APPF - Earnings call transcript Q2 2022

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Operator

Good afternoon. Thank you for standing by. And welcome to AppFolio Inc.'s Second Quarter 2022 Financial Results Conference Call. Please be advised that today's conference is being recorded and a replay will be available on AppFolio Investor Relations website. I would now like to hand the conference over to Lori Barker, Investor Relations. Ms. ahead. go please Barker,

Lori Barker

financial Randall, afternoon, I'd are Lori for like at we quarter Officer. Fay Relations Financial President today and Good call on for joining Investor section the AppFolio, www.appfolioinc.com. Investor is being of the Sien Jason as XXXX second CEO; AppFolio's AppFolio's website Goon, and to report With call everyone. you. AppFolio's me today Barker, I'm on our Relations Chief us results. This Thank thank and simultaneously you webcast

are Before characterizations everyone results is SEC within we Any those any uncertainties. call policy. by of during events, to the of or statement. statements, any other assumes get started, refers subject that AppFolio's including forward-looking statements projections conditions statements I statement and or Litigation conference meaning our forward-looking the those product future would future reason, Comments to future expectations, to of like obligation no required remind financial Securities AppFolio differ risks such and this forward-looking Act Private harbor and AppFolio's contain to of webcast safe Reform except future made for projections, including law. development listed forward-looking a in as or such could in materially filings. enhancements market actual update expressed from XXXX,

to ahead. SEC. XX, AppFolio's Jason, I'll year on well December filings our the the SEC go the President With SEC, with XXXX, ended as CEO. please which including with filings Randall, over detail please XX-K turn company's greater as see and and Form for risks that, other XX, call For the uncertainties, about was with Jason February our the the XXXX, filed

Jason Randall

quarter, powerful report million X than welcome customers. more you, second experiences revenue AppFolio's year-over-year our joining million we've results that and the we I'm This to continued was and to pleased added these second our now quarter units. Thank is in million than for management XX% industry the more reflect up growing real X.X XXXX basis and a $XXX a exceptional units time serve estate first financial results. property to and delivering us Lori, solution on everyone of on base to focus

I'll customer Our I'll dedicated growth deeper and challenge new increase second how and how times for productivity it and sustained it Then investments dig specific reinforces to focus, automate and rental integration highlights. innovative and ways long-term have highlight the all of an is into June Increasing productivity. delivered two innovative we've property upmarket. recently stack, market. and I'll even team workflows change product announcement our resilience developed easier in marketplace quarter AppFolio our revenue workflows move of with constant new customers. our the make start strategy execution during to for managers our ongoing to

As The residential new workflows to like platform. carefully SaaS we a centralization continue to of needs. of on accelerated SMB the rise AppFolio unique onto adding focus providers routes continue we upmarket their extend to beyond single our customers

corporate the using Stack, resident focus Manager. preferred entire software of our especially National portfolios, the AppFolio variety hub. customer’s which Integrations customers with their at API both announced partners our AppFolio best architecture larger and Annual to to a June Association's we and choices marketplace integrate choice ability are segments provide record, And customers Stack Property certified are and design single the a complex integrations to the experiences. mid-market in as we particularly around endpoints our business modern to to experience. Now to they improving and users our with a Apartment Stack Apartmentalize, enable designed system gives more our integrate from our the of important customers. allows boosting build centralized customers management of is to Conference AppFolio getting and integration reliable address offering run into seamlessly manage applications To new their a property productivity to important AppFolio on

HappyCo, partnerships Stack and Lowe's Meld. partner about we how and include maintenance can quarter, Knock, New streamline ButterflyMX, customers AppFolio’s this Conservice, solve Property talked Last new help Lowe's tasks how challenge.

many of Now integrations. have we examples more

data management, customers to residents with and compliance. sustainability access all regulatory billing meet property with teams partnership freeing new handle up turn staff better reduce process, move automates Our resident Data property, inspection moving on utilities process AppFolio and the Conservice so to in focusing the is out inspections are to move goals, experience. Manager. average and unit great make to while improve pay Property simplify saved, provides the on HappyCo time Manager utility AppFolio based ability utility management and and triggered those costs resident a provides and workflows and the Property in dates and and create automatically

user-friendly with a and bidirectional integration link helps the online a application prospective residents generates a Knock’s partnership Property our for lead other customers facilitate integration helps each Intuitive record the ready, to workflow prospect is inquiries, provides residents. AppFolio’s This system it Another that in CRM. once prospective AppFolio Manager. example, submit the

integrations and a simplified customers. these our to All tested deliver mirror required are and customer's readiness a partners that API pass certification process. to integration all of validated check and enable seamless choices partner are workflows used trusted experience The to AppFolio’s each for streamline

