AppFolio, Inc. reports 106% Net Income growth in 2018 and 32.2% Revenue growth
02/28/2019 • About AppFolio, Inc. (
$APPF) • By InTwits
AppFolio, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- AppFolio, Inc. is a fast growth stock: 2018 revenue growth was 32.2%, 5 year revenue CAGR was 48.3% at 2018 ROIC 17.3%
- EBITDA Margin is expanding: 18.0% in 2018 vs. 15.3% in 2017 vs. -10.0% in 2014
- EBITDA Margin is quite volatile: 18.0% in 2018, 15.3% in 2017, 1.4% in 2016, -11.9% in 2015, -10.0% in 2014
- AppFolio, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 3.3% while average EBITDA Margin was 7.8% for the sames years. In 2018 SBC/Revenue was even higher: 3.3%
- AppFolio, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.1%. At the same time it's a lot of higher than industry average of 13.3%.
- CAPEX is quite volatile: $2m in 2018, $2m in 2017, $4m in 2016, $4m in 2015, $2m in 2014
- In the last 5 years the company invested considerably less than D&A: $14m vs. $47m. In 2018 this situation was still the same: CAPEX was 2 while D&A was 15
- The company has highly profitable business model: ROIC is 17.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 32.2%. Revenue growth showed acceleration in 18Q4 - it increased 32.9% YoY. Revenue decline was accelerating on average at -11.6 pp per annum in 2014-2018. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.3 pp from 24.7% to 22.4% in FY2018. EBITDA Margin grew at 8.3 pp per annum in 2014-2018.
Gross Margin showed almost no change in 2018. Gross Margin followed a growing trend at 2.4 pp per annum in the last 5 years. SG&A as a % of Revenue decreased on 4.1 pp from 34.7% to 30.6% in 2018. SG&A as a % of Revenue declined at -5.6 pp per annum in the last 5 years. Stock Based Compensation (SBC) as a % of Revenue decreased slightly on 0.91 pp from 4.2% to 3.3% in 2018.
Net Income margin increased on 3.7 pp from 6.8% to 10.5% in 2018. Net Income margin followed a growing trend at 8.5 pp per annum in 2014-2018. The efficient tax rate was 2.1% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 1.1%. AppFolio, Inc.'s CAPEX/Revenue decreased on 3.8 pp from 4.9% in 2015 to 1.1% in 2018. For the last three years the average CAPEX/Revenue was 2.2%. During 2014-2018 CAPEX as a % of Revenue topped in 2015 at 4.9% and was declining since that time.
Accounts receivable as a % of Revenue increased slightly on 0.55 pp from 2.4% to 2.9% in 2018. Accounts payable as a % of Revenue increased slightly on 0.91 pp from 1.1% to 2.0% in 2018.
AppFolio, Inc. has spent
$14m on M&A in 2018 which accounts for 7.6% of revenue.
Return on investment
The company operates at high and attractive ROE (22.6%) while ROIC is a bit lower (17.3%). ROIC increased on 5.3 pp from 12.1% to 17.3% in 2018. ROE surged on 10.0 pp from 12.6% to 22.6% in 2018. ROIC grew at 19.3 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.7x and Debt / EBITDA is 1.5x. Debt jumped while cash jumped on 360%.
AppFolio, Inc. has no short term refinancing risk: cash is higher than short term debt (6,106.8%).
Valuation and dividends
AppFolio, Inc.'s trades at EV/EBITDA 28.3x and P/E 49.8x.
Management team
The company's CEO Jason Randall is a founder and has spent 2 years with the company. CEO total compensation was
$724,149 in 2018 which included
$360,000 salary. Ida Kane is a AppFolio, Inc.'s CFO. Ida Kane has spent 4 years at the company.
0.50% of the company is owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 916 employees. The number of employees jumped on 36.3%. Average revenue per employee in 2018 was
$207,501 and it decreased on 3.0%.
