AppFolio, Inc. (NASDAQ: APPF) ("AppFolio" or the "Company"), a
cloud-based technology platform built for the real estate industry,
today announced its financial results for the third quarter ended
September 30, 2023.
"AppFolio's third quarter profitable revenue growth reflects our
commitment to delivering industry leading innovation, while being
disciplined in our execution," said Shane Trigg, President and CEO,
AppFolio. "We continue to be focused on creating exceptional value
that powers the future of the real estate industry and sets our
customers apart from the rest."
Financial Highlights
- Revenue: Total revenue was $165.4 million in Q3 2023, a 32%
increase from $125.1 million in the Q3 2022.
- Units Served: Total units on the AppFolio Property Manager
platform increased to approximately 7.8 million in Q3 2023 from
approximately 7.1 million at the end of Q3 2022.
- Income (Loss) from Operations: GAAP loss from operations in Q3
2023 was ($0.1 million), or (0%) of revenue, compared to a loss
from operations of ($7.8 million), or (6.3%) of revenue, in the
same quarter of 2022. Non-GAAP income from operations in Q3 2023
was $26.7 million, or 16.1% of revenue, compared to $4.7 million,
or 3.7% of revenue, in Q3 2022.
- Cash Flow: Non-GAAP free cash flow was $33.6 million, or 20.3%
of revenue, in Q3 2023, compared to $11.9 million, or 9.5% of
revenue, in the same quarter of 2022.
Financial OutlookBased on information available
as of October 26, 2023, AppFolio's outlook for fiscal year
2023 follows:
- Full year revenue is expected to be
in the range of $608 million to $612 million.
- Full year non-GAAP operating margin
as a percentage of revenue is expected to be in the range of 10.5%
to 11.0%.
- Full year non-GAAP free cash flow
margin as a percentage of revenue is expected to be in the range of
10.5% to 11.5%.
- Weighted average shares outstanding are expected to be
approximately 36 million for the full year.
Conference Call InformationAs
previously announced, the Company will host a conference call
today, October 26, 2023, at 2:00 p.m. Pacific Time (PT), 5:00
p.m. Eastern Time (ET), to discuss the company’s third quarter 2023
financial results. A live webcast of the call will be available at:
https://edge.media-server.com/mmc/p/y8bj2sxd. To access the call by
phone, please go to the following link:
https://register.vevent.com/register/BIf07eb38911d14309a2004ff019fac57f,
and you will be provided with dial in details. A replay of the
webcast will also be available for a limited time on AppFolio’s
Investor Relations website at
https://ir.appfolioinc.com/news-events/events.
The Company also provides announcements
regarding its financial results and other matters, including SEC
filings, investor events, and press releases, on its Investor
Relations website at https://ir.appfolioinc.com/, as a means of
disclosing material nonpublic information and for complying with
AppFolio's disclosure obligations under Regulation FD.
About AppFolio, Inc.AppFolio is
a cloud-based technology platform built for the real estate
industry. Our solutions enable our customers to digitally transform
their businesses, address critical business operations and deliver
a better customer experience. For more information about AppFolio,
visit ir.appfolioinc.com.
Investor Relations Contact: Lori
Barkerir@appfolio.com
Use of Non-GAAP Financial
MeasuresReconciliations of non-GAAP financial measures to
AppFolio’s financial results as determined in accordance with GAAP
are included at the end of this press release following the
accompanying financial data. For a description of these non-GAAP
financial measures, including the reasons management uses each
measure, please see the section of the tables titled “Statement
Regarding the Use of Non-GAAP Financial Measures.”
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,” “could,” “estimates,” “expects,” “intends,” “may,”
“plans,” “potential,” “predicts, “projects,” “seeks,” “should,”
“will,” “would” or similar expressions and the negatives of those
expressions. In particular, forward-looking statements contained in
this press release relate to future operating results and financial
position, including the Company's fiscal year 2023 financial
outlook, anticipated future expenses and investments, the Company's
business opportunities, and the impact of the Company's strategic
actions and initiatives.
