AppFolio, Inc. Announces Third Quarter 2020 Financial Results
SANTA BARBARA, Calif., Nov. 09, 2020 (GLOBE NEWSWIRE) -- AppFolio, Inc. (NASDAQ: APPF) ("AppFolio" or the "Company"), a leading provider of cloud-based business software solutions, services, and data analytics to the real estate vertical today announced its financial results for the third quarter ended September 30, 2020.
AppFolio's operating results for the third quarter of 2020 are summarized in the tables accompanying this press release. The Company nevertheless urges investors to read its Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the "SEC") on March 2, 2020, as well as its more detailed third quarter 2020 results that will be included in the Company's Quarterly Report on Form 10-Q, which will be filed with the SEC today. 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.
Divestiture of MyCase
On September 30, 2020, the Company completed its previously-announced sale of 100% of the issued and outstanding equity interests of MyCase, Inc. ("MyCase"), a California corporation and former wholly owned subsidiary of the Company that provides legal practice and case management software solutions to law firms. The Company sold MyCase to Mockingbird AcquisitionCo Inc., a Delaware corporation (“Buyer”) affiliated with funds advised by Apax Partners LLP, for $193.0 million pursuant to a Stock Purchase Agreement, dated September 7, 2020 (the “Purchase Agreement”), by and among Buyer, the Company and MyCase (the “MyCase Transaction”). In connection with the closing of the MyCase Transaction, and in accordance with the terms of the Purchase Agreement, the Company and MyCase entered into certain ancillary agreements, including relating to certain post-closing transition services to be provided by the Company to MyCase.
Financial Outlook
While we are encouraged by the results to date, we are not providing updated full year revenue guidance for fiscal year 2020.
Diluted weighted average shares 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, November 9, 2020, 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.
To listen to the live call, participants may register in advance at http://www.directeventreg.com/registration/event/6087563. After registering, a confirmation will be sent through email, including dial-in details and unique conference call codes for entry. Registration will be open through the start of the live call. To ensure the connection of all participants, please register in advance, a minimum of 10 minutes before the start of the call. A replay of the conference call will be available at (800) 585-8367 or (416) 621-4642 for international callers. Please use conference ID: 6087563. A live and recorded webcast of the conference call will be available at http://ir.appfolioinc.com.
About AppFolio, Inc.
AppFolio offers industry-specific, cloud-based business software solutions, services, and data analytics to the real estate vertical. Today our products include AppFolio Property Manager, AppFolio Property Manager PLUS and AppFolio Investment Management. 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 business opportunities, the impact of the Company's strategic actions and initiatives, the impact of the COVID-19 pandemic on the Company's business, and the timing of providing updated financial guidance.
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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, which will be filed with the SEC today, 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, 2020 |
December 31, 2019 |
|||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 144,028 | $ | 15,813 | ||||
| Investment securities—current | 32,689 | 22,876 | ||||||
| Accounts receivable, net | 9,416 | 7,562 | ||||||
| Prepaid expenses and other current assets | 15,720 | 15,540 | ||||||
| Total current assets | 201,853 | 61,791 | ||||||
| Investment securities—noncurrent | 5,135 | 12,089 | ||||||
