APPIAN CORP

(UNAUDITED)

1. Organization and Description of Business

Appian Corporation (together with its subsidiaries, “Appian,” the “Company,” “we,” or “our”) provides process automation. For over 25 years, our highly reliable and scalable platform has been leveraged by large enterprises and governments. Combining leading edge process orchestration and intelligence, we provide everything an organization needs to design, automate, and optimize critical processes, facilitating continuous adaptation in changing environments.

We are headquartered in McLean, Virginia, and operate globally through subsidiaries and offices across North America, Europe, Asia-Pacific, and Latin America.

2. Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements and footnotes include the accounts of Appian and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial reporting. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ deficit, and cash flows. All intercompany accounts and transactions have been eliminated in consolidation.

The results of operations for the current period are not necessarily indicative of the results for the full year or the results for any future periods. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”) on February 19, 2026.

Reclassifications

During the fourth quarter of 2025, the Company reclassified certain information technology, cybersecurity, and facility operating expenses from general and administrative expenses to cost of revenue, research and development, and sales and marketing expense. Amounts for the three and nine months ended September 30, 2025 have been reclassified to conform to the current period presentation. The revised presentation did not result in any changes to previously reported revenues, operating income, income before income taxes, net income, or earnings per share.

Use of Estimates

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the amounts reported in these consolidated financial statements and accompanying notes. Although we believe the estimates we use are reasonable, due to the inherent uncertainty involved in making these estimates, actual results reported in future periods could differ from those estimates.

Significant estimates embedded in the consolidated financial statements include, but are not limited to, revenue recognition, income taxes and the related valuation allowance established against deferred tax assets, the amortization period of deferred commissions, the amortization period of the cost to obtain the judgment preservation insurance policy, and stock-based compensation.

Concentration of Credit and Customer Risk

Our financial instruments exposed to concentration of credit and customer risk consist primarily of cash, cash equivalents, accounts receivable, and short-term investments and marketable securities. Deposits held with banks may exceed the amount of insurance provided on such deposits; however, we believe the financial institutions holding our cash deposits are financially sound and, accordingly, minimal credit risk exists with respect to these balances. With regard to our customers, credit evaluation and account monitoring procedures are used to minimize the risk of loss.

Revenue generated from U.S. federal government agencies was 30.1% and 27.5% of total revenue for the three and nine months ended September 30, 2026, respectively. Additionally,37.7% and 37.9% of our revenue during the three and nine months ended September 30, 2026, respectively, was generated from international customers. For the three and nine months ended September 30, 2025, revenue generated from U.S. federal government agencies was 25.0% and 24.9% of total revenue, respectively. Additionally,39.7% and 38.2% of our revenue during the three and nine months ended September 30, 2025, respectively, was generated from international customers.

No single end-customer accounted for more than 10% of our total revenue in the three and nine months ended September 30, 2026 or 2025. As of September 30, 2026 we had two resellers whose accounts receivable comprised 20.5% and 17.8% of total accounts receivable, respectively. One reseller accounted for 13.4% of total accounts receivable as of December 31, 2025.

Cash and Cash Equivalents

We consider all highly liquid investments with original maturities of three months or less, as well as overnight repurchase agreements, to be cash equivalents.

Allowance for Expected Credit Losses

Accounts receivable and unbilled revenue are stated at realizable value, net of an allowance for expected credit losses. The allowance is based on our assessment of the collectability of accounts and incorporates an estimation of expected lifetime credit losses on our receivables. We regularly review the composition of our accounts receivable aging, historical bad debts, changes in payment patterns, customer creditworthiness, post-balance sheet date collection activity, and current economic trends that affect collectability. If the financial condition of our customers were to deteriorate, resulting in their inability to make required payments, additional provisions for expected credit losses would be required and would increase bad debt expense. The allowance for doubtful accounts totaled $3.9 million and $3.4 million as of September 30, 2026 and December 31, 2025, respectively.

