摩根士丹利-新科技栈3Q25预览：业绩超预期与上调指引终将到来？-New Stack 3Q25 Preview – Round 1-20251022

MorganstanleyRESEARCH

October20,202507:43AMGMT

Software|NorthAmerica

NewStack3Q25Preview—Round1:AretheBeatsandRaisesFinallyHere?

Astablespendenvironment,modestlyimprovingchecksandgenerallyconservativeQ3guidancesetupourcoveragewellintoCQ3butthegovshutdowncouldconstrainQ4guides.

FavorAPPN,DOCN,DT,FROGandTEAMintoresultswhiletheDDOGsetupisverytrickybutwelean+ve.

KeyTakeaways

Intra-quarterindustryconversationspointtoastablespendenvironmentwithmostpartnersexceedingplan

PartnercommentarysquareswellwithourrecentCIOSurveypointingtoanuptickin2025softwarespendingintentionsto+3.8%from+3.6%

ComingoffsolidQ2performance,mostcompaniesguidedconservativelyforQ3creatinganattractivesetupbutgovshutdownisthex-factorforQ4guides

WefavorAppian,Atlassian,DigitalOcean,DynatraceandJFrogintoCQ3results

DatadogsetupistrickygivenuncertaintyaroundOpenAIbutpotentialforcoregrowthtoimprovemakesusleanpositiveintoresults

WillTheGovernmentShutdownSpoilanAttractiveSetupHeadingIntoQ3Results?Ourintra-quarterindustryconversationspointedtoastablespend

environmentwithmanypartnersmodestlyexceedingtheirexpectationsforQ3.

Whiledatamodernizationremainsthehottestareaofinvestment,wethinkmarketssuchassoftwaredevelopment,observabilityandprocessautomationareshowingstabilityatoverallhealthylevelsofgrowth.Thepicturearisingfromourindustry

conversationssquareswellwithourrecentCIOsurveywithprojected2025spendgrowthonsoftwaretickingupto+3.8%from+3.6%lastquarter.Furthermore,a

numberofcompaniessettoreportpostedsolidCQ2resultswhileprovidingquiteconservativeCQ3revenueguidesandnotmateriallyraising2Hestimates.This

createsanattractivesetupheadingintoQ3on-quarterearningsseasonwiththe

mainriskfactorbeingthegovernmentshutdown,whichcouldlimittheraisetoCQ4estimates.ThatsaidwefavorAtlassian(coveredbyKeithWeiss),DigitalOcean

(coveredbyJoshBaer),JFrog,Appian,andDynatrace.WhilethesetupforDatadogisextremelytrickygivenongoinguncertaintyonOpenAIrevenuecontributiongoing

intoCY26andbeyond,wewouldleanpositivegiventhepotentialforcorebusinessgrowthexOpenAItoimproveinQ3orQ4.

OurViewonCompany-SpecificSetupsHeadingintoQ3

•Atlassian(OW,$320PT,CoveredbyKeithWeiss)–AttractiveSetup

Idea

MorganStanley&Co.LLC

SanjitKSingh

EquityAnalyst

415576-2060

+1

Sanjit.Singh@

KeithWeiss,CFA

EquityAnalyst

212761-4149

+1

Keith.Weiss@

JoshBaer,CFA

EquityAnalyst

212761-4223

+1

Josh.Baer@

OscarRSaavedra

ResearchAssociate

+1

212761-0827

Oscar.Saavedra@

JamieReynolds

ResearchAssociate

+1

212761-2087

Jamie.Reynolds@

JonathanEisenson

ResearchAssociate

+1

212761-2808

Jonathan.Eisenson@

Software

NorthAmerica

IndustryViewAttractive

MorganStanleydoesandseekstodobusinesswith

companiescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanley

Research.InvestorsshouldconsiderMorganStanley

Researchasonlyasinglefactorinmakingtheirinvestmentdecision.

Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthis

report.

organstanley

RESEARCH

Idea

2

AgainstConservativeEstimates,LowInvestorExpectationsandOver-

wroughtGenAIConcerns.AtlassianheadsintoF1Qearningswithshares

down~37%YTD(vsbroadermarketup18%)andadeeplydiscounted

valuation(20xEV/CY26FCFor0.8xgrowth-adjustedvslarge-cap38xor

1.8x)drivenbyelevatedinvestorconcernsonGenAI'simpacttothedurabilityofAtlassian'sbusiness.Weviewtheseconcernsnotonlyasoverstatedbut

fundamentallyoff.Atlassian'svaluepropositiondoesnottietothe

productivityofasingledeveloper,butinmanagingthebroaderSoftware

DevelopmentLifecyclewherevalueincreaseswiththevolumeandvelocityofsoftwaredevelopment.ThispresentsanattractivesetupforTEAM,asweconsiderastable-to-improvingdemandenvironment,conservativeconsensusestimates,andstrongbusinessmomentumyielding20%+top-linegrowthinF1Q(2-3%aboveconsensus)andaFYguideraiseto+18.5%-19%(from

+18%).

•JFrog(OW,$65PT)–ExpectingAnotherBeatandRaisetoQ4.WithinthecontextofamodestlyimprovingITdemandenvironment,partnerfeedbackonJFrogpointstosequentialimprovementinperformancealongwith

greaterenthusiasmon2026.Inaggregate,mostpartnersreportedabove-

expectationperformancewhiletherestreportedinline–withreported

growthgenerallyinthemid-20%range,animprovementfromlastquarter,whichwasmoreweightedtowardsin-lineperformanceandlow-to-mid-20%.Thecompany'scoreremainsanchoredinArtifactoryandX-Ray,witha

sequentialuptickincontributionfromAdvancedSecurity,whilecloud

migrationsandimprovednet-newlogoactivityprovidedincrementallift.

Given:1)sequentialimprovementinchannelchecks;2)buildingmomentumcomingoutofQ2;3)clearbeneficiaryfromincreasinggrowthinsoftware

updates;and4)greatertractionofitssecurityproducts,webelieveJFrogiswellpositionedtoseeatleastsustainedgrowthinitsself-managedbusinessand40%+YoYgrowthinCloudyielding~20%YoYtotalrevenuegrowth.

Further,assumingaQ4totalrevenueguidancethatimplies+0.5%QoQ

seasonalityagainstabeat-adjustedQ3resultsina+17%YoYQ4guideand~$11millionupwardrevisiontotheFY25guidanceimplying+21%YoY(from+19%).

•DigitalOcean(OW,$44PT,CoveredbyJoshBaer)–Wethinkcontinued

growthaccelerationwilldriveDOCNhigher.BearsGettingQuieter.

FollowingApril'sinvestorday,Bearspickedatthe18-20%2027growth

targetasunrealistic,wereconcernedwiththepotentialoutcomesofthe

largeconvertiblenoterefinancing,andwereupsetbyunderwhelmingFCF

margintargets.Apositiveoutcomefullyaddressingtheconvertiblenotes,

continuedgrowthaccelerationnarrowingthegapto2027targets,

momentumwithlargercustomersandanexpandingAI/MLplatform

increasesmanagementcredibilityandtheDigitalOceanstory,removingsomeoverhangonthestock.Wethinkgrowing15-16%in2H25andguiding2026

tothesamelevelsas2025exitratearebothachievableandallthatisneededtopushshareshigher.RemainOW.

•Datadog(EW,$165PT)–VeryTrickySetup,butForcedtoChooseWeWouldLeanPositive.Therecentstockoutperformanceandpremium

valuationlargelyreflectsimprovingsentimentonOpenAIwithapotential

long-termcontractintheworks.Whileitisdifficulttoaccuratelypindown,AI-nativegrowthcontributionislikelytobegreaterinQ3vsQ2,given

