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What changed in APPFOLIO INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of APPFOLIO INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+320 added−284 removedSource: 10-K (2026-02-05) vs 10-K (2025-02-06)

Top changes in APPFOLIO INC's 2025 10-K

320 paragraphs added · 284 removed · 237 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

42 edited+16 added−14 removed27 unchanged
Biggest changeOur services enable our customers to connect communities, increase operational efficiency, deliver exceptional customer experiences, and improve financial and operational performance. We believe our customer-centric culture leads to long-term customer retention and, ultimately, our long-term success. 1 Our Platform Our mission is to build the platform where the real estate industry comes to do business.
Biggest changeWe believe our customer-centric culture leads to long-term customer retention and, ultimately, our long-term success. 1 Our Platform Our mission is to build the platform where real estate comes to do business. The AppFolio Platform is designed to deliver value to industry stakeholders throughout the property management ecosystem. These stakeholders include property managers, property owners and investors, residents, and vendors.
This includes live and on-demand training, a library of resources, and personalized account management. We regularly measure our Net Promoter Score, Customer Satisfaction Score, and solicit customer feedback in a variety of ways in an effort to continue to improve and better serve our customers.
This includes live and on-demand training, a library of resources, and personalized account management. We regularly measure our Net Promoter Score and Customer Satisfaction Score, and solicit customer feedback in a variety of ways in an effort to continue to improve and better serve our customers.
ITEM 1. BUSINESS Unless otherwise stated in this Annual Report, references to "AppFolio," "we," "us," and "our" refer to AppFolio, Inc. and its consolidated subsidiaries. Overview Founded in 2006, AppFolio is a technology leader powering the future of the real estate industry. We provide a cloud-based platform on which our customers operate their businesses.
ITEM 1. BUSINESS Unless otherwise stated in this Annual Report, references to "AppFolio," "we," "us," and "our" refer to AppFolio, Inc. and its consolidated subsidiaries. Overview Founded in 2006, AppFolio is a technology leader powering the future of real estate. We provide a cloud-based platform, the AppFolio Platform, on which our customers operate their businesses.
Our sales representatives assist prospective customers as they evaluate our products. Our interactive sales methodology allows our sales team to quickly build relationships, assess prospective customers' business challenges, and demonstrate the benefits of our platform. 4 Technology and Operations Our products are powered by a highly scalable computing platform and are designed with a focus on data security and availability.
Our sales representatives assist prospective customers as they evaluate our products. Our interactive sales methodology allows our sales team to quickly build relationships, assess prospective customers' business challenges, and demonstrate the benefits of our platform. Technology and Operations Our products are powered by a highly scalable computing platform and are designed with a focus on data security and availability.
See Item 1A, " Risk Factors " for additional details regarding risks related to government regulations. Human Capital We believe our people are at the heart of our success. We drive our success by investing in our people, and cultivating an exceptional work destination where they want to be and stay.
See Item 1A, " Risk Factors " for additional details regarding risks related to government regulations. Human Capital We believe our people and culture are at the heart of our success. We drive our success by investing in our people, and cultivating an exceptional work destination where they want to be and stay.
We expect to continue to gain leverage in our service experience through self-service and automation, as well as through our third-party solution partners that enable us to quickly expand our service offerings. Additionally, we empower our customers and their networks of stakeholders through the continued development and adoption of our Value Added Services .
We expect to continue to gain leverage in our service experience through self-service and automation, as well as through our third-party solution partners that enable us to quickly expand our service offerings. Additionally, we empower our customers and their networks of stakeholders through the continued development and adoption of our Subscription Services and Value Added Services .
Our company culture, driven by the following six core values, fuels our purpose and results: • Great people make a great company. • Listening to customers is in our DNA. • Innovation powers success. • Simpler is better. • Do the right thing; it’s good for business. • Build trust every day.
Our company culture, driven by the following six core values, fuels our purpose and results: • Great people make a great company. • Listening to customers is in our DNA. • Innovation powers success. • Simpler is better. • Do the right thing; it’s good for business. 6 • Build trust every day.
We dedicate resources to guide our customers through the adoption and utilization of our Value Added Services. Sales and Marketing We leverage a modern and scalable marketing approach along with marketing automation technology to attract and engage prospects and build brand recognition as an industry leader.
We dedicate resources to guide our customers through the adoption and utilization of our Subscription Services and Value Added Services. Sales and Marketing We leverage a modern and scalable marketing approach along with marketing automation technology to attract and engage prospects and build brand recognition as an industry leader.
We believe our competitors primarily fall into the following categories: • Vertical real estate business management service providers that serve companies of all sizes in our markets; and • Horizontal business management service providers that offer broad solutions across multiple industries.
We believe our competitors primarily fall into the following categories: • Vertical real estate business management service providers that serve companies of all sizes in our markets; and 5 • Horizontal business management service providers that offer broad solutions across multiple industries.
We empower our customers and their industry segment stakeholders with a wide variety of Value Added Services, most significantly with: • Electronic Payment Services. Our electronic payment services allow property managers to streamline their receivables and payables through a variety of online payment options.
We empower our customers and their industry stakeholders with a wide variety of Value Added Services, most significantly with: • Electronic Payment Services. Our electronic payment services allow property managers to streamline their receivables and payables through a variety of online payment options.
In addition, we believe that it is easier for our customers to adjust to frequent platform updates, which incrementally change and improve their user experience, than to adapt to infrequent, but more drastic, updates.
In addition, we believe that it is easier for our customers to adjust to frequent platform updates that incrementally change and improve their user experience than to adapt to infrequent, but more drastic, updates.
Examples of these requirements include recycling of all demolished or removed materials whenever possible, installation of energy efficient HVAC units, low power LED lighting and fixtures, and native, drought resistant landscaping. Compensation and Benefits. We build a culture of high performance that recognizes and rewards those who deliver meaningful results, as well as how those results were achieved.
Examples of these requirements include recycling of all demolished or removed materials whenever possible, installation of energy efficient HVAC units, low power LED lighting and fixtures, and native, drought resistant landscaping. Compensation and Benefits. We maintain a culture of high performance that recognizes and rewards those who deliver meaningful results, as well as how those results were achieved.
We believe we are well positioned to compete against both horizontal and vertical competitors because of our innovative platform that can scale and extend through AppFolio Stack™ and our Value Added Services, which can meet the needs of all property management customers across our growing addressable market.
We believe we are well positioned to compete against both vertical and horizontal competitors because of our innovative platform that can scale and extend through AppFolio Stack™ and our Value Added Services, which can meet the needs of all property management stakeholders across our growing addressable market.
By prioritizing performance, transparency, and engagement, we create a culture where diverse perspectives fuel better innovation and stronger outcomes. Employee Development. We invest significant resources to develop the talent needed to remain at the forefront of innovation and make us an employer of choice.
By prioritizing performance, transparency, and engagement, we create a culture where diverse perspectives fuel better innovation and stronger outcomes. Employee Development. We invest significant resources to develop the talent needed to remain at the forefront of innovation, making us an employer of choice.
We encourage employee volunteerism through our employee-led Give Back Committee and company-wide benefit of eight hours of paid volunteer time off annually. Our corporate philanthropy program “AppFolio Gives Back” supports 6 housing availability, an ongoing challenge in the real estate industry, through a combination of employee fundraising, team volunteering, and a corporate matching gift program. Environmental Stewardship.
We empower employee volunteerism through our employee-led Give Back Committee and company-wide benefit of eight hours of paid volunteer time off annually. Our corporate philanthropy program, “AppFolio Gives Back”, supports housing availability, an ongoing challenge in the real estate industry, through a combination of employee fundraising, team volunteering, and a corporate matching gift program. Environmental Stewardship.
Competition The overall market for business management solutions in the real estate industry is global, highly competitive, and continually evolving to respond to changes in technology, operational requirements, and laws and regulations.
Competition The overall market for business management solutions in the real estate industry is global, highly competitive, and continually evolving to respond to changes in technology, including AI, operational requirements, and laws and regulations.
We use a variety of inbound and outbound marketing techniques to promote our solutions, and we participate in industry thought leadership and education. We also host our own annual industry conference, FUTURE, where leaders, innovators, and experts come together to explore, teach, and discuss technology, tools, and trends.
We use a variety of inbound and outbound marketing techniques to promote our products and services, and we participate in industry thought leadership and education. We also host our own annual industry conference, FUTURE, where leaders, innovators, and experts come together to explore, teach, and discuss technology, tools, and trends.
We foster a culture of belonging through employee-led resource groups, open communication, and regular listening forums, where every voice is valued and helps shape our workplace. At the same time, we are committed to empowering all employees to do their best work, grow their careers, and deliver results.
We foster a culture of belonging through employee-led resource groups, open communication, and regular listening forums, where every voice is valued and contributes to shaping our workplace. At the same time, we are committed to empowering all employees to do their best work, grow their careers, and deliver results.
Our quarterly engagement survey provides a platform for employees to provide anonymous feedback directly to their managers and our executives. Societal Impact. We create a culture of impact by striving to be a force for good for our customers, communities, and each other.
Our quarterly engagement survey provides a platform for employees to provide anonymous feedback directly to their managers and our executives. Societal Impact. We create a culture of impact by being a force for good for our customers, our communities, and each other.
Advanced technologies, such as AppFolio Realm and its AI capabilities, are designed to unlock increased productivity and efficiency gains for customers through generative messaging capabilities, customizable workflow automation, and an interactive AI-powered assistant. Our data platform and APIs extend our capabilities and enable third-party integrations through our Stack TM marketplace.
Advanced technologies, such as Realm and its AI capabilities, including our Performers product, are designed to unlock increased productivity and efficiency gains for customers through generative messaging capabilities, customizable workflow automation, and an interactive AI-powered assistant. Our data platform and APIs extend our capabilities and enable third-party integrations through our Stack TM marketplace.
We believe in a culture of environmental stewardship and strive to create environmentally friendly workplaces. We maintain sustainability requirements that all contractors who work in or around our buildings are required to follow.
We believe in a culture of environmental stewardship and strive to create environmentally friendly workplaces. We maintain sustainability requirements that all contractors who work in our buildings or on our grounds are required to follow.
As of December 31, 2024, we had 1,634 employees. We routinely engage temporary employees and consultants. We consider our relationships with our employees and consultants to be strong. To maintain this strong relationship and attract new talent, our human capital management efforts focus on the following initiatives: An Inclusive Workplace.
As of December 31, 2025, we had 1,702 employees. We routinely engage temporary employees and consultants. We consider our relationships with our employees and consultants to be strong. To maintain this strong relationship and attract new talent, our human capital management efforts focus on the following initiatives: An Inclusive Workplace.
Our learning and development offerings are aligned with the needs of our business as well as tailored for individual growth. We conduct in person trainings and make available on-demand programming that cover a wide range of topics from professional development to real estate industry acumen.
Our learning and development offerings are aligned with the needs of our business and tailored for individual growth. We conduct in-person trainings and make available on-demand programming that covers a wide range of topics from professional development to real estate industry acumen.
To help ensure that data is not lost and that customer requests can be satisfied, production assets are securely replicated and regularly backed up to multiple geographic regions. We monitor our production infrastructure to ensure high performance and availability, and our architecture provides us significant flexibility in achieving these goals.
To help ensure that data is not lost and that customer requests can be satisfied, production assets are securely replicated and regularly backed up to an additional geographic region. We monitor our production infrastructure to ensure high performance and availability, and our architecture provides us significant flexibility in achieving these goals.
Ongoing innovation in the investor and 3 resident industry segments are intended to redefine how property managers connect with these critical stakeholders and create additional value for all groups through the use of our platform. Deliver Value Efficiently As our customer base grows, we strive to provide a scalable client service experience that is accessible and easy to use.
Ongoing innovations for investor and resident stakeholders are intended to redefine how property managers connect with these critical stakeholders and create additional value for all groups through the use of our performance-driven platform. Deliver Performance Efficiently As our customer base grows, we strive to provide a scalable client service experience that is accessible and easy to use.
Our commitment to diversity, equity and inclusion starts at the leadership level and cascades to our talented employees. We believe that reflecting the diversity of our customers and communities is essential to driving innovation, performance, and long-term success.
Our commitment to an inclusive workplace starts at the leadership level and cascades to our talented employees. We believe that reflecting the diversity of our customers and communities is essential to driving innovation, performance, and long-term success.
Our compensation and benefits programs support the well-being of our employees and their families so they feel they can live their best lives both at work and at home. Our competitive compensation packages may include base salary, commission or annual performance-based bonuses, and stock-based compensation.
Our compensation and benefits programs support the well-being of our employees and their families enabling them to live their best lives both at work and at home. Our competitive compensation packages may include base salary, commission or annual performance-based bonuses, and stock-based compensation.
Our tenant screening services include credit checks, criminal history, landlord-tenant history, income verification, employment verification, and identity verification for use in connection with the rental application process. • Risk Mitigation. Through our FolioGuard™ brand, we offer risk mitigation products for property managers and residents.
Our tenant screening services, delivered through our FolioScreen™ Trusted Renter product suite, include credit checks, criminal history, landlord-tenant history, income verification, employment verification, and identity verification for use in connection with the rental application process. • Risk Mitigation. Through our FolioGuard™ offerings, we offer risk mitigation products for property managers and residents.
