. It's really accelerated. When you have to develop full-blown apps, you would need a lot of things to come together, and that's exactly where the platform abilities have started to evolve more and more in the last few years. Thankfully, Appian has stood up on the product side in stitching it together in a unified view, and that has been really helping.
We think that Appian would probably do well moving forward as well as a full-blown application development platform moving forward, not just workflows and automations.
Bit of a follow-up here. We've heard quite a bit about kind of growing the overall Appian community and Low-Code for All and some of those initiatives. I was hoping could each of you kind of help us quantify the growth of your Appian practices? So maybe how many practitioners did you have a year ago? How many do you have today? We just heard the 750-800 number. How many do you think you'll have in a year? Once you kind of give us a sense of the kind of growth rate there, what are kind of your strategies for continuing to make sure you can hit that target for the number of practitioners you'd like to have in a year?
Because we know it is tough out there to get as many heads as you would like.
Sure. We have almost kind of doubled our Appian practice in the last 14 months, close to around 1,200 people within Infosys working on Appian today. We are aiming to get to 2,500 people before the end of next year, calendar year. That would be the growth trajectory, just keeping up with all the demand and as well as positioning Appian as a platform for what we want it to be for our customers in this entire space.
I think ours is very similar. Being a company that actually grew, evolved around Appian, our company size is just 1,000 people, out of which 750-800 is Appian. So we have kind of doubled in the recent years, pretty much. I think we had about, maybe 600-500 last year. We had a tremendous growth in the last two years, which is during pandemic, which we are really well proud about. The growth pattern, what we are seeing is, we are planning to double up again. We have an aggressive growth path. We have also invested, quite a bit, a lot in the go-to-market solutions on Appian recently, right?
That's been a very good door opener to a lot of our customers, where we can build go-to-market solutions on Appian. That's an investment we have done, and that team is also gonna grow in the next year or coming months. Yeah.
Yeah. Just to round it off. We've tripled the size of our practice in the last 14 months or so. You know, looking to grow at a multiple level. The way we are. You know, besides just obviously training, getting people trained up on Appian, we also are building business solutions, you know, as accelerators to bring out to the market. We're very good at repeating solutions that work in one place and bringing it to the next client.
Yeah, yeah. For example, we did this in the LIBOR space, right? We created a business solution for LIBOR that can be used at other banks.
I think a very similar example to my add. When the Paycheck Protection Program was launched in the U.S., especially the SMB space, smaller banks who did not have a lot of technology in-house were struggling to service the number of customers they can because it had a set of time and a lot of customers. One of our key customers wanted to bring up a solution in, like, three weeks of time, through automating the entire process of Paycheck Protection Program. Using a platform like Appian, which included almost all the capabilities we needed, including IDP, we were able to deploy that in three weeks, and kind of not double even tripled up the amount of applications they could process in the Paycheck Protection Program.
That is one of the example of go-to-market solutions that we could build much quicker in a platform like Appian.
I think we have time for one more question. Anyone want to take the bait? We're running out of time. All right. Manshu, Arjun, David, thank you so much for your time.
Thank you.
Appreciate it.
Thank you, everyone.
Matt, Marc, and Mark Matheos for the final Q&A.
Yeah. Before we start the Q&A, I just want to remind, we are in a quiet period, guys, so we will wait for the quarter to be talked about on the next week's earnings call. Any long-term questions related to the strategy, long-term financial business model, new product announcements, you're more than welcome to ask those questions. I have received a bunch of questions, but we will go around the room here first before I go to these webcast questions.
Hi, Jake Roberge from William Blair. It was just mentioned a little bit earlier with the partners, but I'm curious how you're thinking internally about productization on the platform. In the keynote, Matt, you mentioned the onboarding and KYC application. Just thinking about how you're thinking about pushing those strategies forward and how partners are thinking about pushing those strategies forward as you look to productize more solutions on the platform?
