AppFolio, Inc. (APPF) Earnings & Analysis

Latest quarter

AppFolio reported Q3 FY2026 revenue of $295.7 million, above the consensus of $294.3 million. Adjusted EPS was $1.82, compared with the consensus of $1.78. Revenue rose 18.6% from $249.4 million a year earlier, while diluted EPS increased to $1.29 from $0.93.

CFO Timothy Eaton said subscription services revenue grew 14% year over year to $62 million, helped by new customers, more units under management and upgrades to premium plans. Value-added services revenue grew 21% to $232 million, led by risk mitigation, screening and online payments, he said. AppFolio’s filing also attributed revenue growth primarily to increased use of payments, screening, risk mitigation and resident services.

AppFolio reported an operating margin of 19.4%, compared with 14.1% a year earlier. Eaton noted that the year-earlier quarter included an incremental bonus-plan accrual, while this year’s third quarter included the company’s annual industry event, which took place in the fourth quarter last year. Free cash flow was $95.8 million, compared with $83.7 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Eaton said new customers, growth in units under management and upgrades to premium plans supported subscription growth. New and renewing customers continued to commit to multiyear agreements, extending the contracted revenue base, he said. AppFolio ended the quarter with approximately 9.8 million units under management, up from 9.1 million a year earlier, and 23.1 thousand customers, up from 21.8 thousand.

Although existing customers continued adding units, Eaton said “unit expansion is pacing slower than last year.” For the fourth quarter, he expected expansion among those customers to remain below the prior-year pace and comparable to the third quarter. He also expected new customer acquisition and retention to remain healthy.

On margins, Eaton said scale benefited third-party service costs and customer support and operations, partly offset by the payments product mix and “incremental data center capacity as more of our customers work runs through Realm-X and Performers.” He said the prior-year quarter’s bonus accrual lowered its margin, while the timing of AppFolio’s annual event moved an expense into this year’s third quarter. Sales and marketing spending included advertising, the event and added sales capacity, he said.

CEO Shane Trigg described banking partnerships that bring customers’ financial data into AppFolio. Through Column, he said, transactions are matched automatically as they arrive. Trigg also said the company unveiled Receptionist Performer to answer incoming calls, handle simple questions and route other requests. Its Stack marketplace connected 5.6 million units across nearly 100 partners, he said.

Eaton said AppFolio invests first in its business and uses its share repurchase program opportunistically. He expected subscription and value-added services seasonality to be broadly consistent with 2025, while noting that a one-time Stack partnership contribution to other revenue in the fourth quarter of 2025 was not expected to recur.

Guidance

Eaton said AppFolio raised its full-year FY2026 revenue guidance to $1.122 billion to $1.127 billion, lifting the midpoint growth rate to 18.3%. He said the company’s non-GAAP operating margin guidance was now 26.5% to 27.5%, reflecting a decision to accelerate sales and marketing investment, including additional sales capacity and industry events.