AppFolio Q1 2026 Earnings Call Transcript – AppFolio (NASDAQ:APPF)

Great afternoon. Thank you for waiting and welcome to AppFolio Inc.’s First Quarter 2026 Financial Outcomes Teleconference. Please be recommended today’s conference is being tape-recorded and a replay will be offered on Appfolio’s financier relations site. I would now like to hand the conference over to Lori Barker, Financier Relations. Thank you Operator. Great afternoon everybody. I’m Lori Barker, Financier Relations for Appfolio and I wish to thank you for joining us today as we report AppFolio’s very first quarter 2026 monetary outcomes. With me on the call today are Shane Trigg, AppFolio’s president and CEO, and Tim Eaton, AppFolio’s CFO. This call is all at once being webcast on the financier Relations area of our [email protected] In addition, an audio replay of the call and a records of the ready remarks will be published to the site. Before we start, I want to advise everybody of Appfolio’s Safe harbor policy. Remarks made throughout this teleconference and webcast include forward looking declarations within the significance of the Personal Securities Lawsuits Reform act of 1995 and undergo threats and unpredictabilities. Any declaration that describes expectations, forecasts or other characterizations of future occasions, consisting of monetary forecasts, future market conditions, organization efficiency or future item improvements or advancement is a forward looking declaration. Appfolio’s real future outcomes might vary materially from those revealed in such forward looking declarations. For any factor, consisting of those noted on our SEC filings. Appfolio presumes no commitment to upgrade any such forward looking declarations other than as needed by law. For higher information about threats and unpredictabilities, please see our SEC filings including our Type 10K for the ended December 31, 2025 which was submitted with the SEC on February 5, 2026. In addition, this call consists of non GAAP monetary steps. Reconciliation of these non GAAP monetary steps and the most straight similar GAAP steps are consisted of in our very first quarter incomes release published on the Financier Relations area of our site. With that, I’ll turn the call over to Shane Trigg. Shane, please proceed.

Thanks Lori and welcome to everybody joining us today. Appfolio is off to a strong start in 2026. Very first quarter earnings reached $262 million, a 20% year over year boost and up from the 16% year over year boost we provided in Q1 2025. Non GAAP operating earnings grew 36% and was 27.3% of earnings and GAAP operating earnings increased 50% and was 19.4% of earnings. We had the very best very first quarter in business history for property brand-new organization system acquisition and systems on platform grew to 9.5 million in line with our expectations and common seasonality. This is an interesting time for our organization and our market. AI is effective and we’re putting it to work throughout every measurement of our organization. Speeding up efficiency for our clients while driving higher effectiveness throughout our own operations. At our yearly Future conference in 2015, we presented Realty efficiency Management, what we call rpm, a brand-new method of thinking of worth development in realty. RPM represents a basic shift from reactive job oriented home management to a holistic practice of providing worth throughout the whole realty community. Homeowners that like where they live, financiers that see constant strong returns. Home management organizations that grow, serving neighborhoods that flourish. Attaining that needs an efficiency platform that offers the harness for for smart AI orchestration and realty. With an AI native architecture of 3 interconnected systems. A system of record, a system of action and a system of development. All available through one combined experience. There’s a distinct benefit in running an objective crucial platform in a vertical market. Sitting at the center of how our clients run their organization. Compliance is embedded in how our platform works, not layered on after the reality. And the domain understanding we have actually encoded throughout property realty is honed by 10s of countless clients. Our RealmX entertainers are completely functional AI representatives constructed straight into the platform, taking ownership of whole workflows and and doing the deal with and for our clients. And by reimagining the resident experience with the services tenants Need, we turn AppFolio from an expense center into a development motorist. One whose worth deepens with every consumer we serve. The RPM discipline we have actually presented and the efficiency platform we have actually constructed are redefining what it suggests to win in realty. It’s pleasing to see the