Yeah. All right. I'll start on that. I believe solutions are the future for us, and I know it takes time to get there, and we're considered a platform company, and we've still got key work to do, like we're doing this past quarter in creating and pioneering the shape of that platform. We're not getting distracted, but we know that the future lies with solutions. It's a larger market, it's more applicable, it's a shorter sales cycle, it eliminates competitors, it increases our pricing power. There's a lot of great reasons why we're looking forward to solutions. Anytime I can, I try to convince our partners to think that way too. Partly because it gives us all those sales advantages, and then also because a partner that is invested in us is more committed to us. We are less substitutable for another firm in our space.
Any kind of commitment and development I can get is great. If you happen to have walked through our vendor room, our partner room, you'll see that many of the partners are demoing not even just one solution, but multiple, two, three, four solutions, and they'll rotate through. They got more solutions than screens. They got to, you know, figure out which one you want and then show it to you. This is exactly the energy I was hoping would build in this community. I believe we have created a great platform for instantiating products based on intellectual property. If you've got insight into a market, this is a terrific way to realize that insight and appeal to customers who wouldn't otherwise be confident about our platform. I love this direction, and we're doing what we can to push it forward.
You know, there's 75 solutions right now built by our partners, and they have tripled what they've sold year-over-year.
Hello. This is Yifei Li with Berenberg. Thanks for doing this event, and thanks for the update, Marc. Welcome, Matt, and as well, thanks for the update, Marc. In terms of the IL5 certification for the government projects, you know, I was able to talk to some of the customers in the public sector yesterday in one of the events. Obviously, this is a big business. I'm just trying to size down the opportunity, meaning, how difficult is it to get certified? This way, you know, as compared to our other competitor once you get the certification, how much lead time advantage does that give you because you have the IL5 certification-
Yeah.
In your pocket?
Well, it's incredibly difficult. It takes years to get it, and it costs millions of dollars. That's just to apply and to sustain. Then you have to convince them that your product is good and show it's running on the cloud and so on. It's really difficult, which is why we got it ahead of ServiceNow and Salesforce and companies that have departments, presumably, of people dedicated to getting the certification. It's not easy. You can't just buy it, and size isn't enough, right? You also have to have the quality. I think it's a big accomplishment, and I think it sets us apart substantially, particularly in the Department of Defense, which is where IL5 is concentrated. It's a meaningful signal outside of that. Actually, Mark, would you like to comment on this?
I'd like to comment on it. The defense world, the intelligence world areas that we put some investments in, this is the cornerstone of that investment. I think one of the other things that's important to understand about IL5, like many other government audit standards like this, evaluation standards like this, you don't just apply. You have to get a current customer to support your application. It's incumbent upon you to have a track record of success to even get to a point where a customer is willing to say, "Yeah, we not only like this, we want this in IL5, and we're gonna support that process through." You know, if you're looking for questions about how this becomes a barrier to entry, believe me, it's a barrier to entry.
I think one of the things it does as well is it also emphasizes, particularly for our federal partners, that we can be used not only for individual projects, which sometimes can get around these requirements, but programs can't. That's where the much bigger opportunities are, the multi-year opportunities, bigger transformation initiatives there. We're very excited about this, and it allows us to set strategies right now because that is in place that are multi-year in nature. Because a lot of these large capture opportunities in the government space, you know, we're talking about capture opportunities that aren't gonna be awarded until 2024 or 2025, but it starts now. Having IL5 now allows us to head start that platform.
Just one follow-up on the IL5. In terms of—
I think that there are certainly indications of that. I will tell you that it's hard to distinguish exclusively what's IL5 from what is a public sector growing interest in low-code as well. There is more than one variable at work at the same time that you can't tease out which one is the absolute determining factor. Certainly, the fact that defense organizations, intelligence organizations are looking at low-code and knowing they need IL5, that combination's wonderful. We're certainly seeing an uptick in that.
