AppFolio, Inc. Q2 FY2025 earnings call

• AppFolio continues to win in the market with revenue growth and non-GAAP operating margin of 26.2%.
• Market is rapidly embracing AI; AppFolio joint research with IREM shows 46% increase in property management professionals' plans to use AI. Showcased AI capabilities at NAA Apartmentalize, including Realm-X Performers like Leasing Performer and Maintenance Performer, and Realm-X Flows. 96% of customers utilized one or more AI-powered solutions since beginning of 2025.
• New customer Northpoint Asset Management switched to AppFolio Property Manager Max due to AppFolio's innovation and investment in Realm-X.
• Second strategic pillar is delivering value efficiently through partnerships, with AppFolio Stack marketplace having 80 partners, over 4 million units connected, and 77% of Plus and Max customers adopting Stack. Cultivating partnerships with fintech solutions for resident experience. Example: partnership with Second Nature and investment in fintech solutions like Flex and Obligo.
• Third pillar is great people and culture; employee engagement survey results are positive. Tim Eaton appointed Chief Financial Officer.

Revenue was $236 million, growing 19% year-over-year. Core solutions revenue was $52.5 million in the second quarter, a 19% year-over-year increase, representing approximately 22.2% of total revenue. Revenue from value-added services grew 19% year-over-year to $180 million, accounting for approximately 76.3% of total revenue. At the end of the quarter, approximately 8.9 million units from 21,403 customers were managed, a 6% increase in ending units and customers compared to the prior year.

• 2025 guidance for annual revenue is increased to $935 million to $945 million, full year growth rate of 18% based on midpoint, fueled by Plus and Max tier adoption, customer growth, new business units, and product/service adoption.
• Expect non-GAAP operating margin between 24.5% and 26.5%.
• Diluted weighted average shares outstanding are anticipated to be approximately $37 million for the full year.
• Cost of revenue exclusive of depreciation and amortization is expected to remain relatively flat as a percentage of revenue.
• 2025 ending headcount is projected to grow but at a rate less than revenue growth while maintaining operational efficiency.