AppFolio is a vertical SaaS platform for real estate operators, anchored in property management software plus payments, screening, insurance/risk, onboarding, and AI workflow automation. The economic model is increasingly two-layered: subscription revenue tied to customers, units, and premium tier adoption, and value-added services revenue tied to transaction volume and attach across payments, screening, FolioGuard, resident onboarding, and RealmX performers.
The current debate is not whether the business is healthy. Q1 2026 revenue was $262M, +20% Y/y, units reached 9.5M, +8% Y/y, and customers reached 22,520, +7% Y/y. The debate is durability: whether premium tiering, Stack integrations, Resident Onboarding Lift, and agentic AI can sustain high-teens growth while preserving mid-to-high-20s non-GAAP operating margins.
Competitive positioning rests on vertical workflow depth and data gravity. Management frames the platform as a system of record, system of action, and system of growth. That matters because AI agents are embedded in governed transaction workflows rather than bolted on through brittle connectors. The strongest proof points are commercial: over 99% of customers using AI-powered Realm suite products, AI actions up 7x Y/y, and Performer adoption up almost 500% Q/q in Q1 2026.
| ($mm unless noted) | FY2022 | FY2023 | FY2024 | FY2025 | FY2026E |
|---|---|---|---|---|---|
| Revenue | $471.9M | $620.4M | $794.2M | $950.8M | $1,117.5M |
| Revenue Growth | — | +31.5% | +28.0% | +19.7% | +17.5% |
| GAAP Operating Income | $-72.4M | $1.0M | $135.6M | $152.9M | — |
| GAAP Net Income | $-68.1M | $2.7M | $204.1M | $140.9M | — |
| Free Cash Flow | $18.8M | $51.2M | $186.1M | $238.9M | — |
Company raised 2026 revenue guidance to $1.11B-$1.125B, midpoint growth of 17.5%, and non-GAAP operating margin to 26%-28% versus 24.7% in 2025.
Mission-critical system of record plus payments / screening / insurance workflows creates data gravity and switching friction.
RealmX Performers automate leasing, maintenance, and resident communications inside the core workflow.
Yardi, RealPage, Entrata, Buildium, and point-solution AI / leasing / maintenance vendors.
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Open Notebook to View / GenerateShane Trigg, President & CEO. Timothy Eaton, CFO. Kyle Triplett, Chief Product Officer. Lori Barker, Investor Relations.
Full Conference Call Transcript Lori Barker: Thank you, operator. Good afternoon, everyone. I am Lori Barker, Investor Relations for AppFolio, Inc. I would like to thank you for joining us today as we report AppFolio, Inc.'s First Quarter 2026 Financial Results. With me on the call today are Shane Trigg, AppFolio, Inc.'s President and CEO, and Timothy Eaton, AppFolio, Inc.'s CFO. This call is simultaneously being webcast on the Investor section of our website at ffolioinc.com. Additionally, an audio replay of the call and a transcript of the prepared comments will be posted to the website. Before we get started, I would like to remind everyone about AppFolio, Inc.'s safe harbor policy. Comments made during this conference call and webcast contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. Any statement that refers to expectations, projections, or other characterizations of future events, financial projections, future market conditions, business performance, or future product enhancements or development, is a forward-looking statement. AppFolio, Inc.'s actual future results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in our SEC filings. AppFolio, Inc. assumes no obligation to update any such forward-looking statements except as required by law. For greater detail about risks and uncertainties, please see our SEC filings, including our Form 10-K for the fiscal year ended 12/31/2025, which was filed with the SEC on 02/05/2026. In addition, this call includes non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in our first quarter earnings release posted on the Investor Relations section of our website. With that, I will turn the call over to Shane Trigg. Shane, please go ahead. Shane Trigg: Thanks, Lori, and welcome to everyone joining us today. AppFolio, Inc. is off to a strong start in 2026. First quarter revenue reached $262 million, a 20% year-over-year increase and up from the 16% year-over-year increase we delivered in Q1 2025. Non-GAAP operating income grew 36% and was 27.3% of revenue, and GAAP operating income increased 50% and was 19.4% of revenue. We had the best first quarter in company history for residential new business unit acquisition, and units on platform grew to 9.5 million in line with our expectations and typical seasonality. This is an exciting time for our business and our industry. AI is powerful, and we are putting it to work across every dimension of our business, accelerating performance for our customers while