Q2 2024 AppFolio Inc Earnings Call

Operator: Good afternoon. Thank you for standing by.

Unknown Executive: Welcome to AppFolio Inc.'s second quarter 2024 financial results conference call. Please be advised that today's conference is being recorded and a replay will be available on AppFolio's Investor Relations website. I would now like to hand the conference over to Lori Barker, Investor Relations.

Folio, Inc.: Good afternoon. Thank you for standing by. Welcome to AppFolio Inc's second quarter 2024 financial results conference call.

Folio, Inc.: Please be advised that today's conference is being recorded and a replay will be available on AppFolio's Investor Relations website. I would now like to hand the conference over to Lori Barker, Investor Relations.

Lori Barker: Thank you. Good afternoon, everyone. I'm Lori Barker, Investor Relations for AppFolio, and I'd like to thank you for joining us today as we report AppFolio's second quarter 2024 financial results. With me on the call today are Shane Trigg, AppFolio's President and CEO, and Fay Sheldon Goon, AppFolio's Chief Financial Officer. This call is simultaneously being webcast on the Investor Relations section of our website at AppFolioInc.com. Before we get started, I would like to remind everyone of AppFolio's Safe Harbor Policy.

Lori Barker: Thank you. Good afternoon, everyone. I'm Lori Barker, Investor Relations for AppFolio. And I'd like to thank you for joining us today as we report AppFolio's second quarter 2024 financial results.

Speaker Change: With me on the call today are Shane Trigg, AppFolio's President and CEO , and Fay Sheldon Goon, AppFolio's Chief Financial Officer.

Folio, Inc.: This call is simultaneously being webcast on the Investor Relations section of our website at AppFolioInc.com.

Lori Barker: 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 uncertainty. For example, any statement that refers to expectations, projections, or other characterizations of future events, including financial projections, future market conditions, or future product enhancements or developments is a forward-looking statement. AppFolio'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.

Lori Barker: AppFolio assumes no obligation to update any such forward-looking statement 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 December 31, 2023, which was filed with the SEC on February 1, 2024. In addition, this call includes non-GAAP financial measures. Reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures is included in our third 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.

Folio, Inc.: Before we get started, I would like to remind everyone of AppFolio's Safe Harbor Policy.

Folio, Inc.: 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.

Folio, Inc.: Any statement that refers to expectations, projections, or other characterizations of future events, including financial projections, future market conditions, or future product enhancements or development, is a forward-looking statement.

Folio, Inc.: AppFolio's actual future results could differ materially from those expressed in such forward-looking statements for any reason, including those listed on our SEC filings.

Folio, Inc.: AppFolio assumes no obligation to update any such forward-looking statement except as required by law.

Folio, Inc.: For greater detail about risks and uncertainties, please see our SEC filings, including our Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 1, 2024.

Folio, Inc.: In addition, this call includes non-GAAP financial measures. Reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures are included in our third quarter earnings release posted on the investor relations section of our website.

Folio, Inc.: 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 for AppFolio's second quarter 2024 financial results. I'm pleased to report that revenue was up 34% year-over-year to $197 million in the second quarter.

Shane Trigg: Thanks, Lori, and welcome to everyone joining us for AppFolio's second quarter 2024 financial results.

Shane Trigg: I'm pleased to report that revenue was up 34% year-over-year to $197 million in the second quarter. At the same time, we improved our margins, driving non-GAAP operating margin to 26% and non-GAAP free cash flow margin to 25%.

Shane Trigg: At the same time, we improved our margins, driving our non-GAAP operating margin to 26% and non-GAAP free cash flow margin to 25%. These results are a testament to our industry leadership. What makes us a leader is how we consistently find ways to meet and exceed our customers' expectations. And there's no better place to connect with current and future customers than the largest multifamily industry event, NAA's Apartmentalize, where we announced a number of innovations to advance our product vision. We heard repeatedly that AppFolio is solving problems differently and better than anyone in the industry, including being the first to bring embedded generative AI to the market.