AppFolio We to customers gives continue partnerships, are familiar and using getting integration a just tools. our choice with Stack started

software Property per with other can their and base system backed is partner best for real for these early incremental and truly we add Stack customers correct, to Property are with using pay we're best an Krause the Stack. is products AppFolio strong investing record. while the that of experience more AppFolio assignment dedicated for integrating always differentiate if Michael partnering provide they with by in This more partners” access user managers to approximately in Company support. and one Manager end remains connections plus, best-in-class point with one month our property not that to certified customer “We with provide customer is AppFolio best the announcements. what integrations partnerships, customer Manager Customers the Orlando, AppFolio dedicated goal management software AppFolio class vendors $X.XX we our Stack integrations connected experiences customers to best-in-class Here's from It's easy look possible. see believe XXXX is AppFolio Stack in of ourselves. Property Property new upgrade unit to AppFolio excited primary We is solutions, AppFolio AppFolio may per customers or and Michael to potential is functions interest so of with Atrium Management is specific on have estate units says, for partnered used the way property Manager Manager integrated

property of we've faster back customers. simplified tenant get in time on addition the property One In improve to our thereby their the reducing the our be make check mission Residents second the capability deposit eCheck. move example steps manual managers renter's AppFolio out recent consuming use. quarter security to track to process funds ability portal, reducing rating, communications our return to important manager to status products in the is efficient. property and rolling took the Stack, forth for for and return and By we can manager's out easier new our

banking is Reconciling progress for accounts property task reconciliation and our here structures. Another accounting a error task a is month complex bank completing manually particularly modernized managers time companies consuming core with example automated large the and each functionality. bank for of is prone,

automate to is it bank risk of goal AppFolio them and property to make to bank Our their securely enabling manually managers reconciliations. easy bank error and manual eliminate and the their connect reconciliations, accounts inherent work at for completing associated

allows Plaid, our consumer now integration, helping bank go XX,XXX bank use This rate, reconciliation known to fintech people AppFolio to new leading institutions. with a higher accounts integrated accounts applications to connect with supporting customers to for financial bank more a so functionality. auto are link they success on can We financial Plaid than securely

future, to approved, that previously it property documents customers enhancement as forget program. there to automatically is This coverage. new managers. our burden ease adequate use task are is properly set liabilities can ensure Another a of manual a our liability for insurance insurance and provided tenant want In they was I landlord verifies and the to highlight system it

still our automated power technology AI Our them in demand access is the is more products easier program Property a focus from to chat This property part to queue evolving while quickly of Manager and support this manager’s milestone giving Customer our allows customer more to require in uploaded and when request resolve customer to and to of customers on making will refine critical of scans area workflow. interactions. simple use receive intake help This time, ticket and another valuable response One grow insurance the recent for to needed. access self-service continuing with troubleshooting. support and to This sentiment. base documents live saving of us advanced AppFolio follow-up times area strategy issues is reserves issues resources wealth our moment that research our which included is be improve crucial workflows. decrease designed capability and the support

As we to into dedication I'm for our needs. the grateful of head customers beyond, second XXXX evolving and employees’ half serving our

and creating entities all diverse, to a backgrounds inclusive and workplace committed are equitable We where thrive. AppFolio’s can

to increase. resulted over million renter's eCheck based the on selected as feedback strategies security continue AppFolio in one AppFolio differentiated than Fortune's to such constantly bank our economic conditions. innovative on financial In the places workflows to AppFolio’s in invest team for own for is our our more growth exciting deposits additional of developing particularly results. second through Fay year-over-year winter have automation Millennials more from and and I types solutions, what summary, ways moving quarter turn revenue will Stack, These call I now like and detail addition been are of insurance. in statements So AppFolio of growth Sien and people. for as has customer propelled with upmarket to changing unit X that we to streamline has This best

Fay Sien Goon

Thank you, Jason.

