Intrinsic value of AppFolio, Inc. - APPF

Previous Close

$95.63

  Intrinsic Value

$77.00

stock screener

  Rating & Target

hold

-19%

Previous close

$95.63

 
Intrinsic value

$77.00

 
Up/down potential

-19%

 
Rating

hold

We calculate the intrinsic value of APPF stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 3.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  32.90
  30.11
  27.60
  25.34
  23.31
  21.47
  19.83
  18.34
  17.01
  15.81
  14.73
  13.76
  12.88
  12.09
  11.38
  10.74
  10.17
  9.65
  9.19
  8.77
  8.39
  8.05
  7.75
  7.47
  7.23
  7.00
  6.80
  6.62
  6.46
  6.31
Revenue, $m
  253
  329
  419
  525
  648
  787
  943
  1,116
  1,306
  1,512
  1,735
  1,974
  2,228
  2,497
  2,782
  3,081
  3,394
  3,721
  4,063
  4,420
  4,791
  5,176
  5,577
  5,994
  6,427
  6,877
  7,345
  7,832
  8,338
  8,864
Variable operating expenses, $m
  196
  255
  326
  408
  503
  611
  732
  866
  1,013
  1,173
  1,345
  1,530
  1,727
  1,936
  2,157
  2,388
  2,631
  2,885
  3,150
  3,427
  3,714
  4,013
  4,324
  4,647
  4,983
  5,332
  5,695
  6,072
  6,464
  6,872
Fixed operating expenses, $m
  22
  23
  23
  24
  25
  25
  26
  26
  27
  27
  28
  29
  29
  30
  30
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  40
  41
  42
Total operating expenses, $m
  218
  278
  349
  432
  528
  636
  758
  892
  1,040
  1,200
  1,373
  1,559
  1,756
  1,966
  2,187
  2,419
  2,663
  2,918
  3,183
  3,461
  3,749
  4,049
  4,360
  4,684
  5,021
  5,371
  5,735
  6,112
  6,505
  6,914
Operating income, $m
  34
  50
  70
  93
  120
  151
  186
  224
  266
  312
  362
  415
  471
  531
  595
  661
  731
  804
  880
  959
  1,042
  1,128
  1,217
  1,310
  1,406
  1,507
  1,611
  1,719
  1,832
  1,949
EBITDA, $m
  41
  59
  81
  107
  137
  171
  210
  252
  299
  350
  405
  464
  527
  594
  664
  738
  816
  897
  981
  1,070
  1,161
  1,257
  1,356
  1,460
  1,567
  1,678
  1,794
  1,915
  2,040
  2,171
Interest expense (income), $m
  0
  3
  4
  6
  8
  11
  13
  17
  20
  24
  29
  34
  39
  45
  51
  57
  64
  71
  78
  86
  94
  102
  111
  120
  129
  139
  149
  160
  171
  182
  194
Earnings before tax, $m
  31
  46
  64
  85
  110
  138
  169
  203
  242
  283
  328
  376
  427
  481
  538
  597
  660
  726
  794
  865
  940
  1,017
  1,097
  1,180
  1,267
  1,357
  1,451
  1,548
  1,650
  1,755
Tax expense, $m
  8
  12
  17
  23
  30
  37
  46
  55
  65
  76
  89
  101
  115
  130
  145
  161
  178
  196
  214
  234
  254
  275
  296
  319
  342
  366
  392
  418
  445
  474
Net income, $m
  23
  34
  47
  62
  80
  100
  123
  149
  176
  206
  240
  274
  312
  351
  392
  436
  482
  530
  580
  632
  686
  742
  801
  862
  925
  991
  1,059
  1,130
  1,204
  1,281

