AppFolio, Inc. (NASDAQ: APPF) ("AppFolio" or the "Company"), a
leading provider of cloud business management solutions for the
real estate industry, today announced its financial results for the
fourth quarter and fiscal year ended December 31, 2022.
"AppFolio continued to show resilience in the
changing real estate industry with 2022 revenue growth of 31%. Not
only did we successfully grow our payments business, we added new
larger customers, current customers expanded their adoption of our
value added services and we increased penetration of AppFolio
Property Manager Plus,” said Jason Randall, President and CEO,
AppFolio. “In 2023 we will continue to focus on expanding our
innovative products and services and trusted customer partnerships.
Our strong team and culture will continue to focus on driving
efficiencies and operational excellence as we introduce new ways to
help our customers manage and scale their increasingly complex
businesses."
Financial Highlights
- Revenue: Total revenue was $124.1
million in the fourth quarter of 2022, a 30% increase from $95.6
million in the fourth quarter of 2021. Total revenue for 2022 grew
31% to $471.9 million from $359.4 million for 2021.
- Units Served: Total units on the
AppFolio Property Manager platform increased to approximately 7.3
million in the fourth quarter of 2022 from approximately 6.3
million at the end of the fourth quarter of 2021.
- Loss from Operations: GAAP loss from
operations in the fourth quarter of 2022 was $20.0 million, or
16.1% of revenue, compared to $7.3 million, or 7.7% of revenue, in
the same quarter of 2021. Non-GAAP loss from operations in the
fourth quarter of 2022 was $3.4 million, or 2.7% of revenue,
compared to Non-GAAP loss from operations of $0.4 million, or 0.4%
of revenue, in the fourth quarter of 2021.
- Cash: Cash, cash equivalents, and
investment securities were $185.2 million as of December 31,
2022, compared to $183.5 million as of December 31, 2021. Non-GAAP
free cash flow was $1.3 million, or 1.0% of revenue, in the fourth
quarter of 2022, compared to $(2.0) million, or (2.1)% of revenue,
in the same quarter of 2021. Total non-GAAP free cash flow for 2022
was $4.1 million, or 0.9% of revenue compared to $12.8 million, or
3.6% of revenue in 2021.
Financial OutlookBased on
information available as of January 26, 2023, AppFolio's
outlook for fiscal year 2023 follows:
- Full year revenue is expected to be
in the range of $565 million to $575 million.
- Full year non-GAAP operating margin
as a percentage of revenue is expected to be approximately
breakeven.
- Full year non-GAAP free cash flow
margin as a percentage of revenue is expected to be in the range of
2% to 3%.
- Weighted average shares outstanding
are expected to be approximately 35 million for the full
year.
Conference Call InformationAs
previously announced, the Company will host a conference call
today, January 26, 2023, at 2:00 p.m. Pacific Time (PT), 5:00
p.m. Eastern Time (ET), to discuss the company’s fourth quarter and
year ended 2022 financial results. A live webcast of the call will
be available at: https://edge.media-server.com/mmc/p/j4kdio9f. To
access the call by phone, please go to the following link:
