AppFolio, Inc.
Q4 2019 Earnings Call Transcript

Published: 2 Mar 2020

[Company Representatives:]

Jason Randall - President, Chief Executive Officer Ida Kane - Chief Financial Officer Erica Abrams - Head Investor Relations

[Operator:]

Thank you for joining us today. Welcome to the AppFolio, Fourth Quarter and Fiscal Year 2019 Financial Results Conference Call. I would now like to turn the call over to Erica Abrams. Thank you.

[Erica Abrams:]

Thank you, Christine. Good afternoon ladies and gentlemen. Thank you for joining us today as we report AppFolio's fourth quarter and fiscal year 2019 financial results. I'm joined today by Jason Randall and Ida Kane of AppFolio to discuss these results. This call is being simultaneously webcast on the Investor Relations section of our website at www.appfolioinc.com. Before we get started, I would like to call everyone's attention to our safe harbor policy. Please note that certain statements made on this call will be forward-looking statements, which are subject to considerable risks and uncertainties. Actual results or performance may be materially different from any results or performance expressed or implied by the forward-looking statements.

[Ida Kane:]

Thank you, Erica, and welcome to everyone joining us on the call today for our AppFolio’s fourth quarter and fiscal year 2019 financial results. We had a strong fiscal year 2019, with full year revenue of $256 million, a 35% increase year-over-year. GAAP net income was $36.3 million or $1.02 per diluted share compared to $20 million or $0.56 per diluted share reported in fiscal 2018. Fiscal year 2019 net income results included $31.5 million tax benefit, primarily related to the release of our valuation allowance against deferred tax assets. Also included in fiscal year 2019 results are $7.3 million of non-cash charges related to stock based compensation. For those of you who track non-GAAP results, our form 10-K was filed today and includes more detailed financial data points that you might find helpful in calculating any relevant non-GAAP results on your own. We ended fiscal year 2019 with 14,385 real-estate Property Manager Customers, managing an aggregate of 4.64 million units in their portfolios, compared to 13,046 customers and 3.9 million units under management reported one year ago. The year-over-year increase in the average size of net new customer acquired is a result of our continued efforts and success acquiring customers with higher unit counts under management. As a reminder, we define a real-estate Property Manager Customer base as the number of customers subscribing to our core solutions. These customers are using AppFolio Property Manager or AppFolio Property Manager PLUS to manage and grow their businesses. In the legal vertical, we closed the year with 10,971 customers up from 10,279 one year ago. As of December 31, 2019 our annual dollar base net expansion was 118% for our Property Manager customers and 121% for our law firm customers. This compares to 116% and 113% respectively in fiscal year 2018. I encourage you to read our 8-K filing today for more information on how we calculate annual dollar based net expansion.

[Jason Randall:]

Thanks Ida. Thank you for joining us today as we report our fourth quarter and fiscal year 2019 financial results. Our financial results in 2019 reflect our continued focus and success with revolutionizing vertical industry businesses, by providing great software and service to our customers. We attribute our progress to our steadfast focus on innovating for our customers and their stakeholders, delivering an exceptional customer experience and enabling a thriving company culture, all while focusing on long term sustainable growth in our business. In our real-estate vertical we took important steps to advance our business, both through acquisition and internal development that continue to position AppFolio for long term success. We made important improvements in AppFolio Property Manager PLUS, APM PLUS, a peer of our award winning software, designed for managing larger businesses with more complex needs. Our focus here was to continue to improve business efficiency, help mitigate risk and provide deeper business insights to our customers at scale. We extended innovative capabilities such as configurable workflows, provide more flexibility in automation for customers who manage large, dispersed teams with more complex property portfolios. We also provide customers with an auditing center for greater management oversight of employees’ actions across the platform. The result of our continued focus on improving functionality of APM PLUS is growing adoption and favorable reviews and feedback from customers and prospects. As many of you know, in early 2019 we acquired Dynasty marketplace and quickly released AppFolio AI leasing assistant Lisa, as a value plus service offering. From here we continue to incorporate AI technology into our products to improve our customer’s businesses. We developed and released Smart Bill Entry, a feature now included in our core AppFolio Property Manager offering. This feature harnesses the power of AI by bring up hours of invoice entry through automation. We believe that artificial intelligence is a powerful technology that will enable us to further revolutionize the real estate industry well into the future.