AppFolio (NASDAQ:APPF), a software-as-a-service business focused on the needs of property managers and law firms, reported its fourth-quarter and full-year results on Monday, Feb. 26. Revenue growth accelerated slightly to 35% during the period, and the company cranked out a profit for the fourth time in a row.

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AppFolio Q4 results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Change


$37.9 million

$28.0 million


GAAP net income

$2.6 million

($1.3 million)






Adjusted EPS




GAAP = generally accepted accounting principles. EPS = earnings per share. Data source: AppFolio.

What happened with Appfolio this quarter?

  • Core solutions revenue -- which primarily consists of subscription fees -- grew 27% to $15.5 million.
  • Value+ services revenue -- which is earned when customers pay for add-on services such as application screening, payments processing, or website hosting -- jumped 42% to $20.8 million.
  • Property manager customer count grew 17% year over year to 11,700. Total units on the platform grew 21% to 3.25 million.
  • Legal customers grew 15% to 9,350. 
  • The company generated $7.8 million in cash from operating activities during the fourth quarter.

Zooming out to the full year, here's a look at the company's key numbers from 2017:

  • Revenue grew 36% to $143.8 million.
  • GAAP net income was $9.7 million, which is a sharp reversal from the $8.3 million loss that was recorded in 2016.
  • Non-GAAP net income -- which excludes stock-based compensation -- was $15.9 million, or $0.45 per share. 

What management had to say

AppFolio CEO Jason Randall provide investors with the following commentary related to the company's performance:

Our financial results in 2017 reflect our continued dual focus on gaining operating leverage in our existing business and reinvesting back into the business for future growth. We attribute our progress in that regard not only to our emphasis on delighting our customers but also to our consistent pace of product and technology innovation and our unwavering dedication to our talented and engaged team. AppFolio remains committed to the mission of revolutionizing vertical industry businesses by providing great cloud-based business management software and services.

Randall also stated that the company remains heads-down focused on introducing new Value+ services to its current customers and expanding into new markets. 

Looking forward

CFO Ida Kane stated that the company is transitioning to a new accounting standard in 2018 called ASC 606. Kane said that this transition will not have a material impact on revenue, but will change the timing of when costs related to new sales contracts are recognized. Instead of being expensed immediately, these sales costs will be deferred and expensed over a three-year period. 

Turning to guidance, management expects revenue in 2018 to land between $179 million and $182 million. The midpoint of this range represents growth of 26%.

Randall ended his prepared remarks on the investor call by outlining his priorities for the year ahead:

As we look ahead, our company culture remains a key area of focus. We know that engaged and happy employees deliver outstanding customer experiences. Our team is at the very core of our success and we believe our culture, along with our values, will continue to provide us with a competitive advantage. Going forward, we remain focused on long-term sustainable growth while continuing to serve our happy and growing base of customers.

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