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1. Company Snapshot

1.a. Company Description

AppFolio, Inc., together with its subsidiaries, provides cloud business management solutions for the real estate industry.The company offers AppFolio Property Manager, a platform to leverage process automation, easy to use interface, and the optimization of common workflows for property management companies, as well as completes and records critical transactions in the system and give its customers access to the data they need to run their business; AppFolio Property Manager Plus, which offers customizable workflows that allow customers to digitize their existing processes, performance insights, intelligent revenue management, and integrations through selected partners and dedicated strategic account managers; and AppFolio Investment Management, a solution that is designed to enable real estate investment management organizations to manage investor relationships through enhancing transparency and streamlining certain business processes.It also provides value added services that are designed to enhance, automate, and streamline processes and workflows for property management businesses, such as electronic payment, tenant screening, and insurance services.


AppFolio, Inc.was incorporated in 2006 and is headquartered in Santa Barbara, California.

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1.b. Last Insights on APPF

AppFolio's recent performance was negatively impacted by its Q3 earnings miss, with the company reporting $1.31 per share, below the Zacks Consensus Estimate of $1.45 per share. Additionally, institutional investors have been selling shares, including Bessemer Group Inc., which cut its stake by 50.2%, and Bank of Montreal Can, which trimmed its holdings by 11.7%. A recent upgrade to a neutral rating notes strong Q3 growth but also highlights concerns about high valuation, market risk aversion, and potential competitive threats.

1.c. Company Highlights

2. AppFolio's Q3 2025 Earnings: Strong Revenue Growth and Margin Expansion

AppFolio reported a robust third quarter of 2025, with revenue reaching $249 million, a 21% year-over-year increase. The non-GAAP operating margin stood at 23.5%. Earnings per share (EPS) came in at $1.31, slightly below estimates of $1.45. The company's core solutions revenue grew 17% to $54 million, while value-added services revenue increased 22% to $192 million, driving the overall revenue growth. The unit count managed by AppFolio rose 7% to 9.1 million units from 21,759 customers.

Publication Date: Nov -25

📋 Highlights
  • Revenue Growth:: Q3 2025 revenue rose 21% YoY to $249 million, driven by strong performance across core and value-added services.
  • Customer and Unit Expansion:: Managed 9.1 million units and 21,759 customers, reflecting 7% growth in both metrics.
  • Segment Performance:: Core solutions revenue increased 17% to $54 million, while value-added services jumped 22% to $192 million.
  • Margin Impact:: $13 million in bonus-related expenses reduced non-GAAP operating margin to 23.5%, though it reached 29% excluding these costs.
  • 2025 Guidance:: Full-year revenue projected at $945–$950 million (19% growth midpoint) with non-GAAP operating margin of 23.5–24.5%.

Operational Highlights

The company accrued an additional $13 million in expenses due to strong performance under its annual corporate bonus plan, which impacted the operating margin. Excluding this one-time expense, the operating margin would have been approximately 29%. AppFolio's employee base grew by 10% year-over-year to 1,703 employees, indicating continued investment in its workforce.

Guidance and Outlook

AppFolio updated its 2025 guidance, expecting annual revenue to be between $945 million and $950 million, representing a midpoint growth rate of 19%. The non-GAAP operating margin is expected to be between 23.5% and 24.5%. Looking ahead to 2026, analysts estimate revenue growth of 18.5%. The company's diluted weighted average shares outstanding are expected to be approximately 36 million for the full year.

Valuation and Metrics

AppFolio's current valuation metrics indicate a premium, with a P/E Ratio of 39.83 and an EV/EBITDA of 49.86. The company's ROE stands at 42.1%, and ROIC at 34.69%, reflecting strong profitability. The Free Cash Flow Yield is 2.61%, which, while not exceptionally high, is still a positive indicator. The market seems to have priced in significant growth expectations, as reflected in the P/S Ratio of 8.96. According to the CEO, "our technology is enabling our customers to drive operational efficiency and improve their bottom line," which could be a key driver of future growth.

