Appian Soars After Winning $2.04 Billion Verdict Against Pegasystems

Appian Corp shares soared and Pegasystems Inc shares tumbled on Tuesday after a Virginia jury ordered Pegasystems to pay its software rival $2.04 billion in damages for misappropriating trade secrets.

The damages award issued on Monday by the Fairfax County Circuit Court jury followed a seven-week trial, and may be the largest in Virginia's history, Appian said.

Shares of Appian rose $16.60, or 38.6%, to $59.62 in Tuesday trading.

Pegasystems shares fell $13.68, or 20.7%, to $52.25 after earlier falling to $36.50, their lowest since January 2017.

Appian, based in McLean, Virginia, alleged in its May 2020 lawsuit that Pegasystems retained an employee of a government contractor from 2012 to 2014 to access its software, helping it to improve its own products and better train its sales force.

It said Pegasystems, based in Cambridge, Massachusetts, referred internally to the contractor as a "spy" and to its scheme as "Project Crush," with some employees using bogus credentials to fool Appian into providing access.

Appian said the jury found the misappropriation willful and malicious, which could enable it to recoup legal fees.

Lisa Pintchman, a spokeswoman for Pegasystems, said the verdict resulted from "significant error" and was not supported by the facts or law. She said the company "will certainly appeal what we believe is an unjust result."

Pegasystems also plans to ask the trial judge to set aside the verdict, which included a damages award of $1 for a violation of the Virginia Computer Crimes Act.

In 2021, Appian posted an $88.6 million net loss on $369.3 million of revenue, while Pegasystems lost $63 million on revenue of $1.21 billion, regulatory filings show.

Appian general counsel Christopher Winters said in a statement: "The award of substantial damages to Appian is entirely appropriate given the nature and extent of what Pegasystems did."