SANTA BARBARA, Calif., Aug. 08, 2016 (GLOBE NEWSWIRE) -- AppFolio, Inc. (NASDAQ:APPF), a leading provider of cloud-based business software solutions, today announced results for the second quarter ended June 30, 2016.

Second Quarter 2016 Highlights
  • Second quarter revenue was $26.2 million, an increase of 42% period-over-period.
  • Second quarter GAAP net loss was $2.3 million, or a net loss of $0.07 per share; Non-GAAP net loss was $1.2 million, or a net loss of $0.03 per share. 
  • Increased property manager customers 32% year-over-year to 9,275; increased units under management 26% year-over-year to 2.4 million.
  • Increased law firm customers 50% year-over-year to 7,349.

The Company generated approximately $3.1 million in cash from operating activities and reported $1.1 million in positive Non-GAAP Adjusted EBITDA for the second quarter of 2016. At June 30, 2016, the Company had $51.2 million in cash and cash equivalents and investment securities.

"We executed well on our strategic initiatives in the quarter and made important progress toward realizing operating leverage in our business," commented Brian Donahoo, President and CEO of AppFolio.  "The market for our SMB software continues to expand, as property management and legal customers seek solutions to help them automate, modernize and grow in today's digital world. AppFolio's technology and customer focus remains a competitive differentiator, and the impact of our word of mouth marketing from happy customers continues to be a powerful tool for our long-term success."

Financial OutlookBased on information available as of August 8, 2016, we are updating our outlook for full year 2016 as indicated below.
  • Full year revenue is expected to be in the range of $103.0 million to $105.0 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 EBITDA 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, August 8, 2016, to discuss our second 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 844-239-5286 (Domestic), or 513-268-0783 (International). The conference ID is 54075354.  A replay will be available at 855-859-2056 (Domestic) and 404-537-3406 (International) until the end of day August 12, 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)
    June 30,  2016   December 31,  2015
Assets        
Current assets        
Cash and cash equivalents   $ 10,963     $ 12,063  
Investment securities—current   11,234     10,235  
Accounts receivable, net   3,045     2,048  
Prepaid expenses and other current assets   3,807     3,160  
Total current assets   29,049     27,506  
Investment securities—noncurrent   28,977     34,417  
Property and equipment, net   7,143     6,107  
Capitalized software, net   12,804     10,022  
Goodwill   6,737     6,737  
Intangible assets, net   3,808     4,516  
Other assets   1,236     1,176  
Total assets   $ 89,754     $ 90,481  
Liabilities and Stockholders' Equity        
Current liabilities        
Accounts payable   $ 1,090     $ 2,369  
Accrued employee expenses   6,235     5,159  
Accrued expenses   3,751     3,340  
Deferred revenue   6,101     4,953  
Other current liabilities   1,631     1,084  
Total current liabilities   18,808     16,905  
Other liabilities   1,865     879  
Total liabilities   20,673     17,784  
Stockholders' equity:        
Preferred stock, $0.0001 par value, 25,000 authorized and no shares issued and outstanding as of June 30, 2016 and December 31, 2015        
Class A common stock, $0.0001 par value, 250,000 shares authorized as of June 30, 2016 and December 31, 2015; 11,018 and 9,005 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively;   1     1  
Class B common stock, $0.0001 par value, 50,000 shares authorized as of June 30, 2016 and December 31, 2015; 22,625 and 24,541 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively;   3     3  
Additional paid-in capital   143,406     141,528  
Accumulated other comprehensive income (loss)   220     (153 )
Accumulated deficit   (74,549 )   (68,682 )
Total stockholders' equity   69,081     72,697  
Total liabilities and stockholders' equity   $ 89,754     $ 90,481  

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)(in thousands, except per share amounts)
  Three Months Ended June 30,   Six Months Ended June 30,
  2016   2015   2016   2015
Revenue $ 26,203     $ 18,425     $ 49,414     $ 34,273  
Costs and operating expenses:              
Cost of revenue (exclusive of depreciation and amortization) 11,212     8,109     21,742     15,174  
Sales and marketing 7,567     6,239     15,118     11,948  
Research and product development 3,024     2,154     6,067     4,163  
General and administrative 4,389     3,707     7,938     7,099  
Depreciation and amortization 2,359     1,431     4,476     2,614  
Total costs and operating expenses 28,551     21,640     55,341     40,998  
Loss from operations (2,348 )   (3,215 )   (5,927 )   (6,725 )
Other income (expense), net 2     (5 )   (22 )   (7 )
Interest income (expense), net 95     (243 )   119     (275 )
Loss before provision for income taxes (2,251 )   (3,463 )   (5,830 )   (7,007 )
Provision for (benefit from) income taxes 13     (63 )   37     11  
Net loss $ (2,264 )   $ (3,400 )   $ (5,867 )   $ (7,018 )
Net loss per share, basic and diluted (0.07 )   (0.36 )   (0.18 )   (0.77 )
Weighted average common shares outstanding, basic and diluted 33,523     9,328     33,493     9,122  

Supplemental Revenue Information

The following table presents our revenue categories for the quarter ended June 30, 2016 and 2015 (in thousands):
    Three Months Ended June 30,   Six Months Ended June 30,
    2016   2015   2016   2015
Core solutions   $ 10,572     $ 7,697     $ 20,335     $ 14,831  
Value+ services                                                                         14,399     9,408     26,653     17,112  
Other   1,232     1,320     2,426     2,330  
Total revenues   $ 26,203     $ 18,425     $ 49,414     $ 34,273  

