AppFolio (APPF) Q1 2026 Earnings Transcript

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Date

April 23, 2026, at 5 p.m. ET

Call participants

• President & Chief Executive Officer — Shane Trigg
• Chief Financial Officer — Timothy Eaton
• Investor Relations — Lori Barker

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Takeaways

• Revenue -- $262 million, up 20% year over year and higher than the 16% growth achieved during the same period the prior year.
• GAAP operating income -- $51 million, a 50% year-over-year increase, representing 19.4% of revenue.
• Non-GAAP operating income -- $72 million, up 35% from the prior year, at 27.3% of revenue.
• Subscription services revenue -- $58 million, rising 18% year over year due to gains in new customers, total units managed, and upgrades to Plus and Max premium tiers.
• Value-added services revenue -- $201 million, growing 22% year over year, with increased adoption in FolioGuard, FolioScreen, online payments, Resident Onboarding Lift, and Realmex Performers.
• Units on platform -- 9.5 million managed units, an 8% increase from the previous year, consistent with seasonal trends.
• Customer count -- 22,520 customers at quarter end, up 7% year over year.
• AI engagement -- Over 99% of nearly 23,000 customers use AI-powered Realm suite products, with a 7x increase in AI actions year over year and nearly 500% Performer adoption growth quarter over quarter.
• Maintenance Performer improvements -- Enhanced with automated vendor follow-up that contacts vendors, tracks work orders, confirms completion, and logs every interaction.
• Stack partner ecosystem -- Exceeded 5 million units connected, recently expanded with cloud communications via SimpleVoIP and full accounts payable workflows for Plus and Max customers through AvidXchange integration.
• Resident Onboarding Lift attach rate -- 95% attach rate at move-in with the product versus 64% without, increasing insurance coverage and boosting user satisfaction per internal and survey data.
• Non-GAAP cost of revenue -- Flat year over year at 36% of revenue, as operational efficiencies were offset by payments mix and increased data center spending for AI-related growth.
• Sales & marketing spend -- Stable at 13% of revenue, reflecting continued investments in sales capacity and go-to-market efforts for product and unit growth.
• R&D expense -- Declined to 16% of revenue from 17%, attributed to higher innovation velocity and engineering productivity through AI tool deployment.
• General & administrative expense -- Reduced to 7% of revenue from 8%, credited to scaling benefits and operational efficiency.
• Employee count -- 1,721 employees at quarter end, a 4% increase year over year, primarily due to sales-related hiring.
• Share repurchases -- $125 million deployed for 702,500 shares in the quarter, with nearly 1.4 million shares bought back since 2025 and $125 million remaining in the buyback program.
• Raised annual revenue guidance -- New guidance range of $1.11 billion to $1.125 billion for 2026, reflecting an anticipated midpoint growth rate of 17.5%.
• Raised non-GAAP operating margin guidance -- Full-year margin now forecast between 26% and 28%, up from 24.7% reported in 2025.
• Diluted weighted average shares outstanding -- Projected at roughly 36 million for 2026.

Summary

AppFolio (NASDAQ:APPF) management described Q1 as the company's strongest first quarter for new residential business unit acquisition in its history, attributing this to customer adoption of AI-powered automation and consolidated workflows. Customer and unit retention were characterized as remaining strong and aligned with historical averages. Executives highlighted high engagement rates for AI-driven tools, naming the maintenance and resident onboarding features as adoption drivers. New integrations with partners, such as SimpleVoIP and AvidXchange, have broadened the platform's capabilities, while enhanced automation functionality is positioned as key to premium-tier growth. Operational discipline through reduced R&D and G&A expenses contributed to margin expansion, and the company concluded by raising both annual revenue and non-GAAP margin expectations for the full year. Employee growth was focused largely on sales, with continued hiring expected as the company expands sales capacity and develops premium products.

• Shane Trigg announced the promotion of Kyle Triplett to Chief Product Officer to advance product strategy and design leadership.
• Award recognition was stated for AppFolio's AI achievements, including the 2026 Artificial Intelligence Excellence Award in the agentic AI category.
• Executives described customers transitioning from manual systems to integrated, AI-powered workflows and cited customer testimonials on improvements in operational efficiency, leasing activity, and resident outcomes.
• The share repurchase program was presented as part of long-term capital allocation priorities aimed at managing dilution and supporting shareholder value.

Industry glossary

• RealmX Performers: AI agents built into AppFolio's platform that autonomously execute core real estate management workflows for users.
• Resident Onboarding Lift: AppFolio's digital solution streamlining renter move-in processes, including insurance and utilities setup, designed to enhance tenant experience and product adoption.
• Stack: AppFolio's integrated partner and workflow ecosystem enabling direct in-platform access to third-party and proprietary business management tools.
• Agentic AI: Artificial intelligence systems capable of autonomous, end-to-end execution of business processes, as applied in AppFolio's RealmX Performers.
• FolioGuard: AppFolio's risk mitigation service suite, part of its value-added offerings for real estate managers.
• AvidXchange: Third-party partner integrated for automated accounts payable management, used by AppFolio premium customers.
• NOI: Net Operating Income, a measure of profit from property operations referenced in customer satisfaction studies discussed by management.

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.

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