We also experience competition from numerous technology providers that focus almost exclusively on one or more point solutions in the real estate industry or in other industries. Continued consolidation among cloud-based point solution providers could significantly increase competition.
We also experience competition from numerous technology providers that focus almost exclusively on one or more point solutions in the real estate industry or in other industries.
In addition, certain of our services (such as our tenant screening and risk mitigation services) are highly regulated or intended to be used in connection with other highly regulated activities.
Government Regulation Our business activities are subject to various federal, state and local laws and regulations. In addition, certain of our services (such as our tenant screening and risk mitigation services) are highly regulated or intended to be used in connection with other highly regulated activities.
Our Customers We define customers as those paying for a subscription to our core solutions. As of December 31, 2024, we had 20,784 property management customers. Customer Service We believe our success is tied to long-term customer relationships, not a one-time sale. Our team is structured to deliver continuous service.
Our Customers We define customers as those contracted for a Property Manager Subscription Services Plan. As of December 31, 2025, we had 22,096 property management customers. 4 Customer Service We believe our success is tied to long-term customer relationships, not a one-time sale. Our team is structured to deliver continuous service.
Our strategy is anchored on the following three strategic pillars that are designed to facilitate the expansion and retention of our customer base. Differentiate to Win We strive to continually create differentiated product experiences that solve customer needs and create new revenue streams for AppFolio and our customers.
Differentiate to Win We strive to continually create differentiated product experiences that solve customer needs and create new revenue streams for AppFolio and our customers.
Research and Product Development We rely heavily on input from our customers and prospective customers in developing products that meet their needs and in anticipating developments in their businesses. We perform research and market validation efforts to guide our product roadmap. Our platform is frequently updated to provide new innovations and respond to market trends and customer needs.
We perform research and market validation efforts to guide our product roadmap. Our platform is frequently updated to provide new innovations and respond to market trends and customer needs.
Our Business and Growth Strategy Our growth strategy is centered on delivering value to all industry segments in the property management ecosystem, including, but not limited to, property managers, residents, vendors, and investors. Adding value to each of these industry segments improves retention and expansion opportunities for existing customers and creates a differentiated product experience to attract new customers.
Our Business and Growth Strategy Our growth strategy is centered on delivering value to all industry stakeholders in the property management ecosystem, including, but not limited to, property managers, residents, vendors, and investors.
AppFolio Property Manager Core has access to a limited set of Stack TM Core Integrations, a basic set of third-party integrations, and AppFolio Realm assistant and messages. AppFolio Property Manager Core is generally suited for small property management companies that prefer an all-in-one system that is comprehensive and easy to use. • AppFolio Property Manager Plus.
AppFolio Property Manager Core is generally suited for small property management companies, serving as the basic, comprehensive, all-in-one system of record centered on accounting functionality, and includes access to a limited set of Stack™ integrations. • AppFolio Property Manager Plus.
Sensitive data in our systems is encrypted during transmission and before being written to disk. We regularly evaluate our product and infrastructure security, including through third-party penetration testing. In addition, our products allow our customers to define roles that provide different levels of access to users, allowing them to view and modify specific items depending on their role.
We work to ensure that our customers and their communities are confident in our data practices. Sensitive data in our systems is encrypted during transmission and before being written to disk. We regularly evaluate our product and infrastructure security, including through third-party penetration testing.
We also limit access to certain confidential information or trade secret information, including our source code, to those who have a need for such access.
We also limit access to certain confidential information or trade secret information, including our source code, to those who have a need for such access. Despite our precautions, it may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create products and services that compete with ours.
We help our customers navigate an increasingly interconnected and growing network of stakeholders in their business ecosystems, including property managers, property investors, potential residents, residents, and vendors. We also provide key functionality related to critical transactions across the real estate lifecycle, including screening potential residents, sending and receiving payments, and providing insurance-related risk mitigation services.
We also provide key functionality related to critical transactions across the real estate lifecycle, including screening potential residents, sending and receiving payments, and providing insurance-related risk mitigation services. Our services enable our customers to connect communities, increase operational efficiency, deliver exceptional customer experiences, and improve financial and operational performance.
We strive to provide a seamless experience for our customers that increases their efficiency without sacrificing ease of use. Utilization and adoption of our Value Added Services is typically higher for residential properties than community association or commercial properties because of the unique and complex needs of the residential rental lifecycle.
Utilization and adoption of our Subscription Services and Value Added Services is typically higher for residential properties than community association or commercial properties because of the unique and complex needs of the residential rental lifecycle. Subscription Plans and Services The AppFolio Platform is primarily offered via three Subscription Plans: Core, Plus, and Max. • AppFolio Property Manager Core.
FolioGuard Renters Insurance, provided by AppFolio Insurance Services, Inc., a wholly-owned subsidiary of AppFolio, protects the personal belongings of renters, as well as the property itself, from certain unexpected damages. See Item 7, " Management's Discussion and Analysis of Financial Condition and Results of Operations " for information regarding the seasonality of our Value Added Services revenue.
FolioGuard Renters Insurance, provided by our wholly-owned subsidiary AppFolio Insurance Services, Inc., protects the personal belongings of renters, as well as the property itself, from certain unexpected damages. • Resident Services . AppFolio provides services intended to enhance the resident experience, leveraging modern communication software and mobile portals.
Value Added Services AppFolio offers Value Added Services that supplement our core solutions and are designed to enhance, automate, and streamline business-critical processes and workflows. Our Value Added Services generally fall into the categories of electronic payment services, tenant screening, risk mitigation, maintenance, and business optimization.
Our Value Added Services generally fall into the categories of electronic payment services, tenant screening, risk mitigation, maintenance, and business optimization. We strive to provide a seamless experience for our customers that increases their efficiency without sacrificing ease of use.
Supervisors can distribute work to staff in a secure and controlled environment, while leadership retains visibility across the entire system. Some sensitive customer actions require secondary verification via two-factor authentication, and any customer can enable two-factor authentication for logging into their account.
Some sensitive customer actions require secondary verification via two-factor authentication, and any customer can enable two-factor authentication for logging into their account. Research and Product Development We rely heavily on input from our customers and prospective customers to develop products that meet their needs and anticipate developments in their businesses.
Removed
Our platform is designed to deliver value to industry segments throughout the property management ecosystem. It is optimized for use across multiple devices and operating systems, and includes an intuitive interface and streamlined workflows.
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Our primary customers are property management companies who manage a variety of property types, including single family, multifamily, affordable, commercial, student, and community associations. We help our customers navigate an increasingly interconnected and growing network of stakeholders in their business ecosystems, including property managers, property investors, potential residents, residents, and vendors.
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Our platform is (i) a system of record to centralize and automate essential business processes, (ii) a system of engagement to enhance business interactions between our customers and their network of industry segment stakeholders, and (iii) a system of performance to leverage data to predict and optimize business workflows.
Added
Our performance-driven platform is (i) a system of record to centralize and store all critical operating information, (ii) a system of action to automate complex workflows while delivering improved outcomes, and (iii) a system of growth to drive value and revenue for the entire ecosystem.
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Our platform is enhanced with AppFolio Realm, a suite of AI-powered tools that assist with leasing, maintenance, accounting, and other business critical tasks. AppFolio Realm includes generative AI to answer questions, perform tasks and automate common workflows.
Added
The AppFolio Platform is built upon a unified architecture designed to serve as a single secure system of record for our customers' operational and financial data. This platform foundation provides real-time business intelligence and accounting functionality while maintaining data integrity. Building upon this foundation, AppFolio Realm integrates artificial intelligence, or AI, directly into the platform’s workflows.
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The platform also includes Stack TM , our partner ecosystem that allows customers to connect our platform with specialized technology and services offered by third parties. Our platform is frequently updated to provide new innovations and respond to market trends and customer needs.
Added
Through features such as Realm, the platform is capable of automating repetitive, high-volume tasks and promoting operational efficiency. To further enhance the platform's versatility, the AppFolio Stack™ marketplace utilizes application programming interfaces, or APIs, to facilitate our customers' ability to integrate specialized, third-party technology and services.
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We rely on strategic partners and third-party service providers to deliver certain aspects of our platform, and strive to provide a seamlessly integrated experience for our customers and their industry segment stakeholders. Core Solutions Our platform is offered as a service and made available via three subscription plans: • AppFolio Property Manager Core.
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This extensible ecosystem allows customers and partners to customize their workflows and incorporate specialized external solutions into the unified AppFolio environment. We categorize our products and services into two categories, Subscription Services and Value Added Services.
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AppFolio Property Manager Core provides the basic functionality required to operate a property management business. Centered on accounting, AppFolio Property Manager Core serves as our customers’ system of record. All critical transactions are completed and recorded in the system, giving our customers access to the data they need.
Added
AppFolio Property Manager Plus is designed for more complex, growing property management businesses, expanding on the Core plan functionality by adding capabilities for affordable housing and student housing, advanced accounting, advanced data analysis, and read-only API access, along with access to all Stack™ integrations. • AppFolio Property Manager Max.
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It also serves as their system of engagement as they interact with key industry segments, including residents living at their properties, investors owning those properties, and vendors providing products and services to those properties.
Added
AppFolio Property Manager Max includes the functionality of Plus and adds functionality designed for our largest operators, offering tools such as end-to-end leasing support with built-in leasing customer relationship management, or CRM, and leasing signals, and provides full database access through a read/write API. 2 The Subscription Services AppFolio offers are provided through the Core, Plus, and Max Subscription Plans or can be added as ancillary functionality.
Removed
AppFolio Property Manager Plus includes the functionality of AppFolio Property Manager Core and adds an expanded set of functionalities designed to meet the needs of more complex, growing property management businesses.
Added
Key services offered include: • Accounting and Reporting. AppFolio provides property management accounting software that acts as a single system of record, capturing every transaction in one centralized database. The software utilizes AI-powered features, such as Smart Budgeting, Bank Feed, Bill Approval Flows, and Smart Bill Entry to reduce manual data entry and increase reporting accuracy.
Removed
This includes support for affordable housing management, student housing management, more complex accounting needs, advanced data analysis, increased customization with a small number of user-defined fields, and enhanced customer support.
Added
Performance Insights dashboards enables data-driven strategic decision-making and efficient financial management. • Marketing and Leasing. The marketing and leasing tools are designed to help customers maximize occupancy, maintain a leasing pipeline, and manage the fully integrated lead-to-lease process. Our Realm Leasing Performer leverages AI to automate prospect engagement, including lead qualification, data capture, and tour scheduling.
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AppFolio Property Manage Plus also has 2 access to all of our Stack TM integrations, AI-powered customizable workflows through AppFolio Realm Flows, database access through a read application programming interface, and dedicated customer support resources. • AppFolio Property Manager Max.
Added
These capabilities are integrated with our Leasing CRM, which provides centralized end-to-end leasing management and conversion tracking. For portfolio optimization, our Leasing Signals supports customers' pricing decisions using their own unique pricing strategies and provides explainable pricing suggestions based on public data. • Maintenance. The platform provides property maintenance tools through automation and online maintenance workflows.
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AppFolio Property Manager Max includes the functionality of AppFolio Property Manager Plus and adds functionality designed to meet the needs of even larger property management businesses.
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Our Realm Maintenance Performer utilizes AI to automate service request intake and triage. The tool facilitates real-time, multi-lingual communication with residents and automatically generates prioritized work orders. This automation is designed to reduce response times and streamline the resolution of maintenance issues.
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Such functionality includes an end-to-end leasing funnel with built-in customer relationship management tools, increased customization with a large number of user-defined fields, full database access through a read/write application programming interface, and dedicated customer support resources.
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Our Unit Turn Board allows customers to track and manage the tasks required to prepare a unit for new occupancy, with the goal of minimizing vacancy periods and optimizing rental income. • Communication and Service. AppFolio provides modern communication tools to streamline customer service, maintain operations, and create seamless experiences for residents, property owners, and investors.
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In particular, we have control over the specific server and region on which each customer's data resides, and we can move such data between different geographic regions to avoid service disruption or to increase service performance. We work to ensure that our customers and their communities are confident in our data practices.
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Our Realm Messages integrates text and email communications into a centralized inbox. This feature allows customers to manage resident correspondence within the platform's core workflow, which is designed to improve record-keeping and response efficiency. Value Added Services AppFolio also offers Value Added Services that supplement our Subscription Services and are designed to enhance, automate, and streamline business-critical processes and workflows.
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Despite our precautions, it may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create products and services that compete with ours. 5 Government Regulation Our business activities are subject to various federal, state and local laws and regulations.
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The resident journey is enhanced with features, such as a personalized onboarding experience that integrates with third-party partners to facilitate the offering of resident services. 3 See Item 7, " Management's Discussion and Analysis of Financial Condition and Results of Operations " for information regarding the seasonality of our Value Added Services revenue.
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We believe adding value to each of these industry stakeholders improves retention and expansion opportunities for existing customers and creates a differentiated product experience to attract new customers. Our strategy is anchored on the following three strategic pillars that are designed to facilitate the expansion and retention of our customer base.
Added
In addition, our products allow our customers to define roles that provide different levels of access to users, allowing them to view and modify specific items depending on their role. Supervisors can distribute work to staff in a secure and controlled environment, while leadership retains visibility across the entire system.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

133 edited+38 added−4 removed101 unchanged
Biggest changeIn addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets. We are required to test goodwill and any other intangible assets with an indefinite life for possible impairment on an annual basis, or more frequently, when circumstances indicate that impairment may have occurred.
