AppFolio reports Q2 2025 revenue increased by 19% to $236 million, with significant AI adoption among its customers.
Quiver AI Summary
AppFolio, Inc. announced its second quarter financial results for 2025, showcasing continued growth and market success, with a 19% increase in revenue year-over-year to $236 million and a 6% rise in total units under management to 8.9 million. CEO Shane Trigg highlighted that 96% of customers are utilizing AI-powered solutions, enhancing their operational performance. The company's GAAP operating income was $41 million, representing 17.2% of revenue, while non-GAAP operating income reached $62 million or 26.2% of revenue. Looking ahead, AppFolio forecasts full year revenue between $935 million and $945 million, with non-GAAP operating margins expected to range from 24.5% to 26.5%. A conference call to discuss these results was scheduled for later the same day, with additional investor information available on their website.
Potential Positives
- Revenue grew 19% year-over-year to $236 million, indicating strong financial growth.
- Total units under management increased by 6% year-over-year to 8.9 million, reflecting higher customer engagement and market expansion.
- Non-GAAP operating income increased by 22% year-over-year to $62 million, showcasing improved operational efficiency despite slight declines in GAAP operating margin.
- 96% of customers reported using one or more AI-powered solutions, highlighting the successful adoption of innovative technology that provides a competitive advantage in the market.
Potential Negatives
- GAAP operating income decreased from 18.3% of revenue in Q2 2024 to 17.2% in Q2 2025, indicating a decline in operating efficiency.
- There was a significant drop in total assets from $626.7 million at the end of December 2024 to $567.4 million by June 30, 2025, which may raise concerns about the company's financial health.
- Forward-looking statements suggest uncertainty around future operating results and financial position, indicating that actual results may significantly differ from expectations, thus presenting potential risk to investors.
FAQ
What were AppFolio's financial results for Q2 2025?
AppFolio reported a revenue growth of 19% year-over-year, reaching $236 million for Q2 2025.
How did AppFolio's customer utilization of AI solutions perform?
96% of AppFolio customers utilized one or more of the company's AI-powered solutions, demonstrating significant adoption.
What is AppFolio's financial outlook for FY 2025?
AppFolio expects full-year revenue to range between $935 million to $945 million, with non-GAAP operating margins of 24.5% to 26.5%.
When will AppFolio discuss its financial results?
AppFolio will host a conference call on July 31, 2025, at 2:00 p.m. PT to discuss its Q2 financial results.
Where can I find more information about AppFolio's investor relations?
Additional information can be found on AppFolio's Investor Relations website at https://ir.appfolioinc.com/.
Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.
$APPF Congressional Stock Trading
Members of Congress have traded $APPF stock 1 times in the past 6 months. Of those trades, 0 have been purchases and 1 have been sales.
Here’s a breakdown of recent trading of $APPF stock by members of Congress over the last 6 months:
- REPRESENTATIVE JOSH GOTTHEIMER sold up to $15,000 on 04/09.
To track congressional stock trading, check out Quiver Quantitative's congressional trading dashboard.
$APPF Insider Trading Activity
$APPF insiders have traded $APPF stock on the open market 34 times in the past 6 months. Of those trades, 30 have been purchases and 4 have been sales.
Here’s a breakdown of recent trading of $APPF stock by insiders over the last 6 months:
- TIMOTHY K BLISS has made 9 purchases buying 22,000 shares for an estimated $4,778,053 and 0 sales.
- ALEXANDER WOLF has made 20 purchases buying 13,500 shares for an estimated $2,903,482 and 0 sales.
- WILLIAM SHANE TRIGG (Chief Executive Officer) has made 0 purchases and 2 sales selling 9,401 shares for an estimated $2,008,217.
- ELIZABETH ERIN BARAT (Chief People Officer) sold 4,682 shares for an estimated $1,066,512
- ROBERT DONALD III CASEY purchased 4,000 shares for an estimated $870,920
- TIMOTHY MATHIAS EATON (Int. Chief Financial Officer) sold 1,057 shares for an estimated $233,734
To track insider transactions, check out Quiver Quantitative's insider trading dashboard.
