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AppFolio, Inc. Announces Fourth Quarter and Fiscal Year 2024 Financial Results

1. AppFolio's Q4 2024 revenue rose 19% to $204 million. 2. The company reported a fiscal 2024 revenue growth of 28% to $794 million. 3. Non-GAAP operating income for Q4 2024 was $41 million, declining from Q4 2023. 4. AppFolio forecasts fiscal 2025 revenue between $920 million to $940 million.

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Why Bullish?

Despite a dip in operating income margins, increased revenue shows positive growth. The forecasted revenue growth may excite investors, akin to past revenue surges.

How important is it?

The financial report indicates strong growth potential for AppFolio, which can influence stock prices. Periodic strong performances generally correlate with market interest and valuations.

Why Short Term?

Immediate financial results are expected to influence investor sentiment. Historically, similar growth announcements have resulted in short-term market positive reactions.

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SANTA BARBARA, Calif., Jan. 30, 2025 (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 fourth quarter and fiscal year ended December 31, 2024. "I am proud of our strong performance in 2024 as we continue to deliver value to our customers through differentiated industry-leading innovation," said Shane Trigg, President and CEO, AppFolio. "Our investments in AI and the resident experience are translating into meaningful outcomes for our customers and fueling our mission to build the platform where the real estate industry comes to do business. We are acquiring, growing, and retaining customers while delivering exceptional service." Financial Highlights for Fourth Quarter of 2024 Revenue grew 19% year-over-year to $204 million.Total units under management grew 6% year-over-year to 8.7 million.GAAP operating income was $23 million, or 11.3% of revenue, compared to operating income of $28 million, or 16.4% of revenue in Q4 2023.Non-GAAP operating income was $41 million, or 20.2% of revenue, compared to an operating income of $42 million, or 24.3% of revenue, in Q4 2023.Net cash provided by operating activities was $37 million, or 18.0% of revenue, compared to $31 million, or 18.1% of revenue, in Q4 2023.Non-GAAP free cash flow was $35 million, or 17.3% of revenue, compared to $34 million, or 19.9% of revenue, in Q4 2023. Financial Highlights for Fiscal Year 2024 Revenue grew 28% year-over-year to $794 million.GAAP operating income was $136 million, or 17.1% of revenue, compared to operating income of $1 million, or 0.2% of revenue, in fiscal year 2023.Non-GAAP operating income was $200 million, or 25.2% of revenue, compared to operating income of $76 million, or 12.2% of revenue, in fiscal year 2023.Net cash provided by operating activities was $188 million, or 23.7% of revenue, compared to $60 million, or 9.7% of revenue, in fiscal year 2023.Non-GAAP free cash flow was $182 million, or 22.9% of revenue, compared to $74 million, or 11.9% of revenue, in fiscal year 2023. Financial OutlookBased on information available as of January 30, 2025, AppFolio's outlook for fiscal year 2025 follows: Full year revenue is expected to be in the range of $920 million to $940 million.Full year non-GAAP operating margin as a percentage of revenue is expected to be in the range of 24.5% to 26.5%.Diluted weighted average shares outstanding are expected to be approximately 37 million for the full year. Conference Call InformationAs previously announced, the Company will host a conference call today, January 30, 2025, at 2:00 p.m. Pacific Time (PT), 5:00 p.m. Eastern Time (ET), to discuss the Company’s fourth quarter and fiscal year 2024 financial results. A live webcast of the call will be available at: https://edge.media-server.com/mmc/p/ed7u6ptp/. To access the call by phone, please go to the following link: https://register.vevent.com/register/BIdc9c20754ec649859552be5efc7cfa83, 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 AppFolioAppFolio 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 Barkerir@appfolio.com