appf-20200803
0001433195false00014331952020-05-042020-05-04

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 3, 2020
AppFolio, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)
001-3746826-0359894
(Commission File Number)(IRS Employer Identification Number)
50 Castilian Drive
Santa Barbara, CA 93117
(Address of principal executive offices)
Registrant’s telephone number, including area code: (805) 364-6093
N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common Stock, $0.0001 par valueAPPFNASDAQ Global Market


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying


with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02. Results of Operations and Financial Condition.
        On August 3, 2020, AppFolio, Inc. (the “Company”) issued a press release announcing its financial results for its second fiscal quarter ended June 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
        The information contained in this Item 2.02, including the press release attached as Exhibit 99.1 hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that Section. Such information shall not be deemed to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as otherwise expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
Exhibit Number
Description
99.1



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AppFolio, Inc.
By: /s/ Ida Kane
Name: Ida Kane
Title: Chief Financial Officer







EXHIBIT INDEX
Exhibit Number
Description
99.1Press release issued on August 3, 2020.



 Document


Exhibit 99.1

News Release


AppFolio, Inc. Announces Second Quarter 2020 Financial Results

SANTA BARBARA, Calif., August 3, 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 June 30, 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, August 3, 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 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 June 30, 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,
2020		December 31,
2019
Assets
Current assets
Cash and cash equivalents$53,315  $15,813  
Investment securities—current20,930  22,876  
Accounts receivable, net12,663  7,562  
Prepaid expenses and other current assets15,836  15,540  
Total current assets102,744  61,791  
Investment securities—noncurrent5,933  12,089  
Property and equipment, net26,323  14,744  
Operating lease right-of-use assets25,732  27,803  
Capitalized software, net35,218  30,023  
Goodwill58,425  58,425  
Intangible assets, net18,911  21,377  
Deferred taxes40,711  27,574  
Other long-term assets6,354  6,276  
Total assets$320,351  $260,102  
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$3,402  $1,927  
Accrued employee expenses18,570  17,758  
Accrued expenses13,316  10,833  
Deferred revenue5,098  4,600  
Other current liabilities5,088  11,139  
Term loan, net—current portion1,833  1,208  
Total current liabilities47,307  47,465  
Operating lease liabilities33,394  33,312  
Revolving facility49,000  —  
Term loan, net46,146  47,375  
Total liabilities175,847  128,152  
Stockholders’ equity:
Preferred stock, $0.0001 par value, 25,000 shares authorized and no shares issued and outstanding as of June 30, 2020 and December 31, 2019—  —  
Class A common stock, $0.0001 par value, 250,000 shares authorized as of June 30, 2020 and December 31, 2019; 17,371 and 16,923 shares issued as of June 30, 2020 and December 31, 2019, respectively; 16,952 and 16,552 shares outstanding as of June 30, 2020 and December 31, 2019, respectively2  2  
Class B common stock, $0.0001 par value, 50,000 shares authorized as of June 30, 2020 and December 31, 2019; 17,339 and 17,594 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively2  2  
Additional paid-in capital156,919  161,509  
Accumulated other comprehensive income131  33  
Treasury stock, at cost, 419 and 371 shares of Class A common stock as of June 30, 2020 and December 31, 2019, respectively(25,756) (21,562) 
Retained earnings (accumulated deficit)13,206  (8,034) 
Total stockholders’ equity144,504  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
June 30,		Six Months Ended
June 30,
 2020201920202019
Revenue$81,043  $63,624  $153,538  $120,715  
Costs and operating expenses:
Cost of revenue (exclusive of depreciation and amortization)27,411  25,128  56,372  49,309  
Sales and marketing13,717  13,232  28,223  24,451  
Research and product development12,128  9,339  23,340  17,820  
General and administrative14,785  8,214  23,357  16,406  
Depreciation and amortization6,657  5,415  13,071  10,491  
Total costs and operating expenses74,698  61,328  144,363  118,477  
Income from operations6,345  2,296  9,175  2,238  
Other income (expense), net(10) (56) 12  (57) 
Interest expense, net(562) (427) (1,056) (924) 
Income before benefit from income taxes5,773  1,813  8,131  1,257  
Benefit from income taxes(13,484) (21,338) (13,109) (25,619) 
Net 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  
Weighted average common shares outstanding:
Basic34,254  34,010  34,214  33,962  
Diluted35,614  35,412  35,647  35,385  