Deferred Commissions

We capitalize costs of obtaining a contract with a customer, which consist of sales commissions paid to our sales team and the associated incremental payroll taxes. These costs are recorded as deferred commissions in the consolidated balance sheets. Costs to obtain a subscription contract for a new customer or upsell an existing customer’s subscription are amortized over an estimated economic life offive years as sales commissions on initial sales are not commensurate with sales commissions on contract renewals. Commissions paid relating to contract renewals are deferred and amortized over the related renewal period. We determine the estimated economic life based on both qualitative and quantitative factors such as expected renewals, product life cycles, contractual terms, and customer attrition. We periodically review the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the estimated economic life. Costs to obtain a contract for professional services arrangements are expensed as incurred as the contractual periods of our professional services arrangements are generally one year or less.

Amortization associated with deferred commissions is recorded to sales and marketing expense in our consolidated statements of operations. Total commission expense was $14.0 million and $38.0 million for the three and nine months ended September 30, 2026, respectively. Total commission expense was $13.2 million and $38.2 million for the three and nine months ended September 30, 2025, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Significant additions or improvements extending the useful life of an asset are capitalized, while repairs and maintenance costs which do not significantly improve the related assets or extend their useful lives are charged to expense as incurred. The estimated useful lives of our property and equipment are generally 3 years for computer software, computer hardware, and internally developed software,5 years for equipment, and 10 years for office furniture and fixtures. Leasehold improvements have an estimated useful life of the shorter of the useful life of the assets or the lease term.

Treasury Stock

We account for treasury stock under the cost method. We reissue treasury stock to satisfy the vesting of restricted stock units. Because we are in an accumulated deficit position, all reissuances of treasury stock are recorded as a decrease to additional paid-in capital in our consolidated balance sheets.

Recent Accounting Pronouncements

Adopted

In the first quarter of 2026, we adopted ASU 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient allowing companies to assume the conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. Adopting this provision did not impact the calculation of our expected credit loss for our current accounts receivable, our results of operations, cash flows, and financial condition.

Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires more detailed disclosures of certain categories of expenses such as employee compensation, depreciation, and intangible asset amortization that are components of existing expense captions presented on the face of the income statement. The new guidance will be effective beginning with our annual reporting for fiscal year 2027 and for interim period reporting beginning in fiscal year 2028. The guidance may be applied either on a retrospective or prospective basis, and early adoption is permitted. We are currently evaluating the impact this standard will have on our financial statement presentation and disclosures.

In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software (Subtopic 350-40), which, among other changes, replaces the stage-based capitalization model with a principles-based model clarifying capitalization is to begin when (i) management has authorized and committed to funding a software project and (ii) it is probable the project will be completed and the software will be used to perform the function intended. The new guidance will be effective for our annual and interim period reporting beginning in fiscal year 2028 and can be applied prospectively, retrospectively, or via a modified transition approach. Early adoption is permitted. We are currently evaluating the impact this standard will have on our financial statement presentation and disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) Narrow-Scope Improvements, which is intended to improve the navigability of the guidance in ASC 270 - Interim Reporting and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with U.S. GAAP. ASU 2025-11 also addresses the form and content of such financial statements, in addition to interim disclosure requirements. The guidance also establishes a principle under which companies must disclose events since the end of the last annual reporting period that have a material impact on the entity. The new guidance will be effective for our interim periods beginning in the first quarter of 2028. Early adoption is permitted. We are currently evaluating the impact this standard will have on our financial statement presentation and disclosures.

3. Revenue

Revenue Recognition

We generate subscriptions revenue primarily through the sale of cloud subscriptions bundled with maintenance and support and hosting services. Other subscriptions include self-managed license subscriptions and any associated maintenance and support. We generate professional services revenue from fees for our consulting services, including application development and deployment assistance as well as training related to our platform.

The following table summarizes revenue recorded during the three and nine months ended September 30, 2026 and 2025 (in thousands):

Performance Obligations and Timing of Revenue Recognition

We primarily sell products and services that fall into the categories discussed below. Each category contains one or more performance obligations that are either (1) capable of being distinct (i.e., the customer can benefit from the product or service on its own or together with readily available resources, including those purchased separately from us) and distinct within the context of the contract (i.e., separately identified from other promises in the contract) or (2) a series of distinct products or services that are substantially the same and have the same pattern of transfer to the customer. Our license subscriptions are delivered at a point in time while our cloud subscriptions, maintenance and support, and professional services are delivered over time.

