AppFolio Q1 2025 Earnings Report

AppFolio EPS Results

• Actual EPS: $1.21
• Consensus EPS: $1.23
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: $1.05

AppFolio Revenue Results

• Actual Revenue: $217.70 million
• Expected Revenue: $220.95 million
• Beat/Miss: Missed by -$3.25 million
• YoY Revenue Growth: +15.90%

AppFolio Announcement Details

• Quarter: Q1 2025
• Date: 4/24/2025
• Time: After Market Closes
• Conference Call Date: Thursday, April 24, 2025
• Conference Call Time: 5:00PM ET

AppFolio (NASDAQ:APPF), together with its subsidiaries, provides cloud business management solutions for the real estate industry in the United States. The company provides a cloud-based platform that enables users to automate and optimize common workflows; tools that assist with leasing, maintenance, and accounting; and other technology and services offered by third parties. It offers AppFolio Property Manager Core, a platform that provides the basic functionalities required to operate a property management business, as well as serves as a system of record; AppFolio Property Manager Plus, which offers housing management, student housing management, complex accounting, leasing insights, large-scale operations support, role-based permissions, stack integrations, and enhanced customer support services; AppFolio Property Manager Max offers customer relationship management functionality, field customization, customer database functionality, and customer success management services; and AppFolio Investment Manager, a software that provides investment management, asset management, and relationship management solutions. The company also provides value-added services that are designed to enhance, automate, and streamline processes and workflows for property management businesses, such as electronic payment, tenant screening, and insurance services. AppFolio, Inc. was incorporated in 2006 and is headquartered in Santa Barbara, California.

AppFolio Q1 2025 Earnings Call Transcript

Key Takeaways

• First quarter revenue grew 16% year-over-year to $218 million, with a non-GAAP operating margin of 24.3% and net cash from operations of 17.7%, and full-year guidance of $920–940 million in revenue and 24.5–26.5% operating margin.
• AppFolio announced a strategic partnership and minority investment with Second Nature to integrate resident benefits like internet, pest control, and rewards into its platform, alongside a new Zillow integration and simplified rental application.
• AI-powered adoption remains strong, with 89% of new customers leveraging RealmX, saving an average of 9.7 hours per week and delivering a 73% higher lead-to-showing conversion rate, fueling upgrades to Plus and Max plans.
• Customer units under management increased 6% to 8.8 million across 21,105 customers, while value-added services revenue also grew 16%, reflecting higher usage of payments, screening, and risk mitigation services.
• AppFolio completed its $100 million share repurchase, launched a new $300 million buyback program, and maintains a strong balance sheet with $211 million in cash and investments, supporting ongoing strategic investments.

Presentation

[Operator]

Good afternoon. Thank you for standing by, and welcome to AppFolios Inc. First Quarter twenty twenty five Financial Results Conference Call. Please be advised today's conference is being recorded and a replay will be available on AppFolio's Investor Relations website. I would now like to hand the conference over to Lori Barker, Investor Relations.

[Operator]

You may begin.

[Lori Barker, Investor Relations at AppFolio]

Thank you. Good afternoon, everyone. I'm Laurie Barker, Investor Relations for AppFolio, and I'd like to thank you for joining us today as we report AppFolio's first quarter twenty twenty five financial results. With me on the call today is Shane Trigg, AppFolio's President and CEO. This call is being simultaneously webcast on the Investor Relations section of our website at appfolioinc.com.

[Lori Barker, Investor Relations at AppFolio]

Before we get started, I would like to remind everyone of AppFolio's Safe Harbor policy. Comments made during this conference call and webcast contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. Any statement that refers to expectations, projections, or other characterizations of future events, including financial projections, future market conditions, business performance or future product enhancements or development is a forward looking statement. AppFolio's actual future results could differ materially from those expressed in such forward looking statements for any reason, including those listed on our SEC filings. AppFolio assumes no obligation to update any such forward looking statements except as required by law.

[Lori Barker, Investor Relations at AppFolio]

For greater detail about risks and uncertainties, please see our SEC filings, including our Form 10 ks for the fiscal year ended 12/31/2024, which was filed with the SEC on 02/06/2025. In addition, this call includes non GAAP financial measures. Reconciliations of these non GAAP financial measures with the most directly comparable GAAP measures are included in our fourth quarter earnings release posted on the Investor Relations section of our website. With that, I will turn the call over to Shane Trigg. Shane, please go ahead.

[Shane Trigg, President & CEO at AppFolio]

Thanks, Lori, and welcome to everyone joining us for AppFolio's first quarter twenty twenty five financial results. Revenue grew 16% year over year to $218,000,000 in the first quarter as we continue to drive increased customer value in ARPU, growth in new customer units and increased adoption of our services. I'm proud to say that we had a strong start to the year in winning new business, demonstrating our success in the market as more and more customers choose AppFolio. Also, non GAAP operating margin was 24% and net cash provided by operating activities was 18%, positioning us well to continue investing in differentiated industry leading innovation. Achieving our mission to build the platform where the real estate industry comes to do business requires us to create value for all stakeholders.