Biggest changeWe are required to test goodwill and any other intangible assets with an indefinite life for possible impairment on an annual basis, or more frequently, when circumstances indicate that impairment may have occurred. We are also required to evaluate amortizable intangible assets and fixed assets for impairment if there are indicators of a possible impairment.
Our electronic payment services business also exposes us to risk in connection with theft, fraud and other malicious activity by our employees, our third-party service providers’ employees, or third-parties who improperly gain access to our systems or our customers’ systems.
Our electronic payment services business also exposes us to risk in connection with theft, fraud and other malicious activity by our employees, our third-party service providers’ employees, or third-parties who improperly gain access to our systems, our customers’ systems, or our third-party providers' systems.
We do not directly access the payment card networks, such as Visa and MasterCard, that enable our acceptance of credit cards and debit cards, including some types of prepaid cards. Accordingly, we must rely on banks or other card payment processors to process transactions and must pay fees for their services.
We do not directly access the payment card networks, such as Visa and MasterCard, that enable our acceptance of credit cards and debit cards, including some types of prepaid cards. Accordingly, we must rely on banks or other card payment processors to process transactions and pay fees for their services.
Our failure to comply with these obligations could result in material additional penalties or other actions by the FTC or other agencies, including enjoining our ability to provide tenant screening services. 9 Our potential liability in any enforcement action, class action lawsuit, or significant single plaintiff action could have a material impact on our business, especially given that certain applicable laws and regulations provide for fines or penalties on a per occurrence basis and we participate in a large number of tenant screening transactions.
Our failure to comply with these obligations could result in material additional penalties or other actions by the FTC or other agencies, including enjoining our ability to provide tenant screening services. 9 Our potential liability in any enforcement action, class action lawsuit, or significant single plaintiff lawsuit could have a material impact on our business, especially given that certain applicable laws and regulations provide for fines or penalties on a per occurrence basis and we participate in a large number of tenant screening transactions.
As AI represents a rapidly evolving field, it inherently carries a spectrum of risks typical to emerging technologies. We anticipate the enactment of new laws and regulations pertaining to AI use, potentially placing us under increased regulatory oversight, escalating litigation risks, and augmenting our existing obligations regarding confidentiality and privacy. Such developments could negatively impact our business operations.
As AI represents a rapidly evolving field, it inherently carries a spectrum of risks typical of emerging technologies. We anticipate the enactment of new laws and regulations pertaining to AI use, potentially placing us under increased regulatory oversight, escalating litigation risks, and augmenting our existing obligations regarding confidentiality and privacy. Such developments could negatively impact our business operations.
If we are unable to protect our intellectual property rights adequately or the security controls made available by our code hosting partners are compromised and our code is improperly accessed, which has previously occurred and could occur again in the future, our competitors could use the intellectual property we have developed to enhance their own products and services, which could harm our business.
If we are unable to adequately protect our intellectual property rights or the security controls made available by our code hosting partners are compromised and our code is improperly accessed, which has previously occurred and could occur again in the future, our competitors could use the intellectual property we have developed to enhance their own products and services, which could harm our business.
These claims could result in litigation, which could be costly for us to defend, and could require us to make our source code freely available, purchase a costly license or cease offering the implicated functionality unless and until we can re-engineer them to avoid infringement.
These claims could result in litigation, which could be costly for us to defend, and require us to make our source code freely available, purchase a costly license or cease offering the implicated functionality unless and until we can re-engineer them to avoid infringement.
Because of the 10-to-1 voting ratio between our Class B common stock and Class A common stock, the holders of our Class B common stock collectively control a majority of the combined voting power of our outstanding capital stock and therefore control the election of a majority of our directors and thereby have the power to control our affairs and policies, including the appointment of management and strategic decisions, as well as matters that are submitted to a vote by our holders of our common stock.
Because of the 10-to-1 voting ratio between our Class B common stock and Class A common stock, the holders of our Class B common stock collectively control a majority of the combined voting power of our outstanding capital stock and therefore control the election of a majority of our directors and thereby have the power to control our affairs and policies, including the appointment of management and strategic decisions, as well as matters that are submitted to a vote by the holders of our common stock.
Our Amended and Restated Certificate of Incorporation and our Amended and Restated Bylaws contain provisions that could have the effect of rendering more difficult hostile takeovers, change-in-control transactions or changes in our Board of Directors or management.
Our Amended and Restated Certificate of Incorporation (our "Certificate") and our Amended and Restated Bylaws (our "Bylaws") contain provisions that could have the effect of rendering more difficult hostile takeovers, change-in-control transactions or changes in our Board of Directors or management.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, which may delay, deter or prevent a change-in-control transaction. Section 203 imposes certain restrictions on mergers, business combinations and other transactions between us and holders of 15% or more of our common stock.
As a Delaware corporation, we are also subject to the provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, which may delay, deter or prevent a change-in-control transaction. Section 203 imposes certain restrictions on mergers, business combinations and other transactions between us and holders of 15% or more of our common stock.
Unfavorable regulations, laws, and administrative or judicial decisions interpreting or applying laws and regulations applicable to our business could subject us to litigation or governmental investigation and increase our cost of doing business, any of which may adversely affect our operating results. In addition, the application of federal, state and local tax laws to services provided electronically is continuously evolving.
Unfavorable laws, regulations and administrative or judicial decisions interpreting or applying laws and regulations applicable to our business could subject us to litigation or governmental investigation and increase our cost of doing business, any of which may adversely affect our operating results. In addition, the application of federal, state and local tax laws to services provided electronically is continuously evolving.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted or amended at any time, possibly with retroactive effect, and could be applied solely or disproportionately to services provided over the Internet.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted or amended at any time (possibly with retroactive effect), and be applied solely or disproportionately to services provided over the Internet.
These enactments or amendments could adversely affect our sales activity due to the inherent cost increase such taxes would represent and could ultimately result in a negative impact on our operating results.
These enactments or amendments could adversely affect our sales activity due to the inherent cost increase such taxes would represent and ultimately result in a negative impact on our operating results.
Therefore, despite our significant efforts to keep our systems, products and networks protected and up to date, we may be unable to anticipate new modes for cyber attacks, detect security incidents or react to them in a timely manner, or implement adequate preventive measures, any of which may expose us to a risk of loss, harm to our reputation, litigation, fines, penalties, and potential liability.
Therefore, despite our significant efforts to keep our systems, products and networks protected and up to date, we may be unable to anticipate new modes for cyber attacks, detect security incidents or react to them in a timely 12 manner, or implement adequate preventive measures, any of which may expose us to a risk of loss, harm to our reputation, litigation, fines, penalties, and potential liability.
While we have not experienced material losses resulting from payment returns or chargebacks in the past, there can be no assurance that we will not experience significant losses in the future. Any increase in returns or chargebacks that we are not able to recover from our customers may adversely affect our financial condition and results of operations.
While we have not experienced material losses resulting from payment returns or chargebacks in the past, there can be no assurance that we will not experience significant losses in the future. Any increase in returns or chargebacks that we are not able to recover from our customers may adversely affect our business, financial condition and results of operations.
In particular, to continue to enhance our products and solutions, add new and innovative core functionality and/or Value Added Services, as well as develop new products, it will be critical for us to maintain and, over time, grow the current skill set and abilities of our research and product development organization.
In particular, to continue to enhance our products and services, add new and innovative core functionality and/or Value Added Services, as well as develop new products, it will be critical for us to maintain and, over time, grow the current skill set and abilities of our research and product development organization.
If we fail to successfully maintain and enhance our brands, or if we make investments that are not offset by increased revenue, our operating results could be adversely affected. 14 If we fail to manage our growth effectively, our costs and operating expenses may increase without corresponding increases in revenue, which would adversely affect our operating results.
If we fail to successfully maintain and enhance our brands, or if we make investments that are not offset by increased revenue, our operating results could be adversely affected. If we fail to manage our growth effectively, our costs and operating expenses may increase without corresponding increases in revenue, which would adversely affect our operating results.
We have experienced, and anticipate that we will continue to experience, significant growth in the size, complexity, and diversity of our business. This growth has placed, and we expect that it will continue to place, a significant strain on our administrative, operational, and financial resources. Our future success depends, in part, on our ability to manage this growth effectively.
We have experienced, and anticipate that we will continue to experience, significant growth in the size, complexity, and diversity of our business. This growth has placed, and we expect that it will continue to place, a significant strain on our administrative, operational, financial and accounting resources. Our future success depends, in part, on our ability to manage this growth effectively.
The development and incorporation of AI in our services may result in reputational harm or liability, which could adversely affect our business and operating results. We employ machine learning and AI technologies, including generative AI, in our product and service offerings. Research into and continued development of such technologies remains ongoing.
The development and incorporation of AI in our services may result in reputational harm or liability, which could adversely affect our business and operating results. We employ machine learning and AI technologies, including generative and agentic AI, in our product and service offerings. Research into, and continued development of, such technologies remains ongoing.
The CCPA also granted a new state agency, the California Privacy Protection Agency, powers to adopt and enforce regulations interpreting the CCPA. In addition, the CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information.
The CCPA also granted a new state agency, the California Privacy Protection Agency, powers to adopt and enforce regulations interpreting the CCPA. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information.
The dual class structure of our common stock concentrates voting control with a limited number of stockholders, including our directors and principal stockholders, effectively limiting other stockholders' ability to influence corporate matters. Our Class B common stock has ten votes per share, and our Class A common stock has one vote per share.
The dual class structure of our common stock concentrates voting control with a limited number of stockholders, including certain of our directors and principal stockholders, effectively limiting other stockholders' ability to influence corporate matters. Our Class B common stock has ten votes per share, and our Class A common stock has one vote per share.
If the perceived value of our equity awards declines, we are unable to offer equity awards in competitive amounts, or if the price of our Class A common stock experiences significant volatility, this may adversely affect our ability to retain and recruit highly skilled employees.
If the perceived value of our equity awards declines, we are unable to offer equity awards in competitive amounts, or the price of our Class A common stock experiences volatility, this may adversely affect our ability to retain and recruit highly skilled employees.
Maintaining and enhancing our brands is critical to achieving widespread awareness and acceptance of our solutions as well as maintaining and expanding our customer base, which is a key component of our strategy. We expect the importance of brand recognition will increase, as competition for our products and services increases.
Maintaining and enhancing our brands is critical to achieving widespread awareness and acceptance of our products and services as well as maintaining and expanding our customer base, which is a key component of our strategy. We expect the importance of brand recognition will increase as competition for our products and services increases.
As our business grows, the number of individuals using our products, as well as the amount of information we collect, store, and process is increasing, and our brands are becoming more widely recognized, which makes us a greater target for malicious activity.
As our business grows, the number of individuals using our products, as well as the amount of information we collect, store, process, and transmit is increasing, and our brands are becoming more widely recognized, which makes us a greater target for malicious activity.
In addition, if transactions or settlement reconciliations are not performed timely or are inaccurate due to human or processing errors, we could experience significant financial loss that could have an adverse effect on our business and operating results.
In addition, if transactions or settlement reconciliations are not performed timely or are inaccurate due to human or processing errors, we could experience significant financial loss that could have an adverse effect on our business, financial condition, and operating results.
Accordingly, the results of any one quarter should not be relied upon as an indication of our future 17 performance. See Item 7, " Management's Discussion and Analysis of Financial Condition and Results of Operations " for additional details regarding the seasonality of our revenue.
Accordingly, the results of any one quarter should not be relied upon as an indication of our future performance. See Item 7, " Management's Discussion and Analysis of Financial Condition and Results of Operations " for additional details regarding the seasonality of our revenue.
Risks Related to Our Products and Solutions If we are found to be in violation of the legal requirements applicable to our products and services, our business and operating results may be adversely affected. Our business activities are subject to various federal, state and local laws and regulations.
Risks Related to Our Products and Services If we are found to be in violation of the legal requirements applicable to our products and services, our business and operating results may be adversely affected. Our business activities are subject to various federal, state and local laws and regulations.
In any such event, we may be required to expend additional resources to help correct the problem or we may choose to expend additional resources to take corrective action even when not required. The costs incurred in correcting any material errors, defects or other disruptions could be substantial.
In any such event, we may be required to expend additional resources to correct the problem or we may choose to expend additional resources to take corrective action even when not required. The costs incurred in correcting any material errors, defects or other disruptions could be substantial.
If we are unsuccessful in establishing or 10 maintaining our relationships with third-party service providers, our ability to compete in the marketplace or to grow our customer base and revenue could be impaired, which could negatively impact our operating results.
If we are unsuccessful in establishing or maintaining our relationships with third-party service providers, our ability to compete in the marketplace or to grow our customer base and revenue could be impaired, which could negatively impact our operating results.
If we do not continue to preserve our corporate culture or maintain our core values as we grow and evolve, we may be unable to foster the 13 passion, creativity, teamwork, focus and innovation we believe we need to support our growth.
If we do not continue to preserve our corporate culture or maintain our core values as we grow and evolve, we may be unable to foster the passion, creativity, teamwork, focus and innovation we believe we need to support our growth.
