Customer Base and Market Penetration - As of December 31, 2024, AppFolio had 20,784 property management customers[28]. - As of December 31, 2024, the company managed 8.7 million property management units, an increase from 8.2 million units in 2023, indicating growth in market penetration[152]. - The company had 20,784 property management customers as of December 31, 2024, up from 19,737 in 2023, reflecting an increase in customer base[156]. Product and Service Offerings - AppFolio's platform includes AI-powered tools through AppFolio Realm, enhancing leasing, maintenance, and accounting tasks[16]. - The company offers three subscription plans: Core, Plus, and Max, catering to different sizes of property management businesses[17][19]. - AppFolio's Value Added Services include electronic payment services, tenant screening, and risk mitigation, aimed at increasing efficiency for residential properties[20][21]. - The company’s revenue model includes subscription fees for core solutions and usage-based fees for Value Added Services, with a significant majority of revenue coming from electronic payment services, tenant screening, and risk mitigation services[155]. Financial Performance - Total revenue for the year ended December 31, 2024, was $794,202, representing a 28% increase from $620,445 in 2023[163]. - Core solutions revenue increased by 15% to $180,605, while Value Added Services revenue grew by 33% to $605,011[163]. - Cost of revenue (exclusive of depreciation and amortization) increased by 18% to $282,067, representing 35.5% of total revenue[166]. - Sales and marketing expenses rose by 3% to $110,597, accounting for 13.9% of total revenue[168]. - Research and product development expenses increased by 6% to $160,375, representing 20.2% of total revenue[170]. - General and administrative expenses decreased by 8% to $85,974, accounting for 10.8% of total revenue[172]. - Interest income increased by 99% to $13,981, primarily due to higher interest rates[177]. - The company recorded an income tax benefit of $53.7 million due to the release of a valuation allowance against deferred tax assets[179]. - As of December 31, 2024, cash and cash equivalents totaled $278.2 million, sufficient to meet working capital needs for at least the next twelve months[180]. Employee Relations and Development - As of December 31, 2024, the company had 1,634 employees, emphasizing strong relationships with both employees and consultants[43]. - The company invests significant resources in employee development, offering tailored learning and development programs aligned with business needs[44]. - The company provides eight hours of paid volunteer time off annually to encourage employee volunteerism through its "Give Back Committee"[45]. - The compensation packages include base salary, commission, annual performance-based bonuses, and stock-based compensation, aimed at retaining and motivating employees[49]. - The company maintains a commitment to health, safety, and wellness, regularly soliciting feedback to assess employee well-being[50]. Regulatory and Compliance Risks - The company’s business operations are subject to various federal, state, and local regulations, particularly concerning tenant screening and risk mitigation services[41]. - The tenant screening services business is subject to complex laws, including the Fair Credit Reporting Act, which may lead to regulatory inquiries and enforcement actions[65]. - In January 2021, the company entered into a settlement agreement with the FTC, paying a fine and agreeing to ongoing compliance obligations[66]. - The company faces potential liability from enforcement actions or lawsuits, which could materially impact its business and reputation[67]. - Compliance with evolving privacy laws may increase operational costs and complexity, potentially leading to legal claims and regulatory actions[82][84]. - The company faces significant risks from government regulations and privacy concerns, which may increase costs and impede growth plans[85]. Technology and Innovation - AppFolio emphasizes continuous innovation and frequent platform updates to meet market trends and customer needs[36]. - Rapid technological developments and changing customer needs require the company to innovate continuously; failure to do so may harm demand for its products[95]. - The incorporation of AI technologies carries risks of reputational harm, increased regulatory oversight, and potential legal liabilities, which could adversely affect business operations[73]. - The inability to keep pace with technological advancements may render solutions less competitive, adversely affecting operating results[74]. Market and Competitive Landscape - The growth strategy focuses on delivering value to all segments in the property management ecosystem, enhancing customer retention and attracting new clients[22]. - The company aims to attract larger property management customers with complex portfolios, providing a single platform for management[23]. - Effective brand management is essential for attracting new customers, and failure to enhance brand recognition could lead to competitive disadvantages[93]. - The company expects long-term revenue growth rate to decline due to increasing competition and market saturation[106]. - Market opportunity estimates are subject to significant uncertainty, which could affect investment decisions and long-term growth prospects[91]. Risks and Challenges - Errors, defects, or disruptions in products could lead to significant expenditures and reputational harm, potentially resulting in substantial costs for correction[68]. - The inability to deliver effective customer service may adversely affect customer relationships and operating results, with increased demand potentially raising costs without corresponding revenue[69]. - A decline in demand for insurance-related risk mitigation products could adversely affect revenues if property management customers stop requiring renters to purchase rental insurance policies[70]. - Failure to maintain relationships with third-party service providers could impair the ability to compete and grow customer base and revenue, negatively impacting operating results[71][72]. - Disruptions in third-party services that host the platform could negatively impact operations and business performance[76]. - Cybersecurity vulnerabilities could lead to unauthorized access to sensitive data, harming customer relationships and exposing the company to litigation and penalties[77][78]. - The company may face significant expenses and damages from third-party claims of intellectual property infringement[104]. - Risks associated with open source and third-party software could introduce security vulnerabilities and adversely impact business operations[105]. Corporate Governance - The dual class structure of common stock concentrates voting control, limiting influence of Class A shareholders on corporate matters[114]. - The Risk and Compliance Oversight Committee of the Board of Directors oversees the company’s cybersecurity program and risk exposure, ensuring regular updates to the full Board[129]. - The company maintained effective internal control over financial reporting as of December 31, 2024[211]. Investment and Capital Management - The company has authorized a share repurchase program of up to $100 million, with $4.2 million repurchased to date[184]. - Cash used in investing activities increased due to higher purchases of available-for-sale investment securities and cash paid in business acquisitions, net of cash acquired[189]. - Cash used in financing activities increased primarily due to an increase in net share settlements for employee tax withholdings associated with the vesting of equity awards[190]. - The company recognized deferred tax assets and released its valuation allowance at December 31, 2024, indicating it is more likely than not that the deferred tax assets will be realized[196]. - The allocation of purchase price in business combinations requires significant estimates in determining the fair value of acquired assets and assumed liabilities[201].

