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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: [email protected]

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 marketing 13,717      13,232      28,223      24,451   
Research and product development 12,128      9,339      23,340      17,820   
General and administrative 14,785      8,214      23,357      16,406   
Depreciation and amortization 6,657      5,415      13,071      10,491   
Total costs and operating expenses 74,698      61,328      144,363      118,477   
Income from operations 6,345      2,296      9,175      2,238   
Other income (expense), net (10 )   (56 )   12      (57 )
Interest expense, net (562 )   (427 )   (1,056 )   (924 )
Income before benefit from income taxes 5,773      1,813      8,131      1,257   
Benefit from income taxes (13,484 )   (21,338 )   (13,109 )   (25,619 )
Net income $ 19,257      $ 23,151      $ 21,240      $ 26,876   
               
Net income per common share:              
Basic $ 0.56      $ 0.68      $ 0.62      $ 0.79   
Diluted $ 0.54      $ 0.65      $ 0.60      $ 0.76   
Weighted average common shares outstanding:              
Basic 34,254      34,010      34,214      33,962   
Diluted 35,614      35,412      35,647      35,385   
                       

Stock-Based Compensation Expense
(in thousands)

  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2020   2019   2020   2019
Costs and operating expenses:              
Cost of revenue (exclusive of depreciation and amortization) $ 520      $ 415      $ 646      $ 739   
Sales and marketing 477      302      702      550   
Research and product development 580      363      874      671   
General and administrative 1,176      607      1,490      1,279   
Total stock-based compensation expense $ 2,753      $ 1,687      $ 3,712      $ 3,239   
                               

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)

  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2020   2019   2020   2019
Cash from operating activities              
Net income $ 19,257      $ 23,151      $ 21,240      $ 26,876   
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation and amortization 6,657      5,415      13,071      10,491   
Amortization of operating lease right-of-use assets 1,018      987      2,071      1,928   
Deferred income taxes (13,499 )   (21,362 )   (13,137 )   (25,643 )
Stock-based compensation 2,753      1,687      3,712      3,239   
Other     81      (30 )   108   
Changes in operating assets and liabilities:              
Accounts receivable (3,520 )   (644 )   (5,136 )   (2,695 )
Prepaid expenses and other current assets 2,530      (1,859 )   (292 )   (5,199 )
Other assets 41      830      (107 )   1,254   
Accounts payable 555      88      193      188   
Accrued employee expenses 6,144      3,547      717      680   
Accrued expenses 3,808      (196 )   4,534      1,384   
Deferred revenue (161 )   313      532      581   
Operating lease liabilities (876 )   (1,024 )   (92 )   (1,759 )
Other liabilities (422 )   504      100      380   
  Net cash provided by operating activities 24,293      11,518      27,376      11,813   
Cash from investing activities              
Purchases of available-for-sale investments (12,740 )   (678 )   (13,389 )   (678 )
Proceeds from sales of available-for-sale investments —      —      13,942      1,750   
Proceeds from maturities of available-for-sale investments 500      1,750      7,750      4,000   
Purchases of property, equipment and intangible assets (6,314 )   (1,395 )   (14,306 )   (2,425 )
Additions to capitalized software (5,887 )   (4,762 )   (12,709 )   (9,420 )
Cash paid in business acquisition, net of cash acquired —      —      —      (54,004 )
  Net cash used in investing activities (24,441 )   (5,085 )   (18,712 )   (60,777 )
Cash from financing activities              
Proceeds from stock option exercises 232      109      329      199   
Tax withholding for net share settlement (3,232 )   (3,436 )   (9,690 )   (4,751 )
Payment of contingent consideration —      —      (5,977 )   —   
Proceeds from issuance of debt 753      572      50,190      1,169   
Principal payments on debt (1,069 )   (885 )   (1,818 )   (1,794 )
Payment of debt issuance costs —      (60 )   —      (420 )
Purchase of treasury stock —      —      (4,194 )   —   
  Net cash (used in) provided by financing activities (3,316 )   (3,700 )   28,840      (5,597 )
  Net (decrease) increase in cash and cash equivalents and restricted cash (3,464 )   2,733      37,504      (54,561 )
Cash, cash equivalents and restricted cash              
Beginning of period 57,215      17,212      16,247      74,506   
End of period $ 53,751      $ 19,945      $ 53,751      $ 19,945   

 

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