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AppFolio's operating results for the third quarter of 2021 are summarized in the tables accompanying this press release. The Company nevertheless urges investors to read its Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the "SEC") on March 1, 2021, as well as its more detailed third quarter 2021 results that will be included in the Company's Quarterly Report on Form 10-Q, which will be filed with the SEC today. These periodic report filings, together with other documents the Company files with the SEC from time to time, will be accessible on AppFolio's website, http://ir.appfolioinc.com. The limited information that follows in this press release is not adequate for making an informed investment judgment.

As previously announced, the Company will host a conference call today, November 8, 2021, at 1:30 p.m. Pacific Time, 4:30 p.m. Eastern Time, to discuss its financial results. Participants who wish to dial into the conference call, please register in advance at https://www.incommglobalevents.com/registration/q4inc/9012/appfolio-inc-announces-third-quarter-2021-financial-results. After registering, a confirmation email will be sent, including dial-in details and a unique code for entry. Registration will be open through the start of the live call.

AppFolio provides innovative software, services and data analytics to the real estate industry. Our cloud-based business management solutions are designed to enable our customers to digitally transform their businesses, address critical business operations and enable exceptional customer service. Today our core solutions include AppFolio Property Manager, AppFolio Property Manager PLUS, and AppFolio Investment Management. In addition, the Company offers a variety of Value+ services that are designed to enhance, automate and streamline essential processes and workflows for our customers. AppFolio was founded in 2006 and is headquartered in Santa Barbara, CA. Learn more at www.appfolioinc.com.

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements are subject to considerable risks and uncertainties. Forward-looking statements include all statements that are not statements of historical fact contained in this press release, and can be identified by words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts," “projects,” “seeks,” “should,” “will,” “would” or similar expressions and the negatives of those expressions. In particular, forward-looking statements contained in this press release relate to the Company's future or assumed revenues and weighted-average outstanding shares, as well as its future growth and success.

Forward-looking statements represent AppFolio's current beliefs and assumptions based on information currently available. Forward-looking statements involve numerous known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Some of the risks and uncertainties that may cause the Company's actual results to materially differ from those expressed or implied by these forward-looking statements are described in the section entitled “Risk Factors” in AppFolio's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, which will be filed with the SEC today, as well as in the Company's other filings with the SEC. You should read this press release with the understanding that the Company's actual future results may be materially different from the results expressed or implied by these forward looking statements.


	September 30, 2021		December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	84,444	$	140,263
Investment securities—current	76,034		28,256
Accounts receivable, net	12,184		10,057
Prepaid expenses and other current assets	24,714		20,777
Total current assets	197,376		199,353
Investment securities—noncurrent	9,287		6,770
Property and equipment, net	28,177		26,439
Operating lease right-of-use assets	42,597		30,561
Capitalized software development costs, net	40,711		35,459
Goodwill	56,147		56,147
Intangible assets, net	12,864		16,357
Deferred income taxes—noncurrent	12,834		12,181
Other long-term assets	7,394		6,213
Total assets	$	407,387	$	389,480
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	2,493	$	1,040
Accrued employee expenses—current	25,785		18,888
Accrued expenses	13,090		14,069
Deferred revenue	2,738		2,262
Income tax payable	186		9,095
Other current liabilities	4,910		4,451

Total current liabilities	49,202		49,805
Accrued employee expenses—noncurrent	2,059		—
Operating lease liabilities	56,559		40,146


Deferred income taxes—noncurrent	7,868		13,609
Total liabilities	115,688		103,560
Stockholders’ equity:
Preferred stock, $0.0001 par value, 25,000 shares authorized and no shares issued and outstanding as of September 30, 2021 and December 31, 2020	—		—
Class A common stock, $0.0001 par value, 250,000 shares authorized as of September 30, 2021 and December 31, 2020; 19,610 and 19,148 shares issued as of September 30, 2021 and December 31, 2020, respectively; 19,191 and 18,729 shares outstanding as of September 30, 2020 and December 31, 2020, respectively	2		2
Class B common stock, $0.0001 par value, 50,000 shares authorized as of September 30, 2021 and December 31, 2020; 15,453 and 15,659 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	2		2
Additional paid-in capital	164,740		161,247
Accumulated other comprehensive (loss) income	(17)		56
Treasury stock, at cost, 419 shares of Class A common stock as of September 30, 2021 and December 31, 2020	(25,756)		(25,756)
Retained earnings	152,728		150,369
Total stockholders’ equity	291,699		285,920
Total liabilities and stockholders’ equity	$	407,387	$	389,480


