AppFolio, Inc. Announces Second Quarter 2020 Financial Results

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      
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      
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 marketing13,717   13,232   28,223   24,451  
Research and product development12,128   9,339   23,340   17,820  
General and administrative14,785   8,214   23,357   16,406  
Depreciation and amortization6,657   5,415   13,071   10,491  
Total costs and operating expenses74,698   61,328   144,363   118,477  
Income from operations6,345   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 taxes5,773   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:       
Basic34,254   34,010   34,214   33,962  
Diluted35,614   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 marketing477   302   702   550  
Research and product development580   363   874   671  
General and administrative1,176   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 amortization6,657   5,415   13,071   10,491  
Amortization of operating lease right-of-use assets1,018   987   2,071   1,928  
Deferred income taxes(13,499) (21,362) (13,137) (25,643)
Stock-based compensation2,753   1,687   3,712   3,239  
Other  81   (30) 108  
Changes in operating assets and liabilities:       
Accounts receivable(3,520) (644) (5,136) (2,695)
Prepaid expenses and other current assets2,530   (1,859) (292) (5,199)
Other assets41   830   (107) 1,254  
Accounts payable555   88   193   188  
Accrued employee expenses6,144   3,547   717   680  
Accrued expenses3,808   (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 activities24,293   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 investments500   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 exercises232   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 debt753   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 period57,215   17,212   16,247   74,506  
End of period$53,751   $19,945   $53,751   $19,945  

 

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