Q4 2023 Appian Corp Earnings Call
Participants
Sri Anantha; VP, Finance & Investor Relations; Appian Corporation
Matt Calkins; Chairman, CEO; Appian Corporation
Mark Matheos; Chief Financial Officer; Appian Corp
Sanjit Singh; Analyst; Morgan Stanley
Steve Enders; Analyst; Citigroup Inc.
Jake Roberge; Analyst; William Blair
Kevin Kumar; Analyst; The Goldman Sachs Group, Inc.
Frederick Havemeyer; Analyst; Macquarie Capital Venture Studio
Thomas Blakey; Analyst; KeyBanc Capital Markets
Presentation
Operator
Standing by, and welcome to Appian's fourth quarter 2023 earnings conference call. (Operator Instructions) As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Sri Anantha, Vice President, Finance and Investor Relations. Please go ahead.
Sri Anantha
Thank you, operator. Good morning, and thank you for joining us to review Appian's fourth quarter and full year 2023 financial results. With me today are Matt Calkins, Chairman and Chief Executive Officer; and Mark Matheos, Chief Financial Officer. After prepared remarks, we will open the call for questions. You can follow along with our earnings presentation by downloading it from the main page of our investor site at investors dot appian.com. During this call, we may make statements related to our business that are forward-looking under federal securities laws and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
These include comments related to our financial results trends and guidance for the first quarter and full year 2024 the benefits of our platform industry and market trends, our go-to-market and growth strategy, our market opportunity and ability to expand our leadership position, our ability to maintain and upsell existing customers and our ability to acquire new customers. The words anticipate, continue, estimate, expect, intend, will, and similar expressions are intended to identify forward-looking statements or similar indications of future expectations.
These statements reflect our views only as of today. They do not represent our views as of any subsequent date. They are subjected to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to our most recent annual report on Form 10-K, quarterly reports on Form 10-Q and other filings with the SEC.
These documents are also available on our Investors section of our website. Additionally, Non-GAAP financial measures will be discussed on this conference call refer to the tables in our earnings release and the investor section of our website for a reconciliation of these measures to their most directly comparable GAAP financial measures.
With that, I would like to turn the call over to Matt.
Matt Calkins
Thanks, Sri, and thanks, everyone for joining us today. In the fourth quarter of 2023, Appian's cloud subscription revenue grew 26% to $81.3 million. Subscriptions revenue grew by 24% to $115.8 million. Total revenue grew 16% to $145.3 million. Our cloud subscriptions revenue retention rate was 119%, and our adjusted EBITDA was a gain of $1.0 million. For the full year, Appian's cloud subscription revenue grew 29% to $304.5 million. Subscriptions revenue grew 21% to $412.3 million. Total revenue grew 17% to $545.4 million, and our adjusted EBITDA was a loss of $44.8 million, and I mentioned two milestones at the top of this call last year. For the first time, our revenue exceeded $1.5 billion.
Second, an interesting component to the first observation. We achieved the highest Non-GAAP gross margin in our public history last quarter at 78% in our presentation deck. We've included one last time the special bonus metrics we tracked quarterly in 2023. We didn't get the recession I expected, but there were some macro complications and you can see at all, starting on page 5.
Last year was a year of a I talk now the conversation has shifted more tangible things shipped, features, successful deployments, practical value that change will be good for Appian. We have a distinctive approach to the AI market based on years of leadership and existing technology. We are focused specifically on the application of AI to data. We're leaders in data fabric, which is like a virtual database, uniting the customer's enterprise.
And we are leaders in AI and now we will be leaders in the combination of these two things. I think everyone understands by now that AI. is only as good as the data behind it, more data, better AI Appian has an open data strategy that allows a eye to benefit from information scattered across the enterprise.
Ask a question and your response will be informed by everything known to the business, not just the contents of one silo, same for generating new content, the more data that supports the AI, the more sources you bring to bear the better the output. Let's explore this with an example the purpose of this examples to show you the advantage of having a draw from multiple data sources that AI is better that way.