$APPF Hedge Fund Activity
We have seen 180 institutional investors add shares of $APPF stock to their portfolio, and 227 decrease their positions in their most recent quarter.
Here are some of the largest recent moves:
- AQR CAPITAL MANAGEMENT LLC removed 471,558 shares (-71.9%) from their portfolio in Q1 2025, for an estimated $103,695,604
- KAYNE ANDERSON RUDNICK INVESTMENT MANAGEMENT LLC added 354,061 shares (+84.4%) to their portfolio in Q1 2025, for an estimated $77,858,013
- WILLIAM BLAIR INVESTMENT MANAGEMENT, LLC added 310,834 shares (+73.6%) to their portfolio in Q2 2025, for an estimated $71,578,853
- FMR LLC added 248,693 shares (+41.6%) to their portfolio in Q1 2025, for an estimated $54,687,590
- PRINCIPAL FINANCIAL GROUP INC added 220,239 shares (+121.2%) to their portfolio in Q1 2025, for an estimated $48,430,556
- FULLER & THALER ASSET MANAGEMENT, INC. removed 185,054 shares (-100.0%) from their portfolio in Q1 2025, for an estimated $40,693,374
- JACOBS LEVY EQUITY MANAGEMENT, INC added 169,016 shares (+4272.4%) to their portfolio in Q1 2025, for an estimated $37,166,618
To track hedge funds' stock portfolios, check out Quiver Quantitative's institutional holdings dashboard.
$APPF Analyst Ratings
Wall Street analysts have issued reports on $APPF in the last several months. We have seen 1 firms issue buy ratings on the stock, and 0 firms issue sell ratings.
Here are some recent analyst ratings:
- DA Davidson issued a "Buy" rating on 04/14/2025
To track analyst ratings and price targets for $APPF, check out Quiver Quantitative's $APPF forecast page.
$APPF Price Targets
Multiple analysts have issued price targets for $APPF recently. We have seen 3 analysts offer price targets for $APPF in the last 6 months, with a median target of $267.0.
Here are some recent targets:
- Ryan Tomasello from Keefe, Bruyette & Woods set a target price of $267.0 on 07/31/2025
- Brent Bracelin from Piper Sandler set a target price of $240.0 on 07/17/2025
- Peter Heckmann from DA Davidson set a target price of $275.0 on 04/14/2025
Full Release
SANTA BARBARA, Calif., July 31, 2025 (GLOBE NEWSWIRE) -- AppFolio, Inc. (NASDAQ: APPF) ("AppFolio" or the "Company"), a technology leader powering the future of the real estate industry, today announced its financial results for the second quarter ended June 30, 2025.
"Our second quarter results reflect that we continue to win in the market,” said Shane Trigg, President and CEO, AppFolio. “Our customers are seeing tangible performance benefits by adopting our central, AI-native platform, with 96% of customers having used one or more of our AI-powered solutions. AppFolio is proving to be a competitive advantage for ambitious property management businesses.”
Financial Highlights for Second Quarter of 2025
- Revenue grew 19% year-over-year to $236 million.
- Total units under management grew 6% year-over-year to 8.9 million.
- GAAP operating income was $41 million, or 17.2% of revenue, compared to operating income of $36 million, or 18.3% of revenue in Q2 2024.
- Non-GAAP operating income was $62 million, or 26.2% of revenue, compared to non-GAAP operating income of $51 million, or 26.0% of revenue, in Q2 2024.
-
Net cash provided by operating activities was $53 million, or 22.3% of revenue, compared to $51 million, or 25.8% of revenue, in Q2 2024.
Financial Outlook
Based on information available as of July 31, 2025, AppFolio's outlook for fiscal year 2025 follows:
- Full year revenue is expected to be in the range of $935 million to $945 million.
- Full year non-GAAP operating margin as a percentage of revenue is expected to be in the range of 24.5% to 26.5%.
-
Diluted weighted average shares outstanding are expected to be approximately 37 million for the full year.
