Appian (APPN) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01If we are unable to sustain our revenue growth rate, we may not achieve or maintain profitability in the future
2. 02We may not be able to scale our business quickly enough to meet our customers’ growing needs, and if we are not able to grow efficiently, our operating results could be harmed
3. 03We are dependent on a single product, and the lack of continued market acceptance of our platform could cause our operating results to suffer
4. 04Our sales cycle is long and unpredictable, particularly with respect to large customers, and our sales efforts require considerable time and expense, all of which may cause our operating results to fluctuate
5. 05Market adoption of process automation platforms to drive process automation may not grow as we expect, which may harm our business and prospects
6. 06We currently face significant competition
7. 07Our recent corporate growth may not be indicative of our future growth and, if we continue to grow, we may not be able to manage our growth effectively
8. 08If our security measures are actually or perceived to have been breached, or if unauthorized access to our platform or customer data occurs, our platform may be perceived as not being secure, and customers may reduce the use of or stop using our platform, and we may incur significant liabilities
9. 09We derive a material portion of our revenue from a limited number of customers, and the loss of one or more of these customers could materially and adversely impact our business, results of operations, and financial condition
10. 10A portion of our revenue is generated from subscriptions sold to governmental entities and heavily regulated organizations, which are subject to a number of challenges and risks
11. 11We have experienced losses in the past, and we may not achieve or sustain profitability in the future
12. 12AI is a disruptive set of technologies that may affect the markets for our software dramatically and in unpredictable ways
13. 13Regulatory and legislative developments related to the use of AI could adversely affect our use of such technologies in our products, services, and business
14. 14Our future results of operations may fluctuate significantly due to a wide range of factors, which makes our future results difficult to predict
15. 15We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which could cause our stock price to decline
16. 16motivate key personnel or hire, retain, and motivate qualified personnel, our business would be harmed
17. 17If we do not continue to innovate and provide a platform that is useful to our customers, we may not remain competitive, and our revenue and operating results could suffer
18. 18We may need to reduce or change our pricing model to remain competitive
19. 19Our business could be adversely affected if our customers are not satisfied with the deployment services provided by us or our partners
20. 20We are substantially dependent upon customer renewals, the addition of new customers, and the continued growth of our subscriptions revenue
21. 21Because we generally recognize revenue from cloud subscriptions ratably over the term of the subscription agreement, near term changes in sales may not be reflected immediately in our operating results
22. 22We may not achieve market acceptance of our pre-built solutions, which may adversely impact our financial results
23. 23If we are not able to maintain and enhance our brand, our business and operating results may be adversely affected
24. 24If our platform fails to perform properly or there are defects or disruptions in the rollout of our platform updates or enhancements, our reputation could be adversely affected, our market share could decline, and we could be subject to liability claims
25. 25The costs incurred in correcting any material defects or errors might be substantial and could adversely affect our operating results
26. 26We rely upon AWS to operate our cloud offering; any disruption of or interference with our use of AWS would adversely affect our business, results of operations, and financial condition
27. 27Our growth depends in part on the success of our strategic relationships with third parties
28. 28Because our long-term growth strategy involves further expansion of our sales to customers outside the United States, our business will be susceptible to risks associated with international operations
29. 29We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all
30. 30We are seeking to reinstate a substantial judgment against our competitor, Pegasystems, for willful and malicious trade secret misappropriation, and elements of our ability to reinstate and ultimately obtain payment with respect to that judgment are subject to risk
31. 31We maintain cash deposits in excess of federally insured limits. Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance
32. 32Pursuant to the terms of our outstanding indebtedness, we may be limited in our ability to incur future debt
33. 33If currency exchange rates fluctuate substantially in the future, our financial results, which are reported in U.S. dollars, could be adversely affected
34. 34We employ third-party licensed software for use in or with our software, and the inability to maintain these licenses or errors in the software we license could result in increased costs or reduced service levels, which would adversely affect our business
35. 35If we do not or cannot maintain the compatibility of our platform with third-party applications that our customers use in their businesses, our revenue will decline
36. 36Catastrophic events may disrupt our business
37. 37Adverse economic conditions abroad may negatively impact our business
38. 38Future acquisitions could disrupt our business and adversely affect our business operations and financial results

Risks Related to Regulatory Compliance and Governmental Matters

1. 39Failure to comply with governmental laws and regulations could harm our business
2. 40Any inability to adequately address privacy or cybersecurity concerns, even if unfounded, or comply with applicable privacy or data protection laws, regulations, and policies could result in additional cost and liability to us, damage our reputation, inhibit sales, and adversely affect our business
3. 41If our platform fails to function in a manner allowing our customers to operate in compliance with regulations and/or industry standards, our revenue and operating results could be harmed
4. 42Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for our platform and could have a negative impact on our business
5. 43We are subject to anti-corruption laws with respect to our domestic and international operations, and non-compliance with such laws can subject us to criminal and/or civil liability and materially harm our business
6. 44We are subject to governmental export and import controls and economic and trade sanctions that could impair our ability to conduct business in international markets and subject us to liability if we are not in compliance with applicable laws and regulations

Risks Related to Our Intellectual Property

1. 45Any failure to protect our proprietary technology and intellectual property rights could substantially harm our business and operating results
2. 46We may be subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages, and could limit our ability to use certain technologies
3. 47Portions of our platform utilize open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business

Risks Related to Tax and Accounting Matters

1. 48If our estimates or judgments relating to our critical accounting estimates prove to be incorrect, our results of operations could be adversely affected
2. 49Our operating results may be negatively affected by additional tax liabilities
3. 50Our ability to use net operating losses to offset future taxable income may be subject to certain limitations
4. 51We are obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our Class A common stock

Risks Related to Our Class A Common Stock

1. 52Mr. Calkins for the foreseeable future, which will limit the ability of others to influence corporate matters
2. 53We do not intend to pay dividends on our common stock for the foreseeable future so any returns will depend on appreciation in the price of our Class A common stock
3. 54Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our Class A common stock
4. 55thereby reducing the likelihood a stockholder would receive a premium for its shares of our Class A common stock in an acquisition
5. 56Unfavorable conditions in the global economy or the vertical markets we serve could limit our ability to grow our business and negatively affect our operating results
6. 57Our stock price has been volatile and may be volatile in the future
7. 58If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our stock price and trading volume could decline