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AppFolio Buys WegoWise, Gains Robust Analytics Capabilities

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AppFolio, Inc. (APPF - Free Report) recently concluded the buyout of WegoWise. However, the financial terms of the deal have been kept under wraps.

Boston, MA-based WegoWise’s forte lies in providing utility analytics software. The cloud-based WegoWise platform enables managers and building owners to optimize operating expenses and capital expenditure pertaining to utilities.

The robust solutions offered by the platform comprise automated utility processes for data acquisition and analytics, peer-to-peer (P2P) performance benchmarking, utility compliance reporting, spike tracking, among others.

WegoWise’s software is leveraged by almost 700,000 units, most of them being multi-family. Founded in 2010, WegoWise serves more than 450 customers in the United States.

Notably, shares of AppFolio have returned a whopping 112.7% year to date, substantially outperforming the industry’s rally of 28.9%. In the same period, the stock has outperformed S&P 500 index’s rise of 9.9%.

Enhancing Value+ Service: Key Catalyst

The emergence of utility management among large portfolio property owners and managers makes us optimistic about the WegoWisebuyout.

With this acquisition, AppFolio intends to provide its real estate customers with a utility management Value+ Service. Notably, the company has enhanced its Value+ Platform by introducing a Renters Insurance product option to tenant users. In the second quarter, Value + services revenues surged 40% year over year to $28.8 million.

Enhanced usage of company’s screening services and electronic payment services droveyear-over-year growth. Increasing legal liability to landlord insurance by notable property manager customers and unit base also contributed to growth.

UnderAppFolio’s umbrella WegoWise will maintain its operations. These advancements are projected to augment the customer base of AppFolio, which comprised 12,300 property managers and around 10,000 legal customers at the end of the second quarter.

Cash Position

As of Jun 30, 2018, AppFolio had cash & cash equivalents and investment securities of $52.7 million, up from $45.8 million as of Mar 31, 2018. In the second quarter of fiscal 2018, cash flow from operating activities was $11.7 million, up from $3.3 million in the previous quarter.

Moreover, the company has no debt. Strength in cash and debt-free balance positions AppFolio well to pursue similar growth strategies going forward.

To Conclude

AppFolio’s sustained focus on product and technology related innovations remain key catalysts. In a bid to make the offerings user friendly, upgrades to product suite are based on customer feedback. This in turn is expected to bolster its customer base.

Acquisition of Renter's Friend (April 2013), an online rental application service, aided growth by expanding the company’s product portfolio and adding competence. We expect the acquisition synergies to continue driving AppFolio’s top-line performance in the quarters ahead.

Zacks Rank & Other Stocks to Consider

AppFolio carries a Zacks Rank #2 (Buy).

Aspen Technology, Inc. (AZPN - Free Report) , Mellanox (MLNX - Free Report) and Logitech International S.A. (LOGI - Free Report) , are other stocks worth considering in the same sector. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AspenTech, Mellanox and Logitech have a long-term earnings growth rate of 16.5%, 15% and 8%, respectively.

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