AppFolio, Inc. Announces Second Quarter 2025 Financial Results

Rhea-AI Summary

AppFolio (NASDAQ: APPF), a real estate technology leader, reported strong Q2 2025 financial results with revenue growing 19% year-over-year to $236 million. The company's total units under management increased 6% to 8.9 million, while GAAP operating income reached $41 million (17.2% of revenue).

Non-GAAP operating income rose to $62 million (26.2% of revenue), and operating cash flow was $53 million. The company highlighted that 96% of customers are using their AI-powered solutions. For fiscal year 2025, AppFolio projects revenue between $935-945 million and expects non-GAAP operating margin of 24.5-26.5%.

Positive

• None.

Negative

• GAAP operating margin declined to 17.2% from 18.3% year-over-year
• Operating cash flow margin decreased to 22.3% from 25.8% in Q2 2024

Insights

Financial Analyst

AppFolio delivers solid 19% revenue growth with improving margins, driven by AI solution adoption and premium tier upgrades.

AppFolio posted impressive Q2 results with revenue climbing 19% year-over-year to $236 million, outpacing the 6% growth in units under management (now at 8.9 million). This revenue-to-unit growth differential highlights successful monetization through premium tiers and value-added services, particularly their Realm-X AI solutions.

The company's profitability metrics show mixed but generally positive trends. GAAP operating income reached $41 million, representing 17.2% of revenue – solid performance though down slightly from 18.3% in Q2 2024. More encouragingly, non-GAAP operating income improved to $62 million (26.2% of revenue), showing a marginal improvement from 26.0% in the year-ago quarter.

Cash flow generation remains robust with $53 million from operations (22.3% of revenue), though down from 25.8% a year earlier. This slight compression in cash flow margin bears watching but isn't concerning given the growth investments.

Management's full-year revenue guidance of $935-945 million implies continued strong growth through H2 2025. The non-GAAP operating margin guidance of 24.5-26.5% suggests confidence in maintaining the current profitability level while continuing to invest in growth initiatives.

The 96% AI solution adoption rate among customers demonstrates exceptional product-market fit for AppFolio's technology strategy, creating sticky relationships with property management businesses while enabling premium pricing. This AI differentiation is proving to be a crucial competitive advantage in the real estate technology sector, allowing AppFolio to grow revenue faster than its property unit base.

Strong revenue growth driven by Realm-X adoption through premium tiers and value added services

SANTA BARBARA, Calif., July 31, 2025 (GLOBE NEWSWIRE) -- AppFolio, Inc. (NASDAQ: APPF) ("AppFolio" or the "Company"), a technology leader powering the future of the real estate industry, today announced its financial results for the second quarter ended June 30, 2025.

"Our second quarter results reflect that we continue to win in the market,” said Shane Trigg, President and CEO, AppFolio. “Our customers are seeing tangible performance benefits by adopting our central, AI-native platform, with 96% of customers having used one or more of our AI-powered solutions. AppFolio is proving to be a competitive advantage for ambitious property management businesses.”

Financial Highlights for Second Quarter of 2025

• Revenue grew 19% year-over-year to $236 million.
• Total units under management grew 6% year-over-year to 8.9 million.
• GAAP operating income was $41 million, or 17.2% of revenue, compared to operating income of $36 million, or 18.3% of revenue in Q2 2024.
• Non-GAAP operating income was $62 million, or 26.2% of revenue, compared to non-GAAP operating income of $51 million, or 26.0% of revenue, in Q2 2024.
• Net cash provided by operating activities was $53 million, or 22.3% of revenue, compared to $51 million, or 25.8% of revenue, in Q2 2024.
  

Financial Outlook
Based on information available as of July 31, 2025, AppFolio's outlook for fiscal year 2025 follows:

• Full year revenue is expected to be in the range of $935 million to $945 million.
• Full year non-GAAP operating margin as a percentage of revenue is expected to be in the range of 24.5% to 26.5%.
• Diluted weighted average shares outstanding are expected to be approximately 37 million for the full year.
  