https://register.vevent.com/register/BI1a3bcda7808844f6982d79643cf7929a,
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 leading provider of cloud business management solutions 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 www.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 our
Form 10-Q for the quarter ended September 30, 2022 filed with the
SEC on October 28, 2022 and the section entitled “Risk Factors” in
AppFolio's Annual Report on Form 10-K for the fiscal year ended
December 31, 2022 to be filed with the SEC, 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)
|
|
December 31,2022 |
|
December 31,2021 |
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
70,769 |
|
$ |
57,847 |
Investment securities—current |
|
|
89,297 |
|
|
64,600 |
Accounts receivable, net |
|
|
16,503 |
|
|
12,595 |
Prepaid expenses and other current assets |
|
|
24,899 |
|
|
23,553 |
Total current assets |
|
|
201,468 |
|
|
158,595 |
Investment securities—noncurrent |
|
|
25,161 |
|
|
61,076 |
Property and equipment, net |
|
|
26,110 |
|
|
30,479 |
Operating lease right-of-use assets |
|
|
23,485 |
|
|
41,710 |
Capitalized software development costs, net |
|
|
35,315 |
|
|
41,212 |
Goodwill |
|
|
56,060 |
|
|
56,147 |
Intangible assets, net |
|
|
4,833 |
|
|
11,711 |
Other long-term assets |
|
|
8,785 |
|
|
7,087 |
Total assets |
|
$ |
381,217 |
|
$ |
408,017 |
Liabilities and Stockholders’ Equity |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
2,473 |
|
$ |
1,704 |
Accrued employee expenses |
|
|
34,376 |
|
|
30,065 |
Accrued expenses |
|
|
15,601 |
|
|
13,284 |
Other current liabilities |
|
|
8,893 |
|
|
7,589 |
Total current liabilities |
|
|
61,343 |
|
|
52,642 |
Operating lease liabilities |
|
|
50,237 |
|
|
55,733 |
Other liabilities |
|
|
4,091 |
|
|
2,261 |
Stockholders’ equity |
|
|
265,546 |
|
|
297,381 |
Total liabilities and stockholders’ equity |
|
$ |
381,217 |
|
$ |
408,017 |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(UNAUDITED)(in thousands,
except per share amounts)
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue(1) |
$ |
124,058 |
|
|
$ |
95,600 |
|
|
$ |
471,883 |
|
|
$ |
359,370 |
|
Costs and operating expenses: |
|
|
|
|
|
|
|
Cost of revenue (exclusive of depreciation and
amortization)(2) |
|
50,342 |
|
|
|
39,097 |
|
|
|
191,826 |
|
|
|
143,944 |
|
Sales and marketing(2) |
|
29,840 |
|
|
|
19,945 |
|
|
|
107,398 |
|
|
|
73,200 |
|
Research and product development(2) |
|
31,152 |
|
|
|
19,591 |
|
|
|
111,118 |
|
|
|
65,980 |
|
General and administrative(2) |
|
24,534 |
|
|
|
16,308 |
|
|
|
100,792 |
|
|
|
57,279 |
|
Depreciation and amortization |
|
8,142 |
|
|
|
8,001 |
|
|
|
33,119 |
|
|
|
30,845 |
|
Total costs and operating expenses |
|
144,010 |
|
|
|
102,942 |
|
|
|
544,253 |
|
|
|
371,248 |
|
Loss from operations |
|
(19,952 |
) |
|
|
(7,342 |
) |
|
|
(72,370 |
) |
|
|
(11,878 |
) |
Other income, net |
|
213 |
|
|
|
12,406 |
|
|
|
4,469 |
|
|
|
13,111 |
|
Interest income, net |
|
552 |
|
|
|
328 |
|
|
|
1,184 |
|
|
|
501 |
|
(Loss) income before provision for income taxes |
|
(19,187 |
) |
|
|
5,392 |
|
|
|
(66,717 |
) |
|
|
1,734 |
|
Provision for income taxes |
|
513 |
|
|
|
6,723 |
|
|
|
1,402 |