Subscriptions Revenue

Our subscription contracts are priced based on the number of users who access and utilize the applications built on our platform, non-user-based single application licenses, or consumption-based pricing. Our subscription contract terms generally vary fromone tothree years with most providing for payment in advance on an annual, quarterly, or monthly basis. In certain instances, our customers have paid their entire contract up front.

Cloud Subscriptions

We generate cloud subscriptions revenue primarily from the sales of subscriptions to access our cloud offering, together with related support services to our customers. We perform all required maintenance and support for our cloud offering, and the related revenue is reported as a component of cloud subscriptions revenue. Cloud subscriptions revenue is recognized on a ratable basis over the contract term beginning on the later of the date the service is made available to the customer or the commencement of the contract term. Our cloud-based subscription contracts generally have a term ofone tothree years in length. We bill customers and collect payment for subscriptions to our platform in advance, and they are non-cancellable.

Other Subscriptions

Our other subscriptions revenue is comprised of both license subscriptions and the related maintenance and support. Our license subscriptions revenue is derived from customers with self-managed installations of our platform. The majority of our self-managed license contracts areone year in length. For self-managed license subscriptions, we account for the software and related support separately as they are distinct performance obligations. Revenue from license subscriptions is recognized when control of the software license has transferred to the customer, which is the later of delivery or commencement of the contract term. Revenue from maintenance and support is recognized ratably over the contract period, which is the period over which the customer has continuous access to maintenance and support.

Professional Services Revenue

Our professional services revenue is comprised of fees for consulting services, including application development and deployment assistance as well as training services related to our platform. Our professional services are considered distinct performance obligations when sold standalone or with other products.

Consulting Services

We sell consulting services to assist customers in planning and executing the deployment of our software. Customers are not required to use consulting services to fully benefit from the software. Consulting services are regularly sold on a standalone basis and most often as either (1) under a fixed-fee arrangement or (2) on a time and materials basis. We also sell advisory services on a subscription basis to support customers or partners with their development and deployment. Consulting services contracts are considered separate performance obligations because they do not integrate with each other or with other products and services to deliver a combined output to the customer, do not modify or customize (or are not modified or customized by) each other or other products and services, and do not affect the customer's ability to use other consulting offerings, products, and services. Revenue under consulting contracts is recognized over time as services are delivered. Revenue from subscription-based consulting contracts is recognized ratably over the contract period. For time and materials-based consulting contracts, we have elected the practical expedient of recognizing revenue upon invoicing since the invoiced amount corresponds directly to the value of our service to date.

Training Services

We sell various training services to our customers. Training services are sold in the form of prepaid training credits that are redeemed based on a fixed rate per course. Training revenue is recognized when the associated training services are delivered.

Significant Judgments and Estimates

Determining the Transaction Price

The transaction price is the total amount of consideration we expect to receive in exchange for the service offerings in a contract and may include both fixed and variable components. Variable consideration is included in the transaction price to the extent it is probable a significant reversal will not occur. The amount of variable consideration excluded from the transaction price for the three and nine months ended September 30, 2026 and 2025 was immaterial. Our estimates of variable consideration are also subject to subsequent true-up adjustments and may result in changes to transaction prices; however, such true-up adjustments are not expected to be material.

Allocating the Transaction Price Based on Standalone Selling Prices (“SSP”)

We allocate the transaction price to each performance obligation in a contract based on its relative SSP. The SSP is the observable price at which we sell the product or service separately. In the absence of observable pricing, we estimate SSP using the residual approach. We establish SSP as follows:

1. Cloud subscriptions - Given the highly variable selling price of our cloud subscriptions and the related maintenance and support, we establish the SSP using a residual approach after first determining the SSP of consulting and training services. We have concluded the residual approach to estimating the SSP of our cloud subscriptions is an appropriate allocation of the transaction price.

2. License subscriptions - Given the highly variable selling price of our license subscriptions, we have established the SSP of license subscriptions using a residual approach after first determining the SSP of the related maintenance and support. Maintenance and support for license subscriptions is sold on a standalone basis in conjunction with renewals of our legacy perpetual software licenses and within a narrow range of the net license fee. Because an economic relationship exists between the license and maintenance and support, we have concluded the residual approach to estimating the SSP of license subscriptions is an appropriate allocation of the transaction price.

