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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): July 30, 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 July 30, 2018, AppFolio, Inc. (the “Company”) issued a press release announcing its financial results for its second fiscal quarter ended June 30, 2018. 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 July 30, 2018.




Exhibit



Exhibit 99.1
https://cdn.kscope.io/6a6cf414b65e0f92574815f6a9924e53-appfolioimagea43.jpg

News Release


AppFolio, Inc. Announces Second Quarter 2018 Financial Results

SANTA BARBARA, Calif., July 30, 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 June 30, 2018 and has updated its financial guidance for fiscal year 2018.

AppFolio's operating results for the second quarter 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 second 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 July 30, 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 July 30, 2018, AppFolio has updated its financial guidance for fiscal year 2018 as follows:

•
Full year revenue is expected to be in the range of $183 million to $185 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, July 30, 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 August 2, 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 over 20,000 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 revenues and 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)

 
June 30,
2018
 
December 31,
2017
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
18,010

 
$
16,109

Investment securities—current
34,710

 
29,800

Accounts receivable, net
5,554

 
3,387

Prepaid expenses and other current assets
6,253

 
4,546

Total current assets
64,527

 
53,842

Investment securities—noncurrent
22,550

 
22,401

Property and equipment, net
6,528

 
6,696

Capitalized software, net
18,392

 
17,609

Goodwill
6,737

 
6,737

Intangible assets, net
1,140

 
1,725

Other assets
4,084

 
1,238

Total assets
$
123,958

 
$
110,248

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
1,840

 
$
610

Accrued employee expenses
8,772

 
10,710

Accrued expenses
5,759

 
4,289

Deferred revenue
3,791

 
7,080

Other current liabilities
1,751

 
1,223

Total current liabilities
21,913

 
23,912

Other liabilities
1,067

 
1,257

Total liabilities
22,980

 
25,169

Stockholders’ equity:
 
 
 
Preferred stock, $0.0001 par value, 25,000 authorized and no shares issued and outstanding as of June 30, 2018 and December 31, 2017
—

 
—

Class A common stock, $0.0001 par value, 250,000 shares authorized as of June 30, 2018 and December 31, 2017; 15,638 and 14,879 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively;
2

 
1

Class B common stock, $0.0001 par value, 50,000 shares authorized as of June 30, 2018 and December 31, 2017; 18,577 and 19,102 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively;
2

 
3

Additional paid-in capital
153,752

 
152,531

Accumulated other comprehensive loss
(289
)
 
(209
)
Accumulated deficit
(52,489
)
 
(67,247
)
Total stockholders’ equity
100,978

 
85,079

Total liabilities and stockholders’ equity
$
123,958

 
$
110,248






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


 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Revenue
$
47,240

 
$
35,877

 
$
89,580

 
$
68,003

Costs and operating expenses:
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization)
17,729

 
13,701

 
34,342

 
26,694

Sales and marketing
7,625

 
7,192

 
15,030

 
14,299

Research and product development
5,750

 
4,002

 
11,083

 
7,631

General and administrative
5,248

 
5,101

 
10,564

 
9,905

Depreciation and amortization
3,579

 
3,114

 
7,079

 
6,110

Total costs and operating expenses
39,931

 
33,110

 
78,098

 
64,639

Income from operations
7,309

 
2,767

 
11,482

 
3,364

Other expense, net
(18
)
 
(60
)
 
(21
)
 
(88
)
Interest income, net
226

 
120

 
402

 
222

Income before provision for income taxes
7,517

 
2,827

 
11,863

 
3,498

Provision for income taxes
43

 
30

 
69

 
41

Net income
$
7,474

 
$
2,797

 
$
11,794

 
$
3,457

 
 
 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
 
 
Basic
0.22

 
0.08

 
0.35

 
0.10

Diluted
0.21

 
0.08

 
0.33

 
0.10

Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
34,173

 
33,838

 
34,122

 
33,772

Diluted
35,408

 
34,928

 
35,361

 
34,879



Stock-Based Compensation Expense
(in thousands)
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2018
 
2017
 
2018
 
2017
Costs and operating expenses:
 
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization)
 
$
250

 
$
209

 
$
470

 
$
338

Sales and marketing
 
228

 
210

 
438

 
330

Research and product development
 
287

 
182

 
512

 
298

General and administrative
 
572

 
1,018

 
1,235

 
1,750

Total stock-based compensation expense
$
1,337

 
$
1,619

 
$
2,655

 
$
2,716






CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Cash from operating activities
 
 
 
 
 
 
 
Net income
$
7,474

 
$
2,797

 
$
11,794

 
$
3,457

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
3,579

 
3,114

 
7,079

 
6,110

Purchased investment premium, net of amortization
32

 
(90
)
 
94

 
(104
)
Amortization of deferred financing costs
16

 
16

 
32

 
32

Loss on disposal of property and equipment
19

 
61

 
20

 
89

Stock-based compensation
1,337

 
1,619

 
2,655

 
2,716

Changes in operating assets and liabilities:

 
 
 
 
 
 
Accounts receivable
(1,020
)
 
(418
)
 
(2,168
)
 
(1,721
)
Prepaid expenses and other current assets
(1,000
)
 
(614
)
 
(559
)
 
(212
)
Other assets
(296
)
 
(56
)
 
(1,062
)
 
(51
)
Accounts payable
424

 
(300
)
 
839

 
(319
)
Accrued employee expenses
1,802

 
2,238

 
(2,040
)
 
576

Accrued expenses
822

 
321

 
1,433

 
794

Deferred revenue
(1,955
)
 
(660
)
 
(3,289
)
 
399

Other liabilities
478

 
31

 
226

 
100

Net cash provided by operating activities
11,712

 
8,059

 
15,054

 
11,866

Cash from investing activities
 
 
 
 
 
 
 
Purchases of property and equipment
(317
)
 
(445
)
 
(580
)
 
(837
)
Additions to capitalized software
(2,569
)
 
(2,280
)
 
(5,505
)
 
(5,271
)
Purchases of investment securities
(5,259
)
 
(9,060
)
 
(20,832
)
 
(15,597
)
Sales of investment securities
—

 
—

 
5

 
—

Maturities of investment securities
7,299

 
3,044

 
15,595

 
7,489

Purchases of intangible assets
—

 
(1
)
 
—

 
(1
)
Net cash used in investing activities
(846
)
 
(8,742
)
 
(11,317
)
 
(14,217
)
Cash from financing activities
 
 
 
 
 
 
 
Proceeds from stock option exercises
188

 
241

 
658

 
386

Tax withholding for net share settlement
(1,593
)
 
(138
)
 
(2,494
)
 
(1,345
)
Proceeds from issuance of debt
31

 
30

 
63

 
59

Principal payments on debt
(31
)
 
(30
)
 
(63
)
 
(59
)
Net cash (used in) provided by financing activities
(1,405
)
 
103

 
(1,836
)
 
(959
)
Net increase (decrease) in cash, cash equivalents and restricted cash
9,461

 
(580
)
 
1,901

 
(3,310
)
Cash, cash equivalents and restricted cash
 
 
 
 
 
 
 
Beginning of period
8,977

 
8,396

 
16,537

 
11,126

End of period
$
18,438

 
$
7,816

 
$
18,438

 
$
7,816


    







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):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Cash and cash equivalents
$
18,010

 
$
7,389

 
$
18,010

 
$
7,389

Restricted cash included in other assets
428

 
427

 
428

 
427

Total cash, cash equivalents and restricted cash
$
18,438

 
$
7,816

 
$
18,438

 
$
7,816