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AppFolio, Inc. Announces First Quarter 2020 Financial Results

SANTA BARBARA, Calif., May 04, 2020 (GLOBE NEWSWIRE) -- AppFolio, Inc. (APPF) ("AppFolio" or the "Company"), a leading provider of cloud-based business software solutions, services, and data analytics to the real estate and legal markets, today announced its financial results for the first quarter ended March 31, 2020.

AppFolio's operating results for the first quarter of 2020 are summarized in the tables accompanying this press release. The Company nevertheless urges investors to read its Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the "SEC") on March 2, 2020, as well as its more detailed first quarter 2020 results that will be included in the Company's Quarterly Report on Form 10-Q, which will be filed with the SEC today. These periodic report filings, together with other documents the Company files with the SEC from time to time, will be accessible on AppFolio's website, http://ir.appfolioinc.com. The limited information that follows in this press release is not adequate for making an informed investment judgment

Financial Outlook
While we are encouraged by the results of our first quarter, and the more recent demand for our products and services, we are unable to predict, with any reasonable degree of certainty, the full extent of the potential impact of the COVID-19 pandemic on our business and financial results. As a result, we are withdrawing our previously communicated full year revenue guidance for fiscal year 2020.

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, May 4, 2020, 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.

The conference call can be accessed by dialing 833.502.0474 and entering ID #1898165. International callers may dial 236.714.2184. A replay of the conference call will be available at 800.585.8367, and at 416.621.4642 for international callers. A live and recorded webcast of the conference call will be available at http://ir.appfolioinc.com.

About AppFolio, Inc.
AppFolio offers industry-specific, cloud-based business software solutions, services, and data analytics to the real estate and legal markets. Today our products include real estate software (AppFolio Property Manager, AppFolio Property Manager PLUS and AppFolio Investment Management) 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 business opportunities, the impact of the Company's strategic actions and initiatives, the impact of the COVID-19 pandemic on the Company's business, and the timing of providing updated financial guidance.

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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, which will be filed with the SEC today, 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)

    March 31,
2020
  December 31,
2019
Assets        
Current assets        
Cash and cash equivalents   $ 56,779     $ 15,813  
Investment securities—current   7,952     22,876  
Accounts receivable, net   9,617     7,562  
Prepaid expenses and other current assets   18,362     15,540  
Total current assets   92,710     61,791  
Investment securities—noncurrent   6,676     12,089  
Property and equipment, net   22,536     14,744  
Operating lease right-of-use assets   26,750     27,803  
Capitalized software, net   32,587     30,023  
Goodwill   58,425     58,425  
Intangible assets, net   20,121     21,377  
Deferred taxes   27,212     27,574  
Other long-term assets   6,410     6,276  
Total assets   $ 293,427     $ 260,102  
Liabilities and Stockholders’ Equity        
Current liabilities        
Accounts payable   $ 2,509     $ 1,927  
Accrued employee expenses   11,833     17,758  
Accrued expenses   11,419     10,833  
Deferred revenue   5,732     4,600  
Other current liabilities   5,636     11,139  
Term loan, net—current portion   1,520     1,208  
Total current liabilities   38,649     47,465  
Operating lease liabilities   34,143     33,312  
Revolving facility   49,000      
Term loan, net   46,760     47,375  
Total liabilities   168,552     128,152  
Stockholders’ equity:        
Preferred stock, $0.0001 par value, 25,000 shares authorized and no shares issued and outstanding at March 31, 2020 and December 31, 2019        
Class A common stock, $0.0001 par value, 250,000 shares authorized at March 31, 2020 and December 31, 2019; 17,089 and 16,923 shares issued at March 31, 2020 and December 31, 2019, respectively; 16,670 and 16,552 shares outstanding at March 31, 2020 and December 31, 2019, respectively   2     2  
Class B common stock, $0.0001 par value, 50,000 shares authorized at March 31, 2020 and December 31, 2019; 17,536 and 17,594 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively   2     2  
Additional paid-in capital   156,513     161,509  
Accumulated other comprehensive income   165     33  
Treasury stock, at cost, 419 and 371 shares of Class A common stock at March 31, 2020 and December 31, 2019, respectively   (25,756 )   (21,562 )
Accumulated deficit   (6,051 )   (8,034 )
Total stockholders’ equity   124,875     131,950  
Total liabilities and stockholders’ equity   $ 293,427     $ 260,102  

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)

  Three Months Ended
March 31,
  2020   2019
Revenue $ 72,495     $ 57,091  
Costs and operating expenses:      
Cost of revenue (exclusive of depreciation and amortization) 28,961     24,181  
Sales and marketing 14,506     11,219  
Research and product development 11,212     8,481  
General and administrative 8,572     8,192  
Depreciation and amortization 6,414     5,076  
Total costs and operating expenses 69,665     57,149  
Income (loss) from operations 2,830     (58 )
Other income (expense), net 22     (1 )
Interest expense, net (494 )   (497 )
Income (loss) before provision for (benefit from) income taxes 2,358     (556 )
Provision for (benefit from) income taxes 375     (4,281 )
Net income $ 1,983     $ 3,725  
       
Net income per common share:      
Basic $ 0.06     $ 0.11  
Diluted $ 0.06     $ 0.11  
Weighted average common shares outstanding:      
Basic 34,175     33,913  
Diluted 35,681     35,342  
           

Stock-Based Compensation Expense
(in thousands)

  Three Months Ended
March 31,
  2020   2019
Costs and operating expenses:      
Cost of revenue (exclusive of depreciation and amortization) $ 126     $ 324  
Sales and marketing 225     248  
Research and product development 294     308  
General and administrative 314     672  
Total stock-based compensation expense $ 959     $ 1,552  


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(UNAUDITED) 
(in thousands)
  Three Months Ended
March 31,
  2020   2019
Cash from operating activities      
Net income $ 1,983     $ 3,725  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 6,414     5,076  
Amortization of operating lease right-of-use assets 1,053     942  
Deferred income taxes 362     (4,281 )
Stock-based compensation 959     1,552  
Other (38 )   27  
Changes in operating assets and liabilities:      
Accounts receivable (1,616 )   (2,051 )
Prepaid expenses and other current assets (2,822 )   (3,577 )
Other assets (148 )   660  
Accounts payable (362 )   100  
Accrued employee expenses (5,427 )   (2,867 )
Accrued expenses 726     1,580  
Deferred revenue 693     268  
Operating lease liabilities 784     (735 )
Other liabilities 522     (124 )
Net cash provided by operating activities 3,083     295  
Cash from investing activities      
Purchases of available-for-sale investments (649 )    
Proceeds from sales of available-for-sale investments 13,942     1,750  
Proceeds from maturities of available-for-sale investments 7,250     2,250  
Purchases of property, equipment and intangible assets (7,992 )   (1,030 )
Additions to capitalized software (6,822 )   (4,658 )
Cash paid in business acquisition, net of cash acquired     (54,004 )
Net cash provided by (used in) investing activities 5,729     (55,692 )
Cash from financing activities      
Proceeds from stock option exercises 97     90  
Tax withholding for net share settlement (6,458 )   (1,315 )
Payment of contingent consideration (5,977 )    
Proceeds from issuance of debt 49,437     597  
Principal payments on debt (749 )   (909 )
Payment of debt issuance costs     (360 )
Purchase of treasury stock (4,194 )    
Net cash provided by (used in) financing activities 32,156     (1,897 )
Net increase (decrease) in cash and cash equivalents and restricted cash 40,968     (57,294 )
Cash, cash equivalents and restricted cash      
Beginning of period 16,247     74,506  
End of period $ 57,215     $ 17,212