Appian Partners with OSTech to Expand into Japanese Market, While Facing Cloud Growth Concerns
Appian (APPN) is enhancing its international presence with a newly announced partnership with Outsourcing Technology of Japan (OSTech). This collaboration aims to streamline OSTech’s business processes by leveraging Appian’s low-code development platform and process automation capabilities. OSTech anticipates a notable 25% reduction in workload thanks to the platform’s ability to eliminate data silos and facilitate seamless integration and automation across various systems.
Key Takeaways:
- Appian expands its reach into the Japanese market through a partnership with OSTech.
- The partnership focuses on implementing Appian’s low-code platform to enhance process automation and efficiency.
- While the collaboration represents positive growth for Appian, the company is facing sluggish cloud revenue growth and pressure on its share price.
- Despite these challenges, Appian sees positive momentum in its government acquisition management suite.
Appian’s Expansion into Japan: A Strategic Move
The collaboration with OSTech provides Appian with a valuable entry point into the Japanese market. OSTech, a leading provider of IT integration services, will offer enhanced process and digital transformation solutions built upon Appian’s platform, specifically focusing on Business Process Management System (BPMS) and process automation. This strategic move highlights Appian’s commitment to expanding its international footprint and diversifying its revenue streams.
The Cloud Growth Challenge
Despite the positive developments, Appian’s share price has been under pressure due to concerns over its cloud revenue growth. The company expects a modest year-over-year increase of 18% in cloud subscription revenues for 2024, which has led to investor apprehension. This slowdown has contributed to a 17.6% decline in Appian’s share price year-to-date, trailing behind the Zacks Internet Software industry’s 13.5% return and the Zacks Computer and Technology sector’s 20.8% gain.
Government Acquisition Management Suite: A Potential Growth Driver
While cloud revenue growth remains a concern, Appian is experiencing positive traction in its Government Acquisition Management (GAM) suite. GAM bookings more than doubled in the first half of 2024, demonstrating its appeal within the government sector. Appian’s recent acquisition of ProcureSight, an AI-powered platform that aggregates public procurement data, further bolsters its position within this market. This strategic acquisition is likely to fuel continued momentum for the GAM suite, potentially mitigating some of the pressures from slower cloud growth.
An Expanded International Presence
Appian’s international operations are playing a crucial role in driving its growth. In the second quarter of 2024, international revenues accounted for 38% of total revenue, showcasing the increasing importance of these markets. The partnership with OSTech further reinforces Appian’s commitment to building a strong global presence.
Zacks Rank and Alternatives
Appian currently holds a Zacks Rank #3 (Hold). While the company’s international expansion and government sector focus are positives, the sluggish cloud growth outlook creates uncertainty for investors.
For those seeking a stronger alternative in the technology sector, consider AudioEye (AEYE), VTEX (VTEX), and Synchronoss (SNCR). All three stocks currently have a Zacks Rank #1 (Strong Buy) and have delivered strong year-to-date returns, with AudioEye leading the pack at 312%, VTEX at 7.1%, and Synchronoss at 89.9%.
Conclusion
Appian’s partnership with OSTech marks a significant step in its expansion into the Japanese market. However, concerns over cloud revenue growth continue to weigh on its share price. Despite these challenges, Appian’s commitment to international markets and the success of its GAM suite offer potential for future growth. Investors will be watching closely to see how the company addresses the cloud growth concerns and leverages its international expansion to drive profitability and shareholder value.