SANTA BARBARA, Calif., May 09, 2016 (GLOBE NEWSWIRE) -- AppFolio, Inc. (NASDAQ:APPF), a leading provider of cloud-based business software solutions, today announced results for the first quarter ended March 31, 2016.

First Quarter 2016 Highlights
  • First quarter revenue was $23.2 million, an increase of 46% period-over-period.
  • First quarter GAAP net loss was $3.6 million, or a net loss of $0.11 per share; Non-GAAP net loss was $3.1 million, or a net loss of $0.09 per share.
  • Increased property manager customers 36% year-over-year to 8,816; increased units under management 27% year-over-year to 2.3 million.
  • Increased law firm customers 61% year-over-year to 6,834.

The Company used approximately $0.7 million in cash for operating activities and reported a $1.0 million loss in Non-GAAP Adjusted EBITDA. At March 31, 2016, the Company had $52.1 million in cash and cash equivalents and investment securities.

"We are pleased with our first quarter performance, posting solid growth in revenue and units under management, as well as good progress with our land and expand strategy," commented Brian Donahoo, President and CEO of AppFolio.  "During the quarter, we continued to delight our customers through our rapid pace of innovation with the release of AppFolio Premium Leads for our property manager customers, among other significant enhancements to our software platform. The first quarter was a strong start to what we believe will be a successful year for AppFolio."

Financial Outlook

Based on information available as of May 9, 2016, we are reiterating our outlook for full year 2016 as indicated below.
  • Full year revenue is expected to be in the range of $100.0 million to $104.0 million.
  • Weighted average common shares outstanding are expected to be approximately 33.7 million for the full 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, Non-GAAP net loss per share, and Non-GAAP Adjusted EBITDA 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. Non-GAAP Adjusted EBTIDA is defined as net loss before depreciation and amortization, stock-based compensation expense, provision for income taxes, other income (expense), net, and interest income (expense), net.

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 limitation 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, May 9, 2016, to discuss our first 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 93220882.  A replay will be available at 855-859-2056 (Domestic) and 404-537-3406 (International) until the end of day May 13, 2016. 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 our future growth and success.

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 our Annual Report on Form 10-K for the year ended December 31, 2015, which we filed with the Securities and Exchange Commission (the "SEC") on February 29, 2016, 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)
 
    March 31,  2016   December 31,  2015
Assets        
Current assets        
Cash and cash equivalents   $ 11,268     $ 12,063  
Investment securities—current   9,947     10,235  
Accounts receivable, net   2,642     2,048  
Prepaid expenses and other current assets   4,440     3,160  
Total current assets   28,297     27,506  
Investment securities—noncurrent   30,910     34,417  
Property and equipment, net   6,964     6,107  
Capitalized software, net   11,239     10,022  
Goodwill   6,737     6,737  
Intangible assets, net   4,160     4,516  
Other assets   1,273     1,176  
Total assets   $ 89,580     $ 90,481  
Liabilities and Stockholders' Equity        
Current liabilities        
Accounts payable   $ 1,470     $ 2,369  
Accrued employee expenses   5,518     5,159  
Accrued expenses   4,053     3,340  
Deferred revenue   5,658     4,953  
Other current liabilities   1,135     1,084  
Total current liabilities   17,834     16,905  
Other liabilities   1,746     879  
Total liabilities   19,580     17,784  
Stockholders' equity:        
Preferred stock, $0.0001 par value, 25,000 authorized and no shares issued and outstanding as of March 31, 2016 and December 31, 2015        
Class A common stock, $0.0001 par value, 250,000 shares authorized as of March 31, 2016 and December 31, 2015; 10,707 and 9,005 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively;   1     1  
Class B common stock, $0.0001 par value, 50,000 shares authorized as of March 31, 2016 and December 31, 2015; 22,887 and 24,541 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively;   3     3  
Additional paid-in capital   142,134     141,528  
Accumulated other comprehensive gain (loss)   147     (153 )
Accumulated deficit   (72,285 )   (68,682 )
Total stockholders' equity   70,000     72,697  
Total liabilities and stockholders' equity   $ 89,580     $ 90,481  
                 