Shane Trigg: These results are a testament to our industry leadership. What makes us the leader is how we consistently find ways to meet and exceed our customers' expectations.

Shane Trigg: And there's no better place to connect with current and future customers than the largest multifamily industry event, NAA's Apartmentalize, where we announced a number of innovations to advance our product vision.

Shane Trigg: We heard repeatedly that AppFolio is solving problems differently and better than anyone in the industry, including being the first to bring embedded generative AI to the market.

Shane Trigg: Through our thought leadership, our brand, our people, and, of course, our product innovation, we showed that we're building the platform where the real estate industry comes to do business. Bob Penninger, NAA's President and CEO, recognized AppFolio's progress in advancing the industry, commenting on the quote, across all sectors of the rental housing industry, from affordable to student housing and beyond. AppFolio's commitment to innovation continues to make a tangible impact. Their involvement as a 2024 NAA strategic partner at such a pivotal time for rental housing is paramount, and we appreciate their enduring contributions to our industry now more than ever."

Shane Trigg: Through our thought leadership, our brand, our people, and of course our product innovation, we showed that we're building the platform where real estate industry comes to do business.

Bob Penninger: Bob Penninger, NAA's President and CEO , recognized AppFolio's progress in advancing the industry, commenting, quote, across all sectors of the rental housing industry.

Speaker Change: From affordable to student housing and beyond, AppFolio's commitment to innovation continues to make a tangible impact.

Speaker Change: Their involvement as a 2024 NAA strategic partner at such a pivotal time for rental housing is paramount, and we appreciate their enduring contributions to our industry now more than ever."

Shane Trigg: I'm so proud of our organization and excited for our customers to benefit from the enormous opportunity ahead. Our strategy is working, and I'd like to highlight some examples of recent progress across each of its components, starting with how we differentiate to win. We hear consistently from our customers that their biggest challenge is driving operational efficiency.

Speaker Change: I'm so proud of our organization and excited for our customers to benefit from the enormous opportunity ahead. Our strategy is working, and I'd like to highlight some examples of recent progress across each of its components, starting with how we differentiate to win.

Shane Trigg: Our new capabilities in AppFolio, RealmX, and our embedded generative AI are creating differentiated value that enables our customers to truly transform their operational performance, all within AppFolio's one powerful platform. One of these capabilities is Relnex Assistant, a co-pilot experience. With a single prompt, Relnex Assistant can generate reports and initiate individual and bulk access.

Speaker Change: We hear consistently from our customers that their biggest challenge is driving operational efficiency.

Speaker Change: Our new capabilities in AppFolio, RealmX, our embedded generative AI, are creating differentiated value that enables our customers to truly transform their operational performance, all within AppFolio's one powerful platform.

Speaker Change: One of these capabilities is Relnex Assistant, a co-pilot experience. With a single prompt, Relnex Assistant can generate reports and initiate individual and bulk actions.

Shane Trigg: Another capability is RealmX Messages, a reimagined inbox that helps property managers sort through, act on, and respond to routine resident communication. Every AppFolio user can access Roamex Assistant and Roamex Messages right now. An upcoming release we're really excited about is RealmX Flows, an automation engine that helps users standardize their processes through workflows defined by users and automated with AI. RealmX Flows can be taught to complete tasks like rental applications, rent collection, and lease renewal.

Speaker Change: Another capability is Romex Messages, a reimagined inbox that helps property managers sort through, act on, and respond to routine resident communications. Every AppFolio user can access Romex Assistant and Romex Messages right now.

Speaker Change: An upcoming release we're really excited about is RealmX Flows, an automation engine that helps users standardize their processes.

Speaker Change: The workflows defined by users and automated with AI.

Speaker Change: RealmX Flows can be taught to complete tasks like rental applications, rent collection, and lease renewals. This will boost productivity and allow teams to stay in control with visibility into each workflow step from inception to completion.

Shane Trigg: This will boost productivity and allow teams to stay in control with visibility into each workflow step from inception to completion. Our customers recognize RealmX is a huge strategic advantage. According to a June 2024 survey of early RealmX users, they are already saving an average of 12 and a half hours per week using RealmX.

