Our residents, our employees, our clients, I want them to feel the personal connection to us. I never want them to feel that they are a number within our portfolio. I want them to know that they can reach out to leadership or their manager and get a human response and know that we're a local company. The name of our business is Pelican Property Management. We do management in commercial, HOA, condominiums, rental units. We really do all that's out there, and our goal was challenging the status quo. What are we gonna change next? What do we need to fix next? You have to take an industry and look at it differently, and that's what we've done. That was unique to us. That was our special sauce, where we were able to look at what everybody else was doing and question and say why, and that was so important. A major key in our business is getting the questions and problems solved as quickly as possible. We looked at every single system out there. We landed on AppFolio because it was just more innovative than the rest of the packages out there. It's a one-stop shop. It's a one-piece software. It's in fact, constantly I'm referring to the software as a Swiss army knife. AppFolio is modern, mobile, and innovative in everything we need to run our management business. It's magic how it works, and it gets better and better by the weeks. Great. Thank you. Welcome to AppFolio's Investor Day 2022. We're very excited that you're all here with us today. It's great to have the people here in person. After so many months in COVID, we're welcoming you to Santa Barbara. People online, we're super pleased that you can join us today as well. I'm Lori Barker. I'm a Managing Director of The Blueshirt Group, Investor Relations, and I represent investor relations for AppFolio. Today, we're gonna hear from a number of AppFolio speakers. We'll begin with AppFolio's vision and strategy. Jason Randall, President and CEO, will be our first presenter. Following that, Shane Trigg, General Manager of Real Estate, will present customer-centric innovation, the key to our future. Will Moxley, Senior Vice President of Product, will talk you through one powerful platform, the key to AppFolio's differentiation. We'll come back after a break and hear from a customer panel moderated by Shane Trigg. We'll complete the formal presentation with Fay Sien Goon, Chief Financial Officer, and for today's meeting, I'd like to ask you to save your Q&A for that portion of our program at the end. At that time, we'll take questions both in person and online for those streaming. We'll conclude our program around noon or shortly thereafter, and at that time, for in-person attendees, we'll move on to lunch and onto the patio. We'll say goodbye at that time to those of us that are streaming. This presentation contains forward-looking statements that are based on management's beliefs and assumptions, which are formed from currently available information. Forward-looking statements include any statement that refers to possible or assumed strategy, trend analyses, future product developments, future market conditions and size, and other characteristics of future events. We assume no obligation to update any such forward-looking statements. For greater detail about risks and uncertainties, please see our filings with the SEC, including our Form 10-K for the year ended December 31, 2021, and our most recent quarterly report on Form 10-Q, which can be found on the investor relations website. Without further ado, Jason Randall. Is that working okay? Sound good? Good morning. Welcome. It's great to be back together. Thank you for joining us today. It's wonderful to see everyone in person again. It's been a couple years since we had an investor day, and I'm also welcoming all of our streaming attendees. It's a particularly exciting time for AppFolio, hosting our tenth customer conference here at the hotel over the next couple of days. For those of you who have followed us for a number of years, you know how important spending time with our customers is to us. We hope that this session will help you better understand our business, our long-term strategies, and the real estate customers we serve. Let's get started. We were founded in 2006 with the mission to revolutionize vertical industry businesses providing great software and services. Today, our vertical market focus is the real estate industry. Our mission is even more relevant today as digital transformation is effectively a requirement for any business success. In the modern world, the way we work today requires powerful software solutions. Our business model, which we have built to be both scalable and repeatable, gives us an advantage to capture new parts of the real estate ecosystem. We've worked to build a consistent strategy focused on long-term sustainable growth. Today you're gonna learn more about our areas of focus around growth that include our long-term investments, our intense customer focus, driving continued learning, our passion for innovative products, solve customer problems in new ways that make their lives easier and more productive, and of course, our dedicated team, which is inspired to build and sustain a thriving culture. All of these elements have allowed us to deliver sustained revenue growth and resilience during evolving conditions like COVID and now staffing considerations, inflationary pressures. You're gonna hear a lot more about that today. You can see all this in action through our consistent compound annual growth rate of 30% for real estate revenue, which we have been normalized following the divestiture of MyCase. Let's take a look at the contributors to consistent growth. Our goal is to have continued opportunity as we execute our strategy. We wanna methodically layer new revenue streams alongside growing, while profitable and productive lines of business. Our model can be broken into repeatable stages. First, land new customers, expand into new value streams, grow as our customers grow, retain