APPFOLIO INC
For the period ended Jun 30, 2026. Filed Jul 23, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Jul 23, 2026
APPF$230.74-1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-04-23.
0001433195-26-000023
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-23.
0001433195-26-000058
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 84 previous paragraphs and 83 current paragraphs.
57 unchanged; 23 reworded; 3 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
•GAAP operating income grew 31% to $53 million, or 18.8% of revenue, compared to $41 million, or 17.2% of revenue in Q2 2025.
Current report
•Non-GAAP operating income grew 24% to $76 million, or 27.1% of revenue, compared to $62 million, or 26.2% of revenue in Q2 2025.
Current report
General and administrative expense increased for the three and six months ended June 30, 2026, compared to the same periods in the prior year. The increase for the three and six months ended June 30, 2026, was primarily due to a $2.4 million and $3.7 million increase in software and professional fees, for the respective three and six-month periods.
Removed paragraphs (4)
Previous report
•GAAP operating income was $50.7 million, or 19.4% of revenue, compared to GAAP operating income of $33.8 million, or 15.5% of revenue in Q1 2025.
Previous report
•Non-GAAP operating income was $71.5 million, or 27.3% of revenue, compared to non-GAAP operating income of $53.0 million, or 24.3% of revenue in Q1 2025.
Previous report
•Repurchased 703 thousand shares of the Company's Class A common stock for $125 million.
Previous report
General and administrative expense stayed relatively flat for the three months ended March 31, 2026, compared to the same period in the prior year.
Reworded paragraphs (23)
Previous wording
Financial Highlights for the First Quarter of 2026
Current wording
Financial Highlights for the Second Quarter of 2026
Previous wording
•Revenue grew 20% year-over-year to $262.2 million.
Current wording
•Revenue grew 19% year-over-year to $281 million.
Previous wording
•Total property management units under management grew 8% year-over-year to 9.5 million.
Current wording
•Total units under management grew 8% year-over-year to 9.6 million.
Previous wording
•Net cash provided by operating activities was $34.3 million, or 13.1% of revenue, compared to $38.5 million, or 17.7% of revenue in Q1 2025.
Current wording
•Net cash provided by operating activities was $88 million, or 31.2% of revenue, compared to $53 million, or 22.3% of revenue in Q2 2025.
Previous wording
Property management units under management. We believe that our ability to increase our number of property management units under management is an indicator of our market penetration, growth, and potential future business opportunities. We define property management units under management as active or committed units under management at the period end date. We had 9.5 million and 8.8 million property management units under management as of March 31, 2026 and 2025, respectively.
Current wording
Property management units under management. We believe that our ability to increase our number of property management units under management is an indicator of our market penetration, growth, and potential future business opportunities. We define property management units under management as active or committed units under management at the period end date. We had 9.6 million and 8.9 million property management units under management as of June 30, 2026 and 2025, respectively.
Previous wording
As of March 31, 2026 and 2025, we had 22,520 and 21,105 property management customers, respectively.
Current wording
As of June 30, 2026 and 2025, we had 22,751 and 21,403 property management customers, respectively.
Previous wording
The increase in revenue for the three months ended March 31, 2026, compared to the same period in the prior year, was primarily attributable to an increase in the usage of our payments, tenant screening, and risk mitigation services. During the three months ended March 31, 2026, we also experienced growth of 8% in the number of property management units under management compared to the same period in the prior year, which drove growth in users of our Subscription Services and Value Added Services.
Current wording
The increase in revenue for the three and six months ended June 30, 2026, compared to the same periods in the prior year, was primarily attributable to an increase in the usage of our payments, tenant screening, and risk mitigation services. During the three and six months ended June 30, 2026, we also experienced growth of 8% in the number of property management units under management compared to the same periods in the prior year, which drove growth in users of our Subscription Services and Value Added Services.
Previous wording
Cost of revenue (exclusive of depreciation and amortization) increased for the three months ended March 31, 2026, compared to the same period in the prior year. The increase was primarily driven by higher third-party service provider costs of $14.6 million due to increased adoption and usage of our Value Added Services for the respective three-month periods.
Current wording
Cost of revenue (exclusive of depreciation and amortization) increased for the three and six months ended June 30, 2026, compared to the same periods in the prior year. The increase was primarily driven by higher third-party service provider costs of $15.6 million and $30.2 million, respectively, due to increased adoption and usage of our Value Added Services for the respective three and six-month periods.
