AppFolio(US:APPF)2025-10-30 20:05Financial Performance - Revenue grew 21% year-over-year to $249 million[5] - Net income for Q3 2025 was $33,646, compared to $33,006 in Q3 2024, reflecting a year-over-year increase of 1.9%[17] - Non-GAAP net income for the nine months ended September 30, 2025, was $141,686, up from $126,922 in 2024, reflecting an increase of 11.6%[20] - Basic net income per common share was $0.94, compared to $0.91 in Q3 2024[15] - Non-GAAP net income per share, basic, for Q3 2025 was $1.33, compared to $1.30 in Q3 2024, showing a slight increase of 2.3%[20] Operating Income and Margins - GAAP operating income was $35 million, or 14.1% of revenue, compared to $43 million, or 20.7% of revenue in Q3 2024[5] - Non-GAAP operating income remained at $59 million, but as a percentage of revenue, it decreased to 23.5% from 28.7% in Q3 2024[5] - The company reported a GAAP operating margin of 14.1% for Q3 2025, down from 20.7% in Q3 2024[20] - Full year non-GAAP operating margin is expected to be between 23.5% and 24.5%[5] Cash Flow and Assets - Net cash provided by operating activities was $86 million, or 34.5% of revenue, compared to $58 million, or 28.1% of revenue in Q3 2024[5] - Cash provided by operating activities for the nine months ended September 30, 2025, was $177,115, compared to $151,593 for the same period in 2024, representing a 16.8% increase[17] - The company’s cash, cash equivalents, and restricted cash at the end of Q3 2025 stood at $76,343, compared to $62,667 at the end of Q3 2024[17] - Total assets increased to $640.5 million from $626.7 million as of December 31, 2024[13] Expenses - Stock-based compensation expense for the quarter was $20.8 million, up from $16.0 million in Q3 2024[15] - Stock-based compensation expense for Q3 2025 was $20,793, compared to $16,035 in Q3 2024, marking an increase of 29.1%[20] - The company’s total operating expenses for Q3 2025 were $91,476, which is a 27.7% increase from $71,631 in Q3 2024[19] - GAAP cost of revenue for Q3 2025 was $91,476, up 27.7% from $71,631 in Q3 2024, with a GAAP cost of revenue as a percentage of revenue increasing from 35% to 37%[19] Non-GAAP Financial Measures - The company utilizes non-GAAP financial measures to assess and compare operating results across reporting periods, which include income from operations, operating margin, and net income per share[22] - Non-GAAP operating margin is calculated as non-GAAP operating income from operations as a percentage of revenue, providing useful supplemental information to investors[22] - Non-GAAP financial measures may not be directly comparable to those of other companies in the industry due to different calculation methods[23] - The company encourages investors to review reconciliations of historical non-GAAP financial measures to their most directly comparable GAAP measures[23] - Limitations exist in using non-GAAP financial measures as they can exclude expenses that may materially impact reported financial results[23] - Non-GAAP financial measures should not be considered in isolation from GAAP financial information[23] Tax Rate Projections - The company projects a long-term non-GAAP tax rate of 21% for 2025 and 25% for 2024, considering factors such as operating structure and existing tax positions[24] - The company periodically re-evaluates its projected tax rate based on significant events and relevant tax law changes[24] - Amortization of purchased intangible assets is viewed as arising from pre-acquisition activities and is not typically affected by operations during any particular period[24] - Stock-based compensation expenses are aimed at aligning employee interests with stockholders and vary for reasons generally unrelated to operational performance[24]