Steve Enders with Citi. Matt, I wanna ask you about the product roadmap and how you're thinking about where the Appian platform's gonna go from here. I think one of your partners mentioned on the main stage that they're very encouraged by the next few years. Wondering kinda how you're thinking about where Appian's gonna go from here.
Yeah. We see it as our job to pioneer and invent this space. I mentioned a few minutes ago that we were the first ones talking about low- code, and we were, right? We emphasized that in our IPO back when nobody was saying it. I think by bringing the suite together, we've made a critical turn in the evolution of this industry, and others are gonna be forced to follow that. That's gonna be tough, by the way, for some of our competitors, particularly if they've committed to an alliance that forces them not to have it all under one roof. Our goal is to keep making this product more powerful and more accessible.
We believe that the need that this industry serves is so essential that we've got years of solid growth ahead of us, that the demand is gonna persist and grow. We believe that Appian has touched only a corner of that. I remember at our IPO, we brought out a fascinating statistic saying that we had a few hundred customers at that time, and we were making half a million dollars per year for each of those customers. They constituted a tiny fraction of the applicable market. Our thesis was simple. We're gonna take this much value that we've shown we can deliver on a per customer basis and take it to all the customers we haven't met yet. That's essentially what we're doing.
Our average hasn't even changed all that much over the past several years. We're gonna keep doing that, broadening the market and taking the barriers down that keep people from adopting a low-code or a digital transformation solution. Our goal is pretty simple. There have been times in the history of this business that I thought we need to pull a new, you know, rabbit out of our hat. This is a moment where we need to. I don't feel that. We don't need to change our direction. We need to just fulfill this mission. Our mission is to bring this essential area of functionality to more companies by making it more and more accessible, which is really the entire trajectory of the business. It's accessibility.
We've been working from the beginning on making it easier for humans to control and collaborate with machines. We will stay there.
Just a quick follow-up on that. You're talking about, you know, trying to expand kinda distribution and get out to more customers. How do you—what are kind of the biggest levers that you can utilize to expand that? I guess maybe for Marc, how do you leverage the channel and create incentives to help broaden that distribution?
Yeah, that's exactly where I wanna try to take this question, actually. It's the channel. It's our biggest lever, and we got the right guy here, Marc, to talk about it.
I think it's important to understand that our approach to segmentation is starting to be matched by a partner strategy in various segments as well. Certainly you heard from our partners that were up here, those are partners that tend to deal with the global strategic organizations, larger enterprise organizations. I got to tell you, at the same time, we're seeing even our large partners like that deal with organizations that are very interested in transformation that might be a 1,000 persons strong. I mean, there's a lot of interest there to drive dramatic change, and our partners are taking us to those organizations. Now, historically, a lot of our focus has been on working a path to strategic enterprise class accounts and doing things. We've deepened our relationships with organizations.
You can see that walking through the partner showcase upstairs. It literally is a who's who of the firms that make those impacts. We are now looking as well to broaden the impact of our channel. How can we get to more parts of the market? How can we get to more geographies in the market? We've seen a lot of success there. You know, our channel is taking us deeper into places like Latin America. It's taken us into Japan over the last year. There are numerous other growth areas that our partners can lead us into, and we're able to work behind them, next to them as we continue to grow. We're very excited about what those opportunities have to offer.
I think that we have presented an extraordinarily attractive investment for our partners of all types, but it also means that we have to scale that up. I mean, the numbers that we heard from Arjun, from Manshu, from David are, I love hearing those numbers. They're not numbers anymore. You go back five, six, seven years, we were enthusiastic when people's practices were crossing 100 people. It's a whole different scale that we bring ourselves up today to work with. Even in the partner world, I think all of our partners, just not only the ones here, but out on the floor, will tell you the number one thing that they're looking at doing is how do they get more people up to speed on Appian because they see the demand there.
All of our efforts, whether it's in the product itself to, you know, expanding our education and training and making it easier, that's the main focus for us.
