AppFolio, Inc. Earnings Analysis: 2015 By the Numbers

AppFolio, Inc. reports financial results for the year ended December 31, 2015.

We analyze the earnings along side the following peers of AppFolio, Inc. – Q2 Holdings, Inc. and Qualys, Inc. (QTWO-US and QLYS-US) that have also reported for this period.

Highlights

  • Gross margins widened from 44.70% to 46.64% compared to the same period last year, operating (EBITDA) margins now -11.87% from -9.92%.
  • Year-on-year change in operating cash flow of -1,540.84% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings rose compared to same period last year, despite decline in operating and pretax margins.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

N/A N/A N/A 2014 2015
Relevant Numbers (Annual)
Revenues N/A N/A N/A 47.67 74.98
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings N/A N/A N/A -8.62 -15.67
Earnings Growth (YOY) N/A N/A N/A N/A -81.74
Net Margin N/A N/A N/A -18.08 -20.9
EPS N/A N/A N/A -0.03 -0.73
Return on Equity N/A N/A N/A N/A -147.6
Return on Assets N/A N/A N/A -33.9 -27.03

Access our Ratings and Scores for AppFolio, Inc.

Earnings Growth Analysis

The company’s earnings declined year-on-year largely because of the increases in operating costs. Its operating margins (EBITDA margins) went from -9.92% to -11.87%. This decline in earnings would have been worse except for the fact that the company showed improvement in gross margins, from 44.70% to 46.64%. For comparison, gross margins were 44.70% and EBITDA margins -9.92% in the immediate last period.

Gross Margin Versus EBITDA Margin

Cash Versus Earnings – Sustainable Performance?

APPF-US‘s change in operating cash flow of -1,540.84% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Margins

Despite a decline in operating (EBIT) margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin Versus PreTax Margin

Access our Ratings and Scores for AppFolio, Inc.

Company Profile

AppFolio, Inc. provides web-based property management software. It offers software solutions for small and medium-sized businesses in the property management and legal industries or verticals. The firm’s products include cloud-based property management software (AppFolio Property Manager), rental syndication and lead tracking software (Rentlinx) and cloud-based legal practice management software (MyCase). The company was founded by Brian Donahoo, Klaus Schauser and Jonathan Walker in 2006 and is headquartered in Goleta, CA.

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