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 fiscal year ended December 31, 2022, which was filed
with the SEC on February 9, 2023, 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)
|
|
September 30,2023 |
|
December 31,2022 |
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
59,937 |
|
$ |
70,769 |
Investment securities—current |
|
|
131,589 |
|
|
89,297 |
Accounts receivable, net |
|
|
20,359 |
|
|
16,503 |
Prepaid expenses and other current assets |
|
|
27,992 |
|
|
24,899 |
Total current assets |
|
|
239,877 |
|
|
201,468 |
Investment
securities—noncurrent |
|
|
— |
|
|
25,161 |
Property and equipment,
net |
|
|
27,132 |
|
|
26,110 |
Operating lease right-of-use
assets |
|
|
19,799 |
|
|
23,485 |
Capitalized software
development costs, net |
|
|
24,021 |
|
|
35,315 |
Goodwill |
|
|
56,060 |
|
|
56,060 |
Intangible assets, net |
|
|
2,976 |
|
|
4,833 |
Other long-term assets |
|
|
8,735 |
|
|
8,785 |
Total assets |
|
$ |
378,600 |
|
$ |
381,217 |
Liabilities and
Stockholders’ Equity |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
1,350 |
|
$ |
2,473 |
Accrued employee expenses |
|
|
42,093 |
|
|
34,376 |
Accrued expenses |
|
|
19,979 |
|
|
15,601 |
Other current liabilities |
|
|
10,725 |
|
|
8,893 |
Total current liabilities |
|
|
74,147 |
|
|
61,343 |
Operating lease
liabilities |
|
|
41,108 |
|
|
50,237 |
Other liabilities |
|
|
689 |
|
|
4,091 |
Stockholders’ equity |
|
|
262,656 |
|
|
265,546 |
Total liabilities and stockholders’ equity |
|
$ |
378,600 |
|
$ |
381,217 |
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(UNAUDITED) |
(in thousands, except per share amounts) |
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Revenue(1) |
$ |
165,440 |
|
|
$ |
125,079 |
|
|
$ |
448,615 |
|
|
$ |
347,825 |
|
Costs and operating
expenses: |
|
|
|
|
|
|
|
Cost of revenue (exclusive of depreciation and
amortization)(2) |
|
62,739 |
|
|
|
50,707 |
|
|
|
176,801 |
|
|
|
141,484 |
|
Sales and marketing(2) |
|
29,701 |
|
|
|
25,644 |
|
|
|
86,101 |
|
|
|
77,558 |
|
Research and product development(2) |
|
41,592 |
|
|
|
28,959 |
|
|
|
116,517 |
|
|
|
79,966 |
|
General and administrative(2) |
|
23,907 |
|
|
|
19,347 |
|
|
|
74,417 |
|
|
|
76,258 |
|
Depreciation and amortization |
|
7,568 |
|
|
|
8,241 |
|
|
|
22,055 |
|
|
|
24,977 |
|
Total costs and operating expenses |
|
165,507 |
|
|
|
132,898 |
|
|
|
475,891 |
|
|
|
400,243 |
|
Loss from operations |
|
(67 |
) |
|
|
(7,819 |
) |
|
|
(27,276 |
) |
|
|
(52,418 |
) |
Other (loss) income, net |
|
(249 |
) |
|
|
4,221 |
|
|
|
(283 |
) |
|
|
4,256 |
|
Interest income, net |
|
1,788 |
|
|
|
374 |
|
|
|
4,627 |
|
|
|
632 |
|
Income (loss) before provision
for income taxes |
|
1,472 |
|
|
|
(3,224 |
) |
|
|
(22,932 |
) |
|
|
(47,530 |
) |
(Benefit from) provision for
income taxes |
|
(24,973 |
) |
|
|
938 |
|
|
|
4,634 |
|
|
|
889 |
|
Net income (loss) |
$ |
26,445 |
|
|
$ |
(4,162 |
) |
|
$ |
(27,566 |
) |
|
$ |
(48,419 |
) |
Net income (loss) per common
share |
|
|
|
|
|
|
|
Basic |
$ |
0.74 |
|
|
$ |
(0.12 |
) |
|
$ |
