• AppFolio, Inc. Announces Third Quarter 2024 Financial Results

    المصدر: Nasdaq GlobeNewswire / 24 أكتوبر 2024 16:05:00   America/New_York

    Q3 revenue grows 24%
    Company announces acquisition of LiveEasy as part of its expanded resident vision

    SANTA BARBARA, Calif., Oct. 24, 2024 (GLOBE NEWSWIRE) -- AppFolio, Inc. (NASDAQ: APPF) ("AppFolio" or the "Company"), a technology leader powering the future of the real estate industry, today announced its financial results for the third quarter ended September 30, 2024.

    "Our results reflect relentless customer focus and strong execution of our strategy," said Shane Trigg, President and CEO, AppFolio. "With our next-generation resident application, FolioSpace™, we are redefining how property managers and residents connect, and demonstrating our commitment to investing in innovation that builds the platform where the real estate industry comes to do business."

    Financial Highlights for Third Quarter of 2024

    • Revenue grew 24% year-over-year to $206 million.
    • Total units under management grew 9% year-over-year to 8.5 million.
    • GAAP operating income was $43 million, or 20.7% of revenue, compared to an operating loss of ($0 million), in Q3 2023.
    • Non-GAAP operating income was $59 million, or 28.7% of revenue, compared to an operating income of $27 million, or 16.1% of revenue, in Q3 2023.
    • Net cash provided by operating activities was $58 million, or 28.1% of revenue, compared to $37 million, or 22.2% of revenue, in Q3 2023.
    • Non-GAAP free cash flow was $56 million, or 27.1% of revenue, compared to $34 million, or 20.3% of revenue, in Q3 2023.

    Business Highlight

    • AppFolio acquired LiveEasy, a concierge platform providing moving and home services throughout the resident onboarding process. These services will be integrated into FolioSpace, AppFolio’s next-generation resident application.

    Executive Management Transition

    • Fay Sien Goon, the Company’s Chief Financial Officer, will depart AppFolio as of October 25, 2024. The Company has commenced a search for a successor to Ms. Goon and will consider internal and external candidates. Pending the appointment of Ms. Goon’s successor, AppFolio has appointed Tim Eaton as the Company’s interim Chief Financial Officer, effective October 25, 2024. Mr. Eaton has served as the Company’s Chief of Staff to the Chief Executive Officer since 2022, and in various other leadership roles within the Company since 2020.

    Financial Outlook
    Based on information available as of October 24, 2024, AppFolio's outlook for fiscal year 2024 follows:

    • Full year revenue is expected to be in the range of $786 million to $790 million.
    • Full year non-GAAP operating margin as a percentage of revenue is expected to be in the range of 24.5% to 25.5%.
    • Full year non-GAAP free cash flow margin as a percentage of revenue is expected to be in the range of 22% to 24%.
    • Diluted weighted average shares outstanding are expected to be approximately 37 million for the full year.

    Conference Call Information
    As previously announced, the Company will host a conference call today, October 24, 2024, at 2:00 p.m. Pacific Time (PT), 5:00 p.m. Eastern Time (ET), to discuss the company’s third quarter 2024 financial results. A live webcast of the call will be available at: https://edge.media-server.com/mmc/p/56effhwx. To access the call by phone, please go to the following link: https://register.vevent.com/register/BI0592d6d11ce14a179afe199e2d07039c, and you will be provided with dial in details. A replay of the webcast will also be available for a limited time on AppFolio’s Investor Relations website at https://ir.appfolioinc.com/news-events/events.

    The Company also provides announcements regarding its financial results and other matters, including SEC filings, investor events, and press releases, on its Investor Relations website at https://ir.appfolioinc.com/, as a means of disclosing material nonpublic information and for complying with AppFolio's disclosure obligations under Regulation FD.

    About AppFolio
    AppFolio is a technology leader powering the future of the real estate industry. Our innovative platform and trusted partnership enable our customers to connect communities, increase operational efficiency, and grow their business. For more information about AppFolio, visit ir.appfolioinc.com.

    Investor Relations Contact:
    Lori Barker
    ir@appfolio.com

    Use of Non-GAAP Financial Measures
    Reconciliations of current and historical non-GAAP financial measures to AppFolio’s financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables entitled “Statement Regarding the Use of Non-GAAP Financial Measures.”

    AppFolio is unable, at this time, to provide GAAP equivalent guidance measures on a forward-looking basis for non-GAAP operating margin and non-GAAP free cash flow margin because certain items that impact these measures are uncertain, out of our control, or cannot be reasonably predicted, such as charges related to stock-based compensation expense. The effect of these excluded items may be significant.