Financial and operational results
FY ended 12/31/2018
AppFolio, Inc. ($APPF) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 47.7 | 75.0 | 105.6 | 143.8 | 190.1 | 32.2% |
| Gross Profit | 25.1 | 41.1 | 61.0 | 88.5 | 116.5 | 31.6% |
| SG&A | 23.4 | 40.4 | 46.8 | 49.9 | 58.2 | 16.6% |
| EBITDA | -4.8 | -8.9 | 1.5 | 22.0 | 34.2 | 55.4% |
| EBIT | -8.6 | -15.0 | -8.4 | 9.3 | 19.7 | 110.6% |
| Tax | | 0.1 | 0.1 | 0.1 | 0.4 | 624.1% |
| Net Income | -8.6 | -15.7 | -8.3 | 9.7 | 20.0 | 105.5% |
| Stock Based Compensation | 0.9 | 1.0 | 4.3 | 6.1 | 6.3 | 4.0% |
Balance Sheet
|
|---|
| Cash | 5.4 | 12.1 | 10.7 | 16.1 | 74.1 | 359.8% |
| Accounts Receivable | 1.2 | 2.0 | 2.5 | 3.4 | 5.5 | 62.9% |
| Accounts Payable | 2.1 | 2.4 | 0.9 | 0.6 | 1.5 | 142.8% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 1.2 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 48.6 | |
Cash flow
|
|---|
| Capex | 1.9 | 3.7 | 4.2 | 2.2 | 2.1 | -5.0% |
| Acquisitions | | 4.0 | | | 14.4 | |
Ratios
|
|---|
| Revenue growth | 79.6% | 57.3% | 40.8% | 36.2% | 32.2% | |
| EBITDA growth | 0.0% | 87.2% | -117.0% | 1,357.3% | 55.4% | |
|
|---|
| Gross Margin | 52.7% | 54.8% | 57.7% | 61.6% | 61.3% | -0.3% |
| EBITDA Margin | -10.0% | -11.9% | 1.4% | 15.3% | 18.0% | 2.7% |
| EBIT Margin | -18.0% | -20.0% | -8.0% | 6.5% | 10.3% | 3.8% |
| SG&A, % of revenue | 49.0% | 53.9% | 44.3% | 34.7% | 30.6% | -4.1% |
| SBC, % of revenue | 1.9% | 1.3% | 4.1% | 4.2% | 3.3% | -0.9% |
| Net Income Margin | -18.1% | -20.9% | -7.8% | 6.8% | 10.5% | 3.7% |
| CAPEX, % of revenue | 3.9% | 4.9% | 4.0% | 1.5% | 1.1% | -0.4% |
|
|---|
| ROIC | -55.4% | -35.6% | -11.8% | 12.1% | 17.3% | 5.3% |
| ROE | | | -11.6% | 12.6% | 22.6% | 10.0% |
| Net Debt/EBITDA | | | -7.1x | -0.7x | -0.7x | 0.0x |
People
|
|---|
| Insider ownership | 0.5% | 0.5% | 0.5% | 0.5% | 0.5% | 0.0% |
| Employees | | 573 | 626 | 672 | 916 | 36.3% |
| Revenue/Employee, th. $ | | 131 | 169 | 214 | 208 | -3.0% |
AppFolio, Inc. ($APPF) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 42 | 47 | 50 | 50 | | 31.8% | 31.7% | 32.2% | 32.9% |
| EBITDA | 8 | 11 | 9 | 6 | | 113.6% | 85.1% | 34.6% | 13.1% |
| Net Income | 4 | 7 | 6 | 3 | | 554.5% | 167.2% | 50.0% | 2.8% |
Balance Sheet
|
|---|
| Cash | 9 | 18 | 14 | 74 | | 7.3% | 143.7% | -7.0% | 359.8% |
| Short Term Debt | 0 | 0 | 0 | 1 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 49 | | | | | |
Ratios
|
|---|
| Gross Margin | 60.8% | 62.5% | 61.5% | 60.4% | | 1.2% | 0.7% | -1.4% | -1.2% |
| EBITDA Margin | 18.1% | 23.0% | 18.3% | 12.9% | | 6.9% | 6.7% | 0.3% | -2.3% |
| Net Income Margin | 10.2% | 15.8% | 11.0% | 5.3% | | 8.1% | 8.0% | 1.3% | -1.5% |
Peers in Application Software
Below we provide AppFolio, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| AppFolio, Inc. ($APPF) | | 57.3% | 40.8% | 36.2% | 32.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.1% |
|---|
| AppFolio, Inc. ($APPF) | 52.7% | 54.8% | 57.7% | 61.6% | 61.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -9.4% | -5.3% | -4.2% | -3.3% |
|---|
| AppFolio, Inc. ($APPF) | -10.0% | -11.9% | 1.4% | 15.3% | 18.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| AppFolio, Inc. ($APPF) | 3.9% | 4.9% | 4.0% | 1.5% | 1.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.2% | -11.2% | -9.2% | -11.8% | -10.4% |
|---|
| AppFolio, Inc. ($APPF) | -55.4% | -35.6% | -11.8% | 12.1% | 17.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.4x | -1.0x | -0.9x | -0.9x | -0.6x |
|---|
| AppFolio, Inc. ($APPF) | | | -7.1x | -0.7x | -0.7x |