marketplace accepting RPM and our clients, turning it into day-to-day practice. Dan Rubenstein puts it well. He’s the CEO of Hampton Management Associates, a 3,000 system Bay Location home management business that this quarter signed a 3 year renewal on our max strategy. I estimate, AppFolio is assaulting the friction in our organization by combining our tech stack and into a single platform. By incorporating RealmX entertainers to automate core workflows, we have actually transitioned our group from manual administrative jobs to high worth citizen engagement. Partnering with AppFolio permits us to invest less time on system upkeep and compliance and reallocate resources towards scaling. It offers one source of fact where whatever is streamlined so we can stop transforming the wheel and and return to business of improving our residential or commercial properties. End quote Dan’s experience shows the kind of consumer results we pursue through the pillars of our business technique. Our very first tactical pillar is Differentiate to win. Beginning with our system of action, our AI technique is producing quantifiable business results at scale. More than 99% of our almost 23,000 clients are now utilizing some kind of our AI powered world suite. AI actions are up 7x year over year and entertainer adoption has actually grown nearly 500% quarter over quarter. Business Intelligence Group has actually acknowledged this momentum, calling AppFolio a 2026 Expert System and Quality Award Winner in the Agentic AI classification. Upkeep Entertainer is a fine example given that it takes on a workflow that’s universal in home management. Local concerns do not stop at 5pm and neither does AppFolio. Over half of all work orders are sent after hours and RealmX. Upkeep Entertainer exists to react to locals in approximately 6 seconds, triaging and repairing the problem and immediately producing a work order when required. This quarter we boosted the Upkeep Entertainer with brand-new supplier follow up abilities. It now proactively contacts suppliers, keeps track of open work orders, verifies conclusions and logs every interaction immediately. Turning to our System of record, AppFolio Stack is deepening what clients can do straight within AppFolio while continually broadening the classifications it covers, most just recently including cloud interactions through SimpleVoIP. We have actually gone beyond 5 million systems linked on Stack, producing an effective network whose worth grows with every connection. The depth of these combinations is what sets them apart. Through our collaboration with Avid, Exchange plus and max, clients can now handle their whole accounts payable lifecycle, costs payment, actual time status tracking, reconciliation and scams defense straight within AppFolio. This isn’t simply an information handoff in between systems, it’s the complete workflow inside our platform. In our system of development, we begin with one conviction. The citizen is at the center of the realty community. When they flourish, so does everybody in the market. And the information is clear on what that suggests for organization efficiency. Our nationwide research study of more than 3,000 tenants verifies that a modern-day resident experience is a strong motorist of complete satisfaction. The research study reveals pleased locals are 72% most likely to restore and 34% less most likely to to prepare a relocation straight affecting NOI and home efficiency. However we’re determining something much deeper than complete satisfaction the effect on the every day lives of tenants. Homeowners on our platform with access to resident services score 14% greater on the Cantrell ladder for life complete satisfaction. The greatest utilize minute to provide that worth is at relocation in. It sets the tone for the whole resident journey and is where providing simple access to the best services ends up being a differentiator for home supervisors. Local Onboarding Lift changes that minute. Instead of a list of manual jobs, Relocate ends up being a structured, transparent digital experience covering tenants, insurance coverage, energy setup and other important services. The Outcome is a 95% connect rate at relocation in compared to 64% without it and more tenants with insurance protection that safeguards their personal effects. Our current addition of Grouprate Web to Local Onboarding Lift offers locals practical, cost effective connection from the minute they relocate. In the exact same occupant research study I pointed out a minute back, 97% of group rate Web users state it’s conserved them cash and enhance their monetary well being. Brad Randall, the president of Welsh Randall and almost 6,000 systems at Folio Client, headquartered in Ogden, Utah, describes it in this manner and I estimate locals finish