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What's in Store for AppFolio (APPF) this Earnings Season?

Zacks Equity Research

AppFolio Inc. APPF is expected to report fourth-quarter 2016 results on Feb 27. The company posted decent third-quarter results, wherein its loss of 3 cents per share was much narrower than the year-ago loss of 14 cents, largely due to improving revenues.

Property manager customers grew 27% year over year to 9612. Units count improved 26% on a year-over-year basis to 2.5 million while law firm customers grew 40% year over year to 7799. Revenues improved 39% quarter over quarter to $28.2 million.

Not surprisingly, shares of AppFolio have outperformed the Zacks Internet Software industry over the last one year. While the industry gained 21%, the stock appreciated a significant 95.7%.

Let’s see how things are shaping up for this announcement.

Factors at Play

AppFolio continues to see robust customer growth in the property management and legal space, which is likely to have a positive impact on the company’s top line in the soon-to-be reported quarter.

We note that in Sep 2016, AppFolio launched two software solutions targeted toward property management professionals that are helping the company to further leverage its cloud-based business software solutions. Also, the company’s Value + services is gaining traction in the above mentioned markets, which is also expected to positively impact fourth-quarter revenues.  

Moreover, attach rates along with cross-sell activity are likely to improve Appfolio’s average revenue per user, resulting in expansion of the gross margin in the soon-to-be reported quarter.

However, intensifying competition in the cloud based business software solutions space remains a concern for the company.

AppFolio, Inc. Price and EPS Surprise


AppFolio, Inc. Price and EPS Surprise | AppFolio, Inc. Quote

Other Expected Releases

Apart from AppFolio, another player from the same space, Amaya Inc. AYA is slated to report on Mar 13. Additionally, a couple of other companies from the broader technology space namely Pure Storage, Inc. PSTG and Momo Inc. MOMO will report their quarterly earnings on Mar 1 and Mar 7, respectively.

Notably, both Amaya and Pure Storage carry a Zacks Rank #2 (Buy), while Momo holds a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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