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AppFolio, Inc. Announces Fourth Quarter and Fiscal Year 2018 Financial Results

SANTA BARBARA, Calif., Feb. 28, 2019 (GLOBE NEWSWIRE) -- AppFolio, Inc. (APPF) ("AppFolio" or the "Company"), a leading provider of cloud-based business software solutions, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2018.

AppFolio's operating results for the fourth quarter and fiscal year 2018 are summarized in the tables accompanying this press release. The Company nevertheless urges investors to read its full Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the Securities and Exchange Commission (the "SEC") on February 28, 2019, and is available on AppFolio's website at http://ir.appfolioinc.com. The limited information that follows is not adequate for making an informed investment judgment.

Financial Outlook

Based on information available as of February 28, 2019, the Company's current outlook for fiscal year 2019 follows:

  • Full year revenue is expected to be in the range of $250 million to $255 million.
     
  • 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, February 28, 2019, 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.

A live webcast of the call will be available at http://ir.appfolioinc.com, and it may also be accessed by dialing 866-393-4306 (Domestic), or 734-385-2616 (International). The conference ID is 5763969. A replay of the call will be available at 855-859-2056 (Domestic) and 404-537-3406 (International) until the end of day March 4, 2019, and an archived webcast will be available for twelve months on the Company's website.

About AppFolio 

AppFolio's mission is to revolutionize vertical industry businesses by providing great software and service. Our cloud-based solutions serve customers in the real estate and legal markets. Today our products include property management software (AppFolio Property Manager, including the new AppFolio Property Manager Plus) 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 future or assumed revenues and weighted-average outstanding shares, as well as its future growth and success.

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 Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on February 28, 2019, 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)
 
 
  December 31,
  2018   2017
Assets      
Current assets      
Cash and cash equivalents $ 74,076     $ 16,109  
Investment securities—current 16,631     29,800  
Accounts receivable, net 5,516     3,387  
Prepaid expenses and other current assets 11,775     4,546  
Total current assets 107,998     53,842  
Investment securities—noncurrent 11,256     22,401  
Property and equipment, net 6,871     6,696  
Capitalized software, net 20,485     17,609  
Goodwill 15,548     6,737  
Intangible assets, net 5,895     1,725  
Other assets 7,688     1,238  
Total assets $ 175,741     $ 110,248  
Liabilities and Stockholders’ Equity      
Current liabilities      
Accounts payable $ 1,481     $ 610  
Accrued employee expenses 12,377     10,710  
Accrued expenses 8,281     4,289  
Deferred revenue 3,414     7,080  
Other current liabilities 1,447     1,223  
Long-term debt, net—current portion 1,213      
Total current liabilities 28,213     23,912  
Long-term debt, net 48,602      
Long-term deferred rent and other liabilities 7,080     1,257  
Total liabilities 83,895     25,169  
Commitments and contingencies      
Stockholders’ equity:      
Preferred stock, $0.0001 par value, 25,000 authorized and no shares issued and outstanding at December 31, 2018 and December 31, 2017      
Class A common stock, $0.0001 par value, 250,000 shares authorized at December 31, 2018 and December 31, 2017; issued - 16,159 and 14,879, shares at December 31, 2018 and December 31, 2017; outstanding - 15,789 and 14,879 shares at December 31, 2018 and December 31, 2017, respectively; 2     1  
Class B common stock, $0.0001 par value, 50,000 shares authorized at December 31, 2018 and December 31, 2017; 18,109 and 19,102 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively; 2     3  
Additional paid-in capital 157,898     152,531  
Accumulated other comprehensive loss (178 )   (209 )
Treasury stock, at cost, 370,751 Class A shares (21,562 )    
Accumulated deficit (44,316 )   (67,247 )
Total stockholders’ equity 91,846     85,079  
Total liabilities and stockholders’ equity $ 175,741     $ 110,248  

 

