William Blair has reiterated an Outperform rating on AppFolio Inc. after the property management software provider reported a quarterly performance the firm described as marked by accelerating unit additions, revenue growth and outstanding free cash flow. The reaffirmation comes even as AppFolio shares declined by about 11% in after-hours trading.
The analyst note highlights several operating metrics the firm views as supportive of AppFolio's upward strategy. Over the past twelve months the company recorded 18.9% revenue growth, and its five-year revenue compound annual growth rate stood at 25%.
Customer-level metrics were particularly notable. William Blair reported that the average new customer added this quarter carried 852 units, a figure that reflects a 58% sequential increase and 70% year-over-year gain. The firm interprets that growth as validation of AppFolio's move upmarket.
Adoption of higher-tier subscription offerings was also rising. About 25% of users are now on APM Plus or Max plans, up from 20% at the end of 2024. The company has seen faster uptake of AI functionality launched in October and strong demand for resident services, the note said.
On valuation, William Blair calculated that, at an after-market price of $183 per share, AppFolio was trading at roughly 6 times forward revenue and 22 times adjusted EBITDA. Complementary analysis pointed to a price-to-earnings-growth ratio of about 0.66, suggesting an attractive valuation profile relative to forecasted growth rates. The company's overall financial health was characterized as "GREAT," with a 43% cash return on invested capital.
Analyst consensus across the coverage universe remains strong. A market-level composite rating shows a Buy orientation with an average score near 1.43 and price targets ranging from $245 to $330, reinforcing William Blair's view of AppFolio as one of its preferred names.
AppFolio's most recent quarterly results for the fourth quarter of 2025 exceeded expectations. The company reported earnings per share of $1.39 versus a $1.25 consensus estimate, representing an 11.2% earnings surprise. Revenue for the quarter came in at $248 million, modestly above the $246.56 million anticipated by analysts.
Despite these upside surprises in earnings and revenue, the stock fell in aftermarket trading, a market reaction noted in the firm research. William Blair continues to list the stock among its top picks, citing the combination of growth, improving product mix and cash generation.
Context and implications
Taken together, the operating trends highlighted by William Blair - larger average new customers, rising adoption of premium plans and AI features, and strong resident services uptake - are consistent with the firms view that AppFolio is successfully moving upmarket while sustaining solid revenue momentum and free cash flow performance.
At the same time, short-term market moves have pressured the shares despite the beat on earnings and revenue, underlining a near-term disconnect between reported fundamentals and investor reaction.