AppFolio, Inc. Announces Third Quarter 2024 Financial Results
AppFolio (NASDAQ: APPF) reported strong Q3 2024 financial results with revenue growing 24% year-over-year to $206 million. Total units under management increased 9% to 8.5 million. The company achieved GAAP operating income of $43 million (20.7% of revenue) compared to no operating loss in Q3 2023. Non-GAAP operating income was $59 million (28.7% of revenue). The company acquired LiveEasy, a concierge platform for resident onboarding services. AppFolio updated its full-year 2024 guidance, expecting revenue between $786-790 million and non-GAAP operating margin of 24.5-25.5%. CFO Fay Sien Goon will depart on October 25, 2024, with Tim Eaton appointed as interim CFO.
AppFolio (NASDAQ: APPF) ha riportato risultati finanziari solidi per il terzo trimestre 2024, con un fatturato in crescita del 24% anno su anno, raggiungendo 206 milioni di dollari. Il numero totale di unità gestite è aumentato del 9%, raggiungendo 8,5 milioni. L'azienda ha ottenuto un reddito operativo GAAP di 43 milioni di dollari (20,7% del fatturato), rispetto a una perdita operativa nel terzo trimestre 2023. Il reddito operativo non GAAP è stato di 59 milioni di dollari (28,7% del fatturato). L'azienda ha acquisito LiveEasy, una piattaforma di concierge per i servizi di onboarding dei residenti. AppFolio ha aggiornato le previsioni per l'intero anno 2024, prevedendo un fatturato compreso tra 786 e 790 milioni di dollari e un margine operativo non GAAP del 24,5-25,5%. Il CFO Fay Sien Goon lascerà il 25 ottobre 2024, con Tim Eaton nominato CFO ad interim.
AppFolio (NASDAQ: APPF) reportó sólidos resultados financieros en el tercer trimestre de 2024, con ingresos crecientes del 24% interanual, alcanzando 206 millones de dólares. El total de unidades bajo gestión aumentó un 9%, llegando a 8.5 millones. La compañía logró un ingreso operativo GAAP de 43 millones de dólares (20.7% de los ingresos), en comparación con una pérdida operativa en el tercer trimestre de 2023. El ingreso operativo no GAAP fue de 59 millones de dólares (28.7% de los ingresos). La empresa adquirió LiveEasy, una plataforma de concierge para servicios de incorporación de residentes. AppFolio actualizó su guía para todo el año 2024, previendo ingresos entre 786 y 790 millones de dólares y un margen operativo no GAAP del 24.5-25.5%. El CFO Fay Sien Goon se irá el 25 de octubre de 2024, y Tim Eaton ha sido nombrado CFO interino.
AppFolio (NASDAQ: APPF)는 2024년 3분기 강력한 재무 실적을 보고했으며, 수익이 전년 대비 24% 증가하여 2억 6백만 달러에 달했습니다. 관리 단위 총 수는 9% 증가하여 850만 개에 이릅니다. 회사는 GAAP 운영 소득으로 4,300만 달러(수익의 20.7%)를 기록했으며, 2023년 3분기에는 운영 손실이 없었습니다. 비GAAP 운영 소득은 5,900만 달러(수익의 28.7%)였습니다. 회사는 거주자 온보딩 서비스용 컨시어지 플랫폼인 LiveEasy를 인수했습니다. AppFolio는 2024년 전체 연도 가이드를 업데이트했으며, 수익은 7억 8천만 달러에서 7억 9천만 달러 사이로 예상하고 있으며, 비GAAP 운영 마진은 24.5-25.5%로 설정하였습니다. CFO인 Fay Sien Goon은 2024년 10월 25일에 퇴사하며, Tim Eaton이 임시 CFO로 임명됩니다.
AppFolio (NASDAQ: APPF) a annoncé de solides résultats financiers pour le troisième trimestre 2024, avec des revenus en hausse de 24 % par rapport à l'année précédente, atteignant 206 millions de dollars. Le nombre total d'unités sous gestion a augmenté de 9 % pour atteindre 8,5 millions. L'entreprise a réalisé un bénéfice d'exploitation GAAP de 43 millions de dollars (20,7 % des revenus), par rapport à une perte d'exploitation au troisième trimestre 2023. Le bénéfice d'exploitation non-GAAP était de 59 millions de dollars (28,7 % des revenus). L'entreprise a acquis LiveEasy, une plateforme de concierge pour les services d'accueil des résidents. AppFolio a mis à jour ses prévisions pour l'année 2024, s'attendant à des revenus compris entre 786 et 790 millions de dollars et à une marge d'exploitation non-GAAP de 24,5 à 25,5 %. La CFO Fay Sien Goon partira le 25 octobre 2024, et Tim Eaton a été nommé CFO par intérim.
