AppFolio, Inc. Announces Third Quarter Financial Results


SANTA BARBARA, Calif., Nov. 07, 2016 (GLOBE NEWSWIRE) -- AppFolio, Inc. (NASDAQ:APPF), a leading provider of cloud-based business software solutions, today announced results for the third quarter ended September 30, 2016.

Third Quarter 2016 Highlights

•         Third quarter revenue was $28.2 million, an increase of 39% period-over-period.

•         Third quarter GAAP net loss was $1.1 million, or a net loss of $0.03 per share; Non-GAAP net income was $0.2 million, or $0.00 per share.

•         Increased property manager customers 27% year-over-year to 9,612; increased units under management 26% year-over-year to 2.5 million.

•         Increased law firm customers 40% year-over-year to 7,799.

The Company generated approximately $2.3 million in cash from operating activities and reported $2.7 million in Non-GAAP Adjusted EBITDA for the third quarter of 2016. At September 30, 2016, the Company had $49.6 million in cash and cash equivalents and investment securities.

“We are pleased with our results in the quarter, achieving strong revenue, increasing units under management and continuing to realize operating leverage," commented Brian Donahoo, President and CEO of AppFolio.  "During the quarter we hosted over 700 property manager customers at our Fourth Annual Customer Conference for three days of industry education, networking events, and hands-on product demonstrations and feedback sessions with AppFolio experts. We also announced two new product offerings for our Property Managers customers, including Collections and Revenue Management, which will enhance our platform and further highlight our commitment to helping our customers successfully manage and grow their businesses and expand our market opportunity.”

Financial Outlook

Based on information available as of November 7, 2016, we are updating our outlook for full year 2016 as indicated below.

  • Full year revenue is expected to be in the range of $104.0 million to $105.0 million.
     
  • Weighted average common shares outstanding are expected to be approximately 33.6 million for the full year.

Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, we provide investors with certain Non-GAAP financial measures, including Non-GAAP net loss, Non-GAAP net loss per share, and Non-GAAP Adjusted EBITDA which are financial measures that have not been prepared in accordance with GAAP. Non-GAAP net loss and non-GAAP net loss per share are defined as net loss and net loss per share, respectively, attributable to common stockholders before stock-based compensation expense. Non-GAAP Adjusted EBTIDA is defined as GAAP net loss before depreciation and amortization, stock-based compensation expense, provision for income taxes, other income (expense), net, and interest income (expense), net.

We use these Non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. The principal limitation of these Non-GAAP financial measures is that they exclude expenses that are required by GAAP to be recorded in our financial statements. These financial measures are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. In addition, these financial measures may be different from Non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. A reconciliation of the Non-GAAP financial measures to the most direct comparable GAAP measure has been provided in the financial statement tables included below in this press release.

We urge investors to review these reconciliations and not to rely on any single financial measure to evaluate our business.

Conference Call Information
As previously announced, we will host a conference call today, November 7, 2016, to discuss our third quarter financial results at 2:00 p.m. Pacific Time, 5:00 p.m. Eastern Time. A live webcast of the conference call will be available at http://ir.appfolioinc.com. The conference call can also be accessed by dialing 844-239-5286 (Domestic), or 513-268-0783 (International). The conference ID is 98002643.  A replay will be available at 855-859-2056 (Domestic) and 404-537-3406 (International) until the end of day November 11, 2016. An archived webcast of this conference call will be available for 12 months on our website listed above.

About AppFolio, Inc.
AppFolio provides comprehensive, easy-to-use, cloud-based business software solutions for small and medium-sized businesses in various vertical markets. Our products include cloud-based property management software (AppFolio Property Manager) and cloud-based legal practice management software MyCase). The Company was founded in 2006 and is headquartered in Santa Barbara, CA. Learn more at www.appfolioinc.com

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,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “could,” “will,” “would,” or similar expressions and the negatives of those expressions. In particular, forward-looking statements contained in this press release relate to our future or assumed revenues and weighted-average outstanding shares, as well as our future growth and success.