Conference Call Infor
mation
As previously announced, the Company will host a conference call today, July 31, 2025, at 2:00 p.m. Pacific Time (PT), 5:00 p.m. Eastern Time (ET), to discuss the Company’s second quarter financial results. A live webcast of the call will be available at:
https://edge.media-server.com/mmc/p/ijgr58yt
. To access the call by phone, please go to the following link:
https://register-conf.media-server.com/register/BIdccd543a8ef7485c8f06cd2837c68ea9
, and you will be provided with dial in details. A replay of the webcast will also be available for a limited time on AppFolio’s Investor Relations website at
https://ir.appfolioinc.com/news-events/events
.
The Company also provides announcements regarding its financial results and other matters, including SEC filings, investor events, and press releases, on its Investor Relations website at https://ir.appfolioinc.com/, as a means of disclosing material nonpublic information and for complying with AppFolio's disclosure obligations under Regulation FD.
About AppFolio
AppFolio is a technology leader powering the future of the real estate industry. Our innovative platform and trusted partnership enable our customers to connect communities, increase operational efficiency, and grow their business. For more information about AppFolio, visit ir.appfolioinc.com.
Investor Relations Contact:
Lori Barker
[email protected]
Use of Non-GAAP Financial Measures
Reconciliations of current and historical non-GAAP financial measures to AppFolio’s financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables entitled “Statement Regarding the Use of Non-GAAP Financial Measures.”
AppFolio is unable, at this time, to provide GAAP equivalent guidance measures on a forward-looking basis for non-GAAP operating margin because certain items that impact this measure are uncertain, out of our control, or cannot be reasonably predicted, such as charges related to stock-based compensation expense. The effect of these excluded items may be significant.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements are subject to considerable risks and uncertainties. Forward-looking statements include all statements that are not statements of historical fact contained in this press release, and can be identified by words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “future’” “predicts, “projects,” “target,” “seeks,” “contemplates,” “should,” “will,” “would” or similar expressions and the negatives of those expressions. In particular, forward-looking statements contained in this press release relate to future operating results and financial position, including the Company's fiscal year 2025 financial outlook, anticipated future expenses and investments, the Company's business opportunities, the impact of the Company's strategic actions and initiatives, the potential benefits and effect of the Company's AI-powered solutions, and their impact on the Company’s plans, objectives, expectations and capabilities.
Forward-looking statements represent AppFolio's current beliefs and expectations based on information currently available and speak only as of the date the statement is made. Forward-looking statements are subject to numerous known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to materially differ from those expressed or implied by these forward-looking statements include those risks, uncertainties and other factors described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on February 6, 2025, as such risk factors may be updated from time to time in our subsequent filings with the SEC, and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recently filed Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as well as in the Company's other filings with the SEC. You should read this press release with the understanding that the Company's actual future results may be materially different from the results expressed or implied by these forward-looking statements.
