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 3, 2020
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation)
| (Commission File Number) | (IRS Employer Identification Number) | ||||
(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)) | |||||
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 | ||||||
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. ☐
Item 2.02. Results of Operations and Financial Condition.
On August 3, 2020, AppFolio, Inc. (the “Company”) issued a press release announcing its financial results for its second fiscal quarter ended June 30, 2020. 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 August 3, 2020. | |||||||
Exhibit 99.1
News Release
AppFolio, Inc. Announces Second Quarter 2020 Financial Results
SANTA BARBARA, Calif., August 3, 2020 (GLOBE NEWSWIRE) -- AppFolio, Inc. (NASDAQ: APPF) ("AppFolio" or the "Company"), a leading provider of cloud-based business software solutions, services, and data analytics to the real estate and legal markets, today announced its financial results for the second quarter ended June 30, 2020.
AppFolio's operating results for the second quarter of 2020 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 March 2, 2020, as well as its more detailed second quarter 2020 results that will be included in the Company's Quarterly Report on Form 10-Q, which will be filed with the SEC today. 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
While we are encouraged by the results of our second quarter we are unable to predict, with any reasonable degree of certainty, the full extent of the potential impact of the COVID-19 pandemic on our business and financial results. As a result, we are not providing updated full year revenue guidance for fiscal year 2020.
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, August 3, 2020, 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.
To listen to the live call, participants may register in advance at http://www.directeventreg.com/registration/event/3697242. After registering, a confirmation will be sent through email, including dial-in details and unique conference call codes for entry. A replay of the conference call will be available at (800) 585-8367 or (416) 621-4642 for international callers. Please use conference ID: 3697242. 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 business opportunities, the impact of the Company's strategic actions and initiatives, the impact of the COVID-19 pandemic on the Company's business, and the timing of providing updated financial guidance.
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 June 30, 2020, which will be filed with the SEC today, 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, 2020 | December 31, 2019 | |||||||||||||
| Assets | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | 53,315 | $ | 15,813 | ||||||||||
| Investment securities—current | 20,930 | 22,876 | ||||||||||||
| Accounts receivable, net | 12,663 | 7,562 | ||||||||||||
| Prepaid expenses and other current assets | 15,836 | 15,540 | ||||||||||||
| Total current assets | 102,744 | 61,791 | ||||||||||||
| Investment securities—noncurrent | 5,933 | 12,089 | ||||||||||||
| Property and equipment, net | 26,323 | 14,744 | ||||||||||||
| Operating lease right-of-use assets | 25,732 | 27,803 | ||||||||||||
| Capitalized software, net | 35,218 | 30,023 | ||||||||||||
| Goodwill | 58,425 | 58,425 | ||||||||||||
| Intangible assets, net | 18,911 | 21,377 | ||||||||||||
| Deferred taxes | 40,711 | 27,574 | ||||||||||||
| Other long-term assets | 6,354 | 6,276 | ||||||||||||
| Total assets | $ | 320,351 | $ | 260,102 | ||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||
| Current liabilities | ||||||||||||||