|
|
|
706 |
|
Net (loss) income |
$ |
(19,700 |
) |
|
$ |
(1,331 |
) |
|
$ |
(68,119 |
) |
|
$ |
1,028 |
|
|
|
|
|
|
|
|
|
Net (loss) income per common share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.56 |
) |
|
$ |
(0.04 |
) |
|
$ |
(1.95 |
) |
|
$ |
0.03 |
|
Diluted |
$ |
(0.56 |
) |
|
$ |
(0.04 |
) |
|
$ |
(1.95 |
) |
|
$ |
0.03 |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
35,229 |
|
|
|
34,738 |
|
|
|
35,010 |
|
|
|
34,578 |
|
Diluted |
|
35,229 |
|
|
|
34,738 |
|
|
|
35,010 |
|
|
|
35,701 |
|
(1) The following table presents our revenue
categories:
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Core solutions |
$ |
35,378 |
|
$ |
28,691 |
|
$ |
132,541 |
|
$ |
105,148 |
Value Added Services |
|
86,287 |
|
|
63,754 |
|
|
327,636 |
|
|
241,289 |
Other |
|
2,393 |
|
|
3,155 |
|
|
11,706 |
|
|
12,933 |
Total revenue |
$ |
124,058 |
|
$ |
95,600 |
|
$ |
471,883 |
|
$ |
359,370 |
(2) Includes stock-based compensation expense as
follows:
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Costs and operating expenses: |
|
|
|
|
|
|
|
Cost of revenue (exclusive of depreciation and amortization) |
$ |
767 |
|
$ |
515 |
|
$ |
2,640 |
|
$ |
2,024 |
Sales and marketing |
|
3,185 |
|
|
742 |
|
|
8,681 |
|
|
2,329 |
Research and product development |
|
4,870 |
|
|
1,935 |
|
|
16,030 |
|
|
5,457 |
General and administrative |
|
3,904 |
|
|
2,096 |
|
|
13,584 |
|
|
5,531 |
Total stock-based compensation expense |
$ |
12,726 |
|
$ |
5,288 |
|
$ |
40,935 |
|
$ |
15,341 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(UNAUDITED)(in thousands) |
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Cash from operating activities |
|
|
|
|
|
|
|
Net (loss) income |
$ |
(19,700 |
) |
|
$ |
(1,331 |
) |
|
$ |
(68,119 |
) |
|
$ |
1,028 |
|
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
7,525 |
|
|
|
7,488 |
|
|
|
30,820 |
|
|
|
29,032 |
|
Amortization of operating lease right-of-use assets |
|
689 |
|
|
|
887 |
|
|
|
3,187 |
|
|
|
3,199 |
|
Impairment, net |
|
2,230 |
|
|
|
— |
|
|
|
22,022 |
|
|
|
— |
|
Deferred income taxes |
|
399 |
|
|
|
6,644 |
|
|
|
(993 |
) |
|
|
250 |
|
Stock-based compensation, including as amortized |
|
13,343 |
|
|
|
5,801 |
|
|
|
43,234 |
|
|
|
17,154 |
|
Gain on sale of business |
|
— |
|
|
|
— |
|
|
|
(4,156 |
) |
|
|
(380 |
) |
Gain on sale of equity-method investment and recovery of note
receivable |
|
— |
|
|
|
(12,767 |
) |
|
|
(40 |
) |
|
|
(12,767 |
) |
Other |
|
221 |
|
|
|
160 |
|
|
|
175 |
|
|
|
249 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
(1,619 |
) |
|
|
(753 |
) |
|
|
(4,198 |
) |
|
|
(2,103 |
) |
Prepaid expenses and other current assets |
|
(2,239 |
) |
|
|
1,390 |
|
|
|
(5,398 |
) |
|
|
(2,168 |
) |
Other assets |
|
(254 |
) |
|
|
(78 |
) |
|
|
(1,883 |
) |
|
|
(1,259 |
) |
Accounts payable |
|
945 |
|
|
|
(887 |
) |
|
|
1,176 |
|
|
|
497 |
|
Accrued employee expenses |
|
5,103 |
|
|
|
4,929 |
|
|
|
4,281 |
|
|
|
11,264 |
|
Accrued expenses |
|
(539 |
) |
|
|
(347 |
) |
|
|
3,452 |
|
|
|
(1,773 |
) |
Operating lease liabilities |
|
(776 |
) |
|
|
(727 |
) |
|
|
(2,524 |
) |
|
|
1,268 |
|
Other liabilities |
|
753 |
|
|
|
(1,477 |
) |
|
|
4,329 |
|
|
|
(8,100 |
) |