at shortages with revenue XX% rate growth pleased who with year-over-year electronic is has critical quarter and staffing in in productivity workflows grew core We services, been are strong another value-added second payments We to now the usage-based the dealing inflation. strong to improve our such services. revenue Streamlining customers million. This $XXX.X solutions never quarter. continued our as and growth with property management are more

million Core unit we and XX,XXX customers, management management the from as year success earlier. property increase. our strong At we on steadily also as serve. increase our mentioned, of based units management ending another from management customers to and million quarter we the property most units business $XX.X quarter, number compared platform of the Demonstrating X.X our subscription from in move to end management. Jason units associations property are of X.X of Additionally, in counts mightily QX, property on we XX% solution customer revenue managed XX,XXX first derived increasing year. to property continue the significant unit upmarket. units a contributed the Residential property was and customers be second year-over-year management XX% million annual This community half counts part management represents a have during units this under to

the our addition as believe Plus. of adoption will example larger of number we core of our drive customers types of an and in revenue unit. with excellent important that AppFolio that it continue continue customers Property growth to Stack units integration per is we propel focus revenue that higher to we AppFolio initiatives marketplace unit the grew to to portfolios serve, Manager rates In on also overtime is note larger

of services, QX, XX% This management. a services continued of our increase expansion added increase payment experienced especially electronic strong the in our is we property million. year-over-year growth value value-added offerings $XX.X and rise units adoption utilization under Regarding in due and to primarily year-over-year management services. to The revenue our

out increase As sequential saw before this in the move. in tenants we begin screening solid case the they a applications as filling our second typically quarter, quarterly business

to refer like to to the non-GAAP release GAAP would our today. I in expenses, addressing reconciliations press you earlier Before

higher service of payment a their Most online non-GAAP expense prior variance exclusive revenue, depreciation incentives half our of other from half value-added operating that expenses. XX%. to percent expenses associated our the mix payment and programs. a as of benefit the compared for this About cost non-recurring cost refer costs last year’s commentary is the million all In of QX, with due of revenue a of will year, with of provider of a for $X.X forward, to was amortization variance Going and quarter overall to operating and second is XX% and third-party of revenue providers. related service annual related services

operating primarily QX in XX% of Turning increase to for year-over-year X,XXX is to headcount operating now growth related employees. additional expenses to expenses. A

As due to grew year necessary percent expenses revenue related QX increased support XXXX of in marketing to primarily XX% due this of segment, same QX product projects to capabilities and quarter including a XX% products from to year. XX% like making last as personnel costs expenses this from the XX% growth. revenue, R&D from strengthen sales in security. XX% to revenue expanding year, a to continuing percentage product XX% and easier larger XXXX. year Primarily to Meanwhile, as in a QX expenses last of the in our G&A use, our our customer for to Stack, decreased percentage

you will charge. a to continue find we million scale impairment GAAP efficiencies. reconciliations, As In non-GAAP G&A see $XX.X our to and

in real spaces. we flexible we certain be lease and way more needs will be the reassessed to move estate we we office our work, exiting As

non-GAAP income last quarter from quarter to flow negative $XX Free X% in cash compared the in in QX, million, or million year. of the the second same operations $X was negative of to compared X% revenue X% XX% quarter second was Our XXXX. in or

our the year balance The guidance range cash, in with of growth increasing to to $XXX million second $XXX million. projected We midpoint million cash rate equivalents $XXX securities. represents investment revenue the sheet. to XX%. full Turning XXXX and a range full of ended the year quarter We're

of more the lower revenue. back services which sequential the revenue seasonally seen remind seasonality historically higher third both cost value-added have me screening in typical the fourth half in you a and slightly tenant Let and due pronounced services of Payments we become in our of value-added revenue Starting declines about impacts and the leasing mix revenue quarter, to in this activities. quarter. percent and becomes year,

of of our and partially card in due mix some last expect for mentioned recent cost price continue amortization by offset a cost depreciation to credit increase as percentage for of revenue we the exclusive increase to in slightly change we XXXX As to calls, revenues a and efficiencies product modest payments.

our year to While expected moderate and this are retaining percentage continue last of a year, the be headcount attracting in will compared more costs increase talent year-over-year little to increasing.

higher revenues of are full the than in our guidance expenses prior operating and As for a percent total line broadly to expected year. the remain year with past and

strategy, is more XXXX, value-added a our nicely, approximately and expenditures, XX we be XXXX the our in year and the line efficiencies it before pleased million we through in with evaluate the for our prior guidance guidance. see served year, all Full but average non-GAAP continued and more our to year. lower shares the revenue scale growing material are move available to Unit grow as expected to our our continue to are expand increase outstanding We operating our and and are are Thank year percentage our be growth be trends. of than as us scale for Weighted revenues and shares changes land services in reduce growth to of increasing of products make as take full expected through will journey today. time year margins we and investment revenue full business. continue to our customers on to you focus pillars of joining we even mix.

Operator

Thank call. conference today's concludes all participating. you for This

and disconnect, have now a day. may pleasant You

AppFolio (APPF) 28 Jul 222022 Q2 Earnings call transcript