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# AppFolio Paid $3.9 Million To Exit A Santa Barbara Office Lease, Then Booked A $1.5 Million Gain
- URL: https://www.bullished.co/appfolio-paid-3-9-million-to-exit-a-santa-barbara-office-lease-then-booked-a-1-5-million-214dffb8/
- Published: 2026-10-22T21:36:09.000Z
- Updated: 2026-10-22T21:36:09.000Z
- Description: The lease buyout helped pull third-quarter general and administrative costs down 5%, alongside a $2.9 million drop in personnel costs.
- Author: Matteo Parrino
- Tags: Deals, APPF, Industry: Technology

[AppFolio](https://www.bullished.co/tag/appf/), which makes cloud-based software for property managers, paid a [$3.9 million termination fee](https://www.sec.gov/Archives/edgar/data/0001433195/000143319526000064/appf-20260930.htm?ref=bullished.co) in July to get out of one Santa Barbara office lease and recorded a $1.5 million gain on the exit, according to its 10-Q filed Thursday. The gain sits inside general and administrative expense, which fell 5% in the third quarter.

## How the gain reached the expense line

General and administrative expense fell to $25.953 million from $27.446 million a year earlier. Lower personnel costs, which cut $2.9 million and included stock-based and performance-based pay, and the $1.5 million lease gain drove the decline, while professional fees rose $2.6 million and offset most of it.

The prior quarter read differently. The [second-quarter filing](https://www.sec.gov/Archives/edgar/data/0001433195/000143319526000058/appf-20260630.htm?ref=bullished.co) cited higher software and professional fees for the increase in that line and listed no gains. Over nine months, general and administrative expense is up 4%, to $75.92 million, from $72.733 million.

As part of the exit, AppFolio removed the related lease asset and liability from its books. Total lease liabilities were $29.288 million at September 30, down from $38.160 million at the end of 2025\. Operating lease payments in the quarter drew $4.941 million from operating cash flow, against $1.075 million a year earlier, per the [earnings release](https://www.sec.gov/Archives/edgar/data/0001433195/000143319526000062/appfq32026exhibit991.htm?ref=bullished.co).

## A smaller footprint, a bigger business

AppFolio sells software that property managers use for accounting, leasing, maintenance and communication, and earns revenue from subscriptions and from add-on services such as payments and tenant screening. It had 23,121 property management customers at September 30, up from 21,759 a year earlier.

Revenue rose 19% to $296 million in the quarter, and operating income rose 64% to $57.4 million. Lease cost for the nine months slipped to $3.83 million from $4.014 million, and remaining office lease terms run from ten months to 6.3 years. Future minimum lease payments total $33.868 million, with $8.977 million due after 2030.

The company expects research and product development spending to fall as a share of revenue this year as it uses AI tools, and the third-quarter explanation for that line cites lower headcount.

## Tax rate jumps, cash builds

The effective tax rate was 22.9%, against 8.4% a year earlier, which the company attributed to higher non-deductible officers' compensation and fewer stock-compensation and research tax benefits. Cash, cash equivalents and investment securities stood at $307.3 million.

Shares closed at $217.33 on Thursday, giving the company a market value of about $7.7 billion.

The company said it expects general and administrative expense to stay relatively flat as a share of revenue for the full year.

### Sources

- [10-Q Filing — AppFolio (APPF)](https://www.sec.gov/Archives/edgar/data/0001433195/000143319526000064/appf-20260930.htm?ref=bullished.co) — SEC EDGAR
- [10-Q Filing — AppFolio (APPF), Q2 FY2026 filed 2026-07-23 (comparison basis)](https://www.sec.gov/Archives/edgar/data/0001433195/000143319526000058/appf-20260630.htm?ref=bullished.co) — SEC EDGAR
- [Earnings release (8-K Item 2.02, appfq32026exhibit991.htm) — AppFolio, filed 2026-10-22](https://www.sec.gov/Archives/edgar/data/0001433195/000143319526000062/appfq32026exhibit991.htm?ref=bullished.co) — SEC EDGAR
- [AppFolio, Inc. (APPF) Stock Price, News, Quote & History - Yahoo Finance](https://ca.finance.yahoo.com/quote/APPF/?ref=bullished.co) — Yahoo Finance
- [AppFolio: Q3 Earnings Snapshot – WTOP News](https://wtop.com/national/2026/10/appfolio-q3-earnings-snapshot/?ref=bullished.co) — wtop.com
- [AppFolio Stock In Focus Before Earnings Forecasts Point To Higher Service Revenue](https://finance.yahoo.com/markets/stocks/articles/appfolio-stock-focus-earnings-forecasts-001553017.html?ref=bullished.co) — Yahoo Finance
- [Docusign Inc. (DOCU) Hit a 52 Week High, Can the Run Continue?](https://finance.yahoo.com/markets/stocks/articles/docusign-inc-docu-hit-52-184159596.html?.tsrc=rss&ref=bullished.co) — Yahoo Finance
- [Keefe, Bruyette & Woods Maintains Outperform ...](https://www.benzinga.com/news/26/10/62506152/keefe-bruyette-woods-maintains-outperform-appfolio-raises-price-target-255?ref=bullished.co) — benzinga.com

### More on AppFolio

- [AppFolio Raises 2026 Revenue Outlook To $1.122 Billion-$1.127 Billion As Operating Profit Jumps 64%](https://www.bullished.co/appfolio-raises-2026-revenue-outlook-to-1-122-billion-1-127-billion-as-operating-profit-1de5a074/)

[All AppFolio (APPF) coverage →](https://www.bullished.co/tag/appf/)