the whole motion on their phone. It strolls them through each action plainly so they comprehend precisely what they’re registering for and why. The outcome is much faster lease execution, less concerns, and locals who feel great and established for success from the first day. End quote. Our 2nd tactical pillar is provide efficiency effectively. Let’s begin with how we’re providing for our clients. As the market moves towards rpm, enthusiastic operators are picking Appfolio to drive increased efficiency. Mandy Management, a New Sanctuary, Connecticut based operator handling more than 3,000 systems, is among our latest clients. They picked Appfolio to combine their diverse systems into one combined platform. By changing cumbersome user interfaces and manual counting with incorporated AI workflows and actual time reporting, they’re improving whatever from upkeep coordination to resident interactions to speed up efficiency. New consumer momentum is one procedure of our success. Similarly crucial is the retention and development we’re driving within our own consumer base. Considering that 2017, West Des Moines, Iowa based Newberry Living has actually grown its portfolio to 2,300 systems on AppFolio. They continue to combine brand-new acquisitions under our platform driven by our high efficiency AI tools. Rich Overholt, Innovation Application Organizer at Newberry Living describes and I estimate we assessed a specialized AI renting option together with realmex Leasing Entertainer and picked Appfolio. What won us over was just how much Appfolio currently comprehended about how we run. Other services needed us to bring all that context to them with thAppFolio, it was currently there. Considering that releasing Leasing Entertainer, our query to finished provings conversion rate has actually increased 20% and leasing entertainer is now driving 57% of all finished provings, releasing our on website group to remain concentrated on closing high intent trips. End quote we’re effectively connecting AR items when clients signed broaden or restore with us, showing the growing worth they see in our platform and continuing to drive development. For AppFolio, that worth is rooted in how AppFolio is constructed. A unified platform that securely links the system of record in the system of action offers the harness for smart AI orchestration. Our AI representatives run straight on governed actual time information and transactional workflows, lowering latency, preventing port fragility and enhancing precision and security. AppFolio’s AI information architecture offers agenic abilities, native access to the underlying information design and execution layer, making it possible for more trusted automation, much better orchestration and faster outcomes. The exact same discipline we give our clients efficiency we use to our own AI Native engineering is altering how we construct. We’re compressing the time from principle to implementation, allowing our groups to style, code, test and fine-tune items with higher speed and accuracy. That suggests more worth in the hands of our clients much faster. This shift is releasing our engineers to pursue the work that substances long term platform worth, consisting of market and consumer chances that that otherwise might have taken us longer to resolve. Our growing effectiveness is shown in our monetary efficiency as we lowered R and D as a portion of earnings year over year, which Tim will talk to soon. Our 3rd tactical pillar is terrific individuals and culture. I’m regularly influenced by our group’s capability to innovate at a remarkable rate and make a genuine distinction for our clients. It’s their devotion that makes our vision to power the future of realty a truth. I’m delighted to share that AppFolio has actually been recertified as an excellent location to work for 2026. That acknowledgment is a reflection of individuals at the heart of this business, at Folians who exhibit our worths, live the AppFolioan method and deeply appreciate our clients. On that note, I’m pleased to reveal that Kyle Triplett has actually been promoted to Chief Item Officer. A number of you understand Kyle from his management throughout our item company where he’s contributed in providing the AppFolio efficiency platform and our RealmX AI abilities. In this broadened function, Kyle will continue to lead our item technique and style, advancing Appfolia’s development management and guaranteeing our platform continues to set the requirement for our market. The RPM discipline we have actually presented and the efficiency platform we have actually constructed are turning home supervisors into efficiency supervisors and when they win, everybody in the realty community does also. With that, I will hand it over to Tim to share more about AppFolio’s Q1 monetary outcomes.

