Q4 2020 Appfolio Inc Earnings Call
And then.
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Ladies and gentlemen, thank you for standing by and welcome to the at Folio, Inc. Announces fourth quarter and fiscal year 2020 financial results Conference call. At this time, all participants are in a listen only mode.
Be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today Erica Abrams. Thank you. Please go ahead.
Thank you Christine good afternoon, ladies and gentlemen, and thank you for joining US today as you reported at folio of fourth quarter and fiscal year 2020 financial results with me on the call today are Jason Randall affiliate as President and CEO and <unk> affiliates Chief Financial Officer.
This call is simultaneously being webcast on the Investor Relations section of our website at Www dot absolutely of Dot com.
Before we get started I would like to remind everyone that absolutely of safe Harbor policy.
Comments made during this conference call and webcast containing forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and.
And are subject to risks and uncertainties.
Any statement that refers to expectations projections or other characterizations of future events, including financial projections or future market conditions is a forward looking statement.
Total was actual future results could differ materially from those expressed in such forward looking statements for any reason, including those listed in our SEC filings.
At Folio of assumes no obligation to update any such forward looking statements, except as required by law.
Please see our filings with the SEC, including our form 10-K, which was filed earlier today for greater detail about risks and uncertainties.
With that I'll turn the call over to <unk> CFO.
Please go ahead.
Thank you Erica welcome to everyone joining us for our affiliates' fourth quarter and fiscal year 2020 financial results.
We reported total revenue of $310 $1 million for fiscal year 2020.
GAAP net income was $158 $4 million or $4.44 per diluted share.
This includes the pretax gain of $187 $7 million related to the sale of my case offset by net tax expense of $51 $3 million.
For fiscal year 2020, we recorded income tax expense of $38 $4 million.
Also included in GAAP net income is $9 million in noncash charges related to stock based compensation.
Our form 10-K was filed today and includes more details on our results.
On the call today to enhance clarity and comparability I will discuss the results of our continuing real estate business, excluding the impact of the my Cape Operation.
To that end revenue from our continuing business for fiscal year, 2020 was $284 $7 million, which represents an increase of 23% over revenue of $231 $1 million in the year ago period.
As you know, we provide innovative software services and data analytics to customers in the real estate industry. Our solutions are used by property managers, whom we refer to as customers in our 10 in our public filings and also by numerous other constituencies in the property management business ecosystem.
These other constituencies include property owners rental prospects tenants and service providers, whom we collectively refer to as users.
We generate revenue from customers and from these users of our software and services aimed to serve the full business ecosystem.
Core solutions revenue derived from subscriptions to our customers and our continuing business in fiscal year 2020 was $86 5 million, an increase of 19% over $72 $6 million for the year ago period.
Value plus services revenue from our continuing business was $184 $2 million in fiscal year 2020, an increase of 27% over $145.2 million for the year ago period.
The increase in revenue year over year was primarily attributable to 10% growth in the number of property manager customers using our software and 17% growth in units under management.
Throughout 2020 demand for electronic payment services increased as residents property managers owners and customers transacted more business online, which we attribute in part to the COVID-19 pandemic.
During the year, we also introduced new value plus services and expanded the functionality of others, which resulted in incremental revenue.
As a reminder of significant majority of our value plus services revenue comes directly and indirectly from the use of our electronic payment services tenant screening services and the insurance services, we make available to customers.
At December 31, 2020, we had over 15700 real estate property manager customers managing an aggregate of 536 million units in their portfolios.
We continue to focus on growing our customer end user base and expanding their adoption and utilization of value plus services, which are designed to enhance automate and streamline processes and workflows that are essential to our customers' businesses.
For fiscal 2020, our annual dollar based net expansion was 112% for our property manager customers.
I encourage you to read our 8-K filing today for more information on how we calculate annual dollar based net expansion.
Turning to spending we saw on overall increase in expenses from our continuing business of 23% in fiscal year 2020 compared to prior year.
Total expenses of $277 $1 million included a $4 $3 million legal settlement with the FTC previously discussed an increase in professional service fees and other costs of $2 $3 million related to the my case transaction.