3. Maintenance and support - We establish the SSP of maintenance and support for license subscriptions as a percentage of the stated net subscription fee based on observable pricing of maintenance and support renewals from our legacy perpetual software licenses.

4. Consulting and training services - The SSP of consulting and training services is established based on the observable pricing of standalone sales within each geographic region where the services are sold.

Contract Balances

Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to our contracts with customers. Contract assets primarily relate to unbilled amounts for contracts with customers for which the amount of revenue recognized exceeds the amount billed to the customer. Contract assets are transferred to accounts receivable when the right to invoice becomes unconditional.

Contract liabilities consist of deferred revenue and include payments received in advance of the satisfaction of performance obligations. Deferred revenue is then recognized as the revenue recognition criteria are met. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current.

The following table sets forth our contract asset and contract liability balances (in thousands):

• Current and non-current contract assets are reported as components of the ‘Prepaid expenses and other current assets’ and ‘Other assets’ line items, respectively, in our consolidated balance sheets.

Revenue recognized from amounts included in contract liabilities at the beginning of the period totaled $305.3 million and $263.0 million for the nine months ended September 30, 2026 and 2025, respectively.

Transaction Price Allocated to the Remaining Performance Obligations

As of September 30, 2026, we had an aggregate transaction price of $635.9 million allocated to unsatisfied performance obligations. We expect to recognize $451.9 million of this balance as revenue over the next 12 months with the remaining amount recognized thereafter.

4. Leases

As of September 30, 2026, our lease portfolio consists entirely of operating leases for corporate offices. Our operating leases have remaining lease terms with various expiration dates through 2031, and some leases include options to extend the term for up to an additional 10 years.

Lease Costs

Expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense. We have lease agreements which require payments for lease and non-lease components (i.e., common area maintenance) that are accounted for as a single lease component. Variable lease payment amounts that cannot be determined at the commencement of the lease such as maintenance costs, utilities, and service charges are not included in right-of-use assets for operating leases or operating lease liabilities but instead are expensed as incurred and recorded as variable lease expense. We often receive customary incentives from our landlords such as tenant improvement allowances and rent abatement periods, which effectively reduce total lease payments owed for the leases.

The following table sets forth the components of lease expense for the three and nine months ended September 30, 2026 and 2025 (in thousands, exclusive of sublease income):

Sublease income totaled $0.3 million and $0.8 million for the three and nine months ended September 30, 2026, respectively. Sublease income totaled $0.3 million and $1.0 million for the three and nine months ended September 30, 2025, respectively.

Supplemental Lease Information

Supplemental balance sheet information related to operating leases as of September 30, 2026 and December 31, 2025 is presented in the following table (in thousands, except for lease term and discount rate):

Supplemental cash flow and expense information related to operating leases for the three and nine months ended September 30, 2026 and 2025 is shown below (in thousands):

A summary of our future minimum lease commitments under non-cancellable operating leases as of September 30, 2026 is shown below (in thousands):

5. Goodwill and Intangible Assets

The following table details the changes in goodwill during the nine months ended September 30, 2026 and fiscal year ended December 31, 2025 (in thousands):

Intangible assets, net consisted of the following as of September 30, 2026 and December 31, 2025 (in thousands):

Intangible amortization expense was $0.2 million and $0.8 million for the three and nine months ended September 30, 2026, respectively, and $0.3 million and $0.9 million for the three and nine months ended September 30, 2025, respectively. As of September 30, 2026, the weighted average remaining amortization period for customer relationships was approximately 4.6 years.

The following table shows the projected annual amortization expense related to amortizable intangible assets as of September 30, 2026 (in thousands):

6. Property and Equipment, net

Property and equipment, net consisted of the following as of September 30, 2026 and December 31, 2025 (in thousands):

Depreciation expense totaled $2.7 million and $6.9 million for the three and nine months ended September 30, 2026, respectively. Depreciation expense totaled $2.1 million and $6.5 million for the three and nine months ended September 30, 2025, respectively. We disposed of $0.2 million and $0.9 million worth of fully depreciated equipment during the three and nine months ended September 30, 2026, respectively. We hadno disposals or retirements during the three and nine months ended September 30, 2025.