Revenue and Growth - Revenue grew 19% year-over-year to $204 million in Q4 2024[5] - Total revenue for the twelve months ended December 31, 2024, was $282.067 million, up from $238.076 million in 2023, indicating a year-over-year growth of 18.5%[20] - Full year revenue is expected to be in the range of $920 million to $940 million for fiscal year 2025[9] Income and Profitability - Net income for Q4 2024 was $102.7 million, compared to $30.3 million in Q4 2023[16] - The company reported a diluted net income per share of $2.79 for Q4 2024, compared to $0.83 for Q4 2023[16] - Net income for Q4 2024 was $102.734 million, a significant increase from $30.268 million in Q4 2023, representing a growth of 239%[18] - GAAP operating income was $23 million, or 11.3% of revenue, compared to $28 million, or 16.4% of revenue in Q4 2023[5] - Non-GAAP operating income was $41 million, or 20.2% of revenue, compared to $42 million, or 24.3% of revenue in Q4 2023[5] Cash Flow and Financial Position - Net cash provided by operating activities was $188 million, or 23.7% of revenue, compared to $60 million, or 9.7% of revenue in fiscal year 2023[5] - Non-GAAP free cash flow was $182 million, or 22.9% of revenue, compared to $74 million, or 11.9% of revenue in fiscal year 2023[5] - Operating cash flow for Q4 2024 was $36.566 million, compared to $31.183 million in Q4 2023, reflecting an increase of 17%[18] - Free cash flow for Q4 2024 was $35,313 million, slightly up from $34,267 million in Q4 2023, with a free cash flow margin of 17.3% compared to 19.9%[22] Expenses and Costs - GAAP cost of revenue for Q4 2024 was $76.189 million, which is 37% of revenue, compared to 36% in Q4 2023[20] - Non-GAAP cost of revenue for Q4 2024 was $74.928 million, also 37% of revenue, compared to 35% in Q4 2023[20] - Research and product development expenses for Q4 2024 were $42.296 million, representing 21% of revenue, compared to 20% in Q4 2023[20] - Stock-based compensation expense for Q4 2024 was $16.374 million, up from $12.980 million in Q4 2023[18] - The amortization of purchased intangibles for Q4 2024 was $1,744 million, compared to $619 million in Q4 2023, reflecting an increase in intangible asset amortization[21] Shareholder Information - The company reported a weighted-average diluted share count of 36,783 million for Q4 2024, compared to 36,596 million in Q4 2023[21] Other Financial Metrics - Full year non-GAAP operating margin is expected to be in the range of 24.5% to 26.5%[9] - The GAAP operating margin for Q4 2024 was 11.3%, down from 16.4% in Q4 2023, while Non-GAAP operating margin decreased to 20.2% from 24.3%[21] - The income tax effect of adjustments for Q4 2024 was $(86,898) million, compared to $(11,556) million in Q4 2023[21] Business Activities - The company completed a business acquisition with a cash payment of $77.421 million during the year[18] - The company incurred CEO separation costs of $11,520 million and workforce reduction costs of $10,278 million during the twelve months ended December 31, 2023[21]

Table of Contents Title of each class Trading Symbol Name of each exchange on which registered Class A common stock, $0.0001 par value APPF NASDAQ Global Market Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐Smaller reporting company☐ Emerging growth company ☐ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2 ...