Previous wording
Sales and marketing expense increased for the three months ended March 31, 2026, compared to the same period in the prior year. The increase was primarily due to a $4.5 million increase in personnel-related costs, including stock-based and performance-based compensation, to support growth in the business, combined with a $1.1 million increase in advertising and promotion expense due to increased targeted go-to-market investment, for the respective three-month periods.
Current wording
Sales and marketing expense increased for the three and six months ended June 30, 2026, compared to the same periods in the prior year. The increase was primarily due to a $5.2 million and $9.7 million increase in personnel-related costs, including stock-based and performance-based compensation, to support growth in the business, for the respective three and six-month periods.
Previous wording
Research and product development expense increased for the three months ended March 31, 2026, compared to the same period in the prior year. The increase was primarily due to a $4.8 million increase in personnel-related costs, including stock-based and performance-based compensation, net of capitalized software development costs driven by headcount growth, for the respective three-month periods.
Current wording
Research and product development expense increased for the three and six months ended June 30, 2026, compared to the same periods in the prior year. The increase was primarily due to a $3.5 million and $8.4 million increase in personnel-related costs, including stock-based and performance-based compensation, net of capitalized software development costs driven by headcount growth, for the respective three and six-month periods.
Previous wording
Depreciation and amortization expense for the three months ended March 31, 2026 decreased, compared to the same period in the prior year as various assets have reached the end of their useful life.
Current wording
Depreciation and amortization expense for the three and six months ended June 30, 2026 decreased, compared to the same periods in the prior year as various assets have reached the end of their useful life.
Previous wording
Interest income for the three months ended March 31, 2026 decreased, compared to the same period in the prior year, primarily due to the sale of available-for-sale investment securities and lower interest rates.
Current wording
Interest income for the three and six months ended June 30, 2026 decreased, compared to the same periods in the prior year, primarily due to the sale of available-for-sale investment securities and lower interest rates.
Previous wording
For the three months ended March 31, 2026, we recorded income tax expense of $10.7 million, representing an effective tax rate of 20.1%. Our effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to research & development tax credits, partially offset by state income taxes and non-deductible officers' compensation. For the three months ended March 31, 2025, our effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to excess tax benefits from stock-based compensation and research & development tax credits, partially offset by state income taxes and non-deductible officers' compensation.
Current wording
For the three and six months ended June 30, 2026, we recorded income tax expense of $12.9 million and $23.5 million, representing an effective tax rate of 23.7% and 21.9%, respectively. Our effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to state income taxes and non-deductible officers' compensation partially offset by tax benefits from research and development tax credits. For the three and six months ended June 30, 2025, our effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to excess tax benefits from stock-based compensation and research and development tax credits, partially offset by state income taxes and non-deductible officers' compensation.
Previous wording
The increase in our effective tax rate for the three months ended March 31, 2026, as compared to the same period in 2025, is primarily driven by higher pre-tax income and a decrease in excess tax benefits from stock-based compensation.
Current wording
The increase in our effective tax rate for the three and six months ended June 30, 2026, as compared to the same periods in 2025, is primarily driven by higher pre-tax income and a decrease in excess tax benefits from stock-based compensation.
Previous wording
Our principal sources of liquidity continue to be cash, cash equivalents, and investment securities, as well as cash flows generated from our operations. As of March 31, 2026, we had $151.7 million in cash, cash equivalents, and investment securities. We have financed our operations primarily through cash generated from operations.
Current wording
Our principal sources of liquidity continue to be cash, cash equivalents, and investment securities, as well as cash flows generated from our operations. As of June 30, 2026, we had $221.7 million in cash, cash equivalents, and investment securities. We have financed our operations primarily through cash generated from operations.
Previous wording
In addition, to optimize our capital structure, on September 30, 2025, we entered into the Credit Facility which provides for a $150.0 million senior secured revolving credit facility, including sublimits of $25.0 million for letters of credit and $25.0 million for swingline loans, and is scheduled to mature on September 30, 2030. We did not draw on the Credit Facility during the first quarter of 2026, and as of March 31, 2026, we had no outstanding borrowings under the Credit Facility and were in compliance with the covenants under the Credit Facility. For more information regarding the Credit Facility, refer to "Credit Facility" in Note 6, Commitments and Contingencies, of our Condensed Consolidated Financial Statements.