AppFolio (NASDAQ: APPF) hat für das dritte Quartal 2024 starke finanzielle Ergebnisse gemeldet, mit einem Umsatzwachstum von 24% im Vergleich zum Vorjahr auf 206 Millionen US-Dollar. Die Gesamtzahl der verwalteten Einheiten stieg um 9% auf 8,5 Millionen. Das Unternehmen erzielte einen GAAP-Betriebsgewinn von 43 Millionen US-Dollar (20,7% des Umsatzes) im Vergleich zu einem Betriebsverlust im dritten Quartal 2023. Der nicht-GAAP-Betriebsgewinn betrug 59 Millionen US-Dollar (28,7% des Umsatzes). Das Unternehmen erwarb LiveEasy, eine Concierge-Plattform für die Aufnahme von Bewohnerdiensten. AppFolio hat die Prognose für das gesamte Jahr 2024 aktualisiert und erwartet einen Umsatz zwischen 786 und 790 Millionen US-Dollar sowie eine nicht-GAAP-Betriebsquote von 24,5-25,5%. CFO Fay Sien Goon wird am 25. Oktober 2024 ausscheiden, und Tim Eaton wurde als interimistischer CFO eingesetzt.
- Revenue grew 24% YoY to $206 million
- Units under management increased 9% YoY to 8.5 million
- GAAP operating income improved to $43 million from $0 in Q3 2023
- Non-GAAP operating income increased to $59 million from $27 million YoY
- Operating cash flow improved to $58 million from $37 million YoY
- Strategic acquisition of LiveEasy to enhance resident services
- Departure of CFO Fay Sien Goon
Insights
AppFolio delivered exceptional Q3 results with
The acquisition of LiveEasy strategically enhances their resident services portfolio, potentially creating new revenue streams. With 8.5 million units under management growing at
The LiveEasy acquisition and integration into FolioSpace represents a significant strategic move in AppFolio's product ecosystem. By incorporating concierge moving and home services into their resident application, they're creating a comprehensive platform that addresses the entire resident lifecycle. This vertical integration could lead to increased user retention and higher revenue per user.
The
Q3 revenue grows
Company announces acquisition of LiveEasy as part of its expanded resident vision
SANTA BARBARA, Calif., Oct. 24, 2024 (GLOBE NEWSWIRE) -- AppFolio, Inc. (NASDAQ: APPF) ("AppFolio" or the "Company"), a technology leader powering the future of the real estate industry, today announced its financial results for the third quarter ended September 30, 2024.
"Our results reflect relentless customer focus and strong execution of our strategy," said Shane Trigg, President and CEO, AppFolio. "With our next-generation resident application, FolioSpace™, we are redefining how property managers and residents connect, and demonstrating our commitment to investing in innovation that builds the platform where the real estate industry comes to do business."
Financial Highlights for Third Quarter of 2024
- Revenue grew
24% year-over-year to$206 million . - Total units under management grew
9% year-over-year to 8.5 million. - GAAP operating income was
$43 million , or20.7% of revenue, compared to an operating loss of ($0 million ), in Q3 2023. - Non-GAAP operating income was
$59 million , or28.7% of revenue, compared to an operating income of$27 million , or16.1% of revenue, in Q3 2023. - Net cash provided by operating activities was
$58 million , or28.1% of revenue, compared to$37 million , or22.2% of revenue, in Q3 2023. - Non-GAAP free cash flow was
$56 million , or27.1% of revenue, compared to$34 million , or20.3% of revenue, in Q3 2023.
Business Highlight
- AppFolio acquired LiveEasy, a concierge platform providing moving and home services throughout the resident onboarding process. These services will be integrated into FolioSpace, AppFolio’s next-generation resident application.
Executive Management Transition
- Fay Sien Goon, the Company’s Chief Financial Officer, will depart AppFolio as of October 25, 2024. The Company has commenced a search for a successor to Ms. Goon and will consider internal and external candidates. Pending the appointment of Ms. Goon’s successor, AppFolio has appointed Tim Eaton as the Company’s interim Chief Financial Officer, effective October 25, 2024. Mr. Eaton has served as the Company’s Chief of Staff to the Chief Executive Officer since 2022, and in various other leadership roles within the Company since 2020.
