AppFolio Raises Revenue Outlook To $1.122 Billion Or More, But Existing Customers Add Units More Slowly
The CFO said on the earnings call that unit growth will stay below last year's fourth-quarter pace as sales spending climbs to 15% of revenue.
AppFolio, which makes cloud software that property managers use to run their businesses, raised its full-year revenue guidance to $1.122 billion to $1.127 billion on its third-quarter earnings call Thursday. CFO Tim Eaton also told analysts that existing customers are adding units more slowly than a year ago, and that the pace will stay below last year's fourth quarter.
Slower unit growth from existing customers
Eaton said on the call that "unit expansion is pacing slower than last year, a trend we highlighted during our second quarter call." New-customer acquisition was strong, he said, and retention was healthy and in line with historical averages.
For the fourth quarter, he said management expects new-customer acquisition and retention to stay healthy while unit expansion among existing customers stays below last year's fourth quarter.
Units on the platform reached about 9.8 million, up 8% from 9.1 million a year earlier. Customers grew 6% to 23,121 from 21,759.
A deliberate spending push
Full-year non-GAAP operating margin guidance, which excludes items such as stock-based pay, is now 26.5% to 27.5%, against 24.7% in 2025. Eaton said the range reflects "a deliberate decision to accelerate our sales and marketing investment this year."
Sales and marketing took 15% of third-quarter revenue, up from 13% a year earlier. Eaton cited higher advertising and promotion costs, including the company's largest Future conference to date, plus added sales capacity. The conference fell in the third quarter this year and in the fourth quarter of 2025.
Research and development fell to 15% of revenue from 18%, and general and administrative costs to 6% from 8%. The year-earlier quarter also carried an extra bonus accrual that lowered its margin.
The quarter and the outlook
Revenue was $296 million, up 19% from $249 million a year earlier. Subscription services rose 14% to $62 million, and value-added services, such as payments and screening, rose 21% to $232 million. Non-GAAP operating income was $81 million, or 27.3% of revenue, and GAAP operating income was $57 million, or 19.4%.
The new guidance lifts the midpoint growth rate to 18.3%. Eaton said the fourth quarter of 2025 included one-time revenue from a stack partnership that the company does not expect to recur.
Operating cash flow was $97 million for the quarter, and cash and current investments stood at $307 million. Eaton said the share repurchase program remains opportunistic.
Management guided to roughly 36 million diluted weighted average shares for the full year.
Sources
- AppFolio Q3 2026 Earnings Call Transcript — benzinga.com
- AppFolio Stock In Focus Before Earnings Forecasts Point To Higher Service Revenue — Yahoo Finance
- AppFolio Non-GAAP EPS of $1.82 beats by $0.03, revenue of $295.69M beats by $1.23M (NASDAQ:APPF) — seekingalpha.com
- Keefe, Bruyette & Woods Maintains Outperform ... — benzinga.com
- AppFolio, Inc. (APPF) Stock Price, News, Quote & History - Yahoo Finance — Yahoo Finance