Okay. I'll just ask one more. And I know this is awkward because your partner's in the room, but if... Are we at a point where or have you thought through if some of these other, quote-unquote, "low- code" guys come in and start saying, you know, "Hey, well, we can get 80% of what we need, and they're gonna charge me," I'm just making up numbers. "ServiceNow or whoever, you know, the ServiceNow San Diego can charge me $10, and Appian's $100. Why the heck would I wanna go spend $100? I can spend $10." Is that in your thought process of things that may occur down the road? It may not even be happening today. I'm completely making it-
Oh, it's absolutely happening today.
Okay.
It happens in every technology sector. You know, people come in, they promise the sun, the moon, and the stars, then they fall flat on their face. The question is, can you convince people that they're going to fall flat on their face?
Mm-hmm
... before they get the opportunity to prove that they can fall flat on their face? You have to do it. I got to tell you that one of the most encouraging things that I've seen is the understanding by our partners, large and small, of the distinguishing characteristics of the products that are in the market because they live and breathe this. Now, the great thing about having a larger partner organization is that for many of these partners, you know, they're doing $50 million, $100 million, $150 million, $200 million at any one of these, you know, gold star accounts or however they classify it. They have the same customer satisfaction focus areas that we do.
If they make a bad decision, they bring something in that might be cheap on the front end, but it's gonna waste two years development time. They got a black eye too. It's in their own best interest to make sure that they're doing a due diligence and evaluation of products. Just like we win the Customers' Choice awards for the customers, if you went and polled the partners, and I have every confidence in saying this, they will tell you that they love our technology better than any other technology out there because we tend to work.
I'd love to speak to this also.
Please.
I think that some industries come down to a price competition, and some of them are feature differentiated to a point where price is not the primary vector in which competition occurs. We have focused on this industry partly because we know that it's an industry in which price competition is not the primary vector. That's important to our identity and why we're here. This is instead an industry in which features matter, and our job is to have those features. This is not going to be a homogenized industry. Marc references the Gartner Customers' Choice survey, where we have been the customer's choice every year, and we're the only choice.
Now if you heard the keynote, you know that we're the only choice for businesses over a billion the last two years, only choice for midsize business the last two years, only choice Europe, Middle East, Africa, North America last two years. There's a difference. There's a big difference right now between our functionality and others, and we count on that because I don't want to compete on price. We would have avoided this industry if we figured this was gonna be a price competitive industry. I like to say when I'm teaching my own sales force about how we distinguish our product and our offering from others, I say the best arguments in enterprise software are as follows. The first one is, we have it, they don't, right? If at all possible, you say, "This is what we can offer.
They can't even offer that thing. Right? The second one is, you could trust us because, right, your friend bought our technology. This reference bought your technology. That logo bought our technology, and things turned out great. Trust is a great argument in enterprise software. Third, maybe is we have more features or we got better features or something like that. The worst argument you could ever make is we have a lower price. Appian digs in at the high end, speaks to people for whom features matter, and makes a meaningful difference so that we're competitive on non-price vectors. The last thing I'll say about this is that there are always two constructions of price.
Price is paid in money, but it's also paid in non-money, which is to say risk and time and reputation and all the other things in which you could pay a price. Appian is determined to be the low price leader in non-money factors. All right? Appian is going to be the bargain if you're paying in non-money. If you don't want to take a risk, if you don't want to spend extra time, if you don't want to hurt your reputation, you're going to buy Appian, right? If you would rather spend cash money than non-money, then Appian would be a great purchase for you. That's the niche we need to be in, right? There are some people who will pick to pay differently, but this is an industry in which non-money is an essential currency, and we're going to be the bargain along that vector.
Is it, and I'm not sure what I'm trying to ask, but is it we're willing to match price because we can identify accounts that we know in six months are going to come back and buy a ton more once they realize the value. Is that kinda-
No.
No.
No. We're not willing to match price.
Okay. I thought you said something about we're gonna be the bargain.