    Forward-Looking Statements
    This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements are subject to considerable risks and uncertainties. Forward-looking statements include all statements that are not statements of historical fact contained in this press release, and can be identified by words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “future,” “predicts,” “projects,” “target,” “seeks,” “contemplates,” “should,” “will,” “would” or similar expressions and the negatives of those expressions. In particular, forward-looking statements contained in this press release relate to future operating results and financial position, including the Company's fiscal year 2024 financial outlook, anticipated future expenses and investments, the Company's business opportunities, the impact of the Company's strategic actions and initiatives, the potential benefits and effect of the FolioSpace resident app and the acquisition of LiveEasy and their impact on the Company’s plans, objectives, expectations and capabilities.

    Forward-looking statements represent AppFolio's current beliefs and expectations based on information currently available and speak only as of the date the statement is made. Forward-looking statements are subject to numerous known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to materially differ from those expressed or implied by these forward-looking statements include the Company’s ability to successfully launch the FolioSpace resident app and integrate the LiveEasy business, the Company’s ability to implement its plans, objectives and expectations with respect to the FolioSpace resident app and the LiveEasy business, negative effects of the announcement of the FolioSpace resident app and/or the Live Easy acquisition on the Company’s business operations, operating results or share price, and unknown liabilities associated with the acquisition as well as those risks, uncertainties and other factors described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 1, 2024, and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recently filed Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as well as in the Company's other filings with the SEC. You should read this press release with the understanding that the Company's actual future results may be materially different from the results expressed or implied by these forward-looking statements.

    The Company undertakes no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.


    CONDENSED CONSOLIDATED BALANCE SHEETS
    (UNAUDITED)
    (in thousands)
     
      September 30,
    2024    		 December 31,
    2023
    Assets    
    Current assets    
    Cash and cash equivalents $62,417 $49,509
    Investment securities—current  268,951  162,196
    Accounts receivable, net  25,581  20,709
    Prepaid expenses and other current assets  38,194  39,943
    Total current assets  395,143  272,357
    Property and equipment, net  25,478  28,362
    Operating lease right-of-use assets  17,744  19,285
    Capitalized software development costs, net  16,330  21,562
    Goodwill  56,060  56,060
    Other long-term assets  12,542  11,263
    Total assets $523,297 $408,889
    Liabilities and Stockholders’ Equity     
    Current liabilities    
    Accounts payable $509 $1,141
    Accrued employee expenses  33,625  35,567
    Accrued expenses  14,899  21,723
    Other current liabilities  14,664  11,335
    Total current liabilities  63,697  69,766
    Operating lease liabilities  38,402  41,114
    Other liabilities  8,371  697
    Total liabilities  110,470  111,577
    Stockholders’ equity  412,827  297,312
    Total liabilities and stockholders’ equity $523,297 $408,889



    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (UNAUDITED)
    (in thousands, except per share amounts)
     
     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
      2024  2023  2024  2023
    Revenue(1)$205,733 $165,440  $590,538 $448,615 
    Costs and operating expenses:       
    Cost of revenue (exclusive of depreciation and amortization)(2) 71,631  62,739   205,878  176,801 
    Sales and marketing(2) 25,406  29,701   77,161  86,101 
    Research and product development(2) 40,662  41,592   118,079  116,517 
    General and administrative(2) 21,139  23,907   62,525  74,417 
    Depreciation and amortization 4,327  7,568   14,209  22,055 
    Total costs and operating expenses 163,165  165,507   477,852  475,891 
    Income (loss) from operations 42,568  (67)  112,686  (27,276)
    Other income (loss), net —  (249)  —  (283)
    Interest income, net 4,014  1,788   10,482  4,627 
    Income (loss) before provision for income taxes 46,582  1,472   123,168  (22,932)
    Provision for (benefit from) income taxes 13,576  (24,973)  21,834  4,634 
    Net income (loss)$33,006 $26,445  $101,334 $(27,566)
    Net income (loss) per common share:       
    Basic$0.91 $0.74  $2.80 $(0.78)
    Diluted$0.90 $0.72  $2.76 $(0.78)
    Weighted average common shares outstanding       
    Basic 36,306  35,691   36,211  35,567 
    Diluted 36,756  36,482   36,752  35,567 
                  

    (1) The following table presents our revenue categories:

     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
      2024  2023  2024  2023
    Core solutions$46,030 $39,756 $132,974 $115,440
    Value Added Services 157,726  123,188  451,677  326,108
    Other 1,977  2,496  5,887  7,067
    Total revenue$205,733 $165,440 $590,538 $448,615
                