Offset by a benefit of $2 million for third party service provider incentives earned related to adoption and utilization of online payment services that was recorded in cost of sales.
The increase in cost over the prior year from mainly attributable to the growth in our value for services revenue in the third party cost incurred to support them as well as growth in personnel costs.
Increasing 16% year over year to over 1300 of volume is dedicated to of continuing business at fiscal year end.
In addition.
Typing and promotion cost increase year over year offset by reductions in workplace and travel related costs as we adjusted our business in response to the COVID-19 pandemic.
As we move into 2021, we continue to operate as of remote workplace and expect to return to the office no sooner than the second quarter.
We do hope to transition back to in person work during fiscal 2021 Covid permitted.
To that end, we continue to invest in our physical office locations with the Buildout of Santa Barbara the expansion of our Dallas location and the signing of a new lease in San Diego early in 2021.
In addition, we expect to continue to invest in areas of our business that enable future growth aligned with customer success.
Turning to the fourth quarter performance total revenue from our continuing business was $72 $4 million, which represented growth of approximately 20% year over year on a comparable basis.
As a reminder, we experienced limited seasonality in the fourth quarter and our value plus services revenue, primarily with respect of certain leasing related services, we provide to our property management customers.
Fourth quarter of 2020 was no different.
Core solutions revenue was $22 $9 million in the fourth quarter and valuable services was $46 million, which represented growth of approximately 18% and 25% respectively year over year.
Revenue in the quarter with $3 $5 million from our continuing business.
Total expenses from continuing business in the fourth quarter was $74 $6 million, which is an increase over the year ago period of 23%.
Moving to the balance sheet at December 31, 2020, our principle sources of liquidity with cash and cash equivalents on investment securities, which had an aggregate balance of $175 $3 million.
During the fiscal year, our cash and cash equivalents increased primarily as a result of the proceeds from the my kids transaction net of repayment of amounts owed under.
And termination of our credit agreement.
For fiscal year, 2020, we generated $48 $3 million from operating activities on.
Primary uses of cash were capitalized software development costs of $26 million in connection with continued investment in our technology and service offerings and.
Capital expenditure of $19 million to purchase property and equipment for the continued growth and expansion of our business.
In addition, we spent $4 $2 million for the repurchase of shares.
Looking ahead, we are not providing revenue guidance for fiscal year 2021 at this time due to continued limited visibility into future business trends on financial performance in the current operating environment.
We expect to reevaluate this throughout the year.
We also expect our weighted average diluted share count for fiscal year 2020 to be approximately 36 million shares.
With that I'll turn the call over to Jason for additional comments.
Thanks, Ethan and thank you all for joining us today, as we share of fourth quarter and fiscal year 2020 results.
Our financial performance in 2020, because of a testament to our steadfast focus on three areas.
First innovating to better enable our customers to automate the central business processes.
Enhanced business interactions and leverage data to predict and optimize business workflows.
Second delivering an exceptional customer experience.
Third formidable thriving company culture.
2020 worth of year filled with challenges, but also adaptability innovation and resilience.
Three of 2021 with more than 5 million millions of units under now under management on our property management platform.
We remain focused on positioning our company for long term sustainable growth.
As we've discussed on previous calls the pandemic of spurred changes to the way our customers do business.
We believe there is a continued need for digital transformation across the real estate industry.
Total customers are well equipped to navigate this transformation.
Our software and services of the foundation of their business.
Folio of software and solutions are designed to serve as our customer systems of record engagement and intelligence.
Exceptional customer experiences and increasing efficiency across our customers' businesses.
Throughout the fiscal year 2020, we evolved in lockstep with our customers on.
A locking value from delivering capabilities have enabled our customers to focus on their customers and business ecosystems.
Can spend more time on strategic work and less time on in terms of tests.
At the beginning of the pandemic, we heard from customers that mainstream high relative service levels.
Hence digital communications was a priority.
We delivered the ability to post custom announcements across resident homeowner and owner portals.
On a functionalities of of maintenance workflow to enable property managers to post an important safety announcements.
We also introduced new and expanded functionality across of all of our customers most of central workflows Lucy.
