GlobeNewswire Inc | Aug 3, 2020 04:30PM EDT

August 03, 2020

SANTA BARBARA, Calif., Aug. 03, 2020 (GLOBE NEWSWIRE) -- AppFolio, Inc. (NASDAQ: 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 second quarter ended June30, 2020.

AppFolio's operating results for the second 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 second 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 second quarter 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 not providing updated 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, August3, 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.

To listen to the live call, participants may register in advance at http://www.directeventreg.com/registration/event/3697242. After registering, a confirmation will be sent through email, including dial-in details and unique conference call codes for entry. A replay of the conference call will be available at (800) 585-8367 or (416) 621-4642 for international callers. Please use conference ID: 3697242. 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 atwww.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 June30, 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)

June 30, December 31, 2020 2019Assets Current assets Cash and cash equivalents $ 53,315 $ 15,813 Investment securities?current 20,930 22,876 Accounts receivable, net 12,663 7,562 Prepaid expenses and other current assets 15,836 15,540 Total current assets 102,744 61,791 Investment securities?noncurrent 5,933 12,089 Property and equipment, net 26,323 14,744 Operating lease right-of-use assets 25,732 27,803 Capitalized software, net 35,218 30,023 Goodwill 58,425 58,425 Intangible assets, net 18,911 21,377 Deferred taxes 40,711 27,574 Other long-term assets 6,354 6,276 Total assets $ 320,351 $ 260,102 Liabilities and Stockholders? Equity Current liabilities Accounts payable $ 3,402 $ 1,927 Accrued employee expenses 18,570 17,758 Accrued expenses 13,316 10,833 Deferred revenue 5,098 4,600 Other current liabilities 5,088 11,139 Term loan, net?current portion 1,833 1,208 Total current liabilities 47,307 47,465 Operating lease liabilities 33,394 33,312 Revolving facility 49,000 ? Term loan, net 46,146 47,375 Total liabilities 175,847 128,152 Stockholders? equity: Preferred stock, $0.0001 par value, 25,000shares authorized and no shares issued and ? ? outstanding as of June 30, 2020 and December31, 2019Class A common stock, $0.0001 par value,250,000 shares authorized as of June 30, 2020and December 31, 2019; 17,371 and 16,923shares issued as of June 30, 2020 and 2 2 December 31, 2019, respectively; 16,952 and16,552 shares outstanding as of June 30, 2020and December 31, 2019, respectivelyClass B common stock, $0.0001 par value,50,000 shares authorized as of June 30, 2020and December 31, 2019; 17,339 and 17,594 2 2 shares issued and outstanding as of June 30,2020 and December 31, 2019, respectivelyAdditional paid-in capital 156,919 161,509 Accumulated other comprehensive income 131 33 Treasury stock, at cost, 419 and 371 sharesof Class A common stock as of June 30, 2020 (25,756 ) (21,562 ) and December 31, 2019, respectivelyRetained earnings (accumulated deficit) 13,206 (8,034 ) Total stockholders? equity 144,504 131,950 Total liabilities and stockholders? equity $ 320,351 $ 260,102

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

Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019Revenue $ 81,043 $ 63,624 $ 153,538 $ 120,715 Costs andoperating expenses:Cost ofrevenue(exclusive of 27,411 25,128 56,372 49,309 depreciationandamortization)Sales and 13,717 13,232 28,223 24,451 marketingResearch andproduct 12,128 9,339 23,340 17,820 developmentGeneral and 14,785 8,214 23,357 16,406 administrativeDepreciationand 6,657 5,415 13,071 10,491 amortizationTotal costsand operating 74,698 61,328 144,363 118,477 expensesIncome from 6,345 2,296 9,175 2,238 operationsOther income (10 ) (56 ) 12 (57 )(expense), netInterest (562 ) (427 ) (1,056 ) (924 )expense, netIncome beforebenefit from 5,773 1,813 8,131 1,257 income taxesBenefit from (13,484 ) (21,338 ) (13,109 ) (25,619 )income taxesNet income $ 19,257 $ 23,151 $ 21,240 $ 26,876 Net income per common share:Basic $ 0.56 $ 0.68 $ 0.62 $ 0.79 Diluted $ 0.54 $ 0.65 $ 0.60 $ 0.76 Weightedaverage common sharesoutstanding:Basic 34,254 34,010 34,214 33,962 Diluted 35,614 35,412 35,647 35,385

Stock-Based Compensation Expense(in thousands)

Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019Costs andoperating expenses:Cost ofrevenue(exclusive of $ 520 $ 415 $ 646 $ 739 depreciationandamortization)Sales and 477 302 702 550 marketingResearch andproduct 580 363 874 671 developmentGeneral and 1,176 607 1,490 1,279 administrativeTotalstock-based $ 2,753 $ 1,687 $ 3,712 $ 3,239 compensationexpense

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED) (in thousands)

Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019Cash from operating activitiesNet income $ 19,257 $ 23,151 $ 21,240 $ 26,876 Adjustments to reconcilenet income to net cash provided by operatingactivities:Depreciation and 6,657 5,415 13,071 10,491 amortizationAmortization of operating 1,018 987 2,071 1,928 lease right-of-use assetsDeferred income taxes (13,499 ) (21,362 ) (13,137 ) (25,643 )Stock-based compensation 2,753 1,687 3,712 3,239 Other 8 81 (30 ) 108 Changes in operating assets and liabilities:Accounts receivable (3,520 ) (644 ) (5,136 ) (2,695 )Prepaid expenses and 2,530 (1,859 ) (292 ) (5,199 )other current assetsOther assets 41 830 (107 ) 1,254 Accounts payable 555 88 193 188 Accrued employee expenses 6,144 3,547 717 680 Accrued expenses 3,808 (196 ) 4,534 1,384 Deferred revenue (161 ) 313 532 581 Operating lease (876 ) (1,024 ) (92 ) (1,759 )liabilitiesOther liabilities (422 ) 504 100 380 Net cash provided by 24,293 11,518 27,376 11,813 operating activitiesCash from investing activitiesPurchases ofavailable-for-sale (12,740 ) (678 ) (13,389 ) (678 )investmentsProceeds from sales ofavailable-for-sale ? ? 13,942 1,750 investmentsProceeds from maturitiesof available-for-sale 500 1,750 7,750 4,000 investmentsPurchases of property,equipment and intangible (6,314 ) (1,395 ) (14,306 ) (2,425 )assetsAdditions to capitalized (5,887 ) (4,762 ) (12,709 ) (9,420 )softwareCash paid in businessacquisition, net of cash ? ? ? (54,004 )acquired Net cash used in (24,441 ) (5,085 ) (18,712 ) (60,777 )investing activitiesCash from financing activitiesProceeds from stock 232 109 329 199 option exercisesTax withholding for net (3,232 ) (3,436 ) (9,690 ) (4,751 )share settlementPayment of contingent ? ? (5,977 ) ? considerationProceeds from issuance of 753 572 50,190 1,169 debtPrincipal payments on (1,069 ) (885 ) (1,818 ) (1,794 )debtPayment of debt issuance ? (60 ) ? (420 )costsPurchase of treasury ? ? (4,194 ) ? stock Net cash (used in)provided by financing (3,316 ) (3,700 ) 28,840 (5,597 )activities Net (decrease) increasein cash and cash (3,464 ) 2,733 37,504 (54,561 )equivalents andrestricted cashCash, cash equivalents and restricted cashBeginning of period 57,215 17,212 16,247 74,506 End of period $ 53,751 $ 19,945 $ 53,751 $ 19,945