Speaker Change: Our customers recognize RealmX is a huge strategic advantage. According to a June 2024 survey of early RealmX users, they are already saving an average of 12.5 hours per week using RealmX.

Shane Trigg: Not only are they achieving operational efficiency, but their people are happier. Seventy-five percent of those users agree that RealmX reduces busy work. We believe this is just the beginning of the value we can deliver for our customers through RealmX. According to one of these users, Simon Wong, CEO of Hogan Invest, said, "AppFolio RealmX has completely shifted how we manage our properties." With its intuitive interface and powerful capabilities, we've seen significant improvements in efficiency and productivity across our portfolio. Tasks that used to take hours can now be completed in minutes, allowing us to focus more on providing exceptional service." End quote.

Speaker Change: Not only are they achieving operational efficiency, their people are happier. 75% of those users agree that RealmX reduces busy work. We believe this is just the beginning of the value we can deliver for our customers through RealmX.

Speaker Change: According to one of these users, Simon Wong, CEO of Hogan Invest,

Simon Wong: AppFolio RealmX has completely shifted how we manage our properties. With its intuitive interface and powerful capabilities, we've seen significant improvements in efficiency and productivity across our portfolio.

Simon Wong: Tasks that used to take hours can now be completed in minutes, allowing us to focus more on providing exceptional service." The second component of our strategy is to unlock upmarket customers.

Shane Trigg: The second component of our strategy is to unlock upmarket customers. A report from the National Multifamily Housing Council found it's common for multifamily operators to utilize 10 to 20 different solution providers throughout the customer journey, resulting in complexity, integration challenges, and inconsistencies in the customer experience. AppFolio is rapidly innovating to solve these pain points. Building the platform where the real estate industry comes to do business involves giving customers the power to manage multiple portfolio types in a single place.

Speaker Change: A report from the National Multifamily Housing Council found it's common for multifamily operators to utilize 10 to 20 different solution providers throughout the customer journey, resulting in complexity, integration challenges, and inconsistencies in the customer experience.

Speaker Change: AppFolio is rapidly innovating to solve these pain points.

Speaker Change: Building the platform where the real estate industry comes to do business involves giving customers the power to manage multiple portfolio types in a single place. We're making this easier and more intuitive than ever through our recent innovations in affordable housing and now student housing.

Shane Trigg: We're making this easier and more intuitive than ever through our recent innovations in affordable housing and now student housing. For customers with student housing, we now offer pre-leasing metrics to give property managers a comprehensive, real-time view of leasing performance. We've also introduced flexible leasing, offering property managers the versatility to lease units to either groups or individuals, as well as mix the two lease types within the same unit.

Speaker Change: For customers with student housing, we now offer pre-leasing metrics to give property managers a comprehensive, real-time view of leasing performance.

Speaker Change: We've also introduced flexible leasing, offering property managers versatility to lease units to either groups or individuals, as well as mix the two lease types within the same unit.

Shane Trigg: Indiana-based Granite is an AppFolio Property Manager Plus customer with 5,000 units and 11,000 student housing beds. According to President and Chief Development Officer John Raybould, "AppFolio has allowed us to stay very competitive and at the forefront of our competition because of the technology and tools they allow us to work with." We've seen the significant investment AppFolio has made into the student housing side of the business, and that really shows a commitment to wanting to be a big player in that sector of real estate. In our opinion, there isn't another software out there that we feel would give us the same competitive leverage that we have with AppFolio. end quote

Speaker Change: Indiana based Granite is an AppFolio Property Manager Plus customer with 5,000 units and 11,000 student housing beds.

John Raybould: According to President and Chief Development Officer John Raybould, quote, AppFolio has allowed us to stay very competitive and at the forefront of our competition because of the technology and tools they allow us to work with.

Speaker Change: We've seen the significant investment AppFolio has made into the student housing side of the business, and that really shows a commitment to wanting to be a big player in that sector of real estate.