(0.78 |
) |
|
$ |
(1.39 |
) |
Diluted |
$ |
0.72 |
|
|
$ |
(0.12 |
) |
|
$ |
(0.78 |
) |
|
$ |
(1.39 |
) |
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
Basic |
|
35,691 |
|
|
|
35,043 |
|
|
|
35,567 |
|
|
|
34,936 |
|
Diluted |
|
36,482 |
|
|
|
35,043 |
|
|
|
35,567 |
|
|
|
34,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The following table presents our revenue categories:
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Core solutions |
$ |
39,756 |
|
$ |
33,940 |
|
$ |
115,440 |
|
$ |
97,163 |
Value Added Services |
|
123,188 |
|
|
88,399 |
|
|
326,108 |
|
|
241,349 |
Other |
|
2,496 |
|
|
2,740 |
|
|
7,067 |
|
|
9,313 |
Total revenue |
$ |
165,440 |
|
$ |
125,079 |
|
$ |
448,615 |
|
$ |
347,825 |
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes stock-based compensation expense as follows:
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Costs and operating
expenses: |
|
|
|
|
|
|
|
Cost of revenue (exclusive of depreciation and amortization) |
$ |
1,149 |
|
$ |
789 |
|
$ |
2,905 |
|
$ |
1,873 |
Sales and marketing |
|
2,041 |
|
|
2,023 |
|
|
4,902 |
|
|
5,496 |
Research and product development |
|
6,064 |
|
|
4,330 |
|
|
15,851 |
|
|
11,160 |
General and administrative |
|
6,003 |
|
|
3,688 |
|
|
16,274 |
|
|
9,680 |
Total stock-based compensation
expense |
$ |
15,257 |
|
$ |
10,830 |
|
$ |
39,932 |
|
$ |
28,209 |
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(UNAUDITED) |
(in thousands) |
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Cash from operating
activities |
|
|
|
|
|
|
|
Net income (loss) |
$ |
26,445 |
|
|
$ |
(4,162 |
) |
|
$ |
(27,566 |
) |
|
$ |
(48,419 |
) |
Adjustments to reconcile net
income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
6,980 |
|
|
|
7,658 |
|
|
|
20,115 |
|
|
|
23,295 |
|
Amortization of operating lease right-of-use assets |
|
509 |
|
|
|
689 |
|
|
|
1,618 |
|
|
|
2,498 |
|
Gain on lease modification |
|
— |
|
|
|
— |
|
|
|
(4,281 |
) |
|
|
— |
|
Impairment, net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,792 |
|
Deferred income taxes |
|
(5 |
) |
|
|
158 |
|
|
|
4 |
|
|
|
(1,392 |
) |
Stock-based compensation, including as amortized |
|
15,845 |
|
|
|
11,413 |
|
|
|
41,872 |
|
|
|
29,891 |
|
Gain on sale of business |
|
— |
|
|
|
(4,156 |
) |
|
|
— |
|
|
|
(4,156 |
) |
Other |
|
(801 |
) |
|
|
(92 |
) |
|
|
(1,518 |
) |
|
|
(86 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
(327 |
) |
|
|
345 |
|
|
|
(3,857 |
) |
|
|
(2,579 |
) |
Prepaid expenses and other current assets |
|
1,666 |
|
|
|
(507 |
) |
|
|
(763 |
) |
|
|
(3,159 |
) |
Other assets |
|
(312 |
) |
|
|
(321 |
) |
|
|
51 |
|
|
|
(1,629 |
) |
Accounts payable |
|
(496 |
) |
|
|
214 |
|
|
|
(1,485 |
) |
|
|
231 |
|
Accrued employee expenses |
|
10,534 |
|
|
|
2,395 |
|
|
|
7,815 |
|
|
|
(822 |
) |
Accrued expenses |
|
2,237 |
|
|
|
809 |
|
|
|
4,407 |
|
|
|
3,991 |
|
Taxes payable |
|
(28,112 |
) |
|
|
(188 |
) |
|
|
(2,960 |
) |
|
|
(136 |
) |
Operating lease liabilities |
|
1,558 |
|
|
|
(437 |
) |
|
|
(3,080 |
) |
|
|
(1,748 |
