What happened

AppFolio, Inc. (NASDAQ:APPF) gained 17.4% in April, according to data provided by S&P Global Market Intelligence.

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AppFolio specializes in cloud-based enterprise software for property management and law-firm management. Shares popped thanks to analyst expectations for strong earnings following the company's April 16 announcement that it would publish first-quarter results on April 30. 

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So what

AppFolio reported first-quarter earnings results after market close on April 30. Sales for the quarter ending in March jumped 32% compared to the prior-year period to reach $42.3 million. Earnings per share for the period rose 514% year over year to reach $0.12 per share. 

The recent quarter showed that AppFolio's customers are using the company's services more and opting for premium features, which is good news as these add-on products tend to be high margin for the company. Sales for Value Plus products (a category that includes services added to a basic subscription package) were up 39% on the year to reach $24.6 million. AppFolio is also making progress building its customer base. The customer count for the property-management software was up 15% year over year while law firm-management software customers climbed 12% from the prior-year period.

Now what

AppFolio is the leading software provider in two niche markets and has a very high customer retention rate. Those are characteristics that suggest the business could have a long runway for growth. However, the company's stock is already priced at lofty multiples -- 11 times forward sales and 76 times forward earnings. AppFolio will need to continue to deliver high levels of sales and earnings growth to justify its current valuation.