APPFOLIO INC (APPF) Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue grew 16% year-over-year to $217.702M; GAAP operating margin was 15.5% and non-GAAP operating margin 24.3% as the company invested in resident experience and AI while payments mix modestly lifted cost of revenue percentage .
• Versus S&P Global consensus, revenue was slightly below ($217.702M vs $220.417M*) and non-GAAP diluted EPS was modestly below ($1.21 vs $1.224*) — a minor miss on both lines amid strong new business wins and product adoption .
• Management maintained FY2025 guidance: revenue $920M–$940M, non-GAAP operating margin 24.5%–26.5%, and ~37M diluted shares; seasonality expected similar to 2024 .
• New $300M repurchase authorization (replacing a substantially exhausted $100M program) and continued integration of LiveEasy with new partners (Zillow, Second Nature via FolioSpace) are key stock-reaction catalysts reinforcing capital returns and product-led growth .

Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

• Strong new business and adoption: “We had a strong start to the year in winning new business” and “customers… choose AppFolio,” underpinned by resident experience and partner integrations (Zillow, Second Nature) via FolioSpace .
• AI adoption driving outcomes: 89% of new customers used generative AI Realm‑X; reported 9.7 hours saved weekly, 73% higher lead-to-show conversion, and lease renewal rates up 8% — supporting premium tier upgrades (Plus/Max) and services adoption .
• Capital returns: Completed ~$96M buyback (~445k shares) under prior authorization; Board approved new $300M repurchase program, enhancing flexibility for shareholder returns .

What Went Wrong

• Slight miss vs consensus: Revenue ($217.702M) and non-GAAP diluted EPS ($1.21) were modestly below S&P Global consensus ($220.417M and $1.224*, respectively) .
• Margin compression YoY: GAAP operating margin declined to 15.5% (from 18.2%); non-GAAP operating margin to 24.3% (from 25.7%) as cost of revenue % rose with payments mix and card fee changes .
• Cash from operations lower YoY: Net cash provided by operating activities was $38.465M (17.7% of revenue) vs $42.954M (22.9%) in Q1 2024, reflecting working capital movements and investment initiatives .

Values retrieved from S&P Global.*

Financial Results

Consolidated Results vs Prior Year, Prior Quarter, and Estimates

Estimate Comparison (S&P Global)

Values retrieved from S&P Global.*

Segment Revenue Breakdown

KPIs

Guidance Changes

AppFolio is unable to provide GAAP-equivalent guidance for non-GAAP operating margin due to uncertainty around items like stock-based compensation .

Earnings Call Themes & Trends

Management Commentary

• “AppFolio’s first quarter results underscore that our ongoing commitment to delivering industry-leading innovation and exceptional service is driving new customer adoption of our products and services… we have accelerated our resident strategy… well positioned to win for all stakeholders” — Shane Trigg, President & CEO .
• “Since the start of 2025, 89% of new customers… have used one or more of our generative AI-powered AppFolio Realm‑X capabilities… saving an average of 9.7 hours each week… 73% higher lead-to-show conversion rate… lease renewal rates are up 8%” .
• Guidance tone: Revenue seasonality similar to 2024; cost of revenue % relatively flat vs prior year; ending headcount growth to be less than revenue growth as efficiency focus continues .

Q&A Highlights

• The published transcript comprised prepared remarks; formal Q&A content was not provided. Key clarifications embedded in remarks included guidance seasonality, cost-of-revenue trajectory (mix and efficiency offsets), and disciplined headcount plans relative to revenue growth .

Estimates Context

• Q1 2025 results modestly missed Wall Street consensus: revenue $217.702M vs $220.417M*, and EPS (normalized) $1.21 vs $1.224* — minor deviations likely tied to payments mix and timing against strong adoption trends .
• With guidance maintained and product momentum intact, estimate revisions may be limited; watch for upward adjustments in Value Added Services trajectory and AI adoption benefits vs potential small downward tweaks to margin assumptions given payments mix .

Values retrieved from S&P Global.*

Key Takeaways for Investors

• Product-led growth remains robust: resident experience integrations (Zillow, Second Nature) plus FolioSpace and LiveEasy workflows underpin durable demand and ARPU expansion .
• AI as a moat: Realm‑X adoption is translating to measurable customer performance gains, supporting upgrades to Plus/Max tiers and Value Added Services scaling .
• Minor miss but stable trajectory: slight revenue/EPS shortfalls vs consensus came alongside maintained FY guide and strong execution — limiting negative estimate momentum .
• Payments mix headwinds are manageable: higher COR % from card adoption and fee resets temper near-term margins but are offset by operational efficiencies and product mix over time .
• Capital allocation signal: $300M buyback authorization provides flexibility and may support share demand on pullbacks or execution milestones .
• Watch KPIs: sequential growth in Core and Value Added Services; units under management at 8.8M; cash generation remains solid even with YoY compression .
• Near-term trading: expect focus on incremental announcements (resident partnerships, AI features) and repurchase activity; medium-term thesis centers on platform leverage and monetization of AI/resident ecosystem at scale .

Values retrieved from S&P Global.*