) |
Other liabilities |
|
1,036 |
|
|
|
2,185 |
|
|
|
(1,272 |
) |
|
|
3,712 |
|
Net cash provided by operating activities |
|
36,757 |
|
|
|
16,003 |
|
|
|
29,100 |
|
|
|
19,284 |
|
Cash from investing
activities |
|
|
|
|
|
|
|
Purchases of
available-for-sale investments |
|
(35,322 |
) |
|
|
(25,494 |
) |
|
|
(108,919 |
) |
|
|
(70,394 |
) |
Proceeds from sales of
available-for-sale investments |
|
— |
|
|
|
— |
|
|
|
1,013 |
|
|
|
— |
|
Proceeds from maturities of
available-for-sale investments |
|
44,635 |
|
|
|
33,100 |
|
|
|
94,252 |
|
|
|
76,598 |
|
Purchases of property and
equipment |
|
(3,761 |
) |
|
|
(844 |
) |
|
|
(5,932 |
) |
|
|
(5,943 |
) |
Capitalization of software
development costs |
|
(1,243 |
) |
|
|
(3,275 |
) |
|
|
(3,394 |
) |
|
|
(10,468 |
) |
Proceeds from sale of
business, net of cash divested |
|
— |
|
|
|
5,124 |
|
|
|
— |
|
|
|
5,124 |
|
Proceeds from sale of
equity-method investment |
|
— |
|
|
|
— |
|
|
|
629 |
|
|
|
— |
|
Net cash provided by (used in) investing activities |
|
4,309 |
|
|
|
8,611 |
|
|
|
(22,351 |
) |
|
|
(5,083 |
) |
Cash from financing
activities |
|
|
|
|
|
|
|
Proceeds from stock option
exercises |
|
683 |
|
|
|
1,976 |
|
|
|
2,185 |
|
|
|
2,579 |
|
Tax withholding for net share
settlement |
|
(6,510 |
) |
|
|
(1,984 |
) |
|
|
(19,766 |
) |
|
|
(7,581 |
) |
Net cash used in financing activities |
|
(5,827 |
) |
|
|
(8 |
) |
|
|
(17,581 |
) |
|
|
(5,002 |
) |
Net increase (decrease) in cash and cash equivalents and restricted
cash |
|
35,239 |
|
|
|
24,606 |
|
|
|
(10,832 |
) |
|
|
9,199 |
|
Cash, cash equivalents
and restricted cash |
|
|
|
|
|
|
|
Beginning of period |
|
24,948 |
|
|
|
42,876 |
|
|
|
71,019 |
|
|
|
58,283 |
|
End of period |
$ |
60,187 |
|
|
$ |
67,482 |
|
|
$ |
60,187 |
|
|
$ |
67,482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION FROM GAAP TO NON-GAAP RESULTS |
(UNAUDITED) |
(in thousands, except per share data) |
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Costs and
operating expenses: |
|
|
|
|
|
|
GAAP cost of
revenue (exclusive of depreciation and amortization) |
$ |
62,739 |
|
|
$ |
50,707 |
|
|
$ |
176,801 |
|
|
$ |
141,484 |
|
|
|
Less: Stock-based compensation expense |
|
1,149 |
|
|
|
789 |
|
|
|
2,905 |
|
|
|
1,873 |
|
|
|
Less: Workforce reduction
costs |
|
2,135 |
|
|
|
— |
|
|
|
2,135 |
|
|
|
— |
|
|
Non-GAAP cost of
revenue (exclusive of depreciation and amortization) |
$ |
59,455 |
|
|
$ |
49,918 |
|
|
$ |
171,761 |
|
|
$ |
139,611 |
|
|
GAAP cost of
revenue (exclusive of depreciation and amortization) as a
percentage of revenue |
|
38 |
% |
|
|
41 |
% |
|
|
39 |
% |
|
|
41 |
% |
|
Non-GAAP cost of
revenue (exclusive of depreciation and amortization) as a
percentage of revenue |
|
36 |
% |
|
|
40 |
% |
|
|
38 |
% |
|
|
40 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP sales and
marketing |
$ |
29,701 |
|
|
$ |
25,644 |
|
|
$ |
86,101 |
|
|
$ |
77,558 |
|
|
|
Less: Stock-based compensation
expense |
|
2,041 |
|
|
|
2,023 |
|
|
|
4,902 |
|
|
|
5,496 |
|
|
|
Less: Workforce reduction