3. NewsRoom

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AppFolio, Inc. (APPF) Discusses Vision, Strategy, Product Differentiation, and Financial Overview at Investor Meeting Transcript

Nov -22

Source: seekingalpha.com

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AppFolio, Inc. $APPF Shares Sold by Bank of Montreal Can

Nov -17

Source: defenseworld.net

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SnapInspect Launches Property Inspection and Maintenance Software in AppFolio Stack™ Marketplace for Property Managers

Nov -14

Source: globenewswire.com

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Aviva PLC Sells 671 Shares of AppFolio, Inc. $APPF

Nov -14

Source: defenseworld.net

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AppFolio: Further Multiples Compression Is Likely, Though Accelerating Growth Is A Plus (Upgrade)

Nov -10

Source: seekingalpha.com

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Bessemer Group Inc. Sells 2,223 Shares of AppFolio, Inc. $APPF

Nov -03

Source: defenseworld.net

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AppFolio (APPF) Q3 Earnings: Taking a Look at Key Metrics Versus Estimates

Oct -31

Source: zacks.com

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AppFolio (APPF) Misses Q3 Earnings Estimates

Oct -30

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.31%)

6. Segments

Value Added Services

Expected Growth: 10.27%

AppFolio's Value Added Services segment growth of 10.27% is driven by increasing adoption of its cloud-based property management software, expansion into new markets, and rising demand for ancillary services such as online rent payments, tenant screening, and insurance services, which enhance the overall user experience and drive revenue growth.

Core Solutions

Expected Growth: 10.43%

AppFolio's Core Solutions segment growth of 10.43% is driven by increasing adoption of cloud-based property management software, rising demand for digital lease signing and online rent payments, and expansion into new markets. Additionally, the company's focus on innovation, customer satisfaction, and strategic partnerships contribute to its growth momentum.

Other

Expected Growth: 10.47%

AppFolio's 10.47% growth is driven by increasing adoption of its cloud-based property management software, expansion into new markets, and growing demand for digital solutions in the real estate industry. Additionally, the company's focus on innovation, customer satisfaction, and strategic partnerships contribute to its sustained growth.

7. Detailed Products

AppFolio Property Manager

A comprehensive property management software designed for multifamily, commercial, and student housing properties.

AppFolio Investment Management

A cloud-based investment management platform for real estate investment firms and fund managers.

AppFolio MyCase

A legal practice management software for law firms and attorneys.

8. AppFolio, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

AppFolio's property management software is highly specialized, making it difficult for substitutes to emerge. However, the company's reliance on third-party integrations and APIs increases the threat of substitutes.

Bargaining Power Of Customers

AppFolio's customers are typically small to medium-sized property management companies, which have limited bargaining power. The company's software is also highly customized, making it difficult for customers to switch to alternative solutions.

Bargaining Power Of Suppliers

AppFolio's suppliers are primarily technology and infrastructure providers, which are abundant and interchangeable. The company's strong brand and market position also reduce the bargaining power of its suppliers.

Threat Of New Entrants

While the property management software market is growing, it still requires significant investment in technology and infrastructure to enter. AppFolio's established brand and customer base also create barriers to entry for new entrants.

Intensity Of Rivalry

The property management software market is highly competitive, with several established players competing for market share. AppFolio's strong brand and customer base help to mitigate the intensity of rivalry, but the company still faces significant competition.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 13.08%
Debt Cost 3.95%
Equity Weight 86.92%
Equity Cost 7.90%
WACC 7.38%
Leverage 15.05%

11. Quality Control: AppFolio, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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AppFolio

A-Score: 5.1/10

Value: 0.6

Growth: 9.7

Quality: 8.8

Yield: 0.0

Momentum: 7.0

Volatility: 4.7

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A-Score: 4.9/10

Value: 2.0

Growth: 9.2

Quality: 7.8

Yield: 0.0

Momentum: 3.0

Volatility: 7.3

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Lyft

A-Score: 4.7/10

Value: 2.9

Growth: 7.7

Quality: 6.1

Yield: 0.0

Momentum: 8.5

Volatility: 3.0

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Guidewire Software

A-Score: 4.5/10

Value: 0.0

Growth: 8.3

Quality: 6.2

Yield: 0.0

Momentum: 7.5

Volatility: 5.0

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Duolingo

A-Score: 4.4/10

Value: 0.3

Growth: 9.9

Quality: 8.0

Yield: 0.0

Momentum: 6.0

Volatility: 2.3

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Clearwater Analytics

A-Score: 4.1/10

Value: 2.4

Growth: 8.7

Quality: 6.5

Yield: 0.0

Momentum: 1.0

Volatility: 6.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

235.76$

Current Price

235.76$

Potential

-0.00%

Expected Cash-Flows