Summary
AppFolio reported fourth quarter revenue of $248.2 million, up 21.9% from $203.7 million in the prior-year quarter. Full fiscal year revenue reached $950.8 million, up 19.7% from $794.2 million. Unit growth carried much of the load: total property management units under management rose 8% year over year to 9.4 million at December 31, 2025, up from 8.7 million a year earlier, and the property management customer count reached 22,096 versus 20,784. Remaining performance obligations stood at $93.9 million.
Operating leverage in the quarter was the standout. Fourth quarter GAAP operating income was $43.6 million, up 89.8% from $23.0 million, and GAAP operating margin was 17.6%, up 6.3 percentage points from 11.3%. The full-year picture looks different. Fiscal 2025 GAAP operating income was $152.9 million, up 12.7% from $135.6 million, but GAAP operating margin slipped to 16.1% from 17.1%, down 1.0 percentage point, as expenses grew faster than revenue across the year.
Reported net income fell sharply. Fourth quarter net income was $39.9 million, down 61.1% from $102.7 million. Fiscal 2025 net income was $140.9 million, down 30.9% from $204.1 million, and full-year diluted EPS was $3.88, down 30.1% from $5.55. The drop traces back to the prior year, when the company released a valuation allowance against its U.S. federal and state deferred tax assets and recorded a large one-time tax benefit that pushed the prior-year effective tax rate deeply negative. The earnings comparison says more about tax accounting than about the underlying business, since operating income and cash generation both moved higher.
Cash generation accelerated. Fourth quarter operating cash flow was $65.0 million, up 77.7% from $36.6 million, while full-year operating cash flow was $242.1 million, up 28.7% from $188.2 million. Capital expenditures were $1.31 million in the quarter, up 573.8% from $0.20 million, and $3.16 million for the year, up 56.5% from $2.0 million. Both remain small next to cash flow. On a non-GAAP basis, fourth quarter operating income was $61.7 million, or 24.9% of revenue, compared with $41.1 million, or 20.2% of revenue, a year earlier. Full-year non-GAAP operating income was $234.9 million, or 24.7% of revenue, against $199.8 million, or 25.2% of revenue, in 2024. Non-GAAP net income was $50.4 million for the quarter and $192.0 million for the year.
Guidance for fiscal 2026 is full-year guidance, not a quarterly outlook. Revenue is expected in the range of $1,100 million to $1,120 million, and non-GAAP operating margin is expected between 25.5% and 27.5% of revenue. Diluted weighted average shares outstanding are expected at roughly 36 million to 37 million for the full year. Management expects cost of revenue, sales and marketing, research and product development, and general and administrative expense to stay relatively flat as a percentage of revenue in 2026, with depreciation and amortization also flat as a percentage of revenue.
Seasonality is a genuine caveat. Value Added Services revenue peaks with second quarter leasing activity and third quarter resident move-ins, and fourth quarter revenue typically declines sequentially, so one quarter of growth should not be extrapolated. Management notes that macroeconomic pressure on tenant behavior, product mix, and adoption of less seasonal services can amplify those swings. Liquidity looks comfortable: no borrowings were outstanding under the $150.0 million revolving credit facility at December 31, 2025, non-cancelable purchase commitments totaled $31.3 million and are due mainly over the next three years, and operating lease obligations were $38.2 million. The company also warns that future acquisitions or investments could require additional equity or debt financing on terms that may not be favorable.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $248.2M | $249.4M | -0.5% | $203.7M | +21.9% |
| Research & development | $46.0M | $54.0M | -15.0% | $42.3M | +8.6% |
| Sales & marketing | $40.2M | $35.9M | +11.8% | $33.4M | +20.1% |
| General & administrative | $22.9M | $27.4M | -16.7% | $23.4M | -2.5% |
| Total operating expenses | $204.6M | $214.3M | -4.5% | $180.7M | +13.2% |
| Operating income (loss) | $43.6M | $35.0M | +24.3% | $23.0M | +89.8% |
| Operating margin | 17.6% | 14.1% | +3.5 pp | 11.3% | +6.3 pp |
| Net income (loss) | $39.9M | $33.6M | +18.6% | $102.7M | -61.1% |
| Net margin | 16.1% | 13.5% | +2.6 pp | 50.4% | -34.4 pp |
| Diluted EPS | $1.10 | $0.93 | +$0.17 | $2.79 | -$1.69 |
Risks
Tenant screening and resident-focused offerings are subject to FCRA, Fair Housing Act, and increasing FTC/CFPB scrutiny, including fee transparency and mandatory services. The company previously settled with the FTC in January 2021 and remains subject to ongoing compliance and reporting obligations; violations could lead to per-occurrence fines, enforcement, or loss of ability to provide tenant screening.
Electronic payment services rely on a limited number of third-party clearing banks, money transmitters, and card processors, in some cases without a backup provider. The company bears chargeback and fraud losses, and third-party bad actors have previously gained improper access to systems, resulting in financial loss.
The company faces rapid AI-driven competition and regulatory uncertainty from generative and agentic AI. Competitors may incorporate AI more successfully, AI laws and intellectual property precedent are unsettled, and AI outputs could be inaccurate or biased, creating reputational and legal liability.
All revenue is generated from real estate industry customers. Higher interest rates, rental market declines, customer consolidation, or regulatory changes affecting rental housing could reduce demand or increase attrition.
The $150 million senior secured revolving Credit Facility entered on September 30, 2025 contains covenants restricting indebtedness, liens, investments, dividends, equity repurchases, mergers, and asset dispositions, and requires maintenance of a Consolidated Net Leverage Ratio. It is secured by substantially all personal property and default could accelerate borrowings or allow proceeds against collateral.
The company holds non-marketable equity investments in privately held companies, including a $75.0 million long-term investment made in 2025. Valuations require judgment, and observable price changes or impairments are recorded through the statement of operations, potentially causing volatility or loss of invested capital.
The company and its third-party service providers have experienced cybersecurity incidents in the past, including improper access to code hosting and third-party systems. Remote work and AI-enabled attacks increase risk; breaches could lead to liability, fines, reputational damage, and customer loss.
Value Added Services revenue has historically been seasonal, with sequential increases in the first three quarters and a sequential decline in the fourth quarter. Macroeconomic factors affecting tenant behavior, product mix, or adoption of less seasonal services may exacerbate the effect on revenue.
Competition for personnel is intense, with upward compensation pressure especially for backgrounds in AI and cybersecurity. The perceived value of equity awards, stock price volatility, or inability to offer competitive awards could impair retention and hiring.
The effective tax rate increased to 12.5% for the year ended December 31, 2025 from a benefit of (35.8)% in 2024, primarily due to the prior-year valuation allowance release and lower excess tax benefits. This contributed to net income down 30.9% and diluted EPS down 30.1% year to date, and tax positions remain subject to audits and NOL limitation risk.
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 Q4 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.