 
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
 
  Three Months Ended March 31,
  2016   2015
Revenue $ 23,211     $ 15,848  
Costs and operating expenses:      
Cost of revenue (exclusive of depreciation and amortization) 10,530     7,065  
Sales and marketing 7,551     5,709  
Research and product development 3,043     2,009  
General and administrative 3,549     3,392  
Depreciation and amortization 2,117     1,183  
Total costs and operating expenses 26,790     19,358  
Loss from operations (3,579 )   (3,510 )
Other expense, net (24 )   (2 )
Interest income (expense), net 24     (32 )
Loss before provision for income taxes (3,579 )   (3,544 )
Provision for income taxes 24     74  
Net loss $ (3,603 )   $ (3,618 )
Net loss per share, basic and diluted (0.11 )   (0.41 )
Weighted average common shares outstanding, basic and diluted   33,463     8,913  
           

Supplemental Revenue Information

The following table presents our revenue categories for the quarter ended March 31, 2016 and 2015 (in thousands):
 
    Three Months Ended March 31,
    2016   2015
Core solutions   $ 9,763     $ 7,134  
Value+ services     12,255     7,703  
Other   1,193     1,011  
Total revenues   $ 23,211     $ 15,848  
                 

 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
       
  Three Months Ended March 31,
  2016   2015
Cash from operating activities      
Net loss $ (3,603 )   $ (3,618 )
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization 2,117     1,183  
Purchased investment premium, net of amortization 145      
Amortization of deferred financing costs 16     5  
Loss on disposal of property and equipment 29     7  
Stock-based compensation 463     133  
Lease abandonment 91      
Changes in operating assets and liabilities:      
Accounts receivable (594 )   (665 )
Prepaid expenses and other current assets (1,281 )   (526 )
Other assets (110 )   (44 )
Accounts payable (653 )   209  
Accrued employee expenses 94     901  
Accrued expenses 987     800  
Deferred revenue 705     455  
Other liabilities 858     (51 )
  Net cash used in operating activities (736 )   (1,211 )
Cash from investing activities      
Purchases of property and equipment (1,891 )   (721 )
Additions to capitalized software (2,179 )   (1,231 )
Purchases of investment securities (9,385 )    
Sales and calls of investment securities 11,005      
Maturities of investment securities 2,330      
Purchases of intangible assets     (5 )
  Net cash used in investing activities (120 )   (1,957 )
Cash from financing activities      
Proceeds from stock option exercises 80     68  
Proceeds from issuance of restricted stock     141  
Principal payments under capital lease obligations (7 )   (6 )
Proceeds from issuance of debt 29     10,000  
Principal payments on debt (41 )    
Payment of debt issuance costs     (413 )
  Net cash provided by financing activities 61     9,790  
  Net cash (decrease) increase in cash and cash equivalents (795 )   6,622  
Cash and cash equivalents      
Beginning of period 12,063     5,412  
End of period 11,268     12,034  
           

 
Stock-Based Compensation Expense
(in thousands)
 
    Three Months Ended March 31,
    2016   2015
Costs and operating expenses:        
Cost of revenue (exclusive of depreciation and amortization)     $ 45     $ 24  
Sales and marketing   42     23  
Research and product development   51     5  
General and administrative   325     81  
Total stock-based compensation expense   $ 463     $ 133  
                 

 
Reconciliation of GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)
 
  Three Months Ended March 31,
  2016   2015
Net loss $ (3,603 )   $ (3,618 )
Stock-based compensation expense 463     133  
Non-GAAP net loss $ (3,140 )   $ (3,485 )
Non-GAAP net loss per share, basic and diluted $ (0.09 )   $ (0.39 )
Weighted average common shares outstanding, basic and diluted   33,463     8,913  
           

   
  Three Months Ended March 31,
  2016   2015
Net loss $ (3,603 )   $ (3,618 )
Depreciation and amortization 2,117     1,183  
Stock-based compensation expense   463     133  
Provision for income taxes 24     74  
Other expense, net 24     2  
Interest (income) expense, net (24 )   32  
Non-GAAP Adjusted EBITDA $ (999 )   $ (2,194 )
               

The following table presents our customers and units under management at the end of each quarter for the last six quarters:
           
  2016   2015   2014
  March 31,   December 31,   September 30,   June 30,   March 31,   December 31,
Property manager customers 8,816     8,218     7,561     7,016     6,491     5,885  
Property manager units under management (in millions)   2.30     2.15     2.01     1.92     1.81     1.68  
                       
Legal customers 6,834     6,145     5,566     4,891     4,253     3,658  
                                   
Investor Relations Contact:Erica Abrams, ir@appfolio.com, 805-364-6093

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