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Appian Corp. (APPN) stock traded higher Thursday after the company reported better-than-expected third-quarter 2026 results and raised its full-year outlook.
Strong subscription growth, rising enterprise AI adoption and demand for legacy software modernization helped drive the results. The software company also reported higher adjusted operating income and EBITDA as customers expanded their use of its automation platform.
Appian reported adjusted earnings of 51 cents per share, beating Wall Street's estimate of 33 cents.
Revenue rose 25% year over year on a constant-currency basis to $234.63 million, topping analysts' estimate of $215.22 million. Reported revenue growth was approximately 26%.
Total subscription revenue increased 28% on a constant-currency basis to $187.8 million, while reported growth reached approximately 29%. Professional services revenue rose 18% to $46.9 million.
Cloud subscription revenue grew 20% on a constant-currency basis to $136.4 million, representing approximately 21% reported growth.
Appian's cloud net annualized recurring revenue expansion rate reached 120% as of Sept. 30, up from 115% in the previous quarter and 112% a year earlier.
Adjusted operating income rose to $40.6 million from $29.8 million a year earlier. Adjusted EBITDA increased to $43.4 million from $32.2 million.
Appian ended the quarter with $47.33 million in cash and cash equivalents. Total cash, short-term investments and marketable securities reached $88.95 million.
The company used $15.4 million in operating cash, compared with $18.7 million generated a year earlier.
CEO Matt Calkins said businesses increasingly use Appian's platform to deploy AI across critical operations.
AI usage on the platform jumped more than 50% from the previous quarter. Customers are using the technology to speed up audits, insurance underwriting and investment processes.
About 80% of Appian's annual recurring revenue comes from financial services, life sciences and the public sector. These industries prioritize security, reliability and regulatory compliance.
A European bank expanded its Appian licenses to introduce AI into compliance operations. Meanwhile, a North American insurer increased its Appian spending by 86% after expanding its DocCenter deployment.
Calkins said AI-assisted modernization is helping Appian secure some of its largest enterprise agreements. Businesses are replacing outdated applications and combining workflows on Appian's platform. The company is also using its Enterprise Growth Plans to encourage broader customer adoption.
Calkins said the U.S. government is increasingly turning to technology and AI-driven automation to improve efficiency. He said federal agencies are more willing to contract directly with software vendors, creating opportunities for larger deals.
Appian is capitalizing on this shift, with Calkins saying the company is securing more large and prime government contracts than ever before.
Appian reported strong U.S. government demand, securing separate seven-figure agreements with a Cabinet-level agency and a military branch.
A U.S. military branch awarded Appian a seven-figure contract to modernize fleet-management operations after a system integrator's earlier implementation failed.
CFO Srdjan Tanjga said customers need a qualifying subscription tier to access production AI capabilities, creating opportunities for higher subscription revenue.
Appian's Advanced subscription tier costs 25% to 35% more than its Standard tier. Customers can also purchase additional AI consumption bundles or pay overage fees when they exceed their included usage.
Tanjga said AI consumption revenue remains small but could become a larger growth driver as adoption increases.
Appian expects fourth-quarter revenue of $233 million to $237 million, representing 15% to 17% year-over-year growth. The forecast exceeds Wall Street's $226.431 million estimate.
However, the company projects adjusted earnings of 30 cents to 34 cents per share, below analysts' estimate of 37 cents.
For fiscal 2026, Appian raised its revenue forecast to $873 million to $877 million from its previous range of $845 million to $853 million. The updated outlook exceeds analysts' estimate of $849.77 million.
Appian also increased its full-year adjusted earnings forecast to $1.20 to $1.24 per share from $1.04 to $1.12. Wall Street expects adjusted earnings of $1.08 per share.
APPN Price Action: Appian shares were up 4.74% at $52.18 at the time of publication on Thursday. The stock is approaching its 52-week high of $54.12, according to market data.
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