7. Accrued Expenses

Accrued expenses consisted of the following as of September 30, 2026 and December 31, 2025 (in thousands):

8. Debt

New Senior Secured Credit Facilities Credit Agreement

On August 5, 2026, we entered into a newfive-year Senior Secured Credit Facilities Credit Agreement with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, as administrative agent and collateral agent for the lenders party thereto (the “Credit Agreement”) in an aggregate principal commitment of $300.0 million, comprising a $60.0 million term loan facility and a $240.0 million revolving credit facility, which includes a $50.0 million letter of credit sub-facility and a $25.0 million swingline sub-facility. The Credit Agreement matures on August 5, 2031 and replaces our prior debt facility that was in place as of June 30, 2026. The proceeds from the new facility were used to refinance the Company’s existing indebtedness and will provide ongoing liquidity for working capital requirements, general corporate purposes, and other strategic initiatives. In connection with the refinancing, we reduced our cash balance by $36.6 million to lower our indebtedness. As of September 30, 2026, we had used borrowing capacity of $140.0 million under our $240.0 million revolving credit facility and had $60.0 million outstanding on the term loan facility.

During the three months ended September 30, 2026, we recognized a loss on debt extinguishment of $0.4 million in ‘Other expense (income), net’ on the consolidated statements of operations, reflecting the write-off of unamortized debt issuance costs and certain lender fees. Capitalized debt issuance costs of $2.4 million were recorded on the consolidated balance sheets at closing of the new Credit Agreement, of which $0.5 million related to the term loan was recorded as a direct deduction from short-term and long-term debt and $1.9 million related to the revolving credit facility was included in other current and long-term assets. These costs are being amortized as a component of interest expense over thefive-year term.

Under the new Credit Agreement, we may elect whether amounts drawn bear interest on the outstanding principal amount at a rate per annum equal to either (a) the higher of the Prime rate or the Federal Funds Effective rate plus 0.5% or (b) the forward-looking term rate based on the secured overnight financing rate (“Term SOFR”), plus an applicable margin. The additional interest rate margin ranges from 0.25% to 1.00% in the case of Base Rate advances and from 1.25% to 2.00% in the case of Term SOFR advances, depending on the Company’s Consolidated Total Net Leverage Ratio as defined in the Credit Agreement.

Our obligations are secured on a senior lien basis by a security interest in all of the Company’s right, title, and interest in, to, and under substantially all of its assets, including its intellectual property, subject to limited exceptions and permitted liens. The Credit Agreement contains customary representations, warranties, and covenants, including covenants by us limiting additional indebtedness, guaranties, liens, fundamental changes, mergers and consolidations, dispositions of assets, investments, paying dividends, repurchasing or retiring capital stock, or prepaying certain junior indebtedness and preferred stock, certain corporate changes, and transactions with affiliates. The Credit Agreement also provides for customary events of default, including but not limited to non-payment, breaches or defaults in the performance of covenants, insolvency, bankruptcy, and the occurrence of a material adverse effect on us.

The following table summarizes outstanding debt balances (in thousands):

(1)Deferred debt issuance costs associated with the term loan facility are recorded net of the debt obligation and amortized to interest expense over the term of the Credit Agreement.

As of September 30, 2026, we were in compliance with all covenants contained in the Credit Agreement. In addition, we had outstanding letters of credit totaling $7.3 million in connection with securing leased office spaces.

9. Income Taxes

The provision for income taxes is based upon the estimated annual effective tax rates for the year applied to the current period income before tax plus the tax effect of any significant or unusual items, discrete events, or changes in tax law. Our operating subsidiaries are exposed to statutory effective tax rates ranging from zero to approximately 35%. Fluctuations in the distribution of pre-tax income among our operating subsidiaries can lead to fluctuations of the effective tax rate in the consolidated financial statements. For the three and nine months ended September 30, 2026, the actual effective tax rates were 6.3% and 145.5%, respectively. For the three and nine months ended September 30, 2025, the actual effective tax rates were 15.0% and 36.8%, respectively. The change in the effective tax rates for each period as compared to the same period in the prior year was primarily due to near breakeven positions in both 2026 and 2025.

As of September 30, 2026, our net unrecognized tax benefits totaled $8.8 million, which if recognized would result in no net effect on the effective tax rate due to a valuation allowance. The amount of reasonably possible unrecognized tax benefits that could decrease over the next 12 months due to the expiration of certain statutes of limitations or settlements of tax audits is not material to our consolidated financial statements.