Net cash provided by operating activities |
|
6,081 |
|
|
|
8,932 |
|
|
|
25,365 |
|
|
|
35,391 |
|
Cash from investing activities |
|
|
|
|
|
|
|
Purchases of available-for-sale investments |
|
(8,845 |
) |
|
|
(74,174 |
) |
|
|
(79,279 |
) |
|
|
(241,215 |
) |
Proceeds from sales of available-for-sale investments |
|
994 |
|
|
|
— |
|
|
|
994 |
|
|
|
43,198 |
|
Proceeds from maturities of available-for-sale investments |
|
11,285 |
|
|
|
33,600 |
|
|
|
87,883 |
|
|
|
107,354 |
|
Purchases of property and equipment |
|
(597 |
) |
|
|
(2,937 |
) |
|
|
(6,540 |
) |
|
|
(8,103 |
) |
Capitalization of software development costs |
|
(4,220 |
) |
|
|
(6,104 |
) |
|
|
(14,688 |
) |
|
|
(24,615 |
) |
Proceeds from sale of business, net of cash divested |
|
— |
|
|
|
402 |
|
|
|
5,124 |
|
|
|
402 |
|
Proceeds from sale of equity-method investment |
|
— |
|
|
|
12,520 |
|
|
|
40 |
|
|
|
12,520 |
|
Net cash used in investing activities |
|
(1,383 |
) |
|
|
(36,693 |
) |
|
|
(6,466 |
) |
|
|
(110,459 |
) |
Cash from financing activities |
|
|
|
|
|
|
|
Proceeds from stock option exercises |
|
1,895 |
|
|
|
1,823 |
|
|
|
4,474 |
|
|
|
2,614 |
|
Tax withholding for net share settlement |
|
(3,056 |
) |
|
|
(659 |
) |
|
|
(10,637 |
) |
|
|
(9,962 |
) |
Net cash (used in) provided by financing
activities |
|
(1,161 |
) |
|
|
1,164 |
|
|
|
(6,163 |
) |
|
|
(7,348 |
) |
Net increase (decrease) in cash and cash equivalents
and restricted cash |
|
3,537 |
|
|
|
(26,597 |
) |
|
|
12,736 |
|
|
|
(82,416 |
) |
Cash, cash equivalents and restricted cash |
|
|
|
|
|
|
|
Beginning of period |
|
67,482 |
|
|
|
84,880 |
|
|
|
58,283 |
|
|
|
140,699 |
|
End of period |
$ |
71,019 |
|
|
$ |
58,283 |
|
|
$ |
71,019 |
|
|
$ |
58,283 |
|
RECONCILIATION FROM GAAP TO NON-GAAP
RESULTS(UNAUDITED)(in thousands, except
per share data)
|
|
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Costs and operating expenses: |
|
|
|
|
|
|
GAAP cost of revenue (exclusive of depreciation and
amortization) |
$ |
50,342 |
|
|
$ |
39,097 |
|
|
$ |
191,826 |
|
|
$ |
143,944 |
|
|
|
Less: Stock-based compensation expense |
|
767 |
|
|
|
515 |
|
|
|
2,640 |
|
|
|
2,024 |
|
|
Non-GAAP cost of revenue (exclusive of depreciation and
amortization) |
$ |
49,575 |
|
|
$ |
38,582 |
|
|
$ |
189,186 |
|
|
$ |
141,920 |
|
|
GAAP cost of revenue (exclusive of depreciation and amortization)
as a percentage of revenue |
|
41 |
% |
|
|
41 |
% |
|
|
41 |
% |
|
|
40 |
% |
|
Non-GAAP cost of revenue (exclusive of depreciation and
amortization) as a percentage of revenue |
|
40 |
% |
|
|
40 |
% |
|
|
40 |
% |
|
|
39 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP sales and marketing |
$ |
29,840 |
|
|
$ |
19,945 |
|
|
$ |
107,398 |
|
|
$ |
73,200 |
|
|
|
Less: Stock-based compensation expense |
|
3,185 |
|
|
|
742 |
|
|
|
8,681 |
|
|
|
2,329 |
|
|
Non-GAAP sales and marketing |
$ |
26,655 |
|
|
$ |
19,203 |
|
|
$ |
98,717 |
|
|
$ |
70,871 |
|
|
GAAP sales and marketing as a percentage of revenue |
|
24 |
% |
|
|
21 |
% |
|
|
23 |
% |
|
|
20 |
% |
|
Non-GAAP sales and marketing as a percentage of revenue |
|
21 |
% |
|
|
20 |
% |
|
|
21 |
% |
|
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP research and product development |