We were to the large US state government entity that awards hundreds of millions of dollars in contracts every year using happens, its procurement processes are highly regulated, must comply with federal and local laws. In Q4, this organization deployed Appian AI to optimize its awards management process. As you know, contracting usually involves many data objects of different types in different formats, typically in many different locations.
Now I will understand thousands of regulatory procedural policies from various sources. So please don't have to manually search for information. Appian AI. has embedded in the customer's workflow doing work and making the customer's data more usable than before. Dermot officers and supporting staff can ask questions in real time and get great answers. This allows them to advance their procurements and speed and accuracy.
Our second advantage is simplicity. Appian takes a practical view towards technology. Our goal isn't just to make extraordinary software, but to make it accessible programming and Appian has done to the mass not a keyboard. We take the same approach to AI. one of the nation's largest universities uses Appian to improve graduation rates recently deployed Appian AI. to its student advisors a I will recommend actions to take on student cases and proposed meeting agendas to advisors before they meet with students.
First, I want to emphasize how important it is that such a system draw on all the data in the enterprise. If you're trying to help a student complete a four year degree, you need to know about all the threats to their progress. You need to know if they're failing any courses that's in one system, you need to know if they're late on tuition payments, that's in another system, you need to know if they're missing classes, that's in the attendant slots. You need to know if they have friends who recently dropped out that someplace else, you get the idea. These are different data sources and AI. needs the more to identify risks and make a good recommendation.
My other point is that such a system must be easy to set up and use counselors just want to ask a chat bot, some questions about their students not become a technologist themselves. We made it easy and it was easy to deploy as well going live in under two months. All this talk about drawing on the full enterprise of data sounds great until you consider the implications, merging datasets within the enterprise, uploading massive amounts of data and training AI algorithms, you don't control.
Appian requires none of that. We offer insights across the widest amount of data, but we do it while disclosing the least of it specialize in private pay. We use our data fabric to provide just the information that's pertinent for every question rather than pre training and algorithm on everything an organization knows it's more cost-effective and much more respectful of our clients' architecture privacy.
Another example to make this point, a top pharmaceutical company manages several core processes with our platform, including ones related to clinic clinical trials and manufacturing logistics. In Q4, the company named Appian its standard enterprise workflow tool. It will now deploy our platform to over 50,000 employees. The company aims to bring new products to market faster. Our AI is privy to their confidential documents, their lab results, et cetera.
This is sensitive work and needless to say, they take the privacy of their data very seriously. This global firm has decided to trust our technology to make the most of what they know while keeping the highest commitment to protecting it. Appian landed some of our largest seven-figure deals this quarter, the total contract value of our top 10 net new software deals increased by 70% in Q4 2023 compared to the same period last year.
Here are some notable stories. A US military branch wants to unify its operational systems so we can better mobilize its forces. Appian will integrate data from 14 legacy systems into a single modern platform. In Q4, it purchased a seven figure software deal. 100,000 analysts will use Appian to train, manage and equip personnel globally.
Another example, a financial services company managing hundreds of billions of dollars in assets became a new customer in Q4 with a seven figure software deal companies growing quickly and wants to modernize legacy systems that are too costly to maintain Appian's data fabric with unified data from over a dozen core systems into a single view. So we can run and workflows like customer onboarding, wire transfer happening will help the customer scale and process more than 4 million transactions annually.
Next, a national police force recently adopted new strategic priorities to optimize operations and improve public safety. In Q4. It selected Appian as an enterprise-wide platform to improve productivity and unify the group's disparate systems, starting with an incident management app desk workers will triage inbound requests, open cases and route them to field officers for investigation.
This process had always been manual. Now thousands of offers officers will be able to respond to incidents faster using Appian last example, now a top health insurance provider is running Company-wide initiative to modernize systems and save $1 billion. It selected our platform to aid this effort. Starting with its enrollment process.