With the launch of a fully aware.
Shortens customers are able to further modernize their leasing process.
Conduct live shows without in person contact.
We also added capability to support previewing units through <unk> tours.
By a number of leading providers that can be enabled into our customers got polio powered websites.
Making it easy for prospective residents to engage with available units themselves all of our at a distance.
These enhancements brought value for our customers in terms of social distancing and we believe these new capabilities will change the way our customers manage the leasing process going forward.
We also made meaningful advancements in further automating and optimizing another critical workflow for our customers.
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We expanded online payment features to enable rent collection of flexibility.
We ended the fourth quarter, we advanced a set of purpose built capabilities with a lot of property management of customers to attract corporate books, alongside but separate from the property books, providing our customers with more accurate reported.
Or kind of workforce.
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Another key area of focus has been our continued expansion of about folio of property manager surplus of tea.
Of our software designed to meet the unique challenges.
On a larger customers managing distributed teams of portfolios across multiple regions.
Of course customers benefited from enhancements to business critical processes around leasing data and workflow automation, which provides customers with real time visibility into.
Total portfolio leasing performance actual actionable dashboard views around employee performance and further automation of workflows.
We continue to hear positive feedback from our customers on the value of impact our software and services are bringing to their business.
Josh Mcintyre President of Mcintyre management point of Jay over 500 units commented on folio.
<unk> allows us to provide full transparency to our clients automate reported and recurring work orders and manage to the correspondence with EPS without.
Without folio, we've also been able to double our units under management during COVID-19 or staff as has the flexibility to work from home.
We also continued to expand our offerings for community Association managers, focusing on streamlining proficiency and helping them better serve their homeowners on board members.
In 2020, we released an end to end of mailing service accessible within our core product that allows customers to avoid manual millwork.
Transforming traditional workflows and unlocking operational efficiencies of one platform.
More recently, we announced a new multiple fund accounting capabilities of visualized assets liabilities and equity for separate funds on a single balance sheet.
The integration with chuckled for walk spot automation.
Alrighty sure who manages 3800 years of that fully the property managers Chief operating Officer of Association Management Company Cap management recently said.
Consolidated all of our management business activities and on both of your property manager has allowed us to access all critical and background data quickly could be a wide range of devices.
We've increased homeowner in board of director satisfaction, while increasing the amount of data and it's easy to view for all.
Turning to our folio of investment management in 2020, we released functionality that helps real estate investment managers grow their portfolios of investments by engaging with investors and driving efficiencies on their business.
New capabilities enabled general partners to create and manage tasks for their dashboard view visual diagrams of their more complex on vessel structures tracking with all taxes from distributions of enhanced security on signature request documents.
Now to our team of about folio, we believe that engaged employees.
Our approach of experience.
Our people and culture of always been at the heart of our folio of success in 2020, we quickly pivoted to a work from home environment.
On new and creative ways to collaborate and innovate while continuing to satisfy customers.
During 2020, Apple will continue to gain of industry recognition for our innovative technology company culture and business success.
Since our last update of <unk>.
Oreo of selected number one unfortunately first of.
The 100 fastest growing companies.
We were also recognized for our strong culture is one of battery venture's highest rate of public cloud companies to work force.
Which is based on the Glassdoor ratings of current and former employees.
Folio of AI leasing assistant Lisa was one of the real estate product of the year, but of the business Intelligence group of awards for innovation.
In summary, despite its many challenges 2020 marked another year of strategic and operational progress for our folio. Looking ahead, we remain focused on areas of enable long term sustainable growth for our business we expect.
To accomplish this by delivering innovative technology solutions that create exceptional experiences for our real estate customers all fueled by an engaged and happy team.
Thank you all for joining us today I will now turn the call back to the operator. Please go ahead.
Thank you for participating on today's conference call. This call will be available for replay beginning at 730 Eastern standard time today through 11 59 P. M. Eastern standard time on March 4th 2021. The conference I'd number for replay is 8438 087 scans of the conference.
The number for replay is 8438 087, the number to dial for the replay is one 805 858367, ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Thank you.
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