    (2) Includes stock-based compensation expense as follows:

     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
      2024  2023  2024  2023
    Costs and operating expenses:       
    Cost of revenue (exclusive of depreciation and amortization)$1,126 $1,149 $3,261 $2,905
    Sales and marketing 2,071  2,041  5,284  4,902
    Research and product development 7,471  6,064  19,625  15,851
    General and administrative 5,367  6,003  16,133  16,274
    Total stock-based compensation expense$16,035 $15,257 $44,303 $39,932



    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (UNAUDITED)
    (in thousands)
     
     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
     2024 2023 2024 2023
    Cash from operating activities       
    Net income (loss)$33,006  $26,445  $101,334  $(27,566)
    Adjustments to reconcile net income (loss) to net cash provided by operating activities:       
    Depreciation and amortization 3,912   6,980   12,804   20,115 
    Amortization of operating lease right-of-use assets 488   509   1,541   1,618 
    Gain on lease modification —   —   —   (4,281)
    Stock-based compensation, including as amortized 16,449   15,845   45,707   41,872 
    Other (2,141)  (806)  (6,146)  (1,514)
    Changes in operating assets and liabilities:       
    Accounts receivable 110   (327)  (4,872)  (3,857)
    Prepaid expenses and other assets (4,046)  1,354   1,111   (712)
    Accounts payable (728)  (496)  (291)  (1,485)
    Operating lease liabilities (1,778)  1,558   (3,196)  (3,080)
    Accrued expenses and other liabilities 12,498   (14,305)  3,601   7,990 
    Net cash provided by operating activities 57,770   36,757   151,593   29,100 
    Cash from investing activities       
    Purchases of available-for-sale investments (113,780)  (35,322)  (265,319)  (108,919)
    Proceeds from sales of available-for-sale investments —   —   —   1,013 
    Proceeds from maturities of available-for-sale investments 69,300   44,635   163,755   94,252 
    Purchases of property and equipment (363)  (3,761)  (1,821)  (5,932)
    Capitalization of software development costs (1,583)  (1,243)  (4,112)  (3,394)
    Proceeds from sale of equity-method investment —   —   —   629 
    Net cash (used in) provided by investing activities (46,426)  4,309   (107,497)  (22,351)
    Cash from financing activities       
    Proceeds from stock option exercises 15   683   3,913   2,185 
    Tax withholding for net share settlement (8,581)  (6,510)  (35,101)  (19,766)
    Net cash used in financing activities (8,566)  (5,827)  (31,188)  (17,581)
    Net increase (decrease) in cash, cash equivalents and restricted cash 2,778   35,239   12,908   (10,832)
    Cash, cash equivalents and restricted cash       
    Beginning of period 59,889   24,948   49,759   71,019 
    End of period$62,667  $60,187   62,667   60,187 



    RECONCILIATION FROM GAAP TO NON-GAAP RESULTS
    (UNAUDITED)
    (in thousands, except per share data)
     
     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
      2024   2023   2024   2023 
    Costs and operating expenses:     
    GAAP cost of revenue (exclusive of depreciation and amortization)$71,631  $62,739  $205,878  $176,801 
    Stock-based compensation expense (1,126)  (1,149)  (3,261)  (2,905)
    Workforce reduction costs —   (2,135)  —   (2,135)
    Non-GAAP cost of revenue (exclusive of depreciation and amortization)$70,505  $59,455  $202,617  $171,761 
    GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue 35%  38%  35%  39%
    Non-GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue 34%  36%  34%  38%
            
    GAAP sales and marketing$25,406  $29,701  $77,161  $86,101 
    Stock-based compensation expense (2,071)  (2,041)  (5,284)  (4,902)
    Workforce reduction costs —   (3,401)  —   (3,401)
    Non-GAAP sales and marketing$23,335  $24,259  $71,877  $77,798 
    GAAP sales and marketing as a percentage of revenue 12%  18%  13%  19%
    Non-GAAP sales and marketing as a percentage of revenue 11%  15%  12%  17%
            
    GAAP research and product development$40,662  $41,592  $118,079  $116,517 
    Stock-based compensation expense (7,471)  (6,064)  (19,625)  (15,851)
    Workforce reduction costs —   (2,635)  —   (2,635)
    Non-GAAP research and product development$33,191  $32,893  $98,454  $98,031 
    GAAP research and product development as a percentage of revenue 20%  25%  20%  26%
    Non-GAAP research and product development as a percentage of revenue 16%  20%  17%  22%
            
