AppFolio, Inc.

Thank you for joining us today. Welcome to the AppFolio third quarter 2019 financial results conference call. I would now like to turn the call over to Erica Abrams. Thank you.

Thank you, Christine. Good afternoon, ladies and gentlemen. Thank you for joining us today as we report AppFolio's third quarter 2019 financial results. I'm joined today by Jason Randall and Ida Kane of AppFolio to discuss these results. This call is simultaneously being webcast on the investor relations section of our website at www.appfolioinc.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 will be forward-looking statements, which are subject to considerable risks and uncertainties. Actual results performance may be materially different from any results performance expressed were implied by the forward-looking statements. Forward-looking statements may relate to future plans and financial conditions, results of operations, business forecasts and plans, strategic plans and objectives, and product development plans. Please see our filings with the SEC for greater detail about risks and uncertainties. Forward-looking statements are based on assumptions as of today, and we assume no obligation to update any forward-looking statements after today Thank you, Erica, and welcome to everyone joining us on the call today for Upfolio's third quarter 2019 financial results.

Total revenue for the quarter increased by 36% over the same period one year ago to $67.9 million. GAAP net income was $5 million, or 14 cents per diluted share, which includes a $1.3 million income tax benefit related to research and development tax credits. For those of you who track non-GAAP results, our Form 10-Q that was filed today includes more detailed information that you might find helpful in calculating non-GAAP results including stock-based compensation expense. The third quarter of 2019 continues to reflect our investments ahead of potential revenue in several growth areas that we believe will positively impact long-term shareholder value, including a Folio Property Manager Plus or offering that serves larger, more complex real estate property manager customers, a Folio Investment Management, which serves real estate investment managers, Lisa, at Folio's AI Leasing Assistant, which we developed from the technology acquired through the Dynasty acquisition and is now offered as a Value Plus service, and Atfolio Utility Management, which we developed from technology acquired through the WeGalize acquisition and is also now offered as a ValuePlus service. Core Solutions revenue in the third quarter was $22.5 million, a 26% increase year-over-year, primarily due to a 19% increase in property manager units under management and an 11% increase in the number of property manager customers. We close the third quarter with 14,034 property manager customers managing 4.41 million units. Growth in net new units under management per customer reflects our ongoing focus and success serving property managers with larger and more complex portfolios. As a reminder, customers that are not subscribing to our core solutions, including, for example, standalone Dynasty and WeGoWise customers, are not included in our customer and unit count. In our legal vertical, customer count increased 6% year-over-year to 10,781. Third quarter Value Plus Services revenue was $41.6 million, a 35% increase year-over-year. Revenue from each of our Value Plus Services increased year-over-year. The majority of growth in this area continues to be driven by increased usage of our electronic payments, screening, and insurance services by a larger base of property manager customers and a higher number of units under management. Other revenue was $3.8 million in the third quarter, primarily related to an increase in revenue generated from customer subscriptions for the standalone WeGoWise platform and Dynasty Technology Services. In addition, we experienced an increase in website setup fees associated with our property manager customers upgrading to a new website hosting platform. Turning to expenses, total costs and operating expenses for the third quarter increased 43% year-over-year compared to an overall 36% increase in total revenue. Our year-over-year increase in costs is primarily related to a 41% growth in headcount to support our growth areas and an expanding base of both new and existing customers. Moving to our balance sheet, we closed the third quarter with approximately $45.2 million in cash, cash equivalents, and investment securities, and $49.1 million of debt. We generated $11.6 million from operating activities, used $1.7 million to purchase property and equipment and invested $6.2 million in additional product innovation via capitalized software. We did not initiate any stock repurchases during the third quarter. I would like to remind investors that we experienced some seasonality in our property management business during the fourth quarter of the calendar years. In prior years, we have noted that there is a tendency for fewer people to move during the quarter, resulting in less screening and payment services revenue attributable to rental applications for new tenants. We expect the seasonality to continue to exist in 2019. Given our performance in the quarter, we are raising our outlook for the full year 2019. We now expect revenue to be in the range of $254.5 million to $255.5 million. which represents year-over-year revenue growth of over 34% at the midpoint. We continue to expect our weighted average diluted share count for the year to be approximately $36 million. That concludes my prepared remarks. As a reminder, investors are invited to submit questions via investor Q&A form located on the investor overview section of our website. With that, I'll turn the call over to Jason for some additional comments.