costs |
|
3,401 |
|
|
|
— |
|
|
|
3,401 |
|
|
|
— |
|
|
Non-GAAP sales and
marketing |
$ |
24,259 |
|
|
$ |
23,621 |
|
|
$ |
77,798 |
|
|
$ |
72,062 |
|
|
GAAP sales and
marketing as a percentage of revenue |
|
18 |
% |
|
|
21 |
% |
|
|
19 |
% |
|
|
22 |
% |
|
Non-GAAP sales and
marketing as a percentage of revenue |
|
15 |
% |
|
|
19 |
% |
|
|
17 |
% |
|
|
21 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP research and
product development |
$ |
41,592 |
|
|
$ |
28,959 |
|
|
$ |
116,517 |
|
|
$ |
79,966 |
|
|
|
Less: Stock-based compensation
expense |
|
6,064 |
|
|
|
4,330 |
|
|
|
15,851 |
|
|
|
11,160 |
|
|
|
Less: Workforce reduction
costs |
|
2,635 |
|
|
|
— |
|
|
|
2,635 |
|
|
|
— |
|
|
Non-GAAP research
and product development |
$ |
32,893 |
|
|
$ |
24,629 |
|
|
$ |
98,031 |
|
|
$ |
68,806 |
|
|
GAAP research and
product development as a percentage of revenue |
|
25 |
% |
|
|
23 |
% |
|
|
26 |
% |
|
|
23 |
% |
|
Non-GAAP research
and product development as a percentage of revenue |
|
20 |
% |
|
|
20 |
% |
|
|
22 |
% |
|
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP general and
administrative |
$ |
23,907 |
|
|
$ |
19,347 |
|
|
$ |
74,417 |
|
|
$ |
76,258 |
|
|
|
Less: Stock-based compensation
expense |
|
6,003 |
|
|
|
3,688 |
|
|
|
16,274 |
|
|
|
9,680 |
|
|
|
Less: Impairment, net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,792 |
|
|
|
Less: Gain on lease
modification |
|
— |
|
|
|
— |
|
|
|
(4,281 |
) |
|
|
— |
|
|
|
Less: CEO separation costs,
net |
|
— |
|
|
|
— |
|
|
|
11,520 |
|
|
|
— |
|
|
|
Less: Workforce reduction
costs |
|
2,106 |
|
|
|
— |
|
|
|
2,106 |
|
|
|
— |
|
|
Non-GAAP general
and administrative |
$ |
15,798 |
|
|
$ |
15,659 |
|
|
$ |
48,798 |
|
|
$ |
46,786 |
|
|
GAAP general and
administrative as a percentage of revenue |
|
14 |
% |
|
|
15 |
% |
|
|
17 |
% |
|
|
22 |
% |
|
Non-GAAP general
and administrative as a percentage of revenue |
|
10 |
% |
|
|
13 |
% |
|
|
11 |
% |
|
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP depreciation
and amortization |
$ |
7,568 |
|
|
$ |
8,241 |
|
|
$ |
22,055 |
|
|
$ |
24,977 |
|
|
|
Less: Amortization of
stock-based compensation capitalized in software development
costs |
|
589 |
|
|
|
584 |
|
|
|
1,857 |
|
|
|
1,682 |
|
|
|
Less: Amortization of
purchased intangibles |
|
617 |
|
|
|
1,093 |
|
|
|
1,940 |
|
|
|
3,396 |
|
|
Non-GAAP
depreciation and amortization |
$ |
6,362 |
|
|
$ |
6,564 |
|
|
$ |
18,258 |
|
|
$ |
19,899 |
|
|
GAAP depreciation
and amortization as a percentage of revenue |
|
5 |
% |
|
|
7 |
% |
|
|
5 |
% |
|
|
7 |
% |
|
Non-GAAP
depreciation and amortization as a percentage of revenue |
|
4 |
% |
|
|
5 |
% |
|
|
4 |
% |
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Income
(loss) from operations: |
|
|
|
|
|
|
|
|
GAAP loss from
operations |
$ |
(67 |
) |
|
$ |
(7,819 |
) |
|
$ |
(27,276 |
) |
|
$ |
(52,418 |
) |
|
|
Less: Stock-based compensation expense |
|
15,257 |
|
|
|
10,830 |
|
|
|
39,932 |
|
|
|
28,209 |
|
|
|
Less: Amortization of
stock-based compensation capitalized in software development
