Appian Earnings: Year Closed in Style as Cloud Subscriptions Continue Healthy Growth

No-moat Appian reported fourth-quarter results above our expectations for revenue and profitability. The firm’s main growth driver, cloud subscriptions, increased 26% with near-100% gross retention, while cloud net retention ticked up to 119% as the firm demonstrated its ability to cross-sell and upsell existing customers while attracting new business. Appian continues to demonstrate its prowess in artificial intelligence and within the sticky government sector and figures to benefit from both over the long term. Considering the firm’s ability to attract and retain customers coupled with an improving margin profile, we have raised our fair value estimate to $42 per share, from $37. Shares traded significantly higher upon results and screen as slightly undervalued relative to our updated valuation.