| Accounts payable | $ | 3,402 | $ | 1,927 | ||||||||||
| Accrued employee expenses | 18,570 | 17,758 | ||||||||||||
| Accrued expenses | 13,316 | 10,833 | ||||||||||||
| Deferred revenue | 5,098 | 4,600 | ||||||||||||
| Other current liabilities | 5,088 | 11,139 | ||||||||||||
| Term loan, net—current portion | 1,833 | 1,208 | ||||||||||||
| Total current liabilities | 47,307 | 47,465 | ||||||||||||
| Operating lease liabilities | 33,394 | 33,312 | ||||||||||||
| Revolving facility | 49,000 | — | ||||||||||||
| Term loan, net | 46,146 | 47,375 | ||||||||||||
| Total liabilities | 175,847 | 128,152 | ||||||||||||
| Stockholders’ equity: | ||||||||||||||
| Preferred stock, $0.0001 par value, 25,000 shares authorized and no shares issued and outstanding as of June 30, 2020 and December 31, 2019 | — | — | ||||||||||||
| Class A common stock, $0.0001 par value, 250,000 shares authorized as of June 30, 2020 and December 31, 2019; 17,371 and 16,923 shares issued as of June 30, 2020 and December 31, 2019, respectively; 16,952 and 16,552 shares outstanding as of June 30, 2020 and December 31, 2019, respectively | 2 | 2 | ||||||||||||
| Class B common stock, $0.0001 par value, 50,000 shares authorized as of June 30, 2020 and December 31, 2019; 17,339 and 17,594 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 2 | 2 | ||||||||||||
| Additional paid-in capital | 156,919 | 161,509 | ||||||||||||
| Accumulated other comprehensive income | 131 | 33 | ||||||||||||
| Treasury stock, at cost, 419 and 371 shares of Class A common stock as of June 30, 2020 and December 31, 2019, respectively | (25,756) | (21,562) | ||||||||||||
| Retained earnings (accumulated deficit) | 13,206 | (8,034) | ||||||||||||
| Total stockholders’ equity | 144,504 | 131,950 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 320,351 | $ | 260,102 | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Revenue | $ | 81,043 | $ | 63,624 | $ | 153,538 | $ | 120,715 | |||||||||||||||
| Costs and operating expenses: | |||||||||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization) | 27,411 | 25,128 | 56,372 | 49,309 | |||||||||||||||||||
| Sales and marketing | 13,717 | 13,232 | 28,223 | 24,451 | |||||||||||||||||||
| Research and product development | 12,128 | 9,339 | 23,340 | 17,820 | |||||||||||||||||||
| General and administrative | 14,785 | 8,214 | 23,357 | 16,406 | |||||||||||||||||||
| Depreciation and amortization | 6,657 | 5,415 | 13,071 | 10,491 | |||||||||||||||||||
| Total costs and operating expenses | 74,698 | 61,328 | 144,363 | 118,477 | |||||||||||||||||||
| Income from operations | 6,345 | 2,296 | 9,175 | 2,238 | |||||||||||||||||||
| Other income (expense), net | (10) | (56) | 12 | (57) | |||||||||||||||||||
| Interest expense, net | (562) | (427) | (1,056) | (924) | |||||||||||||||||||
| Income before benefit from income taxes | 5,773 | 1,813 | 8,131 | 1,257 | |||||||||||||||||||
| Benefit from income taxes | (13,484) | (21,338) | (13,109) | (25,619) | |||||||||||||||||||
| Net income | $ | 19,257 | $ | 23,151 | $ | 21,240 | $ | 26,876 | |||||||||||||||
| Net income per common share: | |||||||||||||||||||||||
| Basic | $ | 0.56 | $ | 0.68 | $ | 0.62 | $ | 0.79 | |||||||||||||||
| Diluted | $ | 0.54 | $ | 0.65 | $ | 0.60 | $ | 0.76 | |||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | 34,254 | 34,010 | 34,214 | 33,962 | |||||||||||||||||||
| Diluted | 35,614 | 35,412 | 35,647 | 35,385 | |||||||||||||||||||
Stock-Based Compensation Expense
(in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Costs and operating expenses: | |||||||||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization) | $ | 520 | $ | 415 | $ | 646 | $ | 739 | |||||||||||||||
| Sales and marketing | 477 | 302 | 702 | 550 | |||||||||||||||||||
