AppFolio: Capturing Tremendous Economies Of Scale

seekingalpha10-27

AppFolio delivered tremendous Q3 results, beating Wall Street's expectations by a wide mile and also boosting its full-year outlook.Its latest outlook calls for 27% y/y growth in FY24 (versus 24-25% ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2478568135?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1925865357/image_1925865357.jpg","is_english":true,"pubTime":"2024-10-27 09:05","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2478568135","market":"sh","top_or_hot":-1,"title":"AppFolio: Capturing Tremendous Economies Of Scale","media":"seekingalpha","content":"<div>\n<p>AppFolio delivered tremendous Q3 results, beating Wall Street's expectations by a wide mile and also boosting its full-year outlook.Its latest outlook calls for 27% y/y growth in FY24 (versus 24-25% ...</p>\n\n<a href=\"https://seekingalpha.com/article/4729897-appfolio-capturing-tremendous-economies-of-scale\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>AppFolio: Capturing Tremendous Economies Of Scale</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAppFolio: Capturing Tremendous Economies Of Scale\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-10-27 09:05 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4729897-appfolio-capturing-tremendous-economies-of-scale><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>AppFolio delivered tremendous Q3 results, beating Wall Street's expectations by a wide mile and also boosting its full-year outlook.Its latest outlook calls for 27% y/y growth in FY24 (versus 24-25% ...</p>\n\n<a href=\"https://seekingalpha.com/article/4729897-appfolio-capturing-tremendous-economies-of-scale\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4023","symbol_name":"应用软件","start_time":0,"source_url":"https://seekingalpha.com/article/4729897-appfolio-capturing-tremendous-economies-of-scale","article_id":"2478568135","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1925865357/image_1925865357.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2478568135","pubTimestamp":1729991100,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"AppFolio delivered tremendous Q3 results, beating Wall Street's expectations by a wide mile and also boosting its full-year outlook.Its latest outlook calls for 27% y/y growth in FY24 (versus 24-25% g","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4023":"应用软件","APPF":"AppFolio, Inc."},"translate_title":"AppFolio：捕捉巨大的规模经济","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"APPF":0.9},"content_text":"AppFolio delivered tremendous Q3 results, beating Wall Street's expectations by a wide mile and also boosting its full-year outlook.Its latest outlook calls for 27% y/y growth in FY24 (versus 24-25% growth previously) driven by sales expansion, with a new Chief Revenue Officer enhancing its growth prospects.AppFolio's comprehensive platform, AI innovations, and secular tailwinds in the rental market position it as a high-quality, growth-oriented investment despite its premium valuation.Trading at 9.7x EV/FY24 revenue, AppFolio offers high quality, consistency, and rising operating leverage, justifying its premium price for long-term investors.   peeterv The stock market continues to be quite nervous near all-time highs, but there are a few growth stocks that balance growth and high-quality profitability scaling that can still be bought and held for years to come. And even amid jitters in the commercial real estate industry, one of the most prominent vertical software providers to that industry, AppFolio (NASDAQ:APPF), remains king of the hill as it continues to acquire more enterprise multifamily property owners and expands its product portfolio. Year to date, AppFolio has soared with over 25% appreciation. And yet in spite of this, the stock is also down ~20% from YTD highs above $260: creating a great buying point for new investors, especially in the wake of yet another beat-and-raise quarter from the company which could help to spark a rebound rally in this name. Data by YCharts Amid strong growth, the bull case is bright I last wrote a bullish note on AppFolio in August, when the stock was trading at similar ~$215 levels. Since then, the company has continued to raise its guidance for the current year, a result of the company's sales expansion. The company has recently onboarded a new Chief Revenue Officer with the hopes of maturing its sales force and acquiring more big-ticket property managers. At the same time, despite its focus on growth amid a massive market opportunity in commercial real estate, AppFolio also continues to gain significant operating leverage, which has allowed its operating margin and cash flow story to soar.  This combination of strong growth plus sharp margin expansion is rare today, when many enterprise-facing software companies have instead cited sharp macro headwinds as an excuse for lower growth. With this in mind, I'm retaining a buy call on AppFolio, despite the fact that the stock remains expensive (even after its fall from mid-summer highs). Here is my full updated long-term bull case on AppFolio:   Growth at scale. AppFolio is growing at a mid-20s clip, despite hitting nearly $800 million in annual revenue, as the company continues to add more units under management and upsell its existing property managers.  Holistic solutions for the real estate industry. AppFolio's product platform covers, property managers, residents, and real estate investors - a truly complete solution for the entire commercial real estate ecosystem.  AI innovation. Though real estate isn't exactly an area that comes first to mind when it comes to AI, the company's AI products, branded Realm-X, have delivered time savings for property managers through automation of several rote tasks.  