OpenAI'shyper-growthandthelaunchofGPT5.0inQ3coupledwiththe

growingadoptionfromthebroaderAIecosystem.Whileit'shardtohave

definitiveconviction,thecorebusinessexOpenAIcouldseebettergrowth,given:1)steady-to-slightlyimprovingchecks;2)recentbookingsandnew

logostrength,whichhaveseenadelayedconversionintorevenuebutwhichcouldstarttocomeonline;and3)earlyindicationsofimprovingAWS

growth(whichisDatadog'slargestsourceofrevenue).Assuming11-12ptsofAI-nativegrowthcontributionandsustainedgrowthinthecorebusiness

wouldyield+29%YoYgrowthinQ3,withfurtherupsidepossibleifthecoreactuallyaccelerates.Withnear-termexpectationselevatedandgiventhatitisstillearlyinthecustomAIapplicationdevelopmentcycle,thecurrent

setupappearstrickyparticularlygiventhepotentialforOpenAItoseesomedown-sellin2026resultinginpotentialrisktotheinitial2026revenue

guide.Ontheotherhand,acontinueduptickintheAI-nativecohort

combinedwithanyaccelerationinthecorebusinesscouldsendsharesmeaningfullyhigherinthenearterm.

•Palantir(EW,$155PT)–50%+GrowthLikelyinQ3asCommercial

MomentumContinues.Ourchannelfeedbacksuggestsmomentumis

durable,asallpartnersbeatexpectationsbyahealthymarginwhile

describingrobustnewlogoadditionsandanimpressivetimelinetodeployingmultipleadditionalusecasesafterrollingoutthefirst.Forinstance,aftera1-weekbootcamponclientdataand1-2weekstoproveimpact(oftenvia

labor-costreduction),firstproductionusecasesusuallygolivein3-4

months,andbymonths6-7customerstypicallyscaleto4-6usecases,asFoundrymoveseasilyacrossfunctions.ConsideringthestrongmomentumcomingoutofQ2andstrongchannelfeedback,webelievePalantircan

deliver50%+YoYgrowthinQ3,whichimpliesa~9ptaccelerationvsQ2.Giventhegovernmentshutdown,thedebatewillfocusontheQ4guide.

Thatsaid,wethinkconsensuslookingforQ4growthstilllooksachievablebutthiswouldimplyamaterialYoYdecelerationwithsharestradingat77xCY26sales.

•Appian(EW,$29PT)–ExpectSustainedGrowthinSaaSandRaisetoQ4.OurcheckssuggeststabletoimprovinggrowthinQ3underpinnedbysolidPublicSectordemandwithcoreclaimsoperationsdrivinghigh,transactionalusage.ProductfeedbackpointstomeaningfulimprovementsinAI

capabilitiesanduserexperience,enabledbyDataFabricwithpartnersalsohighlightinganuptickinAIsubscriptiontier,withmostnewcustomers

landingonPremiumandupgradesamongexistingstartingtocomeonline

afteraslowstart.Consensuscallingfor+17%/+13%YoYgrowthforcloud

revenue/totalrevenueinQ3representsafavorablesetup,asbothimply

significantYoYdecelerationandarewell-below3-yearaverageQoQ

seasonalityagainstimprovingmomentumcomingoutofQ2,risingsales

efficiency,andencouragingchannelfeedback.WebelieveAppiancandeliver+20-21%YoYcloudgrowth,whichimpliessustainedgrowthvsQ2.Fortotalrevenue,consensusof$174M(+13%YoY)impliesa350bpsdeceleration

MorganStanleyResearch3

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RESEARCH

Idea

4

againsta230bpseasiercomparevsQ2and+2%QoQseasonality(vs6.5%3yraverage).Againstthis,webelieveAppiancandeliver+17%YoYgrowth,whichimpliesmodestacceleration.AssumingQ4guidancecomesupby+4%QoQseasonality(inlinewith3yraverage)againstabeat-adjustedQ3,this

wouldimplyaQ4revenueguideof+12%-13%YoY.

•Dynatrace(EW,$55PT)–SustainedGrowthAgainstLowExpectationsLikelyEnoughtoDriveShareUpside.DynatraceheadsinF2Q26earningswithshares-11%YTD(vsbroadermarket+18%),whiletradingat6.3xCY26Salesor0.39xgrowth-adjusted(vsDevOpspeersat7.3xor0.44x).The

recentstockunderperformanceanddiscountvaluationlargelyreflect

investorconcernsaboutthecompany'sabilitytore-accelerateARRgrowth,compoundedbyuncertaintyaroundmodelingon-demandconsumption

revenue.However,whenconsideringthebuildingmomentumcomingoutofF1Q,encouragingchannelfeedback,amaturingsalesorganization,anda

conservativeguide,weviewafavorablesetupforsharestomovehigheronsustainedNNARRandtoplinegrowth.