Financial Data and Key Metrics - Revenue increased 24% year-over-year to $206 million in Q3 2024 [5] - Non-GAAP operating margin expanded to 29% in Q3 2024 [5] - Non-GAAP free cash flow margin grew to 27% in Q3 2024 [5] - Core solutions revenue was $46 million in Q3, a 15.8% year-over-year increase [14] - Value-added services revenue grew 28% year-over-year to $158 million in Q3 [15] - Managed approximately 8.5 million units from 20,403 customers, a 5% increase in customers and a 9% increase in ending units compared to the previous year [15] - Non-GAAP operating margin grew to 28.7% compared to 16.1% last year [18] - Free cash flow margin was 27.1% compared to 20.3% in Q3 2023 [18] - Strong cash and investment position of $331 million at the end of the quarter [18] Business Line Data and Key Metrics - Core solutions revenue driven by new customers and additional total units on platform [14] - Growth in adoption of AppFolio Property Manager Plus and Max [14] - Value-added services growth primarily from higher usage of the online payments platform and the decision to stop waiving eCheck fees in August 2023 [15] - Risk mitigation and screening services grew in line with seasonal expectations [15] Market Data and Key Metrics - The company continues to emphasize residential portfolios, with a 9% increase in ending units [15] - Demand for screening services and risk mitigation products is seasonally higher in Q2 and Q3 [17] Company Strategy and Industry Competition - Focus on innovation, including the launch of FolioSpace, a next-generation resident experience [6] - Acquisition of LiveEasy to accelerate potential in the resident industry segment [7] - Embracing generative AI technology with the release of Realm-X Assistant and messages [8] - Unlocking upmarket customers by extending the value of the platform to scale with complex operations [10] - Expanding coverage of property types, including affordable housing [11] - Launching new anti-fraud solutions like document verification and ID verification [12] - Onboarding Marcy Campbell as the new Chief Revenue Officer to optimize the customer journey and strengthen go-to-market capabilities [12] Management Commentary on Operating Environment and Future Outlook - The company is raising its projected full-year revenue guidance to $786 million to $790 million, implying an annual growth rate of 27% [18] - Updated guidance reflects expectations for continued customer upgrades to premium product tiers and adoption of value-added services [18] - Non-GAAP operating margin guidance raised to 24.5% to 25.5% for the full year [19] - Free cash flow margin guidance remains 22% to 24% [19] - Expects a decline in operating margin in Q4 due to seasonal patterns and increased investments [20] Other Important Information - Fay Sien Goon, CFO, is leaving the company, and Tim Eaton will assume the role of interim CFO [13] - The company is conducting an extensive and inclusive search for a new CFO [13] Q&A Session Summary - No specific Q&A session details were provided in the content

[Agreement and Plan of Merger Overview](index=1&type=section&id=Agreement%20and%20Plan%20of%20Merger) This section outlines the acquisition of Move EZ, Inc. by AppFolio, Inc. through a reverse triangular merger structure [Parties to the Agreement](index=1&type=section&id=Parties%20to%20the%20Agreement) This section identifies AppFolio, Inc. as the Purchaser, Move EZ, Inc. as the Company, and WT Representative LLC as the Equityholder Representative in the merger Parties Involved in the Merger | Role | Entity | Description | | :--- | :--- | :--- | | **Purchaser** | AppFolio, Inc. | A Delaware corporation acquiring the Company | | **Merger Sub** | Lilac Merger Sub, Inc. | A Delaware corporation and wholly-owned subsidiary of the Purchaser, which will merge into the Company | | **Company** | Move EZ, Inc. | A Delaware corporation being acquired | | **Equityholder Representative** | WT Representative LLC | Appointed to represent the interests of the Company's equityholders | - The structure of the transaction is a reverse triangular merger, where Merger Sub merges with and into the Company. The Company will survive the merger and become a wholly-owned subsidiary of the Purchaser[8](index=8&type=chunk)[76](index=76&type=chunk) [Article I: Definitions](index=6&type=section&id=ARTICLE%20I%20DEFINITIONS) This article defines key capitalized terms, including critical financial figures and legal concepts central to the merger agreement [Section 1.01: Defined Terms](index=6&type=section&id=Section%201.01%20Defined%20Terms) This section provides definitions for key capitalized terms used throughout the merger agreement, establishing the specific meanings for financial, legal, and operational concepts central to the transaction Key Financial Definitions | Term | Definition/Value | Source Chunk(s) | | :--- | :--- | :--- | | **Purchase Price** | $80,000,000 | chunk_num: [58] | | **Holdback Amount** | $800,000 | chunk_num: [32] | | **Representative Expense Amount** | $500,000 | chunk_num: [59] | | **Working Capital Target** | -$324,516.30 (a negative number) | chunk_num: [73] | - The agreement defines "Fraud" narrowly as actual and intentional common law fraud under Delaware law, explicitly excluding constructive and equitable fraud. This limits the scope of potential post-closing claims outside the indemnification framework[31](index=31&type=chunk) - The definition of "Indebtedness" is comprehensive, including not only borrowed money but also deferred purchase prices, capital leases, unpaid pre-closing taxes, deferred compensation, and specific liabilities like **$100,000** for correcting accounting methods related to Section 174 of the Code[34](index=34&type=chunk)[35](index=35&type=chunk) [Article II: The Merger](index=24&type=section&id=ARTICLE%20II%20THE%20MERGER) This article details the mechanics of the merger, including stock conversion, treatment of equity rights, and payment procedures [Section 2.01: The Merger](index=24&type=section&id=Section%202.01%20The%20Merger) This section outlines the fundamental mechanics of the merger. At the Effective Time, Merger Sub will merge into the Company, ceasing its separate existence. The Company will continue as the surviving corporation and become a wholly-owned subsidiary of the Purchaser, governed by the Delaware General