We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. Due to our net operating loss carryforwards, the tax years 2016 through 2026 remain open to examination by the major taxing jurisdictions to which we are subject. There are no open examinations that would have a meaningful impact on our consolidated financial statements.

10. Stock-Based Compensation

Compensation expense related to stock-based awards is accounted for using the estimated fair value of the award on the grant date. We calculate the fair value of stock options containing only a service condition using the Black-Scholes option pricing model. The fair value of restricted stock units (“RSUs”) is based on the closing market price of our common stock on the Nasdaq Global Market on the date of grant. For service-based awards such as RSUs, stock-based compensation expense is recognized on a straight-line basis over the requisite service period.

We account for forfeitures of our stock-based awards as they occur rather than estimating expected forfeitures. As of September 30, 2026, the total unrecognized compensation cost related to unvested RSUs was approximately $47.4 million, which will be recognized over a weighted average period of 1.7 years.

Our annual bonus program provides eligible employees with the option to receive all or a portion of their earned annual bonuses, otherwise payable in cash, in the form of RSUs. The RSUs are granted by our Board of Directors during the first quarter of the following year and are fully vested upon grant. The portion of the annual bonus to be paid in the form of RSUs is recorded as stock-based compensation expense while the related obligations are recorded as liabilities in the ‘Accrued compensation and related benefits’ line item on our consolidated balance sheets. During the three and nine months ended September 30, 2026, we recognized $3.0 million and $7.9 million of stock-based compensation related to this program, respectively. During the three and nine months ended September 30, 2025, we recognized $1.4 million and $4.3 million of stock-based compensation related to this program, respectively.

The following table summarizes the components of our stock-based compensation expense for the three and nine months ended September 30, 2026 and 2025 (in thousands):

11. Basic and Diluted Earnings (Loss) per Common Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted earnings (loss) per share is computed similar to basic, except the weighted average number of common shares outstanding is increased to include additional outstanding shares from the assumed exercise of stock options and vesting of stock awards, if dilutive. The dilutive effect, if any, of convertible shares is calculated using the treasury stock method.

The following table is a reconciliation of weighted-average number of shares outstanding used to compute basic and diluted earnings (loss) per share (in thousands):

For the three and nine months ended September 30, 2026, approximately 0.7 million and 1.0 million outstanding common stock equivalents, respectively, were excluded from the computation of diluted earnings per share because their effect would have been antidilutive. For the three and nine months ended September 30, 2025, approximately 0.9 million and 1.2 million outstanding common stock equivalents, respectively, were excluded from the computation of diluted earnings per share because their effect would have been antidilutive.

12. Commitments, Contingencies, and Other Matters

Minimum Purchase Commitments

We have a non-cancellable cloud hosting arrangement with Amazon Web Services (“AWS”) that contains provisions for minimum purchase commitments. Specifically, purchase commitments under the agreement total $220.0 million over five years. The agreement, which originated in July 2021 and was amended in October 2024, currently contains minimum annual spending requirements of $44.0 million from November 2024 to October 2029. Spending under this agreement for the three and nine months ended September 30, 2026 totaled $18.8 million and $52.2 million, respectively. Spending under this agreement for the three and nine months ended September 30, 2025 totaled $14.3 million and $37.6 million, respectively. The timing of payments under the agreement may vary, but we expect to meet our minimum annual spending requirement during the term of the arrangement.

Pegasystems Litigation

Trade Secrets Case

On May 29, 2020, we filed a civil complaint against Pegasystems, Inc. (“Pegasystems”) and Youyong Zou, a Virginia resident, in the Circuit Court for Fairfax County, Virginia. Appian Corp v. Pegasystems Inc. & Youyong Zou, No. 2020-07216 (Fairfax Cty. Ct.). On May 10, 2022, we announced the jury awarded us $2.036 billion in damages for misappropriation of our trade secrets and $1 in damages for violating the Virginia Computer Crimes Act. Pegasystems filed several post-trial motions seeking relief in the form of reducing the damages award or setting aside the jury’s verdict and either granting a new trial or entering judgment in Pegasystems’ favor. All of these motions were denied, and final judgment was entered by the Court on September 15, 2022. The final judgment reaffirmed the $2.036 billion in damages and also ordered Pegasystems to pay Appian $23.6 million in attorney's fees associated with the case as well as statutory post-judgment interest on the judgment at an annual rate of 6%, or approximately $122.0 million per year.