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

               
  Three Months Ended June 30,   Six Months Ended June 30,
  2016   2015   2016   2015
Cash from operating activities              
Net loss $ (2,264 )   $ (3,400 )   $ (5,867 )   $ (7,018 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:              
Depreciation and amortization 2,359     1,431     4,476     2,614  
Purchased investment premium, net of amortization (50 )       95      
Amortization of deferred financing costs 16     26     32     31  
Loss on disposal of property and equipment 3     6     32     13  
Noncash interest expense     223         223  
Stock-based compensation 1,092     212     1,555     345  
Lease abandonment (31 )       60      
Changes in operating assets and liabilities:              
Accounts receivable (402 )   (557 )   (996 )   (1,222 )
Prepaid expenses and other current assets 634     (82 )   (647 )   (608 )
Other assets 18     (39 )   (92 )   (83 )
Accounts payable 82     674     (571 )   883  
Accrued employee expenses 812     163     906     1,064  
Accrued expenses (236 )   (240 )   751     560  
Deferred revenue 443     20     1,148     475  
Other liabilities 637     (33 )   1,495     (84 )
Net cash provided by (used in) operating activities 3,113     (1,596 )   2,377     (2,807 )
Cash from investing activities              
Purchases of property and equipment (1,270 )   (789 )   (3,161 )   (1,510 )
Additions to capitalized software (2,980 )   (1,924 )   (5,159 )   (3,155 )
Purchases of investment securities (7,300 )       (16,685 )    
Sales and calls of investment securities 8,069         19,074      
Maturities of investment securities         2,330      
Cash paid in business acquisition, net of cash acquired     (4,039 )       (4,039 )
Purchases of intangible assets     (6 )       (11 )
Net cash used in investing activities (3,481 )   (6,758 )   (3,601 )   (8,715 )
Cash from financing activities              
Proceeds from stock option exercises 73     250     153     318  
Proceeds from issuance of restricted stock             141  
Proceeds from issuance of options     208         208  
Principal payments under capital lease obligations (8 )   (9 )   (15 )   (15 )
Proceeds from the initial public offering, net of underwriting discounts and commissions     69,192         69,192  
Payments of initial public offering costs     (807 )       (807 )
Payment of contingent consideration     (2,429 )       (2,429 )
Proceeds from issuance of debt 28         57     10,000  
Principal payments on debt (30 )   (42 )   (71 )   (42 )
Payment of debt issuance costs     (119 )       (532 )
Net cash provided by financing activities 63     66,244     124     76,034  
Net cash (decrease) increase in cash and cash equivalents (305 )   57,890     (1,100 )   64,512  
Cash and cash equivalents              
Beginning of period 11,268     12,034     12,063     5,412  
End of period $ 10,963     $ 69,924     $ 10,963     $ 69,924  

Stock-Based Compensation Expense (in thousands)
    Three Months Ended June 30,   Six Months Ended June 30,
    2016   2015   2016   2015
Costs and operating expenses:                
Cost of revenue (exclusive of depreciation and amortization)                                       $ 138     $ 27     $ 183     $ 51  
Sales and marketing   130     28     172     51  
Research and product development   104     7     155     12  
General and administrative   720     150     1,045     231  
Total stock-based compensation expense   $ 1,092     $ 212     $ 1,555     $ 345  

Reconciliation of GAAP Measures to Non-GAAP Measures  (in thousands, except per share data)
  Three Months Ended June 30,   Six Months Ended June 30,
  2016   2015   2016   2015
Net loss $ (2,264 )   $ (3,400 )   $ (5,867 )   $ (7,018 )
Stock-based compensation expense 1,092     212     1,555     345  
Non-GAAP net loss $ (1,172 )   $ (3,188 )   $ (4,312 )   $ (6,673 )
Non-GAAP net loss per share, basic and diluted $ (0.03 )   $ (0.34 )   $ (0.13 )   $ (0.73 )
Weighted average common shares outstanding, basic and diluted                                                 33,523     9,328     33,493     9,122  

  Three Months Ended June 30,   Six Months Ended June 30,
  2016   2015   2016   2015
Net loss $ (2,264 )   $ (3,400 )   $ (5,867 )   $ (7,018 )
Depreciation and amortization 2,359     1,431     4,476     2,614  
Stock-based compensation expense                                                                                         1,092     212     1,555     345  
Provision (benefit) for income taxes 13     (63 )   37     11  
Other (income) expense, net (2 )   5     22     7  
 Interest (income) expense, net (95 )   243     (119 )   275  
Non-GAAP Adjusted EBITDA $ 1,103     $ (1,572 )   $ 104     $ (3,766 )

The following table presents our customers and units under management at the end of each quarter for the last six quarters:
  2016   2015
  June 30,   March 31,   December 31,   September 30,   June 30,   March 31,
Property manager customers 9,275     8,816     8,218     7,561     7,016     6,491  
Property manager units under management (in millions)                 2.41     2.30     2.15     2.01     1.92     1.81  
                       
Legal customers 7,349     6,834     6,145     5,566     4,891     4,253  

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

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