driving greater efficiencies across our own operations. At our annual FUTURE conference last year, we introduced Real Estate Performance Management, what we call RPM, a new way of thinking about value creation in real estate. RPM represents a fundamental shift from reactive, task-oriented property management to a holistic practice of delivering value across the entire real estate ecosystem: residents that love where they live, investors that see consistent strong returns, property management businesses that grow, serving communities that thrive. Achieving that requires a performance platform that provides the harness for intelligent AI orchestration in real estate, with an AI-native architecture of three interconnected systems: a system of record, a system of action, and a system of growth, all accessible through one unified experience. There is a unique advantage in operating a mission-critical platform in a vertical market, sitting at the center of how our customers operate their business. Compliance is embedded in how our platform works, not layered on after the fact, and the domain knowledge we have encoded across residential real estate is sharpened by tens of thousands of customers. Our RealmX Performers are fully operational AI agents built directly into the platform, taking ownership of entire workflows and doing the work with and for our customers. And by reimagining the resident experience with the services renters demand, we turn AppFolio, Inc. from a cost center into a growth driver—one whose value deepens with every customer we serve. The RPM discipline we have introduced and the performance platform we have built are redefining what it means to win in real estate. It is gratifying to see the market embracing RPM and our customers turning it into daily practice. Dan Rubenstein puts it well. He is the CEO of Hampton Management Associates, a 3,000-unit Bay Area property management company that this quarter signed a three-year renewal on our Max plan. I quote, “AppFolio, Inc. is attacking the friction in our business by consolidating our tech stack into a single platform. By integrating Realmex performers to automate core workflows, we have transitioned our team from manual administrative tasks to high-value resident engagement. Partnering with AppFolio, Inc. allows us to spend less time on system maintenance and compliance and reallocate resources towards scaling. It provides one source of truth where everything is simplified, so we can stop reinventing the wheel and get back to the business of bettering our properties.” End quote. Dan’s experience reflects the type of customer outcomes we pursue through the pillars of our company strategy. Our first strategic pillar is differentiate to win. Starting with our system of action, our AI strategy is producing measurable commercial outcomes at scale. More than 99% of our nearly 23,000 customers are now using some form of our AI-powered Realm suite. AI actions are up 7x year over year, and Performer adoption has grown almost 500% quarter over quarter. The Business Intelligence Group has recognized this momentum, naming AppFolio, Inc. a 2026 Artificial Intelligence Excellence Award winner in the agentic AI category. Maintenance Performer is a good example, since it tackles a workflow that is universal in property management. Resident issues do not stop at 5 PM and neither does AppFolio, Inc. Over half of all work orders are submitted after hours, and RealmX Maintenance Performer is there to respond to residents in an average of six seconds, triaging and troubleshooting the issue and automatically creating a work order when needed. This quarter, we enhanced the Maintenance Performer with new vendor follow-up capabilities. It now proactively contacts vendors, monitors open work orders, confirms completion, and logs every interaction automatically. Turning to our system of record, AppFolio, Inc. Stack is deepening what customers can do directly within AppFolio, Inc. while continuously expanding the categories it covers, most recently adding cloud communications through SimpleVoIP. We have surpassed 5 million units connected on Stack, creating a powerful network whose value grows with every connection. The depth of these integrations is what sets them apart. Through our partnership with AvidXchange, Plus and Max customers can now manage their entire accounts payable life cycle—bill payment, real-time status tracking, reconciliation, and fraud protection—directly within AppFolio, Inc. This is not just a data handoff between systems; it is the full workflow inside our platform. In our system of growth, we start with one conviction: the resident is at the center of the real estate ecosystem. When they thrive, so does everyone in the industry. And the data is clear on what that means for business performance. Our national study of more than 3,000 renters