Summary
AppFolio entered the second half of fiscal 2025 with $235.6 million in second-quarter revenue, up 19.4% from the prior-year quarter. Property management units under management rose 6% year over year to 8.9 million, up from 8.4 million a year earlier. The company reported 21,403 property management customers at June 30, 2025, up from 20,167 a year earlier. Management said 96% of customers have used one or more of its AI-powered solutions. The growth story remains Realm-X adoption through premium tiers and value added services. The company also pointed to increased usage of payments, tenant screening, and risk mitigation services as a key driver of the revenue increase. Management described the platform as a competitive advantage for ambitious property management businesses.
GAAP operating income was $40.5 million, up 12.4% from the prior-year quarter, but operating margin slipped to 17.2% from 18.3%. That margin pressure came as the company invested in growth. Management called out higher personnel-related costs and third-party service provider costs. On a non-GAAP basis, operating income was $62 million, or 26.2% of revenue, compared with $51 million, or 26.0% of revenue, in the prior-year quarter. Non-GAAP net income was $49.8 million, and non-GAAP diluted EPS was $1.38. GAAP net income was $36.0 million, up 21.3%, and diluted EPS was $0.99, up $0.18 from $0.81.
The cash flow picture was mixed. Second-quarter operating cash flow was $52.6 million, up 3.5% from the prior-year quarter. But for the first six months, operating cash flow was $91.1 million, down 2.9%. Year-to-date revenue rose 17.8% to $453.3 million, while net income fell 1.4% to $67.4 million and diluted EPS was $1.85, down $0.01. The first half also showed an operating margin of 16.4%, down 1.8 percentage points from 18.2%. Operating income for the six months rose 6.0% to $74.3 million. For the first half, non-GAAP operating margin was 25.3%, compared with 25.9%.
Guidance for the full fiscal year 2025 calls for a non-GAAP operating margin of 24.5% to 26.5%, a range that excludes stock-based compensation and purchased intangible amortization. The company expects diluted weighted average shares outstanding of approximately 37 million for the full year. Management tied the outlook to continued adoption of value added services and AI features, plus growth in property management units. The quarter showed that mix at work. Value added services and AI-powered tools are driving usage, while the core platform supports retention and cross-sell. The company also said it expects costs to stay relatively flat as a percentage of revenue for the year.
The main risks look operational and cost related. The company needs to keep adding customers and units, and it faces execution risk on new product rollouts and acquisitions. The Move EZ, Inc. acquisition in the fourth quarter of 2024 lifted amortization expense, and management is still evaluating the impact of the One Big Beautiful Bill Act signed on July 4, 2025. Higher third-party costs for payments, screening, and risk mitigation services could pressure profitability. Interest income fell because of lower rates and the sale of available-for-sale securities. The company said its future capital requirements depend on market acceptance of its software, changes in customer count, adoption of value added services, timing of new products, and investment levels. It may need additional equity or debt financing for acquisitions or expansion. AppFolio also has a new $300.0 million stock repurchase authorization, which gives it a lever to return capital but does not change the operating challenges.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $235.6M | $217.7M | +8.2% | $197.4M | +19.4% |
| Research & development | $46.7M | $43.8M | +6.7% | $39.5M | +18.1% |
| Sales & marketing | $36.8M | $31.1M | +18.4% | $27.3M | +34.7% |
| General & administrative | $21.9M | $23.4M | -6.1% | $20.3M | +8.3% |
| Total operating expenses | $195.1M | $183.9M | +6.1% | $161.3M | +20.9% |
| Operating income (loss) | $40.5M | $33.8M | +19.9% | $36.0M | +12.4% |
| Operating margin | 17.2% | 15.5% | +1.7 pp | 18.3% | -1.1 pp |
| Net income (loss) | $36.0M | $31.4M | +14.6% | $29.7M | +21.3% |
| Net margin | 15.3% | 14.4% | +0.8 pp | 15.0% | +0.2 pp |
| Diluted EPS | $0.99 | $0.86 | +$0.13 | $0.81 | +$0.18 |
Risks
The company holds non-marketable equity investments in privately-held companies, including a strategic investment in Second Nature. These investments are inherently risky and could result in partial or complete loss of invested capital, and fair value adjustments could cause volatility in the statement of operations.
On April 23, 2025, the Board authorized a $300.0 million Class A common stock repurchase program. The program could increase trading price volatility, diminish cash reserves, and impact the ability to finance growth, fund working capital, or pursue strategic acquisitions.
Operating margin declined 1.1 percentage points for the quarter and 1.8 percentage points year to date, even as revenue grew 19.4% for the quarter and 17.8% year to date. This suggests expenses are growing faster than revenue and could continue to pressure profitability.
Operating cash flow decreased 2.9% year to date to $91.1 million, while net income decreased 1.4% year to date. Along with the new share repurchase program, this decline could pressure liquidity and the ability to fund growth initiatives.
Revenue growth is primarily attributed to increased usage of payments, tenant screening, and risk mitigation services, which are Value Added Services. A decline in usage of these services could materially reduce revenue growth.
Interest income, net decreased for the three and six months ended June 30, 2025 compared to the prior year, primarily due to the sale of available-for-sale investment securities and lower interest rates. This could continue to reduce non-operating income.
SaaS KPIs
All quarters →Property management customers
Non-GAAP operating margin
Total units under management
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from APPFOLIO INC's SEC filings for Q2 FY2025 (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.