Conference Call Information
As previously announced, the Company will host a conference call today, July 31, 2025, at 2:00 p.m. Pacific Time (PT), 5:00 p.m. Eastern Time (ET), to discuss the Company’s second quarter financial results. A live webcast of the call will be available at: https://edge.media-server.com/mmc/p/ijgr58yt. To access the call by phone, please go to the following link: https://register-conf.media-server.com/register/BIdccd543a8ef7485c8f06cd2837c68ea9, and you will be provided with dial in details. A replay of the webcast will also be available for a limited time on AppFolio’s Investor Relations website at https://ir.appfolioinc.com/news-events/events.

The Company also provides announcements regarding its financial results and other matters, including SEC filings, investor events, and press releases, on its Investor Relations website at https://ir.appfolioinc.com/, as a means of disclosing material nonpublic information and for complying with AppFolio's disclosure obligations under Regulation FD.

About AppFolio
AppFolio is a technology leader powering the future of the real estate industry. Our innovative platform and trusted partnership enable our customers to connect communities, increase operational efficiency, and grow their business. For more information about AppFolio, visit ir.appfolioinc.com.

Investor Relations Contact:
Lori Barker
ir@appfolio.com 

Use of Non-GAAP Financial Measures
Reconciliations of current and historical non-GAAP financial measures to AppFolio’s financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables entitled “Statement Regarding the Use of Non-GAAP Financial Measures.”

AppFolio is unable, at this time, to provide GAAP equivalent guidance measures on a forward-looking basis for non-GAAP operating margin because certain items that impact this measure are uncertain, out of our control, or cannot be reasonably predicted, such as charges related to stock-based compensation expense. The effect of these excluded items may be significant.

Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements are subject to considerable risks and uncertainties. Forward-looking statements include all statements that are not statements of historical fact contained in this press release, and can be identified by words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “future’” “predicts, “projects,” “target,” “seeks,” “contemplates,” “should,” “will,” “would” or similar expressions and the negatives of those expressions. In particular, forward-looking statements contained in this press release relate to future operating results and financial position, including the Company's fiscal year 2025 financial outlook, anticipated future expenses and investments, the Company's business opportunities, the impact of the Company's strategic actions and initiatives, the potential benefits and effect of the Company's AI-powered solutions, and their impact on the Company’s plans, objectives, expectations and capabilities.

Forward-looking statements represent AppFolio's current beliefs and expectations based on information currently available and speak only as of the date the statement is made. Forward-looking statements are subject to numerous known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to materially differ from those expressed or implied by these forward-looking statements include those risks, uncertainties and other factors described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on February 6, 2025, as such risk factors may be updated from time to time in our subsequent filings with the SEC, and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recently filed Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as well as in the Company's other filings with the SEC. You should read this press release with the understanding that the Company's actual future results may be materially different from the results expressed or implied by these forward-looking statements.

The Company undertakes no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands)
		June 30, 2025			December 31, 2024
Assets
Current assets
Cash and cash equivalents		$	73,478		$	42,504
Investment securities—current			54,088			235,745
Accounts receivable, net			32,543			24,346
Prepaid expenses and other current assets			37,026			32,807
Total current assets			197,135			335,402
Property and equipment, net			22,641			24,483
Operating lease right-of-use assets			16,464			17,472
Capitalized software development costs, net			12,414			15,429
Goodwill			96,410			96,410
Intangible assets, net			43,942			49,057
Deferred income taxes			90,095			76,910
Long-term investments			77,033			2,033
Other long-term assets			11,269			9,482
Total assets		$	567,403		$	626,678
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$	3,254		$	2,378
Accrued employee expenses			25,784			30,157
Accrued expenses			18,103			14,658
Other current liabilities			20,448			16,087
Total current liabilities			67,589			63,280
Operating lease liabilities			35,180			37,476
Other liabilities			8,988			6,632
Total liabilities			111,757			107,388
Stockholders’ equity			455,646			519,290
Total liabilities and stockholders’ equity		$	567,403		$	626,678

