AppFolio, Inc. Announces Second Quarter 2020 Financial Results

Rhea-AI Summary

AppFolio, a cloud-based software provider for real estate and legal markets, announced its Q2 2020 financial results. The company did not disclose full-year revenue guidance due to uncertainties from the COVID-19 pandemic. The diluted weighted average shares are projected to be around 36 million for the year. AppFolio encourages investors to refer to their Annual Report on Form 10-K and their detailed Q2 results in the upcoming Form 10-Q. A conference call is scheduled for August 3, 2020, to discuss the financial outcomes further.

Positive

• None.

Negative

• No updated full-year revenue guidance due to COVID-19 uncertainties.
• Potential negative impact on business and financial results from the pandemic.

SANTA BARBARA, Calif., Aug. 03, 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

 

FAQ

What were AppFolio's Q2 2020 financial results?

AppFolio reported its financial results for Q2 2020 but did not provide detailed figures in the press release.

Why did AppFolio not provide full-year revenue guidance for 2020?

AppFolio refrained from giving full-year revenue guidance due to uncertainties surrounding the potential impact of the COVID-19 pandemic.

When is the conference call for AppFolio's financial results?

The conference call to discuss AppFolio's financial results is scheduled for August 3, 2020, at 1:30 p.m. Pacific Time.

How many diluted weighted average shares does AppFolio expect for 2020?

AppFolio expects approximately 36 million diluted weighted average shares for the full year.