Stock-Based Compensation Expense
(in thousands)
Three Months Ended
June 30,		Six Months Ended
June 30,
2020201920202019
Costs and operating expenses:
Cost of revenue (exclusive of depreciation and amortization)$520  $415  $646  $739  
Sales and marketing477  302  702  550  
Research and product development580  363  874  671  
General and administrative1,176  607  1,490  1,279  
Total stock-based compensation expense$2,753  $1,687  $3,712  $3,239  





CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 Three Months Ended
June 30,		Six Months Ended
June 30,
 2020201920202019
Cash from operating activities
Net income$19,257  $23,151  $21,240  $26,876  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization6,657  5,415  13,071  10,491  
Amortization of operating lease right-of-use assets1,018  987  2,071  1,928  
Deferred income taxes(13,499) (21,362) (13,137) (25,643) 
Stock-based compensation2,753  1,687  3,712  3,239  
Other8  81  (30) 108  
Changes in operating assets and liabilities:
Accounts receivable(3,520) (644) (5,136) (2,695) 
Prepaid expenses and other current assets2,530  (1,859) (292) (5,199) 
Other assets41  830  (107) 1,254  
Accounts payable555  88  193  188  
Accrued employee expenses6,144  3,547  717  680  
Accrued expenses3,808  (196) 4,534  1,384  
Deferred revenue(161) 313  532  581  
Operating lease liabilities(876) (1,024) (92) (1,759) 
Other liabilities(422) 504  100  380  
Net cash provided by operating activities24,293  11,518  27,376  11,813  
Cash from investing activities
Purchases of available-for-sale investments(12,740) (678) (13,389) (678) 
Proceeds from sales of available-for-sale investments—  —  13,942  1,750  
Proceeds from maturities of available-for-sale investments500  1,750  7,750  4,000  
Purchases of property, equipment and intangible assets(6,314) (1,395) (14,306) (2,425) 
Additions to capitalized software(5,887) (4,762) (12,709) (9,420) 
Cash paid in business acquisition, net of cash acquired—  —  —  (54,004) 
Net cash used in investing activities(24,441) (5,085) (18,712) (60,777) 
Cash from financing activities
Proceeds from stock option exercises232  109  329  199  
Tax withholding for net share settlement(3,232) (3,436) (9,690) (4,751) 
Payment of contingent consideration—  —  (5,977) —  
Proceeds from issuance of debt753  572  50,190  1,169  
Principal payments on debt(1,069) (885) (1,818) (1,794) 
Payment of debt issuance costs—  (60) —  (420) 
Purchase of treasury stock—  —  (4,194) —  
Net cash (used in) provided by financing activities(3,316) (3,700) 28,840  (5,597) 
Net (decrease) increase in cash and cash equivalents and restricted cash(3,464) 2,733  37,504  (54,561) 
Cash, cash equivalents and restricted cash
Beginning of period57,215  17,212  16,247  74,506  
End of period$53,751  $19,945  $53,751  $19,945  




v3.20.2
Cover
May 04, 2020
Cover [Abstract]  
Document Type 8-K
Document Period End Date Aug. 03, 2020
Entity Registrant Name AppFolio, Inc.
Entity Incorporation, State or Country Code DE
Entity File Number 001-37468
Entity Tax Identification Number 26-0359894
Entity Address, Address Line One 50 Castilian Drive
Entity Address, City or Town Santa Barbara
Entity Address, State or Province CA
Entity Address, Postal Zip Code 93117
City Area Code 805
Local Phone Number 364-6093
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Entity Central Index Key 0001433195
Amendment Flag false