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue	$	95,809	$	84,086	$	263,770	$	237,624
Costs and operating expenses:
Cost of revenue (exclusive of depreciation and amortization)	38,730		32,752		104,847		89,124
Sales and marketing	19,362		14,894		53,255		43,117
Research and product development	16,500		13,454		46,389		36,794
General and administrative	13,404		12,946		40,971		36,303
Depreciation and amortization	7,826		6,680		22,844		19,751
Total costs and operating expenses	95,822		80,726		268,306		225,089
(Loss) income from operations	(13)		3,360		(4,536)		12,535
Other (loss) income, net	(353)		187,747		705		187,759
Interest income (expense), net	65		(853)		173		(1,909)
(Loss) income before (benefit from) provision for income taxes	(301)		190,254		(3,658)		198,385
(Benefit from) provision for income taxes	(160)		52,578		(6,017)		39,469
Net (loss) income	$	(141)	$	137,676	$	2,359	$	158,916

Net (loss) income per common share:
Basic	$	—	$	4.01	$	0.07	$	4.64
Diluted	$	—	$	3.86	$	0.07	$	4.46
Weighted average common shares outstanding:
Basic	34,614		34,296		34,525		34,241
Diluted	34,614		35,665		35,695		35,662


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cash from operating activities
Net income	$	(141)	$	137,676	$	2,359	$	158,916
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,826		6,680		22,844		19,751
Amortization of operating lease right-of-use assets	913		902		2,312		2,973

Deferred income taxes	(308)		36,015		(6,394)		22,878
Stock-based compensation	4,063		3,096		10,053		6,808
Gain on sale of business	(21)		(187,636)		(380)		(187,636)
Other	309		200		89		170

Changes in operating assets and liabilities:
Accounts receivable	2,657		2,907		(1,350)		(2,229)
Prepaid expenses and other current assets	(1,387)		(567)		(3,558)		(859)
Other assets	(199)		(213)		(1,181)		(320)
Accounts payable	83		502		1,384		695
Accrued employee expenses—current	(1,303)		1,202		6,335		1,919
Accrued expenses	1,621		1,397		(1,426)		5,931
Deferred revenue	(335)		283		(302)		815
Income tax payable	120		—		(8,909)		—

Accrued employee expenses—noncurrent	1,091		—		2,059		—
Operating lease liabilities	310		(1,043)		1,995		(1,135)
Other liabilities	499		16,439		529		16,539
Net cash provided by operating activities	15,798		17,840		26,459		45,216
Cash from investing activities
Purchases of available-for-sale investments	(18,748)		(16,490)		(167,041)		(29,879)
Proceeds from sales of available-for-sale investments	1,000		—		43,198		13,942
Proceeds from maturities of available-for-sale investments	47,004		5,550		73,754		13,300
Purchases of property, equipment and intangible assets	(2,362)		(2,245)		(5,166)		(16,551)
Capitalization of software development costs	(6,600)		(6,988)		(18,511)		(19,697)

Proceeds from sale of business, net of cash divested	—		191,427		—		191,427

Net cash provided by (used in) investing activities	20,294		171,254		(73,766)		152,542
Cash from financing activities
Proceeds from stock option exercises	145		73		791		402


Tax withholding for net share settlement	(403)		(1,269)		(9,303)		(10,959)



Payment of contingent consideration	—		—		—		(5,977)
Proceeds from issuance of debt	—		562		—		50,752
Principal payments on debt	—		(97,747)		—		(99,565)

Purchase of treasury stock	—		—		—		(4,194)
Net cash used in financing activities	(258)		(98,381)		(8,512)		(69,541)
Net increase (decrease) in cash and cash equivalents and restricted cash	35,834		90,713		(55,819)		128,217
Cash, cash equivalents and restricted cash
Beginning of period	49,046		53,751		140,699		16,247
End of period	$	84,880	$	144,464	$	84,880	$	144,464