AppFolio (NASDAQ:APPF) reported its first-quarter earnings on Monday, April 30. The software-as-a-service company showed once again that its two small-business platforms are having no trouble attracting new customers. Better yet, existing customers continue to interact with the software more often and are increasing their spending on the company's Value Plus services offering. The combination helped drive a 32% increase in overall revenue and a big expansion in profits. 

AppFolio Q1 results: The raw numbers


Q1 2018

Q1 2017

Year-Over-Year Change


$42.3 million

$32.1 million


GAAP net income

$4.3 million

$0.7 million






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

What happened with AppFolio this quarter?

  • Subscription revenue jumped 24% to $16.2 million. 
  • Value Plus services revenue -- which is recorded when customers pay for optional services -- increased 39% to $24.6 million. The majority of the revenue growth was driven by increased use of the company's payment and screening services. 
  • The number of property management customers on the platform grew 15% to 12,000. Total property management units grew 20% to 3.4 million.
  • The customer count for MyCase -- which is the company's product aimed at small law firms -- grew 12% to 9,700.
  • The huge jump in net income was caused by margin expansion across the board. However, management reminded investors that the company adopted a new revenue recognition standard on Jan. 1, 2018. This change positively impacted net income by $1.3 million, or $0.04 per share.
Computer and phone showing AppFolio software

Image source: AppFolio.

What management had to say

As usual, AppFolio CEO Jason Randall kept his commentary on the quarter brief during the company's conference call with analysts: "Our success to date results from our continued focus on delivering value to our customers while maintaining a rapid pace of product innovation and a steadfast focus on our team and culture. We remain committed to our long-term strategy of sustainable growth as well as finding leverage in our existing business and opportunities to invest back into the business for future growth."

Randall also commented on a number of product enhancements that were rolled out during the quarter that should drive incremental value to customers and open up new sources of revenue for the business: "During the first quarter, we also expanded our screening offering to add a decisioning tool that allows property managers to define specific criteria ... and receive a calculated preliminary screening recommendation. Customers benefit from increased efficiency, decreased risk, and improved compliance."

Looking forward

Management reaffirmed its guidance for 2018, which calls for revenue to land between $179 million and $182 million. The middle of this guidance suggests that the company expects top-line growth of about 26% for the year.

Randall closed the conference call by restating that the company remains heads-down focused on delivering on its objectives: " ... we are pleased with the momentum we built so far this year and remain focused on executing against our long-term strategy and continuing to delight our growing base of customers."

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