[Shane Trigg, President & CEO at AppFolio]

Last week, we announced a strategic partnership with Second Nature to enhance the resident experience. Through the AppFolio Stack Partner ecosystem, our property management customers will have the ability to offer second nature's robust suite of services to their residents. We're excited about how this combination will create a simpler, more personalized experience for residents, enhancing the service our property managers are able to provide while improving their bottom line. In today's competitive market, renters have high expectations when it comes to where they live, making resident satisfaction a priority. Property managers know that meeting residents' needs and preferences is key to maintaining high occupancy rates.

[Shane Trigg, President & CEO at AppFolio]

When choosing a place to live, prospective renters will evaluate properties based on the quality of the rental experience. Increasingly, they're demanding services that save them money and enhance their lives. Our upcoming AppFolio research report shows that seventy one percent of renters consider resident benefits important when evaluating new rentals, yet only 42% currently have access to them. This highlights the need to meet and exceed resident expectations to stay competitive, supporting our first strategic pillar of differentiate to win. We're redefining how property managers and renters connect throughout the entire resident journey.

[Shane Trigg, President & CEO at AppFolio]

That starts with attracting residents and eliminating barriers that slow the leasing process. We recently announced that Zillow has joined the AppFolio Stack Partner ecosystem, allowing renters to discover homes faster and property managers to fill vacancies more efficiently. We're also introducing a new simplified rental application to help property management customers achieve better quality and outcomes with less effort. This application is fully integrated with the templates and customizations customers expect, streamlining processing times and flowing seamlessly into Folio Screen Trusted Renters, our comprehensive screening solution announced last fall at Future, which combines advanced fraud detection tools with fair housing compliance. Once a property manager has qualified the applicant, it's time for the lease signing.

[Shane Trigg, President & CEO at AppFolio]

And here again, we're delivering differentiated innovation. Through our alliance with Second Nature, AppFolio customers will be able to make available to their residents transparent, customizable, valuable services such as group rate internet, pest control, air filter delivery, credit building, and rewards, all within AppFolio paid conveniently by residents alongside their rent. After the lease is signed, our property management customers can focus on onboarding the new resident and ensuring a seamless move in experience. Through our previously discussed acquisition of LiveEasy, we'll reduce the stress of moving, deliver increased convenience and save renters time and money. These workflows and more will be delivered to residents through Folio Space, our next generation resident interface, enabling AppFolio's property management customers to create a unified and elevated experience for the millions of residents they serve during all the moments that matter, from application to move in through lease renewal.

[Shane Trigg, President & CEO at AppFolio]

This built in fully managed resident experience for property managers gives operators of all sizes the opportunity to seamlessly offer services that their residents are demanding and that deliver exceptional value. Take AppFolio customer Franklin Villanueva Lobo, owner of Silver Springs, Maryland based Adonis Property Management, who recently shared, We're thrilled to see AppFolio innovating in the resident experience. Anything that improves lead quality, streamlines the leasing process, and saves time for both applicants and management teams is a big win in our book. Looking forward to offering our renters an even smoother experience. Our second strategic pillar is to deliver value efficiently.

[Shane Trigg, President & CEO at AppFolio]

Our leadership in AI is creating a competitive moat to help us win the market, resulting in significant business growth and a strong influx of new customers. We're helping both new and existing customers adopt and grow their use of AppFolio services, particularly around our AI powered Realm Suite. Since the start of 2025, '80 '9 percent of new customers going live on AppFolio have used one or more of our generative AI powered AppFolio RealmX capabilities, Assistant, Messages and Flows. RealmX is maximizing and delivering real performance for these customers who report saving an average of nine point seven hours each week on their reporting tasks. More importantly, they're generating an incredible 73% higher lead to showing conversion rate.

[Shane Trigg, President & CEO at AppFolio]

And as one customer recently told us, lease renewal rates are up 8%. We continue to see strong upgrades from AppFolio Property Manager core customers to our Plus and Max plans in order to leverage the powerful automation made possible by Realm Exflows, as well as to take advantage of additional Realm products like smart maintenance, leasing CRM and leasing signals. One of these customers is 2B Living, which manages more than 5,000 multifamily, single family and commercial units across the Bay Area on AppFolio. They've expanded rapidly adding 1,500 units to AppFolio just last year. With 100% of their portfolio on AppFolio property manager Max, 2B Living has been able to streamline their operations as they take on more units without needing to add extra headcount.

[Shane Trigg, President & CEO at AppFolio]

As early adopters of Realm X, 2B Living is taking advantage of generative AI to transform the way their team manages day to day tasks. According to Brooks Baskin, founder and CEO, quote, We find RealmX to be a great empowerment tool that has helped us with two really important functions. One, we're able to build our processes and workflows in AppFolio, so tasks happen through automation without losing a hands on touch. Two, RomX has allowed us to get tasks done using RomX Assistant. This has really helped us gain efficiency as our business continues to grow.

