AppFolio, Inc.

Good day, and thank you for standing by. Welcome to the AppFolio, Inc. First Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. And if you require any further assistance, just press star zero. I will now hand it over to today's presenter, Ms. Erica Abrams. You may begin your conference.

Thank you, Maria. Good afternoon, ladies and gentlemen, and thank you for joining us today as we report AppFolio's first quarter of 2021 financial results. With me on the call today are Jason Randall, AppFolio's president and CEO, and Ida Kane, AppFolio's chief financial officer. 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 remind everyone of AppFolio's safe harbor policy. 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. 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. APFOLIO'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. APFOLIO 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-Q, which was filed earlier today, for greater detail about risks and uncertainties. With that, I will turn the call over to Ida Cain, CFO. Ida, please go ahead.

Thank you, Erica, and welcome to everyone joining us for Upfolio's first quarter of fiscal year 2021 financial results. For the quarter, we reported total revenue of $78.9 million. Gap net income was $479,000, or one cent per diluted share. This includes an income tax benefit of $5.5 million. Also included in GAAP net income is $2.8 million in non-cash charges related to stock-based compensation. As Erica mentioned, our Form 10-Q 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 case operations for comparable periods historically. To that end, revenue from our continuing business for the first quarter of 2021 was $78.9 million, which represents an increase of 22% over revenue of $64.9 million over the same period in the prior year. 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 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 in our public filings. We generate revenue from our customers and from these users as our software and services aim to serve the full business ecosystem. Core solutions revenue derived from subscriptions to our customers in our continuing business in the first quarter of fiscal 2021 was $24.2 million, an increase of 18% over $20.5 million for the year-ago period. Value plus services revenue from our continuing business was $51.5 million in the first quarter of 2021, an increase of 26%, over $40.9 million for the same year-ago period. The increase in revenue year-over-year was primarily attributed to a 10% growth in the average number of property manager customers using our software and a 16% growth in the average number of units under management. During the first quarter of 2021, we continued to experience increased demand for our electronic payment services as residents, property managers, owners, and customers transacted more business online. We also experienced growth in several other Value Plus service offerings, primarily those related to the rental process. A 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 and other constituencies in the property management ecosystem. At March 31, 2021, we had over 16,100 real estate property management customers with 5.62 million units in their portfolios. We continue to focus on growing our customer and user base and expanding their adoption and utilization of ValuePlus services, which are designed to enhance, automate, and streamline processes and workflows that are essential to our customers' businesses. Turning now to spending. Total costs and operating expenses in the first quarter of 2021 were $84.3 million, and included a $1.4 million accrual related to long-term executive cash incentive plans for certain executives. Our SEC filings have additional information regarding the long-term executive cash incentive plans and related accrual. Including these accrual, we saw an overall increase in costs and operating expenses from our continuing business of 34% in the first quarter of 2021 as compared to the prior year. The 34% increase in costs year-over-year from $62.8 million to $84.3 million from our continuing business are mainly attributable to the 26% growth in our Value Plus Services revenue and the third-party costs incurred to support them, as well as growth in personnel costs, with headcount increasing 18% year-over-year. As we mentioned in our last earnings call, We hope to begin slowly transitioning back to in-person work during the remainder of fiscal year 2021. However, employees currently have the option to work remotely for at least the rest of the year, and our return to work plan is contingent on public health guidance. Last month, we signed a new lease agreement for our office space in San Diego. We are in the early stages of preparing that space for our employees and expect that office space to come online in fiscal year 2022. Moving to the balance sheet, at March 31st, 2021, our principal sources of liquidity were cash, cash equivalents, and investment securities, which had an aggregate balance of almost $160 million. During the quarter, we used $4.4 million for operating activities, In addition, we used $6.1 million for capitalized software development in connection with continued investment in our technology and service offering, and $900,000 for capital expenditures. Furthermore, we spent $4 million related to tax withholdings for RSU net share settlements. Before I move to the outlook for the remainder of 2021, I would like to address my upcoming departure. As you know from the press release, I recently informed Jason and the board of directors that I will be leaving the company. This personal decision was difficult for me, given how positive I feel about Upfolio. I am grateful for the opportunity and success we have achieved over the past six plus years, and I'm committed to supporting Jason, the board, and the rest of the Upfolio team through a successful transition. With the first quarter behind us and a full year of COVID in the rear view mirror, we are sharing guidance for our full fiscal year 2021. We expect total revenue from our continuing business for fiscal 2021 to be in the range of $348 to $355 million. The midpoint of the range implies year-over-year growth of 23.5% from our continuing business in 2021. We continue to expect our weighted average diluted share count for the year to be approximately 36 million shares. With that, I'll turn the call over to Jason for some additional comments. Please go ahead, Jason.