APPF

Overall Financial Performance Highlights

• Total Q2 2026 revenue hit $281 million, a 19% year-over-year increase; AppFolio crossed $1 billion in trailing 12-month revenue for the first time in company history
• Total units on platform grew 8% year-over-year to 9.6 million, total customers increased 6% year-over-year to 22,751
• GAAP operating income reached $53 million (18.8% of revenue), a 31% year-over-year increase; non-GAAP operating income reached $76 million (27.1% of revenue), a 24% year-over-year increase

Customer and Industry Trends

• 45% of property managers are actively planning to consolidate disconnected software solutions, driven by the rising cost of operational complexity from siloed systems and poorly performing AI tools that do not deliver tangible outcomes
• There is a growing performance gap: top-quartile property managers are more than twice as profitable as the rest of the industry, while the average property manager still spends two-thirds of time on reactive routine work

Product and Platform Innovation

• AppFolio's Real Estate Performance Management (RPM) platform is built on an AI-native architecture with interconnected systems of record, action, and growth to close this performance gap
• RealmX Flows workflow orchestration has been expanded to 5x more triggers with over 1,000 conditional workflow routing/filtering options; Flows adoption has grown triple digits year-over-year across core use cases
• Deployed AI Performers for key property management workflows: Leasing Performer handles roughly half of all completed showings for adopting customers, Maintenance Performer responds to inquiries in seconds, and Resident Messenger Performer manages renewal communications
• Announced the new Accounting Performer agent to streamline manual financial close, bill entry, and budgeting processes; all AI agents operate within customer-defined governance and permissions
• Launched the RealmX cloud connector to enable secure agent-to-agent communication with external cloud systems while preserving AppFolio-native governance controls
• AI-powered application fraud detection cuts leasing decision time by 5.7 days and catches 69% more fraudulent applications than legacy solutions; co-created Resident Onboarding Lift streamlines move-in, creates new incremental revenue streams, and frees up ~20 hours of team time per month for adopting operators

Strategic Pillars

1. Differentiate to win: Build a proprietary AI-native performance platform that delivers tangible business outcomes for customers, rather than selling disconnected bolt-on AI tools
2. Deliver performance efficiently: Deeper platform adoption drives stronger customer results and retention; premium tier adoption has grown from ~1 in 4 units to nearly 1 in 3 units, with early adopters reporting measurable improvements such as a 1.9 percentage point occupancy lift and 30%+ increase in lease applications
3. Invest in great people and customer-centric culture: Customer listening is a core company value, and deep customer partnerships drive long-term product and business success

• Management raised full-year 2026 total revenue guidance to a range of $1.117 billion to $1.127 billion, lifting the midpoint year-over-year growth rate to 18.0%, driven by stronger-than-expected premium tier adoption, new business growth, and rising adoption of AI agentic products and resident services • The guidance assumes a more moderate pace of unit expansion among existing customers, while new customer acquisition and retention are expected to remain healthy • Full-year 2026 non-GAAP operating margin guidance was raised to a range of 26.5% to 28.0%, up from the prior outlook and compared to 24.7% non-GAAP operating margin in 2025 • Cost of revenue (excluding depreciation and amortization) is expected to remain relatively flat as a percentage of revenue compared to 2025 • Operating expenses as a percentage of revenue are expected to decline modestly full-year, as revenue scale and AI-driven internal productivity improvements offset selective hiring, particularly in sales roles • Full-year 2026 diluted weighted average shares outstanding are expected to total approximately 36 million • Seasonality for subscription and value-added services revenue is expected to be broadly consistent with 2025

AppFolio operates two core product segments: 1) Subscription Services: Q2 2026 revenue reached $60 million, a 14% year-over-year increase from $52.5 million in Q2 2025. This segment contributed 21.4% of total Q2 2026 revenue. Growth is driven by new customer wins, expansion in units under management, and increased customer upgrades to premium platform tiers. 2) Value-Added Services: Q2 2026 revenue hit $219 million, a 22% year-over-year increase from Q2 2025. This segment contributed 78.6% of total Q2 2026 revenue. Growth is led by established offerings including folio guard risk mitigation, folio screen tenant screening, and online payments, with growing contributions from newer offerings such as resident onboarding lift, move-in services, and RealmX AI agentic products.

Management referenced standard risks associated with forward-looking statements, noting that actual future results could differ materially from projected outcomes due to factors including those disclosed in AppFolio's SEC filings (such as the Form 10-K for the fiscal year ended December 31, 2025). No additional material operational risks, unanticipated failures, or emerging headwinds were explicitly discussed on the call.

The prepared remarks section concluded the call, and no question and answer session was held.