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AppFolio, Inc. Announces Third Quarter 2018 Financial Results

October 29, 2018

SANTA BARBARA, Calif., Oct. 29, 2018 (GLOBE NEWSWIRE) -- AppFolio, Inc. (NASDAQ: APPF) ("AppFolio" or the "Company"), a leading provider of cloud-based business software solutions, today announced its financial results for the quarter ended September 30, 2018 and has updated its financial guidance for fiscal year 2018.

AppFolio's operating results for the third quarter of 2018 are summarized in the tables accompanying this press release. The Company nevertheless urges investors to review its Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the "SEC") on February 26, 2018, as well as its more detailed third quarter 2018 results that will be included in the Company's Quarterly Report on Form 10-Q, which will be filed with the SEC on October 29, 2018.  These periodic report filings, together with other documents the Company files with the SEC from time to time, will be accessible on AppFolio's website, http://ir.appfolioinc.com. The limited information that follows in this press release is not adequate for making an informed investment judgment.

Financial Outlook

Based on information available as of October 29, 2018, AppFolio has updated its financial guidance for fiscal year 2018 as follows:

  • Full year revenue is expected to be in the range of $187 million to $188 million.

  • Diluted weighted average shares outstanding are expected to be approximately 36 million for the full year.

Conference Call Information

As previously announced, the Company will host a conference call today, October 29, 2018 at 1:30 p.m. Pacific Time, 4:30 p.m. Eastern Time, to discuss its financial results. Investors are invited to submit questions to management via the Investor Q&A form located on the Investor Overview section of AppFolio's website.

A live webcast of the call will be available at http://ir.appfolioinc.com, and it may also be accessed by dialing 866-393-4306 (Domestic), or 734-385-2616 (International). The conference ID is 1199261.  A replay will be available at 855-859-2056 (Domestic) and 404-537-3406 (International) until the end of day November 1, 2018, and an archived webcast will be available for 12 months on the Company's website.

About AppFolio, Inc.

AppFolio's mission is to revolutionize vertical industry businesses by providing great software and service. Our cloud-based solutions serve customers in the real estate and legal markets. Today our products include property management software (AppFolio Property Manager) and legal practice management software (MyCase). AppFolio was founded in 2006 and is headquartered in Santa Barbara, CA.  Learn more at www.appfolioinc.com.

Investor Relations Contact: ir@appfolio.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 the Company's future or assumed revenue and fully diluted weighted-average outstanding shares.

Forward-looking statements represent AppFolio'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 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. Some of the risks and uncertainties that may cause the Company's actual results to materially differ from those expressed or implied by these forward-looking statements are described in the section entitled “Risk Factors” in AppFolio's Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on February 26, 2018, 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.

Except as required by applicable law or the rules of the NASDAQ Global Market, AppFolio assumes 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,
2018
  December 31,
2017
Assets        
Current assets        
Cash and cash equivalents   $ 13,745     $ 16,109  
Investment securities—current   31,823     29,800  
Accounts receivable, net   5,489     3,387  
Prepaid expenses and other current assets   10,916     4,546  
Total current assets   61,973     53,842  
Investment securities—noncurrent   19,861     22,401  
Property and equipment, net   6,699     6,696  
Capitalized software, net   19,172     17,609  
Goodwill   15,548     6,737  
Intangible assets, net   6,179     1,725  
Other assets   6,757     1,238  
Total assets   $ 136,189     $ 110,248  
Liabilities and Stockholders’ Equity        
Current liabilities        
Accounts payable   $ 1,108     $ 610  
Accrued employee expenses   7,493     10,710  
Accrued expenses   7,715     4,289  
Deferred revenue   3,172     7,080  
Other current liabilities   1,296     1,223  
Total current liabilities   20,784     23,912  
Other liabilities   7,042     1,257  
Total liabilities   27,826     25,169  
Stockholders’ equity:        
Preferred stock, $0.0001 par value, 25,000 authorized and no shares issued and outstanding as of September 30, 2018 and December 31, 2017        
Class A common stock, $0.0001 par value, 250,000 shares authorized as of September 30, 2018 and December 31, 2017; 15,984 and 14,879 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively;   2     1  
Class B common stock, $0.0001 par value, 50,000 shares authorized as of September 30, 2018 and December 31, 2017; 18,250 and 19,102 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively;   2     3  
Additional paid-in capital   155,556     152,531  
Accumulated other comprehensive loss   (232 )   (209 )
Accumulated deficit   (46,965 )   (67,247 )
Total stockholders’ equity   108,363     85,079  
Total liabilities and stockholders’ equity   $ 136,189     $ 110,248  
 

