How are energy investors positioned?
AppFolio Inc. (APPF) delivered impressive second-quarter results for 2025, surpassing Wall Street expectations. The company’s earnings per share (EPS) came in at $1.38, exceeding the forecasted $1.27 by 8.66%. Revenue reached $236 million, beating the expected $230.1 million. Following the announcement, AppFolio’s stock rose by 3.16%, closing at $259.2. The company maintains a "GREAT" financial health rating according to InvestingPro analysis, with particularly strong scores in profitability and growth metrics.
Key Takeaways
- AppFolio’s Q2 revenue grew 19% year-over-year to $236 million.
- EPS of $1.38 surpassed forecasts by 8.66%.
- Stock price increased by 3.16% post-earnings announcement.
- Strong adoption of AI solutions, with 96% of customers utilizing these technologies.
- AppFolio expanded its marketplace to 80 partners.
Company Performance
AppFolio demonstrated robust performance in Q2 2025, with a notable 19% year-over-year revenue growth. The company continues to lead in the property management technology sector, driven by its innovative AI solutions and an expanding partner ecosystem. The strategic focus on AI has resulted in increased efficiency for customers, contributing to the company’s competitive edge.
Financial Highlights
- Revenue: $236 million, up 19% year-over-year.
- Earnings per share: $1.38, up from the forecasted $1.27.
- Non-GAAP operating margin: 26.2%.
- Cash and investment securities: $128 million.
Earnings vs. Forecast
AppFolio exceeded analysts’ expectations with an EPS surprise of 8.66%, reporting $1.38 against a forecast of $1.27. Revenue also surpassed projections, reaching $236 million compared to the anticipated $230.1 million. This performance marks a significant achievement for the company, reflecting its strong market position and effective strategic initiatives.
Market Reaction
Following the earnings announcement, AppFolio’s stock price rose by 3.16%, closing at $259.2. This positive movement reflects investor confidence in the company’s growth trajectory and strategic direction. The stock is trading near its 52-week high of $273, with impressive returns of 24% over the past year and 14% in the last six months. Based on InvestingPro Fair Value calculations, the stock appears to be trading above its intrinsic value, suggesting investors should monitor valuation levels carefully.
Outlook & Guidance
AppFolio has set its annual revenue guidance for 2025 between $935 million and $945 million, representing an 18% growth rate. The company anticipates a non-GAAP operating margin of 24.5% to 26.5%, underscoring its commitment to maintaining profitability while investing in high-priority initiatives.
Executive Commentary
CEO Shane Trigg highlighted the widespread adoption of AI solutions, stating, "96% have utilized one or more of our AI-powered solutions." This reflects the company’s focus on innovation and customer satisfaction. Additionally, Adam Haleck, CEO of Northpointe Asset Management, emphasized the impact of AppFolio’s solutions, saying, "AppFolio will free our team from task-based silos."
Risks and Challenges
- Potential market saturation in the property management sector.
- Economic uncertainties that could impact investment and growth.
- The need to continuously innovate to maintain competitive advantage.
- Integration challenges with new partners and technologies.
- Dependence on AI solutions, which require ongoing development and support.
Overall, AppFolio’s strong Q2 2025 performance and strategic initiatives position the company for continued growth, despite potential challenges in the evolving market landscape. With analyst price targets ranging from $240 to $300 and a consensus recommendation of 2.17, market experts maintain a positive outlook on the stock’s future performance. Access comprehensive analysis and real-time updates through InvestingPro’s detailed research reports and financial tools.
Full transcript - Appfolio Inc (APPF) Q2 2025:
Conference Operator: Good afternoon and thank you for standing by. Welcome to AppFolio’s Second Quarter twenty twenty five Earnings 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 like now to turn the conference over to Lori Barker, Investor Relations. You may now begin.
Lori Barker, Investor Relations, AppFolio: Thank you. Good afternoon, everyone. I’m Laurie Barker, Investor Relations for AppFolio, and I’d like to thank you for joining us today as we report AppFolio’s second quarter twenty twenty five financial results. With me on the call today is Shane Trigg, AppFolio’s President and CEO. This call is simultaneously being webcast on the Investor Relations section of our website at appfolioinc.com.
Before we get started, I would like to remind everyone of AppFolio’s Safe Harbor policy. Comments made during this conference call and webcast contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and they are subject to risks and uncertainties. Any statement that refers to expectations, projections, or other characterizations of future events, including financial projections, future market conditions, business performance, or future product enhancements or development is a forward looking statement. AppFolio’s actual future results could differ materially from those expressed in such forward looking statements for any reason, including those listed on our SEC filings. AppFolio assumes no obligation to update any such forward looking statements except as required by law.