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  149
  194
  247
  310
  382
  464
  556
  658
  770
  892
  1,023
  1,164
  1,314
  1,473
  1,640
  1,816
  2,001
  2,194
  2,396
  2,606
  2,825
  3,052
  3,289
  3,534
  3,790
  4,055
  4,331
  4,618
  4,916
  5,226
Adjusted assets (=assets-cash), $m
  149
  194
  247
  310
  382
  464
  556
  658
  770
  892
  1,023
  1,164
  1,314
  1,473
  1,640
  1,816
  2,001
  2,194
  2,396
  2,606
  2,825
  3,052
  3,289
  3,534
  3,790
  4,055
  4,331
  4,618
  4,916
  5,226
Revenue / Adjusted assets
  1.698
  1.696
  1.696
  1.694
  1.696
  1.696
  1.696
  1.696
  1.696
  1.695
  1.696
  1.696
  1.696
  1.695
  1.696
  1.697
  1.696
  1.696
  1.696
  1.696
  1.696
  1.696
  1.696
  1.696
  1.696
  1.696
  1.696
  1.696
  1.696
  1.696
Average production assets, $m
  32
  41
  52
  66
  81
  98
  118
  140
  163
  189
  217
  247
  279
  312
  348
  385
  424
  465
  508
  552
  599
  647
  697
  749
  803
  860
  918
  979
  1,042
  1,108
Working capital, $m
  -13
  -17
  -21
  -27
  -33
  -40
  -48
  -57
  -67
  -77
  -88
  -101
  -114
  -127
  -142
  -157
  -173
  -190
  -207
  -225
  -244
  -264
  -284
  -306
  -328
  -351
  -375
  -399
  -425
  -452
Total debt, $m
  77
  110
  150
  196
  249
  310
  378
  453
  535
  625
  722
  826
  937
  1,054
  1,178
  1,308
  1,444
  1,586
  1,735
  1,890
  2,052
  2,220
  2,394
  2,575
  2,764
  2,960
  3,163
  3,375
  3,595
  3,824
Total liabilities, $m
  110
  143
  182
  229
  282
  342
  410
  486
  568
  658
  755
  859
  969
  1,087
  1,210
  1,340
  1,477
  1,619
  1,768
  1,923
  2,085
  2,252
  2,427
  2,608
  2,797
  2,993
  3,196
  3,408
  3,628
  3,857
Total equity, $m
  39
  51
  65
  81
  100
  122
  146
  172
  202
  234
  268
  305
  344
  386
  430
  476
  524
  575
  628
  683
  740
  800
  862
  926
  993
  1,062
  1,135
  1,210
  1,288
  1,369
Total liabilities and equity, $m
  149
  194
  247
  310
  382
  464
  556
  658
  770
  892
  1,023
  1,164
  1,313
  1,473
  1,640
  1,816
  2,001
  2,194
  2,396
  2,606
  2,825
  3,052
  3,289
  3,534
  3,790
  4,055
  4,331
  4,618
  4,916
  5,226
Debt-to-equity ratio
  1.970
  2.170
  2.310
  2.410
  2.490
  2.550
  2.590
  2.630
  2.650
  2.680
  2.690
  2.710
  2.720
  2.730
  2.740
  2.750
  2.750
  2.760
  2.760
  2.770
  2.770
  2.780
  2.780
  2.780
  2.780
  2.790
  2.790
  2.790
  2.790
  2.790
Adjusted equity ratio
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  23
  34
  47
  62
  80
  100
  123
  149
  176
  206
  240
  274
  312
  351
  392
  436
  482
  530
  580
  632
  686
  742
  801
  862
  925
  991
  1,059
  1,130
  1,204
  1,281
Depreciation, amort., depletion, $m
  7
  9
  11
  14
  17
  20
  24
  29
  33
  39
  43
  49
  56
  62
  70
  77
  85
  93
  102
  110
  120
  129
  139
  150
  161
  172
  184
  196
  208
  222
Funds from operations, $m
  30
  42
  58
  76
  97
  121
  148
  177
  210
  245
  283
  324
  367
  413
  462
  513
  567
  623
  681
  742
  806
  872
  940
  1,012
  1,086
  1,163
  1,243
  1,326
  1,413
  1,503
Change in working capital, $m
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
Cash from operations, $m
  33
  46
  63
  82
  103
  128
  155
  186
  219
  256
  294
  336
  380
  427
  476
  528
  583
  639
  699
  760
  825
  891
  961
  1,033
  1,108
  1,186
  1,267
  1,351
  1,439
  1,530
Maintenance CAPEX, $m
  -5
  -6
  -8
  -10
  -13
  -16
  -20
  -24
  -28
  -33
  -38
  -43
  -49
  -56
  -62
  -70
  -77
  -85
  -93
  -102
  -110
  -120
  -129
  -139
  -150
  -161
  -172
  -184
  -196
  -208
New CAPEX, $m
  -8
  -10
  -11
  -13
  -15
  -17
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -61
  -63
  -66
Cash from investing activities, $m
  -13
  -16
  -19
  -23
  -28
  -33
  -40
  -46
  -52
  -59
  -66
  -73
  -81
  -90
  -98
  -107
  -116
  -126
  -136
  -147
  -156
  -168
  -179
  -191
  -204
  -217
  -230
  -245
  -259
  -274
Free cash flow, $m
  20
  31
  43
  58
  75
  94
  116
  141
  168
  197
  229
  263
  299
  338
  379
  421
  467
  514
  563
  614
  668
  723
  781
  841
  904
  969
  1,036
  1,106
  1,180
  1,256
Issuance/(repayment) of debt, $m
  27
  33
  39
  46
  53
  61
  68
  75
  83
  90
  97
  104
  111
  117
  124
  130
  136
  143
  149
  155
  161
  168
  175
  181
  188
  196
  204
  212
  220
  229
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  27
  33
  39
  46
  53
  61
  68
  75
  83
  90
  97
  104
  111
  117
  124
  130
  136
  143
  149
  155
  161
  168
  175
  181
  188
  196
  204
  212
  220
  229
Total cash flow (excl. dividends), $m
  48
  64
  82
  104
  128
  155
  184
  216
  250
  287
  326
  367
  410
  455
  502
  552
  603
  656
  712
  769
  829
  891
  956
  1,023
  1,092
  1,165
  1,240
  1,318
  1,400
  1,485
Retained Cash Flow (-), $m
  -10
  -12
  -14
  -16
  -19
  -21
  -24
  -27
  -29
  -32
  -34
  -37
  -39
  -42
  -44
  -46
  -48
  -51
  -53
  -55
  -57
  -60
  -62
  -64
  -67
  -70
  -72
  -75
  -78
  -81
Prev. year cash balance distribution, $m
  62
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  100
  52
  68
  88
  109
  133
  160
  189
  221
  255
  291
  330
  370
  413
  458
  505
  554
  606
  659
  714
  772
  832
  894
  958
  1,025
  1,095
  1,168
  1,243
  1,322
  1,403
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  96
  47
  60
  72
  85
  97
  108
  118
  127
  134
  138
  141
  141
  139
  135
  128
  121
  112
  101
  91
  80
  69
  59
  49
  40
  32
  25
  19
  14
  11
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