Speaker Change: In our opinion, there isn't another software out there that we feel would give us the same competitive leverage that we have with AppFolio."

Shane Trigg: Another way we're capturing the upmarket segment is by extending the value of our platform through our app integration partners. We continue to rapidly scale our AppFolio Stack Marketplace, which now has more than 3 million units connected. Stack seamlessly integrates our customers' preferred software applications with our platform, giving customers more choice and flexibility. One of our newest partners is resident app lively.

Speaker Change: Another way we're capturing the upmarket segment is by extending the value of our platform through our app integration partners.

Speaker Change: We continue to rapidly scale our AppFolio Stack Marketplace, which now has more than 3 million units connected. Stack seamlessly integrates our customers' preferred software applications with our platform, giving customers more choice and flexibility.

Shane Trigg: This integration empowers connected AppFolio customers with tools for apartment management, smart access, and resident experiences. It represents another step on our journey of delivering the best experience in the market to our property management customers and the residents they serve. The investments we're making in expanding our coverage of additional property types and in growing our partner ecosystem are giving large multifamily operators increasingly more reasons to choose AppFolio as the single platform from which to consolidate, manage, and grow their business.

Speaker Change: One of our newest partners is Resident AppLively.

Speaker Change: This integration empowers connected AppFolio customers with tools for apartment management, smart access, and resident experiences. It represents another step on our journey of delivering the best experience in the market to our property management customers and the residents they serve.

Speaker Change: The investments we're making in expanding our coverage of a different of additional property types and in growing our partner Ecosystem are giving large multifamily operators Increasingly more reasons to choose AppFolio as the single platform from which to consolidate manage and grow their business

Shane Trigg: At the same time, these innovations are creating added value for our smaller owner operator and property management customers. The third component of our strategy is to elevate our customers by driving their adoption and success on our platform. Our multi-tiered product lineup creates instant upgrade paths, so as our customers grow, we have offerings that grow with them. The newest plan in our lineup, AppFolio Property Manager Max, is geared towards large operators with complex and diversified property portfolios and includes a number of powerful differentiating features.

Speaker Change: At the same time, these innovations are creating added value for our smaller owner-operator and property management customers.

Speaker Change: The third component of our strategy is to elevate our customers by driving their adoption and success on our platform.

Speaker Change: Our multi-tier product lineup creates instant upgrade paths, so as our customers grow, we have offerings that grow with them.

Speaker Change: The newest plan in our lineup, AppFolio Property Manager Max, is geared towards large operators with complex and diversified property portfolios, and includes a number of powerful differentiating features.

Shane Trigg: We continue to see strong adoption of this plan as MAX proves to be a valuable way for us to deepen and extend our existing customer relationships, as well as in new business and competitive situations. The fourth component of our strategy is to scale the business.

Speaker Change: We continue to see strong adoption of this plan as MAX proves to be a valuable way for us to deepen and extend our existing customer relationships as well as win new business in competitive situations.

Fay Sien Goon: At the end of 2023, we launched the AppFolio Stack Solution Partner Program, offering customers easy access to some of the best accounting and consulting solution partners in the industry. This program is thriving as we continue to onboard new solution partners such as KSC Group, 111 Advisors, and Redirect. An example of the value these partners bring is the recent sale of the AppFolio Property Manager Max plan to a new 10,000+ unit customer.

Speaker Change: The fourth component of our strategy is to scale the business.

Speaker Change: At the end of 2023, we launched the AppFolio Stack Solution Partner Program, offering customers easy access to some of the best accounting and consulting solution partners in the industry.

Speaker Change: This program is thriving as we continue to onboard new solution partners such as KSC Group, 111 Advisors, and Redirect.

Speaker Change: An example of the value these partners bring is the recent sale of the AppFolio Property Manager Max Plan to a new 10,000 plus unit customer.

