Shares of AppFolio, Inc. APPF went down approximately 9% on Mar 1, 2019, after the company reported fourth-quarter 2018 results.
On a GAAP basis, the company reported earnings of 7 cents per share, which was flat year over year. The Zacks Consensus Estimate is pegged at 20 cents per share.
Notably, Appfolio shares have gained 63.3% year over year, substantially outperforming the 11.3% rally of the industry it belongs to.
Revenues surged 33% year over year to $50.4 million and also beat the Zacks Consensus Estimate of $48 million. Core solution revenues came in at $19.4 million during the reported quarter, up 26% year over year. The increase was primarily driven by increase in the number of property manager customers (up 11%) and 20% higher property manager units under management.
As of Dec 31, 2018, the company had roughly 13,050 real estate property managers, up from approximately 11,700 customers in the year-ago period. Legal customers count grew 10% year over year and came in at 10,300.
The company had acquired WegoWise. With this buyout, AppFolio intends to provide its real estate customers with a utility management Value+ Service. Notably, the company has enhanced its Value+ Platform by introducing a Renters Insurance product option to tenant users.
Recently, AppFolio acquired Dynasty Marketplace, Inc, a provider of advanced artificial intelligence (AI) solutions for the real estate market. The buyout will aid the company’s system of intelligence capabilities to offer higher AI services to real estate customers.
Further, AppFolio has enhanced its Value+ Platform with Renters Insurance product option to tenant users, which is likely to garner incremental revenues. During the fourth quarter, Value + services revenue was $28.8 million, up 38% year over year. The year-over-year increase can primarily be attributed to robust usage of electronic payments, screening and insurance services and higher number of property manager units under management.
Total cost and operating expenses for the quarter increased 34% year over year and came in at $47.7 million. The increase can primarily be attributed to higher compensation expenses and increase in headcount.
Operating income during the reported quarter came in at $2.7 million compared with $2.4 million reported in the year-ago quarter.
The company ended the fourth quarter with cash and cash equivalents of $74.1 million. Operating cash flow was $11.7 million during the quarter.
For 2019, the company forecasts revenues between $250 million and $255 million, representing year-over-year growth of 33% at the mid-point of the range. The Zacks Consensus Estimate is pegged at $239.2 million.
Zacks Rank and Stocks to Consider
AppFolio has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Symantec Corporation SYMC, Pegasystems Inc. PEGA and Fortinet, Inc. FTNT, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Symantec, Pegasystems and Fortinet have a long-term earnings growth rate of 7.9%, 8% and 16.8%, respectively.
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