 

 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
 
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2018   2017   2018   2017
Revenue $ 50,126     $ 37,903     $ 139,706     $ 105,906  
Costs and operating expenses:              
Cost of revenue (exclusive of depreciation and amortization) 19,282     14,053     53,624     40,747  
Sales and marketing 8,681     7,257     23,711     21,556  
Research and product development 6,440     4,367     17,523     11,998  
General and administrative 6,541     5,405     17,105     15,310  
Depreciation and amortization 3,705     3,237     10,784     9,347  
Total costs and operating expenses 44,649     34,319     122,747     98,958  
Income from operations 5,477     3,584     16,959     6,948  
Other income (expense), net 1     (5 )   (20 )   (93 )
Interest income, net 229     155     631     377  
Income before provision for income taxes 5,707     3,734     17,570     7,232  
Provision for income taxes 183     52     252     93  
Net income $ 5,524     $ 3,682     $ 17,318     $ 7,139  
               
Net income per common share:              
Basic 0.16     0.11     0.51     0.21  
Diluted 0.16     0.10     0.49     0.20  
Weighted average common shares outstanding:              
Basic 34,219     33,905     34,154     33,817  
Diluted 35,610     35,205     35,524     35,091  
 

 

 
Stock-Based Compensation Expense
(in thousands)
 
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2018   2017   2018   2017
Costs and operating expenses:              
Cost of revenue (exclusive of depreciation and amortization) $ 282     $ 189     $ 752     $ 527  
Sales and marketing 270     186     708     516  
Research and product development 218     173     730     471  
General and administrative 994     1,040     2,229     2,790  
Total stock-based compensation expense $ 1,764     $ 1,588     $ 4,419     $ 4,304  
 

 

 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
               
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2018   2017   2018   2017
Cash from operating activities              
Net income $ 5,524     $ 3,682     $ 17,318     $ 7,139  
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation and amortization 3,705     3,237     10,784     9,347  
Purchased investment premium, net of amortization 5     82     99     (22 )
Amortization of deferred financing costs 16     16     48     48  
Amortization of deferred costs 547         1,312      
(Income) loss on disposal of property and equipment (2 )   5     18     94  
Stock-based compensation 1,764     1,588     4,419     4,304  
Changes in operating assets and liabilities:              
Accounts receivable 703     813     (1,465 )   (908 )
Prepaid expenses and other current assets (4,655 )   (644 )   (5,214 )   (856 )
Other assets (3,176 )   (3 )   (5,003 )   (54 )
Accounts payable (362 )   688     477     369  
Accrued employee expenses (1,185 )   270     (3,225 )   846  
Accrued expenses 1,964     919     3,397     1,713  
Deferred revenue (958 )   (529 )   (4,247 )   (130 )
Other liabilities 5,657     (434 )   5,883     (334 )
Net cash provided by operating activities 9,547     9,690     24,601     21,556  
Cash from investing activities              
Purchases of property and equipment (1,160 )   (843 )   (1,740 )   (1,680 )
Additions to capitalized software (3,492 )   (2,814 )   (8,997 )   (8,085 )
Purchases of investment securities (7,952 )   (2,000 )   (28,784 )   (17,597 )
Sales of investment securities 696     15     701     15  
Maturities of investment securities 12,882     3,485     28,477     10,974  
Cash paid in business acquisition (14,441 )       (14,441 )    
Purchases of intangible assets             (1 )
Net cash used in investing activities (13,467 )   (2,157 )   (24,784 )   (16,374 )
Cash from financing activities              
Proceeds from stock option exercises 55     122     713     508  
Tax withholding for net share settlement (400 )   (263 )   (2,894 )   (1,608 )
Proceeds from issuance of debt 30     29     93     88  
Principal payments on debt (30 )   (29 )   (93 )   (88 )
Net cash used in financing activities (345 )   (141 )   (2,181 )   (1,100 )
Net (decrease) increase in cash and cash equivalents (4,265 )   7,392     (2,364 )   4,082  
Cash, cash equivalents and restricted cash              
Beginning of period 18,438     7,816     16,537     11,126  
End of period $ 14,173     $ 15,208     $ 14,173     $ 15,208  
 
 

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets to the total of the same such amounts shown above (in thousands):

  September 30,
  2018   2017
Cash and cash equivalents $ 13,745     $ 14,781  
Restricted cash included in other assets 428     427  
Total cash, cash equivalents and restricted cash $ 14,173     $ 15,208  

AppFolio, Inc.

Source: AppFolio, Inc.

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