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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 2015 results on Feb 8. Let’s see how things are shaping up for this announcement.

Goleta, CA-based AppFolio offers cloud-based software solutions for property management and legal industries. The company launched its IPO in June last year and trades under the symbol “APPF”. The company offered 6.2 million shares at a rate of $12 each and projected net proceeds in the range of $71.4 million to $82.6 million.

Notably, the company had planned to use the proceeds to increase its financial flexibility and workforce as well as for research and development.

AppFolio’s third-quarter revenues surged 56% year over year to $20.3 million from $13 million. Moreover, the company witnessed a 74% year-over-year growth in law firm clients, while property management customers grew 52%.

Unfortunately, the company has had a history of incurring losses. In the last quarter, the company suffered a loss of $4.76 million compared with a loss of $1.27 million reported in the year-ago period.

Nevertheless, the company has been able to significantly increase its revenues on a year-over-year basis and the trend should continue in the to-be-reported quarter as well. During the third-quarter earnings call, the company provided revenue guidance range of $74.6 million to $75.1 million for the full year, reflecting approximately 56% growth at the mid-point. Currently, the Zacks Consensus Estimate for 2015 is pegged at $75 million.

Additionally, the software solutions market for small-to-medium sized businesses is projected to reach $125 billion in 2016. If AppFolio can improve profitability, it will be a valuable tech stock to add to the portfolio.

Stocks to Consider

Here are some stocks, which you may consider as they have a favorable Zacks Rank and a positive Earnings ESP and are likely to post an earnings beat this quarter:

MaxLinear Inc. MXL, with an Earnings ESP of +2.94% and a Zacks Rank #1 (Strong Buy).

InterDigital, Inc. IDCC, with an Earnings ESP of +33.00% and a Zacks Rank #2 (Buy).

Baidu Inc. BIDU, with an Earnings ESP of +11.25% and a Zacks Rank #3 (Hold).

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