•Confluent(EW,$25PT)–DespiteTwoEstimateCuts,theSetupShould

BeEasierThanitIs,inOurView.WhilewedoultimatelyexpectConfluenttopostupsideto3Q25results,andacknowledgeanundemandingvaluation(tradingat~5.2xEV/'26revenue/0.33xgrowthadj,vs.infrastructuregroupavgof7.6x/0.52x,respectively)–weseearelativelychallengedsetupforare-ratingintothe2H.On3Q25,weseescopeforConfluentCloudtocomein~1%/~$1.5millionaheadofconsensus,accompaniedby~2%/~$2.5upside

relativetoconsensusinConfluentPlatform,ultimatelydrivingsubscriptionrevenueof$285.5million/+19%YoY(vs.consensusof$281.6million/17.4%YoY).However,andparticularlyonCloud,thisscenariowouldreflect

another~600bpsdecelerationinYoYgrowthrelativetothe29%YoYputupin2Q,andwouldalsoimply~150bpsofdecelerationonsubscriptionrevenuegrowth(to~19%,from21%YoYin2Q).Turningto4Q25,weseean

incrementallymorechallengedsetuponaccountofOpenAImigratingto

Confluent'son-premise/Platformsolution(fromCloud),andexpectguidancetocontemplatesubscriptionrevenueof~$293million/+17%YoY–which

wouldbegenerallyinlinewithMSe/consensus.

Exhibit1:YTDPerformanceforCompaniesSettoReportinInfrastructureSoftware

Source:FactSet,Companydata,MorganStanleyResearch

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RESEARCH

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Exhibit2:Last3-MonthPerformanceforCompaniesSettoReportinInfrastructureSoftware

Source:FactSet,Companydata,MorganStanleyResearch

Exhibit3:1-MonthPerformanceforCompaniesSettoReportinInfrastructureSoftware

Source:FactSet,Companydata,MorganStanleyResearch

Exhibit4:SummaryBeatvsConsensus

Source:VisibleAlpha,Companydata,MorganStanleyResearch

Idea

6

organstanley

RESEARCH

Idea

Exhibit5:InfrastructureSoftwareMultiplesHaveExpanded,butStillBelow5-YearTrailingAverage

25x

EV/NTMSalesInfrastructureSoftwarevsBroaderSoftwareCoverage

Maxat:22.3x

20.5x

20x

15x

5yearAverage(Trailing):10.4x

10x

InfrastructureSoftwareat:9.3x

5x

TotalSoftwareat:7.3x

Jan-13

May-13

Sep-13

Jan-14

May-14

Sep-14

Jan-15

May-15

Sep-15

Jan-16

May-16

Sep-16

Jan-17

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Jan-22

May-22

Sep-22

Jan-23

May-23

Sep-23

Jan-24

May-24

Sep-24

Jan-25

May-25

Sep-25

0x

TotalSoftwareEV/NTMSales5yearAverage(Trailing)InfrastructureSoftwareEV/NTMSales

Source:FactSet,VisibleAlpha,Companydata,MorganStanleyResearch

Exhibit6:InfrastructureEV/S/GMultiplesTradingBelowOverallSoftware

EV/NTMSales/Growth(2-YrCAGR)InfrastructureSoftwarevsBroaderSoftwareCoverage

InfrastructureSoftwareEV/NTMSales/GrowthTotalSoftwareEV/NTMSales/Growth5yearAverage(Trailing)5yearAverage('14-'18)

1.60x

1.40x

Maxat:1.35x

1.20x

1.00x

0.80x

5yearaverage('14-'18):0.69x5yearAverage(Trailing):0.70x

0.60x

0.55x

InfrastructureSoftwareat:0.63x

0.40x

TotalSoftwareat:0.53x

0.20x

0.00x

Jan-14

Apr-14

Jul-14

Oct-14

Jan-15

Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Jul-16

Oct-16

Jan-17

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Jan-23

Apr-23

Jul-23

Oct-23

Jan-24

Apr-24

Jul-24

Oct-24

Jan-25

Apr-25

Jul-25

Oct-25

Source:FactSet,Companydata,MorganStanleyResearchestimates

Exhibit7:EUR:USD

EUR:USDExchangeRate(Jan21-Current)