Use of Non-GAAP Financial MeasuresReconciliations 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 because certain items that impact this measure 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 2025 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 Company's AI and resident experience related services 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 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)  December 31,2024 December 31,2023Assets    Current assets    Cash and cash equivalents $42,504 $49,509Investment securities—current  235,745  162,196Accounts receivable, net  24,346  20,709Prepaid expenses and other current assets  32,807  39,943Total current assets  335,402  272,357Property and equipment, net  24,483  28,362Operating lease right-of-use assets  17,472  19,285Capitalized software development costs, net  15,429  21,562Goodwill  96,410  56,060Intangible assets, net  49,057  2,357Deferred income taxes  76,910  —Other long-term assets  11,515  8,906Total assets $626,678 $408,889Liabilities and Stockholders’ Equity     Current liabilities    Accounts payable $2,378 $1,141Accrued employee expenses  30,157  35,567Accrued expenses  14,658  21,723Other current liabilities  16,087  11,335Total current liabilities  63,280  69,766Operating lease liabilities  37,476  41,114Deferred tax liabilities  —  697Other liabilities  6,632  —Total liabilities  107,388  111,577Stockholders’ equity  519,290  297,312Total liabilities and stockholders’ equity $626,678 $408,889  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)(in thousands, except per share amounts) Three Months EndedDecember 31, Twelve Months EndedDecember 31,  2024   2023  2024   2023Revenue(1)$203,664  $171,830 $794,202  $620,445Costs and operating expenses:       Cost of revenue (exclusive of depreciation and amortization)(2) 76,189   61,275  282,067   238,076Sales and marketing(2) 33,436   21,501  110,597   107,602Research and product development(2) 42,296   34,847  160,375   151,364General and administrative(2) 23,449   19,035  85,974   93,452Depreciation and amortization 5,336   6,933  19,545   28,988Total costs and operating expenses 180,706   143,591  658,558   619,482Income from operations 22,958   28,239  135,644   963Other income, net 697   286  697   3Interest income, net 3,499   2,404  13,981   7,031Income before provision for income taxes 27,154   30,929  150,322   7,997(Benefit from) provision for income taxes (75,580)  661  (53,746)  5,295Net income$102,734  $30,268 $204,068  $2,702Net income per common share:       Basic$2.82  $0.85 $5.63  $0.08Diluted$2.79  $0.83 $5.55  $0.07Weighted average common shares outstanding       Basic 36,374   35,812  36,252   35,629Diluted 36,783   36,596  36,782   36,417  (1) The following table presents our revenue categories:  Three Months EndedDecember 31, Twelve Months EndedDecember 31,  2024   2023  2024   2023Core solutions$47,631  $41,252 $180,605  $156,692Value Added Services 153,334   127,990  605,011   454,098Other 2,699   2,588  8,586   9,655Total revenue$203,664  $171,830 $794,202  $620,445  (2) Includes stock-based compensation expense as follows:  Three Months EndedDecember 31, Twelve Months EndedDecember 31,  2024   2023  2024   2023Costs and operating expenses:           Cost of revenue (exclusive of depreciation and amortization)$1,261  $798 $4,522  $3,703Sales and marketing 2,746   1,081  8,030   5,983Research and product development 5,789   5,123  25,414   20,974General and administrative 6,228   5,430  22,361   21,704Total stock-based compensation expense$16,024  $12,432 $60,327  $52,364  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)(in thousands) Three Months EndedDecember 31, Twelve Months EndedDecember 31,  2024   2023   2024   2023 Cash from operating activities       Net income (loss)$102,734  $30,268  $204,068  $2,702 Adjustments to reconcile net income (loss) to net cash provided by operating activities:       Depreciation and amortization 4,986   6,385   17,790   26,500 Amortization of operating lease right-of-use assets 489   514   2,030   2,132 Gain on lease modification —   —   —   (4,281)Deferred income taxes (76,937)  (494)  (76,937)  (490)Stock-based compensation, including as amortized 16,374   12,980   62,081   54,852 Other (2,074)  (1,590)  (8,220)  (3,108)Changes in operating assets and liabilities:       Accounts receivable 1,489   (349)  (3,383)  (4,206)Prepaid expenses and other assets 3,015   (12,781)  4,126   (13,493)Accounts payable 1,850   (80)  1,559   (1,565)Operating lease liabilities 53   576   (3,143)  (2,504)Accrued expenses and other liabilities (15,413)  (4,246)  (11,812)  3,744 Net cash provided by operating activities 36,566   31,183   188,159   60,283 Cash from investing activities       Purchases of available-for-sale investments (51,854)  (86,821)  (317,173)  (195,740)Proceeds from sales of available-for-sale investments 9,984   —   9,984   1,013 Proceeds from maturities of available-for-sale investments 76,280   58,130   240,035   152,382 Purchases of property and equipment (195)  (3,109)  (2,016)  (9,041)Capitalization of software development costs (1,058)  (1,431)  (5,170)  (4,825)Proceeds from equity-method investment —   —   —   629 Cash paid in business acquisition, net of cash acquired (77,421)  —   (77,421)  — Net cash used in investing activities (44,264)  (33,231)  (151,761)  (55,582)Cash from financing activities       Proceeds from stock option exercises 11   410   3,924   2,595 Tax withholding for net share settlement (12,226)  (8,790)  (47,327)  (28,556)Net cash used in financing activities (12,215)  (8,380)  (43,403)  (25,961)Net decrease in cash, cash equivalents and restricted cash (19,913)  (10,428)  (7,005)  (21,260)Cash, cash equivalents and restricted cash       Beginning of period 62,667   60,187   49,759   71,019 End of period$42,754  $49,759  $42,754  $49,759   RECONCILIATION FROM GAAP TO NON-GAAP RESULTS(UNAUDITED)(in thousands, except per share data)   Three Months EndedDecember 31, Twelve Months EndedDecember 31,    2024   2023   2024   2023 Costs and operating expenses:      GAAP cost of revenue (exclusive of depreciation and amortization)$76,189  $61,275  $282,067  $238,076   Stock-based compensation expense (1,261)  (798)  (4,522)  (3,703)  Workforce reduction costs —   —   —   (2,135) Non-GAAP cost of revenue (exclusive of depreciation and amortization)$74,928  $60,477  $277,545  $232,238  GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue 37%  36%  36%  38% Non-GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue 37%  35%  35%  37%           GAAP sales and marketing$33,436  $21,501  $110,597  $107,602   Stock-based compensation expense (2,746)  (1,081)  (8,030)  (5,983)  Workforce reduction costs —   —   —   (3,401) Non-GAAP sales and marketing$30,690  $20,420  $102,567  $98,218  GAAP sales and marketing as a percentage of revenue 16%  13%  14%  17% Non-GAAP sales and marketing as a percentage of revenue 15%  12%  13%  16%           GAAP research and product development$42,296  $34,847  $160,375  $151,364   Stock-based compensation expense (5,789)  (5,123)  (25,414)  (20,974)  Workforce reduction costs —   —   —   (2,635) Non-GAAP research and product development$36,507  $29,724  $134,961  $127,755  GAAP research and product development as a percentage of revenue 21%  20%  20%  24% Non-GAAP research and product development as a percentage of revenue 18%  17%  17%  21%           GAAP general and administrative$23,449  $19,035  $85,974  $93,452   Stock-based compensation expense (6,228)  (5,430)  (22,361)  (21,704)  Gain on lease modification —   —   —   4,281   CEO separation costs, net —   —   —   (11,520)  Workforce reduction costs —   —   —   (2,106) Non-GAAP general and administrative$17,221  $13,605  $63,613  $62,403  GAAP general and administrative as a percentage of revenue 12%  11%  11%  15% Non-GAAP general and administrative as a percentage of revenue 8%  8%  8%  10%           GAAP depreciation and amortization$5,336  $6,933  $19,545  $28,988   Amortization of stock-based compensation capitalized in software development costs (350)  (548)  (1,754)  (2,489)  Amortization of purchased intangibles (1,744)  (619)  (2,100)  (2,476) Non-GAAP depreciation and amortization$3,242  $5,766  $15,691  $24,023  GAAP depreciation and amortization as a