| Research and product development | 580 | 363 | 874 | 671 | |||||||||||||||||||
| General and administrative | 1,176 | 607 | 1,490 | 1,279 | |||||||||||||||||||
| Total stock-based compensation expense | $ | 2,753 | $ | 1,687 | $ | 3,712 | $ | 3,239 | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) | |||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Cash from operating activities | |||||||||||||||||||||||
| Net income | $ | 19,257 | $ | 23,151 | $ | 21,240 | $ | 26,876 | |||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||
| Depreciation and amortization | 6,657 | 5,415 | 13,071 | 10,491 | |||||||||||||||||||
| Amortization of operating lease right-of-use assets | 1,018 | 987 | 2,071 | 1,928 | |||||||||||||||||||
| Deferred income taxes | (13,499) | (21,362) | (13,137) | (25,643) | |||||||||||||||||||
| Stock-based compensation | 2,753 | 1,687 | 3,712 | 3,239 | |||||||||||||||||||
| Other | 8 | 81 | (30) | 108 | |||||||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||||||||
| Accounts receivable | (3,520) | (644) | (5,136) | (2,695) | |||||||||||||||||||
| Prepaid expenses and other current assets | 2,530 | (1,859) | (292) | (5,199) | |||||||||||||||||||
| Other assets | 41 | 830 | (107) | 1,254 | |||||||||||||||||||
| Accounts payable | 555 | 88 | 193 | 188 | |||||||||||||||||||
| Accrued employee expenses | 6,144 | 3,547 | 717 | 680 | |||||||||||||||||||
| Accrued expenses | 3,808 | (196) | 4,534 | 1,384 | |||||||||||||||||||
| Deferred revenue | (161) | 313 | 532 | 581 | |||||||||||||||||||
| Operating lease liabilities | (876) | (1,024) | (92) | (1,759) | |||||||||||||||||||
| Other liabilities | (422) | 504 | 100 | 380 | |||||||||||||||||||
| Net cash provided by operating activities | 24,293 | 11,518 | 27,376 | 11,813 | |||||||||||||||||||
| Cash from investing activities | |||||||||||||||||||||||
| Purchases of available-for-sale investments | (12,740) | (678) | (13,389) | (678) | |||||||||||||||||||
| Proceeds from sales of available-for-sale investments | — | — | 13,942 | 1,750 | |||||||||||||||||||
| Proceeds from maturities of available-for-sale investments | 500 | 1,750 | 7,750 | 4,000 | |||||||||||||||||||
| Purchases of property, equipment and intangible assets | (6,314) | (1,395) | (14,306) | (2,425) | |||||||||||||||||||
| Additions to capitalized software | (5,887) | (4,762) | (12,709) | (9,420) | |||||||||||||||||||
| Cash paid in business acquisition, net of cash acquired | — | — | — | (54,004) | |||||||||||||||||||
| Net cash used in investing activities | (24,441) | (5,085) | (18,712) | (60,777) | |||||||||||||||||||
| Cash from financing activities | |||||||||||||||||||||||
| Proceeds from stock option exercises | 232 | 109 | 329 | 199 | |||||||||||||||||||
| Tax withholding for net share settlement | (3,232) | (3,436) | (9,690) | (4,751) | |||||||||||||||||||
| Payment of contingent consideration | — | — | (5,977) | — | |||||||||||||||||||
| Proceeds from issuance of debt | 753 | 572 | 50,190 | 1,169 | |||||||||||||||||||
| Principal payments on debt | (1,069) | (885) | (1,818) | (1,794) | |||||||||||||||||||
| Payment of debt issuance costs | — | (60) | — | (420) | |||||||||||||||||||
| Purchase of treasury stock | — | — | (4,194) | — | |||||||||||||||||||
| Net cash (used in) provided by financing activities | (3,316) | (3,700) | 28,840 | (5,597) | |||||||||||||||||||
| Net (decrease) increase in cash and cash equivalents and restricted cash | (3,464) | 2,733 | 37,504 | (54,561) | |||||||||||||||||||
| Cash, cash equivalents and restricted cash | |||||||||||||||||||||||
| Beginning of period | 57,215 | 17,212 | 16,247 | 74,506 | |||||||||||||||||||
| End of period | $ | 53,751 | $ | 19,945 | $ | 53,751 | $ | 19,945 | |||||||||||||||