Appfolio (APPF) and Karyopharm Therapeutics (KPTI) Report
AppFolio (APPF) reported earnings after the close yesterday with results that (again) beat expectations. Shares are up roughly 5% today and will remain in the portfolio with a HOLD rating. For a few years we’ve been holding this stock and management’s stingy communication style can make it a bit boring to follow. But the results are undeniable (we’re up over 400%).
In Q2 the trend continued, with revenue up 27.4% to $81.4 million (beating by $3.2 million) while adjusted EPS of $0.54 beat by $0.42. The earnings beat was partially driven by an income tax benefit. Revenue from core solutions was up 21% to $26.1 million while revenue from Value Plus services continues to drive a bigger chunk of growth, rising 32% to $51.5 million. This is driven by things like electronic payments, tenant screening and insurance services. AppFolio ended the quarter with 15,011 real estate property manager customers managing 4.9 million units, up from 13,737 customers and 4.2 million units a year ago. The legal vertical continues to grow modestly, with customers up from 10,631 to 11,305. Management did not provide full-year guidance as it says the benefits and challenges of the pandemic are just too difficult to forecast. No surprise there.
As has been our strategy here we’ll continue to let the stock tell the story. Shares raced higher as the market surged off the March lows and APPF hit a new high of 180 back in June. A roughly 20% pullback had the stock near pre-pandemic highs (roughly 148) just before the report, and shares are now at 154. We’ll continue to hold so long as the stock performs. HOLD
Karyopharm Therapeutics (KPTI) reported last night with results that were generally consistent with the pre-released results from a few weeks ago. Xpovio net sales were $18.6 million and were somewhat impacted by the pandemic given the challenges with treatment in the multiple myeloma market, though the trend is improving (up 12% over Q1). Roughly 170 new prescribing accounts were added in the quarter.
Management said the trial evaluating Xpovio in Covid-19 didn’t show much positive impact, though a certain subsegment of the trial population may have benefited from treatment. This hasn’t been one of the reasons we’ve owned the stock, but the findings may be affecting the storyline in a negative way short-term (but immaterial long-term).
The real story is the potential to treat many more multiple myeloma patients. The big catalyst there is the likelihood of Xpovio plus Takeda’s Velcade being approved to treat second line multiple myeloma, which should be added to the label in the first quarter of 2021. This is a key part of the story and, along with expansion into diffuse large B-cell lymphoma (DLBCL), is the main reason long-term investors should own the stock.
To put things in context, Karyopharm is seen generating around $113 million in revenue this year. In 2021 estimates suggest revenue will go to $220 million (up 95%) and by 2023 sales will have surged to nearly $500 million and the company will be turning a profit.
Granted, that’s a few years away and a company like this will likely see the stock move in a stair-stepping fashion rather than the more consistent uptrend that we are so used to from software stocks, so it can be a little tough to hold on to. Provided shares remain reasonably resilient we’ll stick with it. However, if they dip too much we will let it go. Keeping at buy down to around 15. BUY