For greater detail about risks and uncertainties, please see our SEC filings, including our Form 10 ks for the fiscal year ended 12/31/2024, which was filed with the SEC on 02/06/2025. In addition, this call includes non GAAP financial measures. Reconciliation of these non GAAP financial measures with the most directly comparable GAAP measures are included in our earnings release posted on the Investor Relations section of our website. With that, I will turn the call over to Shane Trick. Shane,
Shane Trigg, President and CEO, AppFolio: Lori. And welcome, everyone, for joining us today. I’m pleased with our second quarter results, which reflect that we continue to win in the market. Revenue was $236,000,000 growing 19% year over year with non GAAP operating margin of 26.2%. New business wins, customers moving to premium tiers, and increased adoption of our value added services demonstrate our position as the industry leader.
Our market is rapidly embracing AI. Upcoming AppFolio joint research with the Institute of Real Estate Management, also known as IREM, shows that in the past nine months, there has been a 46% increase in property management professionals’ plans to use AI or agentic technology in the future. That mirrors our team’s experience at this year’s NAA Apartmentalize, the rental housing industry’s largest event where there was palpable excitement to learn about AI and agentic capabilities. The innovation we showcased at the event was a powerful demonstration of how we differentiate to win the first pillar of our strategy. Our central AI native platform architecture enables us to rapidly deliver innovation to customers, helping them seamlessly integrate AI into their everyday workflows, so they can achieve peak performance for themselves, their residents, their investors, and every other stakeholder in the real estate ecosystem.
We keep pushing what’s possible with our embedded generative AI at Folio RealmX. At Apartmentalyze, we announced the introduction of full agentic AI through RealmX performers, empowering operators to delegate entire workflows to our technology. For example, Realmex leasing performer engages with prospects, creates and updates guest cards, enables self scheduling and rescheduling, and seamlessly collaborates with staff members. Similarly, Realmex maintenance performer communicates with residents, asking smart questions to troubleshoot and diagnose issues, accurately triaging repairs. Realmex performers and Realmex flows, our workflow and action engine, hold the key to unlocking productivity and performance.
Our customers aren’t just seeing the possibilities, they’re living them. Since the beginning of 2025, 96% have utilized one or more of our AI powered solutions, and they are getting tangible performance benefits. Last quarter, I shared how Realmex Flows is maximizing and delivering real performance for our customers, from time savings to improvements and lead to showing conversions and lease renewal rates. We’ve seen this play out again in Q2, with customers who adopted our newest Realmex flow collecting rent 56% faster. Realmex is not just about digitizing tasks, it’s about leveraging the power of technology to get work done in a new way, delivering measurable performance to our customers’ businesses.
We expect to hear about more exciting customer outcomes as we announce additional Realmex performers throughout the year. One of our newest customers is Northpointe Asset Management out of Salt Lake City, managing over 8,000 single and multifamily rental homes on AppFolio Property Manager Max. AppFolio’s pace of innovation and investment in Realmex were key factors in their decision to switch technology partners. Adam Haleck, Northpoint’s CEO shared, It’s essential that our tools evolve with us as we expand our geographic footprint and portfolio. AppFolio will free our team from task based silos, allowing us to focus on holistic outcomes and unlocking tangible performance.
Our second strategic pillar is deliver value efficiently. One important way we’re extending the value of our platform is through our partnerships. We continue to rapidly scale our AppFolio stack marketplace, which seamlessly integrates our customers’ preferred software applications with our platform, giving customers more choice and flexibility. Stack now has 80 partners in the marketplace, including recent additions Amazon Key, Banyan, Planomatic, Possession Partner and RebaRent. More than 4,000,000 units are connected and 77% of our Plus and Max customers have adopted Stack.
Beyond Stack partners, we continue to prioritize owning the moments that matter by helping customers get all the value they need without having to leave the AppFolio ecosystem. We are cultivating partnerships with FinTech solutions that address and enhance aspects of the resident experience, a key initiative for us and an important point of differentiation for our property management customers. Examples include our flexible rent partnership with Flex and the launch of several new deposit alternative solutions with Obigo. We’re creating value across the ecosystem, giving residents the easy, convenient and personalized experiences they expect, helping property managers remove friction in managing payments and giving investors predictable returns. An AppFolio customer that is leveraging many aspects of our platform to create exceptional experiences for their stakeholders is Phoenix based Chamberlain and Associates, managing 14,000 units on AppFolio Property Manager Plus.
Telling us about their use of AppFolio Stack Partners, Kelly Martin, Chief Operating Officer said, The integration of our Affiliate Stack Partners has been seamless. We found the process incredibly easy. Just press a button and the integration happens. It simplified our operations and ensured we’re working with the best tools available, end quote. The third pillar of our strategy is great people and culture.
