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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 7, 2017

AppFolio, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)
001-37468
26-0359894
(Commission File Number)
(IRS Employer Identification Number)
50 Castilian Drive
Santa Barbara, CA 93117
(Address of principal executive offices)
Registrant’s telephone number, including area code: (805) 364-6093
N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company x
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x





Item 2.02. Results of Operations and Financial Condition.
On August 7, 2017, AppFolio, Inc. (the “Company”) issued a press release announcing its financial results for its second fiscal quarter ended June 30, 2017. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information contained in this Item 2.02, including the press release attached as Exhibit 99.1 hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that Section. Such information shall not be deemed to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as otherwise expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:

Exhibit Number
 
Description
99.1
 
Press release issued on August 7, 2017.









SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
AppFolio, Inc.
 
 
 
 
 
 
By: /s/ Ida Kane
 
 
Name: Ida Kane
 
 
Title: Chief Financial Officer
 









EXHIBIT INDEX

Exhibit
Number
 
Description
99.1
 
Press release issued on August 7, 2017.




Exhibit



Exhibit 99.1
https://cdn.kscope.io/44605255411aef25a3e57e89bee7e9f6-appfolioimagea27.jpg

News Release


AppFolio, Inc. Announces Second Quarter 2017 Financial Results

SANTA BARBARA, Calif., August 7, 2017 (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 June 30, 2017.

AppFolio's operating results for the second quarter 2017 are summarized in the tables accompanying this press release. The Company urges investors to review its Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the "SEC") on February 27, 2017, as well as its more detailed second quarter 2017 results set forth on Form 10-Q, which was filed with the SEC on August 7, 2017. Both documents, together with other key SEC filings, are accessible on the Investor Relations page of AppFolio's website, http://ir.appfolioinc.com. The limited information that follows in this press release is not adequate for making an informed investment decision.

Financial Outlook
Based on information available as of August 7, 2017, AppFolio's outlook for fiscal year 2017 follows:

•
Full year revenue is expected to be in the range of $138 million to $139 million.
•
Diluted weighted average shares are expected to be approximately 35 million for the full year.

Executive Leadership Transition 
In a separate press release issued today, the Company announced that Jason Randall will succeed Brian Donahoo as President and Chief Executive Officer, and as member of the Board of Directors of AppFolio following Mr. Donahoo's retirement, effective August 8, 2017. 

Conference Call Information
As previously announced, the Company will host a conference call today, August 7, 2017 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 844-239-5286 (Domestic), or 513-268-0783 (International). The conference ID is 55482832. A replay will be available at 855-859-2056 (Domestic) and 404-537-3406 (International) until the end of day August 8, 2017, and an archived webcast will be available for 12 months on the Company's website.

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 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, 2016, which we filed with the SEC on February 27, 2017, 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)

 
June 30,
2017
 
December 31,
2016
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
7,389

 
$
10,699

Investment securities—current
24,739

 
15,473

Accounts receivable, net
4,231

 
2,511

Prepaid expenses and other current assets
3,748

 
3,537

Total current assets
40,107

 
32,220

Investment securities—noncurrent
25,636

 
26,688

Property and equipment, net
6,674

 
7,077

Capitalized software, net
16,787

 
15,539

Goodwill
6,737

 
6,737

Intangible assets, net
2,405

 
3,105

Other assets
1,237

 
1,217

Total assets
$
99,583

 
$
92,583

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
398

 
$
937

Accrued employee expenses
8,053

 
7,550

Accrued expenses
5,009

 
4,044

Deferred revenue
8,037

 
7,638

Other current liabilities
1,547

 
1,192

Total current liabilities
23,044

 
21,361

Other liabilities
1,374

 
1,540

Total liabilities
24,418

 
22,901

Stockholders’ equity:
 
 
 
Preferred stock, $0.0001 par value, 25,000 authorized and no shares issued and outstanding as of June 30, 2017 and December 31, 2016
—

 
—

Class A common stock, $0.0001 par value, 250,000 shares authorized as of June 30, 2017 and December 31, 2016; 13,319 and 11,691 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively;
1

 
1

Class B common stock, $0.0001 par value, 50,000 shares authorized as of June 30, 2017 and December 31, 2016; 20,590 and 22,028 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively;
3

 
3

Additional paid-in capital
148,716

 
146,692

Accumulated other comprehensive loss
(49
)
 
(51
)
Accumulated deficit
(73,506
)
 
(76,963
)
Total stockholders’ equity
75,165

 
69,682

Total liabilities and stockholders’ equity
$
99,583

 
$
92,583






CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)


 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Revenue
$
35,877

 
$
26,203

 
$
68,003

 
$
49,414

Costs and operating expenses:
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization)
13,701