    GAAP general and administrative$21,139  $23,907  $62,525  $74,417 
    Stock-based compensation expense (5,367)  (6,003)  (16,133)  (16,274)
    Gain on lease modification —   —   —   4,281 
    CEO separation costs, net —   —   —   (11,520)
    Workforce reduction costs —   (2,106)  —   (2,106)
    Non-GAAP general and administrative$15,772  $15,798  $46,392  $48,798 
    GAAP general and administrative as a percentage of revenue 10%  14%  11%  17%
    Non-GAAP general and administrative as a percentage of revenue 8%  10%  8%  11%
            
    GAAP depreciation and amortization$4,327  $7,568  $14,209  $22,055 
    Amortization of stock-based compensation capitalized in software development costs (414)  (589)  (1,404)  (1,940)
    Amortization of purchased intangibles (118)  (617)  (355)  (1,857)
    Non-GAAP depreciation and amortization$3,795  $6,362  $12,450  $18,258 
    GAAP depreciation and amortization as a percentage of revenue 2%  5%  2%  5%
    Non-GAAP depreciation and amortization as a percentage of revenue 2%  4%  2%  4%


     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
      2024   2023   2024   2023 
    Income (loss) from operations:       
    GAAP income (loss) from operations$42,568  $(67) $112,686  $(27,276)
    Stock-based compensation expense 16,035   15,257   44,303   39,932 
    Amortization of stock-based compensation capitalized in software development costs 414   589   1,404   1,940 
    Amortization of purchased intangibles 118   617   355   1,857 
    Gain on lease modification —   —   —   (4,281)
    CEO separation costs, net —   —   —   11,520 
    Workforce reduction costs —   10,278   —   10,278 
    Non-GAAP income from operations$59,135  $26,674  $158,748  $33,970 
            
    Operating margin:        
    GAAP operating margin 20.7%  —%  19.1%  (6.1)%
    Stock-based compensation expense as a percentage of revenue 7.7   9.2   7.5   8.9 
    Amortization of stock-based compensation capitalized in software development costs as a percentage of revenue 0.2   0.4   0.2   0.4 
    Amortization of purchased intangibles as a percentage of revenue 0.1   0.4   0.1   0.4 
    Gain on lease modification as a percentage of revenue —   —   —   (1.0)
    CEO separation costs, net as a percentage of revenue —   —   —   2.6 
    Workforce reduction costs as a percentage of revenue —   6.1   —   2.4 
    Non-GAAP operating margin 28.7%  16.1%  26.9%  7.6%
            
    Net income (loss):       
    GAAP net income (loss)$33,006  $26,445  $101,334  $(27,566)
    Stock-based compensation expense 16,035   15,257   44,303   39,932 
    Amortization of stock-based compensation capitalized in software development costs 414   589   1,404   1,940 
    Amortization of purchased intangibles 118   617   355   1,857 
    Gain on lease modification —   —   —   (4,281)
    CEO separation costs, net —   —   —   11,520 
    Workforce reduction costs —   10,278   —   10,278 
    Income tax effect of adjustments (2,211)  (31,642)  (20,474)  (3,859)
    Non-GAAP net income$47,362  $21,544  $126,922  $29,821 
            
    Net income (loss) per share, basic:       
    GAAP net income (loss) per share, basic$0.91  $0.74  $2.80  $(0.78)
    Non-GAAP adjustments to net income (loss) 0.39   (0.14)  0.71   1.62 
    Non-GAAP net income per share, basic$1.30  $0.60  $3.51  $0.84 
            
    Net income (loss) income per share, diluted:       
    GAAP net income (loss) per share, diluted$0.90  $0.72  $2.76  $(0.78)
    Non-GAAP adjustments to net income (loss) 0.39   (0.13)  0.69   1.60 
    Non-GAAP net income per share, diluted$1.29  $0.59  $3.45  $0.82 
            
    Weighted-average shares used in GAAP per share calculation       
    Basic 36,306   35,691   36,211   35,567 
    Diluted 36,756   36,482   36,752   35,567 
            
    Weighted-average shares used in non-GAAP per share calculation       
    Basic 36,306   35,691   36,211   35,567 
    Diluted 36,756   36,482   36,752   36,345 


     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
      2024   2023   2024   2023 
    Free cash flow:    
    GAAP net cash provided by operating activities$57,770  $36,757  $151,593  $29,100 
    Purchases of property and equipment (363)  (3,761)  (1,821)  (5,932)
    Capitalized software development costs (1,583)  (1,243)  (4,112)  (3,394)
    CEO separation costs payment —   —   —   14,926 
    Partial lease termination payment —   —   —   2,851 
    Severance payments for workforce reduction —   1,801   566   1,801 
    Non-GAAP free cash flow$55,824  $33,554  $146,226  $39,352 
            