costs |
|
589 |
|
|
|
584 |
|
|
|
1,857 |
|
|
|
1,682 |
|
|
|
Less: Amortization of
purchased intangibles |
|
617 |
|
|
|
1,093 |
|
|
|
1,940 |
|
|
|
3,396 |
|
|
|
Less: Impairment, net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,792 |
|
|
|
Less: Gain on lease
modification |
|
— |
|
|
|
— |
|
|
|
(4,281 |
) |
|
|
— |
|
|
|
Less: CEO separation costs,
net |
|
— |
|
|
|
— |
|
|
|
11,520 |
|
|
|
— |
|
|
|
Less: Workforce reduction
costs |
|
10,278 |
|
|
|
— |
|
|
|
10,278 |
|
|
|
— |
|
|
Non-GAAP income
from operations |
$ |
26,674 |
|
|
$ |
4,688 |
|
|
$ |
33,970 |
|
|
$ |
661 |
|
|
|
|
|
|
|
|
|
|
|
Operating
margin: |
|
|
|
|
|
|
|
|
GAAP operating
margin |
|
— |
% |
|
|
(6.3 |
)% |
|
|
(6.1 |
)% |
|
|
(15.1 |
)% |
|
|
Stock-based compensation
expense as a percentage of revenue |
|
9.2 |
|
|
|
8.7 |
|
|
|
8.9 |
|
|
|
8.1 |
|
|
|
Amortization of stock-based
compensation capitalized in software development costs as a
percentage of revenue |
|
0.4 |
|
|
|
0.5 |
|
|
|
0.4 |
|
|
|
0.5 |
|
|
|
Amortization of purchased
intangibles as a percentage of revenue |
|
0.4 |
|
|
|
0.9 |
|
|
|
0.4 |
|
|
|
1.0 |
|
|
|
Impairment, net as a
percentage of revenue |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5.7 |
|
|
|
Gain on lease modification as
a percentage of revenue |
|
— |
|
|
|
— |
|
|
|
(1.0 |
) |
|
|
— |
|
|
|
CEO separation costs, net as a
percentage of revenue |
|
— |
|
|
|
— |
|
|
|
2.6 |
|
|
|
— |
|
|
|
Less: Workforce reduction
costs |
|
6.1 |
|
|
|
— |
|
|
|
2.4 |
|
|
|
— |
|
|
Non-GAAP operating
margin |
|
16.1 |
% |
|
|
3.7 |
% |
|
|
7.6 |
% |
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
Net income
(loss): |
|
|
|
|
|
|
|
|
GAAP net income
(loss) |
$ |
26,445 |
|
|
$ |
(4,162 |
) |
|
$ |
(27,566 |
) |
|
$ |
(48,419 |
) |
|
|
Less: Stock-based compensation
expense |
|
15,257 |
|
|
|
10,830 |
|
|
|
39,932 |
|
|
|
28,209 |
|
|
|
Less: Amortization of
stock-based compensation capitalized in software development
costs |
|
589 |
|
|
|
584 |
|
|
|
1,857 |
|
|
|
1,682 |
|
|
|
Less: Amortization of
purchased intangibles |
|
617 |
|
|
|
1,093 |
|
|
|
1,940 |
|
|
|
3,396 |
|
|
|
Less: Impairment, net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,792 |
|
|
|
Less: Gain on lease
modification |
|
— |
|
|
|
— |
|
|
|
(4,281 |
) |
|
|
— |
|
|
|
Less: CEO separation costs,
net |
|
— |
|
|
|
— |
|
|
|
11,520 |
|
|
|
— |
|
|
|
Less: Workforce reduction
costs |
|
10,278 |
|
|
|
— |
|
|
|
10,278 |
|
|
|
— |
|
|
|
Less: Gain on sale of
business |
|
— |
|
|
|
(4,156 |
) |
|
|
— |
|
|
|
(4,156 |
) |
|
|
Less: Income tax effect of
adjustments |
|
31,642 |
|
|
|
234 |
|
|
|
3,859 |
|
|
|
(724 |
) |
|
Non-GAAP net
income |
$ |
21,544 |
|
|
$ |
3,955 |
|
|
$ |
29,821 |
|
|
$ |
1,228 |
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) per share, basic: |
|
|
|
|
|
|
|
|
GAAP net income
(loss) per share, basic |
$ |
0.74 |
|
|
$ |
(0.12 |
) |
|
$ |
(0.78 |
) |
|
$ |
(1.39 |
) |
|
|
Non-GAAP adjustments to net
income (loss) |
|
(0.14 |
) |
|
|
0.23 |
|
|
|
1.62 |
