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  4. [8-K] APPFOLIO INC Reports Material Event

AppFolio Q3 GAAP operating income jumps 64% to $57M

APPF's fiscal 2026 revenue outlook is $1.122 billion–$1.127 billion, alongside a 26.5%–27.5% non-GAAP operating-margin range.

Filing Impact
(High)
Filing Sentiment

Sentiment and the balance of points

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Form Type
8-K

Rhea-AI Filing Summary

AppFolio, Inc. (APPF) reported third-quarter 2026 revenue of $296 million, up 19% year over year, and 9.8 million units under management, up 8%. GAAP operating income was $57 million, up 64%, equal to 19.4% of revenue versus 14.1% a year earlier. Non-GAAP operating income was $81 million, up 38%, with a 27.3% margin versus 23.5%. Net cash provided by operating activities was $97 million, compared with $86 million.

For fiscal 2026, AppFolio raised its revenue outlook to $1.122 billion–$1.127 billion and gave a non-GAAP operating-margin outlook of 26.5%–27.5%; diluted weighted average shares are expected to be approximately 36 million. The company said it cannot provide forward-looking GAAP-equivalent operating-margin guidance because certain excluded items, including stock-based compensation, are uncertain or cannot be reasonably predicted, and their effect may be significant. The non-GAAP measures supplement rather than replace GAAP results.

4 points · 0 major

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It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.

Rhea-AI Sentiment measures something else, the tone of the wording.

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0 major · 0 points

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Positive

  • Moderate pointRevenue reached $296 million, up 19% year over year.
  • Moderate pointGAAP operating income increased 64% to $57 million.
  • Moderate pointNet income was $46.0 million, versus $33.6 million in Q3 2025.
  • Moderate pointOperating cash flow was $97 million, compared with $86 million a year earlier.

Negative

  • None.

Filing Explained

At September 30, 2026, cash and cash equivalents were $258,536 thousand; current investments were $48,740 thousand and long-term investments were $87,668 thousand.

AppFolio’s October 22, 2026 Form 8-K furnishes its reported third-quarter results; its cash-flow statement records $129,190 thousand spent on common-stock purchases in the first nine months.

For those same nine months, operating activities provided $218,668 thousand of cash, a same-period reference for the stock-purchase outflow.

Item 2.02 Results of Operations and Financial Condition Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Revenue $296 million Third quarter 2026; up 19% year over year
GAAP operating income $57 million Third quarter 2026; up 64% year over year
Non-GAAP operating income $81 million Third quarter 2026; up 38% year over year
Net cash provided by operating activities $97 million Third quarter 2026, compared with $86 million in Q3 2025
Units under management 9.8 million Third quarter 2026; up 8% year over year
Fiscal 2026 revenue outlook $1.122 billion–$1.127 billion The outlook range is increasing
Fiscal 2026 non-GAAP operating-margin outlook 26.5%–27.5% Full-year 2026 outlook
Diluted weighted average shares outstanding Approximately 36 million Expected for full-year 2026
Non-GAAP operating margin financial
"Non-GAAP operating margin is calculated as non-GAAP income from operations"
Non-GAAP operating margin is a way companies show how much profit they make from their main business activities, excluding certain expenses or income they consider unusual or non-recurring. It helps investors see how well the company is performing in its normal operations, without the effects of one-time costs or gains that might distort the picture.
stock-based compensation expense financial
"Stock-based compensation expense"
Stock-based compensation expense is the value that a company records when it gives employees or executives shares or options to buy shares as part of their pay. It matters because it shows the true cost of paying employees this way, which can affect the company's profits and how investors see its financial health.
Value Added Services financial
"Value Added Services"
weighted average shares outstanding financial
"Diluted weighted average shares outstanding are expected to be approximately 36 million"
The weighted average shares outstanding is the average number of a company’s common shares that were available during a reporting period, adjusted so each change (like new shares issued or shares bought back) counts only for the portion of the period it was in effect. Investors use it to calculate per-share measures such as earnings per share, so it shows how ownership dilution or buybacks affect what each share is entitled to—like averaging how many people were at a potluck over time to determine each person’s share of the food.
available-for-sale investments financial
"Purchases of available-for-sale investments"
Available-for-sale investments are bonds or stocks a company buys to earn income or sell later but not to trade day-to-day or hold until they mature. Price changes in these investments often affect the company’s reported net worth rather than immediate profit or loss, so they can make a firm’s balance sheet look stronger or weaker without changing current earnings — like items stored on a shelf whose sticker price changes but don’t yet show up on this month’s bill.
Revenue $296 million Up 19% year over year
GAAP operating income $57 million Up 64% year over year
Non-GAAP operating income $81 million Up 38% year over year
Net cash provided by operating activities $97 million Compared with $86 million in Q3 2025
Guidance

Fiscal 2026 revenue range: $1.122 billion–$1.127 billion; non-GAAP operating margin: 26.5%–27.5%; diluted weighted average shares outstanding: approximately 36 million.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What was APPF's revenue in Q3 2026?
AppFolio reported Q3 2026 revenue of $296 million, up 19% year over year. Units under management totaled 9.8 million, up 8%, and Value Added Services revenue was $231.948 million, compared with $192.092 million in Q3 2025.