Financial Outlook
Based on information available as of October 24, 2024, AppFolio's outlook for fiscal year 2024 follows:
- Full year revenue is expected to be in the range of
$786 million to$790 million . - Full year non-GAAP operating margin as a percentage of revenue is expected to be in the range of
24.5% to25.5% . - Full year non-GAAP free cash flow margin as a percentage of revenue is expected to be in the range of
22% to24% . - Diluted weighted average shares outstanding are expected to be approximately 37 million for the full year.
Conference Call Information
As previously announced, the Company will host a conference call today, October 24, 2024, at 2:00 p.m. Pacific Time (PT), 5:00 p.m. Eastern Time (ET), to discuss the company’s third quarter 2024 financial results. A live webcast of the call will be available at: https://edge.media-server.com/mmc/p/56effhwx. To access the call by phone, please go to the following link: https://register.vevent.com/register/BI0592d6d11ce14a179afe199e2d07039c, 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
AppFolio is a technology leader powering the future of the real estate industry. Our innovative platform and trusted partnership enable our customers to connect communities, increase operational efficiency, and grow their business. For more information about AppFolio, visit ir.appfolioinc.com.
Investor Relations Contact:
Lori Barker
ir@appfolio.com
Use of Non-GAAP Financial Measures
Reconciliations of current and historical 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 entitled “Statement Regarding the Use of Non-GAAP Financial Measures.”
AppFolio is unable, at this time, to provide GAAP equivalent guidance measures on a forward-looking basis for non-GAAP operating margin and non-GAAP free cash flow margin because certain items that impact these measures are uncertain, out of our control, or cannot be reasonably predicted, such as charges related to stock-based compensation expense. The effect of these excluded items may be significant.
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,” “future,” “predicts,” “projects,” “target,” “seeks,” “contemplates,” “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 2024 financial outlook, anticipated future expenses and investments, the Company's business opportunities, the impact of the Company's strategic actions and initiatives, the potential benefits and effect of the FolioSpace resident app and the acquisition of LiveEasy and their impact on the Company’s plans, objectives, expectations and capabilities.
Forward-looking statements represent AppFolio's current beliefs and expectations based on information currently available and speak only as of the date the statement is made. Forward-looking statements are subject to 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. The risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to materially differ from those expressed or implied by these forward-looking statements include the Company’s ability to successfully launch the FolioSpace resident app and integrate the LiveEasy business, the Company’s ability to implement its plans, objectives and expectations with respect to the FolioSpace resident app and the LiveEasy business, negative effects of the announcement of the FolioSpace resident app and/or the Live Easy acquisition on the Company’s business operations, operating results or share price, and unknown liabilities associated with the acquisition as well as those risks, uncertainties and other factors described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 1, 2024, and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recently filed Annual Report on Form 10-K or Quarterly Report on Form 10-Q, 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.
The Company undertakes no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (UNAUDITED) | ||||||
| (in thousands) | ||||||
| September 30, 2024 | December 31, 2023 | |||||
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 62,417 | $ | 49,509 | ||