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share amounts)
	Three Months Ended June 30,							Six Months Ended June 30,
		2025				2024			2025			2024
Revenue(1)	$	235,575			$	197,375		$	453,277		$	384,805
Costs and operating expenses:
Cost of revenue (exclusive of depreciation and amortization)(2)		83,827				69,601			163,325			134,247
Sales and marketing(2)		36,776				27,300			67,833			51,755
Research and product development(2)		46,674				39,522			90,432			77,417
General and administrative(2)		21,936				20,254			45,287			41,386
Depreciation and amortization		5,850				4,670			12,105			9,882
Total costs and operating expenses		195,063				161,347			378,982			314,687
Income from operations		40,512				36,028			74,295			70,118
Other (loss)/income, net		(11	)			—			45			—
Interest income, net		1,466				3,476			4,419			6,468
Income before provision for income taxes		41,967				39,504			78,759			76,586
Provision for income taxes		5,987				9,839			11,396			8,258
Net income	$	35,980			$	29,665		$	67,363		$	68,328
Net income per common share:
Basic	$	1.00			$	0.82		$	1.87		$	1.89
Diluted	$	0.99			$	0.81		$	1.85		$	1.86
Weighted average common shares outstanding
Basic		35,922				36,241			36,111			36,164
Diluted		36,204				36,742			36,425			36,720

⁽¹⁾ The following table presents our revenue categories:

	Three Months Ended June 30,						Six Months Ended June 30,
		2025			2024			2025			2024
Core solutions	$	52,473		$	44,024		$	101,986		$	86,944
Value Added Services		180,145			151,620			344,851			293,951
Other		2,957			1,731			6,440			3,910
Total revenue	$	235,575		$	197,375		$	453,277		$	384,805

⁽²⁾ Includes stock-based compensation expense as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
		2025			2024			2025			2024
Costs and operating expenses:
Cost of revenue (exclusive of depreciation and amortization)	$	1,419		$	1,175		$	2,706		$	2,135
Sales and marketing		3,045			1,703			5,893			3,213
Research and product development		8,176			6,472			15,107			12,154
General and administrative		5,659			5,444			10,964			10,766
Total stock-based compensation expense	$	18,299		$	14,794		$	34,670		$	28,268

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
	Three Months Ended June 30,								Six Months Ended June 30,
		2025				2024				2025				2024
Cash from operating activities
Net income	$	35,980			$	29,665			$	67,363			$	68,328
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,850				4,670				12,105				9,881
Amortization of operating lease right-of-use assets		507				530				1,008				1,053
Amortization of costs capitalized to obtain revenue contracts, net		2,699				2,485				5,419				4,985
Deferred income taxes		(7,644	)			—				(13,185	)			—
Stock-based compensation, including as amortized		18,299				14,795				34,670				28,269
Other		(131	)			(2,181	)			(1,048	)			(4,005	)
Changes in operating assets and liabilities:
Accounts receivable		(5,081	)			488				(8,197	)			(4,982	)
Prepaid expenses and other assets		(5,966	)			(6,177	)			(11,426	)			172
Accounts payable		(1,694	)			(296	)			852				437
Operating lease liabilities		(1,051	)			(943	)			(2,102	)			(1,418	)
Accrued expenses and other liabilities		10,875				7,833				5,649				(8,897	)
Net cash provided by operating activities		52,643				50,869				91,108				93,823
Cash from investing activities
Purchases of available-for-sale investments		(1,732	)			(94,377	)			(64,034	)			(151,539	)
Proceeds from sales of available-for-sale investments		99,944				—				202,662				—
Proceeds from maturities of available-for-sale investments		1,670				57,785				43,820				94,455
Purchases of property and equipment		(275	)			(38	)			(505	)			(1,458	)
Capitalization of software development costs		(842	)			(1,404	)			(1,478	)			(2,529	)
Purchases of long-term investments		(75,000	)			—				(75,000	)			—
Cash paid in business acquisition, net of cash acquired		—				—				(906	)			—
Net cash used in investing activities		23,765				(38,034	)			104,559				(61,071	)
Cash from financing activities
Proceeds from stock option exercises		117				24				128				3,898
Tax withholding for net share settlement		(10,020	)			(12,434	)			(19,098	)			(26,520	)
Purchase of common stock		(49,960	)			—				(145,723	)			—
Net cash used in financing activities		(59,863	)			(12,410	)			(164,693	)			(22,622	)
Net decrease in cash, cash equivalents and restricted cash		16,545				425				30,974				10,130
Cash, cash equivalents and restricted cash
Beginning of period		57,183				59,464				42,754				49,759
End of period	$	73,728			$	59,889			$	73,728			$	59,889

