AppFolio, Inc.

Good afternoon. Thank you for standing by, and welcome to Abfolio, Inc.' 's conference call. Please be advised that today's conference is being recorded, and a replay will be available on Abfolio's Investor Relations website. I would now like to hand the conference over to Lori Barker, Investor Relations.

Thank you. Good afternoon, everyone. I'm Lori Barker, Investor Relations for Abfolio. And I'd like to thank you for joining us today as we report AppFolio's first quarter 2023 financial results. With me on the call today are Shane Trigg, AppFolio's President and CEO, and Faysian Goon, AppFolio's Chief Financial Officer. This call is being simultaneously 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 risk and uncertainty. 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. Abfolio's actual results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in our SEC file. Abfolio assumes no obligation to update any such forward-looking statements 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, 2022, which was filed with SEC on February 9, 2023. 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 first quarter earnings release posted on the investor relations section of our website. With that, I will turn it over to Shane Tritt. Shane, please go ahead.

Thanks, Lori, and welcome everyone to our first quarter 2023 earnings call and my first as president and CEO of Appfolio. Before we move through our discussion on the quarter and our strategy, I'd like to take a moment to acknowledge Jason Randall's accomplishments and wish him the very best. I have immense gratitude for Jason and all past and present AppFolians who have helped grow the company, and I'm honored to have this opportunity to lead AppFolio into what I'm confident is a bright future for our customers, employees, and shareholders. I joined this organization three years ago, to guide our real estate business with the mission to make Appfolio the leading property management platform. Today, we're making rapid progress towards that goal through a differentiated product vision and a go-to-market strategy that inspires customers to choose and grow with Appfolio. Results from the first quarter of 2023 demonstrate that we're right on track. I'm pleased to say first quarter revenue grew 29%, year over year to $136 million. We now have more than 7.5 million units on platform, and our total number of customers has expanded to nearly 19,000. We continue to see strong growth in our payments business, contributing to growing ARPU, and we're pleased with the continued adoption of Appfolio Property Manager Plus. One of the first things I did stepping into the CEO role was to reflect on the strength of our strategy. I believe the real estate industry needs Outfolio today more than ever. I also believe that our strategy, built on three key pillars, uniquely positions us and our customers for success. The first pillar of our strategy is creating truly differentiated experiences that solve the challenges our customers are facing and help them better achieve their goals. Continuously listening to our customers helps us understand their challenges and highlights areas in which they're seeking at folios, investment, and innovation. And today, our customers' highest priority is streamlining and automating their business processes. One solution to this challenge we frequently talk about is AI-based innovation. We invested in AI early and in recent quarters have told you about our successes with products like smart maintenance, bank feed, and our AI leasing assistant, Lisa, the last of which was recently awarded a patent for its powerful technology designed to optimize the leasing process by matching tenants with available units. Our ongoing AI investments are paying off for our customers, increasing their productivity and bringing them closer to their customers. We've had time to build the right team, thoroughly integrate AI into our technology platform and create repeatable processes and frameworks to rapidly turn AI advancements into immediate customer benefits. A major transformation is happening right now with the emergence of large language models. Our product and engineering teams have started piloting new capabilities, such as introducing AI-generated real estate listing descriptions into our leasing workflow. I'm excited to see where this will lead and am confident that Appfolio will continue to be an AI leader, building market differentiation well into the future. There is another important way in which we solve the challenge of increasing productivity, one that ties directly into why our customers choose Appfolio, the ease of use of our entire Appfolio platform. I hear this all the time in my conversations with customers. Let me give you a simple example of how focused investment in our team and platform is generating highly impactful improvements to our customers' productivity. We've recently released a series of search-related enhancements, including filtering search results by category, expanding search capabilities to additional documents, seamlessly accessing recent queries, and many more, all of which are designed to make our product even easier to use than it already is today. Helping customers achieve their outcomes through constant innovation has a measurable positive impact on customer satisfaction. In a recent strategic relationship survey, customers rated Appfolio number one among our competitive set for continually innovating the product. The second pillar in our strategy is acquiring new customers upmarket. These sophisticated businesses frequently rely on a broad range of point solutions to complement their property management software and need the capability to power their mixed portfolios with multiple property types. Last year, we launched Appfolio Stack, our marketplace for integration partners to address these customer needs and we continue to gain momentum. The number of units connected to Stack is growing and we're proud to be adding even more leading PropTech partners to the marketplace. We're now at 26. The most recent addition is Mezzo, and we expect to soon integrate with Rent Dynamics, Latch, and Point Central. AppFolio Stack is a good example of an upmarket capability we've built that is also benefiting SMB customers who are adopting at a high rate. Our nine-year partnership with Real Property Management, or RPM, a franchise corporation with 60,000 residential units, is an excellent example of how AppFolio is evolving to meet our customers' complex and growing needs using Stack. RPM chooses one property management service provider for all of its franchise locations, and AppFolio continues to earn their business year after year. they cite Stack as a key reason they continue to grow their business with AppFolio. According to Aaron Brackens, Director of Systems, and I quote, with the advent of AppFolio's Stack Marketplace, RPM has the capability to elevate our operational efficiencies through data aggregation and automation, fueling our goal of delivering best-in-class client experiences, end quote. Portfolio characteristics of upmarket customers are often a mix of conventional residential and other property types, like affordable housing. Expanding our coverage of additional property types contributes to our ability to win and retain these types of customers. In 2022, we worked with charter customers to develop meaningful enhancements to our affordable housing capabilities. In the first quarter of 2023, we added functionality designed to enable these customers to seamlessly manage complex compliance obligations to fulfill state reporting requirements and monitor property compliance for affordable units. The third pillar of our strategy is to expand customer adoption of Appfolio Property Manager Plus and our value-added services. we found that comprehensive adoption is often linked to successful customer onboarding. To that end, one of our service goals this year is empowering customers to confidently adopt the core workflows of accounting, leasing, and maintenance within the first 90 days of onboarding. One of the ways we're doing that is by enabling new customers to import their basic AppFolio data on their own including, for example, bank, owner, property, and tenant information. Across the industry, onboarding is often a time-intensive manual process that can bog property managers down and take much important time from their customers. By integrating self-service onboarding into AppFolio's platform and automating its steps, we significantly reduce the time it takes new customers to get up and running. In Q1, 75% of SMB customers completed their data submissions in 10 days or less. Not only do time to value improvements like this result in faster adoption of our value-added services and higher customer satisfaction, they also improve the productivity of our support team, which now spends less time on data migration and more time helping customers expand on our platform. It's an example when our customers are winning, we win as well. We've demonstrated that our rapid pace of innovation drives increasing value for customers of all sizes. We'll continue to focus on aligning the value we deliver with the value we capture as we scale to meet the unique needs of our customers across all segments. Meeting and exceeding our customers' dynamic needs doesn't happen without Appfolio's great team of people. We remain committed to building a diverse and inclusive company where each Appfolio has the opportunity to thrive. We'll continue to invest in our team in ways that deliver products and services that make our customers' lives easier. To that end, I'm happy to announce that Elizabeth Barrett has been promoted to be our new Chief People Officer. Elizabeth has been instrumental in building our culture during her six plus years at Appfolio, and I'm excited to see her continue to grow in this new role. To close, by focusing on our three strategic pillars, we have an incredible opportunity to deliver extraordinary customer value and drive efficient growth. I'm honored to lead Appfolio into our next phase, rooted in our values, inspired by our customers, and fueled by our people and world-class innovation. I'll now turn the call over to Face Hin for more detail on Appfolio's first quarter financial results.