Key Highlights

  • Revenue rose 19% to USD 296 million; value-added services rose 21% to USD 232 million.
  • Non-GAAP Operating Income rose 38% to USD 81 million, a 27.3% margin.
  • GAAP diluted Earnings were USD 1.29 per share; non-GAAP diluted earnings were USD 1.82.
  • Full-year Revenue guidance is USD 1.122 billion to USD 1.127 billion.

Quarter Results

AppFolio (NASDAQ:APPF) reported third-quarter 2026 results on Thursday. Total revenue was USD 296 million, up 19% year over year. Value-added services revenue rose 21% to USD 232 million, led by FolioGuard mitigation services, FolioScreen and online payments. Subscription services revenue rose 14% to USD 62 million on unit growth and customers moving to premium tiers.

Value-added services were about 78% of revenue. GAAP operating income was USD 57 million, or 19.4% of revenue, against USD 35 million, or 14.1%, a gain of 530 basis points. Non-GAAP operating income was USD 81 million, or 27.3%, up 38%. GAAP Net Income was USD 46 million, or USD 1.29 per diluted share, and non-GAAP net income was USD 64.7 million, or USD 1.82 per share.

Customers and Units

The platform served 9.8 million units, up 8% from 9.1 million, and 23,100 customers, up 6% from 21,800. The chief financial officer said unit expansion among existing customers is pacing slower than last year, a trend comparable to the second quarter. Management introduced a Real Estate Performance Management framework built around systems of record, action and growth.

CEO Shane Trigg described the Realm-X AI suite, which lets customers build custom workflows and dashboards from prompts within security guardrails. The company expanded banking integrations through partnerships with Enterprise Bank and Trust and with Column to automate transaction matching, and its integration marketplace now includes nearly 100 partners connecting 5.6 million units.

Cost Structure

Sales and Marketing was 15% of revenue against 13%, reflecting Advertising costs and the timing of the Future industry event, which fell in the third quarter this year and the fourth quarter of 2025. Research and product development was 15% of revenue against 18%, which management linked to lower personnel costs and engineering productivity from AI tools. General and administrative expense was 6% against 8%. Those three lines together were 36% of revenue, against 39% a year earlier.

Headcount was 1,740, up 2% against revenue growth of 19%, which management cited as scaling revenue faster than headcount. Stock-based compensation was USD 20.6 million against USD 20.8 million. Operating Cash Flow was USD 97 million, or 32.7% of revenue, against USD 86 million, or 34.5%. Cash and investments were USD 307 million.

Raised Guidance

Full-year revenue is guided at USD 1.122 billion to USD 1.127 billion, a midpoint growth rate of 18.3%. Non-GAAP operating Margin is guided at 26.5% to 27.5%, up from 24.7% in fiscal 2025. The company projects a weighted average diluted share count of 36 million for the year. Management said the cash balance provides flexibility for internal Investment and opportunistic repurchases. Operating cash flow of USD 97 million compares with GAAP net income of USD 46 million.

Metrics to Follow

Revenue grew 19% while units grew 8% and customers grew 6%, so most growth came from monetization per unit through value-added services. Non-GAAP operating income grew 38%, with research and general expenses falling as a share of revenue while sales and marketing rose. Reference points are existing-customer unit expansion, value-added services growth, the fourth-quarter timing effect from the Future event, and the full-year margin range.