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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): November 6, 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 November 6, 2017, AppFolio, Inc. (the “Company”) issued a press release announcing its financial results for its third fiscal quarter ended September 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
 









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 November 6, 2017.




Exhibit



Exhibit 99.1
https://cdn.kscope.io/d7f3dd546687b06292c3452d41f455a7-appfolioimagea27.jpg

News Release


AppFolio, Inc. Announces Third Quarter 2017 Financial Results

SANTA BARBARA, Calif., November 6, 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 September 30, 2017.

AppFolio's operating results for the third 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 third quarter 2017 results set forth on Form 10-Q, which was filed with the SEC on November 6, 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 November 6, 2017, AppFolio's outlook for fiscal year 2017 follows:

•
Full year revenue is expected to be in the range of $140 million to $141 million.
•
Diluted weighted average shares are expected to be approximately 35 million for the full year.


Conference Call Information
As previously announced, the Company will host a conference call today, November 6, 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 844-579-6824 (Domestic), or 734-385-2616 (International). The conference ID is 97178163. A replay will be available at 855-859-2056 (Domestic) and 404-537-3406 (International) until the end of day November 8, 2017, and an archived webcast will be available for 12 months on the Company's website.

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.

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)

 
September 30,
2017
 
December 31,
2016
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
14,781

 
$
10,699

Investment securities—current
28,396

 
15,473

Accounts receivable, net
3,419

 
2,511

Prepaid expenses and other current assets
4,393

 
3,537

Total current assets
50,989

 
32,220

Investment securities—noncurrent
20,423

 
26,688

Property and equipment, net
7,005

 
7,077

Capitalized software, net
17,320

 
15,539

Goodwill
6,737

 
6,737

Intangible assets, net
2,054

 
3,105

Other assets
1,219

 
1,217

Total assets
$
105,747

 
$
92,583

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
1,164

 
$
937

Accrued employee expenses
8,169

 
7,550

Accrued expenses
5,908

 
4,044

Deferred revenue
7,508

 
7,638

Other current liabilities
1,083

 
1,192

Total current liabilities
23,832

 
21,361

Other liabilities
1,238

 
1,540

Total liabilities
25,070

 
22,901

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

 
—

Class A common stock, $0.0001 par value, 250,000 shares authorized as of September 30, 2017 and December 31, 2016; 14,494 and 11,691 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively;
1

 
1

Class B common stock, $0.0001 par value, 50,000 shares authorized as of September 30, 2017 and December 31, 2016; 19,448 and 22,028 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively;
3

 
3

Additional paid-in capital
150,520

 
146,692

Accumulated other comprehensive loss
(23
)
 
(51
)
Accumulated deficit
(69,824
)
 
(76,963
)
Total stockholders’ equity
80,677

 
69,682

Total liabilities and stockholders’ equity
$
105,747

 
$
92,583






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


 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2017
 
2016
 
2017
 
2016
Revenue
$
37,903

 
$
28,162

 
$
105,906

 
$
77,576

Costs and operating expenses:
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization)
14,053

 
11,645

 
40,747

 
33,387

Sales and marketing
7,257

 
6,979

 
21,556

 
22,097

Research and product development
4,367

 
3,464

 
11,998

 
9,531

General and administrative
5,405

 
4,642

 
15,310

 
12,580

Depreciation and amortization
3,237

 
2,636

 
9,347

 
7,112

Total costs and operating expenses
34,319

 
29,366

 
98,958

 
84,707

Income (loss) from operations
3,584

 
(1,204
)
 
6,948

 
(7,131
)
Other expense, net
(5
)
 
(12
)
 
(93
)
 
(34
)
Interest income, net
155

 
102

 
377

 
221

Income (loss) before provision for income taxes
3,734

 
(1,114
)
 
7,232

 
(6,944
)
Provision for income taxes
52

 
11

 
93

 
48

Net income (loss)
$
3,682

 
$
(1,125
)
 