confirms that a modern resident experience is a strong driver of satisfaction. The research shows satisfied residents are 72% more likely to renew and 34% less likely to plan a move, directly impacting NOI and property performance. But we are measuring something deeper than satisfaction—the impact on the daily lives of renters. Residents on our platform with access to resident services score 14% higher on the Cantril ladder for life satisfaction. The highest-leverage moment to deliver that value is at move-in. It sets the tone for the entire resident journey. It is where offering easy access to the right services becomes a differentiator for property managers. Resident Onboarding Lift transforms that moment. Rather than a checklist of manual tasks, move-in becomes a streamlined, transparent, digital experience covering renters insurance, utility setup, and other essential services. The result is a 95% attach rate at move-in compared to 64% without it, and more renters with insurance coverage that protects their personal property. Our recent addition of group-rate Internet to Resident Onboarding Lift gives residents convenient, affordable connectivity from the moment they move in. And in the same rental research I mentioned a moment ago, 97% of group-rate Internet users say it saves them money and improves their financial well-being. Brad Randall, the President of Welsh Randall and a nearly 6,000-unit AppFolio, Inc. customer headquartered in Ogden, Utah, explains it this way, and I quote, “Residents complete the entire move-in on their phone. It walks them through each step clearly so they understand exactly what they are signing up for and why. The result is faster lease execution, fewer questions, and residents who feel confident and set up for success from day one.” End quote. Our second strategic pillar is deliver performance efficiently. Let us start with how we are delivering for our customers. As the industry shifts towards RPM, ambitious operators are choosing AppFolio, Inc. to drive increased performance. Mandy Management, a New Haven, Connecticut-based operator managing more than 3,000 units, is one of our newest customers. They selected AppFolio, Inc. to consolidate their disparate systems into one unified platform. By replacing clunky interfaces and manual accounting with integrated AI workflows and real-time reporting, they are streamlining everything from maintenance coordination to resident communications to accelerate performance. New customer momentum is one measure of our success. Equally important is the retention and growth we are driving within our own customer base. Since 2017, West Des Moines, Iowa-based Newbury Living has grown its portfolio to 2,300 units on AppFolio, Inc. They continue to consolidate new acquisitions under our platform, driven by our high-performance AI tools. Rich Overhaull, Technology Implementation Coordinator at Newbury Living, explained, and I quote, “We evaluated a specialized AI leasing solution alongside RealmX Leasing Performer and chose AppFolio, Inc. What won us over was how much AppFolio, Inc. already understood about how we operate. Other solutions required us to bring all that context to them. With AppFolio, Inc., it was already there. Since deploying Leasing Performer, our inquiry-to-completed-showing conversion rate has increased 20%, and Leasing Performer is now driving 57% of all completed showings, freeing our on-site team to stay focused on closing high-intent tours.” End quote. We are successfully attaching AI products when customers sign, expand, or renew with us, reflecting the growing value they see in our platform and continuing to drive growth for AppFolio, Inc. That value is rooted in how AppFolio, Inc. is built. A unified platform that tightly connects the system of record and the system of action provides the harness for intelligent AI orchestration. Our AI agents operate directly on governed real-time data and transaction workflows, reducing latency, avoiding connector fragility, and improving accuracy and security. AppFolio, Inc.'s AI data architecture gives agentic capabilities native access to the underlying data model and execution layer, enabling more reliable automation, better orchestration, and faster results. The same discipline we bring to our customers’ performance we apply to our own. AI-native engineering is changing how we build. We are compressing the time from concept to deployment, enabling our teams to design, code, test, and refine products with greater speed and precision. That means more value in the hands of our customers faster. This shift is freeing our engineers to pursue the work that compounds long-term platform value, including market and customer opportunities that otherwise may have taken us longer to address. Our growing efficiency is reflected in our financial performance as we reduced R&D as a