What is APPF's fiscal 2026 outlook?
AppFolio's fiscal 2026 revenue range is $1.122 billion–$1.127 billion, and its non-GAAP operating-margin range is 26.5%–27.5%. Diluted weighted average shares outstanding are expected to be approximately 36 million for the full year.

How does AppFolio define its non-GAAP financial measures?
AppFolio says its non-GAAP measures supplement, rather than replace or rank above, GAAP measures. They exclude certain non-cash or non-recurring items, including stock-based compensation expense and amortization of purchased intangibles. The company cautions that these measures may not be directly comparable with measures used by other companies.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Available on EDGAR Accepted by SEC EDGAR
0001433195false00014331952026-07-232026-07-23

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 22, 2026
AppFolio, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)
001-3746826-0359894
(Commission File Number)(IRS Employer Identification Number)
70 Castilian Drive
Santa Barbara, CA 93117
(Address of principal executive offices)
Registrant’s telephone number, including area code: (805) 364-6093
N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common Stock, $0.0001 par valueAPPFNASDAQ Global Market


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02 Results of Operations and Financial Condition.
On October 22, 2026, AppFolio, Inc. (the "Company") issued a press release announcing its financial results for its third quarter ended September 30, 2026. A copy of the press release is attached hereto as Exhibit 99.1.
The information contained in this Item 2.02, including the press release attached hereto as Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that Section. Such information shall not be deemed to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as otherwise expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit Number
Description
99.1
Press release issued on October 22, 2026, announcing AppFolio, Inc.'s financial results for its third quarter ended September 30, 2026
104Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date:
October 22, 2026AppFolio, Inc.
By: /s/ Tim Eaton
Name: Tim Eaton
Title: Chief Financial Officer





primary-inc_wordmark.jpg

AppFolio, Inc. Announces Third Quarter 2026 Financial Results
Consistency Continues with 19% Revenue Growth and Expanding Profitability

SANTA BARBARA, Calif., October 22, 2026 -- 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 third quarter ended September 30, 2026.

“Q3 reflects the strength and durability of our business, as new and existing customers continue to adopt our performance platform," said Shane Trigg, Chairman and CEO. "The promise of Real Estate Performance Management is helping create a future of winning with our customers, turning performance into a competitive advantage that compounds over time."

Financial Highlights for Third Quarter of 2026
•Revenue grew 19% year-over-year to $296 million.
•Total units under management grew 8% year-over-year to 9.8 million.
•GAAP operating income grew 64% to $57 million, or 19.4% of revenue, compared to $35 million, or 14.1% of revenue in Q3 2025.
•Non-GAAP operating income grew 38% to $81 million, or 27.3% of revenue, compared to $59 million, or 23.5% of revenue in Q3 2025.
•Net cash provided by operating activities was $97 million, or 32.7% of revenue, compared to $86 million, or 34.5% of revenue in Q3 2025.

Financial Outlook
Based on information available as of October 22, 2026, AppFolio's outlook for fiscal year 2026 follows:
•Full year revenue range is increasing to $1.122 - $1.127 billion.
•Full year non-GAAP operating margin range as a percentage of revenue is now 26.5% - 27.5%.
•Diluted weighted average shares outstanding are expected to be approximately 36 million for the full year.

Conference Call Information
As previously announced, the Company will host a conference call today, October 22, 2026, at 2:00 p.m. Pacific Time (PT), 5:00 p.m. Eastern Time (ET), to discuss the Company’s third quarter financial results. A live webcast of the call will be available at: https://edge.media-server.com/mmc/p/jcjgqabv. To access the call by phone, please go to the following link: https://register-conf.media-server.com/register/BI59a3520d44444834b693d21914243efb, 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 2026 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 AI and its 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, 2025, which was filed with the SEC on February 5, 2026, 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)
September 30,
2026		December 31,
2025
Assets
Current assets
Cash and cash equivalents$258,536 $106,967 
Investment securities—current48,740 144,256 
Accounts receivable, net52,535 36,873 
Prepaid expenses and other current assets47,561 65,218 
Total current assets407,372 353,314 
Property and equipment, net20,316 23,228 
Operating lease right-of-use assets14,227 15,924 
Capitalized software development costs, net11,122 11,324 
Goodwill96,410 96,410 
Intangible assets, net31,153 38,826 
Deferred income taxes32,210 58,823 
Long-term investments87,668 77,033 
Other long-term assets15,193 14,085 
Total assets$715,671 $688,967 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$5,656 $4,123 
Accrued employee expenses43,071 59,774 
Accrued expenses28,679 20,829 
Other current liabilities24,476 22,121 
Total current liabilities101,882 106,847 
Operating lease liabilities24,876 33,287 
Other liabilities6,399 6,254 
Total liabilities133,157 146,388 
Stockholders’ equity582,514 542,579 
Total liabilities and stockholders’ equity$715,671 $688,967 




CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)

Three Months Ended
September 30,		Nine Months Ended
September 30,
2026202520262025
Revenue(1)
$295,691 $249,353 $839,029 $702,630 
Costs and operating expenses:
Cost of revenue (exclusive of depreciation and amortization)(2)
105,580 91,476 303,150 254,801 
Sales and marketing(2)
48,623 35,912 130,068 103,745 
Research and product development(2)
53,128 54,037 153,754 144,469 
General and administrative(2)
25,953 27,446 75,920 72,733 
Depreciation and amortization4,996 5,436 15,001 17,541 
Total costs and operating expenses238,280 214,307 677,893 593,289 
Income from operations57,411 35,046 161,136 109,341 
Other (loss) income, net(1)(4)567 41 
Interest income, net2,204 1,690 5,423 6,109 
Income before provision for income taxes59,614 36,732 167,126 115,491 
Provision for income taxes13,636 3,086 37,180 14,482 
Net income$45,978 $33,646 $129,946 $101,009 
Net income per common share:
Basic$1.30 $0.94 $3.66 $2.80 
Diluted$1.29 $0.93 $3.65 $2.78 
Weighted average common shares outstanding
Basic35,436 35,889 35,507 36,036 
Diluted35,578 36,259 35,616 36,368 
(1) The following table presents our revenue categories:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2026202520262025
Subscription Services
$61,525 $53,752 $179,547 $155,738 
Value Added Services231,948 192,092 652,778 536,943 
Other2,218 3,509 6,704 9,949 
Total revenue$295,691 $249,353 $839,029 $702,630 

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

Three Months Ended
September 30,		Nine Months Ended
September 30,
2026202520262025
Costs and operating expenses:
Cost of revenue (exclusive of depreciation and amortization)$1,315 $1,241 $3,649 $3,947 
Sales and marketing3,586 3,443 10,559 9,336 
Research and product development8,839 9,076 25,639 24,182 
General and administrative6,860 7,033 19,213 17,998 
Total stock-based compensation expense$20,600 $20,793 $59,060 $55,463 




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2026202520262025
Cash from operating activities
Net income$45,978 $33,646 $129,946 $101,009 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization4,996 5,436 15,001 17,541 
Amortization of operating lease right-of-use assets572 517 1,698 1,525 
Gain on lease termination and modification(1,547)— (1,547)— 
Amortization of costs capitalized to obtain revenue contracts, net3,428 2,768 9,896 8,187 
Deferred income taxes10,609 30,303 26,613 17,118 
Stock-based compensation, including as amortized20,600 20,793 59,060 55,463 
Other3 (233)(520)(1,281)
Changes in operating assets and liabilities:
Accounts receivable(2,094)(1,803)(16,012)(10,000)
Prepaid expenses and other assets160 (4,251)(9,933)(15,677)
Accounts payable881 894 1,534 1,746 
Operating lease liabilities(4,941)(1,075)(7,325)(3,177)
Accrued expenses and other liabilities18,121 (988)10,257 4,661 
Net cash provided by operating activities96,766 86,007 218,668 177,115 
Cash from investing activities
Purchases of available-for-sale investments(46,195)(102,541)(92,135)(166,575)
Proceeds from sales of available-for-sale investments— — 140,154 202,662 
Proceeds from maturities of available-for-sale investments1,810 32,800 47,400 76,620 
Purchases of property and equipment(14)(1,336)(242)(1,841)
Proceeds from sale of property and equipment75 — 75 — 
Capitalization of software development costs(983)(936)(3,537)(2,414)
Purchases of long-term investments— — (10,000)(75,000)
Cash paid in business acquisition, net of cash acquired— — — (906)
Net cash (used in) provided by investing activities(45,307)(72,013)81,715 32,546 
Cash from financing activities
Proceeds from stock option exercises and the issuance of common stock under the Employee Stock Purchase Plan1,084 953 2,082 1,081 
Tax withholding for net share settlement(7,228)(12,332)(21,706)(31,430)
Purchase of common stock(4,180)— (129,190)(145,723)
Net cash used in financing activities(10,324)(11,379)(148,814)(176,072)
Net increase in cash, cash equivalents and restricted cash41,135 2,615 151,569 33,589 
Cash, cash equivalents and restricted cash
Beginning of period217,651 73,728 107,217 42,754 
End of period$258,786 $76,343 $258,786 $76,343 




