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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): February 26, 2018
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 February 26, 2018, AppFolio, Inc. (the “Company”) issued a press release announcing its financial results for its fourth fiscal quarter and year ended December 31, 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 February 26, 2018.









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
 




Exhibit



Exhibit 99.1
https://cdn.kscope.io/ffd129dce32807ce120832ba634ad5fa-appfolioimagea36.jpg

News Release


AppFolio, Inc. Announces Fourth Quarter and
Fiscal Year 2017 Financial Results

SANTA BARBARA, Calif., February 26, 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 fourth quarter and fiscal year ended December 31, 2017.

AppFolio's operating results for the fourth quarter and fiscal year 2017 are summarized in the tables accompanying this press release. The Company nevertheless urges investors to read its full Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the Securities and Exchange Commission (the "SEC") on February 26, 2018, and is available on AppFolio's website at http://ir.appfolioinc.com. The limited information that follows is not adequate for making an informed investment judgment.

Financial Outlook

Based on information available as of February 26, 2018, the Company's current outlook for fiscal year 2018 follows:
•
Full year revenue is expected to be in the range of $179 million to $182 million.

•
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, February 26, 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 1675569. A replay of the call will be available at 855-859-2056 (Domestic) and 404-537-3406 (International) until the end of day March 1, 2018, and an archived webcast will be available for twelve 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 the Company's future or assumed revenues and weighted-average outstanding shares, as well as its future growth and success.

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)

 
December 31,
 
2017
 
2016
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
16,109

 
$
10,699

Investment securities—current
29,800

 
15,473

Accounts receivable, net
3,387

 
2,511

Prepaid expenses and other current assets
4,546

 
3,537

Total current assets
53,842

 
32,220

Investment securities—noncurrent
22,401

 
26,688

Property and equipment, net
6,696

 
7,077

Capitalized software, net
17,609

 
15,539

Goodwill
6,737

 
6,737

Intangible assets, net
1,725

 
3,105

Other assets
1,238

 
1,217

Total assets
$
110,248

 
$
92,583

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
610

 
$
937

Accrued employee expenses
10,710

 
7,550

Accrued expenses
4,289

 
4,044

Deferred revenue
7,080

 
7,638

Other current liabilities
1,223

 
1,192

Total current liabilities
23,912

 
21,361

Other liabilities
1,257

 
1,540

Total liabilities
25,169

 
22,901

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

 
—

Class A common stock, $0.0001 par value, 250,000 shares authorized as of December 31, 2017 and 2016; 14,879 and 11,691 shares issued and outstanding as of December 31, 2017 and 2016, respectively
1

 
1

Class B common stock, $0.0001 par value, 50,000 shares authorized as of December 31, 2017 and 2016; 19,102 and 22,028 shares issued and outstanding as of December 31, 2017 and 2016, respectively
3

 
3

Additional paid-in capital
152,531

 
146,692

Accumulated other comprehensive loss
(209
)
 
(51
)
Accumulated deficit
(67,247
)
 
(76,963
)
Total stockholders’ equity
85,079

 
69,682

Total liabilities and stockholders’ equity
$
110,248

 
$
92,583






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


 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Revenue
$
37,897

 
$
28,010

 
$
143,803

 
$
105,586

Costs and operating expenses:
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization)
14,536

 
11,243

 
55,283

 
44,630

Sales and marketing
7,153

 
6,730

 
28,709

 
28,827

Research and product development
4,580

 
3,107

 
16,578

 
12,638

General and administrative
5,889

 
5,399

 
21,199

 
17,979

Depreciation and amortization
3,352

 
2,823

 
12,699

 
9,935

Total costs and operating expenses
35,510

 
29,302

 
134,468

 
114,009

Income (loss) from operations
2,387

 
(1,292
)
 
9,335

 
(8,423
)
Other expense, net
(3
)
 
(3
)
 
(96
)
 
(37
)
Interest income, net
158

 
25

 
535

 
246

Income (loss) before provision for income taxes
2,542

 
(1,270
)
 
9,774

 
(8,214
)
Income tax (benefit) provision
(35
)
 