Corporation Law (DGCL) - The merger will become effective upon the filing of the Certificate of Merger with the Delaware Secretary of State[77](index=77&type=chunk) - Post-merger, all properties, rights, debts, and liabilities of both the Company and Merger Sub will be vested in the Surviving Corporation[77](index=77&type=chunk)[78](index=78&type=chunk) [Section 2.02: Treatment of Company Stock](index=25&type=section&id=Section%202.02%20Treatment%20of%20Company%20Stock) This section details the conversion of the Company's stock at the Effective Time. Each share of Preferred and Common Stock will be cancelled and converted into the right to receive a cash payment, specifically the "Preferred Stock Per Share Amount" and "Common Stock Per Share Amount," respectively. Shares held as treasury stock or by the Purchaser are excluded and cancelled without consideration - All outstanding Preferred Stock and Common Stock (excluding treasury and Purchaser-held shares) will be automatically cancelled and converted into a right to receive cash[78](index=78&type=chunk)[79](index=79&type=chunk) - Each share of Merger Sub's capital stock will be converted into one share of the Surviving Corporation's common stock[80](index=80&type=chunk) [Section 2.03: Treatment of Options, Warrants, Convertible Notes, and Equity Rights](index=25&type=section&id=Section%202.03%20Treatment%20of%20Options%2C%20Warrants%2C%20Convertible%20Notes%20and%20Equity%20Rights) This section specifies the handling of all non-stock equity interests. In-the-money options and warrants will be cancelled in exchange for a cash payment equal to the spread between the Common Stock Per Share Amount and their exercise price. Out-of-the-money instruments are cancelled for no consideration. Convertible Notes and other Equity Rights are also cancelled in exchange for cash payments calculated based on specific conversion formulas - In-the-Money Options and Warrants will be cashed out based on their intrinsic value, while those that are not in-the-money will be cancelled without payment[81](index=81&type=chunk)[83](index=83&type=chunk) - Convertible Notes will be cashed out for an amount equivalent to what the holder would have received if they had converted into Series A Preferred Stock immediately prior to the merger[86](index=86&type=chunk) - Receipt of payment for these instruments is conditional upon the holder executing and delivering a corresponding cancellation agreement (e.g., Option Cancellation Agreement, Warrant Cancellation Agreement)[82](index=82&type=chunk)[84](index=84&type=chunk)[88](index=88&type=chunk) [Section 2.04: Paying Agent and Exchange Procedures](index=28&type=section&id=Section%202.04%20Paying%20Agent%3B%20Letter%20of%20Transmittal%3B%20Exchange%20of%20Certificates%3B%20Lost%20Certificates) This section establishes the process for stockholders to receive their merger consideration. Wilmington Trust, National Association is appointed as the Paying Agent. Stockholders must surrender their stock certificates (or book-entry shares) along with a completed Letter of Transmittal to the Paying Agent to receive their cash payment. Procedures for lost, stolen, or destroyed certificates are also outlined - Wilmington Trust, National Association will act as the Paying Agent to manage the exchange of stock for cash[48](index=48&type=chunk)[94](index=94&type=chunk) - Stockholders must submit a duly executed Letter of Transmittal to receive their portion of the merger consideration[94](index=94&type=chunk)[95](index=95&type=chunk) - Any funds remaining with the Paying Agent **one year** after the closing date will be returned to the Purchaser, after which stockholders must look to the Surviving Corporation for payment[98](index=98&type=chunk) [Sections 2.05-2.11: Additional Merger Effects and Procedures](index=29&type=section&id=Section%202.05-2.11%20Additional%20Merger%20Effects%20and%20Procedures) These sections cover administrative and legal consequences of the merger. This includes the post-merger corporate governance structure, where the certificate of incorporation and bylaws of Merger Sub will become those of the Surviving Corporation, and Merger Sub's directors and officers will assume their roles in the new entity. It also addresses withholding rights, appraisal rights for dissenting stockholders, and the reliance of all parties on the accuracy of the Closing Certificate for payment calculations - The certificate of incorporation and bylaws of the Surviving Corporation will be those of Merger Sub, with the name changed to "Move EZ, Inc."[100](index=100&type=chunk)[101](index=101&type=chunk) - Stockholders who dissent from the merger and perfect their appraisal rights under DGCL Section 262 will be entitled to the fair value of their shares as determined by a court, instead of the merger consideration[104](index=104&type=chunk) - The Purchaser, Merger Sub, and Paying Agent are entitled to rely on the Closing Certificate and Post-Closing Payment Spreadsheets for all payment calculations and allocations, absolving them of liability for such reliance[105](index=105&type=chunk) [Article III: The Closing Transactions](index=30&type=section&id=ARTICLE%20III%20THE%20CLOSING%20TRANSACTIONS) This article describes the closing process, initial payments, required deliveries, and the post-closing adjustment mechanism [Sections 3.01-3.03: The Closing and Initial Payments](index=30&type=section&id=Section%203.01-3.03%20The%20Closing%20and%20Initial%20Payments) This part details the mechanics of the closing, including timing and the calculation of the initial cash payment. The Company must deliver a Closing Certificate with good faith estimates of key financial metrics. The Purchase Price is adjusted by these estimates to determine the "Estimated Closing Consideration." At closing, the Purchaser will retain the Holdback Amount, pay the Representative Expense Amount, and pay off estimated transaction expenses and indebtedness, with the remainder distributed to equityholders - The closing will occur no later than **three business days** after all conditions are satisfied or waived[106](index=106&type=chunk) - A Closing Certificate, delivered by the Company one business day before closing, provides the basis for the initial payments by estimating Closing Working Capital, Indebtedness, Cash, and Transaction