 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
 
  Three Months Ended
December 31,
  Twelve Months Ended
December 31,
  2018   2017   2018   2017
Revenue $ 50,365     $ 37,897     $ 190,071     $ 143,803  
Costs and operating expenses:              
Cost of revenue (exclusive of depreciation and amortization) 19,925     14,536     73,549     55,283  
Sales and marketing 9,577     7,153     33,288     28,709  
Research and product development 6,588     4,580     24,111     16,578  
General and administrative 7,786     5,889     24,891     21,199  
Depreciation and amortization 3,792     3,352     14,576     12,699  
Total costs and operating expenses 47,668     35,510     170,415     134,468  
Income from operations 2,697     2,387     19,656     9,335  
Other (expense), net (36 )   (3 )   (56 )   (96 )
Interest income, net 156     158     787     535  
Income before provision for income taxes 2,817     2,542     20,387     9,774  
Provision for income taxes 168     (35 )   420     58  
Net income $ 2,649     $ 2,577     $ 19,967     $ 9,716  
Net income per common share:              
Basic 0.08     0.08     0.59     0.29  
Diluted 0.07     0.07     0.56     0.28  
Weighted average common shares outstanding:              
Basic 34,050     33,944     34,128     33,849  
Diluted 35,425     35,310     35,562     35,151  


Stock-Based Compensation Expense
 
(in thousands)
  Three Months Ended
December 31,
  Twelve Months Ended
December 31,
  2018   2017   2018   2017
Costs and operating expenses:              
Cost of revenue (exclusive of depreciation and amortization) $ 351     $ 198     $ 1,103     $ 725  
Sales and marketing 326     207     1,034     723  
Research and product development 349     186     1,079     657  
General and administrative 892     1,201     3,121     3,991  
Total stock-based compensation expense $ 1,918     $ 1,792     $ 6,337     $ 6,096  


 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 
  Three Months Ended
December 31,
  Twelve Months Ended
December 31,
  2018   2017   2018   2017
Cash from operating activities              
Net income $ 2,649     $ 2,577     $ 19,967     $ 9,716  
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation and amortization 3,792     3,352     14,576     12,699  
Purchased investment premium, net of amortization 43     (17 )   142     (39 )
Amortization of deferred financing costs 12     15     60     63  
Loss on disposal of property, equipment, and intangibles 4     3     22     97  
Stock-based compensation 1,918     1,792     6,337     6,096  
Changes in operating assets and liabilities:              
Accounts receivable 557     32     (908 )   (876 )
Prepaid expenses and other current assets (859 )   (153 )   (6,073 )   (1,009 )
Other assets (756 )   (30 )   (4,447 )   (84 )
Accounts payable 137     (469 )   614     (100 )
Accrued employee expenses 4,443     2,397     1,219     3,243  
Accrued expenses (116 )   (1,442 )   3,281     271  
Deferred revenue (342 )   (428 )   (4,589 )   (558 )
Other liabilities 184     186     6,067     (148 )
Net cash provided by operating activities 11,666     7,815     36,268     29,371  
Cash from investing activities              
Purchases of property and equipment (362 )   (533 )   (2,102 )   (2,213 )
Additions to capitalized software (3,307 )   (2,370 )   (12,304 )   (10,455 )
Purchases of investment securities (732 )   (9,051 )   (29,516 )   (26,648 )
Sales of investment securities 20,199         20,900     15  
Maturities of investment securities 4,342     5,500     32,819     16,474  
Cash paid in business acquisition         (14,441 )    
Purchases of intangible assets             (1 )
Net cash used in investing activities 20,140     (6,454 )   (4,644 )   (22,828 )
Cash from financing activities              
Proceeds from stock option exercises 322     155     1,035     663  
Tax withholding for net share settlement (233 )   (188 )   (3,127 )   (1,796 )
Purchase of treasury stock (21,562 )       (21,562 )    
Proceeds from issuance of debt 50,045     30     50,138     118  
Principal payments on debt (45 )   (30 )   (138 )   (118 )
Net cash provided by (used in) financing activities 28,527     (33 )   26,346     (1,133 )
Net increase (decrease) in cash and cash equivalents 60,333     1,328     57,970     5,410  
Cash, cash equivalents and restricted cash              
Beginning of period 14,173     15,208     16,536     11,126  
End of period $ 74,506     $ 16,536     $ 74,506     $ 16,536