The provider made a seven figure software deal in Q4 and became a new customer. Appian's data fabric will consolidate Medicare and Medicaid requests into a single application. So employees can do eligibility checks, fix discrepancies, approve applications and initiate the billing process. The organization expects to process millions of requests annually on Appian.
Now a few final notes. Happy and expanded our credit facility this quarter and the participation from existing and new lenders. The aggregate principal amount of the term loan facility is now $200 million, up from $150 million. And the revolving credit facility is $100 million up $75 million. We welcome the additional financial strength.
Appian has made progress in our intention to aim high in this market and sell more large deals. We've held to our financial discipline and done. So without taking anything from, you'll hear more about our plans at our investor meeting on April 16 at Appian World in Washington, D.C., we'll talk strategy, results, technology, AI and more hope to see you there. With that, I'll hand the call to Mark.
Mark Matheos
Thanks, Matt. I'll review the financial highlights for the quarter and then we'll provide guidance for Q1 and the full year 2024. We closed 2023 on a strong note with revenue and adjusted EBITDA coming in above the high end of our guidance range. We saw continued healthy contribution from existing customers and strong growth from key industry verticals.
Let's go into the details. Cloud subscription revenue was $83.1 million, an increase of 26% year over year and above guidance. On a constant currency basis, cloud subscription revenue grew 23% year over year. Total subscriptions revenue was $115.8 million, an increase of 24% year over year. On a constant currency basis, total subscriptions revenue grew 21% year over year. Professional services revenue was $29.5 million, down 9% year over year.
As previously noted, services revenue can be volatile from quarter to quarter, and a few large projects can influence performance our professional services will continue to be a strategic offering focused on enabling partners and driving customer success. Long term, we expect professional services revenue to continue to decline as a percentage of total revenue. Subscriptions revenue was 80% of total revenue compared to 74% in the year ago period and 76% in the prior quarter.
Total revenue was $145.3 million, an increase of 16% year over year and above our guidance range. On a constant currency basis, total revenue grew 13% year over year. Cloud subscription revenue retention rate was 119% as of December 31, 2023, up from 115% a year ago and 117% in the prior quarter.
As a reminder, we continue to target a cloud subscription revenue retention rate of 110% to 120%. On a quarterly basis, our international operations contributed 36% of total revenue compared to 34% in the year ago period. Our cloud software, our net new ACV bookings were approximately 80% of the total net new software bookings in 2023, consistent with last year's mix.
Now Now I'll turn to our profitability metrics. Non-GAAP gross margin was 78% compared to 73% in the year-ago period and 75% in the prior quarter. Subscriptions Non-GAAP gross profit margin was 91% compared to 90% in the year-ago period and 89% in the prior quarter. Professional Services Non-GAAP gross margin was 26% compared to 27% in the year-ago period and 30% in the prior quarter.
As noted on prior earnings calls, we continue to invest in customer success management. These advisors help our customers achieve the most from our technology and increase adoption of our platform. As a result, Professional Services Non-GAAP gross margins should decline to the low 20% range in 2024 and beyond.
Total Non-GAAP operating expenses were $114.1 million, down 4% down from $119.1 million in the year ago period. Adjusted EBITDA was a gain of $1 million versus our guidance of a loss between $16.1 million and $12.1 million compared to an adjusted EBITDA loss of $24.8 million in the year ago period. In the fourth quarter, we had approximately $11.1 million of foreign exchange gains compared to $8.5 million of foreign exchange gains in the same period a year ago. We don't forecast movements in FX rates. Therefore, they aren't considered in our guidance.
Non-GAAP net income was $4.9 million or $0.06 per share per diluted share compared to Non-GAAP net loss of $20.6 million or $0.28 per diluted share for the fourth quarter of 2022. This is based on 75.3 million diluted shares outstanding for the fourth quarter of 2023 and 72.7 million diluted shares outstanding for the fourth quarter of 2022. As noted above, fourth quarter 2022 Non-GAAP net loss was aided by $11.1 million in foreign exchange gains or a gain of $0.15 per share, which was not included in our original guidance.