Through wholly owned subsidiaries, we make rental insurance policies available to these renters and, if our customers so elect, add uncovered units to a qualifying liability to landlord insurance policy via a licensed insurance broker.
Through wholly owned and licensed subsidiaries, we make renters insurance policies available to these renters and, if our customers so elect, add uncovered units to a qualifying liability to landlord insurance policy via a licensed insurance broker.
For example, we intend to continue to make substantial investments in, among other things: our research and product development organization to enhance the ease of use and functionality of our solutions and develop new products; our sales and marketing organization, including expansion of our sales and marketing programs, to increase the size of our customer base and increase adoption and utilization of new and existing Value Added Services by our new and existing customers; and maintaining and expanding our technology infrastructure and operational support to promote the security and availability of our products and solutions.
For example, we intend to continue to make substantial investments in, among other things: our research and product development organization to both enhance the ease of use and functionality of and develop new products and services; our sales and marketing organization, including expansion of our sales and marketing programs, to increase the size of our customer base and increase adoption and utilization of new and existing Value Added Services by our new and existing customers; and maintaining and expanding our technology infrastructure and operational support to promote the security and availability of our products and services.
Real or perceived errors, defects, or other disruptions in our products or the products of our third-party service providers upon which certain of our products are dependent, could result in negative publicity, reputational harm, loss of customers, delay in market acceptance of our products and solutions, loss of competitive position, withholding or delay of payment to us, claims by customers for losses sustained by them and potential litigation or regulatory action.
Real or perceived errors, defects, or other disruptions in our products or the products of our third-party service providers upon which certain of our products are dependent, could result in negative publicity, reputational harm, loss of customers, delay in market acceptance of our products and services, loss of competitive position, withholding or delay of payment to us, claims by customers for losses sustained by them and potential litigation or regulatory action.
Our business involves the storage and transmission of sensitive and proprietary data and personal information collected by or on behalf of our customers, the personal information of our employees, customers, and prospective customers and our proprietary financial, operational and strategic information.
Our business involves the storage, processing and transmission of sensitive and proprietary data and personal information collected by or on behalf of our customers, the personal information of our employees, customers, and prospective customers and our proprietary financial, operational and strategic information.
If our security measures, or the security measures of our third-party service providers, are breached as a result of wrongdoing or malicious activity on the part of our employees, our third-party service providers' employees, our customers’ employees, or any third party, or as a result of any human error or neglect, product defect or otherwise, and this results in the loss, theft, misuse, unauthorized disclosure, or unauthorized access to personal data or other sensitive information, we could incur liability to our customers, employees, and to individuals or organizations whose information was being stored by us or our customers, as well as due to fines, penalties, or actions from payment processing networks or by governmental bodies.
If our security measures, or the security measures of our third-party service providers, are breached as a result of wrongdoing or malicious activity on the part of our employees, our third-party service providers' employees, our customers’ employees, or any third party, or as a result of any human error or neglect, product defect or otherwise, and this results in the loss, theft, misuse, unauthorized disclosure, or unauthorized access to personal data or other sensitive information, we could incur liability to our customers, employees, and to individuals or organizations whose information was being stored by us or our customers, as well as be subject to fines, penalties, or actions from payment processing networks or by governmental bodies.
For example, the California Consumer Privacy Act ("CCPA") requires certain privacy related disclosures and provides California consumers rights with respect to their personal information, including the right to request deletion of their personal information, the right to receive the personal information on record for them, the right to know what categories of personal information generally are maintained about them, as well as the right to opt-out of certain sales of personal information and sharing personal information for certain advertising purposes.
For example, the California Consumer Privacy Act ("CCPA") requires certain privacy related disclosures and provides California consumers rights with respect to their personal information, including the right to request deletion of their personal information, receive the personal information on record for them, know what categories of personal information generally are maintained about them, and opt-out of certain sales and sharing of personal information for certain advertising purposes.
We cannot predict the impact that our capital structure may have on our stock price. 18 Several shareholder advisory firms are opposed to the use of multiple class structures such as ours. As a result, shareholder advisory firms may publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure.
We cannot predict the impact that our capital structure may have on our stock price. 20 Several shareholder advisory firms are opposed to the use of multiple class structures such as ours. As a result, shareholder advisory firms may publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure.
Furthermore, no security program can entirely eliminate the risk of human error, such as an employee or contractor’s failure to follow one or more security protocols, which has previously occurred and we expect will occur again despite our efforts to train our employees and contractors on cybersecurity issues and enforce our security protocols.
Furthermore, no security program can entirely eliminate the risk of human error, such as an employee's or contractor’s failure to follow one or more security protocols, which has previously occurred and we expect will occur again despite our efforts to train our employees and contractors on cybersecurity issues and enforce our security protocols.
In addition, we could lose real estate customers as a result of acquisitions or consolidations, bankruptcies or other financial difficulties facing our real estate customers, new or enhanced legal or regulatory regimes that negatively impact the real estate industry, and conditions or trends specific to the real estate industry such as the economic factors that impact the rental market.
In addition, we could lose real estate customers as a result of acquisitions or consolidations, bankruptcies or other financial difficulties facing our real estate customers, new or enhanced legal or regulatory regimes that negatively impact the real estate industry, or conditions or trends specific to the real estate industry, such as the economic factors that impact the rental market and rental occupancy rates.
In addition, notwithstanding our intention to make strategic decisions and pursue opportunities that positively impact long-term value, the decisions we make and opportunities we pursue may not produce the long-term benefits we expect, which could materially affect our business, financial condition and results of operation. Our acquisition of other companies may subject us to risks.
In addition, notwithstanding our intention to make strategic decisions and pursue opportunities that positively impact long-term value, the decisions we make and opportunities we pursue may not produce the long-term benefits we expect, which could materially affect our business, financial condition and results of operation. Our acquisition of other companies or technologies may subject us to risks.
Our failure to secure, protect and enforce our intellectual property rights could adversely affect our business, financial condition and operating results. 16 We may be sued by third parties for alleged infringement of their proprietary rights, which could cause us to incur significant expenses and require us to pay substantial damages.
Our failure to secure, protect and enforce our intellectual property rights could adversely affect our business, financial condition and operating results. We may be sued by third parties for alleged infringement of their intellectual property rights, which could cause us to incur significant expenses and require us to pay substantial damages.
The adoption of such new technologies could significantly reduce the number or demand of our customers, thereby reducing our revenue, which could materially impact our business, financial condition and operating results. We participate in an intensely competitive market and our business could be harmed if we do not compete effectively.
The adoption of such new technologies could significantly reduce the number or demand of our customers, thereby reducing our revenue, which could adversely impact our business, financial condition and operating results. We participate in an intensely competitive market and our business could be harmed if we do not compete effectively.
Our competitors who are new entrants to the market, and generally smaller, may have more nimble operations due to having fewer products and less overhead and may be willing to take legal and operational risks, which allows them to launch products and meet customer demand more quickly and efficiently.
Our competitors who are new entrants to the market, and generally smaller, may have more nimble operations due to having fewer products and less overhead and may be willing to take legal and operational risks, which may allow them to launch products and meet customer demand more quickly and efficiently.
Increased demand for our support services may increase our costs without corresponding revenue, which could adversely affect our operating results. Further, our sales process is highly dependent on the ease of use of our solutions, our reputation and positive recommendations from our existing customers.
Increased demand for our support services may increase our costs without corresponding revenue, which could adversely affect our operating results. Further, our sales process is highly dependent on the ease of use of our products and services, our reputation and positive recommendations from our existing customers.
We have acquired, and may in the future acquire, other companies (such as our acquisition of Move EZ, Inc. in 2024) or technologies to complement or expand our products and solutions, optimize our technical capabilities, enhance our ability to compete, or otherwise advance our strategic objectives.
We have acquired, and may in the future acquire, other companies (such as our acquisition of Move EZ, Inc. in 2024) or technologies to complement or expand our products and services, optimize our technical capabilities, enhance our ability to compete, or otherwise advance our strategic objectives.
Any claims or litigation, regardless of merit, could cause us to incur significant expenses, distract management, and, if successfully asserted against us, could require that we pay substantial damages, settlement costs or ongoing royalty payments, require that we comply with other unfavorable license and other terms, or prevent us from offering our solutions in their current form, including due to the unavailability of commercially reasonable licensing terms.
Any claims or litigation, regardless of merit, could cause us to incur significant expenses, distract management, and, if successfully asserted against us, could require that we pay substantial damages, settlement costs or ongoing royalty payments, require that we comply with unfavorable license and other terms, or prevent us from offering our products and services in their current form, including due to the unavailability of commercially reasonable licensing terms.
Furthermore, the perception by our current or potential customers that our products could be vulnerable to exploitation or that our security measures are inadequate, even in the absence of a particular problem or threat, could reduce market acceptance of our products and solutions and cause us to lose customers.
Furthermore, the perception by our current or potential customers that our products could be vulnerable to exploitation or that our security measures are inadequate, even in the absence of a particular problem or threat, could reduce market acceptance of our products and services and cause us to lose customers.
We have limited experience and success in acquiring other businesses and we may not be able to effectively integrate acquired assets, technologies, personnel and operations or achieve the anticipated synergies or other benefits from the acquired business due to the inherent risks associated with acquisitions.
We have limited experience and success in acquiring other businesses and we may not be able to effectively integrate acquired assets, technologies, personnel and operations or achieve the anticipated synergies or other benefits from the acquisition due to the inherent risks associated with acquisitions.
Higher interest rates may make it difficult or impossible for our customers to obtain financing and increase their cost of capital, which could negatively impact the demand for our solutions and services, increase customer attrition, and impact our operating results.
Higher interest rates may make it difficult or impossible for our customers to obtain financing and increase their cost of capital, which could negatively impact the demand for our products and services, increase customer attrition, and impact our operating results.
Our corporate culture has contributed to our success and, if we cannot continue to foster this culture, we could lose the passion, creativity, teamwork, focus and innovation fostered by our culture. We believe that our corporate culture has been and will continue to be a key contributor to our success.
Our corporate culture has contributed to our success and, if we cannot continue to preserve this culture, we could lose the passion, creativity, teamwork, focus and innovation fostered by our culture. We believe that our corporate culture has been and will continue to be a key contributor to our success.
Our established competitors may have greater name recognition, longer operating histories, and significantly greater resources, which allows them to respond more quickly and effectively to new or changing opportunities or challenges, technologies, operational requirements and industry standards.
Our established competitors may have greater name recognition, longer operating histories, and significantly greater resources, which may allow them to respond more quickly and effectively to new or changing opportunities or challenges, technologies, operational requirements and industry standards.
In addition, we may not carry insurance sufficient to offset any losses that may result from claims arising from errors, defects or other disruptions in our products. If we are unable to deliver effective customer service, it could harm our relationships with our existing customers and adversely affect our ability to attract new customers and our operating results.
In addition, we may not carry insurance sufficient to offset any losses that may result from claims arising from such errors, defects or other disruptions. 10 If we are unable to deliver effective customer service, it could harm our relationships with our existing customers and adversely affect our ability to attract new customers and our operating results.
If we fail to maintain relationships with third-party service providers that enable certain functionality within our solutions or provide our customers with specialized technology and services, our business and operating results may be harmed.
If we fail to maintain relationships with third-party service providers that enable certain functionality within our products and services or provide our customers with specialized technology and services, our business and operating results may be harmed.
Our success depends, in part, on us refraining from infringing upon the intellectual property rights of others. Our competitors, as well as a number of other entities and individuals, may legally own or claim to own intellectual property relating to our technology or solutions, including without limitation technology we develop and build internally and/or acquire.
Our success depends, in part, on us refraining from infringing upon the intellectual property rights of others. Our competitors, as well as a number of other entities and individuals, may legally own or claim to own intellectual property relating to our technology or products and services, including without limitation technology we develop and build internally and/or acquire.
We depend on the interoperability of our platform with web browsers, and in the case of our mobile applications - operating systems, that we do not control. Any changes in such web browsers or systems that degrade the functionality of our solutions or give preferential treatment to competitive services could adversely affect the adoption and use of our solutions.
We depend on the interoperability of our platform with web browsers, and in the case of our mobile applications, operating systems that we do not control. Any changes in such web browsers or systems that degrade the functionality of our products and services or give preferential treatment to competitive services could adversely affect the adoption and use of our offerings.
In addition, security breaches could result in reputational damage, adversely affect our ability to attract new customers and cause existing customers to reduce or discontinue the use of our products and solutions.
In addition, security breaches could result in reputational damage, adversely affect our ability to attract new customers and cause existing customers to reduce or discontinue the use of our products and services.
Our customers may not renew their subscriptions with us, continue to expand their adoption and utilization of our Value Added Services, or use our Value Added Services at all for a variety of reasons, including macroeconomic pressures on the real estate market, competitive displacement, and reputational harm.
Our customers may not renew their subscriptions with us, continue to expand their adoption and utilization of our Value Added Services, or use our Value Added Services at all for a variety of reasons, including macroeconomic pressures on the real estate market, competitive displacement, customer satisfaction or service, or reputational harm.
If we are unable to successfully expand sales of our solutions to new markets, our revenue may increase at a slower rate than we expect and may even decline, which could adversely affect our business, financial condition and operating results. 15 Our business depends substantially on existing customers renewing their subscriptions with us and expanding their use of our Value Added Services, and a decline in either could adversely affect our operating results.
