Appian Earnings: Shares Tank Excessively as Foreign Exchange Headwinds Weigh on Earnings

No moat Appian’s first-quarter 2024 results met our top-line expectations but exceeded our adjusted EBITDA forecast. Appian foreshadowed this result by providing preliminary results at its annual customer conference in April. Despite the firm delivering a reasonable quarter, shares crumbled around 20% after release as foreign exchange losses weighed on net income and resulted in an earnings per share miss relative to FactSet consensus. We believe Appian is executing well on a path to future profitability supported by solid retention metrics, and that the market has overreacted to this near-term nonoperating headwind. Appian does not hedge foreign exchange risk, so is expected to report fluctuations in net earnings as result of gains or losses on remeasurement.