Fay Sien Goon: By collaborating with a solution partner, we have made it easier for this new customer to migrate onto our platform by solving their unique requirements in an efficient and scalable way. The final component of our strategy is great people and culture. Our vision is to power the future of the real estate industry, but our people are the catalyst that makes it a reality. During the second quarter, AppFolio's product development team put our company values, innovation, power, and success into practice during Hack Day, one of our focused innovation events.

Speaker Change: By collaborating with a solution partner, we have made it easier for this new customer to migrate onto our platform by solving their unique requirements in an efficient and scalable way.

Speaker Change: The final component of our strategy is great people and culture.

Speaker Change: Our vision is to power the future of the real estate industry, but our people are the catalyst that makes it a reality.

Speaker Change: During the second quarter, AppFolio's product development team put our company value, Innovation Power Success, into practice during Hack Day, one of our focused innovation events.

Fay Sien Goon: We take pride in creating space, both in person and virtually, for our teams to think big and build innovative solutions that improve our customers' lives in fun, inspiring ways. We believe technology is one of the best ways to create thriving communities. And during the event, our team identified a number of opportunities where our products and services can improve the lives of our customers' customers. As we've discussed before, we believe there is huge potential to create additional value for residents through our platform, and we are committed to exploring and expanding these opportunities.

Speaker Change: We take pride in creating space, both in-person and virtually, for our teams to think big and build innovative solutions that improve our customers' lives in fun, inspiring ways.

Speaker Change: We believe technology is one of the best ways to create thriving communities. And during the event, our team identified a number of opportunities where our products and services can improve the lives of our customers' customers.

Speaker Change: As we've discussed before, we believe there is huge potential to create additional value for residents through our platform, and we are committed to exploring and expanding these opportunities.

Fay Sien Goon: As we head into the second half of the year and beyond, I'm grateful for the dedication of our team to building a company that will power an entire industry. We will continue to invest in strategic foundations that create extraordinary outcomes for our customers, our shareholders, and each other. I'll now turn the call over to Faye Hsien for more detail on AppFolio's second quarter financial results. Thank you, Shane.

Speaker Change: As we head into the second half of the year and beyond, I'm grateful for the dedication of our team to building a company that will power an entire industry.

Speaker Change: We will continue to invest in strategic foundations that create extraordinary outcomes for our customers, our shareholders, and each other.

Fay Sien Goon: I'll now turn the call over to Faye Hsien for more detail on AppFolio's second quarter financial results.

Fay Sien Goon: Thank you, Shane. We are pleased with our continued strong growth in revenue and increase in profitability as our commitment to industry-leading innovation is driving the adoption and usage of our products and services. In the second quarter, we delivered revenue of $197 million, growing 34% year-over-year. Non-GAAP operating margin expanded to 26% from 6.4% last year, and we generated free cash flow margin of 25% compared to 4.2% last year. Core solutions revenue was $44 million in Q2, a 14% year-over-year increase driven by new customers, additional total units on the platform, and continued adoption of AppFolio Property Manager Plus and Max.

Fay Sien Goon: Thank you, Shane. We are pleased with our continued strong growth in revenue and increase in profitability as our commitment to industry-leading innovation is driving adoption and usage of our products and services.

Speaker Change: In the second quarter, we delivered revenue of $197 million, growing 34% year-over-year.

Speaker Change: non-GAAP operating margin expanded to 26% from 6.4% last year, and we generated free cash flow margin of 25% compared to 4.2% last year.

Fay Sien Goon: At the end of this quarter, we managed approximately 8.4 million units from 20,167 customers, compared to 7.7 million units from 19,145 customers a year earlier. This represents a 5% increase in customers and a 9% increase in ending units as we continue to emphasize high-margin residential portfolios. Second quarter revenue from Value Added Services grew 43% year over year to $152 million. The growth primarily resulted from our decision to stop waiving our e-check fees and higher resident usage of online payments and risk mitigation products, partially offset by reduced transaction fees associated with card-based payments. Turning to spending,

Speaker Change: Core Solutions revenue was $44 million in Q2, a 40% year-over-year increase driven by new customers, additional total units on platform, and continued adoption of AppFolio Property Manager Plus and Max.