the customers for long-term relationships, and scale our business through each and every step. As we reported in Q2 of 2022, we added more than 1 million units to the platform on a year-over-year basis, an example of every one of these elements in action. Today, you're gonna hear each of our speakers describe these elements and how they apply to our business. Let's look at some high points in our history. In 2009, we launched our first value-added service, followed quickly by payment, screening, and insurance. We continued to launch value-added services to serve the needs of our customers. In 2015, we became a public company in 2018 to serve larger and more complex portfolios and to move upmarket. You've heard us talk a lot about that. Now in 2022, we continue to focus on these key strategic areas around innovation, as demonstrated by our recent launch of AppFolio Stack, which you'll hear more about. Our culture, we were recently named a Glassdoor Best Places to Work. In growth, surpassing $100 million in quarterly revenue. Today, we have a substantial market for AppFolio products. Residential real estate TAM, 51 million units, with community association TAM at 28 million units. We believe the real estate property management market is healthy and growing. You're gonna hear more about the resilience later on as well. AppFolio is growing faster than the TAM due to our increase in our product market fit and innovation across all of our segments and our products. Today, AppFolio has 6.8 million units on our platform, and as you know, those units comprise subscription to our core platform. We believe it is exciting time to be in property management. We also continue to look for opportunities to expand into new markets adjacent to the property management space. Two areas that we are currently investing in are investment management, which we launched in 2019, and to be announced tomorrow at our customer conference kickoff, short-term rentals. Shane Trigg, GM of Real Estate, will talk a lot more about residential opportunities, our residential segments, and how we continue to increase our product market fit innovation across all of our segments and products. Our focus on customers has resulted in consistent growth in our property management platform, resulting in 9% compound annual growth rate. You'll hear more today at our customer panel about how property managers need products and services to increase efficiency, grow revenue, especially around workflows like leasing, maintenance, and accounting, and how our services are constantly updated to keep them happy so they can expand their adoption and use. Our deep and rich ecosystem of users on our platform allows us to be well-positioned to explore entry into new real estate markets and expand products and services. We continue to broaden our executive leadership team, leaning into deep experience in developing SaaS businesses and strong leadership with tenure in private and public companies. The leaders you will hear from today, Shane Trigg, who I mentioned earlier, who's held various leadership positions for other publicly traded SaaS companies, including Salesforce and Intuit Real Estate Solutions. Fay Sien Goon, our CFO, with over 20 years of financial and accounting expertise, a proven track record of scaling and leading in high-growth SaaS environments, most recently from ServiceNow. Then you're also gonna hear from Will Moxley, our Senior VP of Product, who brings extensive experience in the cloud, technology, and software industries, both from RingCentral and from Salesforce. Our company values guide our business and our team and are deeply embedded in our culture. Our values have been in place since the early days of our company. They're our foundation of who we are and how we think about meeting the challenges ahead. Our values are material to our culture as well as to our brand. This is because we know that happy and engaged employees deliver the best service and customer experience, so we work hard to have these values be truly reflective of who we are. You see, listening to customers is in our DNA, which is what we try to do every single day. These values continue to be foundational to our success and goals as we continue to build our business. As I spoke about earlier, our business model, which we've built to be both scalable and repeatable, gives us a unique advantage to capture new opportunities while applying our consistent strategy focused on long-term sustainable growth. This is underpinned by operational excellence to ensure scaling across the business and enables continued focus on our long-term strategy. It starts by keeping our existing customers happy. We believe customer success is essential to our long-term success. We work to have loyal and engaged long-term customer relationships. We place significant emphasis on customer experience to differentiate our solution from competing products, and this is gonna continue to be a critical component of our growth going forward. Next, we look to acquire new customers, growing our base and subsequently the number of units managed on our platform. This is done with continued investments in the development of valuable solutions across not only the existing property types we currently serve but new ones as well. To do this, we'll deliver innovative marketing and sales programs, including real estate industry thought leadership and education, harnessing the referral power of satisfied customers. Our new growth initiatives in the areas of affordable housing and partnerships and integrations through AppFolio Stack allow us to acquire more units in all segments, while making us more competitive, especially in the corporate segment. We then work to expand adoption and use by existing customers with our value-added services. You're gonna hear more today about how our improvements are designed to streamline workflows essential to our customers, while simultaneously providing value to their customers as well. This