The Company undertakes no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) (in thousands) |
||||||
June 30,
2025 |
December 31,
2024 |
|||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 73,478 | $ | 42,504 | ||
Investment securities—current | 54,088 | 235,745 | ||||
Accounts receivable, net | 32,543 | 24,346 | ||||
Prepaid expenses and other current assets | 37,026 | 32,807 | ||||
Total current assets | 197,135 | 335,402 | ||||
Property and equipment, net | 22,641 | 24,483 | ||||
Operating lease right-of-use assets | 16,464 | 17,472 | ||||
Capitalized software development costs, net | 12,414 | 15,429 | ||||
Goodwill | 96,410 | 96,410 | ||||
Intangible assets, net | 43,942 | 49,057 | ||||
Deferred income taxes | 90,095 | 76,910 | ||||
Long-term investments | 77,033 | 2,033 | ||||
Other long-term assets | 11,269 | 9,482 | ||||
Total assets | $ | 567,403 | $ | 626,678 | ||
Liabilities and Stockholders’ Equity | ||||||
Current liabilities | ||||||
Accounts payable | $ | 3,254 | $ | 2,378 | ||
Accrued employee expenses | 25,784 | 30,157 | ||||
Accrued expenses | 18,103 | 14,658 | ||||
Other current liabilities | 20,448 | 16,087 | ||||
Total current liabilities | 67,589 | 63,280 | ||||
Operating lease liabilities | 35,180 | 37,476 | ||||
Other liabilities | 8,988 | 6,632 | ||||
Total liabilities | 111,757 | 107,388 | ||||
Stockholders’ equity | 455,646 | 519,290 | ||||
Total liabilities and stockholders’ equity | $ | 567,403 | $ | 626,678 | ||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) (in thousands, except per share amounts) |
||||||||||||
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||
2025 | 2024 | 2025 | 2024 | |||||||||
Revenue (1) | $ | 235,575 | $ | 197,375 | $ | 453,277 | $ | 384,805 | ||||
Costs and operating expenses: | ||||||||||||
Cost of revenue (exclusive of depreciation and amortization) (2) | 83,827 | 69,601 | 163,325 | 134,247 | ||||||||
Sales and marketing (2) | 36,776 | 27,300 | 67,833 | 51,755 | ||||||||
Research and product development (2) | 46,674 | 39,522 | 90,432 | 77,417 | ||||||||
General and administrative (2) | 21,936 | 20,254 | 45,287 | 41,386 | ||||||||
Depreciation and amortization | 5,850 | 4,670 | 12,105 | 9,882 | ||||||||
Total costs and operating expenses | 195,063 | 161,347 | 378,982 | 314,687 | ||||||||
Income from operations | 40,512 | 36,028 | 74,295 | 70,118 | ||||||||
Other (loss)/income, net | (11 | ) | — | 45 | — | |||||||
Interest income, net | 1,466 | 3,476 | 4,419 | 6,468 | ||||||||
Income before provision for income taxes | 41,967 | 39,504 | 78,759 | 76,586 | ||||||||
Provision for income taxes | 5,987 | 9,839 | 11,396 | 8,258 | ||||||||
Net income | $ | 35,980 | $ | 29,665 | $ | 67,363 | $ | 68,328 | ||||
Net income per common share: | ||||||||||||
Basic | $ | 1.00 | $ | 0.82 | $ | 1.87 | $ | 1.89 | ||||
Diluted | $ | 0.99 | $ | 0.81 | $ | 1.85 | $ | 1.86 | ||||
Weighted average common shares outstanding | ||||||||||||
Basic | 35,922 | 36,241 | 36,111 | 36,164 | ||||||||
Diluted | 36,204 | 36,742 | 36,425 | 36,720 | ||||||||
(1) The following table presents our revenue categories:
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
2025 | 2024 | 2025 | 2024 | ||||||||
Core solutions | $ | 52,473 | $ | 44,024 | $ | 101,986 | $ | 86,944 | |||
Value Added Services | 180,145 | 151,620 | 344,851 | 293,951 | |||||||
Other | 2,957 | 1,731 | 6,440 | 3,910 | |||||||
Total revenue | $ | 235,575 | $ | 197,375 | $ | 453,277 | $ | 384,805 | |||
(2) Includes stock-based compensation expense as follows:
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
2025 | 2024 | 2025 | 2024 | ||||||||
Costs and operating expenses: | |||||||||||
Cost of revenue (exclusive of depreciation and amortization) | $ | 1,419 | $ | 1,175 | $ | 2,706 | $ | 2,135 | |||
Sales and marketing | 3,045 | 1,703 | 5,893 | 3,213 | |||||||
Research and product development | 8,176 | 6,472 | 15,107 | 12,154 | |||||||
General and administrative | 5,659 | 5,444 | 10,964 | 10,766 | |||||||
