AppFolio's Q2 Earnings Beat Estimates, Revenues Rise Y/Y

AppFolio, Inc. APPF reported second-quarter 2026 non-GAAP earnings of $1.71 per share, which increased 23.9% year over year. The bottom line surpassed the Zacks Consensus Estimate of $1.67 by 2.4%.

Revenues rose 19.3% to $281 million and beat the consensus mark of $277 million by 1.5%. Growth reflected strength in Value Added Services, premium-tier adoption and new customer wins. Units under management increased 8% to 9.6 million.

APPF's Q2 Revenue Mix Strengthens

Subscription Services revenues increased 14% year over year to $59.8 million. Management attributed the gain to new customer additions, growth in units under management and continued upgrades to the Plus and Max premium tiers.

AppFolio, Inc. Price, Consensus and EPS Surprise

AppFolio, Inc. price-consensus-eps-surprise-chart | AppFolio, Inc. Quote

Value Added Services revenues advanced 21.8% to $219.5 million, led by FolioGuard risk mitigation services, FolioScreen offerings and online payments. Resident Onboarding Lift, Move-In Services through LiveEasy and Realm-X Performers also contributed a growing share. Other revenues declined 37.2% to $1.9 million.

AppFolio Expands Platform Adoption

AppFolio ended the quarter with 22,751 customers, up 6% from 21,403 a year earlier. Nearly one in three units was on a premium tier compared with approximately one in four previously, indicating deeper adoption of the company’s Plus and Max offerings.

The company expanded Realm-X Flows, its workflow orchestration layer, to five times the number of triggers and more than 1,000 conditional routing options. Among customers using Flows, runs grew at a triple-digit rate across lead nurturing, rental applications, move-ins, delinquency and renewals.

Leasing Performer was involved in roughly half of completed showings for customers that deployed it. Bluestone’s use of the product handled more than 10,000 leads, 55% of which arrived after hours, while delivering an average response time of less than nine seconds.

APPF Widens Operating Margins

Non-GAAP operating income grew 23.8% year over year to $76.2 million. The non-GAAP operating margin expanded 90 basis points to 27.1%, reflecting operating leverage as revenues grew faster than several expense categories.

GAAP operating income increased 30.8% to $53 million, while the corresponding margin improved 160 basis points to 18.8%. GAAP net income rose 15.5% to $41.5 million.

Non-GAAP cost of revenues, excluding depreciation and amortization, was 36% of revenues, up from 35%. Operating efficiencies were offset by the payments product mix and incremental data-center capacity supporting increased customer use of AI capabilities.
Research and development declined to 15% of revenues from 16%, aided by productivity gains from AI tools. Sales and marketing and general and administrative expenses remained at 14% and 7% of revenues, respectively. The workforce grew 3% to 1,732 employees.

AppFolio's Cash Flow and Balance Sheet

Operating cash flow totaled $87.6 million, up 66.4% from $52.6 million in the year-ago quarter. The measure represented 31.2% of revenues compared with 22.3% a year earlier, highlighting stronger cash conversion alongside profit growth.

APPF ended June with $217.4 million in cash and cash equivalents and $4.3 million in current investment securities. The company had no borrowings under its $150 million revolving credit facility and remained in compliance with its covenants.

The company did not repurchase shares during the second quarter after spending $125 million on buybacks in the first quarter. Management said its capital-allocation priorities remain focused on business investment, with repurchases conducted opportunistically.

APPF Raises 2026 Outlook

AppFolio raised its 2026 revenue guidance to $1.117-$1.127 billion. The midpoint implies 18% growth, supported by premium-tier adoption, new business units and increased use of offerings, including agentic AI Performers and resident services. The Zacks Consensus Estimates for AppFolio’s revenues are pegged at $1.12 billion, implying a year-over-year increase of 17.5%.

The outlook assumes a more moderate pace of unit expansion among existing customers, while new customer acquisition and retention remain healthy. Management expects Subscription Services and Value Added Services seasonality to be broadly consistent with 2025.

The company also lifted its non-GAAP operating margin outlook to 26.5-28%. Management expects cost of revenues, excluding depreciation and amortization, to remain relatively flat as a percentage of revenues compared with 2025. Diluted weighted-average shares are projected at approximately 36 million.

The Zacks Consensus Estimate for AppFolio’s earnings in 2026 is pegged at $6.75, implying a year-over-year increase of 28%.

Zacks Rank and Stocks to Consider

Currently, TXN carries a Zacks Rank #3 (Hold).

Some better top-ranked stocks in the broader Zacks Computer and Technology sector are Analog Devices ADI, Applied Materials AMAT and Cisco Systems CSCO, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Analog Devices have rallied 69.6% year to date. The Zacks Consensus Estimate for ADI’s fiscal 2026 earnings is pegged at $12.42 per share, down by a penny over the past seven days, indicating an increase of 59.4% year over year.

Shares of Applied Materials have skyrocketed 196.2% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $12.14 per share, up by a penny over the past seven days, indicating a rise of 28.9% year over year.

Cisco Systems shares have surged 63.6% year to date. The Zacks Consensus Estimate for CSCO’s fiscal 2026 earnings is pegged at $4.28 per share, unchanged over the past 30 days, indicating an increase of 12.3% year over year.

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This article originally published on Zacks Investment Research (zacks.com).

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