If we are unable to successfully expand sales of our products and services to new markets, our revenue may increase at a slower rate than we expect and may even decline, which could adversely affect our business, financial condition and operating results. 16 Our business depends substantially on existing customers renewing their subscriptions with us and expanding their use of our Value Added Services, and a decline in either could adversely affect our operating results.
In addition, to deliver high quality solutions, we will need to continuously enhance and modify our functionality to keep pace with technical, contractual, and other changes in Internet-related hardware, mobile operating systems such as iOS and Android, browsers, communication, network and database technologies.
In addition, to deliver high quality products and services, we will need to continuously enhance and modify our functionality to keep pace with technical, contractual, and other changes in Internet-related hardware, mobile operating systems such as iOS and Android, browsers, communication, network and database technologies.
Third-party commercial software or open source software is developed outside of our direct control and may introduce security vulnerabilities that may be difficult to anticipate or mitigate. Further, there is no guarantee that third-party software developers or open source software providers will continue to maintain and update the third-party software that we use.
Third-party commercial software and open source software are developed outside of our direct control and may introduce security vulnerabilities that may be difficult to anticipate or mitigate. Further, there is no guarantee that third-party software developers or open source software providers will continue to maintain and update their software that we use.
Despite our efforts to implement measures and develop our AI tools in a manner that enhances security and fairness, these issues may arise due to the direct interaction of users with generative AI models and the inherent unpredictability and power of these technologies.
Despite our efforts to implement measures and develop our AI tools in a manner that enhances accuracy, security and fairness, these issues may arise due to the direct interaction of users with generative and agentic AI models and the inherent unpredictability and power of these 11 technologies.
In addition, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, modified or applied adversely to us, possibly with retroactive effect, which could require us or our customers to pay additional tax amounts, as well as require us or our customers to pay fines or penalties, as well as interest on past amounts.
Existing tax laws, statutes, rules, regulations or ordinances could also be interpreted, modified or applied adversely to us (possibly with retroactive effect), which could require us or our customers to pay additional tax amounts, as well as require us or our customers to pay fines or penalties, as well as interest on past amounts.
Regardless of size, our current and potential competitors may develop, market and sell new technologies with comparable functionality to our solutions, which could cause us to lose customers, slow the rate of growth of new customers and/or cause us to decrease our prices to remain competitive.
Regardless of size, our current and potential competitors may develop, market and sell new technologies with comparable functionality to our products and services, which could cause us to lose customers, slow the rate of growth of new customers and/or cause us to decrease our prices to remain competitive.
Our competitors may have or expend a greater amount of resources on improvement of technology, and our failure to maintain adequate development programs or compete effectively could materially and adversely affect our business. If we are unable to ensure that our solutions interoperate with other technology, our solutions may become less competitive and our operating results may be harmed.
Our competitors may have or expend a greater amount of resources on improvement of technology, and our failure to maintain adequate development programs or compete effectively could adversely affect our business. If we are unable to ensure that our products and services interoperate with other technology, we may become less competitive and our operating results may be harmed.
The terms of many open source licenses to which we are subject have not been interpreted by United States or foreign courts, and there is a risk that open source licenses could be construed in a manner that imposes unanticipated conditions, restrictions or costs on our ability to provide or distribute our solutions.
The terms of many open source licenses to which we are subject have not been interpreted by United States or foreign courts, and there is a risk that these open source licenses could be construed in a manner that imposes unanticipated conditions, restrictions or costs on our ability to provide or distribute our products and services.
Risks Related to Our Common Stock The market price of our Class A common stock may be volatile or may decline regardless of our operating performance, which could result in substantial losses for our stockholders. The market price of our Class A common stock has been, and is likely to continue to be, highly volatile.
Risks Related to Our Common Stock The market price of our Class A common stock may be volatile or decline regardless of our operating performance, which could result in substantial losses for our stockholders. The market price of our Class A common stock has been, and may continue to be volatile.
Certain functionality of our services is provided, supported or enhanced by third-party service providers, including without limitation functions related to customer relationship management, cloud computing, texting, emailing, electronic payments, tenant screening, and insurance related offerings. Our customers are also able to integrate specialized, third-party technology and services through AppFolio Stack.
Certain functionality of our services is provided, supported or enhanced by third-party service providers, including without limitation functions related to CRM, cloud computing, texting, emailing, electronic payments, tenant screening, and insurance related offerings. Our customers are also able to integrate specialized, third-party technology and services through AppFolio Stack™.
Furthermore, uncertainties regarding the timing or nature of new network platforms or technologies, and modifications to existing platforms or technologies, could increase our research and product development expenses. In the event that it is difficult for our customers to access and use our solutions, our solutions may become less competitive, and our operating results could be adversely affected.
Furthermore, uncertainties regarding the timing or nature of new network platforms or technologies, and modifications to existing platforms or technologies, could increase our research and product development expenses. In the event that it is difficult for our customers to access and use our products and services, our offerings may become less competitive, and our operating results could be adversely affected.
Any failure to maintain high-quality and responsive customer service, or a market perception that we do not maintain high-quality and responsive customer service, could harm our reputation, cause us to lose customers and adversely impact our ability to sell our solutions to prospective customers.
Any failure to maintain high-quality and responsive customer service, or a market perception that we do not maintain high-quality and responsive customer service, could harm our reputation, cause us to lose customers and adversely impact our ability to sell our products and services to prospective customers.
In addition, the widespread adoption of quickly evolving disruptive technology products, such as generative AI, may significantly impact the real estate industry, even if such products are not specifically designed to apply directly to the real estate industry.
In addition, the widespread adoption of quickly evolving disruptive technology 15 products, such as generative and agentic AI, may significantly impact the real estate industry, even if such products are not specifically designed to apply directly to the real estate industry.
For example, we typically experience seasonality in our Value Added Services revenue due to seasonally higher leasing activities in the second quarter, which results in a sequential increase in revenue in the first, second, and third quarters and a sequential decline in revenue in the fourth quarter.
Additionally, we typically experience seasonality in our Value Added Services revenue due to seasonally higher leasing activities in the second quarter, which results in a sequential increase in revenue in the first, second, and third quarters and a sequential decline in revenue in the fourth quarter.
In addition, defending our tax positions or disputing the positions taken by tax authorities may be costly and a distraction to management, which may affect our operating results. Natural disasters, health epidemics, or other catastrophic events may cause damage or disruption to our operations, commerce and the global economy, and have a negative effect on our business and operations.
In addition, defending our tax positions may be costly and a distraction to management, which may affect our operating results. Natural disasters, health epidemics, or other catastrophic events may cause damage or disruption to our operations, commerce and the global economy, and have a negative effect on our business and operations.
For us to maintain or increase our revenue and improve our operating results, it is important that our existing customers continue to use our core solutions, as well as continue to use and increase their adoption and utilization of our Value Added Services.
For us to maintain or increase our revenue and improve our operating results, it is important that our existing customers continue to use our Subscription Services, as well as continue to use and increase their adoption and utilization of our Value Added Services.
The market price of our Class A common stock could be subject to fluctuations in response to many of the risk factors discussed in this Annual Report and other factors beyond our control, including without limitation: • actual or anticipated fluctuations in our financial condition or results of operations; • changes in the estimates of our operating results; • changes in recommendations by securities analysts or the failure of securities analysts to maintain coverage of us; • announcements of new products, services, technologies, or pricing; • fluctuations in our valuation or the valuation of similarly situated companies; • changes to our management team; • trading activity by insiders or the market’s perception that insiders intend to sell their shares; • the trading volume of our Class A common stock, including sales upon exercise of outstanding options or vesting of equity awards; and • the overall performance of the equity markets as well as general economic and market conditions.
The market price of our Class A common stock could be subject to fluctuations in response to many of the risks discussed in the "Risk Factors" section in this Annual Report and other factors beyond our control, including without limitation: • actual or anticipated fluctuations in our financial condition or results of operations; • changes in the estimates of our operating results; • changes in recommendations by securities analysts or the failure of securities analysts to maintain coverage of us; • announcements of new products, services, technologies, or pricing; • fluctuations in our valuation or the valuation of similarly situated companies; • changes to our management team; • trading activity by insiders or the market’s perception that insiders intend to sell their shares; • actual or perceived privacy or data security breaches or other similar incidents; • the trading volume of our Class A common stock, including sales upon exercise of outstanding options or vesting of equity awards; and • the overall performance of the equity markets as well as general economic and market conditions.
Should development of in-use third-party software or open source software cease, significant engineering effort may be required to create an in-house solution. These risks could be difficult to eliminate or manage, and could a material adverse impact on our business and operating results.
Should development of in-use third-party 18 software or open source software cease, significant engineering effort may be required to create an in-house solution. These risks could be difficult to eliminate or manage and have an adverse impact on our business and operating results.
We expect that our real estate industry customers will continue to account for a significant portion or all of our revenue for the foreseeable future. Demand for our solutions and services could be affected by factors that are unique to and adversely affect the real estate industry and our customers within it.
We expect that our real estate industry customers will continue to account for a significant portion, or all, of our revenues for the foreseeable future. Demand for our products and services could be affected by factors that are unique to and adversely affect the real estate industry and our customers within it.
Acceptance of our current and future solutions in new markets will depend on numerous factors, including our ability to provide more sophisticated functionality and features, the pricing of our solutions relative to competitive products, perceptions about the security, privacy and availability of our solutions relative to competitive products, and the time-to-market of updates and enhancements to our solutions.
Acceptance of our current and future products and services in new markets will depend on numerous factors, including our ability to provide more sophisticated functionality and features, the pricing of our products and services relative to competitors, perceptions about the security, privacy and availability of our offerings relative to competitive products and services, and the time-to-market of updates and enhancements to our offerings.
Any provision of Delaware law, our Amended and Restated Certificate of Incorporation, or our Amended and Restated Bylaws that has the effect of rendering more difficult, delaying, deterring or preventing a change-in-control transaction could limit the opportunity for our stockholders to receive a premium for their shares of our capital stock and could also affect the price that some investors are willing to pay for our Class A common stock.
Any provision of Delaware law, our Certificate or our Bylaws that has the effect of rendering more difficult, delaying, deterring or preventing a change-in-control transaction could limit the opportunity for our stockholders to receive a premium for their shares and affect the price that some investors are willing to pay for our Class A common stock.
If third-party bad actors again gain access to our systems or our customers’ systems, or our employees or third-party service providers’ employees misuse our payment systems for malicious purposes, we could experience material financial loss that may affect our operating results. Changes to payment card networks or bank fees, rules, or practices could harm our business.
If third-party bad actors again gain access to any of these systems, or our employees or third-party service providers’ employees misuse our payment systems for malicious purposes, we could experience material financial loss that may adversely affect our operating results. Changes to payment card networks or bank fees, rules, or practices could harm our business.
Federal, state, and foreign government bodies and agencies have adopted, and are increasingly adopting, laws and regulations regarding the collection, 12 use, processing, security and transmission of personal information.
Federal and state government bodies and agencies have adopted, and are increasingly adopting, laws and regulations regarding the collection, storage, use, processing, security and transmission of personal information.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWhile these past cyber-attacks have not materially affected and, in our belief, are not reasonably likely to materially affect us, future cybersecurity incidents and threats may materially affect us, including by affecting our business strategy, results of operations, or financial condition. See Item 1A., " Risk Factors " for additional details regarding cybersecurity risks.
Biggest changeWhile the risks from previous cybersecurity threats and incidents have not materially affected, and, in our belief, are not reasonably likely to materially affect, us, including our business strategy, results of operations or financial condition, future cybersecurity threats and incidences may materially affect us, including our business strategy, results of operations, or financial condition.
The RCOC updates the full Board of Directors on cybersecurity matters as appropriate. 20 Our information security team is led by our Chief Information Security Officer ("CISO"), who has served in the role since 2015 and has experience in application security, intrusion detection, penetration testing, complex threat modeling, and unconventional cyber-attack vectors.
The RCOC updates the full Board of Directors on cybersecurity matters as appropriate. Our information security team is led by our Chief Information Security Officer ("CISO"), who has served in the role since 2015 and has experience in application security, intrusion detection, penetration testing, complex threat modeling, and unconventional cyber-attack vectors.
ITEM 1C. CYBERSECURITY Cybersecurity and Risk Management Strategy Our business involves the storage and transmission of a significant amount of confidential and sensitive information. As a result, we take the confidentiality, integrity, and availability of such information seriously and invest significant time, effort, and resources into protecting such information.
ITEM 1C. CYBERSECURITY Cybersecurity and Risk Management Strategy Our business involves the collection, storage, processing and transmission of a significant amount of confidential and sensitive information. As a result, we take the confidentiality, integrity, and availability of such information seriously and invest significant time, effort, and resources into protecting such information.
To implement our cybersecurity risk management strategy, we maintain comprehensive processes and safeguards to secure the data we hold and to assess, identify and manage material risks from cybersecurity threats, including: • encrypting sensitive data, utilizing a robust 24/7/365 security monitoring system; • regularly assessing product features for security vulnerabilities; • periodically conducting internal penetration tests; and • providing our customers with multi-factor authentication options to help them effectively protect their information.