		RECONCILIATION FROM GAAP TO NON-GAAP RESULTS (UNAUDITED) (in thousands, except per share data)
			Three Months Ended June 30,								Six Months Ended June 30,
				2025				2024				2025				2024
Costs and operating expenses:
	GAAP cost of revenue (exclusive of depreciation and amortization)		$	83,827			$	69,601			$	163,325			$	134,247
		Stock-based compensation expense		(1,419	)			(1,175	)			(2,706	)			(2,135	)
	Non-GAAP cost of revenue (exclusive of depreciation and amortization)		$	82,408			$	68,426			$	160,619			$	132,112
	GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue			36	%			35	%			36	%			35	%
	Non-GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue			35	%			35	%			35	%			34	%
	GAAP sales and marketing		$	36,776			$	27,300			$	67,833			$	51,755
		Stock-based compensation expense		(3,045	)			(1,703	)			(5,893	)			(3,213	)
	Non-GAAP sales and marketing		$	33,731			$	25,597			$	61,940			$	48,542
	GAAP sales and marketing as a percentage of revenue			16	%			14	%			15	%			13	%
	Non-GAAP sales and marketing as a percentage of revenue			14	%			13	%			14	%			13	%
	GAAP research and product development		$	46,674			$	39,522			$	90,432			$	77,417
		Stock-based compensation expense		(8,176	)			(6,472	)			(15,107	)			(12,154	)
	Non-GAAP research and product development		$	38,498			$	33,050			$	75,325			$	65,263
	GAAP research and product development as a percentage of revenue			20	%			20	%			20	%			20	%
	Non-GAAP research and product development as a percentage of revenue			16	%			17	%			17	%			17	%
	GAAP general and administrative		$	21,936			$	20,254			$	45,287			$	41,386
		Stock-based compensation expense		(5,659	)			(5,444	)			(10,964	)			(10,766	)
	Non-GAAP general and administrative		$	16,277			$	14,810			$	34,323			$	30,620
	GAAP general and administrative as a percentage of revenue			9	%			10	%			10	%			11	%
	Non-GAAP general and administrative as a percentage of revenue			7	%			8	%			8	%			8	%
	GAAP depreciation and amortization		$	5,850			$	4,670			$	12,105			$	9,882
		Amortization of stock-based compensation capitalized in software development costs		(241	)			(471	)			(482	)			(989	)
		Amortization of purchased intangibles		(2,558	)			(118	)			(5,115	)			(237	)
	Non-GAAP depreciation and amortization		$	3,051			$	4,081			$	6,508			$	8,656
	GAAP depreciation and amortization as a percentage of revenue			2	%			2	%			3	%			3	%
	Non-GAAP depreciation and amortization as a percentage of revenue			1	%			2	%			1	%			2	%