percentage of revenue year over year, which Tim will speak to shortly. Our third strategic pillar is great people and culture. I am consistently inspired by our team’s ability to innovate at an exceptional pace and make a real difference for our customers. It is their dedication that makes our vision to power the future of real estate a reality. I am pleased to share that AppFolio, Inc. has been recertified as a Great Place to Work for 2026. That recognition is a reflection of the people at the heart of this company, AppFolians who exemplify our values, live the AppFolio, Inc. way, and deeply care about our customers. On that note, I am delighted to announce that Kyle Triplett has been promoted to Chief Product Officer. Many of you know Kyle from his leadership across our product organization, where he has been instrumental in delivering the AppFolio, Inc. performance platform and our RealmX AI capabilities. In this expanded role, Kyle will continue to lead our product strategy and design, advancing AppFolio, Inc.'s innovation leadership and ensuring our platform continues to set the standard for our industry. The RPM discipline we have introduced and the platform we have built are turning property managers into performance managers. And when they win, everyone in the real estate ecosystem does as well. With that, I will hand it over to Tim to share more about AppFolio, Inc.'s Q1 financial results. Timothy Eaton: Thank you, Shane. I am pleased with our first quarter results and strong start to 2026, which demonstrate how our performance platform continues to deliver outcomes for our customers, and that customer value is increasingly visible in our financial results. In the first quarter, we delivered revenue of $262 million, growing 20% year over year, compared to $218 million in Q1 2025. Subscription services revenue, previously called core revenue, grew 18% year over year to $58 million, compared to $49.5 million in Q1 2025. This growth was driven by winning new customers, growth in total units under management, and an increasing number of customers upgrading to our Plus and Max premium tiers. This tier-upgrade trend reflects the growing value customers are finding in RealmX Flows, our AI-powered workflow automation engine currently available in premium tiers, our expanding Stack partner ecosystem, and mixed product, mixed portfolio capabilities, such as student and affordable housing. First quarter revenue from value-added services grew 22% year over year, to $201 million, driven by increased adoption of our FolioGuard risk mitigation services, FolioScreen offerings, and online payments, as well as growth in units under management. Resident Onboarding Lift and Realmex Performers—comprising our Leasing, Maintenance, and Resident Messenger AI agents—are also increasing their contribution to value-added services revenue. We continue to be pleased with our acquisition and retention of customers and units. At the end of the quarter, we managed approximately 9.5 million units, compared to 8.8 million units a year ago, representing an 8% increase. Customers grew to 22,520 from 21,105, a growth rate of 7%. Customer and unit retention continues to be strong and in line with historical averages. In summary, first quarter revenue of $262 million, growing 20% year over year, reflects our continued strength in winning new business and driving adoption of our products and services. Turning to margin, in the first quarter, GAAP operating income, which includes stock-based compensation expense, grew 50% year over year to $51 million, or 19.4% of revenue, compared to $34 million, or 15.5% of revenue, last year. Non-GAAP operating income grew 35% to $72 million, or 27.3% of revenue, compared to $53 million, or 24.3% of revenue, in 2025. Continuing with non-GAAP measures, cost of revenue exclusive of depreciation and amortization was flat year over year at 36% of revenue. Efficiencies in our operations were offset by our payments product mix and additional data center spend to support our customers’ growing usage of our AI product capabilities. As a percent of revenue in the first quarter, sales and marketing was consistent with 2025 at 13%, as we continue to invest in additional sales capacity and go-to-market initiatives to drive new unit acquisition, premium-tier upgrades, and value-added services adoption. R&D spending declined as a percentage of revenue to 16% from 17% in the prior year. The use of AI tools and systems is increasing the velocity of our innovation and the productivity of our engineering teams, particularly in areas such as the resident experience and AI product capabilities. G&A expense declined to 7% from 8% as a percentage of revenue, reflecting the benefits of scale and continued operational efficiencies. We exited the quarter with 1,721 employees, an increase of 4% from 2025, primarily reflecting