To implement our cybersecurity risk management strategy, we maintain comprehensive processes and safeguards to secure the data we hold and to assess, identify and manage material risks from cybersecurity threats, including: • encrypting sensitive data; • utilizing a robust 24/7/365 security monitoring system; • regularly assessing product features for security vulnerabilities; • periodically conducting both internal and third-party penetration tests; and 22 • providing our customers with multi-factor authentication options to help them effectively protect their information.
We also carry insurance that provides certain, limited protection against potential losses arising from a cybersecurity incident. Cybersecurity Governance The Risk and Compliance Oversight Committee of our Board of Directors (the "RCOC") is responsible for overseeing and reviewing AppFolio's cybersecurity program and cybersecurity risk exposure and the steps taken to monitor and mitigate such exposure.
In addition, we carry insurance that provides certain, limited protection against potential losses arising from a cybersecurity incident. Cybersecurity Governance The Risk and Compliance Oversight Committee of our Board of Directors (the "RCOC") is responsible for overseeing and reviewing AppFolio's cybersecurity program and cybersecurity risk exposure and the steps taken to monitor and mitigate such exposure.
Notwithstanding the foregoing efforts, there can be no assurance that our cybersecurity risk management program will entirely eliminate all risks from cybersecurity threats or incidents. Like many other businesses, we have experienced, and expect to continually be subject to, cyber-attacks.
Notwithstanding the foregoing efforts, there can be no assurance that our cybersecurity risk management program will entirely eliminate all risks from cybersecurity threats or incidents. Like many other businesses, we have experienced cybersecurity threats and incidents in the past, and expect to continue to experience cybersecurity threats and potentially cybersecurity incidents in the future.
These third parties help us assess our internal preparedness, adherence to best practices and industry standards, and compliance with applicable laws and regulations as well as help us to identify areas for continued focus and improvement. We conduct annual information security awareness training for employees involved in the systems or processes connected to confidential and sensitive information.
These third parties help us assess our internal preparedness, adherence to best practices and industry standards, and compliance with applicable laws and regulations as well as help us to identify areas for continued focus and improvement. We also conduct annual information security awareness training for all employees.
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See Item 1A., " Risk Factors " for additional details regarding cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our corporate headquarters is located in Santa Barbara, California, where we lease approximately 87,000 square feet of space. We also lease office space in several other U.S. cities. We do not own any real estate.
Biggest changeITEM 2. PROPERTIES Our corporate headquarters is located in Santa Barbara, California, where we lease approximately 86,000 square feet of space. We also lease office space in several other U.S. cities. We do not own any real estate.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor additional information regarding legal proceedings, refer to Note 12, Commitments and Contingencies of our Consolidated Financial Statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II ITEM 5.
Biggest changeFor additional information regarding legal proceedings, refer to Note 11, Commitments and Contingencies of our Consolidated Financial Statements. 23 ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Although the ultimate outcome of such investigative inquiries, legal proceedings and other disputes cannot be predicted with certainty, we do not believe that any such pending investigative inquires, legal proceedings and other disputes, if determined adversely to us, would, individually or taken together, have a material adverse effect on our business, operating results, financial condition or cash flows.
Although the ultimate outcome of such investigative inquiries, legal proceedings and other disputes cannot be predicted with certainty, we do not believe that any such pending investigative inquiries, legal proceedings and other disputes, if determined adversely to us, would, individually or taken together, have a material adverse effect on our business, operating results, financial condition or cash flows.
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MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for our Common Stock Our Class A common stock is listed on the NASDAQ Global Market under the symbol "APPF". Our Class B common stock is not listed or traded on any stock exchange.
Removed
Holders of Record At January 30, 2025, there were 30 holders of record of our Class A common stock and 55 holders of record of our Class B common stock.
Removed
Because many of our shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. Dividend Policy 21 We have never declared or paid any cash dividends on our capital stock.
Removed
We do not anticipate declaring or paying any cash dividends to holders of our capital stock in the foreseeable future and intend to retain all future earnings for use in the growth of our business.
Removed
Stock Performance Graph The following performance graph compares the cumulative total return on our Class A common stock with that of the S&P 500 Index and the NASDAQ Computer Index.
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This graph assumes that, at the close of market on December 31, 2019, $100 was invested in our Class A common stock, the S&P 500 Index and the NASDAQ Computer Index, and assumes the reinvestment of any dividends.
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The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock.
Removed
This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference into any of our other filings under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Unregistered Sales of Equity Securities and Purchases of Equity Securities None.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. (b) Matthew S. Mazza has been appointed Chief Trust Officer of the Company, effective February 6, 2025. Mr.
Added
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for our Common Stock Our Class A common stock is listed on the NASDAQ Global Market under the symbol "APPF". Our Class B common stock is not listed or traded on any stock exchange.
Removed
Mazza previously served as the Company's Chief Legal Officer, a position he held since 2021, and Corporate Secretary, a position he held since 2022. Before becoming Chief Legal Officer, Mr. Mazza served as the Company's General Counsel and Chief Compliance Officer, as well as in other senior legal and compliance roles, since 2016.
Added
Holders of Record At January 29, 2026, there were 18 holders of record of our Class A common stock and 45 holders of record of our Class B common stock.
Removed
(e) In connection with his appointment as Chief Trust Officer, Mr. Mazza entered into an employment agreement with the Company, dated as of February 6, 2025 (the “Employment Agreement”). The Employment Agreement provides for “at-will” employment and sets forth the terms and conditions of Mr. Mazza’s employment. Pursuant to the Employment Agreement, Mr.
Added
Because many of our shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. Dividend Policy We have never declared or paid any cash dividends on our capital stock.
Removed
Mazza will be entitled to receive, among other things: (a) an annual base salary of $420,000; (b) an annual bonus opportunity under the Company’s corporate bonus plan equal to 60% of his annual base salary at target; and (c) for 2025, an award of restricted stock units covering a number of shares of Class A Common Stock of the Company having an aggregate value of approximately $1,800,000 on the date of grant, which will vest in accordance with the Company’s standard practices.
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We do not anticipate declaring or paying any cash dividends to holders of our capital stock in the foreseeable future. Stock Performance Graph The following performance graph compares the cumulative total return on our Class A common stock with that of the S&P 500 Index and the NASDAQ Computer Index.
Removed
In addition, pursuant to the Employment Agreement, in the event the Company terminates Mr.
Added
This graph assumes that, at the close of market on December 31, 2020, $100 was invested in our Class A common stock, the S&P 500 Index and the NASDAQ Computer Index, and assumes the reinvestment of any dividends.
Removed
Mazza’s employment without “cause” or he resigns for “good reason,” (as each term is defined therein) subject to his execution and non-revocation of a general release of claims in favor of the Company and his compliance with certain non-disparagement, confidentiality and other restrictive covenants, he will be entitled to receive: (i) nine months of base salary continuation; (ii) payment of any earned but unpaid annual bonus in respect of the prior completed fiscal year; (iii) a pro rata portion of any annual bonus for the fiscal year in which such termination occurs; and (iv) payment of monthly premiums under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) until the earlier of (x) nine months following the termination date and (y) the date on which Mr.
Added
The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock. 24 This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference into any of our other filings under the Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Removed
Mazza first becomes eligible to obtain group health insurance through another employer or otherwise ceases to be eligible for continuation coverage under COBRA.
Added
Unregistered Sales of Equity Securities and Purchases of Equity Securities None. ITEM 6. [RESERVED]
Removed
The foregoing summary of the Employment Agreement is qualified in its entirety by reference to the full text of the Employment Agreement, which is filed as an Exhibit 10.25 to this Annual Report and incorporated herein by reference. ITEM 9C. DISCLOSURES REGARDING FOREIGN JURISDICTION THAT PREVENT INSPECTIONS Not applicable. PART III

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe expect sales and marketing expense for the year ending December 31, 2025 to slightly increase as a percentage of revenue compared to the year ended December 31, 2024 as we increase awareness and presence through targeted go-to-market investment. 25 Research and Product Development Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Research and product development $ 160,375 $ 151,364 $ 9,011 6 % Percentage of revenue 20.2 % 24.4 % Stock-based compensation, included above $ 25,414 $ 20,974 $ 4,440 21 % Percentage of revenue 3.2 % 3.4 % Research and product development expense for the year ended December 31, 2024 increased compared to the prior year.
Biggest changeResearch and Product Development Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Research and product development $ 190,419 $ 160,375 $ 30,044 19 % Percentage of revenue 20.0 % 20.2 % Stock-based compensation, included above $ 30,687 $ 25,414 $ 5,273 21 % Percentage of revenue 3.2 % 3.2 % Research and product development expense for the year ended December 31, 2025 increased compared to the prior year primarily due to a $22.8 million increase in personnel-related costs, including stock-based and performance-based compensation, net of capitalized software development costs driven by headcount growth, combined with a $2.3 million increase in software spending to support our research and development activities, for the year ended December 31, 2025.
In evaluating the need for a valuation allowance at each reporting period, we consider the weighting of all available positive and negative evidence, which includes, among other things, the nature, frequency and severity of current and cumulative taxable income or losses, future projections of profitability, timing of the future reversal of existing temporary differences, and the duration of statutory carryforward periods.
In evaluating the need for a valuation allowance at each reporting period, we consider the weighting of all available positive and negative evidence, which includes, among other things, the nature, frequency and severity of current and cumulative taxable income or losses, future projections of profitability, timing of the future reversal of existing temporary differences, and the duration of statutory carryforward periods.
In assessing all available evidence, we determined that there was sufficient positive evidence to overcome the negative evidence, including our past and current financial results, growth demonstrated in our top-line performance, as well as projected profitability.
In assessing all available evidence, we determined that there was sufficient positive evidence to overcome the negative evidence, including our past and current financial results, growth demonstrated in our top-line performance, as well as projected profitability.
Our research and product development efforts are focused on expanding functionality and the ease of use of our existing software solutions by adding new core functionality, Value Added Services and other improvements, as well as developing new products and services. We capitalize our software development costs that meet the criteria for capitalization.
Our research and product development efforts are focused on expanding functionality and the ease of use of our existing software products and services by adding new core functionality, Value Added Services and other improvements, as well as developing new products and services. We capitalize our software development costs that meet the criteria for capitalization.
During the measurement period of up to one year from the acquisition date, we 29 may record adjustments to the preliminary fair value of the assets acquired and liabilities assumed with a corresponding offset to goodwill for these business combinations.
During the measurement period of up to one year from the acquisition date, we may record adjustments to the preliminary fair value of the assets acquired and liabilities assumed with a corresponding offset to goodwill for these business combinations.
Although these seasonal factors are common in the real estate industry, historical patterns should not be considered a reliable indicator of our future sales activity or performance. Key Components of Results of Operations Revenue Our core solutions and certain of our Value Added Services are offered on a subscription basis.
Although these seasonal factors are common in the real estate industry, historical patterns should not be considered a reliable indicator of our future sales activity or performance. Key Components of Results of Operations Revenue Our Subscription Services and certain of our Value Added Services are offered on a subscription basis.
The subscription fees for our core solutions vary by property type and are designed to scale with the size of our customers’ businesses. We recognize revenue for subscription-based services on a straight-line basis over the contract term beginning on the date that our service is made available.
The subscription fees for our Subscription Services vary by property type and are designed to scale with the size of our customers’ businesses. We recognize revenue for subscription-based services on a straight-line basis over the contract term beginning on the date that our service is made available.
We expect total revenue for the year ending December 31, 2025 to increase compared to the year ended December 31, 2024 as we continue to add new customers and property management units under management, along with increased adoption and usage of our Value Added Services.
We expect total revenue for the year ending December 31, 2026 to increase compared to the year ended December 31, 2025 as we continue to add new customers and property management units under management, along with increased adoption and usage of our Value Added Services.
We account for individual performance obligations separately if they are distinct. The performance obligations for these contracts include access and use of our core solutions, implementation services, and customer support. Access and use of our core solutions and implementation services are considered distinct. The transaction price is allocated to each performance obligation on a relative standalone selling price basis.
We account for individual performance obligations separately if they are distinct. The performance obligations for these contracts include access and use of our Subscription Services, implementation services, and customer support. Access and use of our Subscription Services and implementation services are considered distinct. The transaction price is allocated to each performance obligation on a relative standalone selling price basis.
We expect cost of revenue (exclusive of depreciation and amortization) for the year ending December 31, 2025, to stay relatively flat as a percentage of revenue compared to the year ended December 31, 2024.
We expect cost of revenue (exclusive of depreciation and amortization) for the year ending December 31, 2026, to stay relatively flat as a percentage of revenue compared to the year ended December 31, 2025.
These third-party costs vary both in amount and as a percent of revenue for each Value Added Service offering.
These third-party costs vary both in amount and as a percentage of revenue for each Value Added Service offering.
Our primary uses of cash from operating activities are for personnel-related expenditures and third-party costs incurred to support the delivery of our software solutions.
Our primary uses of cash from operating activities are for personnel-related expenditures and third-party costs incurred to support the delivery of our software products and services.
We had 8.7 million and 8.2 million property management units under management, as of December 31, 2024 and 2023, respectively. Seasonality We have historically experienced seasonality in our Value Added Services revenue due to seasonally higher leasing activities in the second quarter.
We had 9.4 million and 8.7 million property management units under management, as of December 31, 2025 and 2024, respectively. Seasonality We have historically experienced seasonality in our Value Added Services revenue due to seasonally higher leasing activities in the second quarter.