Oh, I'm sorry. Let me clarify. We are the bargain in non-money, okay?
Oh, okay.
You pay in one currency or the other. You pay in cash or you pay in delay risk, right? Reputational error. I mean, no, you pay in non-cash factors. My point there was that Appian is the best bargain in the industry if you don't want delay and you don't want headache and you don't want reputational risk. If you don't want those things, then you should go with Appian, but, we're not matching cash price. No.
Thank you.
We are the high price or near the high price in this market, and we will remain. We are the high price.
You're drawing a line in the sand on whatever that price is, and you're saying to these partners, "Identify those people that are going to pay us. You know, once you get them in, they're going to just follow that cohort that you've got.
Well, the ratio of what one spends in this market is so heavily weighted toward the non-cash factors that Appian nets out a bargain, right? Just consider what your time is worth. Consider what your risk is worth. Consider how important it is for your organization to be able to change. When you think about those things, Appian is a bargain, right? That's what I tell our customers and our partners. Partners understand that.
Thanks. Joe Meares from Truist. Just going back to the government side, are state and local governments or international governments, like, a material portion of that revenue today? And how do you see that going forward? It seems like their budgets are pretty flush right now.
The U.S. government is a very material part. Other governments, Australia, the U.K., are a small part of our revenue. State and local is a yet smaller part. We have begun to do some work there. Texas, we have an initiative, but those are still nominal components of our overall revenue.
Just as a follow-up question I got from an investor, how does FX affect the business over the long term?
Yeah. Well, over the long term, I hope it nets out, right? We don't hedge at all, right? We let them float.
I know we're running up against time. Matt, we have a few questions from the webcast. One of the questions is, you announced a couple of new products during your keynote and beginning this year. Two years from now, which one of these products you're really excited about and likely to have the biggest impact on revenue growth?
Okay. The unified suite is going to change our industry, right? That'll have the biggest impact. We've changed the direction of the industry. The second biggest feature is low-code data, and by facilitating the easy integration of data from the enterprise, we've made this product and this industry far more accessible. Those are my top two. They're all important, but those are the top two.
Now that you have the core pieces of enterprise automation stack, you seem to be folding the new capabilities into the base platform and not charging explicitly for them. Why is this better monetization approach compared to your competitors who seem to be charging for things like process mining?
Okay. First of all, don't worry, we're charging. All right. We're giving away a nominal amount of usage for each of these other components so that when you buy Appian, you can right away use some process mining and use some RPA and use some AI and use some intelligent document processing and business rules. It's all there for free. If you use a substantial amount, then we charge, right? We just charge once you've set out on your journey instead of for the first step. We feel that we get a little bit more adoption that way. Besides, all of our buyers have already bought an RPA product, probably several. They've probably already bought some process mining. I don't want to put a barrier between their adoption of our version.
I want them to feel that that's a frictionless extension of their commitment to Appian. They might as well just pick up process mining and use it to gauge ROI or pick up RPA and use it to do a few things. I want that first step to be exceptionally easy, and then later steps, we'll tax those. Secondly, it's gonna help us to grow our accounts, particularly process mining, because it's a good work discovery tool. We're going to inspire new usages, find new places to put our product. It's gonna be useful in that way. We should get larger deals because we appeal to a larger. By the way, we've raised our top level prices. I forgot to mention, right? Our nominal, like, suite level.
Suite level price has risen as we've added these new components. We're finding lots of ways to monetize these.
One question on the competitive environment is, have you seen any changes in the competitive environment with some of the larger software providers, like ServiceNow talking about low- code a lot more often today?
They do. I really like what ServiceNow says, by the way. I think that they're so on message. They sound like us sometimes. They're so keyed into the value in this space, and then their product, I don't wanna say anything bad about it, but maybe the product isn't the same or doesn't live up to. Look, I take ServiceNow very seriously. I think that of all the competitors, they're the closest to getting it, if it is what we're seeing and what we're going for. I think we've got different categories of competitors. You've got Salesforce, ServiceNow, and maybe Microsoft. Giant firms whose product is not comparable, but whose marketing and name recognition keeps them in the game.