Expenses[108](index=108&type=chunk) Calculation of Estimated Closing Consideration | Component | Adjustment to Purchase Price | | :--- | :--- | | **Purchase Price** | $80,000,000 | | Estimated Indebtedness | Decrease | | Estimated Transaction Expenses | Decrease | | Working Capital Shortfall | Decrease (if Estimated WC < WC Target) | | Closing Cash | Increase | | Working Capital Surplus | Increase (if Estimated WC > WC Target) | [Sections 3.04-3.05: Deliveries at Closing](index=32&type=section&id=Section%203.04-3.05%20Deliveries%20at%20Closing) These sections list the specific documents and evidence that both the Company and the Purchaser must deliver to each other at the closing to finalize the transaction. The Company's deliveries are extensive, including required third-party consents, resignations of directors and officers, corporate records, tax certificates (FIRPTA), and fully executed cancellation agreements from holders of options, warrants, and other equity rights - The Company must deliver key documents including third-party consents, officer and director resignations, payoff letters for indebtedness, and a FIRPTA certificate stating the Company is not a U.S. real property holding corporation[110](index=110&type=chunk)[111](index=111&type=chunk) - A critical delivery from the Company is evidence of the termination of its 401(k) plan, effective no later than the day before the Closing Date[112](index=112&type=chunk) [Section 3.06: Post-Closing Adjustment](index=34&type=section&id=Section%203.06%20Post-Closing%20Adjustment) This section outlines the process for truing-up the initial payment made at closing. Within 60 days, the Purchaser will prepare a final Closing Statement with the actual values for working capital, indebtedness, cash, and expenses. The Equityholder Representative has 45 days to dispute it. Unresolved disputes are settled by an independent accounting firm (Moss Adams). The final "Actual Closing Consideration" is then compared to the estimated amount, and a payment is made from (or to) the Equityholders, with the Holdback Amount serving as the primary source for payments owed by the Equityholders - A **60-day** post-closing period allows the Purchaser to calculate the final financial figures as of the closing date[115](index=115&type=chunk) - If the Actual Closing Consideration is less than the Estimated Closing Consideration, the Purchaser recovers the difference first from the **$800,000** Holdback Amount[120](index=120&type=chunk) - If the Actual Closing Consideration is greater, the Purchaser pays the difference to the Equityholders and releases the full Holdback Amount[121](index=121&type=chunk) [Article IV: Representations and Warranties of the Company](index=36&type=section&id=ARTICLE%20IV%20REPRESENTATIONS%20AND%20WARRANTIES%20REGARDING%20THE%20GROUP%20COMPANIES) This article contains the Company's comprehensive representations and warranties regarding its corporate, financial, operational, and compliance status [Sections 4.01-4.08: Corporate and Financial Matters](index=36&type=section&id=Section%204.01-4.08%20Corporate%20and%20Financial%20Matters) The Company provides foundational representations regarding its legal and financial status. This includes its due organization and good standing (4.01), proper authorization for the transaction (4.02), the transaction's non-contravention of existing laws or contracts (4.03), absence of litigation (4.04), and a detailed breakdown of its capitalization (4.05). It also confirms it has no subsidiaries other than the Indian Subsidiary (4.06), has no undisclosed brokers' fees (4.07), and that its provided Financial Statements are accurate and prepared in accordance with GAAP (4.08) - The Company represents that its capitalization table (Schedule 4.05) is complete and accurate, covering all stock, options, warrants, and convertible notes[128](index=128&type=chunk)[129](index=129&type=chunk) - The Financial Statements provided are warranted to be prepared from the company's books and records and to fairly present its financial condition in accordance with GAAP[135](index=135&type=chunk)[136](index=136&type=chunk) [Sections 4.09-4.17: Operations, Assets, and Contracts](index=40&type=section&id=Section%204.09-4.17%20Operations%2C%20Assets%2C%20and%20Contracts) This set of representations covers the Company's operational integrity and assets. The Company confirms it has no undisclosed liabilities (4.09) and has operated in the ordinary course of business without material adverse changes since December 31, 2023 (4.10). It asserts compliance with all laws (4.11), good title to its assets (4.12), and provides details on its leased real property (4.13). Extensive representations are made regarding tax matters (4.14), intellectual property (4.15), material contracts (4.16), and insurance coverage (4.17) - Section 4.10 provides a long list of actions the Company has not taken since Dec 31, 2023, ensuring no significant changes to the business occurred during the deal process[137](index=137&type=chunk)[138](index=138&type=chunk)[140](index=140&type=chunk) - The Company makes detailed tax representations (Section 4.14), including timely filing of returns, proper withholding, no undisclosed tax liabilities, and compliance with accounting methods[151](index=151&type=chunk)[152](index=152&type=chunk)[156](index=156&type=chunk) - The Company represents that it owns or has valid rights to all intellectual property necessary for its business and that its operations do not infringe on the IP of others[167](index=167&type=chunk)[169](index=169&type=chunk)[171](index=171&type=chunk) [Sections 4.18-4.31: Employee, Customer, and Compliance Matters](index=51&type=section&id=Section%204.18-4.31%20Employee%2C%20Customer%2C%20and%20Compliance%20Matters) These sections cover representations related to human resources, business relationships, and specialized compliance areas. The Company provides details on its employees and contractors (4.18) and employee benefit plans (4.19), confirming compliance with ERISA and other labor laws. It also lists its material customers and suppliers (4.21), discloses any related-party transactions (4.22), and makes representations about data privacy and security (4.27), international trade (4.29), and anti-corruption laws (4.30). The article concludes with a disclaimer that no other representations