Defendant Youyong Zou has satisfied the judgment of $5,000 (plus interest) against him in lieu of appealing that judgment. On September 15, 2022, Pegasystems filed a notice of appeal to the Court of Appeals of Virginia. On July 30, 2024, the Court of Appeals of Virginia issued a decision reversing the judgment against Pegasystems and remanding the case for a new trial. The decision rejected Pegasystems’ argument that Appian had not presented evidence that trade secrets were misappropriated but reversed the judgment on the basis of evidentiary and damages rulings made by the trial court. On August 29, 2024, Appian submitted a petition to the Supreme Court of Virginia seeking to reverse the Court of Appeals decision and reinstate the full judgment against Pegasystems. Pegasystems filed an opposition to the petition and cross-issues for appeal on October 21, 2024. Appian's petition was heard on February 11, 2025. On January 6, 2026, the Supreme Court of Virginia issued an opinion affirming the opinion rendered by the Court of Appeals on both sides and remanding the case for a retrial. On May 7, 2026, the Circuit Court set the retrial to begin on January 11, 2027. We cannot predict the outcome of any further appeals or any retrial or the exact time it will take to resolve them.

Judgment Preservation Insurance

On September 1, 2023, we obtained a judgment preservation insurance (“JPI”) policy in connection with our $2.036 billion judgment against Pegasystems. The total cost of the policy was $57.3 million and is comprised of the premium, a one-time broker fee, and Virginia lines tax. The policy provides up to $500.0 million of coverage.

The total cost of the policy was capitalized and is being amortized on a straight-line basis over the estimated period to obtain a final and unappealable judgment. Amortization expense associated with the JPI premium is recorded to general and administrative expenses in our consolidated statements of operations. JPI amortization expense was $1.7 million and $5.7 million for the three and nine months ended September 30, 2026, respectively. JPI amortization expense was $3.2 million and $9.4 million for the three and nine months ended September 30, 2025, respectively. As of September 30, 2026, $6.9 million of the unamortized balance is classified as ‘Prepaid expenses and other current assets’ while the remaining $10.3 million is classified as 'Other assets’ on our consolidated balance sheets.

Defamation Case

On August 2, 2023, Pegasystems filed a complaint against the Company in the U.S. District Court for the District of Massachusetts. Pegasystems Inc. v. Appian Corporation, 1:23-cv-11776-LTS (D. Mass.). The complaint asserts claims for defamation, trade libel, and violations of the Lanham Act, 15 U.S.C. § 1125(a). On February 20, 2024, we answered the complaint, asserted counterclaims against Pegasystems for defamation, trade libel, violations of the Lanham Act, 15 U.S.C. § 1125(a), and violations of Mass. Gen. Laws ch. 93A §§ 2 and 11 and sought a declaratory judgment that Pegasystems was not entitled to the recovery sought in its claims.

The parties exchanged opening expert reports in March 2026. Pegasystems claims up to $7.3 million in damages resulting from its claims, while our claims are up to $109.5 million in damages from competitive situations related to the counterclaims. The Court issued a summary judgment ruling on August 21, 2026, dismissing a subset of Pegasystems’ claims and Appian’s counterclaims, and issued a ruling excluding certain of Pegasystems’ damages theories on November 4, 2026. Claims remain active on both sides. A jury trial is currently scheduled for November 2026. While we believe strongly in our claims and defenses, we are unable to reasonably estimate the likelihood of success for either party or the range of any possible gain or loss given the uncertainty as to the likelihood, amount, and timing of any potential gain or loss related to our counterclaims or Pegasystems’ claims.

Other Legal Matters

From time to time, we are subject to legal, regulatory, and other proceedings and claims that arise in the ordinary course of business. Other than as disclosed elsewhere in this Quarterly Report, we are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Share Repurchase Program

On February 17, 2026, the Board of Directors authorized a program to repurchase up to $50.0 million of our common stock (the “Share Repurchase Program”), effective February 2026 through February 2028. On May 5, 2026, the Board of Directors approved an additional $50.0 million for the Share Repurchase Program, bringing the total aggregate authorization under the program to $100.0 million. All other terms and conditions of the Share Repurchase Program remain unchanged. In the third quarter of 2026, we repurchased 0.5 million shares under this program at an average share price of $31.41, totaling an aggregate cost of $17.3 million. As of September 30, 2026, shareholders’ equity included 71.5 million shares outstanding, net of 3.2 million shares of common stock held in treasury.

