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false0001433195 0001433195 2019-10-28 2019-10-28


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): October 28, 2019
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 ☐
 
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. ☐





Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Class A Common Stock, $0.0001 par value
APPF
NASDAQ Global Market









Item 2.02. Results of Operations and Financial Condition.
On October 28, 2019, AppFolio, Inc. (the “Company”) issued a press release announcing its financial results for its third fiscal quarter ended September 30, 2019. 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 October 28, 2019.




 Exhibit



Exhibit 99.1
https://cdn.kscope.io/f19f40c3289aecff3968b7ed8a9c40c2-image2a04.jpg

News Release


AppFolio, Inc. Announces Third Quarter 2019 Financial Results

SANTA BARBARA, Calif., October 28, 2019 (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, 2019.

AppFolio's operating results for the third quarter of 2019 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 February 28, 2019, as well as its more detailed third quarter 2019 results that will be included in the Company's Quarterly Report on Form 10-Q, which will be filed with the SEC on October 28, 2019. 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 October 28, 2019, AppFolio's outlook for fiscal year 2019 follows:
•
Full year revenue is expected to be in the range of $254.5 million to $255.5 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, October 28, 2019, 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.

The conference call can be accessed by dialing 844.624.1561 and entering ID # 8056038. International callers may dial 647.253.8652. A replay of the conference call will be available at 800.585.8367 and 416.621.4642 for international callers. 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 and legal markets. Today our products include real estate software (AppFolio Property Manager, AppFolio Property Manager PLUS and AppFolio Investment Management) 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, 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, which will be filed with the SEC on October 28, 2019, 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,
2019
 
December 31,
2018
Assets
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
20,121

 
$
74,076

Investment securities—current
 
20,355

 
16,631

Accounts receivable, net
 
8,039

 
5,516

Prepaid expenses and other current assets
 
16,150

 
11,775

Total current assets
 
64,665

 
107,998

Investment securities—noncurrent
 
4,698

 
11,256

Property and equipment, net
 
9,842

 
6,871

Operating lease right-of-use assets
 
16,433

 
—

Capitalized software, net
 
27,621

 
20,485

Goodwill
 
58,392

 
15,548

Intangible assets, net
 
22,678

 
5,895

Deferred taxes
 
23,196

 
—

Other long-term assets
 
6,303

 
7,688

Total assets
 
$
233,828

 
$
175,741

Liabilities and Stockholders’ Equity
 
 
 
 
Current liabilities
 
 
 
 
Accounts payable
 
$
1,539

 
$
1,481

Accrued employee expenses
 
13,101

 
12,377

Accrued expenses
 
9,166

 
8,281

Deferred revenue
 
4,163

 
3,414

Other current liabilities
 
13,093

 
1,447

Long-term debt, net—current portion
 
1,208

 
1,213

Total current liabilities
 
42,270

 
28,213

Operating lease liabilities
 
18,448

 
—

Long-term debt, net
 
47,677

 
48,602

Other long-term liabilities
 
16

 
7,080

Total liabilities
 
108,411

 
83,895

Stockholders’ equity:
 
 
 
 
Preferred stock, $0.0001 par value, 25,000 authorized and no shares issued and outstanding at September 30, 2019 and December 31, 2018
 
—

 
—

Class A common stock, $0.0001 par value, 250,000 shares authorized at September 30, 2019 and December 31, 2018; issued - 16,743 and 16,159, shares at September 30, 2019 and December 31, 2018; outstanding - 16,373 and 15,789 shares at September 30, 2019 and December 31, 2018, respectively;
 
2

 
2

Class B common stock, $0.0001 par value, 50,000 shares authorized at September 30, 2019 and December 31, 2018; 17,685 and 18,109 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively;
 
2

 
2

Additional paid-in capital
 
159,399

 
157,898

Accumulated other comprehensive income (loss)
 
38

 
(178
)
Treasury stock, at cost, 370 Class A shares at September 30, 2019 and December 31, 2018
 
(21,562
)
 
(21,562
)
Accumulated deficit
 
(12,462
)
 
(44,316
)
Total stockholders’ equity
 
125,417

 
91,846

Total liabilities and stockholders’ equity
 
$
233,828

 
$
175,741






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


 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Revenue
$
67,935

 
$
50,126

 
$
188,650

 
$
139,706

Costs and operating expenses:
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization)
25,930

