Appfolio (APPF) Beats Again
Appfolio reported last night and, as is typical, the company surpassed expectations and gave us a bare bones report. The punchline is it continues to execute well and we want to keep owning the stock, provided it holds up. In the early going today APPF was up as much as 5%. It’s not up as much now but is still higher on the day.
Details: Revenue was up 35.5% to $68 million and net income was $5 million, aided by a $1.3 million income tax benefit. This worked out to EPS of $0.14, which beat by $0.05. Management guided for full-year revenue of around $255 million, which is $5 million more than consensus.
Core solutions, which reflects the core software for both the property management and legal verticals, was up 26% to $22.5 million while Value+ services, which include all the extra modules (payments, insurance, tenant screening, etc.) grew by 35% to $41.6 million. Other revenue was $3.8 million and reflects acquired technologies that are now part of Value+ services, but which also still have standalone customers.
Appfolio continues to move up-market to land bigger property managers with more complex operations. It is offering them more valuable Value+ services that help automate their operations, and that seems to be a winning strategy. Units under management rose 19% to 4.41 million while property manager customers rose 11%, to 14,034. The legal business only grew by 6% and is under 10% of revenue. It’s still a sort of random line of business compared to the scale of the property management business, but it’s contributing so there’s no real reason to sell it off.
At the end of the day this business is all about being run efficiently and helping customers do the same. Technologies like automation and AI are helping, as evidenced by recent enhancements like Smart Bill Entry, which reads PDF invoices for customers and automatically enters them into the AppFolio Property Manager accounts payable workflow.
Keep holding the stock. HOLD.