Current wording
In addition, to optimize our capital structure, on September 30, 2025, we entered into the Credit Facility which provides for a $150.0 million senior secured revolving credit facility, including sublimits of $25.0 million for letters of credit and $25.0 million for swingline loans, and is scheduled to mature on September 30, 2030. We did not draw on the Credit Facility during the six months ended June 30, 2026, and as of June 30, 2026, we had no outstanding borrowings under the Credit Facility and were in compliance with the covenants under the Credit Facility. For more information regarding the Credit Facility, refer to "Credit Facility" in Note 6, Commitments and Contingencies, of our Condensed Consolidated Financial Statements.
Previous wording
During the first quarter of 2026, we repurchased 702,502 shares of our Class A common stock under the 2025 Stock Repurchase Program at an average purchase price of $177.95 per share, inclusive of broker commissions, for an aggregate repurchase price of $125.0 million, which was recorded as a reduction to stockholders' equity. As of March 31, 2026, the amount remaining available for repurchases under the 2025 Stock Repurchase Program was $125.0 million. For more information regarding our share repurchases, refer to Note 7, Share Repurchase Program, of our Condensed Consolidated Financial Statements of this Quarterly Report.
Current wording
During the first quarter of 2026, we repurchased 702,502 shares of our Class A common stock under the 2025 Stock Repurchase Program at an average purchase price of $177.95 per share, inclusive of broker commissions, for an aggregate repurchase price of $125.0 million, which was recorded as a reduction to stockholders' equity. We did not repurchase any shares of Class A common stock under the 2025 Stock Repurchase Program during the second quarter of 2026. As of June 30, 2026, the amount remaining available for repurchases under the 2025 Stock Repurchase Program was $125.0 million. For more information regarding our share repurchases, refer to Note 7, Share Repurchase Program, of our Condensed Consolidated Financial Statements of this Quarterly Report.
Previous wording
The net increase in cash provided by operating activities for the three months ended March 31, 2026, compared to the same period in the prior year, was primarily due to higher cash collections from customers relative to the increase in operating expenditures.
Current wording
The net increase in cash provided by operating activities for the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to higher cash collections from customers relative to the increase in operating expenditures.
Previous wording
Cash provided by investing activities is generally composed of the cash paid in purchases of investment securities, maturities and sales of investment securities, purchases of property and equipment, business acquisition, net of cash acquired, and additions to capitalized software development.
Current wording
Cash provided by investing activities is generally composed of the cash paid in purchases of investment securities, maturities and sales of investment securities, purchases of property and equipment, purchases of long-term investments, business acquisition, net of cash acquired, and additions to capitalized software development.
Previous wording
The net increase in cash provided by investing activities for the three months ended March 31, 2026, compared to the same period in the prior year, was primarily due to higher sales and maturities of investment securities, and lower purchases of available-for-sale investment securities. For additional information, see Note 4. Investment Securities and Fair Value Measurements, of our Condensed Consolidated Financial Statements.
Current wording
The net increase in cash provided by investing activities for the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to lower purchases of long-term investments in 2026. For additional information, see Note 4. Investment Securities and Fair Value Measurements, of our Condensed Consolidated Financial Statements.
Previous wording
The net increase in cash used in financing activities for the three months ended March 31, 2026, compared to the same period in the prior year, was primarily due to repurchases of our Class A common stock.
Current wording
The net decrease in cash used in financing activities for the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to lower repurchases of our Class A common stock.
Previous wording
To supplement our Condensed Consolidated Financial Statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), this Annual Report contains information regarding our non-GAAP income from operations ("Non-GAAP Operating Income") and non-GAAP operating margin ("Non-GAAP Operating Margin"), each of which constitutes a non-GAAP financial measure. We use these non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Current wording
To supplement our Condensed Consolidated Financial Statements, which are prepared and presented in accordance with GAAP, this Quarterly Report contains information regarding our Non-GAAP Operating Income and Non-GAAP Operating Margin, each of which constitutes a non-GAAP financial measure. We use these non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Previous wording
Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because non-GAAP financial measures are not prepared in accordance with GAAP and can exclude expenses that may have a material impact on our reported financial results. As such, non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of income from operations, the most comparable GAAP measure, to Non-GAAP operating income and operating margin, is provided in the table below. We encourage investors to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.
Current wording
Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because non-GAAP financial measures are not prepared in accordance with GAAP and can exclude expenses that may have a material impact on our reported financial results. As such, non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of income from operations, the most comparable GAAP measure, to Non-GAAP Operating Income and operating margin, the most comparable GAAP measure, to Non-GAAP Operating Margin, is provided in the table below. We encourage investors to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.