Total stock-based compensation expense | $ | 18,299 | $ | 14,794 | $ | 34,670 | $ | 28,268 | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) (in thousands) |
|||||||||||||||
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||||||
2025 | 2024 | 2025 | 2024 | ||||||||||||
Cash from operating activities | |||||||||||||||
Net income | $ | 35,980 | $ | 29,665 | $ | 67,363 | $ | 68,328 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 5,850 | 4,670 | 12,105 | 9,881 | |||||||||||
Amortization of operating lease right-of-use assets | 507 | 530 | 1,008 | 1,053 | |||||||||||
Amortization of costs capitalized to obtain revenue contracts, net | 2,699 | 2,485 | 5,419 | 4,985 | |||||||||||
Deferred income taxes | (7,644 | ) | — | (13,185 | ) | — | |||||||||
Stock-based compensation, including as amortized | 18,299 | 14,795 | 34,670 | 28,269 | |||||||||||
Other | (131 | ) | (2,181 | ) | (1,048 | ) | (4,005 | ) | |||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | (5,081 | ) | 488 | (8,197 | ) | (4,982 | ) | ||||||||
Prepaid expenses and other assets | (5,966 | ) | (6,177 | ) | (11,426 | ) | 172 | ||||||||
Accounts payable | (1,694 | ) | (296 | ) | 852 | 437 | |||||||||
Operating lease liabilities | (1,051 | ) | (943 | ) | (2,102 | ) | (1,418 | ) | |||||||
Accrued expenses and other liabilities | 10,875 | 7,833 | 5,649 | (8,897 | ) | ||||||||||
Net cash provided by operating activities | 52,643 | 50,869 | 91,108 | 93,823 | |||||||||||
Cash from investing activities | |||||||||||||||
Purchases of available-for-sale investments | (1,732 | ) | (94,377 | ) | (64,034 | ) | (151,539 | ) | |||||||
Proceeds from sales of available-for-sale investments | 99,944 | — | 202,662 | — | |||||||||||
Proceeds from maturities of available-for-sale investments | 1,670 | 57,785 | 43,820 | 94,455 | |||||||||||
Purchases of property and equipment | (275 | ) | (38 | ) | (505 | ) | (1,458 | ) | |||||||
Capitalization of software development costs | (842 | ) | (1,404 | ) | (1,478 | ) | (2,529 | ) | |||||||
Purchases of long-term investments | (75,000 | ) | — | (75,000 | ) | — | |||||||||
Cash paid in business acquisition, net of cash acquired | — | — | (906 | ) | — | ||||||||||
Net cash used in investing activities | 23,765 | (38,034 | ) | 104,559 | (61,071 | ) | |||||||||
Cash from financing activities | |||||||||||||||
Proceeds from stock option exercises | 117 | 24 | 128 | 3,898 | |||||||||||
Tax withholding for net share settlement | (10,020 | ) | (12,434 | ) | (19,098 | ) | (26,520 | ) | |||||||
Purchase of common stock | (49,960 | ) | — | (145,723 | ) | — | |||||||||
Net cash used in financing activities | (59,863 | ) | (12,410 | ) | (164,693 | ) | (22,622 | ) | |||||||
Net decrease in cash, cash equivalents and restricted cash | 16,545 | 425 | 30,974 | 10,130 | |||||||||||
Cash, cash equivalents and restricted cash | |||||||||||||||
Beginning of period | 57,183 | 59,464 | 42,754 | 49,759 | |||||||||||
End of period | $ | 73,728 | $ | 59,889 | $ | 73,728 | $ | 59,889 |
RECONCILIATION FROM GAAP TO NON-GAAP RESULTS
(UNAUDITED) (in thousands, except per share data) |
|||||||||||||||||
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||||||||
2025 | 2024 | 2025 | 2024 | ||||||||||||||
Costs and operating expenses:
|
|||||||||||||||||
GAAP cost of revenue (exclusive of depreciation and amortization) | $ | 83,827 | $ | 69,601 | $ | 163,325 | $ | 134,247 | |||||||||
Stock-based compensation expense | (1,419 | ) | (1,175 | ) | (2,706 | ) | (2,135 | ) | |||||||||
Non-GAAP cost of revenue (exclusive of depreciation and amortization) | $ | 82,408 | $ | 68,426 | $ | 160,619 | $ | 132,112 | |||||||||
GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue | 36 | % | 35 | % | 36 | % | 35 | % | |||||||||
Non-GAAP cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue | 35 | % | 35 | % | 35 | % | 34 | % | |||||||||
GAAP sales and marketing | $ | 36,776 | $ | 27,300 | $ | 67,833 | $ | 51,755 | |||||||||
Stock-based compensation expense | (3,045 | ) | (1,703 | ) | (5,893 | ) | (3,213 | ) | |||||||||