results in increased adoption and usage of the entire platform, contributing to growth and retention. We also look to enter and expand into new adjacent markets. Today, we're focused on success in the real estate industry, but we're also leveraging our growing footprint to expand both within the property management market and into adjacent markets as well. As I mentioned, AppFolio Investment Manager, which targets investment managers as our customers, is designed to enable real estate investment management organizations to better manage investor relations by increasing transparency and streamlining certain business processes. By leveraging our knowledge, expertise, customers in the real estate industry to grow AppFolio Investment Manager, we may eventually develop investment management solutions for markets in other industries. Short-term rentals, which I mentioned earlier, is another example. Many of our customers have short-term rental units in their mixed portfolios, and this capability allows us to expand the types of customers that we then go and target, which is an opportunity to provide a purpose-built solution to enable our customers to manage their full business in one place on one powerful platform. As you saw on my previous slide showing the leadership team, we've added the role of Chief Strategy Officer and General Manager, Growth, filled by Jay Choi. Jay will be leading company strategic development and inorganic growth across AppFolio, as well as managing the portfolio of adjacent growth businesses. He brings a wealth of experience in these areas to the team. Our strategy for long-term growth is rooted in our success to date, leveraging the strengths of our model to achieve our strategic objectives. Now customer-centric innovation has always been at the heart of AppFolio's success. The progress we're making and the product innovations we'll showcase tomorrow at our customer conference continue that legacy. This supports our customers as they navigate an ever-changing industry. To tell us more about it, let's welcome Shane Trigg, General Manager of Real Estate. Thanks, Shane. Thank you. Can everyone hear me okay? Does it work? Good. Well, thank you, Jason. I couldn't agree more with your vision, for the future here at AppFolio. We truly have a lot of room to grow and sustain that growth for a very long time. Driving innovation within our core platform, AppFolio Property Manager, is our biggest lever to unlocking growth. Our customers expect it, and we know that delivering differentiated experiences inspires choosing AppFolio, expanding AppFolio, it maintains high retention rates and aligns customer value to the growth of our business. Now, Jason gave a high level of our TAM, and I wanna break this down for you a little bit more. What we're looking here is specifically with the residential property management market, and this is based off the most recent data from the Rental Housing Finance Survey. Currently, we're looking at U.S. only, and we always continue to look at evolving our approach to the fidelity of our data sources. The majority of our revenue in our business is tied to this space, a market where we believe, like Jason said, the opportunity is healthy and continues to grow. Our market covers both single-family residential, multi-family residential, including single-family homes, multi-family apartments, mobile homes, affordable housing, student housing, and senior housing. Many of our customers have mixed use portfolios, which means within their portfolio, they have at least two property types within their portfolio, but we also have a number of customers that only have one property type within their portfolio. It's worth noting that this TAM does not include the 28 million that Jason highlighted for our community associations, and it does not include the TAM for short-term rentals, where we see a growing opportunity moving forward. Now, how do we take advantage of these opportunities? The levers for success in our business are actually pretty simple. At every stage, we look to land, we look to expand, we look to grow, retain, and scale. We look to increase the value we deliver for our customers over time. When we think about expanding or landing, that's really acquiring customers and bringing units onto our platform. As Jason referenced, we have 6.8 million units under management today. We have plenty of opportunities to bring new customers on board onto our platform and expand our business. When we think about expanding our business, once we land a customer, they expand their unit footprint across our platform as they bring more of their portfolio or growing opportunities onto our platform. As our customers grow, we grow with them. When we think about growing, with every unit that comes onto our platform, there's a resident that's actually attached to that unit, where we provide Value Added Services, particularly around payments, screening, and insurance. The adoption of these services increases our average revenue per unit or what we call ARPU. Value Added Services is just one of the ways that we grow revenue and our ARPU over time with our customer base. Another way our existing customer revenue has grown since the last investor meeting that we had a few years ago is the increasing number of customers that are choosing the robust capabilities of APM Plus, which includes additional software capabilities as well as a higher level of service. We not only see customers upgrading to Plus, but we're seeing many net new customers start on Plus, which is increasing that ARPU. Of course, we look to retain our customers and have high retention rates. We do this by delivering product innovation, which Will will talk about here a little bit later, ease of use. We pride ourselves on exceptional service, and we really look to offer a complete customer experience for our customers. Ultimately, by retaining them, we look to scale their business. You know, recently you've seen, and we'll talk about a little