| Investment securities—current | 268,951 | 162,196 | ||||
| Accounts receivable, net | 25,581 | 20,709 | ||||
| Prepaid expenses and other current assets | 38,194 | 39,943 | ||||
| Total current assets | 395,143 | 272,357 | ||||
| Property and equipment, net | 25,478 | 28,362 | ||||
| Operating lease right-of-use assets | 17,744 | 19,285 | ||||
| Capitalized software development costs, net | 16,330 | 21,562 | ||||
| Goodwill | 56,060 | 56,060 | ||||
| Other long-term assets | 12,542 | 11,263 | ||||
| Total assets | $ | 523,297 | $ | 408,889 | ||
| Liabilities and Stockholders’ Equity | ||||||
| Current liabilities | ||||||
| Accounts payable | $ | 509 | $ | 1,141 | ||
| Accrued employee expenses | 33,625 | 35,567 | ||||
| Accrued expenses | 14,899 | 21,723 | ||||
| Other current liabilities | 14,664 | 11,335 | ||||
| Total current liabilities | 63,697 | 69,766 | ||||
| Operating lease liabilities | 38,402 | 41,114 | ||||
| Other liabilities | 8,371 | 697 | ||||
| Total liabilities | 110,470 | 111,577 | ||||
| Stockholders’ equity | 412,827 | 297,312 | ||||
| Total liabilities and stockholders’ equity | $ | 523,297 | $ | 408,889 | ||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
| (UNAUDITED) | |||||||||||||
| (in thousands, except per share amounts) | |||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||
| Revenue(1) | $ | 205,733 | $ | 165,440 | $ | 590,538 | $ | 448,615 | |||||
| Costs and operating expenses: | |||||||||||||
| Cost of revenue (exclusive of depreciation and amortization)(2) | 71,631 | 62,739 | 205,878 | 176,801 | |||||||||
| Sales and marketing(2) | 25,406 | 29,701 | 77,161 | 86,101 | |||||||||
| Research and product development(2) | 40,662 | 41,592 | 118,079 | 116,517 | |||||||||
| General and administrative(2) | 21,139 | 23,907 | 62,525 | 74,417 | |||||||||
| Depreciation and amortization | 4,327 | 7,568 | 14,209 | 22,055 | |||||||||
| Total costs and operating expenses | 163,165 | 165,507 | 477,852 | 475,891 | |||||||||
| Income (loss) from operations | 42,568 | (67 | ) | 112,686 | (27,276 | ) | |||||||
| Other income (loss), net | — | (249 | ) | — | (283 | ) | |||||||
| Interest income, net | 4,014 | 1,788 | 10,482 | 4,627 | |||||||||
| Income (loss) before provision for income taxes | 46,582 | 1,472 | 123,168 | (22,932 | ) | ||||||||
| Provision for (benefit from) income taxes | 13,576 | (24,973 | ) | 21,834 | 4,634 | ||||||||
| Net income (loss) | $ | 33,006 | $ | 26,445 | $ | 101,334 | $ | (27,566 | ) | ||||
| Net income (loss) per common share: | |||||||||||||
| Basic | $ | 0.91 | $ | 0.74 | $ | 2.80 | $ | (0.78 | ) | ||||
| Diluted | $ | 0.90 | $ | 0.72 | $ | 2.76 | $ | (0.78 | ) | ||||
| Weighted average common shares outstanding | |||||||||||||
| Basic | 36,306 | 35,691 | 36,211 | 35,567 | |||||||||
| Diluted | 36,756 | 36,482 | 36,752 | 35,567 | |||||||||
(1) The following table presents our revenue categories:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||
| Core solutions | $ | 46,030 | $ | 39,756 | $ | 132,974 | $ | 115,440 | |||
| Value Added Services | 157,726 | 123,188 | 451,677 | 326,108 | |||||||
| Other | 1,977 | 2,496 | 5,887 | 7,067 | |||||||
| Total revenue | $ | 205,733 | $ | 165,440 | $ | 590,538 | $ | 448,615 | |||
(2) Includes stock-based compensation expense as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||
| Costs and operating expenses: | |||||||||||
| Cost of revenue (exclusive of depreciation and amortization) | $ | 1,126 | $ | 1,149 | $ | 3,261 | $ | 2,905 | |||
| Sales and marketing | 2,071 | 2,041 | 5,284 | 4,902 | |||||||
| Research and product development | 7,471 | 6,064 | 19,625 | 15,851 | |||||||
| General and administrative | 5,367 | 6,003 | 16,133 | 16,274 | |||||||
| Total stock-based compensation expense | $ | 16,035 | $ | 15,257 | $ | 44,303 | $ | 39,932 | |||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
| (UNAUDITED) | |||||||||||||||
| (in thousands) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Cash from operating activities | |||||||||||||||