Non-GAAP sales and marketing | $ | 33,731 | $ | 25,597 | $ | 61,940 | $ | 48,542 | |||||||||
GAAP sales and marketing as a percentage of revenue | 16 | % | 14 | % | 15 | % | 13 | % | |||||||||
Non-GAAP sales and marketing as a percentage of revenue | 14 | % | 13 | % | 14 | % | 13 | % | |||||||||
GAAP research and product development | $ | 46,674 | $ | 39,522 | $ | 90,432 | $ | 77,417 | |||||||||
Stock-based compensation expense | (8,176 | ) | (6,472 | ) | (15,107 | ) | (12,154 | ) | |||||||||
Non-GAAP research and product development | $ | 38,498 | $ | 33,050 | $ | 75,325 | $ | 65,263 | |||||||||
GAAP research and product development as a percentage of revenue | 20 | % | 20 | % | 20 | % | 20 | % | |||||||||
Non-GAAP research and product development as a percentage of revenue | 16 | % | 17 | % | 17 | % | 17 | % | |||||||||
GAAP general and administrative | $ | 21,936 | $ | 20,254 | $ | 45,287 | $ | 41,386 | |||||||||
Stock-based compensation expense | (5,659 | ) | (5,444 | ) | (10,964 | ) | (10,766 | ) | |||||||||
Non-GAAP general and administrative | $ | 16,277 | $ | 14,810 | $ | 34,323 | $ | 30,620 | |||||||||
GAAP general and administrative as a percentage of revenue | 9 | % | 10 | % | 10 | % | 11 | % | |||||||||
Non-GAAP general and administrative as a percentage of revenue | 7 | % | 8 | % | 8 | % | 8 | % | |||||||||
GAAP depreciation and amortization | $ | 5,850 | $ | 4,670 | $ | 12,105 | $ | 9,882 | |||||||||
Amortization of stock-based compensation capitalized in software development costs | (241 | ) | (471 | ) | (482 | ) | (989 | ) | |||||||||
Amortization of purchased intangibles | (2,558 | ) | (118 | ) | (5,115 | ) | (237 | ) | |||||||||
Non-GAAP depreciation and amortization | $ | 3,051 | $ | 4,081 | $ | 6,508 | $ | 8,656 | |||||||||
GAAP depreciation and amortization as a percentage of revenue | 2 | % | 2 | % | 3 | % | 3 | % | |||||||||
Non-GAAP depreciation and amortization as a percentage of revenue | 1 | % | 2 | % | 1 | % | 2 | % |
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||||||||
2025 | 2024 | 2025 | 2024 | ||||||||||||||
Income from operations: | |||||||||||||||||
GAAP income from operations | $ | 40,512 | $ | 36,028 | $ | 74,295 | $ | 70,118 | |||||||||
Stock-based compensation expense | 18,299 | 14,794 | 34,670 | 28,268 | |||||||||||||
Amortization of stock-based compensation capitalized in software development costs | 241 | 471 | 482 | 989 | |||||||||||||
Amortization of purchased intangibles | 2,558 | 118 | 5,115 | 237 | |||||||||||||
Non-GAAP income from operations | $ | 61,610 | $ | 51,411 | $ | 114,562 | $ | 99,612 | |||||||||
Operating margin: | |||||||||||||||||
GAAP operating margin | 17.2 | % | 18.3 | % | 16.4 | % | 18.2 | % | |||||||||
Stock-based compensation expense as a percentage of revenue | 7.8 | 7.4 | 7.7 | 7.3 | |||||||||||||
Amortization of stock-based compensation capitalized in software development costs as a percentage of revenue | 0.1 | 0.2 | 0.1 | 0.3 | |||||||||||||
Amortization of purchased intangibles as a percentage of revenue | 1.1 | 0.1 | 1.1 | 0.1 | |||||||||||||
Non-GAAP operating margin | 26.2 | % | 26.0 | % | 25.3 | % | 25.9 | % | |||||||||
Net income (loss): | |||||||||||||||||
GAAP net income | $ | 35,980 | $ | 29,665 | $ | 67,363 | $ | 68,328 | |||||||||
Stock-based compensation expense | 18,299 | 14,794 | 34,670 | 28,268 | |||||||||||||
Amortization of stock-based compensation capitalized in software development costs | 241 | 471 | 482 | 989 | |||||||||||||
Amortization of purchased intangibles | 2,558 | 118 | 5,115 | 237 | |||||||||||||
Income tax effect of adjustments | (7,257 | ) | (3,883 | ) | (13,599 | ) | (18,262 | ) | |||||||||
Non-GAAP net income | $ | 49,821 | $ | 41,165 | $ | 94,031 | $ | 79,560 | |||||||||
Net income per share, basic: | |||||||||||||||||
GAAP net income per share, basic | $ | 1.00 | $ | 0.82 | $ | 1.87 | $ | 1.89 | |||||||||
Non-GAAP adjustments to net income | 0.39 | 0.32 | 0.73 | 0.31 | |||||||||||||
