Q1 2020 Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the Apple iOS Inc. first quarter 2020 financial results Conference call.
At this time all participants are in listen only mode. If you acquire any further assistance. Please press star Zero I would now like to hand, the conference over to your speaker today Erica Abrams. Please go ahead.
Thank you Josh good afternoon, ladies and gentlemen, thank you for joining US today as your report absolutely as first quarter 2020 financial results.
With me on the call to their Jason Bandel, absolutely as President and CEO and Yeah can you absolutely as Chief Financial Officer.
This call or simultaneously being webcast on the Investor Relations section of our website at Www Dot folio <unk> Dot com.
Before we get started I would like to call everyone's attention to our safe Harbor policy. Please note that certain statements made on this call maybe forward looking statements within the meaning of the federal securities laws that are subject to considerable risks and uncertainties.
Actual results or performance, maybe materially different from any results or performance expressed or implied by the forward looking statements.
Forward looking statements, including any such statements, referring to the upside potential effects or impacts the cobot 19 pandemic upon applications business they relate to future plans and financial condition results of operation business forecasts and plan strategic plans and objectives and product development plans.
Please see our filings with the FCC, including our form 10-Q, which was filed earlier today for greater detail about risks and uncertainty.
Forward looking statements are based on reasonable assumptions I think today, we assume no obligation to update any forward looking statements. After today, even if new information becomes available in the future unless required by law.
With that I'll turn the call ever to either either please go ahead.
Thank you Erica and welcome to everyone joining up on the call today for up folios first quarter fiscal year 2020 financial results.
First and foremost with regard to the Cobot 19 pandemic, we hope all of you and your families are staying safe during this unprecedented time.
We continue to work hard to best to ensure that health and welfare of our employees our customers NR surrounding communities.
To mitigate the adverse impact Kobin 19 may have on our business an operation.
We have implemented a number of measures to protect the health and safety of our employees.
Well as to strengthen our financial position.
[noise] efforts include increasing our available cash position and eliminating reducing or deferring non essential expenditures.
Well, if adopting local and state government recommendations to protect our workforce.
Beginning in mid March we transitioned out all 1300 employees to remote work environment.
Restricted non essential employee travel and minimize costs associated with running our facilities.
We continue to closely monitor trends in our business and the broader markets to determine what additional steps maybe necessary for our employees customers an operation.
In addition, we've taken strategic steps designed not only to protect appfolio in this period of uncertainty, but also to ensure that we are able to capitalize on new and existing opportunities as we move forward.
Turning to the first quarter, we had healthy demand for our product and services.
We reported total revenue of $72.5 million, a 27% increase year over year.
GAAP net income was $2 million or six cents per diluted share during the quarter compared to GAAP net income of $3.7 million or 11 cents per diluted share in the first quarter of last year.
Also included in our first quarter results is $1.9 million in noncash charges related to stock based compensation.
For those of you who track non-GAAP results. Our form 10-Q was filed today and includes more details that you might find helpful. In calculating non-GAAP results on your own.
Revenue from core solutions in the first quarter was $24.9 million up 20% year over year.
First quarter value plus services revenue was $44.1 million is 31% increase year over year.
Growth in revenue was driven primarily by 18% increase in property manager units on a management any 10% increase in the number of property manager customers Mr.
Revenue from each of our value plus services increased year over year. The majority of growth in these areas continues to be driven by increased usage of our electronic payments screening and insurance services by a larger base of property manager customers as well as a high number of units under me.
Management.
During the three months ended March 31st 2020, we didn't experience some variability both positive and negative in demand for certain value plus services. After government restrictions were put in place in the U.S.
Turning to expenses total call and operating expenses for the first quarter increased 22% year over year on a GAAP basis.
Compared to an overall, 27% increase in total revenue.
Our year over year, increasing cost is primarily related to our 26% increase year over year in headcount to support new offerings in customers into enable future growth that we believe will positively impact long term shareholder value.
Partially offsetting the growth in operating expenses for the first quarter is an adjustment to incentive based compensation expense.
I have $2.6 million, reflecting changes in a cool due to the potential impact of Kobin 19.
As we progressed through the balance of 2020, we could have more variability in mystic spend then we would have otherwise expected given the uncertainty.
We ended the first quarter with 14729 real estate property manager customers, managing an aggregate of 4.8 million units and their portfolios.
Parakeet, 13409 customers and 4.08 million units under management reported one year ago.
In the legal vertical we closed the quarter with 11115 customers up from 10485, one year ago.
Moving to the balance sheet, we closed the quarter with approximately $71.4 million in cash cash equivalents and investment securities.
And $97.4 million of total debt.
This includes $49 million that we drew down from our revolving facility during the quarter.
We generated $3.1 million from operating activities in the first quarter. Our primary uses of cash in the quarter, where capital expenditures of $8 million to purchase property and equipment for the continued growth and expansion of our facilities the majority of which relates to the buildout of our corporate headcount.
Orders in Santa Barbara that is expected to be substantially completed during the second quarter of 2020.
We also realized capitalized software development costs of $6.8 million in connection with continued investments in our technology and services offering.
Finally, we paid contingent consideration related to the dynasty acquisition of $6 million and spent $4.2 million for the repurchase of shares under our current share repurchase program.
In summary, we began fiscal year 2020 with healthy demand for our products and services many of which are designed to enable our customers to manage their business is virtually.
We expect demand variability for our products and services could continue as a result of the Tobin 19 pins out Mike.
Although it is presently unclear, whether the cumulative impacts will be positive or negative.
We continue to stay close with and listened to our customers to best ensure that we are responding to their needs in the current environment with innovative solution.
Well, we are encouraged by the results of our first quarter and the more recent demand for our products and services. We are unable to predict with any reasonable degree of certainty. The full extent of the potential impact of the cobot 19 pandemic on our business and financial result.
