What happened

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

APPF Chart

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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. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends AppFolio. The Motley Fool has a disclosure policy.