RECONCILIATION FROM GAAP TO NON-GAAP RESULTS
(UNAUDITED)
(in thousands, except per share data)

Three Months Ended
September 30,		Nine Months Ended
September 30,
2026202520262025
Costs and operating expenses:
GAAP cost of revenue (exclusive of depreciation and amortization)$105,580 $91,476 $303,150 $254,801 
Stock-based compensation expense(1,315)(1,241)(3,649)(3,947)
Non-GAAP cost of revenue (exclusive of depreciation and amortization)$104,265 $90,235 $299,501 $250,854 
GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue36 %37 %36 %36 %
Non-GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue35 %36 %36 %36 %
GAAP sales and marketing$48,623 $35,912 $130,068 $103,745 
Stock-based compensation expense(3,586)(3,443)(10,559)(9,336)
Non-GAAP sales and marketing$45,037 $32,469 $119,509 $94,409 
GAAP sales and marketing as a percentage of revenue16 %14 %16 %15 %
Non-GAAP sales and marketing as a percentage of revenue15 %13 %14 %13 %
GAAP research and product development$53,128 $54,037 $153,754 $144,469 
Stock-based compensation expense(8,839)(9,076)(25,639)(24,182)
Non-GAAP research and product development$44,289 $44,961 $128,115 $120,287 
GAAP research and product development as a percentage of revenue18 %22 %18 %21 %
Non-GAAP research and product development as a percentage of revenue15 %18 %15 %17 %
GAAP general and administrative$25,953 $27,446 $75,920 $72,733 
Stock-based compensation expense(6,860)(7,033)(19,213)(17,998)
Non-GAAP general and administrative$19,093 $20,413 $56,707 $54,735 
GAAP general and administrative as a percentage of revenue9 %11 %9 %10 %
Non-GAAP general and administrative as a percentage of revenue6 %8 %7 %8 %
GAAP depreciation and amortization$4,996 $5,436 $15,001 $17,541 
Amortization of stock-based compensation capitalized in software development costs(153)(241)(634)(723)
Amortization of purchased intangibles(2,558)(2,558)(7,673)(7,673)
Non-GAAP depreciation and amortization$2,285 $2,637 $6,694 $9,145 
GAAP depreciation and amortization as a percentage of revenue2 %2 %2 %2 %
Non-GAAP depreciation and amortization as a percentage of revenue1 %1 %1 %1 %



Three Months Ended
September 30,		Nine Months Ended
September 30,
2026202520262025
Income from operations:
GAAP income from operations$57,411 $35,046 $161,136 $109,341 
Stock-based compensation expense20,600 20,793 59,060 55,463 
Amortization of stock-based compensation capitalized in software development costs153 241 634 723 
Amortization of purchased intangibles2,558 2,558 7,673 7,673 
Non-GAAP income from operations$80,722 $58,638 $228,503 $173,200 
Operating margin:
GAAP operating margin19.4 %14.1 %19.2 %15.6 %
Stock-based compensation expense as a percentage of revenue7.0 8.3 7.0 7.9 
Amortization of stock-based compensation capitalized in software development costs as a percentage of revenue— 0.1 0.1 0.1 
Amortization of purchased intangibles as a percentage of revenue0.9 1.0 0.9 1.1 
Non-GAAP operating margin27.3 %23.5 %27.2 %24.7 %
Net income (loss):
GAAP net income $45,978 $33,646 $129,946 $101,009 
Stock-based compensation expense20,600 20,793 59,060 55,463 
Amortization of stock-based compensation capitalized in software development costs153 241 634 723 
Amortization of purchased intangibles2,558 2,558 7,673 7,673 
Income tax effect of adjustments(4,608)(9,582)(14,408)(23,182)
Non-GAAP net income$64,681 $47,656 $182,905 $141,686 
Net income per share, basic:
GAAP net income per share, basic $1.30 $0.94 $3.66 $2.80 
Non-GAAP adjustments to net income0.53 0.39 1.49 1.13 
Non-GAAP net income per share, basic $1.83 $1.33 $5.15 $3.93 
Net income per share, diluted:
GAAP net income per share, diluted$1.29 $0.93 $3.65 $2.78 
Non-GAAP adjustments to net income0.53 0.38 1.49 1.12 
Non-GAAP net income per share, diluted$1.82 $1.31 $5.14 $3.90 
Weighted-average shares used in GAAP and non-GAAP per share calculation
Basic35,436 35,889 35,507 36,036 
Diluted35,578 36,259 35,616 36,368 














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 22% and 21% for 2026 and 2025, 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.






Source: View Original Filing on SEC EDGAR

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