growth in sales capacity, as we continue to invest to win new business, drive premium-tier upgrades, and increase adoption of value-added services such as Resident Onboarding Lift and Performers. In the first quarter, we deployed $125 million to repurchase 702,500 shares. Our opportunistic share repurchase strategy is one component of how we are driving long-term shareholder value. In 2025 and 2026 to date, we have repurchased nearly 1.4 million shares and have another $125 million remaining of our existing share repurchase program. Our balance sheet remains healthy, providing financial flexibility as we continue on our mission to build the platform where real estate comes to do business. Now turning to our 2026 financial outlook. We are raising our guidance for annual revenue to a range of $1.11 billion to $1.125 billion, for a full-year midpoint growth rate of 17.5%, fueled by adoption of our premium-tier offerings, growth in new business units, and increasing adoption of our products and services, including agentic AI Performers and new resident services. We continue to anticipate 2026 revenue seasonality to be mostly consistent with 2025. We are also raising our guidance for non-GAAP operating margin and expect to deliver between 26% and 28%, compared to 2025 at 24.7%. Cost of revenue exclusive of depreciation and amortization is expected to be relatively flat as a percentage of revenue compared to 2025. While we expect to continue hiring in areas including sales, operating expenses as a percent of revenue are projected to decline modestly as we scale and leverage AI to drive efficiency across our internal operations. Diluted weighted average shares outstanding is now anticipated to be approximately 36 million for the full year. To close, Q1 reflects continued long-term shareholder value creation through revenue growth, margin expansion, and disciplined capital allocation. Together, these priorities are designed to grow operating cash flow over time, manage dilution, and drive durable customer performance. We are pleased with our results and remain focused on executing on our vision to power the future of real estate. Thanks to all of you for your support and interest in AppFolio, Inc. Operator, this concludes today’s call. Operator: Thank you. Ladies and gentlemen, that concludes today’s conference call. You may now disconnect. Goodbye. Read Next Apr 24, 2026 • By Keith Noonan Why AppFolio Stock Skyrocketed Today Apr 28, 2026 • By Motley Fool Transcribing CoStar (CSGP) Q1 2026 Earnings Call Transcript Apr 28, 2026 • By Motley Fool Transcribing Enphase (ENPH) Q1 2026 Earnings Transcript Apr 28, 2026 • By Motley Fool Transcribing F5 (FFIV) Q2 2026 Earnings Call Transcript Apr 28, 2026 • By Motley Fool Transcribing T-Mobile (TMUS) Q1 2026 Earnings Transcript Apr 28, 2026 • By Motley Fool Transcribing Landstar (LSTR) Q1 2026 Earnings Transcript This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. 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Full Conference Call Transcript Lori Barker: Good afternoon, everyone. I'm Lori Barker, Investor Relations for AppFolio. And I'd like to thank you for joining us today as we report AppFolio's third quarter 2025 financial results. With me on the call today are Shane Trigg, AppFolio's President and CEO; and Tim Eaton, AppFolio's CFO. This call is simultaneously being webcast on the Investor Relations section of our website at appfolioinc.com. Before we get started, I would like to remind everyone of AppFolio's safe harbor policy. Comments made during this conference call and webcast contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. Any statement that refers to expectations, projections or other characterizations of future events, including financial projections, future market conditions, business performance or future product enhancements or development is a forward-looking statement. AppFolio's actual future results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in our SEC filings. AppFolio assumes no obligation to update any such forward-looking statements, except as required by law. For greater detail about risks and uncertainties, please see our SEC filings, including our Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on February 6, 2025. In addition, this call includes non-GAAP financial measures. Reconciliations of these non-GAAP financial measures with the most directly comparable GAAP measures are included in our third quarter earnings release posted on the Investor Relations section of our website. With that, I'll turn the call over to Shane Trigg. Shane, please go ahead. Shane Trigg: Thanks, Lori, and welcome to everyone joining us today. In the third quarter, revenue was $249 million, growing 21% year-over-year and non-GAAP operating margin was 23.5%. We continue to grow new business, and our unit count is now 9.1 