We've got relatively recent high growth firms who are category champions, like Celonis, UiPath, and Automation Anywhere, and they're going to wrestle with the fact that the category they're the champion of is not the logical centerpiece in the next generation. Then we've got Pegasystems, which is still our primary competitor and has been for a decade. Pegasystems is different from every one of those other competitors in that their product is far more similar in its capabilities to what we can do today, but we win on intuitiveness and ease of use. The competitive landscape is similar to what it has been, except that we continue to see the kind of flourishing of different categories of competition. I feel confident we can win.
I feel confident that we have the right vision and the right product, and you can see it in our good customer outcomes. The competitors are strong, and a good market will attract strong competitors, even if their goal is not to eat the whole market, but just to eat the low end of it in many cases.
Unless there are any other questions.
Just to follow up on Pegasystems—
Yeah.
— and the speed. What makes Appian able to get those things up and running so much faster than Pegasystems?
Yeah. We're like the next generation of the concept. Pegasystems came along at a time when what they were building was a rules engine that metastasized into something that maybe resembles what we do. Fundamentally, it's rules. It's coding, right? It's not low- code, it's code. It's a heap of logic. Appian's approach was fundamentally conceptually different. Even if they're both pointed toward the same ends these days, their divergent architecture and composition makes them permanently different.
If I could add one flavor to that I think clearly states the difference there. You heard this from some of our partners, you hear this from the floor. You can go do a week's worth of training in Appian online, it could be even faster. Take our introduction to process modeling classes, and you could become a productive member of a team that's gonna deliver the project. You're probably gonna need six to eight weeks of training to even sniff a Pega project, to get going on things. I think that distinction sort of drives home the difference in the market today.
I know we're up against time.
This is Judah, last one. Matt, don't get mad at me. When in your keynote, you made this comment I thought was really interesting, and then you disclosed logins and a number of processes on the platform.
Yeah.
In the last earnings call, which is really cool information we've never seen before, so I appreciate you giving that. In the keynote, you threw those up there, and then you said, "These are more important metrics to me than anything else, including revenue and all that other stuff." Right? Could you just, you know, good, I'm glad you're laughing. Just expand a little bit on it, you know, what that means to you.
Yeah.
We can all not take away that you don't care about revenue.
Figured that question would haunt me at the investor meeting. All right. What I meant by that is that those metrics are precursors to future revenue. We've always cared about the future more than we care about the present. If we're generating a great deal of value for our customers, and they're logging on 4x as often as they were two years ago, and they're running 25x as many processes as they were five years ago, and they're running 50 billion data interactions per year on cloud alone, if we're creating all that value, which is up exponentially, as you saw, that curve is exponential. It's not even linear. If we're up that much in value delivered, then we have a pleasant problem ahead of us.
Our problem, instead of figuring out how we can change the world, is merely to figure out how we can monetize the change we've already made. That's a problem I wish for us. We're seeing that develop. We're seeing a consumer surplus develop, and our job is just to take some of that consumer surplus, which can be done with pricing stratagems, and there's lots of ways to claim a piece of consumer surplus. The best indicator for future revenue is current usage. That's what I meant by it.
Let's end on that note. As Matt said in his keynote, the unified platform is about agility, speed, and empowerment. Thank you for all the in-person attendees and the virtual attendees. Thank you to Himanshu, Arjun, and David. Thanks, Marc Wilson. Before we end, I just wanna let you guys know there's a live build challenge. I was told this is a pretty exciting event where six Appian developers will be competing head-to-head, showing off their app building speed and scale. The winner gets the $10,000 prize. I was told it's a truly exciting event, so you guys should take time to attend the live build challenge. Thank you again. Thanks, Matt. Thanks, Marc.
Thanks, everybody.
This concludes today's conference, and we thank you for your participation.