13. Segment and Geographic Information

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) for purposes of allocating resources and evaluating financial performance. We have determined our CODM is our CEO.

We haveone operating andone reportable segment, representing our consolidated business that helps organizations design, automate, and optimize important business processes from start to finish. We generate revenue from customers primarily through the sale of cloud and other subscriptions bundled with maintenance and support as well as professional services revenue from fees for our consulting services and training related to our platform. Our reportable segment determination is based on our management and internal reporting structure, the nature of the subscriptions and services we offer, and the financial information evaluated regularly by our CODM.

The CODM uses operating income and net income (loss) reported on the consolidated statements of operations to assess performance for the segment and decide how to allocate resources. In addition, the CODM reviews the expense categories presented on the consolidated statements of operations to manage the Company’s operations. Operating income and net income (loss) are used to evaluate profitability trends in the business, and the CODM considers budget-to-actual variances for both profit measures when making decisions about allocating capital and resources. Significant segment expenses, which are the expenses included in operating income and net income (loss), as well as other segment items such as other expense (income), net and income tax expense are included in the consolidated statements of operations. The CODM does not review any significant segment expense information that differs from the expense presented in the consolidated statements of operations. Further, the measure of segment assets is total assets as reported on the consolidated balance sheets.

The following table summarizes revenue by geography for the three and nine months ended September 30, 2026 and 2025 (in thousands):

With respect to geographic information, revenue is attributed to respective geographies based on the contracting address of the customer. The value of our long-lived assets, which are comprised of property and equipment, intangible assets with finite lives, and right-of-use assets, held in the United States and internationally as of September 30, 2026 were $47.5 million and $17.8 million, respectively. As of December 31, 2025, our long-lived assets held in the United States and internationally were $49.0 million and $12.4 million, respectively.

14. Investments and Fair Value Measurements

Fair Value Measurements

U.S. GAAP establishes a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires us to use observable inputs when available and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows:

•Level 1- Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities;

•Level 2- Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

•Level 3- Unobservable inputs for which there is little or no market data and which require us to develop our own estimates and assumptions reflecting those that a market participant would use.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs. There were no instruments measured at fair value on a recurring basis using significant unobservable inputs as of September 30, 2026 and December 31, 2025.

The valuation techniques that may be used to measure fair value are as follows:

•Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;

•Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts; and

•Cost approach- Based on the amount that currently would be required to replace the service capacity of an asset (i.e., replacement cost).

The carrying amounts of our accounts receivable, accounts payable, and accrued expenses approximate fair value as of September 30, 2026 and December 31, 2025 because of the relatively short duration of these instruments. Additionally, the carrying value of our debt associated with the term loan facility approximates fair value because the interest rates are variable and reset on relatively short durations to the current market rates.

Investments

Our investment portfolio consists largely of debt investments classified as available-for-sale. Changes in the fair value of available-for-sale securities, excluding other-than-temporary impairments, have been recorded in ‘Accumulated other comprehensive loss’ in our consolidated balance sheets. The components of our cash, cash equivalents, and investments as of September 30, 2026 are as follows (in thousands):

At December 31, 2025, our investments consisted of the following (in thousands):

We did not hold any Level 3 assets at any point during the three and nine months ended September 30, 2026. Additionally, there were no transfers between Levels 1 and 2 during the nine months ended September 30, 2026. Interest income on our investments, which is recorded within ‘Other expense (income), net’ on our consolidated statements of operations, totaled $0.9 million and $3.9 million for the three and nine months ended September 30, 2026, respectively. Interest income on our investments totaled $1.7 million and $5.3 million for the three and nine months ended September 30, 2025, respectively.

The contractual maturities of our debt securities as of September 30, 2026 and December 31, 2025 were all one year or less. Actual maturities may differ from contractual maturities because borrowers have the right to call or prepay certain obligations.