We focus our sales and marketing efforts on generating awareness of our software solutions, creating sales leads, establishing and promoting our brands, and cultivating an educated community of successful and vocal customers. Research and Product Development.
We focus our sales and marketing efforts on generating awareness of our products and services, creating sales leads, establishing and promoting our brands, and cultivating an educated community of successful and vocal customers. Research and Product Development.
Many of our Value Added Services are facilitated by third-party service providers. Cost of revenue paid to these third-party service providers includes, without limitation, the cost of electronic interchange and payment processing-related services to support our payments services, the cost of credit reporting services for our tenant screening services, and various costs associated with our risk mitigation service providers.
Cost of revenue paid to these third-party service providers includes, without limitation, the cost of electronic interchange and payment processing-related services to support our payments services, the cost of credit reporting services for our tenant screening services, and various costs associated with our risk mitigation service providers.
Interest income, net includes interest earned on investment securities, amortization and accretion of the premium and discounts paid from the purchase of investment securities, and interest earned on cash deposited in our bank accounts. (Benefit from) provision for income taxes. (Benefit from) provision for income taxes consists of federal and state income taxes in the United States.
Interest income, net includes interest earned on investment securities, amortization and accretion of the premium and discounts paid from the purchase of investment securities, and interest earned on cash deposited in our bank accounts. Provision for (benefit from) income taxes.
Recent Accounting Pronouncements For information regarding recent accounting pronouncements, refer to Note 2, Summary of Significant Accounting Policies of our Consolidated Financial Statements included elsewhere in this Annual Report.
Recent Accounting Pronouncements For information regarding recent accounting pronouncements, refer to Note 2, Summary of Significant Accounting Policies of our Consolidated Financial Statements of this Annual Report. 34
For additional information, see Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report. Revenue Recognition Many of our contracts with customers contain multiple performance obligations. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require judgment.
For additional information, refer to Note 2, Summary of Significant Accounting Policies, of our Consolidated Financial Statements of this Annual Report. Revenue Recognition Many of our contracts with customers contain multiple performance obligations. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require judgment.
Cash Used in Financing Activities Cash used in financing activities is generally composed of net share settlements for employee tax withholdings associated with the vesting of equity awards offset by proceeds from the exercise of stock options.
Financing Activities Cash used in financing activities is generally composed of net share settlements for employee tax withholdings associated with the vesting of equity awards and repurchases of our Class A common stock offset by proceeds from the exercise of stock options and issuance of common stock under our employee stock purchase plan.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition, results of operations and liquidity should be read together with our Consolidated Financial Statements and the related notes included elsewhere in this Annual Report. 22 The following discussion and analysis of our financial condition and results of operations includes 2024 and 2023 items and year-over-year comparisons between 2024 and 2023.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition, results of operations and liquidity should be read together with our Consolidated Financial Statements and the related notes included elsewhere in this Annual Report.
As of December 31, 2024, our non-cancelable purchase commitments for business operations totaled $57.5 million, which are due primarily over the next three years. Operating lease obligations total $50.4 million as of December 31, 2024 associated with leased facilities and have varying maturities with $32.9 million due over the next five years.
As of December 31, 2025, our non-cancelable purchase commitments for business operations totaled $31.3 million, which are due primarily over the next three years. Operating lease obligations associated with leased facilities totaled $38.2 million as of December 31, 2025 and have varying maturities with $44.8 million due over the next five years.
Cash Flows The following table presents our cash flows for the periods indicated (in thousands): Year Ended December 31, 2024 2023 Net cash provided by operating activities $ 188,159 $ 60,283 Net cash used in investing activities (151,761) (55,582) Net cash used in financing activities (43,403) (25,961) Net (decrease) in cash and cash equivalents $ (7,005) $ (21,260) Cash Provided by Operating Activities Our primary source of operating cash inflows is cash collected from our customers in connection with their use of our core solutions and Value Added Services.
Cash Flows The following table presents our cash flows for the periods indicated (in thousands): Year Ended December 31, 2025 2024 Net cash provided by operating activities $ 242,105 $ 188,159 Net cash provided by (used in) investing activities 10,244 (151,761) Net cash used in financing activities (187,886) (43,403) Net increase (decrease) in cash and cash equivalents $ 64,463 $ (7,005) Operating Activities Our primary source of operating cash inflows is cash collected from our customers in connection with their use of our Subscription Services and Value Added Services.
Our payments services fees are recorded gross of any interchange and payment processing related fees. We generally invoice our usage-based services on a monthly basis or collect the fee at the time of service. A significant majority of our Value Added Services revenue comes from the use of our electronic payment services, tenant screening services, and risk mitigation services.
Our payments services fees are recorded gross of any interchange and payment processing related fees. We generally invoice our usage-based services on a monthly basis or collect the fee at the time of service.
We expect research and product development expenses for the year ending December 31, 2025 to decrease as a percentage of revenue compared to the year ended December 31, 2024, as we continue to leverage headcount efficiencies.
We expect research and product development expenses for the year ending December 31, 2026 to stay relatively flat as a percentage of revenue compared to the year ended December 31, 2025.
The net increase in cash used in investing activities for the year ended December 31, 2024, compared to the prior year, was primarily due to higher purchases of available-for-sale investment securities and the cash paid in business acquisition, net of cash acquired.
The net increase in cash provided by investing activities for the year ended December 31, 2025, compared to the prior year, was primarily due to higher sales and maturities of available-for-sale investment securities and lower purchases of available-for-sale investment securities.
Interest Income, Net Year Ended December 31, Change 2024 2023 Amount % Interest income, net $ 13,981 $ 7,031 $ 6,950 99 % Percentage of revenue 1.8 % 1.1 % Interest income for the year ended December 31, 2024 increased, compared to the prior year, primarily due to higher interest rates and purchases of available-for-sale investment securities.
Interest Income, Net Year Ended December 31, Change 2025 2024 Amount % Interest income, net $ 8,157 $ 13,981 $ (5,824) (42) % Percentage of revenue 0.9 % 1.8 % Interest income for the year ended December 31, 2025 decreased, compared to the prior year, primarily due to the sale of available-for-sale investment securities and lower interest rates.
In these instances, we determine the standalone selling price based on our overall pricing objectives, taking into consideration customer demographics and other factors. Fees are fixed based on rates specified in the subscription agreements, which do not provide for any refunds or adjustments.
In these instances, we determine the standalone selling price based on our overall pricing objectives, taking into consideration customer demographics and other factors.
General and Administrative Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) General and administrative $ 85,974 $ 93,452 $ (7,478) (8) % Percentage of revenue 10.8 % 15.1 % Stock-based compensation, included above $ 22,361 $ 21,704 $ 657 3 % Percentage of revenue 2.8 % 3.5 % General and administrative expense for the year ended December 31, 2024 decreased compared to the prior year, primarily due to a $15.4 million decrease in personnel-related costs, including cash bonuses and stock-based compensation, which was partially offset by a $7.8 million increase in allocated shared and other costs.
General and Administrative Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) General and administrative $ 95,590 $ 85,974 $ 9,616 11 % Percentage of revenue 10.1 % 10.8 % Stock-based compensation, included above $ 22,633 $ 22,361 $ 272 1 % Percentage of revenue 2.4 % 2.8 % General and administrative expense for the year ended December 31, 2025 increased compared to the prior year primarily due to a $12.3 million increase in personnel-related costs, including stock-based and performance-based compensation, driven by headcount growth, for the year ended December 31, 2025.
We expect depreciation and amortization expenses for the year ending December 31, 2025 to increase as a percentage of revenue compared to the year ended December 31, 2024 due to amortization of the intangible assets recognized from the acquisition of Move EZ, Inc. in the fourth quarter of 2024.
We expect general and administrative expenses for the year ending December 31, 2026 to stay relatively flat as a percentage of revenue compared to the year ended December 31, 2025. 29 Depreciation and Amortization Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Depreciation and amortization $ 22,651 $ 19,545 $ 3,106 16% Percentage of revenue 2.4 % 2.5 % Depreciation and amortization expense for the year ended December 31, 2025 increased, compared to the prior year, primarily due to amortization of the intangible assets recognized from the acquisition of Move EZ, Inc. in the fourth quarter of 2024.
We believe that our existing cash and cash equivalents, investment securities, and cash generated from operating activities will be sufficient to meet our working capital and capital expenditure requirements for at least the next twelve months. 27 Capital Requirements Our future capital requirements depend on many factors, including continued market acceptance of our software solutions; changes in the number of our customers, adoption and utilization of our Value Added Services by new and existing customers; the timing and extent of the introduction of new core functionality, products and Value Added Services; and the timing and extent of our investments across our organization.
Capital Requirements Our future capital requirements depend on many factors, including continued market acceptance of our software products and services; changes in the number of our customers; adoption and utilization of our Value Added Services by new and existing customers; the timing and extent of the introduction of new core functionality, products and Value Added Services; and the timing and extent of our investments across our organization, including acquisitions of businesses and technologies.
Cash Used in Investing Activities Cash used in investing activities is generally composed of the cash paid in business acquisition, net of cash acquired, purchases of investment securities, maturities and sales of investment securities, purchases of property and equipment, and additions to capitalized software development.
The net increase in cash provided by operating activities for the year ended December 31, 2025, compared to the prior year, was primarily due to a higher increase in cash collections from customers relative to the increase in operating expenditures. 31 Investing Activities Cash provided by (used in) investing activities is generally composed of cash paid in purchases of investment securities, maturities and sales of investment securities, purchases of property and equipment, business acquisition, net of cash acquired, and additions to capitalized software development.
Cost of Revenue (Exclusive of Depreciation and Amortization) Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Cost of revenue (exclusive of depreciation and amortization) $ 282,067 $ 238,076 $ 43,991 18 % Percentage of revenue 35.5 % 38.4 % Stock-based compensation, included above $ 4,522 $ 3,703 $ 819 22 % Percentage of revenue 0.6 % 0.6 % Cost of revenue (exclusive of depreciation and amortization) for the year ended December 31, 2024, increased primarily due to increases in expenditures to third-party service providers related to the delivery of our Value Added Services of $40.7 million compared to the prior year.
Cost of Revenue (Exclusive of Depreciation and Amortization) Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Cost of revenue (exclusive of depreciation and amortization) $ 345,341 $ 282,067 $ 63,274 22 % Percentage of revenue 36.3 % 35.5 % Stock-based compensation, included above $ 5,138 $ 4,522 $ 616 14 % Percentage of revenue 0.5 % 0.6 % Cost of revenue (exclusive of depreciation and amortization) increased for the year ended December 31, 2025, compared to the prior year primarily driven by higher third-party service provider costs of $54.7 million, due to increased adoption and usage of our Value Added Services, combined with a $4.9 million increase in personnel-related costs, including stock-based and performance-based compensation, to support growth in the business, for the year ended December 31, 2025.
During the year ended December 31, 2024, we experienced growth of 6% in the number of property management units under management compared to the prior year, which drove growth in both the number users and usage of our subscription and usage-based services. 24 Our electronic payment services experienced increased usage during the comparative periods as residents, property managers, and owners transacted more business online.
During the year ended December 31, 2025, we experienced growth of 8% in the number of property management units under management compared to the prior year, which drove growth in users of our Subscription Services and Value Added Services.
Income Taxes We recognize deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.
Fees are fixed based on rates specified in the subscription agreements, which do not provide for any refunds or adjustments. 33 Income Taxes We recognize deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.
Our Board of Directors has authorized the repurchase of up to $100.0 million of shares of our Class A common stock from time to time. To date, we have repurchased $4.2 million of our Class A common stock under the Share Repurchase Program.
On April 23, 2025, our Board authorized the repurchase of up to $300.0 million of shares of our Class A common stock from time to time pursuant to the 2025 Stock Repurchase Program.
(Benefit from) provision for income taxes Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Income (loss) before provision for income taxes $ 150,322 $ 7,997 $ 142,325 1780 % (Benefit from) provision for income taxes $ (53,746) $ 5,295 $ (59,041) (1,115) % Effective tax rate (35.8) % 66.2 % The decrease in our effective tax rate for the year ended December 31, 2024, as compared to the prior year, is primarily due to the valuation allowance release against our federal and state deferred tax assets, which was partially offset by higher tax expense due to a significant increase in our pre-tax income.
Provision for (benefit from) income taxes Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Income before provision for income taxes $ 161,112 $ 150,322 $ 10,790 7 % Provision for (benefit from) income taxes $ 20,189 $ (53,746) $ 73,935 (138) % Effective tax rate 12.5 % (35.8) % The increase in our effective tax rate for the year ended December 31, 2025, as compared to the prior year, is primarily due to the tax benefits recognized in the prior year related to the valuation allowance release against our federal and state deferred tax assets, as well as lower excess tax benefits from stock-based compensation and research and development tax credits.
We also provide key functionality related to critical transactions across the real estate lifecycle, including screening potential residents, sending and receiving payments, and providing insurance-related risk mitigation services. Our services enable our customers to connect communities, increase operational efficiency, deliver exceptional customer experiences, and improve financial and operational performance.
We help our customers navigate an increasingly interconnected and growing network of stakeholders in their business ecosystems, including property managers, property investors, potential residents, residents, and vendors. We also provide key functionality related to critical transactions across the real estate lifecycle, including screening potential residents, sending and receiving payments, and providing insurance-related risk mitigation services.