1.25

0.95

0.9

Source:Eikon,FactSet,MorganStanleyResearch

MorganStanleyResearch7

organstanley

RESEARCH

Idea

Exhibit8:GBP:USD

GBP:USDExchangeRate(Jan21-Current)

1.45

1.40

1.35

1.30

1.25

1.20

1.15

1.10

1.05

1.00

Source:Eikon,FactSet,MorganStanleyResearch

Exhibit9:USD:JPY

USD:JPYExchangeRate(Jan21-Current)

170

160

150

140

130

120

110

100

90

80

Source:Eikon,FactSet,MorganStanleyResearch

8

organstanley

RESEARCH

Idea

Previewtoearnings

FocusKPI

FocusKPISurprise

LikelyimpacttoconsensusEPS*

AkamaiTechnologies,Inc.Revenue

AKAM.O

In-line

Largelyunchanged

AppianCorpAPPN.OCloudSubscriptionRevenue

Verylikelyupsidesurprise

Modestrevisionhigher

Confluent,Inc.CFLT.OSubscriptionReveue

Likelyupsidesurprise

Modestrevisionhigher

Datadog,Inc.DDOG.ORevenue

▲Likelyupsidesurprise

Largelyunchanged

DigitalOceanHoldingsInc

Net-newARR

DOCN.N

Likelyupsidesurprise

Modestrevisionhigher

AtlassianCorporationPLC

CloudRevenue

TEAM.O

Likelyupsidesurprise

Modestrevisionhigher

DynatraceIncDT.NAnnualRecurringRevenue

Likelyupsidesurprise

Modestrevisionhigher

PalantirTechnologiesInc.TotalRevenue

PLTR.O

Verylikelyupsidesurprise

Modestrevisionhigher

JFrogLtd.FROG.O

Revenue

Likelyupsidesurprise

Modestrevisionhigher

*LikelyimpacttoconsensusEPSisforthenext12monthsSource:Companydata,MorganStanleyResearch

organstanley

RESEARCH

Idea

MorganStanleyResearch9

Appian(APPN,EW,$29PT)

PositiveSetupHeadingintoQ3,WithResilientFederalDemand,andGrowingPremiumMixAgainstDiscountValuation.AppianheadsinQ3earningswithsharesdown16%YTD(vsbroadermarketup18%)andtradingat3xCY26Salesor0.27xgrowth-adjusted(vs

Infrastructurepeersat6.5xor0.44x).Therecentunderperformanceanddiscount

valuationreflectinvestorconcernsaroundAppian'sdefensibilityagainstemergingAI

toolingandthecompany'shighexposuretoU.S.Federal(~25%ofrevenue).However,ourworksuggestsAppianiswellpositionedtobenefitfromAItailwindsratherthanbe

displacedbyit,asthemarketisfavoringstructured,process-orientedAIdeploymentswithhuman-in-the-looptodeliverrealvalue,whichsquarelyalignswithAppian'svalue

proposition.Further,althoughnottotallyimmunetoU.S.Federalrisks,weviewthe

companyasrelativelyinsulatedagainstpotentialcontractdownsizingorchurnvsother

vendors,whilerecentpolicychangesshouldenableincrementalrevenue(readTakeawaysFromManagementMeetings).WithseculartailwindsandrisingGTMproductivity

supportinggrowth–likelyyieldinga3%+toplinebeat-and-raisequarter–andfurthermarginexpansion,recentstockunderperformanceanddiscountvaluationrepresentacompellingsetupforAPPNheadingintoQ3.However,givenrecentvolatilityingrowth,weawaitclearerevidenceofsustainedgrowthbeforegettingonboard.

ChecksHighlightStrongPublicSectorDemandandAIMomentumDriving

Acceleration.OurcheckssuggestsgrowthacceleratedfurtherinQ3to~20%(vsmid-

teensin1H),underpinnedbyverystrongPubSecdemandwithcoreclaimsoperations

drivinghigh,transactionalusage.ProductfeedbackpointstomeaningfulimprovementsinAIcapabilitiesanduserexperience,enabledbyDataFabric.Partnersalsohighlightan

uptickinAIsubscriptiontier,withmostnewcustomerslandingonPremiumandupgradesamongexistingcustomersaccelerating.Coupledwithpaused2025projectsexpectedtoresume,partnersexpect>20%growthin2026.

