SANTA BARBARA, Calif., Nov. 09, 2015 (GLOBE NEWSWIRE) -- AppFolio, Inc. (NASDAQ:APPF), a leading provider of cloud-based business software solutions, today announced results for the third quarter ended September 30, 2015.

Third Quarter 2015 Highlights
  • Revenue was $20.3 million, an increase of 56% period-over-period
  • GAAP net loss was $4.8 million or a net loss of $0.14 per share and Non-GAAP net loss was $4.5 million, or a net loss of $0.13 per share
  • Increased property manager customers 42% year-over-year to 7,561 and 2.0 million units under management
  • Increased law firm customers 74% year-over-year to 5,566

"We are pleased with our continued strong performance, which we believe is a direct result of our focus on customer success," commented Brian Donahoo, President and CEO of AppFolio. "To that end, we hosted over 700 property management customers at our Third Annual Customer Conference for three days of industry education seminars, networking events, and hands-on product demonstration and feedback sessions with AppFolio experts. We also announced the release of an innovative Common Area Maintenance (CAM) feature built for our commercial customers, as well as the upcoming launch of two new Value+ service offerings for our property management customers, which will enhance our platform, further highlight our commitment to helping our customers achieve success and expand our market opportunity."

Revenue for the third quarter was $20.3 million, an increase of 56% period-over-period. GAAP net loss for the quarter was $4.8 million, or a net loss of $0.14 per share.

Non-GAAP net loss for the quarter was $4.5 million, or a net loss of $0.13 per share, based on a weighted average share count of 33.3 million shares outstanding. Non-GAAP net loss and non-GAAP net loss per share for the quarter exclude approximately $0.3 million in share-based compensation related expenses.

During the third quarter, we raised an additional $10.4 million in net proceeds in connection with the exercise in full by our underwriters of their option to purchase additional shares of our common stock in our initial public offering. As a result, the aggregate net proceeds from the initial public offering were approximately $75.4 million. In addition, we repaid in full $10.2 million in outstanding indebtedness. We closed the third quarter with $63.6 million in cash and cash equivalents and investment securities.

Financial OutlookBased on information available as of November 9, 2015, we are updating our outlook for full year 2015 as indicated below.

  • Full year revenue is expected to be in the range of $74.6 million to $75.1 million.
  • Weighted average common shares outstanding are expected to be approximately 33.5 million in the fourth quarter and 21.5 million for the full fiscal year.

Non-GAAP Financial MeasuresTo supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, we provide investors with certain Non-GAAP financial measures, including Non-GAAP net loss and Non-GAAP net loss per share, which are financial measures that have not been prepared in accordance with GAAP. Non-GAAP net loss and non-GAAP net loss per share are defined as net loss and net loss per share, respectively, attributable to common stockholders before stock-based compensation expense.

We use these Non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. The principal limitations of these Non-GAAP financial measures is that they exclude expenses that are required by GAAP to be recorded in our financial statements. These financial measures are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. In addition, these financial measures may be different from Non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. A reconciliation of the Non-GAAP financial measures to the most direct comparable GAAP measure has been provided in the financial statement tables included below in this press release.

We urge investors to review these reconciliations and not to rely on any single financial measure to evaluate our business.

Conference Call InformationAs previously announced, we will host a conference call today, November 9, 2015, to discuss our third quarter financial results at 2:00 p.m. Pacific Time, 5:00 p.m. Eastern Time. A live webcast of the conference call will be available at http://ir.appfolioinc.com. The conference call can also be accessed by dialing 855-539-0896 (Domestic), or 412-455-6028 (International). The conference ID is 60355983.  A replay will be available at 855-859-2056 (Domestic) and 404-537-3406 (International) until the end of day November 13, 2015. An archived webcast of this conference call will be available for 12 months on our website listed above.

About AppFolio, Inc.AppFolio provides comprehensive, easy-to-use, cloud-based business software solutions for small and medium-sized businesses in various vertical markets. Our products include cloud-based property management software ( AppFolio Property Manager) and cloud-based legal practice management software ( MyCase). The Company was founded in 2006 and is headquartered in Santa Barbara, CA. Learn more at www.appfolioinc.com.

Forward-Looking StatementsThis 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 our future or assumed revenues and weighted-average outstanding shares, as well as the future expansion of our Value+ services.

Forward-looking statements represent our management'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 our 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 our actual results to materially differ from those expressed or implied by these forward-looking statements are described in the section entitled "Risk Factors" in the Form 10-Q for the fiscal quarter ended June 30, 2015, which we filed with the Securities and Exchange Commission (the "SEC") on August 6, 2015, as well as in our other filings with the SEC. You should read this press release with the understanding that our 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 Stock Market, we assume 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)
         
    September 30,  2015   December 31,  2014
Assets        
Current assets        
Cash and cash equivalents   $ 11,758     $ 5,412  
Investment securities—current   28,151      
Accounts receivable, net   2,238     1,191  
Prepaid expenses and other current assets   2,571     1,204  
Total current assets   44,718     7,807  
Investment securities—noncurrent   23,704      
Property and equipment, net   4,115     2,623  
Capitalized software, net   8,916     5,509  
Goodwill   6,737     4,998  
Intangible assets, net   4,922     3,615  
Other assets   1,079     882  
Total assets   $ 94,191     $ 25,434  
Liabilities, Convertible Preferred Stock and Stockholders' Equity  (Deficit)        
Current liabilities        
Accounts payable   $ 2,403     $ 2,088  
Accrued employee expenses   6,519     3,150  
Accrued expenses   3,303     1,721  
Deferred revenue   4,442     3,772  
Other current liabilities   572     2,797  
Total current liabilities   17,239     13,528  
Deferred revenue       8  
Other liabilities   626     199  
Total liabilities   17,865     13,735  
Commitments and contingencies        
Convertible preferred stock, Series A, B, B-1, B-2 and B-3, $0.0001 par value       63,166  
Stockholders' equity (deficit):        
Preferred stock, $0.0001 par value        
Class A common stock, $0.0001 par value   1      
Class B common stock, $0.0001 par value   3     1  
Additional paid-in capital   141,115     1,546  
Accumulated other comprehensive loss   (1 )    
Accumulated deficit   (64,792 )   (53,014 )
Total stockholders' equity (deficit)   76,326     (51,467 )
Total liabilities, convertible preferred stock and stockholders' equity (deficit)   $ 94,191     $ 25,434  