Non-GAAP net income per share, basic | $ | 1.39 | $ | 1.14 | $ | 2.60 | $ | 2.20 | |||||||||
Net income per share, diluted: | |||||||||||||||||
GAAP net income per share, diluted | $ | 0.99 | $ | 0.81 | $ | 1.85 | $ | 1.86 | |||||||||
Non-GAAP adjustments to net income | 0.39 | 0.31 | 0.73 | 0.31 | |||||||||||||
Non-GAAP net income per share, diluted | $ | 1.38 | $ | 1.12 | $ | 2.58 | $ | 2.17 | |||||||||
Weighted-average shares used in GAAP and non-GAAP per share calculation | |||||||||||||||||
Basic | 35,922 | 36,241 | 36,111 | 36,164 | |||||||||||||
Diluted | 36,204 | 36,742 | 36,425 | 36,720 |
Statement Regarding the Use of Non-GAAP Financial Measures
We use the following non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
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Non-GAAP presentation of income from operations, costs and operating expenses, operating margin, net income, and net income per share.
These measures exclude certain non-cash or non-recurring items, including stock-based compensation expense, amortization of stock-based compensation capitalized in software development costs
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amortization of purchased intangibles, and the related income tax effect of these adjustments, as applicable and described below. Non-GAAP operating margin is calculated as non-GAAP operating income from operations as a percentage of revenue.
We use each of these non-GAAP financial measures internally to assess and compare operating results across reporting periods, for internal budgeting and forecasting purposes, and to evaluate our financial performance. We believe these non-GAAP financial measures also provide useful supplemental information to investors and facilitate the analysis of our operating results and comparison of operating results across reporting periods.
In particular, we believe these non-GAAP financial measures are useful to investors and others in assessing our operating performance due to the following factors:
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Stock-based compensation expense and amortization of stock-based compensation capitalized in software development costs.
We utilize stock-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of our stockholders while ensuring long-term retention, rather than to address operational performance for any particular period. As a result, stock-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.
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Amortization of purchased intangibles.
We view amortization of purchased intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of purchased intangibles is an expense that is not typically affected by operations during any particular period.
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Income tax effects of adjustments
. We utilize a fixed long-term projected tax rate in our computation of non-GAAP income tax effects to provide better consistency across interim reporting periods. In projecting this long-term non-GAAP tax rate, we utilize a financial projection that excludes the direct impact of other non-GAAP adjustments. The projected rate, which we have determined to be 21% and 25% for 2025 and 2024, respectively, considers other factors such as our current operating structure, existing tax positions in various jurisdictions, and key legislation in major jurisdictions where we operate. We periodically re-evaluate this tax rate, as necessary, for significant events, based on relevant tax law changes, and material changes in the forecasted geographic earnings mix.
Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because non-GAAP financial measures are not prepared in accordance with GAAP and can exclude expenses that may have a material impact on our reported financial results. As such, non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the tables above. We encourage investors to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.