$ |
31,152 |
|
|
$ |
19,591 |
|
|
$ |
111,118 |
|
|
$ |
65,980 |
|
|
|
Less: Stock-based compensation expense |
|
4,870 |
|
|
|
1,935 |
|
|
|
16,030 |
|
|
|
5,457 |
|
|
Non-GAAP research and product development |
$ |
26,282 |
|
|
$ |
17,656 |
|
|
$ |
95,088 |
|
|
$ |
60,523 |
|
|
GAAP research and product development as a percentage of
revenue |
|
25 |
% |
|
|
20 |
% |
|
|
24 |
% |
|
|
18 |
% |
|
Non-GAAP research and product development as a percentage of
revenue |
|
21 |
% |
|
|
18 |
% |
|
|
20 |
% |
|
|
17 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP general and administrative |
$ |
24,534 |
|
|
$ |
16,308 |
|
|
$ |
100,792 |
|
|
$ |
57,279 |
|
|
|
Less: Stock-based compensation expense |
|
3,904 |
|
|
|
2,096 |
|
|
|
13,584 |
|
|
|
5,531 |
|
|
|
Less: Impairment, net |
|
2,230 |
|
|
|
— |
|
|
|
22,022 |
|
|
|
— |
|
|
|
Less: Legal costs and insurance recoveries |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,900 |
) |
|
Non-GAAP general and administrative |
$ |
18,400 |
|
|
$ |
14,212 |
|
|
$ |
65,186 |
|
|
$ |
53,648 |
|
|
GAAP general and administrative as a percentage of revenue |
|
20 |
% |
|
|
17 |
% |
|
|
21 |
% |
|
|
16 |
% |
|
Non-GAAP general and administrative as a percentage of revenue |
|
15 |
% |
|
|
15 |
% |
|
|
14 |
% |
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP depreciation and amortization |
$ |
8,142 |
|
|
$ |
8,001 |
|
|
$ |
33,119 |
|
|
$ |
30,845 |
|
|
|
Less: Amortization of stock-based compensation capitalized in
software development costs |
|
618 |
|
|
|
513 |
|
|
|
2,299 |
|
|
|
1,812 |
|
|
|
Less: Amortization of purchased intangibles |
|
977 |
|
|
|
1,153 |
|
|
|
4,373 |
|
|
|
4,647 |
|
|
Non-GAAP depreciation and amortization |
$ |
6,547 |
|
|
$ |
6,335 |
|
|
$ |
26,447 |
|
|
$ |
24,386 |
|
|
GAAP depreciation and amortization as a percentage of revenue |
|
7 |
% |
|
|
8 |
% |
|
|
7 |
% |
|
|
9 |
% |
|
Non-GAAP depreciation and amortization as a percentage of
revenue |
|
5 |
% |
|
|
7 |
% |
|
|
6 |
% |
|
|
7 |
% |
|
|
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
|
|
|
2022 |
|
|
2021(1) |
|
|
2022 |
|
|
2021(1) |
Loss from operations: |
|
|
|
|
|
|
|
|
GAAP loss from operations |
$ |
(19,952 |
) |
|
$ |
(7,342 |
) |
|
$ |
(72,370 |
) |
|
$ |
(11,878 |
) |
|
|
Less: Stock-based compensation expense |
|
12,726 |
|
|
|
5,288 |
|
|
|
40,935 |
|
|
|
15,341 |
|
|
|
Less: Amortization of stock-based compensation capitalized in
software development costs |
|
618 |
|
|
|
513 |
|
|
|
2,299 |
|
|
|
1,812 |
|
|
|
Less: Amortization of purchased intangibles |
|
977 |
|
|
|
1,153 |
|
|
|
4,373 |
|
|
|
4,647 |
|
|
|
Less: Impairment, net |
|
2,230 |
|
|
|
— |
|
|
|
22,022 |
|
|
|
— |
|
|
|
Less: Legal costs and insurance recoveries |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,900 |
) |
|
Non-GAAP (loss) income from operations |
$ |
(3,401 |
) |
|
$ |
(388 |
) |
|
$ |
(2,741 |
) |
|
$ |
8,022 |
|
|
|
|
|
|
|
|
|
|
|
Operating margin: |
|
|
|
|
|
|
|
|
GAAP operating margin |
|
(16.1 |
)% |
|
|
(7.7 |
)% |
|
|
(15.3 |
)% |
|
|
(3.3 |
)% |
|
|
Stock-based compensation expense as a percentage of revenue |
|
10.3 |
|
|
|
5.5 |
|
|
|
8.7 |
|
|
|
4.3 |
|
|
|
