AppFolio, Inc. Announces Fourth Quarter and Fiscal Year 2024 Financial Results

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CONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)(in thousands)  December 31,2024 December 31,2023Assets    Current assets    Cash and cash equivalents $42,504 $49,509Investment securities—current  235,745  162,196Accounts receivable, net  24,346  20,709Prepaid expenses and other current assets  32,807  39,943Total current assets  335,402  272,357Property and equipment, net  24,483  28,362Operating lease right-of-use assets  17,472  19,285Capitalized software development costs, net  15,429  21,562Goodwill  96,410  56,060Intangible assets, net  49,057  2,357Deferred income taxes  76,910  —Other long-term assets  11,515  8,906Total assets $626,678 $408,889Liabilities and Stockholders’ Equity     Current liabilities    Accounts payable $2,378 $1,141Accrued employee expenses  30,157  35,567Accrued expenses  14,658  21,723Other current liabilities  16,087  11,335Total current liabilities  63,280  69,766Operating lease liabilities  37,476  41,114Deferred tax liabilities  —  697Other liabilities  6,632  —Total liabilities  107,388  111,577Stockholders’ equity  519,290  297,312Total liabilities and stockholders’ equity $626,678 $408,889  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)(in thousands, except per share amounts) Three Months EndedDecember 31, Twelve Months EndedDecember 31,  2024   2023  2024   2023Revenue(1)$203,664  $171,830 $794,202  $620,445Costs and operating expenses:       Cost of revenue (exclusive of depreciation and amortization)(2) 76,189   61,275  282,067   238,076Sales and marketing(2) 33,436   21,501  110,597   107,602Research and product development(2) 42,296   34,847  160,375   151,364General and administrative(2) 23,449   19,035  85,974   93,452Depreciation and amortization 5,336   6,933  19,545   28,988Total costs and operating expenses 180,706   143,591  658,558   619,482Income from operations 22,958   28,239  135,644   963Other income, net 697   286  697   3Interest income, net 3,499   2,404  13,981   7,031Income before provision for income taxes 27,154   30,929  150,322   7,997(Benefit from) provision for income taxes (75,580)  661  (53,746)  5,295Net income$102,734  $30,268 $204,068  $2,702Net income per common share:       Basic$2.82  $0.85 $5.63  $0.08Diluted$2.79  $0.83 $5.55  $0.07Weighted average common shares outstanding       Basic 36,374   35,812  36,252   35,629Diluted 36,783   36,596  36,782   36,417  (1) The following table presents our revenue categories:  Three Months EndedDecember 31, Twelve Months EndedDecember 31,  2024   2023  2024   2023Core solutions$47,631  $41,252 $180,605  $156,692Value Added Services 153,334   127,990  605,011   454,098Other 2,699   2,588  8,586   9,655Total revenue$203,664  $171,830 $794,202  $620,445  (2) Includes stock-based compensation expense as follows:  Three Months EndedDecember 31, Twelve Months EndedDecember 31,  2024   2023  2024   2023Costs and operating expenses:           Cost of revenue (exclusive of depreciation and amortization)$1,261  $798 $4,522  $3,703Sales and marketing 2,746   1,081  8,030   5,983Research and product development 5,789   5,123  25,414   20,974General and administrative 6,228   5,430  22,361   21,704Total stock-based compensation expense$16,024  $12,432 $60,327  $52,364  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)(in thousands) Three Months EndedDecember 31, Twelve Months EndedDecember 31,  2024   2023   2024   2023 Cash from operating activities       Net income (loss)$102,734  $30,268  $204,068  $2,702 Adjustments to reconcile net income (loss) to net cash provided by operating activities:       Depreciation and amortization 4,986   6,385   17,790   26,500 Amortization of operating lease right-of-use assets 489   514   2,030   2,132 Gain on lease modification —   —   —   (4,281)Deferred income taxes (76,937)  (494)  (76,937)  (490)Stock-based compensation, including as amortized 16,374   12,980   62,081   54,852 Other (2,074)  (1,590)  (8,220)  (3,108)Changes in operating assets and liabilities:       Accounts receivable 1,489   (349)  (3,383)  (4,206)Prepaid expenses and other assets 3,015   (12,781)  4,126   (13,493)Accounts payable 1,850   (80)  1,559   (1,565)Operating lease liabilities 53   576   (3,143)  (2,504)Accrued expenses and other liabilities (15,413)  (4,246)  (11,812)  