Now before I turn to the balance sheet, I wanted to briefly update on the recent amendment to our credit agreement on February 12, 2024, we increased the aggregate principal amount of the term loan facility by $50 million and a limit of the revolving credit facility by $25 million. The total aggregate term loan facility is now $200 million and the revolving credit facility is $100 million. Additional details on the terms of the financing will be in the 10-K filing.
Turning to our balance sheet. As of December 31, 2023, cash and cash equivalents and investments were $159 million compared with $196 million as of December 31, 2022. For the fourth quarter, cash used by operations was $8.2 million versus $12.6 million for the same period last year. Total deferred revenue was $240.7 million as of December 31, 2023, an increase of 20% from the year ago period.
As we have stated on past calls, the majority of our customers are invoiced on an annual upfront basis, but we also have large customers that are billed quarterly or monthly due to the variability of our billing terms. Changes in our deferred revenue are generally not indicative of the momentum in our business.
I'll now recap our full year 2023 results. Cloud subscription revenue was $304.5 million, representing 29% growth year over year on a constant currency basis, cloud subscription revenue grew 26% year over year. Total subscriptions revenue for the year was $412.3 million, an increase of 21% compared to 2022. On a constant currency basis, total subscriptions revenue grew 19% year over year. Professional services revenue was $133 million, an increase of 4% compared to 2022. Total revenue was $545.4 million, up 17% compared to 2022.
$On a constant currency basis, total revenue grew 15% year over year. Adjusted EBITDA loss was 44.8 million compared to $76 million loss in 2022. Non-GAAP net loss was $59.2 million in 2023 or a loss of $0.81 per diluted share compared to Non-GAAP net loss of $89.2 million or a loss of $1.23 per diluted share for 2022. This is based on 73.1 million and 72.5 million diluted shares outstanding 2023 and 2022, respectively.
For the year ended December 31, 2023. Cash used in operations was $110.4 million versus $106.6 million for the same period last year. Adjusting for the onetime payment of $57.3 million in the third quarter of 2023. For the judgment preservation insurance policy, 2023 cash usage showed a substantial improvement versus 2022.
As a reminder, we continue to believe cloud subscription revenue is a better indicator of our business momentum than billings or remaining for performance obligations or RPO. The latter metrics can fluctuate based on the timing of invoicing seasonality of on-prem license revenue and the duration of customer contracts. The true scale of the business is represented by subscriptions revenue, which includes support and all software subscription revenue, regardless of whether the customer deploys to the Appian Cloud, their private cloud or on-prem.
Now I'll turn to guidance for the first quarter of 2024. For cloud subscription revenue is expected to be between $84 million and $86 million, representing year-over-year growth of 21% and 23%. Total revenue is expected to be between $140 million and $150 million, representing year-over-year growth of 9% and 11%. Adjusted EBITDA loss for the first quarter of 2024 is expected to be between $9 million and $5 million. Non-GAAP net loss per share is expected to be between $0.21 and $0.16. This assumes 73.5 million diluted weighted average common shares outstanding.
For the full year 202$ for cloud subscription revenue is expected to be between $364 million and $366 million, representing year-over-year growth of 20% to total revenues expected to be between $615 million and $617 million, representing year-over-year growth of 13%. Adjusted EBITDA loss is expected to be between $25 million and $20 million.
Non-GAAP net loss per share is expected to be between $0.73 and $0.66. This assumes 73.8 million diluted weighted average common shares outstanding. Our guidance assumes the following. First, Q1 professional services revenue will decline by a low double digit rate year over year. For the year, we expect professional services revenue will be flat or will decline by a low-single digit rate compared to a year ago. Second, on-prem license revenue will grow year over year by a mid-single digit rate and will track to seasonality that is consistent with prior periods.
