Summary
AppFolio started fiscal 2026 with strong top-line growth and wider profitability. First quarter revenue rose 20.4% year over year to $262.2 million. GAAP operating income climbed 50.2% to $50.7 million, and the GAAP operating margin expanded to 19.4%, up 3.8 percentage points. Net income increased 35.2% to $42.4 million. Diluted earnings per share were $1.18, up 37.2%. Non-GAAP operating income reached $71.5 million, or 27.3% of revenue, compared with $53.0 million, or 24.3% of revenue in the prior-year quarter. Non-GAAP net income was $57.6 million, and non-GAAP diluted earnings per share were $1.61. The company described the quarter as an impressive start to 2026 and said its momentum continues.
Operationally, the customer base kept expanding. Total property management units under management grew 8% year over year to 9.5 million, up from 8.8 million a year earlier. AppFolio served 22,520 property management customers as of March 31, 2026, compared with 21,105 a year earlier. Management said the quarter reflected putting AI to work across every dimension of the business, which is meant to accelerate customer performance while driving greater internal efficiency. Revenue growth was primarily attributable to higher usage of payments, tenant screening, and risk mitigation services, according to the MD&A. The MD&A notes that a significant majority of Value Added Services revenue comes from electronic payment services, tenant screening services, and risk mitigation services. Those services benefit when residents and property managers transact more business online.
Cash generation and capital returns tell a more mixed story. Net cash provided by operating activities was $34.3 million, down 10.8% year over year. Capital expenditures were $0.23 million, flat compared with the prior-year quarter. Remaining performance obligations stood at $103.6 million as of March 31, 2026. AppFolio repurchased 703 thousand shares of Class A common stock for $125 million, at an average purchase price of $177.95 per share. The company had $125.0 million remaining under the 2025 Stock Repurchase Program. It also reported no outstanding borrowings under its $150.0 million credit facility, which matures on September 30, 2030. The credit facility provides a $150.0 million senior secured revolving credit facility, including sublimits of $25.0 million for letters of credit and $25.0 million for swingline loans.
Guidance points to continued growth for the full fiscal year 2026. Management increased the full-year revenue outlook to a range of $1.110 billion to $1.125 billion. The full-year non-GAAP operating margin range is now 26.0% to 28.0%. Diluted weighted average shares outstanding are expected to be approximately 36 million for the full year. The company says it cannot provide GAAP equivalent guidance for non-GAAP operating margin because items such as stock-based compensation are uncertain, out of its control, or cannot be reasonably predicted. The company says the outlook is based on information available as of April 23, 2026. The outlook assumes continued customer additions and more adoption of Value Added Services. The MD&A adds that total revenue for the year ending December 31, 2026 is expected to increase compared with the year ended December 31, 2025.
Risks remain, and the press release directs investors to the Risk Factors section of the annual report for the fiscal year ended December 31, 2025, filed with the SEC on February 5, 2026, along with MD&A in subsequent filings. The company notes that future capital requirements depend on market acceptance of its software, changes in customer counts, adoption and utilization of Value Added Services, new product introductions, and investment levels. AppFolio also says it may need additional equity or debt financing for acquisitions or expansion, and that such financing may not be available on favorable terms. Those factors matter because the full-year outlook depends on sustained usage of payments, screening, and risk mitigation services. The forward-looking statements in the release are subject to risks and uncertainties that could cause actual results to differ materially.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $262.2M | $248.2M | +5.6% | $217.7M | +20.4% |
| Research & development | $49.6M | $46.0M | +8.0% | $43.8M | +13.4% |
| Sales & marketing | $37.5M | $40.2M | -6.6% | $31.1M | +20.7% |
| General & administrative | $24.3M | $22.9M | +6.5% | $23.4M | +4.2% |
| Total operating expenses | $211.5M | $204.6M | +3.3% | $183.9M | +15.0% |
| Operating income (loss) | $50.7M | $43.6M | +16.5% | $33.8M | +50.2% |
| Operating margin | 19.4% | 17.6% | +1.8 pp | 15.5% | +3.8 pp |
| Net income (loss) | $42.4M | $39.9M | +6.3% | $31.4M | +35.2% |
| Net margin | 16.2% | 16.1% | +0.1 pp | 14.4% | +1.8 pp |
| Diluted EPS | $1.18 | $1.10 | +$0.08 | $0.86 | +$0.32 |
Risks
Value Added Services, which are billed on a per-use basis, rose 22% year over year to $201.4 million in FY2026 Q1 and now constitute roughly 77% of total revenue, with a significant majority coming from electronic payments, tenant screening and risk mitigation usage. Because these fees carry no minimum usage commitments, a slowdown in transaction volumes or resident and property manager online activity could disproportionately reduce revenue.
Cost of revenue (exclusive of depreciation and amortization) rose 19% to $95.0 million in FY2026 Q1, driven primarily by $14.6 million of higher third-party service provider costs for electronic interchange, payment processing, credit reporting and risk mitigation. Dependence on these providers ties gross margin to third-party pricing and performance.
Net cash provided by operating activities fell 10.8% to $34.3 million in FY2026 Q1 from $38.5 million in FY2025 Q1, even as revenue grew 20.4%, with operating cash flow dropping to 13.1% of revenue from 17.7%. Continued divergence between revenue growth and cash generation would pressure liquidity.
The effective tax rate increased to 20.1% in FY2026 Q1 from 14.7% in FY2025 Q1, with income tax expense up 97% to $10.7 million, primarily due to higher pre-tax income and a decrease in excess tax benefits from stock-based compensation. A sustained higher rate reduces net income relative to operating results.
Interest income, net declined 40% to $1.8 million in FY2026 Q1 from $3.0 million in FY2025 Q1, primarily due to the sale of available-for-sale investment securities and lower interest rates. Further reductions in cash and investment balances or rates would continue to lower non-operating income.
The company funded $125.0 million of Class A share repurchases in FY2026 Q1, leaving $125.0 million available under the 2025 Stock Repurchase Program and $151.7 million in cash, cash equivalents and investment securities as of March 31, 2026. Future acquisitions or expansion could require additional equity or debt financing that may not be available on favorable terms, impacting the ability to compete successfully.
SaaS KPIs
All quarters →Property management customers
Non-GAAP operating margin
Total units under management
Summary, forecast, risks and KPIs are extracted from APPFOLIO INC's SEC filings for Q1 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.