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AppFolio, Inc. Announces First Quarter 2020 Financial Results

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SANTA BARBARA, Calif., May 04, 2020 (GLOBE NEWSWIRE) -- AppFolio, Inc. (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 first quarter ended March 31, 2020.

AppFolio's operating results for the first 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 first 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 first quarter, and the more recent demand for our products and services, 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 withdrawing our previously communicated 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, May 4, 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.

The conference call can be accessed by dialing 833.502.0474 and entering ID #1898165. International callers may dial 236.714.2184. A replay of the conference call will be available at 800.585.8367, and at 416.621.4642 for international callers. 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: ir@appfolio.com

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 March 31, 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)

March 31,
2020

December 31,
2019

Assets

Current assets

Cash and cash equivalents

$

56,779

$

15,813

Investment securities—current

7,952

22,876

Accounts receivable, net

9,617

7,562

Prepaid expenses and other current assets

18,362

15,540

Total current assets

92,710

61,791

Investment securities—noncurrent

6,676

12,089

Property and equipment, net

22,536

14,744

Operating lease right-of-use assets

26,750

27,803

Capitalized software, net

32,587

30,023

Goodwill

58,425

58,425

Intangible assets, net

20,121

21,377

Deferred taxes

27,212

27,574

Other long-term assets

6,410

6,276

Total assets

$

293,427

$

260,102

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

2,509

$

1,927

Accrued employee expenses

11,833

17,758

Accrued expenses

11,419

10,833

Deferred revenue

5,732

4,600

Other current liabilities

5,636

11,139

Term loan, net—current portion

1,520

1,208

Total current liabilities

38,649

47,465

Operating lease liabilities

34,143

33,312

Revolving facility

49,000

Term loan, net

46,760

47,375

Total liabilities

168,552

128,152

Stockholders’ equity:

Preferred stock, $0.0001 par value, 25,000 shares authorized and no shares issued and outstanding at March 31, 2020 and December 31, 2019

Class A common stock, $0.0001 par value, 250,000 shares authorized at March 31, 2020 and December 31, 2019; 17,089 and 16,923 shares issued at March 31, 2020 and December 31, 2019, respectively; 16,670 and 16,552 shares outstanding at March 31, 2020 and December 31, 2019, respectively

2

2

Class B common stock, $0.0001 par value, 50,000 shares authorized at March 31, 2020 and December 31, 2019; 17,536 and 17,594 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

2

2

Additional paid-in capital

156,513

161,509

Accumulated other comprehensive income

165

33

Treasury stock, at cost, 419 and 371 shares of Class A common stock at March 31, 2020 and December 31, 2019, respectively

(25,756

)

(21,562

)

Accumulated deficit

(6,051

)

(8,034

)

Total stockholders’ equity

124,875

131,950

Total liabilities and stockholders’ equity

$

293,427

$

260,102

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)

Three Months Ended
March 31,

2020

2019

Revenue

$

72,495

$

57,091

Costs and operating expenses:

Cost of revenue (exclusive of depreciation and amortization)

28,961

24,181

Sales and marketing

14,506

11,219

Research and product development

11,212

8,481

General and administrative

8,572

8,192

Depreciation and amortization

6,414

5,076

Total costs and operating expenses

69,665

57,149

Income (loss) from operations

2,830

(58

)

Other income (expense), net

22

(1

)

Interest expense, net

(494

)

(497

)

Income (loss) before provision for (benefit from) income taxes

2,358

(556

)

Provision for (benefit from) income taxes

375

(4,281

)

Net income

$

1,983

$

3,725

Net income per common share:

Basic

$

0.06

$

0.11

Diluted

$

0.06

$

0.11

Weighted average common shares outstanding:

Basic

34,175

33,913

Diluted

35,681

35,342

Stock-Based Compensation Expense
(in thousands)

Three Months Ended
March 31,

2020

2019

Costs and operating expenses:

Cost of revenue (exclusive of depreciation and amortization)

$

126

$

324

Sales and marketing

225

248

Research and product development

294

308

General and administrative

314

672

Total stock-based compensation expense

$

959

$

1,552


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

Three Months Ended
March 31,

2020

2019

Cash from operating activities

Net income

$

1,983

$

3,725

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

6,414

5,076

Amortization of operating lease right-of-use assets

1,053

942

Deferred income taxes

362

(4,281

)

Stock-based compensation

959

1,552

Other

(38

)

27

Changes in operating assets and liabilities:

Accounts receivable

(1,616

)

(2,051

)

Prepaid expenses and other current assets

(2,822

)

(3,577

)

Other assets

(148

)

660

Accounts payable

(362

)

100

Accrued employee expenses

(5,427

)

(2,867

)

Accrued expenses

726

1,580

Deferred revenue

693

268

Operating lease liabilities

784

(735

)

Other liabilities

522

(124

)

Net cash provided by operating activities

3,083

295

Cash from investing activities

Purchases of available-for-sale investments

(649

)

Proceeds from sales of available-for-sale investments

13,942

1,750

Proceeds from maturities of available-for-sale investments

7,250

2,250

Purchases of property, equipment and intangible assets

(7,992

)

(1,030

)

Additions to capitalized software

(6,822

)

(4,658

)

Cash paid in business acquisition, net of cash acquired

(54,004

)

Net cash provided by (used in) investing activities

5,729

(55,692

)

Cash from financing activities

Proceeds from stock option exercises

97

90

Tax withholding for net share settlement

(6,458

)

(1,315

)

Payment of contingent consideration

(5,977

)

Proceeds from issuance of debt

49,437

597

Principal payments on debt

(749

)

(909

)

Payment of debt issuance costs

(360

)

Purchase of treasury stock

(4,194

)

Net cash provided by (used in) financing activities

32,156

(1,897

)

Net increase (decrease) in cash and cash equivalents and restricted cash

40,968

(57,294

)

Cash, cash equivalents and restricted cash

Beginning of period

16,247

74,506

End of period

$

57,215

$

17,212