| Property and equipment, net | 26,565 | 14,744 | ||||||
| Operating lease right-of-use assets | 24,645 | 27,803 | ||||||
| Capitalized software, net | 33,543 | 30,023 | ||||||
| Goodwill | 56,147 | 58,425 | ||||||
| Intangible assets, net | 17,544 | 21,377 | ||||||
| Deferred taxes | 14,826 | 27,574 | ||||||
| Other long-term assets | 6,014 | 6,276 | ||||||
| Total assets | $ | 386,272 | $ | 260,102 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 3,591 | $ | 1,927 | ||||
| Accrued employee expenses | 18,379 | 17,758 | ||||||
| Accrued expenses | 13,546 | 10,833 | ||||||
| Deferred revenue | 2,457 | 4,586 | ||||||
| Income tax payable | 13,571 | — | ||||||
| Other current liabilities | 4,607 | 11,139 | ||||||
| Term loan, net—current portion | — | 1,208 | ||||||
| Total current liabilities | 56,151 | 47,451 | ||||||
| Operating lease liabilities | 32,755 | 33,312 | ||||||
| Term loan, net | — | 47,375 | ||||||
| Deferred taxes | 10,130 | — | ||||||
| Other long-term liabilities | 2,720 | 14 | ||||||
| Total liabilities | 101,756 | 128,152 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $0.0001 par value, 25,000 shares authorized and no shares issued and outstanding as of September 30, 2020 and December 31, 2019 | — | — | ||||||
| Class A common stock, $0.0001 par value, 250,000 shares authorized as of September 30, 2020 and December 31, 2019; 18,450 and 16,923 shares issued as of September 30, 2020 and December 31, 2019, respectively; 18,031 and 16,552 shares outstanding as of September 30, 2020 and December 31, 2019, respectively | 2 | 2 | ||||||
| Class B common stock, $0.0001 par value, 50,000 shares authorized as of September 30, 2020 and December 31, 2019; 16,282 and 17,594 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | 2 | 2 | ||||||
| Additional paid-in capital | 159,296 | 161,509 | ||||||
| Accumulated other comprehensive income | 90 | 33 | ||||||
| Treasury stock, at cost, 419 and 371 shares of Class A common stock as of September 30, 2020 and December 31, 2019, respectively | (25,756 | ) | (21,562 | ) | ||||
| Retained earnings (accumulated deficit) | 150,882 | (8,034 | ) | |||||
| Total stockholders’ equity | 284,516 | 131,950 | ||||||
| Total liabilities and stockholders’ equity | $ | 386,272 | $ | 260,102 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Revenue | $ | 84,086 | $ | 67,935 | $ | 237,624 | $ | 188,650 | |||||||
| Costs and operating expenses: | |||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization) | 32,752 | 25,930 | 89,124 | 75,239 | |||||||||||
| Sales and marketing | 14,894 | 12,636 | 43,117 | 37,087 | |||||||||||
| Research and product development | 13,454 | 10,602 | 36,794 | 28,422 | |||||||||||
| General and administrative | 12,946 | 8,955 | 36,303 | 25,361 | |||||||||||
| Depreciation and amortization | 6,680 | 5,678 | 19,751 | 16,169 | |||||||||||
| Total costs and operating expenses | 80,726 | 63,801 | 225,089 | 182,278 | |||||||||||
| Income from operations | 3,360 | 4,134 | 12,535 | 6,372 | |||||||||||
| Other income (expense), net | 187,747 | (11 | ) | 187,759 | (68 | ) | |||||||||
| Interest expense, net | (853 | ) | (400 | ) | (1,909 | ) | (1,324 | ) | |||||||
| Income before provision for (benefit from) income taxes | 190,254 | 3,723 | 198,385 | 4,980 | |||||||||||
| Provision for (benefit from) income taxes | 52,578 | (1,255 | ) | 39,469 | (26,874 | ) | |||||||||
| Net income | $ | 137,676 | $ | 4,978 | $ | 158,916 | $ | 31,854 | |||||||
| Net income per common share: | |||||||||||||||
| Basic | $ | 4.01 | $ | 0.15 | $ | 4.64 | $ | 0.94 | |||||||
| Diluted | $ | 3.86 | $ | 0.14 | $ | 4.46 | $ | 0.90 | |||||||
| Weighted average common shares outstanding: | |||||||||||||||
| Basic | 34,296 | 34,047 | 34,241 | 33,991 | |||||||||||
| Diluted | 35,665 | 35,421 | 35,662 | 35,406 | |||||||||||
Stock-Based Compensation Expense