million. These results reflect that we're winning in the market, and it's an incredibly exciting time at AppFolio. Earlier this month, we welcomed 2,200 AppFolio customers, prospects, partners and employees to future, our flagship industry event. There, we introduced our bold vision for the industry, real estate performance management and shared the product strategy for achieving it, demonstrating strong progress toward our mission to be the platform where real estate comes to do business. Property management is facing big challenges, battling external market pressures, a surge of new AI tools and an overreliance on disjointed task-based operations. This environment has created a performance gap where businesses are struggling to move beyond task efficiency. New research by the National Apartment Association in partnership with AppFolio shows that property management businesses devote 42% of their time to routine work and another 24% to reactive tasks, totaling 2/3 of their time spent simply keeping things running. By contrast, only 16% of the week is focused on strategic or performance-driven work like long-term planning and team development and 17% on stakeholder engagement. This efficiency focus, coupled with fragmented technology and the flurry of bolt-on AI tools is widening the performance gap. Real estate performance management is the answer, shifting from reactive to proactive to achieve real performance and creating a value ecosystem where everyone thrives. Property managers, residents, investors, owners and vendors. AppFolio's performance platform is designed to meet this moment. It's built on top of an AI-native architecture, meaning AI is at the core, not an add-on and is made up of 3 interconnected systems. First, a system of record, the source of truth for data, stakeholders and operations. Next, a system of action using agentic AI to automate and quickly complete repetitive tasks with context and optimal results. Finally, a system of growth, finding and unlocking new revenue streams by giving residents and investors access to services within one unified experience for the moments that matter. The sum of these systems uniquely enables us to drive productivity, amplify human strengths and transform performance for everyone in our ecosystem by positioning property managers as the competitive advantage in driving the core economics of the business, we create powerful network effects and redefine what winning looks like. AppFolio customer, Wolfgang Croskey, President of Bay Area-based Croskey Real Estate and Co-Founder of Crane, a popular community for property management professionals shared this, "The shift from property manager to performance manager is the future of this business. Owners are demanding strategic asset performance, which requires us to move beyond fragmented tools and adopt smarter, unified platforms." We believe continued strategic execution is the key to unlocking market leadership and sustained value creation. The first pillar of our strategy is differentiate to win. The future of innovation isn't just about creating better tools for work. It's about creating systems that do the work with you. Realm-X Performers is the latest innovation in our Realm-X embedded AI suite, our system of action. With Performers, we're moving beyond traditional automation to agentic, goal-driven AI, transforming the performance of our customers' business. Performers are designed to handle both routine and exception tasks, adapt to changing situations and optimize for business goals set by property managers. Initial offerings include the Realm-X Leasing Performer, Maintenance Performer and Resident Messenger Performer, which automate lead to lease, maintenance triage and resident communications, respectively. Customers fully adopting Realm-X are seeing tangible outcomes. Vacancies are being filled more than 5 days faster. Renewal rates are increasing by 20% and net operating income is almost 3% higher and an average of 10 hours per week are saved on completing tasks. Our most successful customers are moving fast in adopting early, an example being St. Augustine, Florida-based Dream, Live Prosper communities managing over 9,000 units. Says Rob Gayle, President, "AI does not work if you have it separated. It has to be in one workflow or in one software that flows all the way through, and that's what sets AppFolio apart. No one else can do that." AppFolio's system of action ensures that all of DLP's capabilities work together seamlessly, including Realm-X Messages, Assistant, Flows and the newest addition, Maintenance Performer. While Realm-X boosts productivity for their team, it's also crucial for ensuring residents remain a priority, helping DLP to track interactions, automate reminders and give residents the maintenance support they need. Another way we're differentiating to win is through our