What Happened?
Shares of low code software development platform provider Appian (Nasdaq: APPN) jumped 6.5% in the morning session after market optimism around innovators in the software as a service (SaaS) space continued to improve following strong earnings from Salesforce. The enterprise software giant showcased clear progress in capturing demand for AI solutions, signing 200 deals within a week of launching Agentforce, its new AI platform for enterprise customers. In addition, Salesforce reported thousands more deals in the pipeline, hinting at robust future growth.
Reviewing some of the numbers, Salesforce reported sales and adjusted operating income ahead of Wall Street's expectations. On the other hand, EPS and some top-line growth indicators, including billings and remaining performance obligations (RPO), fell slightly below consensus estimates, as products like Tableau, MuleSoft, and Slack revealed some weaknesses. Despite the mixed top-line result, CRM recorded double-digit growth in the Sales and Service Cloud segments, which is encouraging.
Since the onset of the AI boom, Wall Street has been craving hard data to justify the lofty projections surrounding the industry's potential. The numbers are finally trickling in, and the data suggest the AI market's trajectory might exceed initial expectations, heralding the shift from speculative hype to tangible value creation.
After the initial pop the shares cooled down to $40.42, up 4.7% from previous close.
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What The Market Is Telling Us
Appian’s shares are quite volatile and have had 18 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 23.1% on the news that the company reported first-quarter results with revenue guidance for the next quarter, missing analysts' expectations, while full-year revenue guidance was roughly in line. While revenue beat slightly, billings (often analyzed in addition to revenue because it's cash in the door rather than recognized revenue dictated by accounting rules) missed Wall Street's estimates. Overall, this was a weaker quarter for Appian.
Appian is up 15% since the beginning of the year, and at $40.42 per share, it is trading close to its 52-week high of $41.56 from November 2024. Investors who bought $1,000 worth of Appian’s shares 5 years ago would now be looking at an investment worth $980.56.
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