Amortization of stock-based compensation capitalized in software
development costs as a percentage of revenue |
|
0.5 |
|
|
|
0.5 |
|
|
|
0.5 |
|
|
|
0.5 |
|
|
|
Amortization of purchased intangibles as a percentage of
revenue |
|
0.8 |
|
|
|
1.2 |
|
|
|
0.9 |
|
|
|
1.3 |
|
|
|
Impairment, net as a percentage of revenue |
|
1.8 |
|
|
|
— |
|
|
|
4.7 |
|
|
|
— |
|
|
|
Legal costs and insurance recoveries as a percentage of
revenue |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.5 |
) |
|
Non-GAAP operating margin |
|
(2.7 |
)% |
|
|
(0.4 |
)% |
|
|
(0.6 |
)% |
|
|
2.2 |
% |
|
|
|
|
|
|
|
|
|
|
Net (loss) income: |
|
|
|
|
|
|
|
|
GAAP net (loss) income |
$ |
(19,700 |
) |
|
$ |
(1,331 |
) |
|
$ |
(68,119 |
) |
|
$ |
1,028 |
|
|
|
Less: Stock-based compensation expense |
|
12,726 |
|
|
|
5,288 |
|
|
|
40,935 |
|
|
|
15,341 |
|
|
|
Less: Amortization of stock-based compensation capitalized in
software development costs |
|
618 |
|
|
|
513 |
|
|
|
2,299 |
|
|
|
1,812 |
|
|
|
Less: Amortization of purchased intangibles |
|
977 |
|
|
|
1,153 |
|
|
|
4,373 |
|
|
|
4,647 |
|
|
|
Less: Impairment, net |
|
2,230 |
|
|
|
— |
|
|
|
22,022 |
|
|
|
— |
|
|
|
Less: Legal costs and insurance recoveries |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,900 |
) |
|
|
Less: Gain on sale of business |
|
— |
|
|
|
— |
|
|
|
(4,156 |
) |
|
|
— |
|
|
|
Less: Gain on sale of equity-method investment and recovery of note
receivable |
|
— |
|
|
|
(12,767 |
) |
|
|
(40 |
) |
|
|
(12,767 |
) |
|
|
Less: Income tax effect of adjustments |
|
(1,363 |
) |
|
|
(6,820 |
) |
|
|
(2,087 |
) |
|
|
1,300 |
|
|
Non-GAAP net (loss) income |
$ |
(1,786 |
) |
|
$ |
(324 |
) |
|
$ |
(599 |
) |
|
$ |
6,861 |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share, basic: |
|
|
|
|
|
|
|
|
GAAP net (loss) income per share, basic |
$ |
(0.56 |
) |
|
$ |
(0.04 |
) |
|
$ |
(1.95 |
) |
|
$ |
0.03 |
|
|
|
Non-GAAP adjustments to net income |
|
0.51 |
|
|
|
0.03 |
|
|
|
1.93 |
|
|
|
0.17 |
|
|
Non-GAAP net (loss) income per share, basic |
$ |
(0.05 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.02 |
) |
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share, diluted: |
|
|
|
|
|
|
|
|
GAAP net (loss) income per share, diluted |
$ |
(0.56 |
) |
|
$ |
(0.04 |
) |
|
$ |
(1.95 |
) |
|
$ |
0.03 |
|
|
|
Non-GAAP adjustments to net income |
|
0.51 |
|
|
|
0.03 |
|
|
|
1.93 |
|
|
|
0.16 |
|
|
Non-GAAP net (loss) income per share, diluted |
$ |
(0.05 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.02 |
) |
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in GAAP per share calculation |
|
|
|
|
|
|
|
|
|
Basic |
|
35,229 |
|
|
|
34,738 |
|
|
|
35,010 |
|
|
|
34,578 |
|
|
|
Diluted |
|
35,229 |
|
|
|
34,738 |
|
|
|
35,010 |
|
|
|
35,701 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in non-GAAP per share calculation |
|
|
|
|
|
|
|
|
|
Basic |
|
35,229 |
|
|
|
34,738 |
|
|
|
35,010 |
|
|
|
34,578 |
|
|
|
Diluted |
|
35,229 |
|
|
|
34,738 |
|
|
|
35,010 |
|
|
|
35,701 |
|
(1) Amounts have been revised from those
previously reported to reflect the gain realized on the sale of the
SecureDocs, Inc. investment, accounted for under the equity-method
of accounting, in the fourth quarter of fiscal year 2021.
