What Happened:

Shares of low code software development platform provider Appian (Nasdaq: APPN) jumped 15% in the morning session after the company reported fourth-quarter results with revenue outperforming Wall Street's estimates along with solid revenue retention. Gross margin also improved, and cash burn reduced from previous quarters. Notably, the company called out two key milestones during the quarter: Full-year revenue exceeded half a billion dollars, and it recorded the highest quarterly gross margin in its public history. Moving on, guidance for the next quarter and the full year were relatively in line with expectations, with full-year adjusted EBITDA guidance better than Wall Street estimates, suggesting better profitability. Zooming out, this was a solid quarter, showing that the company is staying on track.

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What is the market telling us:

Appian's shares are very volatile and over the last year have had 20 moves greater than 5%. But moves this big are very rare even for Appian and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 3 months ago, when the stock dropped 5.9% on the news that the company reported third quarter results with revenue and adjusted EBITDA guidance for the next quarter falling below Wall Street's expectations. Similarly, its full-year revenue guidance slightly missed Wall Street's estimates. In addition, the company continued to burn cash. On the other hand, revenue and adjusted EPS beat expectations during the quarter, and we enjoyed seeing Appian materially improve its gross margin. Overall, this was a mediocre quarter for Appian.

Appian is up 3.6% since the beginning of the year, but at $36.42 per share it is still trading 32.4% below its 52-week high of $53.90 from June 2023. Investors who bought $1,000 worth of Appian's shares 5 years ago would now be looking at an investment worth $934.45.

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