001-37468 | 26-0359894 | ||||
(Commission File Number) | (IRS Employer Identification Number) |
☐ | 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)) |
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 |
Exhibit Number |
Description | |||||||
99.1 | ||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Date: October 26, 2023 | AppFolio, Inc. | ||||||||||
By: /s/ Fay Sien Goon | |||||||||||
Name: Fay Sien Goon | |||||||||||
Title: Chief Financial Officer |
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 |
Three Months Ended September 30, |
Nine Months Ended September 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 |
Three Months Ended September 30, |
Nine Months Ended September 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 |
Three Months Ended September 30, |
Nine Months Ended September 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 Ended September 30, |
Nine Months Ended September 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 |
Three Months Ended September 30, |
Nine Months Ended September 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 Ended September 30, |
Nine Months Ended September 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 Ended September 30, |
Nine Months Ended September 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 | % |