ExpectingSustained-to-ModestToplineAccelerationandMoreThanFlowThroughtoFYGuidance.Revenueguidance–reflectedinconsensus–callingfor+17%/+13%YoY

growthforcloudrevenue/totalrevenueinQ3representafavorablesetup,asbothimplysignificantdecelerationandwell-below3yraverageQoQseasonalityagainstimprovingmomentumcomingoutofQ2,risingGTMefficiency,andencouragingchannelfeedback.

OnCloudrevenue,consensusof$110M(+17%YoY)impliesa360bpsdecelerationagainstaflat2yr-stackcomparevsQ2and+3.2%QoQseasonality(vs5.5%3yraverage).Againstthis,webelieveAppiancandeliver+20-21%YoYcloudgrowth,whichimpliessustainedgrowthvsQ2and~+6%QoQseasonality,andrepresentsa3%+beatversusconsensus.AssumingQ4guidanceimplies+2%QoQseasonality(below3%3yraverage)againsta

beat-adjustedQ3resultsina+17%-18%Q4guideand$5M-$6MupwardrevisiontotheFY25guidanceor+18%-19%YoY.Ontotalrevenue,consensusof$174M(+13%YoY)

impliesa350bpsdecelerationagainsta230bpseasiercomparevsQ2and+2%QoQ

seasonality(vs6.5%3yraverage).Againstthis,webelieveAppiancandeliver+17%YoYgrowth,whichimpliesmodestaccelerationvsQ2and~+6%QoQseasonality,and

representsa3.5%consensusbeat.AssumingQ4guidanceimplies4%+QoQseasonality(inlinewith3yraverage)againstabeat-adjustedQ3,resultsina+12%-13%Q4guideand

10

$5M-$6MupwardrevisiontotheFY25guidanceor+14%-15%YoY.

KeyMetricsinQ3:

•TotalRevenue:MSe/consensus=$173.7M/$174.1M,+12.8%/+13.0%YoY°Guidance:$172M-$176M,+11.7%-14.2%YoY

°Compare:350bpsdecelerationagainst230bpseasierYoYcomparevs2Q°Seasonality:3-yearhistoricalQoQgrowthof+6.5%,vsMSe/cons+1.8%/

+2.0%QoQ

•CloudRevenue:MSe/consensus=$110.0M/$110.4M,+16.9%/+17.3%YoY°Guidance:$109M-$111M,+16%-18%YoY

°Compare:360bpsdecelerationagainst300bpstougherYoYcomparevs2Q°Seasonality:3-yearhistoricalQoQgrowthof+5.5%,vsMSe/cons+2.9%/

+3.2%QoQ

•EBITDA:MSe/consensus=$10.5M/$10.6M,6.1%margin°Guidance:$9M-$12M,5.2%-6.8%margin

•EPS:MSe/consensus=$0.05/$0.06°Guidance:$0.03-$0.07

KeyMetricsforQ4Guide:

•TotalRevenue:MSe/consensus=$186.2M/$187.4M,+11.7%/+12.4%YoY

•CloudRevenue:MSe/consensus=$114.2M/$114.7M,+15.5%/+15.9%YoY

•EBITDA:MSe/consensus=$16.6M/$17.0M,8.9%/9.1%margin

•EPS:MSe/consensus=$0.12/$0.14

KeyMetricsforFY25Guide:

•TotalRevenue:MSe/consensus=$697.0M/$698.5M,+13.0%/+13.2%YoY°Guidance:$695M-$703M,+12.6%-13.9%YoY

•CloudRevenue:MSe/consensus=$431.0M/$431.8M,+17.1%/+17.3%YoY°Guidance:$429M-$433M,+16.6%-17.7%YoY

•EBITDA:MSe/consensus=$52.0M/$52.5M,7.5%margin°Guidance:$49M-$55M,7.1%-7.8%margin

•EPS:MSe/consensus=$0.31/$0.33°Guidance:$0.28-$0.36

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RESEARCH

Idea

Exhibit10:APPNEstimates:MSvs.Consensus

Source:VisibleAlpha,Companydata,MorganStanleyResearchestimates

Exhibit11:APPNBeatvs.Consensustable

%Beatvs.Consensus

APPN4Q221Q232Q233Q234Q231Q242Q243Q244Q241Q252Q25

4Qtr..8Qtr..