| Net income (loss) | $ | 33,006 | $ | 26,445 | $ | 101,334 | $ | (27,566 | ) | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||
| Depreciation and amortization | 3,912 | 6,980 | 12,804 | 20,115 | |||||||||||
| Amortization of operating lease right-of-use assets | 488 | 509 | 1,541 | 1,618 | |||||||||||
| Gain on lease modification | — | — | — | (4,281 | ) | ||||||||||
| Stock-based compensation, including as amortized | 16,449 | 15,845 | 45,707 | 41,872 | |||||||||||
| Other | (2,141 | ) | (806 | ) | (6,146 | ) | (1,514 | ) | |||||||
| Changes in operating assets and liabilities: | |||||||||||||||
| Accounts receivable | 110 | (327 | ) | (4,872 | ) | (3,857 | ) | ||||||||
| Prepaid expenses and other assets | (4,046 | ) | 1,354 | 1,111 | (712 | ) | |||||||||
| Accounts payable | (728 | ) | (496 | ) | (291 | ) | (1,485 | ) | |||||||
| Operating lease liabilities | (1,778 | ) | 1,558 | (3,196 | ) | (3,080 | ) | ||||||||
| Accrued expenses and other liabilities | 12,498 | (14,305 | ) | 3,601 | 7,990 | ||||||||||
| Net cash provided by operating activities | 57,770 | 36,757 | 151,593 | 29,100 | |||||||||||
| Cash from investing activities | |||||||||||||||
| Purchases of available-for-sale investments | (113,780 | ) | (35,322 | ) | (265,319 | ) | (108,919 | ) | |||||||
| Proceeds from sales of available-for-sale investments | — | — | — | 1,013 | |||||||||||
| Proceeds from maturities of available-for-sale investments | 69,300 | 44,635 | 163,755 | 94,252 | |||||||||||
| Purchases of property and equipment | (363 | ) | (3,761 | ) | (1,821 | ) | (5,932 | ) | |||||||
| Capitalization of software development costs | (1,583 | ) | (1,243 | ) | (4,112 | ) | (3,394 | ) | |||||||
| Proceeds from sale of equity-method investment | — | — | — | 629 | |||||||||||
| Net cash (used in) provided by investing activities | (46,426 | ) | 4,309 | (107,497 | ) | (22,351 | ) | ||||||||
| Cash from financing activities | |||||||||||||||
| Proceeds from stock option exercises | 15 | 683 | 3,913 | 2,185 | |||||||||||
| Tax withholding for net share settlement | (8,581 | ) | (6,510 | ) | (35,101 | ) | (19,766 | ) | |||||||
| Net cash used in financing activities | (8,566 | ) | (5,827 | ) | (31,188 | ) | (17,581 | ) | |||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 2,778 | 35,239 | 12,908 | (10,832 | ) | ||||||||||
| Cash, cash equivalents and restricted cash | |||||||||||||||
| Beginning of period | 59,889 | 24,948 | 49,759 | 71,019 | |||||||||||
| End of period | $ | 62,667 | $ | 60,187 | 62,667 | 60,187 | |||||||||
| RECONCILIATION FROM GAAP TO NON-GAAP RESULTS | |||||||||||||||
| (UNAUDITED) | |||||||||||||||
| (in thousands, except per share data) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Costs and operating expenses: | |||||||||||||||
| GAAP cost of revenue (exclusive of depreciation and amortization) | $ | 71,631 | $ | 62,739 | $ | 205,878 | $ | 176,801 | |||||||
| Stock-based compensation expense | (1,126 | ) | (1,149 | ) | (3,261 | ) | (2,905 | ) | |||||||
| Workforce reduction costs | — | (2,135 | ) | — | (2,135 | ) | |||||||||
| Non-GAAP cost of revenue (exclusive of depreciation and amortization) | $ | 70,505 | $ | 59,455 | $ | 202,617 | $ | 171,761 | |||||||
| GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue | 35 | % | 38 | % | 35 | % | 39 | % | |||||||
| Non-GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue | 34 | % | 36 | % | 34 | % | 38 | % | |||||||
| GAAP sales and marketing | $ | 25,406 | $ | 29,701 | $ | 77,161 | $ | 86,101 | |||||||
| Stock-based compensation expense | (2,071 | ) | (2,041 | ) | (5,284 | ) | (4,902 | ) | |||||||
| Workforce reduction costs | — | (3,401 | ) | — | (3,401 | ) | |||||||||
| Non-GAAP sales and marketing | $ | 23,335 | $ | 24,259 | $ | 71,877 | $ | 77,798 | |||||||
| GAAP sales and marketing as a percentage of revenue | 12 | % | 18 | % | 13 | % | 19 | % | |||||||
| Non-GAAP sales and marketing as a percentage of revenue | 11 | % | 15 | % | 12 | % | 17 | % | |||||||