Third, our Q2 adjusted EBITDA loss will be bigger than Q1's adjusted EBITDA loss. This is due to the combination of on-prem license seasonality and the cost of running our global user conference Appian World. Fourth, total other income and interest expense will be approximately $3 million in Q1 and $15 million for the full year 2024. This capital expenditures will be between $2 million and 3 million in Q1 and between $10 million and $12 million for the full year 2024 Finally, our guidance assumes FX rates as of February 13, 2024.
In conclusion, we are pleased with the performance this quarter. We are investing in growth opportunities that drive long-term value and optimizing costs to drive profitability. We continue to balance our cost profile to prioritize investments in R&D, innovation, CSM coverage and strategic go-to-market areas such as global partnerships, demand-generation activities and targeted sales capacity.
And with that, we will open up the line for questions. Operator?
Question and Answer Session
Operator
Sanjit Singh, Morgan Stanley.
Sanjit Singh
Thank you for taking the questions and congrats on a on a solid end to the year, not as you think about 2024 and coming out of 2023 and what are you seeing in your demand environment in your pipeline as it relates to this momentum around automation and getting practical value of AI, what are some of the use cases that customers are starting to pursue with Appian versus maybe on some of the other initiatives out in the space right now.
Matt Calkins
Ai is a fantastic door opener, but it's best done with a very simple proposition. So we're equipping our team to be able to approach the customer. Hopefully, today, I've got kind of an easy to understand, easy to implement way to get in on a I can show rapid benefits.
I believe that keeping it simple and having a a short period of investment that before you get the payoff is essential to catalyzing their of their large interest in the topic today. So that's helpful. I also feel good about where the pipeline stands and and particularly the large end of the pipeline.
Sanjit Singh
As you know, we're focused a little bit more on those larger opportunities now and that makes total sense than that for you. I mean, the adjust positive adjusted EBITDA and in Q4 that was really nice to see when we think about the balance between expense or managing margins versus versus growth.
What's the trend for that to continue from what we saw in Q4 is there any way or said another way, would the Q4 sort of been the benefit from any sort of shift in expenses to get to that positive adjusted EBITDA in Q4?
Mark Matheos
Well, I'd say for sure, yes, no, we really didn't do anything out of the ordinary to get to a positive adjusted EBITDA in Q2 and Q4. That was an artifact of our strong revenue performance. We had a really good level of linearity in the top line, and we're just on our plan here on the expense side that we've discussed in the past and we're steady as she goes on that in terms of operational discipline.
But the name of the game is still growth for us. We're just doing so with a lot of scrutiny on our expenses to make sure we're getting the ROI we need and running a tight ship, but there's there was nothing out of the ordinary for Q4 in that regard Okay. That's helpful.
Sanjit Singh
Thank you.
Operator
Steve Enders, Citi.
Steve Enders
Great. Thanks for taking the question. My question here on, I guess just to start in our maybe thinking more broadly about the kind of the bigger demand environment and kind of what you're assuming kind of four or '24 and it up for 4Q. Are there some extra conservatism kind of baked in for government shutdown and some other things, but I guess what are you seeing today in kind of the deal environment? And what's kind of been assumed in the health care for us for '24?
Matt Calkins
Okay. So broadly, the deal environment I still think that there's some macro disruption, but it never rose to the level of a recession. I think that there is genuine interest across the board and what we can do for them with a I think that there's recognition that we're creating real value and that that sparks expansion opportunities and it propels demand for our industry, not just for our organization. I think this is a workable demand environment. I think this is a demand environment that we can succeed in and that has done.
Steve Enders
That's helpful. And then maybe just on the on the kind of the net new versus versus customer expansion for wind, it's really good to see that the net retention number tick up a tick up here. I guess maybe what drove the strength of the expansion here in the quarter? And how do you view the sustainability of that moving forward? And what's been embedded into the guidance for '24
Matt Calkins
Well, right now, we don't make any guide on our. I'm also pleased to see it tick up. However, it hasn't ticked up that substantially. It's a couple of points and I don't want to I don't want to dwell on that. That's a that's a blip for now. Maybe we can make it a trend, but it's a blip for now. I do think that it is something we want to accelerate.