system of record. In today's data-driven landscape, a single trusted system of record powers faster, smarter and more confident decisions. We're expanding the options for customers to configure AppFolio to mirror their business structure through accounting configurations and more granular permissions, providing the clean, actionable data that fuels AI and automation. We're also enabling customers with complex mixed portfolios to manage all aspects of their business in AppFolio from automated student leasing workflows and roommate pairing to enhance compliance and affordable housing for HUD and LIHTC properties. And our Stack marketplace makes it easier than ever for partners to seamlessly plug into our platform. One of our newest Stack partners is Procore. A growing number of our customers run vertically integrated businesses that include real estate development and construction. And this partnership means they can manage their entire operation on AppFolio by automatically syncing project financials with Procore. Ultimately, the strength of our innovation helps our customers win, solidifying AppFolio's leadership in the market. Our second strategic pillar is deliver performance efficiently. Our system of growth is creating value for everyone in our customers' ecosystem. Through FolioSpace, AppFolio's next-generation resident experience, we continue to identify and capitalize on moments that matter for our customers. One of these high-leverage moments is resident onboarding. 3/4 of residents report challenges during move-in and a positive experience at this stage correlates to a 76% increase in overall satisfaction with their property manager. This is not just an operational necessity, it's a critical moment for trust building and value delivery. Our customers process millions of move-ins a year, making the magnitude of this opportunity immense. That's why we fully reimagine the resident onboarding experience, transforming one of the most stressful parts of the resident journey into a simplified guided workflow for crucial tasks like lease signing, payment, insurance and utility setup. This provides both residents and property managers a clear streamlined path, resulting in faster move-ins and a reduction in follow-up calls, giving teams time back to focus on building community. To take that experience even further, we've launched Resident Onboarding Lift, co-created by AppFolio and Second Nature. Onboarding Lift focuses on meeting residents' needs at the time they need it most by delivering highly desired value-added services such as credit building, pest control and discounted group rate Internet. This creates a win-win that elevates the resident experience while being a differentiator for property managers. According to Tommy Perfect, Founder and CEO of 900-unit San Diego-based uplift property management, "Onboarding Lift is an amazing addition to the leasing experience. We now have the ability to give residents choices in the leasing process to meet their needs while still achieving our necessary property management compliance. This takes customer experience to the next level." Our third strategic pillar is great people and culture, and I'm incredibly proud of our team and our strong performance year-to-date towards achieving our goals. Our team was recently recognized on 2 prestigious Fortune lists, the Future 50, highlighting our potential for long-term growth and innovation and Best Workplaces in Technology, which affirms our company value that great people make a great company. For us, the ultimate mark of success is helping our customers win. We were thrilled to be voted Vendor of the Year by the 350-plus franchisees of AppFolio Customer Real Property Management. Says Jeff Pepperdine, President, "We are proud to collaborate with a company whose value is recognized by the people using it every day. This demonstrates the impact AppFolio's innovative solutions have on our franchisees, continued business success and growth." The foundation of our great people and culture is built on serving our customers. This award reflects that our success is deeply aligned with our customer success. We are incredibly grateful to the RPM team for this recognition. I'm looking forward to sharing more information and seeing many of you in person or virtually during our November 18 investor meeting. With that, I'm delighted to welcome for the first time as CFO, Tim Eaton, who will discuss our financial performance during the third quarter. Timothy Eaton: Thank you, Shane. I'm deeply proud to be part of an organization that values continuous innovation, close customer partnerships and building trust every day. I'm honored to fully embrace the CFO role, and I'm excited to help lead our teams as we build the platform where real estate comes to do business. I'm pleased to report in the third quarter, we delivered revenue