|
|
|
1.42 |
|
|
Non-GAAP net
income per share, basic |
$ |
0.60 |
|
|
$ |
0.11 |
|
|
$ |
0.84 |
|
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) income per share, diluted: |
|
|
|
|
|
|
|
|
GAAP net income
(loss) per share, diluted |
$ |
0.72 |
|
|
$ |
(0.12 |
) |
|
$ |
(0.78 |
) |
|
$ |
(1.39 |
) |
|
|
Non-GAAP adjustments to net
income (loss) |
|
(0.13 |
) |
|
|
0.23 |
|
|
|
1.60 |
|
|
|
1.39 |
|
|
Non-GAAP net
income per share, diluted |
$ |
0.59 |
|
|
$ |
0.11 |
|
|
$ |
0.82 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares used in GAAP per share calculation |
|
|
|
|
|
|
|
|
|
Basic |
|
35,691 |
|
|
|
35,043 |
|
|
|
35,567 |
|
|
|
34,936 |
|
|
|
Diluted |
|
36,482 |
|
|
|
35,043 |
|
|
|
35,567 |
|
|
|
34,936 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares used in non-GAAP per share calculation |
|
|
|
|
|
|
|
|
|
Basic |
|
35,691 |
|
|
|
35,043 |
|
|
|
35,567 |
|
|
|
34,936 |
|
|
|
Diluted |
|
36,482 |
|
|
|
35,710 |
|
|
|
36,345 |
|
|
|
35,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Free cash
flow: |
|
|
|
|
|
GAAP net cash
provided by operating activities |
$ |
36,757 |
|
|
$ |
16,003 |
|
|
$ |
29,100 |
|
|
$ |
19,284 |
|
|
|
Purchases of property and equipment |
|
(3,761 |
) |
|
|
(844 |
) |
|
|
(5,932 |
) |
|
|
(5,943 |
) |
|
|
Capitalized software
development costs |
|
(1,243 |
) |
|
|
(3,275 |
) |
|
|
(3,394 |
) |
|
|
(10,468 |
) |
|
|
CEO separation costs
payment |
|
— |
|
|
|
— |
|
|
|
14,926 |
|
|
|
— |
|
|
|
Partial lease termination
payment |
|
— |
|
|
|
— |
|
|
|
2,851 |
|
|
|
— |
|
|
|
Severance payments for
workforce reduction |
|
1,801 |
|
|
|
— |
|
|
|
1,801 |
|
|
|
— |
|
|
Non-GAAP free cash
flow |
$ |
33,554 |
|
|
$ |
11,884 |
|
|
$ |
39,352 |
|
|
$ |
2,873 |
|
|
|
|
|
|
|
|
|
|
|
Free cash
flow margin: |
|
|
|
|
|
|
|
GAAP net cash
provided by operating activities as a percentage of revenue |
|
22.2 |
% |
|
|
12.8 |
% |
|
|
6.5 |
% |
|
|
5.5 |
% |
|
|
Purchases of property and
equipment as a percentage of revenue |
|
(2.3 |
) |
|
|
(0.7 |
) |
|
|
(1.3 |
) |
|
|
(1.7 |
) |
|
|
Capitalized software
development costs as a percentage of revenue |
|
(0.8 |
) |
|
|
(2.6 |
) |
|
|
(0.8 |
) |
|
|
(3.0 |
) |
|
|
CEO separation costs
payment |
|
— |
|
|
|
— |
|
|
|
3.4 |
|
|
|
— |
|
|
|
Partial lease termination
payment |
|
— |
|
|
|
— |
|
|
|
0.6 |
|
|
|
— |
|
|
|
Severance payments for
workforce reduction |
|
1.2 |
|
|
|
— |
|
|
|
0.4 |
|
|
|
— |
|
|
Non-GAAP free cash
flow margin |
|
20.3 |
% |
|
|
9.5 |
% |
|
|
8.8 |
% |
|
|
0.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement Regarding the Use of
Non-GAAP Financial Measures
We disclose the following non-GAAP financial
measures in this press release: non-GAAP income (loss) from
operations, non-GAAP operating expenses (cost of revenue (exclusive
of depreciation and amortization), sales and marketing, research
and product development, general and administrative, and
depreciation and amortization), non-GAAP net income (loss),
non-GAAP net income (loss) per share, and free cash flow.