[Shane Trigg, President & CEO at AppFolio]

The third pillar of our strategy is great people and culture. Since our last call, AppFolio was recertified as a great place to work for the eighth time. Part of what makes AppFolio a great place to work is our ability to recognize AppFolians who exemplify our values, live the AppFolian way, cultivate exceptional teams, and deeply care about customers. Our Chief Legal Officer, Matt Mazza's role has been expanded to Chief Trust Officer. In his new role, he will continue to lead our legal and compliance functions, while strengthening cross functional partnerships to enhance data governance and security, protect our software and infrastructure, modernize internal systems and processes, and develop an external trust center, demonstrating our commitment to data security, transparency, and our company value to build trust every day.

[Shane Trigg, President & CEO at AppFolio]

Additionally, Lisa Horner has been promoted to Chief Marketing Officer and Matthew Baird has been promoted to Chief Technology Officer. Evolving our organization as we scale enables our strategy and will continue to cultivate our talent, build a robust pipeline for AppFolio's future and deliver exceptional value to our customers. To that end, we're making good progress in recruiting our next CFO. With that, let me share more about AppFolio's first quarter financial results. In the first quarter, we delivered revenue of $218,000,000 growing 16% year over year.

[Shane Trigg, President & CEO at AppFolio]

Core Solutions revenue was $49,500,000 in the first quarter, a 15% year over year increase, driven by more customers choosing our Plus and Max plans, winning new customers and growth in total units under management. At the end of the quarter, we managed approximately 8,800,000 units from 21,105 customers compared to 8,300,000 units from 19,941 customers a year earlier. This represents a 6% increase in ending units and a 6% increase in customers as we continue to emphasize residential portfolios. First quarter revenue from value added services grew 16% year over year to $165,000,000 This increase reflects greater use and adoption of payments, risk mitigation services and screening, as well as growth in units under management. These drivers were partially offset by the April 2024 reduction in fees associated with certain card based payments.

[Shane Trigg, President & CEO at AppFolio]

Turning to spending, we exited the quarter with $16.48 employees, which is an increase of 1% from the fourth quarter of twenty twenty four. This reflects modest growth in most functional areas as we continue to invest in go to market initiatives and innovation, partially offset by efficiencies in our operations. Cost of revenue exclusive of depreciation and amortization in the first quarter was 36% of revenue compared to 34% last year, primarily due to the reduction in fees associated with certain card based transactions and the mix of revenue as the adoption of credit cards for payments increased. As a percent of revenue in the first quarter, combined sales and marketing, R and D and G and A expense was flat at 38% compared to last year. Sales and marketing expenses as a percentage of revenue increased from 12% in the first quarter of last year to 13% this quarter.

[Shane Trigg, President & CEO at AppFolio]

This includes additional hiring and the impact of the LiveEasy acquisition. Our R and D expenses as a percentage of revenue were consistent with prior year at 17%. Our G and A expenses as a percentage of revenue were also comparable to the first quarter of last year at 8%. Overall, the first quarter non GAAP operating margin was 24.3% compared to 25.7% last year and net cash provided by operating activities this quarter was 17.7% compared to 22.9% in the first quarter last year. Our growth and profitability has empowered us to deliver customer value, accelerate our resident strategy and repurchase stock.

[Shane Trigg, President & CEO at AppFolio]

We ended the quarter with $211,000,000 in cash and current investment securities. Under a previously approved share repurchase program, during the first quarter, we bought approximately 445,000 shares for $96,000,000 completing the previously authorized $100,000,000 program. In addition, the board approved a new stock repurchase program of $300,000,000 on April 23. Also to enhance the resident experience, early in the second quarter, we announced our strategic partnership with Second Nature and purchased a minority non controlling equity interest for $75,000,000 Our 2025 guidance for annual revenue remains $920,000,000 to $940,000,000 for a full year growth rate of 17% based on the midpoint and fueled by plus and max upgrades, growth in customers and new business units and increasing adoption of our products and services. We expect to deliver non GAAP operating margin between 24.526.5% and diluted weighted average shares outstanding are anticipated to be approximately 37,000,000 for the full year.

[Shane Trigg, President & CEO at AppFolio]

Our guidance reflects what we are seeing in today's dynamically changing environment. We anticipate 2025 revenue seasonality to be mostly consistent with 2024. Cost of revenue exclusive of depreciation and amortization is expected to remain relatively flat as a percentage of revenue compared to the prior year as we believe the benefit from operational efficiencies will be mostly offset by product mix. Our 2025 ending headcount is projected to grow as we continue to invest in high priority initiatives that enable us to achieve our strategic objectives. However, we expect the rate of headcount growth to be less than revenue growth as we maintain our focus on operational efficiency.

[Shane Trigg, President & CEO at AppFolio]

Wrapping up, this quarter's results underscore that our ongoing commitment to delivering industry leading innovation and exceptional service is driving new customer adoption of our products and services. By connecting our acquisition of LiveEasy with new industry leading partners such as Zillow and Second Nature, all enabled through Foliospace, we have accelerated our resident strategy creating value for our customers. We are well positioned to win for all stakeholders as the platform powering the future of the real estate industry. Thank you all for joining us today. Operator, this concludes today's call.

[Operator]

Ladies and gentlemen, that concludes today's conference call. You may now disconnect. Goodbye.

Participants

Executives

• Lori Barker, Investor Relations
• Shane Trigg, President & CEO