We want our we want to see more expansion and we are focusing more on the techniques that lead to expansion and deepening the relationship that we have with our clients, having more touch points, having more exposure, emphasizing our humanity, in contrast with the big tech substitutes or what they might consider to be a substitute for Appian technology.
I think we want to shine in the ways that we are naturally advantaged against our larger competition, and we do that by having this sort of that's pervasive human connection. And that's the sort of thing that will lead to more expansion if it works. So this is an important number to me, but I don't want to make any implications about where it's going again, taking the questions here.
Operator
Jake Roberge, William Blair.
Jake Roberge
Hey, thanks for taking the questions and congrats on the solid results. And Matt, I know it's early, but can you talk about how you see monetization shaping up for some the new JNI solutions and data fabric. Could those initiatives start to drive any growth heading into 2024? Or is it still too early for that?
Matt Calkins
We have a monetization strategy for both of those features. We have a stratified pricing system whereby you pay more for a data fabric if it's accessing multiple data sources and more for it for AI or specifically for private AI. So we are absolutely expecting that these features will drive a revenue differentiation, not just volume, not just attention, not just to competitive advantage, but but also tagging them with revenue.
Jake Roberge
Okay, helpful. And then you've made some changes to your go-to-market organization over the past year or so between leadership changes, a small restructuring. And then also just the deeper focus on the partner organization. How do you feel like the go-to-market motion is positioned as you head into this year?
Matt Calkins
I feel like we're a lot stronger than we were a year ago. So that's how I'd read it. I think that tough. We've been careful with the changes that we made last year, but they've been changes for the better.
Jake Roberge
Great. Thanks for taking my questions and congrats on the great results.
Matt Calkins
Thank you.
Operator
Derrick Wood, TD Cowen.
Hey, guys. Thanks. This is Paul on for Derek. On the flag, good strength in the US TCV for top 10 net new customers? And can you just unpack that a little bit and talk about what drove that strength?
Matt Calkins
All right. Well, first of all, I think part of it is driven by our strategic focus. We believe we belong in the big organizations doing mission critical things at relatively higher price points. And that strategy, I think has something to do with the fact that we are seeing higher TCVs on our top 10 deals and for that matter, higher on our median deal, right?
We're just we're just trying to raise the bar, the target sites a little bit, and we're seeing that that's happening. So yes, I'll just say it's strategically aligned, right? It's not it's not unintended. And I don't want to make any promises about where it's going, just to say that it was gratifying to see it come in where it did, because that's what we intended.
Helpful. Thanks.
Operator
Kevin Kumar, Goldman Sachs.
Kevin Kumar
Thanks for taking the question. I wanted to ask about the international public sector and the traction you're seeing there and maybe talk a little bit about the go-to-market investments you're making there and any higher level, I guess, how early are these fees, public sector organizations in terms of thinking about AI and kind of implementing more intelligence into their workflows?
Matt Calkins
As you know, we're a Washington company and I'm looking at the Beltway out my window right now as they take this call. And we've done a lot of business here in Washington, D.C. with the federal US federal government and the international public sector has always represented a big opportunity for us and for that matter.
So as state government in the US, and it is a largely untapped opportunity. How we I did mention in the prepared remarks, one substantial organization and the state government level that works with us and does hundreds of millions of dollars of procurement every year on the Appian platform that's great. But that's that's the beginning.
This is tip of the iceberg stuff. And I even though we have notable wins in other the international or non-federal public sector opportunities, I still feel like the penetration is so minimal. We've done just enough to prove we can do it and not enough to to show what we can do, like how much we can do. So that's an opportunity we look forward to moving into. We're making an effort to move into it, and it's largely on the saturated.
Kevin Kumar
Right. Well, thanks for taking the questions. Thank you.