|
|
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Free cash flow: |
|
|
|
|
|
GAAP net cash provided by operating activities |
$ |
6,081 |
|
|
$ |
8,932 |
|
|
$ |
25,365 |
|
|
$ |
35,391 |
|
|
|
Purchases of property and equipment |
|
(597 |
) |
|
|
(2,937 |
) |
|
|
(6,540 |
) |
|
|
(8,103 |
) |
|
|
Capitalized software development costs |
|
(4,220 |
) |
|
|
(6,104 |
) |
|
|
(14,688 |
) |
|
|
(24,615 |
) |
|
|
Non-recurring expenses paid related to the sale of MyCase |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,759 |
|
|
|
Legal costs and insurance recoveries |
|
— |
|
|
|
(1,900 |
) |
|
|
— |
|
|
|
2,350 |
|
|
Non-GAAP free cash flow |
$ |
1,264 |
|
|
$ |
(2,009 |
) |
|
$ |
4,137 |
|
|
$ |
12,782 |
|
|
|
|
|
|
|
|
|
|
|
Free cash flow margin: |
|
|
|
|
|
|
|
GAAP net cash provided by operating activities as a percentage of
revenue |
|
4.9 |
% |
|
|
9.3 |
% |
|
|
5.4 |
% |
|
|
9.8 |
% |
|
|
Purchases of property and equipment as a percentage of revenue |
|
(0.5 |
) |
|
|
(3.1 |
) |
|
|
(1.4 |
) |
|
|
(2.3 |
) |
|
|
Capitalized software development costs as a percentage of
revenue |
|
(3.4 |
) |
|
|
(6.4 |
) |
|
|
(3.1 |
) |
|
|
(6.8 |
) |
|
|
Non-recurring expenses paid related to the sale of MyCase as a
percentage of revenue |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.2 |
|
|
|
Legal costs and insurance recoveries as a percentage of
revenue |
|
— |
|
|
|
(2.0 |
) |
|
|
— |
|
|
|
0.7 |
|
|
Non-GAAP free cash flow margin |
|
1.0 |
% |
|
|
(2.1 |
)% |
|
|
0.9 |
% |
|
|
3.6 |
% |
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, net, legal costs and insurance recoveries, gain on sale
of business, 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, and insurance recoveries, plus legal costs and non-recurring
expenses paid related to the sale of our wholly owned subsidiary
MyCase, Inc. completed on September 30, 2020. 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 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, net. We believe that
impairment charges, net of gains do not reflect future operating
expenses, and are generally unrelated to financial and operational
performance in any particular period.
- Significant legal costs and
insurance recoveries. Significant legal litigation costs,
settlement expenses or proceeds, other associated expenses, and
insurance recoveries of such costs do not relate to the ongoing
operation of the business and tend to vary significantly based on
the circumstances of each transaction. This is not indicative of
our core operating performance and may not be meaningful in
comparison to our past operating performance.
- Gains and non-recurring costs
related to the sale of businesses. In August 2022 we completed the
sale of AppFolio Utility Management, Inc. and in September 2020 we
completed the sale of MyCase, Inc., each a former wholly owned
subsidiary. We have excluded any gains and charges related to these
sales, as we do not consider such amounts to be part of the ongoing
operation of our business.
- Gains related to the sale of
equity-method investments. In December 2021 we sold all of our
interest in SecureDocs, Inc. an equity-method investment. We have
excluded any gains related to this sale, 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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