are being made outside of the agreement (4.31) - The Company represents that it has complied with all labor and employment laws and that all employee benefit plans are in compliance with ERISA and the Code[183](index=183&type=chunk)[186](index=186&type=chunk) - Representations on data privacy (Section 4.27) confirm compliance with all Privacy Laws and the implementation of a reasonable information security program[201](index=201&type=chunk)[202](index=202&type=chunk) - The Company confirms it has not received any relief under the CARES Act or Paycheck Protection Program[206](index=206&type=chunk)[207](index=207&type=chunk) [Article V: Representations and Warranties of Purchaser and Merger Sub](index=58&type=section&id=ARTICLE%20V%20REPRESENTATIONS%20AND%20WARRANTIES%20OF%20PURCHASER%20AND%20MERGER%20SUB) This article outlines the Purchaser's and Merger Sub's representations and warranties concerning their legal capacity and authority to complete the transaction [Sections 5.01-5.06: Purchaser's Representations](index=58&type=section&id=Section%205.01-5.06%20Purchaser's%20Representations) This article contains the representations and warranties made by the Purchaser and Merger Sub. These are generally more limited than the Company's and focus on their legal capacity to enter into and consummate the transaction. They represent that they are duly organized corporations (5.01), have the authority to execute the agreement (5.02), the transaction does not conflict with their charter documents or laws (5.03), there is no litigation that would prevent the closing (5.04), and they have no undisclosed brokers' fees (5.05) - Purchaser and Merger Sub represent they are validly existing corporations under Delaware law with full power and authority to execute the merger agreement[210](index=210&type=chunk)[211](index=211&type=chunk) - The representations confirm that consummating the merger will not violate Purchaser's or Merger Sub's organizational documents or any applicable laws in a way that would materially affect their ability to close[213](index=213&type=chunk) [Article VI: Covenants](index=59&type=section&id=ARTICLE%20VI%20COVENANTS) This article details the pre-closing and post-closing obligations of all parties, covering business conduct, tax matters, and indemnification [Sections 6.01-6.06: Pre-Closing Covenants](index=59&type=section&id=Section%206.01-6.06%20Pre-Closing%20Covenants) This section outlines the obligations of the parties during the interim period between signing and closing. The Company must conduct its business in the ordinary course (6.01), provide Purchaser with access to information (6.02), and not solicit other acquisition proposals (6.03). The Company is also required to obtain the necessary stockholder written consent within 24 hours (6.04). The parties agree on obtaining D&O runoff insurance policies (6.05) and restrict public announcements about the deal without mutual consent (6.06) - The Company is bound by a "no-shop" clause, preventing it from soliciting or negotiating alternative acquisition proposals[219](index=219&type=chunk) - The Company must obtain written consent from stockholders holding at least **95%** of the voting power of Preferred Stock and **95%** of the combined voting power within **24 hours** of signing[222](index=222&type=chunk) - The cost of a **six-year** D&O "runoff" insurance policy will be split **50/50** between the Company (as a Transaction Expense) and the Purchaser[223](index=223&type=chunk) [Sections 6.07-6.14: Tax, Employee, and Post-Closing Covenants](index=61&type=section&id=Section%206.07-6.14%20Tax%2C%20Employee%2C%20and%20Post-Closing%20Covenants) This part details various tax, employee, and post-closing obligations. Transfer taxes are to be split equally between Equityholders and Purchaser (6.07). Detailed procedures are set for preparing and filing pre-closing and straddle-period tax returns, and for managing tax contests (6.08). The agreement notes that Purchaser has obtained a Representations & Warranties (R&W) insurance policy (6.09). The Company must terminate its 401(k) plan before closing (6.10) and seek stockholder approval to avoid penalties on "parachute payments" under Section 280G (6.11). The agreement also provides for six years of D&O indemnification (6.12) - Transfer taxes are shared equally, while any indirect capital gains taxes related to the Indian Subsidiary are borne solely by the Equityholders[225](index=225&type=chunk) - The agreement establishes a clear process for handling tax matters, with the Equityholder Representative preparing pre-closing income tax returns and Purchaser handling others, subject to mutual review[229](index=229&type=chunk)[230](index=230&type=chunk) - The Company must solicit a stockholder vote to approve any potential "parachute payments" under IRC Section 280G to avoid adverse tax consequences for both the executives and the company[240](index=240&type=chunk) [Article VII: Conditions to Closing](index=66&type=section&id=ARTICLE%20VII%20CONDITIONS%20TO%20CLOSING) This article specifies the conditions that must be satisfied or waived by the parties for the merger to successfully close [Sections 7.01-7.04: Closing Conditions](index=66&type=section&id=Section%207.01-7.04%20Closing%20Conditions) This article specifies the conditions that must be satisfied or waived for the merger to close. A mutual condition is that no law or order prohibits the transaction (7.01). Conditions for the Purchaser to close include the accuracy of the Company's representations and warranties, the Company's compliance with its covenants, the absence of a Material Adverse Effect, and the delivery of all required documents (7.02). Conditions for the Company to close include the accuracy of the Purchaser's representations and warranties and its compliance with covenants (7.03) - A key condition for the Purchaser is that the Company's representations and warranties remain true and correct, particularly the "Company Fundamental Representations"[247](index=247&type=chunk) - The closing is contingent on no Material Adverse Effect having occurred with respect to the Company since the agreement date[249](index=249&type=chunk) - Another condition for the Purchaser is that no stockholders have exercised their statutory appraisal rights under DGCL Section 262[248](index=248&type=chunk) [Article