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
       
  Three Months Ended September 30,   Nine Months Ended September 30,
  2015   2014   2015   2014
Revenue $ 20,305     $ 13,024     $ 54,578     $ 34,452  
Costs and operating expenses:              
Cost of revenue (exclusive of depreciation and amortization) 9,264     5,979     24,438     16,112  
Sales and marketing 7,028     4,312     18,976     11,519  
Research and product development 2,797     1,838     6,960     4,559  
General and administrative 3,888     1,180     10,987     3,564  
Depreciation and amortization 1,638     988     4,252     2,691  
Total costs and operating expenses 24,615     14,297     65,613     38,445  
Loss from operations (4,310 )   (1,273 )   (11,035 )   (3,993 )
Other expense, net (1 )   (6 )   (8 )   (103 )
Interest (expense) income, net (426 )   11     (701 )   48  
Loss before provision for income taxes (4,737 )   (1,268 )   (11,744 )   (4,048 )
Provision for income taxes 23         34      
Net loss $ (4,760 )   $ (1,268 )   $ (11,778 )   $ (4,048 )
Net loss per share, basic and diluted $ (0.14 )   $ (0.14 )   $ (0.68 )   $ (0.46 )
Weighted average common shares outstanding, basic and diluted 33,314     8,807     17,274     8,724  

Stock-Based Compensation Expense
(in thousands)
    Three Months Ended September 30,   Nine Months Ended September 30,
    2015   2014   2015   2014
Costs and operating expenses:              
Cost of revenue (exclusive of depreciation and amortization)   $ 35     $ 17     $ 86     $ 49  
Sales and marketing   33     12     84     32  
Research and product development   10     3     22     17  
General and administrative   200     26     431     60  
Total stock-based compensation expense $ 278     $ 58     $ 623     $ 158  

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
               
  Three Months Ended September 30,   Nine Months Ended September 30,
  2015   2014   2015   2014
Cash from operating activities              
Net loss $ (4,760 )   $ (1,268 )   $ (11,778 )   $ (4,048 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:              
Depreciation and amortization 1,638     988     4,252     2,691  
Purchased investment premium, net of amortization (380 )       (380 )    
Amortization of deferred financing costs 410         441      
Loss on disposal of property and equipment (6 )   6     7     66  
Payment of accrued interest expense (223 )            
Stock-based compensation 278     58     623     158  
Change in fair value of contingent consideration     (60 )       (56 )
Loss on equity-method investment             19  
Changes in operating assets and liabilities:              
Accounts receivable 286     61     (936 )   (588 )
Prepaid expenses and other current assets (737 )   (91 )   (1,345 )   (548 )
Other assets (37 )   (8 )   (120 )   4  
Accounts payable (716 )   252     167     1,033  
Accrued employee expenses 2,046     900     3,110     1,054  
Accrued expenses 674     331     1,234     653  
Deferred revenue 187     62     662     575  
Other liabilities 373     (24 )   289     270  
Net cash (used in) provided by operating activities (967 )   1,207     (3,774 )   1,283  
Cash from investing activities              
Purchases of property and equipment (724 )   (387 )   (2,234 )   (1,634 )
Additions to capitalized software (2,218 )   (1,217 )   (5,373 )   (3,253 )
Purchases of investment securities (60,426 )       (60,426 )    
Sales of investment securities 4,000         4,000      
Maturities of investment securities 4,950         4,950      
Cash paid in business acquisition, net of cash acquired         (4,039 )    
Purchases of intangible assets (5 )   (12 )   (16 )   (18 )
Net cash used in investing activities (54,423 )   (1,616 )   (63,138 )   (4,905 )
Cash from financing activities              
Proceeds from stock option exercises 10     11     328     155  
Proceeds from issuance of restricted stock         141      
Proceeds from issuance of options         208      
Principal payments under capital lease obligations (7 )   (6 )   (22 )   (20 )
Proceeds from initial public offering, net of underwriting discounts 10,378         79,570      
Payments of initial public offering costs (3,192 )       (3,999 )    
Payment of contingent consideration         (2,429 )    
Proceeds from issuance of debt         10,000      
Principal payments on debt (9,958 )       (10,000 )    
Payment of debt issuance costs (7 )       (539 )    
Net cash (used by) provided by financing activities (2,776 )   5     73,258     135  
Net cash (decrease) increase in cash and cash equivalents (58,166 )   (404 )   6,346     (3,487 )
Cash and cash equivalents              
Beginning of period 69,924     8,186     5,412     11,269  
End of period $ 11,758     $ 7,782     $ 11,758     $ 7,782  

Reconciliation of GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)
  Three Months Ended September 30, 2015
   
GAAP net loss $ (4,760 )
Stock-based compensation expense 278  
Non-GAAP net loss $ (4,482 )
Non-GAAP net loss per share, basic and diluted $ (0.13 )
Weighted average common shares outstanding, basic and diluted 33,314  

Investor Relations Contact:Erica Abrams, ir@appfolio.com, 805-364-6093

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