3,744 Net cash provided by operating activities 36,566   31,183   188,159   60,283 Cash from investing activities       Purchases of available-for-sale investments (51,854)  (86,821)  (317,173)  (195,740)Proceeds from sales of available-for-sale investments 9,984   —   9,984   1,013 Proceeds from maturities of available-for-sale investments 76,280   58,130   240,035   152,382 Purchases of property and equipment (195)  (3,109)  (2,016)  (9,041)Capitalization of software development costs (1,058)  (1,431)  (5,170)  (4,825)Proceeds from equity-method investment —   —   —   629 Cash paid in business acquisition, net of cash acquired (77,421)  —   (77,421)  — Net cash used in investing activities (44,264)  (33,231)  (151,761)  (55,582)Cash from financing activities       Proceeds from stock option exercises 11   410   3,924   2,595 Tax withholding for net share settlement (12,226)  (8,790)  (47,327)  (28,556)Net cash used in financing activities (12,215)  (8,380)  (43,403)  (25,961)Net decrease in cash, cash equivalents and restricted cash (19,913)  (10,428)  (7,005)  (21,260)Cash, cash equivalents and restricted cash       Beginning of period 62,667   60,187   49,759   71,019 End of period$42,754  $49,759  $42,754  $49,759   RECONCILIATION FROM GAAP TO NON-GAAP RESULTS(UNAUDITED)(in thousands, except per share data)   Three Months EndedDecember 31, Twelve Months EndedDecember 31,    2024   2023   2024   2023 Costs and operating expenses:      GAAP cost of revenue (exclusive of depreciation and amortization)$76,189  $61,275  $282,067  $238,076   Stock-based compensation expense (1,261)  (798)  (4,522)  (3,703)  Workforce reduction costs —   —   —   (2,135) Non-GAAP cost of revenue (exclusive of depreciation and amortization)$74,928  $60,477  $277,545  $232,238  GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue 37%  36%  36%  38% Non-GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue 37%  35%  35%  37%           GAAP sales and marketing$33,436  $21,501  $110,597  $107,602   Stock-based compensation expense (2,746)  (1,081)  (8,030)  (5,983)  Workforce reduction costs —   —   —   (3,401) Non-GAAP sales and marketing$30,690  $20,420  $102,567  $98,218  GAAP sales and marketing as a percentage of revenue 16%  13%  14%  17% Non-GAAP sales and marketing as a percentage of revenue 15%  12%  13%  16%           GAAP research and product development$42,296  $34,847  $160,375  $151,364   Stock-based compensation expense (5,789)  (5,123)  (25,414)  (20,974)  Workforce reduction costs —   —   —   (2,635) Non-GAAP research and product development$36,507  $29,724  $134,961  $127,755  GAAP research and product development as a percentage of revenue 21%  20%  20%  24% Non-GAAP research and product development as a percentage of revenue 18%  17%  17%  21%           GAAP general and administrative$23,449  $19,035  $85,974  $93,452   Stock-based compensation expense (6,228)  (5,430)  (22,361)  (21,704)  Gain on lease modification —   —   —   4,281   CEO separation costs, net —   —   —   (11,520)  Workforce reduction costs —   —   —   (2,106) Non-GAAP general and administrative$17,221  $13,605  $63,613  $62,403  GAAP general and administrative as a percentage of revenue 12%  11%  11%  15% Non-GAAP general and administrative as a percentage of revenue 8%  8%  8%  10%           GAAP depreciation and amortization$5,336  $6,933  $19,545  $28,988   Amortization of stock-based compensation capitalized in software development costs (350)  (548)  (1,754)  (2,489)  Amortization of purchased intangibles (1,744)  (619)  (2,100)  (2,476) Non-GAAP depreciation and amortization$3,242  $5,766  $15,691  $24,023  GAAP depreciation and amortization as a percentage of revenue 3%  4%  2%  5% Non-GAAP depreciation and amortization as a percentage of revenue 2%  3%  2%  4%                     Three Months EndedDecember 31, Twelve Months EndedDecember 31,    2024   2023   2024   2023 Income from operations:        GAAP income from operations$22,958  $28,239  $135,644  $963   Stock-based compensation expense 16,024   12,432   60,327   52,364   Amortization of stock-based compensation capitalized in software development costs 350   548   1,754   2,489   Amortization of purchased intangibles 1,744   619   2,100   2,476   Gain on lease modification —   —   —   (4,281)  CEO separation costs, net —   —   —   11,520   Workforce reduction costs —   —   —   10,278  Non-GAAP income from