AppFolio Investor Day Presentation Deck
Powering the Future of the Real Estate Industry
© 2023 AppFolio Investor Meeting
10
Statement Regarding Use of Non-GAAP Financial Measures
This presentation includes information about non-GAAP operating margin and free cash flow (collectively the "non-GAAP financial measures"). Our
non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other
companies may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because
non-GAAP financial measures are not prepared in accordance with GAAP and can exclude expenses that may have a material impact on our reported
financial results. As such, non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their most directly comparable GAAP measures
has been provided in the tables above. We encourage investors to review the reconciliation of these historical non-GAAP financial measures to their
most directly comparable GAAP financial measures.
We use non-GAAP financial measures internally to assess and compare operating results across reporting periods, for internal budgeting and
forecasting purposes, and to evaluate our financial performance. We believe these adjustments also provide useful supplemental information to
investors and facilitate the analysis of our operating results and comparison of operating results across reporting periods.
Non-GAAP operating margin is defined as income (loss) from operations, less stock-based compensation, amortization of stock-based compensation
capitalized in software development, and other non-recurring items.
Free cash flow is defined as net cash from operating activities, less purchases of property and equipment, capitalization of software development
costs, payments for separation costs, lease termination payments and severance payments for workforce reduction. We use free cash flow to evaluate
our generation of cash from operations that is available for purposes other than capital expenditures and capitalized software development costs.
Additionally, we believe that information regarding free cash flow provides investors with a perspective on the cash available to fund ongoing
operations, because we review cash flows generated from operations after taking into consideration capital expenditures and the capitalization of
software development costs due to the fact that these expenditures are considered to be a necessary component of ongoing operations.
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