of $249 million, growing 21% year-over-year. Core solutions revenue was $54 million in the third quarter, a 17% year-over-year increase, driven by winning new customers, growth in total units under management and more customers choosing our Plus and Max premium tiers. At the end of the quarter, we managed approximately 9.1 million units from 21,759 customers compared to 8.5 million units from 20,403 customers a year ago. This represents a 7% increase in ending active units -- excuse me, in ending units and a 7% increase in customers. Our growth in units under management illustrates our continued success in the market. Third quarter revenue from value-added services grew 22% year-over-year to $192 million. This increase reflects greater use and adoption of our risk mitigation services, new screening offerings and online payments and usage of credit and debit cards for rent payments as well as growth in units under management. Additionally, LiveEasy and our Second Nature partnership are beginning to contribute to value-added services. In the third quarter, non-GAAP operating margin was 23.5% compared to 28.7% last year. In Q3, we accrued an additional year-to-date expense of approximately $13 million or 5.5% of Q3 revenue as a result of the performance levels we now expect to attain under our annual corporate bonus plan. This Q3 incremental expense was driven by strong new business unit acquisition and revenue growth and the accrual covers the last 3 quarters. Excluding the impact of this overattainment, operating margin was approximately 29% of revenue. Cost of revenue, exclusive of depreciation and amortization in the third quarter was 36% of revenue compared to 34% last year. This increase was the result of increasing adoption of credit cards, additional data center spend to support our customers' growing usage of our AI product capabilities and the additional expense from expected bonus plan overattainment. As a percent of revenue, in the third quarter, combined sales and marketing, R&D and G&A expense was 39% compared to 35% last year. We exited the quarter with 1,703 employees, which is an increase of 10% from the third quarter of 2024. This reflects growth in most functional areas as we continue to invest in innovation and sales capacity and the addition of the LiveEasy business in late 2024. Now turning to guidance. Our 2025 guidance for annual revenue is increasing to $945 million to $950 million for a full year midpoint growth rate of 19%, fueled by Plus and Max tier adoption, growth in customers and new business units and increasing adoption of our products and services. We expect to deliver non-GAAP operating margin between 23.5% and 24.5%. Diluted weighted average shares outstanding, incorporating the shares we repurchased earlier in the year is now anticipated to be approximately $36 million for the full year compared to $37 million in 2024. Cost of revenue, exclusive of depreciation and amortization is expected to be higher as a percentage of revenue compared to the prior years as the benefit from operational efficiencies will be offset by product mix, the additional expense from expected bonus plan overattainment and increasing data center spend from usage of our AI product capabilities. Operating margin as a percent of revenue is projected to be lower than last year with revenue mix impacting cost of revenues, growth in sales capacity, increased spending to support usage of our new resident and AI capabilities and additional expense from expected bonus plan overattainment. It is too early to guide for 2026, but we continue to prioritize delivering efficiencies as we scale. In summary, I'm proud of our strong third quarter performance, and I look forward to seeing some of you virtually or in Santa Barbara at our upcoming November 18 investor meeting, where we will dive deeper into the foundations of our growth and how our recent innovations in AI and the resident experience are driving our momentum. Thanks to all of you for your support and interest in AppFolio. Operator, this concludes today's call. Read Next Apr 24, 2026 • By Keith Noonan Why AppFolio Stock Skyrocketed Today Apr 23, 2026 • By Motley Fool Transcribing AppFolio (APPF) Q1 2026 Earnings Transcript Apr 28, 2026 • By Motley Fool Transcribing CoStar (CSGP) Q1 2026 Earnings Call Transcript Apr 28, 2026 • By Motley Fool Transcribing Enphase (ENPH) Q1 2026 Earnings Transcript Apr 28, 2026 • By Motley Fool Transcribing F5 (FFIV) Q2 2026 Earnings Call Transcript Apr 28, 2026 • By Motley Fool Transcribing T-Mobile (TMUS) Q1 2026 Earnings Transcript This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends AppFolio. The Motley Fool has a disclosure policy . Stocks Mentioned AppFolio NASDAQ : APPF $168.80 ( -0.56% ) -$0.95 *Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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