19

 
58

 
67

Net income (loss)
$
2,577

 
$
(1,289
)
 
$
9,716

 
$
(8,281
)
Net income (loss) per common share:
 
 
 
 
 
 
 
    Basic
0.08

 
(0.04
)
 
0.29

 
(0.25
)
    Diluted
0.07

 
(0.04
)
 
0.28

 
(0.25
)
Weighted average common shares outstanding:
 
 
 
 
 
 
 
    Basic
33,944

 
33,654

 
33,849

 
33,561

    Diluted
35,310

 
33,654

 
35,151

 
33,561




Stock-Based Compensation Expense
(in thousands)
 
Three Months Ended
December 31,
 
Twelve Months Ended December 31,
 
2017
 
2016
 
2017
 
2016
Costs and operating expenses:
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization)
$
198

 
$
150

 
$
725

 
$
471

Sales and marketing
207

 
146

 
723

 
442

Research and product development
186

 
118

 
657

 
382

General and administrative
1,201

 
1,043

 
3,991

 
3,006

Total stock-based compensation expense
$
1,792

 
$
1,457

 
$
6,096

 
$
4,301








CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
2017
 
2016
 
2017
 
2016
Cash from operating activities
 
 
 
 
 
 
 
Net income (loss)
$
2,577

 
$
(1,289
)
 
$
9,716

 
$
(8,281
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
3,352

 
2,823

 
12,699

 
9,935

Purchased investment premium, net of amortization
(17
)
 
60

 
(39
)
 
245

Amortization of deferred financing costs
15

 
15

 
63

 
63

Loss on disposal of property, equipment and intangibles
3

 
8

 
97

 
41

Stock-based compensation
1,792

 
1,457

 
6,096

 
4,301

Lease abandonment
—

 
—

 
—

 
161

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
32

 
196

 
(876
)
 
(463
)
Prepaid expenses and other current assets
(153
)
 
427

 
(1,009
)
 
(377
)
Other assets
(30
)
 
60

 
(84
)
 
(103
)
Accounts payable
(469
)
 
205

 
(100
)
 
(904
)
Accrued employee expenses
2,397

 
2,367

 
3,243

 
2,223

Accrued expenses
(1,442
)
 
(206
)
 
271

 
1,148

Deferred revenue
(428
)
 
1,011

 
(558
)
 
2,685

Other liabilities
186

 
(357
)
 
(148
)
 
826

Net cash provided by operating activities
7,815

 
6,777

 
29,371

 
11,500

Cash from investing activities
 
 
 
 
 
 
 
Purchases of property and equipment
(533
)
 
(682
)
 
(2,213
)
 
(4,242
)
Additions to capitalized software
(2,370
)
 
(2,612
)
 
(10,455
)
 
(11,166
)
Purchases of investment securities
(9,051
)
 
(7,217
)
 
(26,648
)
 
(31,551
)
Sales of investment securities
—

 
2,543

 
15

 
12,559

Maturities of investment securities
5,500

 
4,225

 
16,474

 
21,337

Purchases of intangible assets
—

 
—

 
(1
)
 
(2
)
Net cash used in investing activities
(6,454
)
 
(3,743
)
 
(22,828
)
 
(13,065
)
Cash from financing activities
 
 
 
 
 
 
 
Proceeds from stock option exercises
155

 
92

 
663

 
352

Tax withholding for net share settlement
(188
)
 
(26
)
 
(1,796
)
 
(111
)
Principal payments under capital lease obligations
—

 
(5
)
 
—

 
(29
)
Proceeds from issuance of debt
30

 
30

 
118

 
117

Principal payments on debt
(30
)
 
(29
)
 
(118
)
 
(128
)
Net cash (used in) provided by financing activities
(33
)
 
62

 
(1,133
)
 
201

Net increase (decrease) in cash and cash equivalents
1,328

 
3,096

 
5,410

 
(1,364
)
Cash and cash equivalents
 
 
 
 
 
 
 
Beginning of period
14,781

 
7,603

 
10,699

 
12,063

End of period
$
16,109

 
$
10,699

 
$
16,109

 
$
10,699