AppFolio (APPF 0.29%) released its second-quarter earnings report on Monday, and the cloud-based software provider reported double-digit growth in its customer count and higher spending rates among those already using the platform. The combination helped drive a 31% gain in revenue and triple-digit growth on the bottom line.
Let's look at the results to find out what's next for this fast-growing business.
Image source: AppFolio.
AppFolio Q2 results: The raw numbers
|
Metric |
Q2 2018 |
Q2 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Sales |
$47.2 million |
$35.9 million |
31% |
|
GAAP net income |
$7.5 million |
$2.8 million |
168% |
|
GAAP EPS |
$0.21 |
$0.08 |
163% |
GAAP = generally accepted accounting principles. Data source: AppFolio. Chart by author.
What happened with AppFolio this quarter
- Core solutions revenue, which is earned through subscriptions, jumped 22% to $17 million.
- Value+ services revenue, which is earned when customers choose to purchase optional services, expanded 40% to $28.8 million. Management credits the gains to increased use of electronic payments, tenant screening, and landlord insurance.
- The number of property management customers grew 14% to 12,300. When combined with growth from existing users, total property management units on the platform grew 21% to 3.55 million.
- Customers in the company's legal vertical, called MyCase, grew 12% to 10,000.
- Operating expenses only rose 21% during the period. This was a lower growth rate than revenue, so operating leverage continued to kick in. That explains the triple-digit earnings growth.
What management had to say
AppFolio's management team likes to keep its communication with investors to a minimum.
However, on its conference call with investors, CEO Jason Randall expounded on some of the features being launched on the platform to increase customer engagement: "With Bill Pay, our Value+ payments platform now allows property managers to pay vendors and owners from within AppFolio Property Manager with the click of a button. With checks automatically printed and mailed, customers can spend less time manually processing checks and have greater accuracy in the management of their expenses and vendors, all from within our platform."
Randall also stated that the company is adding new functionality to MyCase that is designed to improve efficiency and reduce manual processes for customers.
Looking forward
Another strong quarter of growth allowed AppFolio's management team to raise its guidance for the full year. The company now believes that revenue in 2018 will land between $183 million and $185 million. This represents a $2.5 million bump at the midpoint from its prior outlook and represents year-over-year revenue growth of around 28%.
Randall closed out his brief remarks by saying that AppFolio remains focused on executing its long-term strategy.
With clear signs that engagement is on the rise and the number of customers on the platform is growing at a double-digit clip, AppFolio's intense focus on the customer experience is paying off for shareholders.