Speaker Change: At the end of this quarter, we managed approximately 8.4 million units from 20,167 customers compared to 7.7 million units from 19,145 customers a year earlier.

Speaker Change: This represents a 5% increase in customers and a 9% increase in ending units as we continue to emphasize high-margin residential portfolios.

Speaker Change: Second quarter revenue from value-added services grew 43% year-over-year to $152 million.

Speaker Change: The growth primarily resulted from our decision to stop waiving our e-check fees and higher resident usage of online payments and risk mitigation products, partially offset by reduced transaction fees associated with card-based payments.

Fay Sien Goon: We exited the quarter with 1,524 employees, which is up slightly from the prior quarter as we are investing in delivering even more innovation to our customers, including the initiatives Shane discussed earlier, such as RealmX, student housing, and affordable housing. Cost of revenue, exclusive of depreciation and amortization, was 35% of revenue compared to 39% last year. The decrease was primarily due to e-check fees and internal operational improvements. On a sequential basis, costs were up slightly as a percent of revenue due to the previously discussed reduction in transaction fees associated with card-based payments.

Speaker Change: Turning to spending.

Speaker Change: We exited the quarter with 1,524 employees, which is up slightly from the prior quarter as we are investing in delivering even more innovation to our customers, including the initiatives Shane discussed earlier, such as RealmX.

Speaker Change: Student Housing and Affordable Housing.

Speaker Change: Cost of revenue exclusive of depreciation and amortization was 35% of revenue compared to 39% last year. The decrease was primarily due to e-check fees and internal operational improvements.

Speaker Change: On a sequential basis, costs were up slightly as a percent of revenue due to the previously discussed reduction in transaction fees associated with card-based payments.

Fay Sien Goon: As a percent of revenue, combined sales and marketing, R&D, and G&A fell to 37% from 51% last year due to growth in revenue and a collective focus on operational efficiency. Sales and marketing expenses as a percentage of revenue decreased from 18% in the second quarter of last year to 13% this quarter. On a sequential basis, we strategically increase our investment in sales and marketing initiatives to enable us to best position ourselves for winning. This investment, as Shane mentioned, included our increased presence at the recent Apartmentalized Industry Conference.

Speaker Change: As a result, as a percent of revenue combined sales and marketing, R&D and G&A fell to 37% from 51% last year due to growth in revenue and a collective focus on operational efficiency.

Speaker Change: Sales and marketing expenses, as a percentage of revenue, decreased from 18% in the second quarter of last year to 13% this quarter. On a sequential basis, we strategically increase our investment in sales and marketing initiatives to enable us to best position within our market.

Speaker Change: This investment, as Shane mentioned, included our increased presence at the recent Apartmental Life Industry Conference.

Fay Sien Goon: In R&D, we improved expenses as a percentage of revenue from 22% last year to 17% this quarter by optimizing operations and maintaining discipline in our investment. Our G&A expenses as a percentage of revenue decreased from 11% last year to 8% this quarter. Overall, non-GAAP operating margin grew to 26% compared to a negative 6.4% operating margin last year. Free cash flow margin this quarter was 25% compared to 4.2% last year.

Shane Trigg: In R&D, we improved expenses as a percentage of revenue from 22% last year to 17% this quarter by optimizing operations and maintaining discipline in our investments.

Shane Trigg: Our G&A expenses as a percentage of revenue decreased from 11% last year to 8% this quarter.

Shane Trigg: Overall, non-GAAP operating margin grew to 26% compared to negative 6.4% last year.

Fay Sien Goon: We are raising our projected full-year revenue guidance to $772 to $778 million, which implies an annual growth rate of 25% based on the midpoint of the rate. This guidance reflects our expectations for continued customer upgrades to premium product use and growing usage and adoption of our value-added services. In addition, our guidance also factors in a modest increase in card usage and reduced transaction fees associated with card-based transactions. Cost of revenue, exclusive of depreciation and amortization, is expected to decrease slightly from the prior year as a percentage of revenue due to e-check fees, product mix, and operational efficiency.

