Why Appian Stock Was Sliding Today

Shares of Appian (NASDAQ: APPN) , a cloud software focused on business process automation, were falling today, even as the company beat estimates in its second-quarter earnings report. It pulled forward guidance to reach break-even on an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) basis.

Despite that, investors seemed underwhelmed by weaker-than-expected revenue guidance for the third quarter and full year.

As a result, the stock was down 11.7% as of 11:05 a.m. ET.

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Appian is evolving

Appian had a number of positive updates to share in the earnings report. The company said usage of Appian AI, a comprehensive platform that includes generative AI, data fabric, and automation, doubled quarter-over-quarter in the period, and it saw bookings from a key government vertical double.

Cloud subscription revenue, the company's primary focus, rose 19% to $88.4 million, and overall revenue was up 15% to $146.5 million, beating the consensus at $143 million. Its gross renewal rate remained strong at 99%, and its subscription gross margin was 88.5%, showing that customers are highly profitable once the company lands them.

On the bottom line, the company narrowed its adjusted EBITDA loss from $24.7 million to $10.5 million, and it reported a per-share loss of $0.26, improving from a per-share loss of $0.39 and beating the consensus at a per-share loss of $0.31.

Appian takes a big step toward profitability

Following a little-publicized round of layoffs in July, which let go of 170 employees, Appian pulled its target for break-even adjusted EBITDA forward from 2025 to 2024.

For the third quarter, the company now sees adjusted EBITDA of break-even to $3 million and forecast total revenue of $149 million-$153 million, up 9%-12% from a year ago but below the consensus of $155.6 million.

For the full year, the company expects adjusted EBITDA of -$3 million to $3 million and total revenue up 12%-13% to $610 million-$615 million, compared to revenue estimates at $615.7 million. While the accelerated move to profitability is a positive sign, investors seem worried that the layoffs could lead to slower revenue growth.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Appian. The Motley Fool has a disclosure policy .