percentage of revenue 3%  4%  2%  5% Non-GAAP depreciation and amortization as a percentage of revenue 2%  3%  2%  4%                     Three Months EndedDecember 31, Twelve Months EndedDecember 31,    2024   2023   2024   2023 Income from operations:        GAAP income from operations$22,958  $28,239  $135,644  $963   Stock-based compensation expense 16,024   12,432   60,327   52,364   Amortization of stock-based compensation capitalized in software development costs 350   548   1,754   2,489   Amortization of purchased intangibles 1,744   619   2,100   2,476   Gain on lease modification —   —   —   (4,281)  CEO separation costs, net —   —   —   11,520   Workforce reduction costs —   —   —   10,278  Non-GAAP income from operations$41,076  $41,838  $199,825  $75,809           Operating margin:         GAAP operating margin 11.3%  16.4%  17.1%  0.2%  Stock-based compensation expense as a percentage of revenue 7.8   7.2   7.6   8.4   Amortization of stock-based compensation capitalized in software development costs as a percentage of revenue 0.2   0.3   0.2   0.4   Amortization of purchased intangibles as a percentage of revenue 0.9   0.4   0.3   0.4   Gain on lease modification as a percentage of revenue —   —   —   (0.7)  CEO separation costs, net as a percentage of revenue —   —   —   1.9   Workforce reduction costs as a percentage of revenue —   —   —   1.8  Non-GAAP operating margin 20.2%  24.3%  25.2%  12.2%          Net income (loss):        GAAP net income$102,734  $30,268  $204,068  $2,702   Stock-based compensation expense 16,024   12,432   60,327   52,364   Amortization of stock-based compensation capitalized in software development costs 350   548   1,754   2,489   Amortization of purchased intangibles 1,744   619   2,100   2,476   Gain on lease modification —   —   —   (4,281)  CEO separation costs, net —   —   —   11,520   Workforce reduction costs —   —   —   10,278   Income tax effect of adjustments (86,898)  (11,556)  (107,372)  (15,415) Non-GAAP net income$33,954  $32,311  $160,877  $62,133           Net income per share, basic:        GAAP net income per share, basic$2.82  $0.85  $5.63  $0.08   Non-GAAP adjustments to net income (1.89)  0.05   (1.19)  1.66  Non-GAAP net income per share, basic$0.93  $0.90  $4.44  $1.74           Net income per share, diluted:        GAAP net income per share, diluted$2.79  $0.83  $5.55  $0.07   Non-GAAP adjustments to net income (1.87)  0.05   (1.18)  1.64  Non-GAAP net income per share, diluted$0.92  $0.88  $4.37  $1.71            Weighted-average shares used in GAAP per share calculation         Basic 36,374   35,812   36,252   35,629   Diluted 36,783   36,596   36,782   36,417            Weighted-average shares used in non-GAAP per share calculation         Basic 36,374   35,812   36,252   35,629   Diluted 36,783   36,596   36,782   36,417                       Three Months EndedDecember 31, Twelve Months EndedDecember 31,    2024   2023   2024   2023 Free cash flow:     GAAP net cash provided by operating activities$36,566  $31,183  $188,159  $60,283   Purchases of property and equipment (195)  (3,109)  (2,016)  (9,041)  Capitalized software development costs (1,058)  (1,431)  (5,170)  (4,825)  CEO separation costs payment —   —   —   14,926   Partial lease termination payment —   —   —   2,851   Severance payments for workforce reduction —   7,624   566   9,425  Non-GAAP free cash flow$35,313  $34,267  $181,539  $73,619           Free cash flow margin:       GAAP net cash provided by operating activities as a percentage of revenue 18.0%  18.1%  23.7%  9.7%  Purchases of property and equipment as a percentage of revenue (0.1)  (1.8)  (0.3)  (1.4)  Capitalized software development costs as a percentage of revenue (0.6)  (0.8)  (0.6)  (0.8)  CEO separation costs payment as a percentage of revenue —   —   —   2.4   Partial lease termination payment as a percentage of revenue —   —   —   0.5   Severance payments for workforce reduction as a percentage of revenue —   4.4   0.1   1.5  Non-GAAP free cash flow margin 17.3%  19.9%  22.9%  11.9%   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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