All in one platform with multiple products. The company's software suite is broad, covering functions ranging from tenant communications, accounting and billing, work order fulfillment, leasing and advertising, and real estate investor updates.  Secular tailwinds toward renting. Single-family homeownership is declining in the current market environment, which is benefiting all companies in the rental ecosystem, and in particular the property management business.  Rule of 40. AppFolio balances 20%+ revenue growth with 20%+ pro forma operating margins, positioning the stock firmly as a \"Rule of 40\" company that deftly balances growth and profitability.  Beat-and-raise helps to justify premium valuation At current share prices near $212, AppFolio trades at a market cap of $7.70 billion. After we net off the $62.4 million of cash off the company's latest balance sheet, its resulting enterprise value is $7.64 billion. The company's latest outlook, meanwhile, calls for $786-$790 million in revenue this year, representing 27% y/y growth: which is higher than $772-$778 million previously (24-25% y/y growth), and 23-24% growth in the quarter before that. Clearly, this is a company that continues to outperform its own (very conservative) expectations.   AppFolio outlook (AppFolio Q3 earnings release) Wall Street, meanwhile, is forecasting deceleration in FY25 to 18% y/y growth, to $924.3 million in revenue. Taking current-year guidance and next year's consensus at face value, AppFolio trades at:  9.7x EV/FY24 revenue 8.3x EV/FY25 revenue  No, we aren't getting value from AppFolio: but we are getting high quality, consistency, incredible sales momentum, and sharply rising operating leverage. In my view, that's worth paying a premium price for. Q3 download Let's now go through AppFolio's latest quarterly results in greater detail. The Q3 earnings summary is shown below:   AppFolio Q3 results (AppFolio Q3 earnings release) AppFolio's revenue grew 24% y/y to $205.7 million, ahead of Wall Street's expectations of $199.1 million (+20% y/y) by a four-point margin. We do note, however, that growth is decelerating sharply: down ten points sequentially versus 34% y/y growth in Q2. The company is effectively becoming a victim of its own scale, as prior-year comps get tougher. We do have to watch out for continued deceleration as an impetus to a shrinking multiple for AppFolio. The company notes that its total units under management grew 9% y/y. As the company continues to move upmarket with its Plus and Max enterprise-grade products, it has also been pushing its Realm-X AI assistant as a means to both save time and improve resident outcomes. The company notes that clients have successfully used these AI tools to improve lease renewal rates. Per CEO Shane Trigg's remarks on the Q3 earnings call:  In the last 30 days, our beta customers have sent almost half a million Realm-X generated messages, saving 26 seconds on average compared to a message composed without it. That's three full work weeks every year that each beta customer has saved just from implementing Realm-X messages. The impact of Realm-X extends beyond time savings, improving our customer's performance. Take the example of Atlas Real Estate with 6,500 multi-family, single-family in commercial units running on AppFolio Property manager Max. Recently, Atlas ran a competition for the staff member achieving the highest number of lease renewals. At the time, Atlas was participating in the Realm-X beta program, testing our Realm-X renewal flow at one of its property portfolios. The property manager overseeing this particular portfolio outperformed their colleagues by a significant margin claiming victory in the competition. Impressed by these results, Atlas quickly adopted Realm-X flows across all its properties. The outcome has been remarkable, an 8% overnight increase in renewal rates. Just imagine an 8% improvement in your business overnight. The future is here and we can't wait to get it into the hands of our customers to help them be more productive, give their teams and customers an exceptional experience and fuel the performance of their business.\"  The company also recently released its new resident portal, FolioSpace, which will be rolled out to over 20k property managers and millions of residents.  On the profitability front, AppFolio's enormous revenue growth coupled with reasonable expense growth has helped the company achieve 28.7% in pro forma operating margins, up more than 12 points y/y. We note that with ~29% pro forma operating margins on top of 24% revenue growth, the company sits above even a \"Rule of 50.\"   AppFolio operating margins (AppFolio Q3 earnings release) A cash flow expansion story is also emerging. Year to date, the company has delivered $146.2 million in FCF (roughly 4x y/y growth) and a 25% FCF margin, sixteen points better y/y.   AppFolio FCF (AppFolio Q3 earnings release) Risks and key takeaways To me, the core risk to AppFolio is valuation. Though an ~8x forward revenue multiple isn't crazy for a company that sits in the \"Rule of 50\" club and is still growing at a mid-20s clip, the stock market is also hovering at highs, which could cause multiple compression across the board, especially for richly valued growth stocks. On top of this, fundamental risks include lower interest rates (which could push more tenants away from renting and toward home buying) and competition from smaller vendors like RealPage and Yardi.  That being said, it's difficult to ignore the fact that AppFolio consistently outperforms its expectations by a wide mile, has many innovation tailwinds under its belt, and is achieving tremendous cash flow and profit growth. Stay long here and keep riding the upward momentum here.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2478568135"}