operations$41,076  $41,838  $199,825  $75,809           Operating margin:         GAAP operating margin 11.3%  16.4%  17.1%  0.2%  Stock-based compensation expense as a percentage of revenue 7.8   7.2   7.6   8.4   Amortization of stock-based compensation capitalized in software development costs as a percentage of revenue 0.2   0.3   0.2   0.4   Amortization of purchased intangibles as a percentage of revenue 0.9   0.4   0.3   0.4   Gain on lease modification as a percentage of revenue —   —   —   (0.7)  CEO separation costs, net as a percentage of revenue —   —   —   1.9   Workforce reduction costs as a percentage of revenue —   —   —   1.8  Non-GAAP operating margin 20.2%  24.3%  25.2%  12.2%          Net income (loss):        GAAP net income$102,734  $30,268  $204,068  $2,702   Stock-based compensation expense 16,024   12,432   60,327   52,364   Amortization of stock-based compensation capitalized in software development costs 350   548   1,754   2,489   Amortization of purchased intangibles 1,744   619   2,100   2,476   Gain on lease modification —   —   —   (4,281)  CEO separation costs, net —   —   —   11,520   Workforce reduction costs —   —   —   10,278   Income tax effect of adjustments (86,898)  (11,556)  (107,372)  (15,415) Non-GAAP net income$33,954  $32,311  $160,877  $62,133           Net income per share, basic:        GAAP net income per share, basic$2.82  $0.85  $5.63  $0.08   Non-GAAP adjustments to net income (1.89)  0.05   (1.19)  1.66  Non-GAAP net income per share, basic$0.93  $0.90  $4.44  $1.74           Net income per share, diluted:        GAAP net income per share, diluted$2.79  $0.83  $5.55  $0.07   Non-GAAP adjustments to net income (1.87)  0.05   (1.18)  1.64  Non-GAAP net income per share, diluted$0.92  $0.88  $4.37  $1.71            Weighted-average shares used in GAAP per share calculation         Basic 36,374   35,812   36,252   35,629   Diluted 36,783   36,596   36,782   36,417            Weighted-average shares used in non-GAAP per share calculation         Basic 36,374   35,812   36,252   35,629   Diluted 36,783   36,596   36,782   36,417                       Three Months EndedDecember 31, Twelve Months EndedDecember 31,    2024   2023   2024   2023 Free cash flow:     GAAP net cash provided by operating activities$36,566  $31,183  $188,159  $60,283   Purchases of property and equipment (195)  (3,109)  (2,016)  (9,041)  Capitalized software development costs (1,058)  (1,431)  (5,170)  (4,825)  CEO separation costs payment —   —   —   14,926   Partial lease termination payment —   —   —   2,851   Severance payments for workforce reduction —   7,624   566   9,425  Non-GAAP free cash flow$35,313  $34,267  $181,539  $73,619           Free cash flow margin:       GAAP net cash provided by operating activities as a percentage of revenue 18.0%  18.1%  23.7%  9.7%  Purchases of property and equipment as a percentage of revenue (0.1)  (1.8)  (0.3)  (1.4)  Capitalized software development costs as a percentage of revenue (0.6)  (0.8)  (0.6)  (0.8)  CEO separation costs payment as a percentage of revenue —   —   —   2.4   Partial lease termination payment as a percentage of revenue —   —   —   0.5   Severance payments for workforce reduction as a percentage of revenue —   4.4   0.1   1.5  Non-GAAP free cash flow margin 17.3%  19.9%  22.9%  11.9%   Statement Regarding the Use of Non-GAAP Financial Measures We use the following non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

These measures exclude certain non-cash or non-recurring items, including stock-based compensation expense, amortization of stock-based compensation capitalized in software development costs, amortization of purchased intangibles, CEO separation costs, net, gain on lease modification, workforce reduction costs, and the related income tax effect of these adjustments, as applicable and described below.

In particular, we believe these non-GAAP financial measures are useful to investors and others in assessing our operating performance due to the following factors: Stock-based compensation expense and amortization of stock-based compensation capitalized in software development costs.

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Author / Journalist: AppFolio, Inc.

Category: Technology

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Published On: 2025-01-30 @ 21:05:00 (12 hours ago)

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