VIII: Indemnification](index=68&type=section&id=ARTICLE%20VIII%20INDEMNIFICATION) This article establishes the post-closing indemnification framework, including survival periods, limitations, and claim procedures [Sections 8.01-8.04: Indemnification Framework and Limitations](index=68&type=section&id=Section%208.01-8.04%20Indemnification%20Framework%20and%20Limitations) This section establishes the post-closing indemnification framework. General representations and warranties do not survive the closing, but "Fundamental Representations" survive for six years, and claims for Fraud survive indefinitely (8.01). Equityholders severally (not jointly) indemnify the Purchaser for breaches of Fundamental Representations and for pre-closing taxes (8.02). The Purchaser provides a reciprocal indemnity for its own breaches (8.03). Liability for Equityholders is capped at the total Purchase Price received by them (8.04) - General representations and warranties do not survive closing, meaning the R&W insurance policy is the primary recourse for breaches of these. Fundamental Representations survive for **six years**, allowing for direct claims against Equityholders[253](index=253&type=chunk) - Equityholders' indemnification obligations are several, based on their pro-rata share of the merger consideration, not joint[256](index=256&type=chunk) - The maximum aggregate liability for the Equityholders for indemnifiable damages is capped at the Purchase Price[258](index=258&type=chunk) [Sections 8.05-8.11: Indemnification Procedures and Remedies](index=71&type=section&id=Section%208.05-8.11%20Indemnification%20Procedures%20and%20Remedies) These sections detail the procedures for handling indemnification claims. It distinguishes between third-party claims (8.05) and inter-party claims (8.06), setting out notice periods and rights to control the defense. A key provision is the order of recovery (8.07), which dictates that for breaches of representations, the Purchaser must first seek recovery from the R&W Policy before making a claim against the Equityholders. The article establishes indemnification as the exclusive remedy for breaches, except in cases of Fraud (8.08), and prohibits subrogation claims by Equityholders against the Surviving Corporation (8.09) - For breaches of representations covered by the R&W Policy, the Purchaser must first recover from the insurer. Direct claims against Equityholders are secondary[271](index=271&type=chunk)[273](index=273&type=chunk) - Indemnification is the sole and exclusive remedy for all claims arising from the agreement, with the significant exception of claims based on Fraud[278](index=278&type=chunk) - Equityholders are prohibited from seeking subrogation or contribution from the Surviving Corporation for any amounts they pay out in indemnification, preventing circular recovery[279](index=279&type=chunk)[280](index=280&type=chunk) [Article IX: Termination](index=75&type=section&id=ARTICLE%20IX%20TERMINATION) This article defines the conditions under which the merger agreement can be terminated prior to closing and the effects of such termination [Sections 9.01-9.02: Termination Rights and Effects](index=75&type=section&id=Section%209.01-9.02%20Termination%20Rights%20and%20Effects) This article outlines the conditions under which the merger agreement can be terminated prior to closing. Termination is permitted by mutual written consent, or by either party in the event of a material breach by the other that is not cured, or if closing conditions are not met within 30 days of the agreement date. If terminated, the agreement becomes void, but neither party is relieved from liability for a willful breach or Fraud - The agreement can be terminated by either party if closing conditions are not fulfilled within **30 days** of the signing date[282](index=282&type=chunk)[283](index=283&type=chunk) - Upon termination, the agreement becomes void, but liability for any willful breach or Fraud prior to termination is preserved[284](index=284&type=chunk)[285](index=285&type=chunk) [Article X: Miscellaneous](index=76&type=section&id=ARTICLE%20X%20MISCELLANEOUS) This article contains general legal provisions governing the agreement, including the role of the Equityholder Representative and dispute resolution [Section 10.01: The Equityholder Representative](index=76&type=section&id=Section%2010.01%20The%20Equityholder%20Representative) This section formally appoints WT Representative LLC as the agent and attorney-in-fact for all Equityholders. The Representative is granted broad authority to act on behalf of Equityholders in all matters related to the agreement, including disputes, negotiations, and distribution of funds. The Representative is indemnified by the Equityholders and will use the $500,000 Representative Expense Amount to cover its costs - WT Representative LLC is irrevocably appointed to act on behalf of all Equityholders, and the Purchaser is entitled to deal exclusively with the Representative on all post-closing matters[286](index=286&type=chunk)[287](index=287&type=chunk) - The Representative will hold and use the **$500,000** Representative Expense Amount to cover its expenses and potential liabilities, with any remainder to be distributed to Equityholders later[291](index=291&type=chunk) [Sections 10.02-10.18: General Provisions](index=78&type=section&id=Section%2010.02-10.18%20General%20Provisions) This part contains standard legal clauses governing the agreement. Key provisions include specific performance rights to enforce the agreement (10.03), confirmation that the transaction documents constitute the entire agreement (10.04), and rules for notices (10.08). It establishes Delaware as the governing law and jurisdiction (10.13, 10.15) and includes a waiver of jury trial for any disputes (10.14). It also clarifies that Purchaser has conducted its own investigation and is not relying on any representations outside of the agreement (10.17) - The parties agree that irreparable damage would occur from a breach and are entitled to seek specific performance as a remedy[294](index=294&type=chunk) - The agreement is governed by the laws of the State of Delaware, and all parties submit to the exclusive jurisdiction of Delaware courts[304](index=304&type=chunk)[306](index=306&type=chunk) - All parties expressly waive their right to a trial