Company: APPN
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0001441683-25-000017
Chunk: 117

Company: APPIAN CORP
Filing Date: 2025-02-19
Form: 10-K
Item: Item 8
Chunk 117
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1,091 1,298 Deductions: Write-offs, net of recoveries(970)(610)(573)Ending balance$3,396 $2,606 $2,125 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 contract for a new customer or upsell an existing customer are amortized over an estimated economic life of five years as sales commissions on these types of activities 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 period of our professional services arrangements are one year or less.

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APPIAN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amortization associated with deferred commissions is recorded to sales and marketing expense in our consolidated statements of operations. The following table summarizes the activity of costs to obtain a contract with a customer for the years ended December 31, 2024, and 2023 (in thousands):Year Ended December 31,20242023Beginning balance$94,025 $85,984 Additional contract costs deferred44,770 53,894 Amortization of deferred contract costs(41,625)(45,853)Ending balance$97,170 $94,025 Commission expense was $50.4 million, $46.8 million, and $39.4 million for the years ended December 31, 2024, 2023, and 2022, respectively.Property and EquipmentProperty 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