Operator
Frederic Havermyer, Macquarie Capital.
Frederick Havemeyer
Thank you, and good morning. I wanted to ask about data fabric in a little bit more depth here about generally speaking, it seems like being in the enterprise data space and data integration space right now is a fantastic bit of positioning considering what enterprises are trying to do with their data and trying to make it useful and of course, ever trying to have a general strategy.
So I'm curious with data fabric, when you're helping customers implement this what have been the most significant challenges that you're helping them to address? And also around that one of the most significant challenges that you were your partners face when implementing and onboarding customers to Data Fabric?
Matt Calkins
Yes, all right. First of all, you have to open up their imaginations. The typical organization does not imagine that it would be possible to merge data silos and to have synthesis or combined benefit from them. We're so used to an enterprise software landscape that is dominated by the walls, right, that that is cut into silos you have to first tell them that it's possible.
And then secondly, the integration, sometimes it's easy. Sometimes it works with API.s and it's very intuitive. And in some cases, the entities could have been custom-built or very out of date. And then integration is a bit more of a challenge. But once it's not, it's not so difficult to overcome once you've conveyed the benefit we can easily stitch these or these data silos together, it's simpler than one might imagine.
And it's very fully featured you can we can read and write you can filter by individual permission, access of its it's actually a really powerful layer. By the way the strength of the data fabric is such that I expect that this year more organizations will start saying these words, Data Fabric will claim that they've got something like it.
And I suspect that what they have is not going to be fully featured the way the way what we've built and have had for years is it's an artifact of our divergent data strategy. Many of our competitors have a data strategy whereby they seek to claim to unify and own the data in an enterprise. And they are big enough in some cases to pull that off to use their size, their leverage against their customer and to force a kind of an aggregation under their own flag. We do not attempt to that.
Instead we have always had a call, call it pro customer, if you like, a open data strategy that it respects and empowers and enables the customer's existing data architecture. That's why we got into this data fabric concept in the first place is because we wanted to be the vendor that would enable the customer to have the data the way they wanted to have it instead of trying to force it all into our database.
So we have taken this. We've built this technology because we first took this decision to be the sort of company that would enable the dispersed data strategy. And because our rivals have largely not taken that decision. They have also not developed that technology. I think that because this is the result of different beliefs about how the market works. There might be a more persistent technology division, then the it might initially appear.
Frederick Havemeyer
Thank you for that, Matt. I wanted to ask also on both renewal rates and net retention rates, understanding also, like you said earlier that a couple of couple of data points is not yet a trend make I wanted to ask it looks like your total gross renewal rate ticked down slightly in 2023 by quarters, while your cloud subscription revenue retention rate ticked up. So wanted to ask, is there anything happening between the total Company business and cloud that would be worth calling out at this point that could be attributable to that?
Matt Calkins
Yes. First of all, I want to address that downtick. Our gross revenue retention rate did indeed downtick from [99] to [98] bottoming at 97 and it's now risen back to [98]. And I just want to clarify that. So that may have been a down tick is still best in class. There is still remarkable numbers then.
And then secondly, I want to say there has been I would suggest a little bit of migration, just a very small amount from on-premise to cloud at a point when I thought there wouldn't be anymore, but there was just a little bit. And so that may be impacting the numbers the moment.
Frederick Havemeyer
Perfect. Thank you very much.
Operator
Thomas Blakey, KeyBanc Capital Markets.
Thomas Blakey
Hi, guys. Thanks for taking my question or a couple here, maybe first on the heels of Fred's, great question on the Data Fabric on. I think you also asked about the actual use cases if you could maybe double-click on that on that. And then, um, after answering that, what is the company as we're hearing an uptick from our calls on Gen-i, but especially especially in the enterprise.
These customers don't use your data fabric. What are these organizations going to do architecturally in terms of breaking down silos, slashed, bringing all their data together? Is it something akin to Appian solutions are compared to a cloud-based data warehouse like Snowflake or I just want to understand like the process, if you don't use you, what are they going to have to use in terms of launching these Chennai enterprise applications around given the examples that would be great.