 
11,212

 
26,694

 
21,742

Sales and marketing
7,192

 
7,567

 
14,299

 
15,118

Research and product development
4,002

 
3,024

 
7,631

 
6,067

General and administrative
5,101

 
4,389

 
9,905

 
7,938

Depreciation and amortization
3,114

 
2,359

 
6,110

 
4,476

Total costs and operating expenses
33,110

 
28,551

 
64,639

 
55,341

Income (loss) from operations
2,767

 
(2,348
)
 
3,364

 
(5,927
)
Other (expense) income, net
(60
)
 
2

 
(88
)
 
(22
)
Interest income, net
120

 
95

 
222

 
119

Income (loss) before provision for income taxes
2,827

 
(2,251
)
 
3,498

 
(5,830
)
Provision for income taxes
30

 
13

 
41

 
37

Net income (loss)
$
2,797

 
$
(2,264
)
 
$
3,457

 
$
(5,867
)
 
 
 
 
 
 
 
 
Net income (loss) per common share:
 
 
 
 
 
 
 
Basic
0.08

 
(0.07
)
 
0.10

 
(0.18
)
Diluted
0.08

 
(0.07
)
 
0.10

 
(0.18
)
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
33,838

 
33,523

 
33,772

 
33,493

Diluted
34,928

 
33,523

 
34,879

 
33,493



Stock-Based Compensation Expense
(in thousands)
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2017
 
2016
 
2017
 
2016
Costs and operating expenses:
 
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization)
 
$
209

 
$
138

 
$
338

 
$
183

Sales and marketing
 
$
210

 
$
130

 
$
330

 
$
172

Research and product development
 
$
182

 
$
104

 
$
298

 
$
155

General and administrative
 
$
1,018

 
$
720

 
$
1,750

 
$
1,045

Total stock-based compensation expense
$
1,619

 
$
1,092

 
$
2,716

 
$
1,555






CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Cash from operating activities
 
 
 
 
 
 
 
Net income (loss)
$
2,797

 
$
(2,264
)
 
$
3,457

 
$
(5,867
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
3,114

 
2,359

 
6,110

 
4,476

Purchased investment premium, net of amortization
(90
)
 
(50
)
 
(104
)
 
95

Amortization of deferred financing costs
16

 
16

 
32

 
32

Loss on disposal of property and equipment
61

 
3

 
89

 
32

Stock-based compensation
1,619

 
1,092

 
2,716

 
1,555

Lease abandonment
—

 
(31
)
 
—

 
60

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
(418
)
 
(402
)
 
(1,721
)
 
(996
)
Prepaid expenses and other current assets
(614
)
 
634

 
(212
)
 
(647
)
Other assets
(56
)
 
18

 
(51
)
 
(92
)
Accounts payable
(300
)
 
82

 
(319
)
 
(571
)
Accrued employee expenses
2,238

 
812

 
576

 
906

Accrued expenses
321

 
(236
)
 
794

 
751

Deferred revenue
(660
)
 
443

 
399

 
1,148

Other liabilities
31

 
637

 
100

 
1,495

Net cash provided by operating activities
8,059

 
3,113

 
11,866

 
2,377

Cash from investing activities
 
 
 
 
 
 
 
Purchases of property and equipment
(445
)
 
(1,270
)
 
(837
)
 
(3,161
)
Additions to capitalized software
(2,280
)
 
(2,980
)
 
(5,271
)
 
(5,159
)
Purchases of investment securities
(9,060
)
 
(7,300
)
 
(15,597
)
 
(16,685
)
Sales of investment securities
—

 
3,512

 
—

 
10,017

Maturities of investment securities
3,044

 
4,557

 
7,489

 
11,387

Purchases of intangible assets
(1
)
 
—

 
(1
)
 
—

Net cash used in investing activities
(8,742
)
 
(3,481
)
 
(14,217
)
 
(3,601
)
Cash from financing activities
 
 
 
 
 
 
 
Proceeds from stock option exercises
241

 
73

 
386

 
153

Tax withholding for net share settlement
(138
)
 
 
 
(1,345
)
 
—

Principal payments under capital lease obligations
—

 
(8
)
 
—

 
(15
)
Proceeds from issuance of debt
30

 
28

 
59

 
57

Principal payments on debt
(30
)
 
(30
)
 
(59
)
 
(71
)
Net cash provided by (used in) financing activities
103

 
63

 
(959
)
 
124

Net decrease in cash and cash equivalents
(580
)
 
(305
)
 
(3,310
)
 
(1,100
)
Cash and cash equivalents
 
 
 
 
 
 
 
Beginning of period
7,969

 
11,268

 
10,699

 
12,063

End of period
7,389

 
10,963

 
7,389

 
10,963