Forward-looking statements represent our management’s current beliefs and assumptions based on information currently available. Forward-looking statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Some of the risks and uncertainties that may cause our actual results to materially differ from those expressed or implied by these forward-looking statements are described in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, which we filed with the Securities and Exchange Commission (the "SEC") on February 29, 2016, as well as in our other filings with the SEC. You should read this press release with the understanding that our actual future results may be materially different from the results expressed or implied by these forward looking statements.

Except as required by applicable law or the rules of the NASDAQ Stock Market, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.


CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except par values)
 
  September 30,
 2016
 December 31,
 2015
Assets    
Current assets    
Cash and cash equivalents $7,603  $12,063 
Investment securities—current 10,018  10,235 
Accounts receivable, net 2,707  2,048 
Prepaid expenses and other current assets 3,964  3,160 
Total current assets 24,292  27,506 
Investment securities—noncurrent 31,930  34,417 
Property and equipment, net 6,867  6,107 
Capitalized software, net 14,434  10,022 
Goodwill 6,737  6,737 
Intangible assets, net 3,457  4,516 
Other assets 1,293  1,176 
Total assets $89,010  $90,481 
Liabilities and Stockholders’ Equity    
Current liabilities    
Accounts payable $574  $2,369 
Accrued employee expenses 4,957  5,159 
Accrued expenses 4,259  3,340 
Deferred revenue 6,627  4,953 
Other current liabilities 1,377  1,084 
Total current liabilities 17,794  16,905 
Other liabilities 1,747  879 
Total liabilities 19,541  17,784 
Stockholders’ equity:    
Preferred stock, $0.0001 par value, 25,000 authorized and no shares issued and
outstanding as of September 30, 2016 and December 31, 2015
    
Class A common stock, $0.0001 par value, 250,000 shares authorized as of
September 30, 2016 and December 31, 2015; 11,523 and 9,005 shares issued and
outstanding as of September 30, 2016 and December 31, 2015, respectively;
 1  1 
Class B common stock, $0.0001 par value, 50,000 shares authorized as of
September 30, 2016 and December 31, 2015; 22,170 and 24,541 shares issued and
outstanding as of September 30, 2016 and December 31, 2015, respectively;
 3  3 
Additional paid-in capital 145,015  141,528 
Accumulated other comprehensive income (loss) 124  (153)
Accumulated deficit (75,674) (68,682)
Total stockholders’ equity 69,469  72,697 
Total liabilities and stockholders’ equity $89,010  $90,481 


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
Revenue$28,162  $20,305  $77,576  $54,578 
Costs and operating expenses:       
Cost of revenue (exclusive of depreciation and amortization)11,645  9,264  33,387  24,438 
Sales and marketing6,979  7,028  22,097  18,976 
Research and product development3,464  2,797  9,531  6,960 
General and administrative4,642  3,888  12,580  10,987 
Depreciation and amortization2,636  1,638  7,112  4,252 
Total costs and operating expenses29,366  24,615  84,707  65,613 
Loss from operations(1,204) (4,310) (7,131) (11,035)
Other expense, net(12) (1) (34) (8)
Interest income (expense), net102  (426) 221  (701)
Loss before provision for income taxes(1,114) (4,737) (6,944) (11,744)
Provision for income taxes11  23  48  34 
Net loss$(1,125) $(4,760) $(6,992) $(11,778)
Net loss per share, basic and diluted(0.03) (0.14) (0.21) (0.68)
Weighted average common shares outstanding, basic and diluted33,600  33,314  33,529  17,274 


Supplemental Revenue Information

The following table presents our revenue categories for the quarter ended September 30, 2016 and 2015 (in thousands):

  Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2016 2015 2016 2015
Core solutions $11,302  $8,330  $31,637  $23,161 
Value+ services 15,684  10,783  42,338  27,895 
Other 1,176  1,192  3,601  3,522 
Total revenues $28,162  $20,305  $77,576  $54,578 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
        
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
Cash from operating activities       
Net loss$(1,125) $(4,760) $(6,992) $(11,778)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
       
