Summary
AppFolio's third quarter of fiscal 2025 showed strong top-line momentum. Revenue reached $249.35 million, up 21.2% year over year. Total units under management grew 7% year over year to 9.1 million. The company had 21,759 property management customers as of September 30, 2025, compared with 20,403 a year earlier. Management attributed the revenue increase to higher usage of payments, tenant screening, and risk mitigation services, along with growth in units under management. The CEO said the Performance Platform, built on an AI-native architecture, is driving real performance outcomes and that customers are winning.
Profitability under GAAP was mixed. GAAP operating income was $35.05 million, down 17.7% from the prior-year quarter. GAAP operating margin was 14.1%, down 6.6 percentage points. Net income was $33.65 million, up 1.9%. Diluted EPS was $0.93, up 3.3%. On a non-GAAP basis, operating income was $58.64 million, or 23.5% of revenue, compared with non-GAAP operating income of $59.14 million, or 28.7% of revenue, in the prior-year quarter. Non-GAAP net income was $47.66 million, and non-GAAP diluted EPS was $1.31. The non-GAAP figures exclude stock-based compensation, amortization of stock-based compensation capitalized in software development costs, amortization of purchased intangibles, and related tax effects.
Cash generation was a clear highlight. Operating cash flow was $86.01 million in the quarter, up 48.9% from the prior-year quarter. That represented 34.5% of revenue, compared with 28.1% of revenue in the prior-year quarter. Year to date, operating cash flow was $177.12 million, up 16.8%. Capital expenditures were $1.34 million in the quarter, up 268.0% from the prior-year quarter. Year-to-date capital expenditures were $1.84 million, up 1.1%. The company ended the quarter with a new $150.0 million senior secured revolving credit facility, with no outstanding borrowings. It also had a $300.0 million stock repurchase authorization from April 23, 2025.
Guidance for the full fiscal year 2025 puts non-GAAP operating margin at 23.5% to 24.5% of revenue. Diluted weighted average shares outstanding are expected to be approximately 36 million for the full year. The company said it cannot provide GAAP equivalent guidance for non-GAAP operating margin because certain items, such as stock-based compensation expense, are uncertain, out of its control, or cannot be reasonably predicted. The effect of those excluded items may be significant.
Risks remain. The press release includes forward-looking statements subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially. Those risks are described in the Risk Factors section of the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as updated in subsequent filings. Management also noted that future capital requirements depend on many factors, including market acceptance of its software solutions, changes in customer numbers, adoption of Value Added Services, and the timing of new product introductions. The company may seek additional equity or debt financing, which may not be available on favorable terms or at all. For the quarter, the main tension is clear: revenue and cash flow grew quickly, while GAAP operating income and operating margin declined.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $249.4M | $235.6M | +5.8% | $205.7M | +21.2% |
| Research & development | $54.0M | $46.7M | +15.8% | $40.7M | +32.9% |
| Sales & marketing | $35.9M | $36.8M | -2.3% | $25.4M | +41.4% |
| General & administrative | $27.4M | $21.9M | +25.1% | $21.1M | +29.8% |
| Total operating expenses | $214.3M | $195.1M | +9.9% | $163.2M | +31.3% |
| Operating income (loss) | $35.0M | $40.5M | -13.5% | $42.6M | -17.7% |
| Operating margin | 14.1% | 17.2% | -3.1 pp | 20.7% | -6.6 pp |
| Net income (loss) | $33.6M | $36.0M | -6.5% | $33.0M | +1.9% |
| Net margin | 13.5% | 15.3% | -1.8 pp | 16.0% | -2.5 pp |
| Diluted EPS | $0.93 | $0.99 | -$0.06 | $0.90 | +$0.03 |
Risks
The company holds non-marketable equity investments in privately held companies, including Second Nature, without controlling interest or significant influence. Fair value adjustments or impairments on these investments are recorded in the statement of operations and could cause volatility or partial or complete loss of invested capital.
Current quarter operating margin declined 6.6 percentage points to 14.1% from 20.7%, and operating income decreased 17.7% to $35.05 million versus the prior-year quarter. The MD&A attributes pressure to cost of revenue increasing 28% and sales and marketing increasing 41% in the quarter, with expectations that sales and marketing will slightly increase as a percentage of revenue for full-year 2025.
On September 30, 2025, the company entered a $150.0 million senior secured revolving credit facility maturing September 30, 2030, with no outstanding borrowings and covenant compliance. The facility provides a first-priority security interest in substantially all personal property and covenants restrict indebtedness, liens, investments, dividends, repurchases, and asset dispositions, which could limit operational flexibility.
The Board authorized a 2025 Stock Repurchase Program of up to $300.0 million on April 23, 2025. Repurchases could increase trading price volatility, reduce cash reserves needed for growth or acquisitions, and there is no guarantee the program will enhance long-term stockholder value.
SaaS KPIs
All quarters →Property management customers
Non-GAAP operating margin
Property Management Units Under Management
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from APPFOLIO INC's SEC filings for Q3 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.