- Non-GAAP presentation of income
(loss) from operations, operating expenses, net income (loss), and
net income (loss) per share. These measures exclude certain
non-cash or non-recurring items, including stock-based compensation
expense, amortization of stock-based compensation capitalized in
software development costs, amortization of purchased intangibles,
impairment, CEO separation costs, net, gain on lease modification,
workforce reduction costs and the related income tax effect of
these adjustments, as applicable and described below.
- Free cash flow. Free cash flow is
defined as net cash from operating activities, less purchases of
property and equipment, capitalization of software development
costs, payments for separation costs, lease termination payments
and severance payments for workforce reduction. We use free cash
flow to evaluate our generation of cash from operations that is
available for purposes other than capital expenditures and
capitalized software development costs. Additionally, we believe
that information regarding free cash flow provides investors with a
perspective on the cash available to fund ongoing operations,
because we review cash flows generated from operations after taking
into consideration capital expenditures and the capitalization of
software development costs due to the fact that these expenditures
are considered to be a necessary component of ongoing
operations.
We use each of these non-GAAP financial measures
internally to assess and compare operating results across reporting
periods, for internal budgeting and forecasting purposes, and to
evaluate our financial performance. We believe these adjustments
also provide useful supplemental information to investors and
facilitate the analysis of our operating results and comparison of
operating results across reporting periods.
In particular, we believe these non-GAAP
financial measures are useful to investors and others in assessing
our operating performance due to the following factors:
- Stock-based compensation expense
and amortization of stock-based compensation capitalized in
software development costs. We utilize stock-based compensation to
attract and retain employees. It is principally aimed at aligning
their interests with those of our stockholders while ensuring
long-term retention, rather than to address operational performance
for any particular period. As a result, stock-based compensation
expenses, which include costs related to our workforce reduction,
vary for reasons that are generally unrelated to financial and
operational performance in any particular period.
- Amortization of purchased
intangibles. We view amortization of purchased intangible assets as
items arising from pre-acquisition activities determined at the
time of an acquisition. While these intangible assets are evaluated
for impairment regularly, amortization of the cost of purchased
intangibles is an expense that is not typically affected by
operations during any particular period.
- Impairment. We believe that
impairment charges do not reflect future operating expenses, and
are generally unrelated to financial and operational performance in
any particular period.
- CEO separation costs, net. We
incurred one-time separation costs associated with our former Chief
Executive Officer's Transition and Separation Agreement, dated
March 1, 2023 ("Separation Agreement"). We have excluded these
costs, as we do not consider such amounts to be part of the ongoing
operation of our business.
- Gain on lease modification. In
January 2023 and June 2023 we amended our San Diego lease. We have
excluded any gain related to the remeasurement of the lease
liability, as we do not consider such amounts to be part of the
ongoing operation of our business.
- Workforce reduction costs. We
incurred one-time severance and related personnel costs associated
with our workforce reduction in the third quarter of 2023. We have
excluded these costs as we do not consider such amounts to be part
of the ongoing operation of our business.
- Income tax effects of adjustments.
We utilize a fixed long-term projected tax rate in our computation
of non-GAAP income tax effects to provide better consistency across
interim reporting periods. In projecting this long-term non-GAAP
tax rate, we utilize a financial projection that excludes the
direct impact of other non-GAAP adjustments. The projected rate,
which we have determined to be 25%, considers other factors such as
our current operating structure, existing tax positions in various
jurisdictions, and key legislation in major jurisdictions where we
operate. We periodically re-evaluate this tax rate, as necessary,
for significant events, based on relevant tax law changes, and
material changes in the forecasted geographic earnings mix.
Our non-GAAP financial measures may not provide
information that is directly comparable to that provided by other
companies in our industry, as other companies may calculate
non-GAAP financial results differently. In addition, there are
limitations in using non-GAAP financial measures because non-GAAP
financial measures are not prepared in accordance with GAAP and can
exclude expenses that may have a material impact on our reported
financial results. As such, non-GAAP financial measures should not
be considered in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP. A reconciliation of
the historical non-GAAP financial measures to their most directly
comparable GAAP measures has been provided in the tables above. We
encourage investors to review the reconciliation of these
historical non-GAAP financial measures to their most directly
comparable GAAP financial measures.
AppFolio (NASDAQ:APPF)
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From Apr 2024 to May 2024
AppFolio (NASDAQ:APPF)
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From May 2023 to May 2024