AppFolio, Inc. is a provider of industry-specific, cloud-based software solutions for small and medium-sized businesses (SMBs) in the property management and legal industries. The Company's mobile-optimized software solutions enable its customers to work at any time and from anywhere across multiple devices. Its property management software provides small and medium-sized property managers with an end-to-end solution to their business needs. The Company's legal software provides solo practitioners and small law firms with a streamlined practice and case management solution, allowing them to manage their practices and case load. It also offers Value+ services, such as its professionally designed Websites and electronic payment services. The Company's property manager customers include third-party managers and owner-operators, managing single- and multi-family residences, commercial property and student housing, as well as mixed real estate portfolios.

FINANCIAL RATIOS  of  AppFolio, Inc. (APPF)

Valuation Ratios
P/E Ratio -403.1
Price to Sales 30.4
Price to Book 46.1
Price to Tangible Book
Price to Cash Flow 268.7
Price to Free Cash Flow -1074.9
Growth Rates
Sales Growth Rate 41.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 36.4%
Cap. Spend. - 3 Yr. Gr. Rate 30.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -8.7%
Ret/ On Assets - 3 Yr. Avg. -24.1%
Return On Total Capital -11.2%
Ret/ On T. Cap. - 3 Yr. Avg. -35.6%
Return On Equity -11.2%
Return On Equity - 3 Yr. Avg. -35.6%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 57.5%
Gross Margin - 3 Yr. Avg. 54.8%
EBITDA Margin 1.9%
EBITDA Margin - 3 Yr. Avg. -7.7%
Operating Margin -7.5%
Oper. Margin - 3 Yr. Avg. -14.7%
Pre-Tax Margin -7.5%
Pre-Tax Margin - 3 Yr. Avg. -15.9%
Net Profit Margin -7.5%
Net Profit Margin - 3 Yr. Avg. -15.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

APPF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the APPF stock intrinsic value calculation we used $190 million for the last fiscal year's total revenue generated by AppFolio, Inc.. The default revenue input number comes from 0001 income statement of AppFolio, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our APPF stock valuation model: a) initial revenue growth rate of 32.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for APPF is calculated based on our internal credit rating of AppFolio, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of AppFolio, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of APPF stock the variable cost ratio is equal to 77.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $22 million in the base year in the intrinsic value calculation for APPF stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for AppFolio, Inc..

Corporate tax rate of 27% is the nominal tax rate for AppFolio, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the APPF stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for APPF are equal to 12.5%.

Life of production assets of 2.8 years is the average useful life of capital assets used in AppFolio, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for APPF is equal to -5.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $91.846 million for AppFolio, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 33.889 million for AppFolio, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of AppFolio, Inc. at the current share price and the inputted number of shares is $3.2 billion.

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