As a result, we're withdrawing our previously communicated full year revenue outlook for fiscal year 2020.
We do continue to expect or diluted weighted average share count for the year to be approximately 36 million shares.
With that I'll turn the call over to Jason for additional comments.
Thank you Ito and thanks to everyone for joining us today.
In the first quarter 2020, we continued on our mission to revolutionize vertical industry businesses by providing great software and service to our expanding customer base.
As cobot 19 rapidly changed our lives and those of our customers, we worked quickly and strategically to bring value in education to our customers and ensuring the safety and well being of our employees.
Our technology serves as a systems of record engagement and intelligence for our customers delivers mission critical and and customer experiences.
As a result, our customers rely on our cloud based software to run their businesses.
I've been able to maintain business continuity and can to continue to serve their customers.
In our real estate vertical property managers and owners are focused on keeping their resident vendors teams in homeowners safe, while maintaining business operations.
Lithia Parker President of our craft management, not folio property manager plus customer with over 4500 units recently told us.
I am so thankful that we run our business on that polio, we cannot of taking the steps to protect our office maintenance and corporate teams without a polio property manager plus.
As it looks residents make payments and submit work orders online while their team can communicate with our resonance and paid vendors remotely.
We have expanded the functionality about folio leasing assistant Lisa to include personal showings, providing an end to end powered virtual we've seen experience.
This enables customers to maintain their leasing operations by hosting live video walk throughs with prospective residents, allowing leasing teams to show available units and sign new leases without any in person contact.
Goes in Hartman, COO fairly management, managing over 2800 units <unk> really user about polio virtual showings.
Recently expressed how polio property manager has worked to support her team in business.
She told US I don't know what we'd be doing right now if it wasn't grab polio.
Well to easily work remotely and communicate virtually all members tools like up, albeit a our leasing assistance.
And then maintenance contact center alongside everything being all in one enough, where we will property manager plus just help so much.
These are uncertain times, but we're getting through it with your amazing support.
We also released enhanced communication tools, such as the ability to post custom announcements across the portfolio resonant homeowner and on the portals.
Functionality to the maintenance work flow to enable property managers to post important safety policies.
We improved our online payments capabilities to empower our customers to deliver flexibility inefficiency for rent collection.
Including capabilities that make it easier to wait piece and provide contract payment plans for renters.
For our customers managing community Association portfolios. We extended features to allow association managers and homeowners to leverage the architectural work you capabilities for enough messaging.
Living them stay in sync threw out a project without discussing logistics around the request and disparate channels.
This feature streamlines communication to a single portal and keeps a record of that communication, while delivering excellent homeowner experience.
And that balloon investment management customers are leveraging online communication tools and portfolio visibility for their investors.
In Q1, we released improvements to our online fund raising htwo, including appeal page it can be shared via that fully on investor portal.
Well as revamped electronic documents Arnie.
We also made improvements to our investor portal activation in log inflow docking uploads and sharing and investors statements and reporting.
Ctwoc stall managing partner of five point real estate recently stated.
A lot about feel investment management feedback from some of our investors is that the level of correspondents, it's better than any institutional investment service.
So good it's simple and that is what any system to garner should strive for.
In addition to all the product enhancements I've mentioned I'm also happy to announce that Shane trig joined up volumes General manager real estate in mid April reporting to me.
Chain brings extensive software his service and it goes to experience to our business. It will be reading strategy execution for the property management products and services.
Prior to joining up folio. He spent eight years at Salesforce in a variety of leadership roles. Most recently as senior Vice President Commerce cloud.
Prior to that field leadership positions at Tomorrow, I software formulation to it real estate solutions. We believe that screen has the right experience perspective, Im leadership skills to lead the Apollo real estate vertical well into the future.
My cases, enabling customers to better maintain business continuity continuity, while working remotely.
Nicole Christy the Christy law firm recently said might use has enabled me to not lose a b or working from home.
My claims love My case, we can work together without ever leaving our houses.
In the past quarter, we expanded the capabilities of my case, releasing several new features including two way text messaging and a new email feature that centralized Huskies communication in my case.
To help firms maximize revenue were really smart time finder and automated tool that helps attorneys find overlook time entries and capture more billable time.
As we look ahead, we'll continue to deliver features designed to help firms maximize revenue improved communication and manage their cases in one centralized solution.
Turning to our team we take the safety of our employees their families in their communities very seriously.
Because we deliver cloud based software we have a deep investment business continuity infrastructure design to maintain the availability performance of our services.
This allowed our workforce to be well prepared with the technology tools required to operate as usual during this time.
Even in the remote capacity.
Since our inception, hopefully this prioritize building an outstanding culture and I continue to be impressed by our teams positive work ethic Cross department collaboration and agility will remain focused on our customers' needs.
Thankful for the team that we have built in for the commitment they have to Apple Leo.
Our strong culture leadership in innovative technology continued to gain recognition throughout the industry. As we received awards from Fortune magazine and great place to work, including Best places to work in Texas and for innovative culture and leadership.
In addition, I believe products are recognized by the business intelligent group with the artificial intelligence Excellence award probably okay, I leasing assistant Lisa.
In summary, we continue to dream remain focused on area. The enable long term sustainable growth for our business, our customers business and our engage unhappy team.
We are actively listening to and partnering with our customers and continue to provide solid foundation for their businesses to help them navigate their challenges and build for the future.
While we expect ongoing fluctuations in the market and customer needs in the months ahead, we remain committed to driving long term sustainable growth for our business, while contributing to our customer success.
Thank you for joining us and that concludes our call for today.
As a reminder, a replay of this conference will be available starting at 730.
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You used to access the even today, which is 1898165. Thank you very much heavier BJ.
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