| GAAP research and product development | $ | 40,662 | $ | 41,592 | $ | 118,079 | $ | 116,517 | |||||||
| Stock-based compensation expense | (7,471 | ) | (6,064 | ) | (19,625 | ) | (15,851 | ) | |||||||
| Workforce reduction costs | — | (2,635 | ) | — | (2,635 | ) | |||||||||
| Non-GAAP research and product development | $ | 33,191 | $ | 32,893 | $ | 98,454 | $ | 98,031 | |||||||
| GAAP research and product development as a percentage of revenue | 20 | % | 25 | % | 20 | % | 26 | % | |||||||
| Non-GAAP research and product development as a percentage of revenue | 16 | % | 20 | % | 17 | % | 22 | % | |||||||
| GAAP general and administrative | $ | 21,139 | $ | 23,907 | $ | 62,525 | $ | 74,417 | |||||||
| Stock-based compensation expense | (5,367 | ) | (6,003 | ) | (16,133 | ) | (16,274 | ) | |||||||
| Gain on lease modification | — | — | — | 4,281 | |||||||||||
| CEO separation costs, net | — | — | — | (11,520 | ) | ||||||||||
| Workforce reduction costs | — | (2,106 | ) | — | (2,106 | ) | |||||||||
| Non-GAAP general and administrative | $ | 15,772 | $ | 15,798 | $ | 46,392 | $ | 48,798 | |||||||
| GAAP general and administrative as a percentage of revenue | 10 | % | 14 | % | 11 | % | 17 | % | |||||||
| Non-GAAP general and administrative as a percentage of revenue | 8 | % | 10 | % | 8 | % | 11 | % | |||||||
| GAAP depreciation and amortization | $ | 4,327 | $ | 7,568 | $ | 14,209 | $ | 22,055 | |||||||
| Amortization of stock-based compensation capitalized in software development costs | (414 | ) | (589 | ) | (1,404 | ) | (1,940 | ) | |||||||
| Amortization of purchased intangibles | (118 | ) | (617 | ) | (355 | ) | (1,857 | ) | |||||||
| Non-GAAP depreciation and amortization | $ | 3,795 | $ | 6,362 | $ | 12,450 | $ | 18,258 | |||||||
| GAAP depreciation and amortization as a percentage of revenue | 2 | % | 5 | % | 2 | % | 5 | % | |||||||
| Non-GAAP depreciation and amortization as a percentage of revenue | 2 | % | 4 | % | 2 | % | 4 | % | |||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Income (loss) from operations: | |||||||||||||||
| GAAP income (loss) from operations | $ | 42,568 | $ | (67 | ) | $ | 112,686 | $ | (27,276 | ) | |||||
| Stock-based compensation expense | 16,035 | 15,257 | 44,303 | 39,932 | |||||||||||
| Amortization of stock-based compensation capitalized in software development costs | 414 | 589 | 1,404 | 1,940 | |||||||||||
| Amortization of purchased intangibles | 118 | 617 | 355 | 1,857 | |||||||||||
| Gain on lease modification | — | — | — | (4,281 | ) | ||||||||||
| CEO separation costs, net | — | — | — | 11,520 | |||||||||||
| Workforce reduction costs | — | 10,278 | — | 10,278 | |||||||||||
| Non-GAAP income from operations | $ | 59,135 | $ | 26,674 | $ | 158,748 | $ | 33,970 | |||||||
| Operating margin: | |||||||||||||||
| GAAP operating margin | 20.7 | % | — | % | 19.1 | % | (6.1) | % | |||||||
| Stock-based compensation expense as a percentage of revenue | 7.7 | 9.2 | 7.5 | 8.9 | |||||||||||
| Amortization of stock-based compensation capitalized in software development costs as a percentage of revenue | 0.2 | 0.4 | 0.2 | 0.4 | |||||||||||
| Amortization of purchased intangibles as a percentage of revenue | 0.1 | 0.4 | 0.1 | 0.4 | |||||||||||
| Gain on lease modification as a percentage of revenue | — | — | — | (1.0 | ) | ||||||||||
| CEO separation costs, net as a percentage of revenue | — | — | — | 2.6 | |||||||||||
| Workforce reduction costs as a percentage of revenue | — | 6.1 | — | 2.4 | |||||||||||
| Non-GAAP operating margin | 28.7 | % | 16.1 | % | 26.9 | % | 7.6 | % | |||||||
| Net income (loss): | |||||||||||||||
| GAAP net income (loss) | $ | 33,006 | $ | 26,445 | $ | 101,334 | $ | (27,566 | ) | ||||||
| Stock-based compensation expense | 16,035 | 15,257 | 44,303 | 39,932 | |||||||||||
| Amortization of stock-based compensation capitalized in software development costs | 414 | 589 | 1,404 | 1,940 | |||||||||||
| Amortization of purchased intangibles | 118 | 617 | 355 | 1,857 | |||||||||||