Shane Trigg: Free cash flow margin this quarter was 25% compared to 4.2% last year.

Shane Trigg: We are raising our projected full-year revenue guidance to $772 to $778 million, which implies an annual growth rate of 25% based on the midpoint of the range.

Shane Trigg: Our updated guidance reflects our expectations for continued customer upgrades to premium product use and growing usage and adoption of our value-added services.

Shane Trigg: In addition, our guidance also factors in a modest increase in card usage and reduced transaction fees associated with card-based payments.

Shane Trigg: Cost of revenue, exclusive of depreciation and amortization, is expected to decrease slightly from prior year.

Shane Trigg: As a percentage of revenue due to e-check fees, product mix, and operational efficiencies.

Fay Sien Goon: The second half of 2024 is expected to be slightly higher than the first half, primarily due to the margin impact of the previously mentioned reduced transaction fees associated with card-based payments. We are raising our guidance for the full-year non-GAAP operating margin to 23.5% to 24.5% and raising guidance on our free cash flow margin to 22% to 24%. This reflects continued growth in units and expansion of ARPU, partially offset by reduced card-based transactions and increasing headcount growth to enable us to achieve our strategic objectives.

Unknown Executive: The second half of the afternoon 24 is expected to be slightly higher than the first half, primarily due to the margin impact of the previously mentioned reduced transaction fees associated with car-based payments.

Shane Trigg: The second half of 2024 is expected to be slightly higher than the first half, primarily due to the margin impact of the previously mentioned reduced transaction fees associated with card-based payments.

Ryan Tomasello: We are raising our guidance for the full year non-cap operating margin to 23.5% to 24.5%.

Shane Trigg: We are raising our guidance for the full year non-gap operating margin to 23.5% to 24.5% and raising guidance on our free cash flow margin to 22% to 24%.

Ryan Tomasello: And raising guidance on a free casual margin to 22% to 24%. This reflects continued growth in units and expansion of our pool, partially offset by the reduced car-based transaction fees.

Shane Trigg: This reflects continued growth in units and expansion of Rpool, partially offset by the reduced card-based transaction fees.

Ryan Tomasello: And increasing hate count growth to enable us to achieve our strategic objectives.

Unknown Executive: In terms of seasonality, demand for screening services and risk mitigation is typically slowing the fourth quarter, as leasing activity declines during the winter months.

Fay Sien Goon: In terms of seasonality, demand for screening services and risk mitigation is typically slower in the fourth quarter as leasing activity declines during the winter months. Diluted Weighted Average Shares Outstanding are expected to be approximately 37 million shares for the full year. The first half of this year demonstrates consistent, successful execution towards our long-term strategy to grow with our customers as we innovate through AI and expand into multiple portfolio types to further elevate our customers and scale the business. Thank you all for joining us today. Operator, this concludes today's call.

Shane Trigg: and Increasing Headcount Growth to Enable Us to Achieve Our Strategic Objectives.

Speaker Change: In terms of seasonality, demand for screening services and risk mitigation is typically slower in the fourth quarter as leasing activity declines during the winter months.

Unknown Executive: Value to rate at every share of sending are expected to be approximately 37 minutes shared for the full year.

Speaker Change: Diluted weighted average shares are expected to be approximately 37 million shares for the full year. The first half of this year demonstrates consistent successful execution towards our long-term strategy to grow with our customers.

Stephen Sheldon: The first half of this year demonstrates consistent, successful execution to with our long-term strategy to grow with our customers. As we innovate through AI and expand into multiple portfolio types, to further elevate our customers and scale the business.

Speaker Change: as we innovate through AI and expand into multiple portfolio types to further elevate our customers and scale the business.

Unknown Executive: Thank you all for joining us today.

Operator: Operator, please conclude today's call. Thank you.

Speaker Change: Thank you all for joining us today. Operator, this concludes today's call.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Operator: This concludes the conference. Thank you for your participation.

Operator: You may not disconnect. Thank you.

Speaker Change: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Speaker Change: Thanks for Standing by

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