Matt Calkins
Now that's accretive. That's a great question. What are they going to do with our data fabric with Snowflake is one obvious example. Snowflakes Snowflake is asking, give us all your data. It's like a modern data warehouse, just pile everything you can into this one's a data source. And when you do, we've already got a partnership lined up for for JNI on top of it, that's fine.
If you can move all your data there, you can move all of it. But when I talk to a lot of CEOs and I can't remember any of them saying that they could move all of their data or even all of their pertinent data into a central repository, Snowflake or anyone else as well. Typically today, I. either runs on one giant silo like Snowflake or only all you can trend, which I'll address in a moment or a data fabric, if it's all you can train that essentially you're saying that AI isn't going to run on our source.
It's just everything you can upload, right? So you can upload one source after another, if you want, but that you've got data loading costs, you've got data freshness issues. You've got variable levels of personal security access to that data issues. There's a lot of flaws with that strategy. And I think also just the idea of training at great length and algorithm that CIO. does not own is problematic for a lot of tech decision-makers.
So I think that even though there is the data lake with Snowflake strategy and there is the train a external algorithm on everything pertinent strategy. These are not plausible strategies. And what I see happening in the absence of data fabric, most of the time is AI. is too limited on the data. It knows, hey, I runs on one silo and just one.
Thomas Blakey
And I think that is unfortunately the typical fallback in the absence of data fabric, it's interesting any use cases that using the power of Sprout out earlier on in the evolution or planning to in 24?
Matt Calkins
Well, you mean use cases for Data Fabric? Yes, most of our customers actually use data fabric. We've got a terrific usage rate somewhere, 80%, 90% of which is which is good at United for a participation in a feature because it's so beneficial. It makes it easy to connect to data sources like even if you're using just one that makes it intuitive and simple.
But if you're using multiple, it's a huge step forward over what was possible in the past. It also makes it far easier for a user to develop new applications because we object ties all of the data that's been touched by the Data Fabric so that a creator of a new report or process can just grab and drag-and-drop that object all of these objects of data across the enterprise are now sort of drivable objects within the development environment. It just makes creation of new car new artifacts really intuitive.
And as for use cases, is it really that the challenge is more thinking of cases where you don't need more than one data source. I mean, I mentioned one in my prepared remarks about the hypothetical students in need of rescue right and how it would be great to be able to to know whether they've attended their classes or Mr. tuition payment or had friends who have dropped out or I've had bad grades or any of that, like all of those things are going to exist in different systems. So even a simple application, like how can we help the student to do well, is it's something that's a natural use case for Data Fabric, Hector, and thanks for that color.
Thomas Blakey
My just follow-up to that, my final question would be you had last year's Appian World View, you expanded your partner programs and reach there pretty significantly from what from what my understanding was, where is Appian's infrastructure in your mind today in terms of reaching to reaching out to enterprises along these lines in terms of a sales motion, did you have the right point at your go-to-market infrastructure to touch these touch points in large enterprises this kind of Gen-i solutions in terms of the Data Fabric and be the last question, you know, well, we definitely did a strategic pivot on partners last year.
Matt Calkins
We have we had 700 registered partners coming into the year. And we still do have a ton of partners. But but we decided that we wanted to focus really focus down and make big investments in partners that were willing to make big investments in U.S. And that beneficial reciprocity is the pattern that we have set going into 2024. I think it'll be more motivational and it will allow for a level of commitment in our partner that leads to greater expansion because it'll be greater implementation quality as well.
Thomas Blakey
Thank you.
Operator
This does conclude the question and answer session of today's program. I'd like to hand the program back to Sri Anantha for any further remarks.
Sri Anantha
Great. Thank you, Jonathan, and thank you all for joining us today, and we look forward to seeing you many of you at upcoming investor events and on our next earnings call. Thank you and talk to you soon.
Operator
Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