(in thousands)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Costs and operating expenses: | |||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization) | $ | 452 | $ | 334 | $ | 1,098 | $ | 1,073 | |||||||
| Sales and marketing | 367 | 354 | 1,069 | 904 | |||||||||||
| Research and product development | 474 | 353 | 1,348 | 1,024 | |||||||||||
| General and administrative | 1,803 | 1,151 | 3,293 | 2,430 | |||||||||||
| Total stock-based compensation expense | $ | 3,096 | $ | 2,192 | $ | 6,808 | $ | 5,431 | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) |
|||||||||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Cash from operating activities | |||||||||||||||
| Net income | $ | 137,676 | $ | 4,978 | $ | 158,916 | $ | 31,854 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
| Depreciation and amortization | 6,680 | 5,678 | 19,751 | 16,169 | |||||||||||
| Amortization of operating lease right-of-use assets | 902 | 1,088 | 2,973 | 3,016 | |||||||||||
| Deferred income taxes | 36,015 | (1,389 | ) | 22,878 | (27,032 | ) | |||||||||
| Stock-based compensation | 3,096 | 2,192 | 6,808 | 5,431 | |||||||||||
| Gain on sale of business | (187,636 | ) | — | (187,636 | ) | — | |||||||||
| Other | 200 | 28 | 170 | 136 | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||
| Accounts receivable | 2,907 | (83 | ) | (2,229 | ) | (2,778 | ) | ||||||||
| Prepaid expenses and other current assets | (567 | ) | 796 | (859 | ) | (4,403 | ) | ||||||||
| Other assets | (213 | ) | (125 | ) | (320 | ) | 1,129 | ||||||||
| Accounts payable | 502 | 82 | 695 | 270 | |||||||||||
| Accrued employee expenses | 1,202 | (194 | ) | 1,919 | 486 | ||||||||||
| Accrued expenses | 1,397 | (1,398 | ) | 5,931 | (14 | ) | |||||||||
| Deferred revenue | 283 | 458 | 815 | 1,039 | |||||||||||
| Operating lease liabilities | (1,043 | ) | (1,127 | ) | (1,135 | ) | (2,886 | ) | |||||||
| Other liabilities | 16,439 | 616 | 16,539 | 996 | |||||||||||
| Net cash provided by operating activities | 17,840 | 11,600 | 45,216 | 23,413 | |||||||||||
| Cash from investing activities | |||||||||||||||
| Purchases of available-for-sale investments | (16,490 | ) | (10,012 | ) | (29,879 | ) | (10,690 | ) | |||||||
| Proceeds from sales of available-for-sale investments | — | 1,000 | 13,942 | 2,750 | |||||||||||
| Proceeds from maturities of available-for-sale investments | 5,550 | 7,000 | 13,300 | 11,000 | |||||||||||
| Purchases of property, equipment and intangible assets | (2,245 | ) | (1,690 | ) | (16,551 | ) | (4,115 | ) | |||||||
| Additions to capitalized software | (6,988 | ) | (6,249 | ) | (19,697 | ) | (15,669 | ) | |||||||
| Cash paid in business acquisition, net of cash acquired | — | — | — | (54,004 | ) | ||||||||||
| Proceeds from sale of business, net of cash divested | 191,427 | — | 191,427 | — | |||||||||||
| Net cash provided by (used in) investing activities | 171,254 | (9,951 | ) | 152,542 | (70,728 | ) | |||||||||
| Cash from financing activities | |||||||||||||||
| Proceeds from stock option exercises | 73 | 60 | 402 | 259 | |||||||||||
| Tax withholding for net share settlement | (1,269 | ) | (790 | ) | (10,959 | ) | (5,541 | ) | |||||||
| Payment of contingent consideration | — | — | (5,977 | ) | — | ||||||||||
| Proceeds from issuance of debt | 562 | 528 | 50,752 | 1,697 | |||||||||||
| Principal payments on debt | (97,747 | ) | (840 | ) | (99,565 | ) | (2,634 | ) | |||||||
| Payment of debt issuance costs | — | — | — | (420 | ) | ||||||||||
| Purchase of treasury stock | — | — | (4,194 | ) | — | ||||||||||
| Net cash used in financing activities | (98,381 | ) | (1,042 | ) | (69,541 | ) | (6,639 | ) | |||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | 90,713 | 607 | 128,217 | (53,954 | ) | ||||||||||
| Cash, cash equivalents and restricted cash | |||||||||||||||
| Beginning of period | 53,751 | 19,945 | 16,247 | 74,506 | |||||||||||
| End of period | $ | 144,464 | $ | 20,552 | $ | 144,464 | $ | 20,552 | |||||||
Source: AppFolio, Inc.