We believe our people have the power to transform our industry, so we cultivate a community that inspires each of us to do the best and most meaningful work of our careers. This culture is reflected in our recent employee engagement survey results, where we heard overwhelmingly positive feedback, particularly in areas such as communicating our strategy, belonging, and workplace environment, where we scored in the ninety fifth percentile of the entire tech industry. According to one employee quote, a central part of my longevity here is because I truly enjoy who I get to work with. We solve meaningful problems for our customers and have fun doing it. Speaking of great people, I am pleased to announce Tim Eaton has been appointed Chief Financial Officer of AppFolio.
Tim has served as Interim Chief Financial Officer since October 2024 and has held other key AppFolio leadership positions, including Chief of Staff to the CEO since joining AppFolio in 2020. He has played an integral role in shaping our strategy, defining our operating model and leading a variety of strategic initiatives. As Interim CFO, Tim has continued to demonstrate his leadership by strengthening the finance team and positioning AppFolio for long term growth and success. A comprehensive search and thorough evaluation of a wide range of candidates ultimately confirmed Tim as the best candidate for the role. Congratulations, Tim, and thank you to AppFolio’s finance team for their commitment to delivering outstanding outcomes during this leadership transition.
With that, let me share more about AppFolio’s second quarter financial results. In the second quarter, we delivered revenue of $236,000,000 growing 19% year over year. Core solutions revenue was $52,500,000 in the second quarter, a 19% year over year increase driven by more customers choosing our Plus and Max Premium tiers, winning new customers and growth in total units under management. At the end of the quarter, we managed approximately 8,900,000 units from 21,403 customers compared to 8,400,000 units from 20,167 customers a year earlier. This represents a 6% increase in ending units and a 6% increase in customers.
Second quarter revenue from value added services grew 19% year over year to $180,000,000 This increase reflects greater use and adoption of screening, risk mitigation services and payments, as well as growth in units under management. In particular, strong screening performance was driven from FolioScreen TrustedRenter, our new comprehensive screening solution that combines advanced fraud detection tools with fair housing compliance. Turning to spending, we exited the quarter with sixteen eighty five employees, which is an increase of 11% from the 2024. This reflects growth in most functional areas as we continue to invest in go to market initiatives, product innovation and the inclusion of the LiveEasy business, which was acquired in late twenty twenty four, partially offset by efficiencies in our operations. Cost of revenue exclusive of depreciation and amortization in the second quarter was flat year over year at 35% of revenue.
As a percent of revenue in the second quarter, combined sales and marketing, R and D and G and A expense was flat at 38% compared to last year. Sales and marketing increased as a percent of revenue as we invest to win new business, while R and D and G and A decreased as a percentage of revenue. Overall, in the second quarter, non GAAP operating margin was 26.2% compared to 26% last year. With our growth and profitability, we continue to deliver customer value and accelerate our resident strategy. In the second quarter, we entered into a strategic partnership with Second Nature to enhance the resident experience, which included purchasing a minority non controlling equity interest for $75,000,000 In addition to investing behind our strategic initiatives, in April, the Board approved a new stock repurchase program of $300,000,000 and we bought back 244,000 shares in the second quarter.
Year to date, we have now repurchased a total of 689,000 shares. Notwithstanding these investments, with our strong cash flow, we ended the quarter with $128,000,000 in cash and investment securities. Our 2025 guidance for annual revenue is increasing to $935,000,000 to $945,000,000 for a full year growth rate of 18% based on the midpoint and fueled by plus and max tier adoption, growth in customers and new business units and increasing adoption of our products and services. We expect to deliver non GAAP operating margin between 24.526.5% and diluted weighted average shares outstanding are anticipated to be approximately $37,000,000 for the full year. Cost of revenue exclusive of depreciation and amortization is expected to remain relatively flat as a percentage of revenue compared to the prior year as we believe the benefit from operational efficiencies will be mostly offset by product mix.
Our twenty twenty five ending headcount is projected to grow as we continue to invest in high priority initiatives that enable us to achieve our strategic objectives. However, we expect the rate of headcount growth to be less than revenue growth as we maintain our focus on operational efficiency. In summary, I’m proud of our strong second quarter performance. We are acquiring, growing and retaining customers while delivering exceptional service and our investments in AI and the resident experience are translating into tangible performance benefits for our customers. As we head into the second half of the year, we’ll continue to focus on delivering value to our customers through industry leading innovation and exceptional service.
I look forward to seeing many of those customers at AppFolio’s Annual Future Conference in San Diego this October. At Future, we’ll be bringing together leaders to discuss the future of the real estate industry as well as unveiling new products and capabilities that will reinforce our mission to build the platform where the real estate industry comes to do business. Thank you all for joining us today. Operator, this concludes today’s call.
Conference Operator: Ladies and gentlemen, this concludes today’s conference call and thank you for participating and you may now disconnect.
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