Thank you Shane. I am pleased with our very first quarter outcomes and strong start to 2026 which show how our efficiency platform continues to provide results for our clients which consumer worth is significantly noticeable in our monetary Outcomes. In the very first quarter we provided earnings of $262 million, growing 20% year over year compared to $218 million in Q1 2025 membership services earnings formerly called core earnings grew 18% year over year to $58 million compared to $49.5 million in Q1 2025. This development was driven by winning brand-new clients, development in overall systems under management and an increasing variety of clients updating to our plus and max premium tiers. This peer upgrade pattern shows the growing worth clients are discovering in RealmX circulations, our AI powered workflow automation engine presently offered in premium tiers, our broadening Stack Partner community and blended item blended portfolio abilities such as trainee and cost effective real estate. Very first quarter earnings from worth included services grew 22% year over year to $201 million driven by increased adoption of our FolioGuard danger mitigation services, Folio screen offerings and online payments along with development in systems under management, Local Onboarding, Lyft and RealmX entertainers comprising our leasing, upkeep and resident messenger AI representatives are likewise increasing their contribution to Worth included services earnings. We continue to be pleased with our acquisition and retention of clients and systems. At the end of the quarter we handled roughly 9.5 million systems compared to 8.8 million systems a year back, representing an 8% boost. Consumers grew to 22,520 from 21,105, a development rate of 7%. Client and system retention continues to be strong and in line with historic averages. In summary, very first quarter earnings of $262 million, growing 20% year over year, shows our ongoing strength in winning brand-new organization and driving adoption of our product or services. Turning to margin in the very first quarter, GAAP operating earnings that includes stock based settlement cost, grew 50% year over year to $51 million or 19.4% of earnings compared to $34 million or 15.5% of earnings. In 2015. Non GAAP operating earnings grew 35% to $72 million or 27.3% of earnings compared to $53 million or 24.3% of earnings in 2025. Continuing with non GAAP steps, expense of earnings unique of devaluation and amortization was flat year over year at 36% of earnings. Effectiveness in our operations were balanced out by our payments item mix and extra information center invest to support our clients Growing use of our AI item abilities as a percent of earnings in the very first quarter sales and marketing followed the very first quarter of 2025 at 13%. As we continue to purchase extra sales capability and go to market efforts to drive brand-new system acquisition, premium care upgrades and worth included services adoption R and D costs decreased as a portion of earnings to 16% from 17% in the previous year. Using AI tools and systems is increasing the speed of our development and the efficiency of our engineering groups, especially in locations such as the resident experience and AI item abilities. GMA cost decreased to 7% from 8% as a portion of earnings, showing the advantages of scale and continued functional performances. We left the quarter with 1,721 workers, a boost of 4% from the very first quarter of 2025, mostly showing development in sales capability as we continue to invest to win brand-new organization, drive premium tier upgrades and increase adoption of worth included services such as resident onboarding lifts and entertainers. In the very first quarter we released $125 million to redeemed 702.5 thousand shares. Our opportunistic share redeemed technique is one part of how we are driving long term investor worth in 2025 and 2026. To date we have actually bought almost 1.4 million shares and have another $125 million staying of our existing share redeemed program. Our balance sheet stays healthy, supplying monetary versatility as we advance our objective to construct the platform where realty pertains to work. Now turning to our 2026 monetary outlook, we are raising our assistance for yearly earnings to a variety of 1.110 to $1.125 billion for a complete year midpoint development rate of 17.5% sustained by adoption of our premium tier offerings, development in brand-new organization systems and increasing adoption of our product or services consisting of agentic AI entertainers and brand-new resident services. We continue to expect 2026 earnings seasonality to be mainly constant with 2025. We are likewise raising our assistance for non GAAP operating margin and anticipate to provide in between 26 and 28% compared to 2025 of 24.7%. Expense of earnings unique of devaluation and amortization is anticipated to be fairly flat as a portion of earnings compared to 2025. While we anticipate to continue employing in locations consisting of sales, operating costs as a percent of earnings are forecasted to decrease decently as we scale and utilize AI to drive effectiveness throughout our internal operations. Watered down weighted typical shares impressive is now prepared for to be roughly 36 million for the complete year to close. Q1 shows continued long term investor worth development through earnings development, margin growth and disciplined capital allotment. Together, these concerns are developed to grow running capital gradually, handle dilution and drive long lasting consumer efficiency. We are pleased with our outcomes and stay concentrated on carrying out on our vision to power the future of realty. Thanks to all of you for your assistance and interest in appfolio. Operator this concludes today’s call.

Disclaimer: This records is offered informative functions just. While we pursue precision, there might be mistakes or omissions in this automatic transcription. For main business declarations and monetary details, please describe the business’s SEC filings and main news release. Business individuals’ and experts’ declarations show their consider as of the date of this call and undergo alter without notification.