CloudSubscriptionRevBeat2.7%2.4%2.1%1.5%4.6%1.0%1.2%4.3%2.6%1.4%4.6%

SubscriptionRevBeat2.2%-0.8%4.0%1.0%5.6%0.3%3.8%3.7%2.3%2.6%5.4%

TotalRevenueBeat2.4%3.1%2.7%1.3%3.3%0.1%2.6%1.5%1.5%2.0%6.7%Adj.EBITDABeat227bps269bps218bps644bps973bps254bps317bps600bps817bps454bps683bpsNon-GAAPEPSBeat$0.12$0.03$0.04$0.06$0.31-$0.09$0.05$0.23$0.01$0.10$0.13

3.2%2.7%

3.5%3.1%

2.9%2.4%

639bps593bps

$0.12$0.10

Source:VisibleAlpha,Companydata,MorganStanleyResearchestimates

Exhibit12:APPNBeatvs.Guidancetable

%Beatvs.Guidance

APPN4Q221Q232Q233Q234Q231Q242Q243Q244Q241Q252Q25

4Qtr..8Qtr..

TotalRevenueBeat-Mean2.7%3.2%3.0%1.6%3.4%0.6%3.1%2.0%1.3%2.1%6.6%CloudSubscriptionRevBeat-Mean2.9%2.5%2.0%1.6%5.1%1.9%1.6%4.5%3.0%1.9%4.8%Adj.EBITDABeat-Mean194bps282bps325bps649bps1077bps382bps342bps606bps848bps455bps696bpsNon-GAAPEPSBeat-Mean$0.11$0.03$0.04$0.06$0.33-$0.06$0.05$0.23$0.01$0.10$0.14

3.0%2.6%

3.6%3.1%

651bps632bps

$0.12$0.11

Source:VisibleAlpha,Companydata,MorganStanleyResearchestimates

Exhibit13:APPNFYGuidanceRaiseAnalysis

APPN-AnnualGuidanceRaise

EarningsDate

16-Feb-23

9-May-23

3-Aug-23

2-Nov-23

14-Feb-24

2-May-24

1-Aug-24

7-Nov-24

19-Feb-25

8-May-25

7-Aug-25

EarningsQuarter

4Q22

1Q23

2Q23

3Q23

4Q23

1Q24

2Q24

3Q24

4Q24

1Q25

2Q25

FwdYearGuide

FY23

FY23

FY23

FY23

FY24

FY24

FY24

FY24

FY25

FY25

FY25

TotalRevenue

FYConsensusEstimatePre-Earnings

$532

$533

$537

$541

$615

$616

$616

$612

$683

$676

$682

NewFYGuidanceLowEnd

$530

$533

$538

$538

$615

$615

$610

$613

$680

$680

$695

NewFYGuidanceHighEnd

$535

$538

$543

$543

$617

$617

$615

$615

$684

$688

$703

NewFYGuidancevs.ConsensusatMidpoint

0.2%

0.5%

0.7%

-0.1%

0.2%

0.1%

-0.5%

0.3%

-0.2%

1.3%

2.5%

FYGuidanceRaise

-

0.6%

0.9%

0.0%

-

0.0%

-0.6%

0.2%

-

0.3%

2.2%

CloudSubscriptionRevenue

FYConsensusEstimatePre-Earnings

$292

$295

$298

$300

$365

$366

$365

$360

$423

$417

$421

NewFYGuidanceLowEnd

$294

$296

$299

$300

$364

$364

$358

$364

$419

$419

$429

NewFYGuidanceHighEnd

$296

$298

$301

$301

$366

$366

$360

$366

$421

$423

$433

NewFYGuidancevs.ConsensusatMidpoint

0.9%

0.6%