    Free cash flow margin:      
    GAAP net cash provided by operating activities as a percentage of revenue 28.1%  22.2%  25.7%  6.5%
    Purchases of property and equipment as a percentage of revenue (0.2)  (2.3)  (0.3)  (1.3)
    Capitalized software development costs as a percentage of revenue (0.8)  (0.8)  (0.7)  (0.8)
    CEO separation costs payment as a percentage of revenue —   —   —   3.4 
    Partial lease termination payment as a percentage of revenue —   —   —   0.6 
    Severance payments for workforce reduction as a percentage of revenue —   1.2   0.1   0.4 
    Non-GAAP free cash flow margin 27.1%  20.3%  24.8%  8.8%


    Statement Regarding the Use of Non-GAAP Financial Measures

    We use the following non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

    • Non-GAAP presentation of income (loss) from operations, costs and operating expenses, operating margin, net income (loss), and net income (loss) per share. These measures exclude certain non-cash or non-recurring items, including stock-based compensation expense, amortization of stock-based compensation capitalized in software development costs, amortization of purchased intangibles, CEO separation costs, net, gain on lease modification, workforce reduction costs, and the related income tax effect of these adjustments, as applicable and described below. Non-GAAP operating margin is calculated as non-GAAP operating income (loss) from operations as a percentage of revenue.
    • Non-GAAP free cash flow. Non-GAAP free cash flow is defined as net cash from operating activities, less purchases of property and equipment, capitalization of software development costs, payments for separation costs and lease termination payments and severance payments for workforce reduction. We use free cash flow to evaluate our generation of cash from operations that is available for purposes other than capital expenditures and capitalized software development costs. Additionally, we believe that information regarding free cash flow provides investors with a perspective on the cash available to fund ongoing operations. We review cash flows generated from operations after taking into consideration capital expenditures and the capitalization of software development costs due to the fact that these expenditures are considered to be a necessary component of ongoing operations. Free cash flow margin is calculated as free cash flow as a percentage of revenue.

    We use each of these non-GAAP financial measures internally to assess and compare operating results across reporting periods, for internal budgeting and forecasting purposes, and to evaluate our financial performance. We believe these adjustments also provide useful supplemental information to investors and facilitate the analysis of our operating results and comparison of operating results across reporting periods.

    In particular, we believe these non-GAAP financial measures are useful to investors and others in assessing our operating performance due to the following factors:

    • Stock-based compensation expense and amortization of stock-based compensation capitalized in software development costs. We utilize stock-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of our stockholders while ensuring long-term retention, rather than to address operational performance for any particular period. As a result, stock-based compensation expenses, which include costs related to our workforce reduction, vary for reasons that are generally unrelated to financial and operational performance in any particular period.
    • Amortization of purchased intangibles. We view amortization of purchased intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of purchased intangibles is an expense that is not typically affected by operations during any particular period.
    • CEO separation costs, net. We incurred one-time separation costs associated with our former Chief Executive Officer's Transition and Separation Agreement, dated March 1, 2023. We have excluded these costs, as we do not consider such amounts to be part of the ongoing operation of our business.
    • Gain on lease modification. In January 2023 and June 2023, we amended our San Diego lease. We have excluded any gain related to the remeasurement of the lease liability, as we do not consider such amounts to be part of the ongoing operation of our business.
    • Workforce reduction costs. We incurred one-time severance and related personnel costs associated with our workforce reduction in the third quarter of 2023. We have excluded these costs, along with the subsequent cash payments, as we do not consider such amounts to be part of the ongoing operation of our business.
    • Income tax effects of adjustments. We utilize a fixed long-term projected tax rate in our computation of non-GAAP income tax effects to provide better consistency across interim reporting periods. In projecting this long-term non-GAAP tax rate, we utilize a financial projection that excludes the direct impact of other non-GAAP adjustments. The projected rate, which we have determined to be 25%, considers other factors such as our current operating structure, existing tax positions in various jurisdictions, and key legislation in major jurisdictions where we operate. We periodically re-evaluate this tax rate, as necessary, for significant events, based on relevant tax law changes, and material changes in the forecasted geographic earnings mix.

    Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because non-GAAP financial measures are not prepared in accordance with GAAP and can exclude expenses that may have a material impact on our reported financial results. As such, non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the tables above. We encourage investors to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.


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