| Gain on lease modification | — | — | — | (4,281 | ) | ||||||||||
| CEO separation costs, net | — | — | — | 11,520 | |||||||||||
| Workforce reduction costs | — | 10,278 | — | 10,278 | |||||||||||
| Income tax effect of adjustments | (2,211 | ) | (31,642 | ) | (20,474 | ) | (3,859 | ) | |||||||
| Non-GAAP net income | $ | 47,362 | $ | 21,544 | $ | 126,922 | $ | 29,821 | |||||||
| Net income (loss) per share, basic: | |||||||||||||||
| GAAP net income (loss) per share, basic | $ | 0.91 | $ | 0.74 | $ | 2.80 | $ | (0.78 | ) | ||||||
| Non-GAAP adjustments to net income (loss) | 0.39 | (0.14 | ) | 0.71 | 1.62 | ||||||||||
| Non-GAAP net income per share, basic | $ | 1.30 | $ | 0.60 | $ | 3.51 | $ | 0.84 | |||||||
| Net income (loss) income per share, diluted: | |||||||||||||||
| GAAP net income (loss) per share, diluted | $ | 0.90 | $ | 0.72 | $ | 2.76 | $ | (0.78 | ) | ||||||
| Non-GAAP adjustments to net income (loss) | 0.39 | (0.13 | ) | 0.69 | 1.60 | ||||||||||
| Non-GAAP net income per share, diluted | $ | 1.29 | $ | 0.59 | $ | 3.45 | $ | 0.82 | |||||||
| Weighted-average shares used in GAAP per share calculation | |||||||||||||||
| Basic | 36,306 | 35,691 | 36,211 | 35,567 | |||||||||||
| Diluted | 36,756 | 36,482 | 36,752 | 35,567 | |||||||||||
| Weighted-average shares used in non-GAAP per share calculation | |||||||||||||||
| Basic | 36,306 | 35,691 | 36,211 | 35,567 | |||||||||||
| Diluted | 36,756 | 36,482 | 36,752 | 36,345 | |||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Free cash flow: | |||||||||||||||
| GAAP net cash provided by operating activities | $ | 57,770 | $ | 36,757 | $ | 151,593 | $ | 29,100 | |||||||
| Purchases of property and equipment | (363 | ) | (3,761 | ) | (1,821 | ) | (5,932 | ) | |||||||
| Capitalized software development costs | (1,583 | ) | (1,243 | ) | (4,112 | ) | (3,394 | ) | |||||||
| CEO separation costs payment | — | — | — | 14,926 | |||||||||||
| Partial lease termination payment | — | — | — | 2,851 | |||||||||||
| Severance payments for workforce reduction | — | 1,801 | 566 | 1,801 | |||||||||||
| Non-GAAP free cash flow | $ | 55,824 | $ | 33,554 | $ | 146,226 | $ | 39,352 | |||||||
| Free cash flow margin: | |||||||||||||||
| GAAP net cash provided by operating activities as a percentage of revenue | 28.1 | % | 22.2 | % | 25.7 | % | 6.5 | % | |||||||
| Purchases of property and equipment as a percentage of revenue | (0.2 | ) | (2.3 | ) | (0.3 | ) | (1.3 | ) | |||||||
| Capitalized software development costs as a percentage of revenue | (0.8 | ) | (0.8 | ) | (0.7 | ) | (0.8 | ) | |||||||
| CEO separation costs payment as a percentage of revenue | — | — | — | 3.4 | |||||||||||
| Partial lease termination payment as a percentage of revenue | — | — | — | 0.6 | |||||||||||
| Severance payments for workforce reduction as a percentage of revenue | — | 1.2 | 0.1 | 0.4 | |||||||||||
| Non-GAAP free cash flow margin | 27.1 | % | 20.3 | % | 24.8 | % | 8.8 | % | |||||||
Statement Regarding the Use of Non-GAAP Financial Measures
We use the following non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
- Non-GAAP presentation of income (loss) from operations, costs and operating expenses, operating margin, 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, 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. Non-GAAP operating margin is calculated as non-GAAP operating income (loss) from operations as a percentage of revenue.
- Non-GAAP free cash flow. Non-GAAP 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 and 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. 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. Free cash flow margin is calculated as free cash flow as a percentage of revenue.
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.
- 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. 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, along with the subsequent cash payments, 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.
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