BTIG has started coverage on Appian Corp. with a "neutral" rating, as analyst Joel Fishbein anticipates a "long runway for growth" for the company.
Fishbein called Appian a "disruptive force" in application development. He expects significant increases in sales capacity for the company over the next three years. A shift toward software should drive margin expansion over time, he added.
The analyst noted that the software-as-a-service provider has strong net retention rates tied to increasing deal sizes, with average revenue per customer of greater than $475,000. Appian has the potential to sustain above-30% subscription revenue growth over the next several years, which would provide upside to current estimates, Fishbein added.
But, he cautioned, much of Appian's revenue is still from professional services, and the company is more than three years out from generating meaningful cash flow. Despite what he called the "admirable" fundamentals of the business, Fishbein said it is tough to recommend buying shares at current levels.
The analyst expects Appian to post losses of 63 cents per share and 43 cents per share in 2018 and 2019, respectively.