Sales and Marketing Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Sales and marketing $ 110,597 $ 107,602 $ 2,995 3 % Percentage of revenue 13.9 % 17.3 % Stock-based compensation, included above $ 8,030 $ 5,983 $ 2,047 34 % Percentage of revenue 1.0 % 1.0 % Sales and marketing expense for the year ended December 31, 2024 increased compared to the prior year, primarily due to a $2.4 million increase in advertising and promotion expense and a $3.4 million increase related to our FUTURE conference.
Sales and Marketing Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Sales and marketing $ 143,904 $ 110,597 $ 33,307 30 % Percentage of revenue 15.1 % 13.9 % Stock-based compensation, included above $ 12,332 $ 8,030 $ 4,302 54 % Percentage of revenue 1.3 % 1.0 % Sales and marketing expense for the year ended December 31, 2025 increased compared to the prior year primarily due to a $20.0 million increase in personnel-related costs, including stock-based and performance-based compensation, to support growth in the business, combined with a $6.8 million increase in advertising and promotion expense due to increased targeted go-to-market investment, for the year ended December 31, 2025. 28 We expect sales and marketing expense for the year ending December 31, 2026 to stay relatively flat as a percentage of revenue compared to the year ended December 31, 2025.
In addition, we charge our customers for assistance onboarding onto our core solutions and for certain other non-recurring services. We generally invoice for these other services in advance of the services being completed and recognize revenue in the period the service is rendered.
We generally invoice for these other services in advance of the services being completed and recognize revenue in the period the service is rendered. We also generate revenue from the legacy customers of businesses we acquire that provide standalone services outside of our platform. Revenue derived from these services is recorded in Other revenue.
Results of Operations Revenue Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Core solutions $ 180,605 $ 156,692 $ 23,913 15 % Value Added Services 605,011 454,098 150,913 33 Other 8,586 9,655 (1,069) (11) Total revenue $ 794,202 $ 620,445 $ 173,757 28 % The increase in revenue for the year ended December 31, 2024, compared to the prior year, was primarily attributable to an increase in the usage of our electronic payment, tenant screening, and risk mitigation services.
Provision for (benefit from) income taxes consists of federal and state income taxes in the United States. 27 Results of Operations Revenue Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Subscription Services $ 211,457 $ 180,605 $ 30,852 17 % Value Added Services 721,549 605,011 116,538 19 Other 17,816 8,586 9,230 108 Total revenue $ 950,822 $ 794,202 $ 156,620 20 % The increase in revenue for the year ended December 31, 2025, compared to the prior year, was primarily attributable to an increase in the usage of our electronic payment, tenant screening, and risk mitigation services by property managers and residents.
As of December 31, 2024, our cash and cash equivalents and investment securities had an aggregate balance of $278.2 million. We have financed our operations primarily through cash generated from operations.
As of December 31, 2025, we had $251.2 million in cash, cash equivalents, and investment securities.
For discussion of 2022 items and year-over-year comparisons between 2023 and 2022, refer to Part II. Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023. Overview We are a technology leader powering the future of the real estate industry.
The following discussion and analysis of our financial condition and results of operations includes 2025 and 2024 items and year-over-year comparisons between 2025 and 2024. For discussion of 2023 items and year-over-year comparisons between 2024 and 2023, refer to Part II. Item 7.
For additional information regarding our Share Repurchase Program, see Note 13, Stockholders' Equity, of the Notes to Consolidated Financial Statement included in Part II, Item 8 of this Annual Report.
For more information regarding our repurchases under the 2019 Stock Repurchase Program and the 2025 Stock Repurchase Program, refer to Note 12, Stockholders' Equity , of our Consolidated Financial Statements of this Annual Report.
For additional information regarding the business combination, see Note 7 Business Combination, of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
For more information regarding the Credit Facility, refer to "Credit Facility" in Note 11, Commitments and Contingencies , of our Consolidated Financial Statements of this Annual Report.
The net increase in cash used in financing activities for the year ended December 31, 2024, compared to the prior year, was primarily due to an increase in net share settlements for employee tax withholdings associated with the vesting of equity awards.
The net increase in cash used in financing activities for the year ended December 31, 2025, compared to the prior year, was primarily due to repurchases of our Class A common stock. Off-Balance Sheet Arrangements As of December 31, 2025, we did not have any off-balance sheet arrangements.
We also generate revenue from the legacy customers of businesses we acquire that provide standalone services outside of our platform. Revenue derived from these services is recorded in Other revenue. As of December 31, 2024 and 2023, we had 20,784 and 19,737 property management customers, respectively. 23 Costs and Operating Expenses Cost of Revenue (Exclusive of Depreciation and Amortization).
As of December 31, 2025 and 2024, we had 22,096 and 20,784 property management customers, respectively. Costs and Operating Expenses Cost of Revenue (Exclusive of Depreciation and Amortization). Many of our Value Added Services are facilitated by third-party service providers.
Off-Balance Sheet Arrangements As of December 31, 2024, we did not have any off-balance sheet arrangements. 28 Critical Accounting Policies and Estimates Our Consolidated Financial Statements and the related notes included elsewhere in this Annual Report are prepared in accordance with accounting principles generally accepted in the United States of America.
“Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024. Our Consolidated Financial Statements are prepared and presented in accordance with accounting principles generally accepted in the United States ("GAAP").
For additional information, see Note 7, Business Combination, and Note 8, Goodwill and Intangible Assets, Net , of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
We used $77.4 million of cash paid for a business acquisition in 2024 and $75.0 million of cash for a long-term investment in 2025. For additional information regarding the business acquisition and long-term investment, see Note 4, Investment Securities and Fair Value Measurements, and Note 7, Business Combination, of our Consolidated Financial Statements of this Annual Report.
Removed
We provide a cloud-based platform on which our customers operate their businesses. We help our customers navigate an increasingly interconnected and growing network of stakeholders in their business ecosystems, including property managers, property investors, potential residents, residents, and vendors.
Added
This Annual Report also contains information regarding our non-GAAP income from operations ("Non-GAAP operating income") and non-GAAP operating margin ("Non-GAAP Operating Margin"), each of which constitutes a non-GAAP financial measure. We use these non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Removed
In addition, we stopped waiving eCheck (ACH) transaction fees beginning in the third quarter of 2023. Our tenant screening and risk mitigation services usage also increased during the comparative periods, driven by higher adoption and growth in units under management, respectively.
Added
For more information regarding these non-GAAP financial measures, refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" below. 25 Overview We are a technology leader powering the future of real estate. We provide a cloud-based platform on which our customers operate their businesses.
Removed
This increase was directly associated with the increased adoption and utilization of our Value Added Services. Allocated shared and other costs increased by $3.5 million for the year ended December 31, 2024, compared to the prior year, primarily related to investment in platform infrastructure in support of our overall growth.
Added
Our services enable our customers to connect communities, increase operational efficiency, deliver exceptional customer experiences, and improve financial and operational performance.
Removed
These increases were partially offset by a $1.5 million reduction in personnel-related costs, including cash bonuses and stock-based compensation. The reduction in personnel-related costs included $3.8 million of severance and related personnel expenses from a workforce reduction in the third quarter of 2023.
Added
Financial Highlights for the Fiscal Year 2025 • Total property management units under management grew 8% year-over-year to 9.4 million. • Revenue grew 20% year-over-year to $950.8 million. • GAAP operating income was $152.9 million, or 16.1% of revenue, compared to GAAP operating income of $135.6 million, or 17.1% of revenue in 2024. • Non-GAAP operating income was $234.9 million, or 24.7% of revenue, compared to non-GAAP operating income of $199.8 million, or 25.2% of revenue, in 2024. • Net cash provided by operating activities was $242.1 million, or 25.5% of revenue, compared to $188.2 million, or 23.7% of revenue, in 2024.
Removed
For additional information, see Note 17, Workforce Reduction , of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. For the year ended December 31, 2024, stock-based compensation increased due to additional grants to current and new employees with higher grant date fair value.
Added
A significant majority of our Value Added Services revenue comes from the use of our electronic payment services, tenant screening services, and risk mitigation services. 26 In addition, we charge our customers for assistance onboarding onto our Subscription Services and for certain other non-recurring services.
Removed
The increase was mainly due to a $4.8 million rise in personnel-related costs, including cash bonuses and stock-based compensation. These costs, net of capitalized software development costs, were driven by headcount growth and higher salaries as we continued to invest in innovation.
Added
We expect depreciation and amortization expenses for the year ending December 31, 2026 to stay flat as a percentage of revenue compared to the year ended December 31, 2025.
Removed
Additionally, there was a $4.2 million increase in allocated shared and other costs, largely due to higher technology expense. The increase in personnel costs was partially offset by $3.4 million in severance and related expenses from a workforce reduction in the third quarter of 2023.
Added
We have financed our operations primarily through cash generated from operations. 30 In addition, to optimize our capital structure, on September 30, 2025, we entered into the Credit Facility, which provides for a $150.0 million senior secured revolving credit facility, including sublimits of $25.0 million for letters of credit and $25.0 million for swingline loans, and is scheduled to mature on September 30, 2030.
Removed
For additional information, see Note 17, Workforce Reduction, of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. For the year ended December 31, 2024, stock-based compensation increased due to additional grants to current and new employees with higher grant date fair value.
Added
We did not draw on the Credit Facility in the fourth quarter of 2025, and as of December 31, 2025, we had no outstanding borrowings under the Credit Facility, and were in compliance with the covenants under the Credit Facility.
Removed
The decrease in personnel-related costs was primarily due to the $14.9 million separation costs incurred in the first quarter of 2023 in connection with our former Chief Executive Officer's separation and the $2.5 million severance related expenses from a workforce reduction in the third quarter of 2023.
Added
We believe that our existing cash and cash equivalents, investment securities, and cash generated from operating activities will be sufficient to meet our working capital and capital expenditure requirements for at least the next twelve months. The available borrowing capacity under the Credit Facility provides us additional liquidity and financial flexibility.
Removed
For additional information, see Note 9, Accrued Employee Expenses , and Note 17, Workforce Reduction , of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
Added
During the first quarter of 2025, we substantially exhausted the shares of Class A common stock remaining available for purchase under the $100 million share repurchase program authorized by our Board of Directors in 2019 (the "2019 Stock Repurchase Program").
Removed
The increase in allocated shared and other costs was primarily due to a $4.3 million lease modifications gain recognized in 2023 and a $3.5 million increase in technology and professional services expenses to support our growth in 2024.
Added
Non-GAAP Financial Measures To supplement our Consolidated Financial Statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), this Annual Report contains information regarding our non-GAAP income from operations ("Non-GAAP Operating Income") and non-GAAP operating margin ("Non-GAAP Operating Margin"), each of which constitutes a non-GAAP financial measure.
Removed
We expect general and administrative expenses for the year ending December 31, 2025 to decrease as a percentage of revenue compared to the year ended December 31, 2024, as we continue to leverage headcount efficiencies. 26 Depreciation and Amortization Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Depreciation and amortization $ 19,545 $ 28,988 $ (9,443) (33)% Percentage of revenue 2.5 % 4.7 % Depreciation and amortization expense for the year ended December 31, 2024 decreased, compared to the prior year, primarily due to decreased amortization expense associated with capitalized software development and intangible balances.
Added
We use these non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. • Non-GAAP Operating Income excludes certain non-cash or non-recurring items, including stock-based compensation expense, amortization of stock-based compensation capitalized in software development costs, and amortization of purchased intangibles, as described below.
Removed
The net increase in cash provided by operating activities for the year ended December 31, 2024, compared to the prior year, was primarily due to a higher increase in cash collections from customers relative to the increase in operating expenditures during the year ended December 31, 2024.
Added
Non-GAAP Operating Margin is calculated as Non-GAAP Operating Income 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.
Added
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.
Added
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: • 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.
Added
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. • Amortization of purchased intangibles.
Added
We view amortization of purchased intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition.
Added
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. 32 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.
Added
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed2 unchanged
Biggest changeAs of December 31, 2024, a hypothetical 100 basis point decrease in interest rates would have resulted in an increase in the fair value of our investment securities of approximately $0.9 million, and a hypothetical 100 basis point increase in interest rates would have resulted in a decrease in the fair value of our investment securities of approximately $0.9 million.
Biggest changeDue to the relatively short-term nature of our investment portfolio, a hypothetical 100 basis point change in interest rates would not have a material effect on the fair value of our portfolio for the periods presented.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Investment Securities As of December 31, 2024, we had $235.7 million of investment securities consisting of United States government and agency securities. The primary objective of investing in securities is to support our liquidity and capital needs.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Investment Securities As of December 31, 2025, we had $144.3 million of investment securities consisting of United States government and agency securities. The primary objective of investing in securities is to support our liquidity and capital needs.
This estimate is based on a sensitivity model which measured an instant change in interest rates by 100 basis points as of December 31, 2024. 30
This estimate is based on a sensitivity model which measured an instant change in interest rates by 100 basis points as of December 31, 2025. 35
While all of our investment securities have fixed interest rates, changes in interest rates may impact the fair value of the investment securities and our interest income over time as funds from maturing positions are reinvested.
While fluctuations in interest rates do not impact our interest income from our investment securities as all of these securities have fixed interest rates, changes in interest rates may impact the fair value of the investment securities.

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