by jury in any action related to the agreement[305](index=305&type=chunk) - Section 10.18 establishes that legal communications between the Company and its counsel (Retained Counsel) regarding the transaction are privileged to the Equityholders, not the Surviving Corporation, post-closing[310](index=310&type=chunk)[311](index=311&type=chunk) [Schedules & Exhibits](index=5&type=section&id=Schedules%20%26%20Exhibits) This section lists the supplementary schedules and exhibits that provide detailed information and ancillary legal documents for the merger agreement [Schedules](index=6&type=section&id=Schedules) The agreement references several schedules that contain detailed information supporting the representations and warranties made in the main body. These include lists of liens to be released, indebtedness to be repaid, key stockholders, transaction expenses, required consents, and the working capital calculation methodology. These schedules are incorporated by reference and are critical for due diligence and closing - The schedules provide the specific, detailed data underlying the broader statements in the merger agreement, such as the exact amounts of indebtedness to be repaid at closing and the specific third-party consents required[6](index=6&type=chunk) [Exhibits](index=6&type=section&id=Exhibits) The agreement includes numerous exhibits that are forms of other legal documents required to execute the transaction. These ancillary documents must be signed by the relevant parties as a condition to closing. Key exhibits include the Support Agreement, Certificate of Merger, Paying Agent Agreement, R&W Policy, and various cancellation agreements for equity instruments - Key Stockholders are required to sign a Support Agreement (Exhibit A), committing to vote in favor of the merger and agreeing to certain restrictive covenants[6](index=6&type=chunk)[319](index=319&type=chunk) - The Paying Agent Agreement (Exhibit C) with Wilmington Trust outlines the agent's duties for distributing the merger consideration and processing Letters of Transmittal[6](index=6&type=chunk)[369](index=369&type=chunk) - The Representations and Warranties (R&W) Insurance Policy (Exhibit D) provides coverage to the Purchaser for breaches of the Company's representations, with a liability limit of **$8 million** and a retention of **$400,000**[6](index=6&type=chunk)[469](index=469&type=chunk)[472](index=472&type=chunk) - The Written Consent (Exhibit J) is the formal document through which stockholders approve the merger, waive appraisal rights, and terminate existing stockholder agreements[6](index=6&type=chunk)[773](index=773&type=chunk)

Table of Contents Title of each class Trading Symbol Name of each exchange on which registered Class A common stock, $0.0001 par value APPF NASDAQ Global Market Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐Smaller reporting company☐ Emerging growth company ☐ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024. ...

Financial Data and Key Metrics Changes - Revenue increased by 34% year-over-year to $197 million in Q2 2024 [5][17] - Non-GAAP operating margin improved to 26% from 6.4% in the previous year [17][20] - Free cash flow margin rose to 25%, compared to 4.2% last year [17][20] Business Line Data and Key Metrics Changes - Core solutions revenue was $44 million, a 14% year-over-year increase driven by new customers and additional units on the platform [17] - Revenue from value-added services grew 43% year-over-year to $152 million, primarily due to increased online payments and risk mitigation product usage [18] Market Data and Key Metrics Changes - Managed approximately 8.4 million units from 20,167 customers, up from 7.7 million units from 19,145 customers a year earlier, representing a 5% increase in customers and a 9% increase in units [17][18] Company Strategy and Development Direction - The company is focused on operational efficiency and innovation, highlighted by the introduction of Realm-X, an embedded generative AI platform [6][8] - AppFolio aims to unlock upmarket customers by providing a comprehensive platform for managing multiple portfolio types [10][12] - The company is expanding its product offerings, including the AppFolio Property Manager Max plan for large operators [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and the potential for continued growth, particularly through AI innovations and expansion into various property types [16][22] - The company raised its full-year revenue guidance to $772 million to $778 million, reflecting expectations for continued customer upgrades and growing usage of value-added services [20][21] Other Important Information - The company exited the quarter with 1,524 employees, indicating ongoing investment in innovation [18] - Cost of revenue as a percentage of revenue decreased to 35% from 39% last year, attributed to operational improvements [19] Q&A Session Summary - No specific questions or answers were recorded in the provided content [23]

appfolio AppFolio, Inc. Announces Second Quarter 2024 Financial Results Q2 revenue grows 34% and profitability continues to expand SANTA BARBARA, Calif., July 25, 2024 -- AppFolio, Inc. (NASDAQ: APPF) ("AppFolio" or the "Company"), a technology leader powering the future of the real estate industry, today announced its financial results for the second quarter ended June 30, 2024. "We're proud of another quarter of strong performance," said Shane Trigg, President and CEO, AppFolio. "Through adoption of AI, m ...

Table of Contents Title of each class Trading Symbol Name of each exchange on which registered Class A common stock, $0.0001 par value APPF NASDAQ Global Market Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐Smaller reporting company☐ Emerging growth company ☐ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024. ...

AppFolio, Inc. (NASDAQ:APPF) Q1 2024 Earnings Conference Call April 25, 2024 5:00 PM ET Company Participants Lori Barker - Investor Relations Shane Trigg - President & Chief Executive Officer Fay Sien Goon - Chief Financial Officer Conference Call Participants Operator Good afternoon. Thank you for standing by and welcome to the AppFolio's First Quarter 2024 Financial Results Conference Call. Please be advised that today's conference is being recorded and a replay will be available on AppFolio's Investor Re ...