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Factors Likely to Influence AppFolio's (APPF) Q4 Earnings

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AppFolio Inc. (APPF - Free Report) is scheduled to release fourth-quarter 2018 results on Feb 28.

Notably, the cloud-based software solutions provider surpassed the Zacks Consensus Estimate in three of the trailing four quarters, pulling off average positive earnings surprise of 18.9%.

In the third quarter, AppFolio reported earnings of 20 cents per share, which soared a whopping 53.8% from the year-ago figure of 13 cents. The figure, however, missed the Zacks Consensus Estimate by a couple of cents.

Revenues surged 32.3% year over year to $50.1 million, beating the consensus estimate by 5.1%.

For the fourth quarter, Zacks Consensus Estimate for earnings is pegged at 20 cents, representing growth of 66.7% from the year-ago quarter whereas the same for the revenues is pegged at $48.1 million, indicating growth of 27%.

Factors at Play in Q4

AppFolio’s sustained focus on product and technology-related innovations to upgrade its solutions meant for property management and legal customers is a key catalyst.

Robust enhancements to its product suite based on customer feedback, which are directed toward making the offerings user friendly, will likely boost engagement, consequently bolstering customer base.

AppFolio recently acquired Dynasty Marketplace, Inc, a provider of advanced artificial intelligence (AI) solutions for the real estate market. The buyout will aid the company’s system of intelligence capabilities to offer higher AI services to real estate customers.

Further, AppFolio has enhanced its Value+ Platform with Renters Insurance product option to tenant users, which is likely to garner incremental revenues. In the third quarter, Value + services revenues surged 42% year over year to $30.8 million.

Increasing usage of screening services and electronic payments is expected to drive Value+ revenues in the to-be reported quarter. Further, legal liability to landlord insurance from notable property manager customers is likely to be a catalyst.

The company’s AppFolio Property Manager Plus will add robust capabilities, comprising Performance Insights Dashboard, Configurable Workflows, Revenue Management and Optimization, among others.

The company strengthened its MyCase offering with new features that enable customers to send and receive payments. This flexible feature is likely to drive incremental adoption of the solution going ahead, eventually bolstering the top line.

These developments are projected to expand the customer base of the company, which comprised 12,640 property managers (up 12% year over year) and around 10,170 legal customers (up 11% year over year) at the end of the third quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.

AppFoliohas a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With a Favorable Combination

Here are some companies, which per our model, have the right combination of elements to post earnings beat in their upcoming releases:

Live Nation Entertainment, Inc. (LYV - Free Report) has an Earnings ESP of +2.41% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Square, Inc. (SQ - Free Report) has an Earnings ESP of +5.95% and a Zacks Rank #2.

AMC Entertainment Holdings, Inc. (AMC - Free Report) has an Earnings ESP of +37.68% and a Zacks Rank #3.

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