 
19,282

 
75,239

 
53,624

Sales and marketing
12,636

 
8,681

 
37,087

 
23,711

Research and product development
10,602

 
6,440

 
28,422

 
17,523

General and administrative
8,955

 
6,541

 
25,361

 
17,105

Depreciation and amortization
5,678

 
3,705

 
16,169

 
10,784

Total costs and operating expenses
63,801

 
44,649

 
182,278

 
122,747

Income from operations
4,134

 
5,477

 
6,372

 
16,959

Other income (expense), net
(11
)
 
1

 
(68
)
 
(20
)
Interest income (expense), net
(400
)
 
229

 
(1,324
)
 
631

Income before provision for (benefit from) income taxes
3,723

 
5,707

 
4,980

 
17,570

Provision for (benefit from) income taxes
(1,255
)
 
183

 
(26,874
)
 
252

Net income
$
4,978

 
$
5,524

 
$
31,854

 
$
17,318

 
 
 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
 
 
Basic
$
0.15

 
$
0.16

 
0.94

 
0.51

Diluted
$
0.14

 
$
0.16

 
0.90

 
0.49

Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
34,047

 
34,219

 
33,991

 
34,154

Diluted
35,421

 
35,610

 
35,406

 
35,524


Stock-Based Compensation Expense
(in thousands)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Costs and operating expenses:
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization)
$
334

 
$
282

 
$
1,073

 
$
752

Sales and marketing
354

 
270

 
904

 
708

Research and product development
353

 
218

 
1,024

 
730

General and administrative
1,151

 
994

 
2,430

 
2,229

Total stock-based compensation expense
$
2,192

 
$
1,764

 
$
5,431

 
$
4,419








CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Cash from operating activities
 
 
 
 
 
 
 
Net income
$
4,978

 
$
5,524

 
$
31,854

 
$
17,318

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
5,678

 
3,705

 
16,169

 
10,784

Amortization of operating lease right-of-use assets
1,088

 
547

 
3,016

 
—

Stock-based compensation
2,192

 
1,764

 
5,431

 
4,419

Deferred income taxes
(1,389
)
 
—

 
(27,032
)
 
—

Other
28

 
19

 
136

 
165

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
(83
)
 
703

 
(2,778
)
 
(1,465
)
Prepaid expenses and other current assets
796

 
(4,655
)
 
(4,403
)
 
(3,902
)
Other assets
(125
)
 
(3,176
)
 
1,129

 
(5,003
)
Accounts payable
82

 
(362
)
 
270

 
477

Accrued employee expenses
(194
)
 
(1,185
)
 
486

 
(3,225
)
Accrued expenses
(1,398
)
 
1,964

 
(14
)
 
3,397

Deferred revenue
458

 
(958
)
 
1,039

 
(4,247
)
Operating lease liabilities
(1,127
)
 
—

 
(2,886
)
 
—

Other liabilities
616

 
5,657

 
996

 
5,883

Net cash provided by operating activities
11,600

 
9,547

 
23,413

 
24,601

Cash from investing activities
 
 
 
 
 
 
 
Purchases of property and equipment
(1,690
)
 
(1,160
)
 
(4,085
)
 
(1,740
)
Additions to capitalized software
(6,249
)
 
(3,492
)
 
(15,669
)
 
(8,997
)
Purchases of investment securities
(10,012
)
 
(7,952
)
 
(10,690
)
 
(28,784
)
Sales of investment securities
1,000

 
696

 
2,750

 
701

Maturities of investment securities
7,000

 
12,882

 
11,000

 
28,477

Acquisition, net of cash acquired
—

 
(14,441
)
 
(54,004
)
 
(14,441
)
Purchases of intangible assets
—

 
—

 
(30
)
 
—

Net cash used in investing activities
(9,951
)
 
(13,467
)
 
(70,728
)
 
(24,784
)
Cash from financing activities
 
 
 
 
 
 
 
Proceeds from stock option exercises
60

 
55

 
259

 
713

Tax withholding for net share settlement
(790
)
 
(400
)
 
(5,541
)
 
(2,894
)
Proceeds from issuance of debt
528

 
30

 
1,697

 
93

Principal payments on debt
(840
)
 
(30
)
 
(2,634
)
 
(93
)
Payment of debt issuance costs
—

 
—

 
(420
)
 
—

Net cash used in financing activities
(1,042
)
 
(345
)
 
(6,639
)
 
(2,181
)
Net increase (decrease) in cash and cash equivalents and restricted cash
607

 
(4,265
)
 
(53,954
)
 
(2,364
)
Cash, cash equivalents and restricted cash
 
 
 
 
 
 
 
Beginning of period
19,945

 
18,438

 
74,506

 
16,537

End of period
$
20,552

 
$
14,173

 
$
20,552

 
$
14,173