$
7,139

 
$
(6,992
)
 
 
 
 
 
 
 
 
Net income (loss) per common share:
 
 
 
 
 
 
 
Basic
0.11

 
(0.03
)
 
0.21

 
(0.21
)
Diluted
0.10

 
(0.03
)
 
0.20

 
(0.21
)
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
33,905

 
33,600

 
33,817

 
33,529

Diluted
35,205

 
33,600

 
35,091

 
33,529



Stock-Based Compensation Expense
(in thousands)
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
Costs and operating expenses:
 
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization)
 
$
189

 
$
138

 
$
527

 
$
321

Sales and marketing
 
186

 
124

 
516

 
296

Research and product development
 
173

 
109

 
471

 
264

General and administrative
 
1,040

 
918

 
2,790

 
1,963

Total stock-based compensation expense
$
1,588

 
$
1,289

 
$
4,304

 
$
2,844






CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2017
 
2016
 
2017
 
2016
Cash from operating activities
 
 
 
 
 
 
 
Net income (loss)
$
3,682

 
$
(1,125
)
 
$
7,139

 
$
(6,992
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
3,237

 
2,636

 
9,347

 
7,112

Purchased investment premium, net of amortization
82

 
90

 
(22
)
 
185

Amortization of deferred financing costs
16

 
16

 
48

 
48

Loss on disposal of property and equipment
5

 
1

 
94

 
33

Stock-based compensation
1,588

 
1,289

 
4,304

 
2,844

Lease abandonment
—

 
101

 
—

 
161

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
813

 
337

 
(908
)
 
(659
)
Prepaid expenses and other current assets
(644
)
 
(157
)
 
(856
)
 
(804
)
Other assets
(3
)
 
(71
)
 
(54
)
 
(163
)
Accounts payable
688

 
(538
)
 
369

 
(1,109
)
Accrued employee expenses
270

 
(1,050
)
 
846

 
(144
)
Accrued expenses
919

 
603

 
1,713

 
1,354

Deferred revenue
(529
)
 
526

 
(130
)
 
1,674

Other liabilities
(434
)
 
(312
)
 
(334
)
 
1,183

Net cash provided by operating activities
9,690

 
2,346

 
21,556

 
4,723

Cash from investing activities
 
 
 
 
 
 
 
Purchases of property and equipment
(843
)
 
(399
)
 
(1,680
)
 
(3,560
)
Additions to capitalized software
(2,814
)
 
(3,395
)
 
(8,085
)
 
(8,554
)
Purchases of investment securities
(2,000
)
 
(7,649
)
 
(17,597
)
 
(24,334
)
Sales of investment securities
15

 
—

 
15

 
10,016

Maturities of investment securities
3,485

 
5,724

 
10,974

 
17,112

Purchases of intangible assets
—

 
(2
)
 
(1
)
 
(2
)
Net cash used in investing activities
(2,157
)
 
(5,721
)
 
(16,374
)
 
(9,322
)
Cash from financing activities
 
 
 
 
 
 
 
Proceeds from stock option exercises
122

 
107

 
508

 
260

Tax withholding for net share settlement
(263
)
 
(85
)
 
(1,608
)
 
(85
)
Principal payments under capital lease obligations
—

 
(9
)
 
—

 
(24
)
Proceeds from issuance of debt
29

 
30

 
88

 
87

Principal payments on debt
(29
)
 
(28
)
 
(88
)
 
(99
)
Net cash provided by (used in) financing activities
(141
)
 
15

 
(1,100
)
 
139

Net increase (decrease) in cash and cash equivalents
7,392

 
(3,360
)
 
4,082

 
(4,460
)
Cash and cash equivalents
 
 
 
 
 
 
 
Beginning of period
7,389

 
10,963

 
10,699

 
12,063

End of period
$
14,781

 
$
7,603

 
$
14,781

 
$
7,603