Summary
AppFolio reported total revenue of $117.4 million for the second quarter of 2022, up 31.9% from $89.0 million in the second quarter of 2021. The earnings release framed the result as revenue growth of 32%. Core solutions revenue rose 28% and Value Added Services revenue rose 35% from the prior-year quarter, so the growth mix leans on payments, screening and risk mitigation rather than subscriptions alone. Units on the AppFolio Property Manager platform reached roughly 6.8 million at the end of the quarter, against roughly 5.8 million a year earlier. MD&A lists 6.83 million and 5.82 million as of June 30, 2022 and 2021. Units under management grew 17% and property management customers grew 8% from the same periods a year ago. The customer count stood at 17,878 at June 30, 2022, up from 16,532.
Profitability swung hard in the other direction. GAAP loss from operations was $29.93 million for the quarter, against GAAP income from operations of $1.15 million in the prior-year quarter. Operating margin was negative 25.5%, down 26.8 percentage points from positive 1.3%. The quarter carried a charge tied to office space the company decided to exit. MD&A describes $19.4 million of impairment, with $15.7 million on right-of-use assets and $3.7 million on property and equipment. Non-GAAP income from operations was $1.2 million, or 1% of revenue, against $5.9 million, or 7% of revenue, in the prior-year quarter. The gap between the two measures comes mainly from stock-based compensation and the lease write-down, both of which management strips out.
Net loss was $29.97 million, or a diluted loss per share of $0.86, for the quarter. For the first half, revenue was $222.75 million, up 32.6% from $167.96 million in the first half of 2021, while the GAAP operating loss was $44.60 million and the first-half operating margin was negative 20.0%, down 17.3 percentage points from negative 2.7%. The first-half net loss was $44.26 million, and the diluted loss per share was $1.27. Cash generation softened alongside earnings. Operating cash flow was $5.5 million in the quarter, down 63.4%, and $3.3 million for the first half, down 69.2%. Capital expenditures were $3.3 million in the quarter, up 75.2%, and $5.1 million for the first half. Deferred revenue, current portion, was $3.08 million, down 4.1% from a year earlier. Free cash flow, a non-GAAP measure, was negative $1.5 million, or negative 1% of revenue, against $10.0 million, or 11% of revenue, in the prior-year quarter.
Guidance covers the full fiscal year 2022. Management's revenue outlook is a range, and full year non-GAAP operating margin is expected to be in line with prior guidance and lower than in 2021. Weighted average shares outstanding are expected to be approximately 35 million for the full year. The cost structure is the bigger worry. Cost of revenue is expected to rise as a percentage of revenue compared with 2021, because third-party service provider costs for Value Added Services are growing faster than total revenue. Sales and marketing, research and product development, and general and administrative expenses, excluding impairment charges, are all expected to increase as a percentage of revenue for the year ending December 31, 2022. Management points to a tight market for talent and to changes in compensation and reward practices, which have had and are expected to continue to have a material impact on results. The press release directs readers to the risk factors in the annual report on Form 10-K for the year ended December 31, 2021. On the product side, AppFolio Stack, an integration marketplace, is part of a multi-year push to serve larger customers and expand Value Added Services.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $117.5M | $105.3M | +11.5% | $89.0M | +31.9% |
| Research & development | $26.7M | $24.3M | +9.7% | $15.5M | +72.1% |
| Sales & marketing | $27.0M | $24.9M | +8.3% | $17.7M | +52.4% |
| General & administrative | $37.9M | $19.0M | +100.1% | $14.2M | +167.1% |
| Total operating expenses | $147.4M | $120.0M | +22.9% | $87.9M | +67.7% |
| Operating income (loss) | -$29.9M | -$14.7M | -104.0% | $1.1M | -2711.7% |
| Operating margin | -25.5% | -13.9% | -11.6 pp | 1.3% | -26.8 pp |
| Net income (loss) | -$30.0M | -$14.3M | -109.8% | $2.0M | -1582.9% |
| Net margin | -25.5% | -13.6% | -11.9 pp | 2.3% | -27.8 pp |
| Diluted EPS | -$0.86 | -$0.41 | -$0.45 | $0.06 | -$0.92 |
Risks
MD&A states the company faces increased competition for talent and has evolved compensation and employee reward practices, which has had and is expected to continue to have a material impact on results. Personnel-related costs rose across sales and marketing, research and product development, and general and administrative functions.
FY2022 Q2 operating margin was -25.5%, down 26.8 pp from 1.3% in FY2021 Q2, and operating income swung to a loss of $29.93M from income of $1.15M. MD&A expects cost of revenue, sales and marketing, and research and product development to increase as a percentage of revenue for the year ending December 31, 2022.
MD&A expects cost of revenue to increase as a percentage of revenue in 2022 because expenditures to third-party service providers for Value Added Services are expected to grow faster than total revenue. This mix dynamic can pressure profitability even as revenue grows.
During FY2022 Q2 the company decided to exit and make available for sublease certain leased office spaces, leading to lease-related asset impairment charges that drove the increase in general and administrative expense. The impairment estimate depends on assumptions including time to obtain a sublessee, discount rate, and anticipated sublease income.
Operating cash flow was $3.28M for the six months ended June 30, 2022, down 69.2% from $10.66M in the prior-year period, and $5.52M for FY2022 Q2, down 63.4% from $15.10M in FY2021 Q2. MD&A attributes the decline primarily to higher employee-related costs and settlement of accounts payable.
SaaS KPIs
All quarters →Property management customers
Non-GAAP operating margin
Non-GAAP Free Cash Flow Margin
Property Management Units Under Management
Non-GAAP free cash flow
Non-GAAP Income from Operations
Summary, forecast, risks and KPIs are extracted from APPFOLIO INC's SEC filings for Q2 FY2022 (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.