Depreciation and amortization2,636  1,638  7,112  4,252 
Purchased investment premium, net of amortization90  (380) 185  (380)
Amortization of deferred financing costs16  410  48  441 
Loss on disposal of property and equipment1  (6) 33  7 
Noncash interest expense  (223)    
Stock-based compensation1,289  278  2,844  623 
Lease abandonment101    161   
Changes in operating assets and liabilities:       
Accounts receivable337  286  (659) (936)
Prepaid expenses and other current assets(157) (737) (804) (1,345)
Other assets(71) (37) (163) (120)
Accounts payable(538) (716) (1,109) 167 
Accrued employee expenses(1,050) 2,046  (144) 3,110 
Accrued expenses603  674  1,354  1,234 
Deferred revenue526  187  1,674  662 
Other liabilities(312) 373  1,183  289 
Net cash provided by (used in) operating activities2,346  (967) 4,723  (3,774)
Cash from investing activities       
Purchases of property and equipment(399) (724) (3,560) (2,234)
Additions to capitalized software(3,395) (2,218) (8,554) (5,373)
Purchases of investment securities(7,649) (60,426) (24,334) (60,426)
Sales of investment securities    10,016   
Maturities of investment securities5,724  8,950  17,112  8,950 
Cash paid in business acquisition, net of cash acquired      (4,039)
Purchases of intangible assets(2) (5) (2) (16)
Net cash used in investing activities(5,721) (54,423) (9,322) (63,138)
Cash from financing activities       
Proceeds from stock option exercises107  10  260  328 
Proceeds from issuance of restricted stock      141 
Proceeds from issuance of options      208 
Tax withholding for net share settlement(85)   (85)  
Principal payments under capital lease obligations(9) (7) (24) (22)
Proceeds from the initial public offering, net of underwriting discounts and commissions  10,378    79,570 
Payments of initial public offering costs  (3,192)   (3,999)
Payment of contingent consideration      (2,429)
Proceeds from issuance of debt30    87  10,000 
Principal payments on debt(28) (9,958) (99) (10,000)
Payment of debt issuance costs  (7)   (539)
Net cash provided by (used in) financing activities15  (2,776) 139  73,258 
Net (decrease) increase in cash and cash equivalents(3,360) (58,166) (4,460) 6,346 
Cash and cash equivalents       
Beginning of period10,963  69,924  12,063  5,412 
End of period$7,603  $11,758  $7,603  $11,758 


Stock-Based Compensation Expense

(in thousands)

  Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2016 2015 2016 2015
Costs and operating expenses:        
Cost of revenue (exclusive of depreciation and amortization) $138  $35  $321  $86 
Sales and marketing 124  33  296  84 
Research and product development 109  10  264  22 
General and administrative 918  200  1,963  431 
Total stock-based compensation expense $1,289  $278  $2,844  $623 


Reconciliation of GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)

 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
Net loss$(1,125) $(4,760) $(6,992) $(11,778)
Stock-based compensation expense1,289  278  2,844  623 
Non-GAAP net income (loss)$164  $(4,482) $(4,148) $(11,155)
Non-GAAP net income (loss) per share, basic$  $(0.13) $(0.12) $(0.65)
Weighted average common shares outstanding, basic33,600  33,314  33,529  17,274 


 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
Net loss$(1,125) $(4,760) $(6,992) $(11,778)
Depreciation and amortization2,636  1,638  7,112  4,252 
Stock-based compensation expense1,289  278  2,844  623 
Provision for income taxes11  23  48  34 
Other expense, net12  1  34  8 
 Interest (income) expense, net(102) 426  (221) 701 
Non-GAAP Adjusted EBITDA$2,721  $(2,394) $2,825  $(6,160)


The following table presents our customers and units under management at the end of each quarter for the last seven quarters:

  2016 2015
  September 30, June 30, March 31, December 31, September 30, June 30, March 31,
Property manager customers 9,612  9,275  8,816  8,218  7,561  7,016  6,491 
Property manager units under
management (in millions)
 2.53  2.41  2.30  2.15  2.01  1.92  1.81 
               
Legal customers 7,799  7,349  6,834  6,145  5,566  4,891  4,253 

 


            

Contact Data