			Three Months Ended June 30,								Six Months Ended June 30,
				2025				2024				2025				2024
Income from operations:
	GAAP income from operations		$	40,512			$	36,028			$	74,295			$	70,118
		Stock-based compensation expense		18,299				14,794				34,670				28,268
		Amortization of stock-based compensation capitalized in software development costs		241				471				482				989
		Amortization of purchased intangibles		2,558				118				5,115				237
	Non-GAAP income from operations		$	61,610			$	51,411			$	114,562			$	99,612
Operating margin:
	GAAP operating margin			17.2	%			18.3	%			16.4	%			18.2	%
		Stock-based compensation expense as a percentage of revenue		7.8				7.4				7.7				7.3
		Amortization of stock-based compensation capitalized in software development costs as a percentage of revenue		0.1				0.2				0.1				0.3
		Amortization of purchased intangibles as a percentage of revenue		1.1				0.1				1.1				0.1
	Non-GAAP operating margin			26.2	%			26.0	%			25.3	%			25.9	%
Net income (loss):
	GAAP net income		$	35,980			$	29,665			$	67,363			$	68,328
		Stock-based compensation expense		18,299				14,794				34,670				28,268
		Amortization of stock-based compensation capitalized in software development costs		241				471				482				989
		Amortization of purchased intangibles		2,558				118				5,115				237
		Income tax effect of adjustments		(7,257	)			(3,883	)			(13,599	)			(18,262	)
	Non-GAAP net income		$	49,821			$	41,165			$	94,031			$	79,560
Net income per share, basic:
	GAAP net income per share, basic		$	1.00			$	0.82			$	1.87			$	1.89
		Non-GAAP adjustments to net income		0.39				0.32				0.73				0.31
	Non-GAAP net income per share, basic		$	1.39			$	1.14			$	2.60			$	2.20
Net income per share, diluted:
	GAAP net income per share, diluted		$	0.99			$	0.81			$	1.85			$	1.86
		Non-GAAP adjustments to net income		0.39				0.31				0.73				0.31
	Non-GAAP net income per share, diluted		$	1.38			$	1.12			$	2.58			$	2.17
	Weighted-average shares used in GAAP and non-GAAP per share calculation
		Basic		35,922				36,241				36,111				36,164
		Diluted		36,204				36,742				36,425				36,720

Statement Regarding the Use of Non-GAAP Financial Measures

We use the following non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

• Non-GAAP presentation of income from operations, costs and operating expenses, operating margin, net income, and net income per share. These measures exclude certain non-cash or non-recurring items, including stock-based compensation expense, amortization of stock-based compensation capitalized in software development costs, amortization of purchased intangibles, and the related income tax effect of these adjustments, as applicable and described below. Non-GAAP operating margin is calculated as non-GAAP operating income from operations as a percentage of revenue.
  

We use each of these non-GAAP financial measures internally to assess and compare operating results across reporting periods, for internal budgeting and forecasting purposes, and to evaluate our financial performance. We believe these non-GAAP financial measures also provide useful supplemental information to investors and facilitate the analysis of our operating results and comparison of operating results across reporting periods.

In particular, we believe these non-GAAP financial measures are useful to investors and others in assessing our operating performance due to the following factors:

• Stock-based compensation expense and amortization of stock-based compensation capitalized in software development costs. We utilize stock-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of our stockholders while ensuring long-term retention, rather than to address operational performance for any particular period. As a result, stock-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.
  
  
• Amortization of purchased intangibles. We view amortization of purchased intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of purchased intangibles is an expense that is not typically affected by operations during any particular period.
  
  
• Income tax effects of adjustments. We utilize a fixed long-term projected tax rate in our computation of non-GAAP income tax effects to provide better consistency across interim reporting periods. In projecting this long-term non-GAAP tax rate, we utilize a financial projection that excludes the direct impact of other non-GAAP adjustments. The projected rate, which we have determined to be 21% and 25% for 2025 and 2024, respectively, considers other factors such as our current operating structure, existing tax positions in various jurisdictions, and key legislation in major jurisdictions where we operate. We periodically re-evaluate this tax rate, as necessary, for significant events, based on relevant tax law changes, and material changes in the forecasted geographic earnings mix.
  

Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because non-GAAP financial measures are not prepared in accordance with GAAP and can exclude expenses that may have a material impact on our reported financial results. As such, non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the tables above. We encourage investors to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.

FAQ

What was AppFolio's (APPF) revenue growth in Q2 2025?

AppFolio reported revenue growth of 19% year-over-year, reaching $236 million in Q2 2025.

How many units does AppFolio manage as of Q2 2025?

AppFolio's total units under management grew 6% year-over-year to 8.9 million in Q2 2025.

What is AppFolio's revenue guidance for fiscal year 2025?

AppFolio expects full year revenue between $935 million to $945 million for fiscal year 2025.

What was AppFolio's operating income in Q2 2025?

AppFolio reported GAAP operating income of $41 million (17.2% of revenue) and non-GAAP operating income of $62 million (26.2% of revenue) in Q2 2025.

What percentage of AppFolio customers use AI-powered solutions?

96% of AppFolio customers have used one or more of their AI-powered solutions.