bit more later about our B2B integration marketplace, AppFolio Stack, and that allows our customers to extend the use of our platform by taking advantage of many of the PropTech solutions that are out there, but still having the same customer and user experience they've grown accustomed to within AppFolio. Now let's talk a little bit more about who our customers are and what they do. As you'll hear from Will in a few minutes, our evolved product vision captures the importance of delivering exceptional value to an increasingly interconnected and growing customer base. Our customer base is a mix of owners and investors, property managers, and residents with critical transactions across the real estate life cycle. Our focus on positioning our platform to meet the demands of our growing portfolio of customers means we expand our capabilities as both a B2B and a B2C business. Now, who are these customers? Today, our customer base is larger than ever and more balanced than ever. This is how we think about our market segments. When you look at that $51 million in TAM, we internally break them down and segment our customers, and this is the internal view of how we go to market to go acquire, serve, and grow those customers. We are focused on growth and scale, rapidly building on our residential SMB leadership to further penetrate the market and add new up-market customers on a path to achieving our long-term goal of being the leader in all the residential segments in which we focus. We consider up-market growth to come from the higher or upper end of mid-market and the corporate segments. Now that we know how we segment our customers, which ultimately drives focus, ownership, and accountability and helps us stay close to meeting the unique needs of those customers in those segments, let's talk about the repeatable process that drives successful outcomes for our customers and AppFolio. We have a disciplined market validation process to ensure that we are building the things that really matter to our customers. Jason referenced listening to our customers is in our DNA, and so everything we do, we wanna build things that are valuable for our customers, and that's how we do it. Our software solutions are designed to be a system of record to centralize and automate essential business processes. It's also meant to be a system of engagement to enhance the business interactions between our customers and their business ecosystems. We are a system of intelligence, where we leverage data to predict and optimize business workflows in order to enable exceptional customer experiences and increase efficiency across our customers' businesses. We also look to align the offering of our service with the size, scale, and complexity of our customers to promote the growth of their business. We have customers that start on APM Core, then they upgrade potentially to APM Plus, or they may start on APM Plus, depending on the offering and where they are in their journey. We then will layer on value-added services as discussed earlier, and of course, we try to deliver an exceptional service experience. Ultimately, this unlocks more value for our customers, helping them keep up and exceed the pace of digital transformation across the real estate industry. Now, our customers rely on our cloud-based software to power their business, especially as they adapt to the evolving needs and expectations of their own customers and businesses. Despite a historic climb in rent prices and a surging demand of units nationwide, today's property managers are contending with a host of challenges from rising material costs to cutthroat competition and perhaps belt-tightening efforts amid wider economic concerns. We recently surveyed 1,000 property managers to understand what are the key challenges that you're facing today. As external economic pressures increase, it's not surprising to see operational efficiency and revenue generation jump to the top as the two commonly most cited challenges. Despite indications that the talent market is normalizing, they still view HR staffing and recruitment as a top challenge, which is not surprising given for any successful business, the competition for talent out there is never ending. We believe a superior and sophisticated property management software platform is the single most critical factor in solving all the challenges that our customers are facing. Now, in order to help our customers overcome these challenges, deliver exceptional experiences for them and exceptional value, and achieve our goals, we have five areas that we focus on in order to make that happen. The first area, and some of this has already been mentioned, is that we are focused on property type expansion and upmarket growth. We will continue to bring units onto our platform across our market segments, as well as add new capabilities that improve our ability to win upmarket. To further our customer and unit acquisition, I'm excited that we'll be adding new property types through some multi-year investments around affordable housing and short-term rentals. We believe the additions will offer capabilities for our customers coming to our platform and most importantly, for our mixed portfolio customers. The second area of focus is around customer experience. As Jason shared, when discussing our values, and I just mentioned a few minutes ago, listening to customers is in our DNA. We are evolving and simplifying our already industry-leading customer experience to meet the unique demands of our growing customer base. From onboarding, to training, to customer care, to customer success and growth, we're focused on delivering product-driven, effortless service experience that enables our customers to gain value quickly, adopt more of our workflows, and achieve their business goals. My favorite example of how we're applying listening to our customers is through our product suggestion board. I'm happy to say that over the past year, we've addressed and resolved 107 ideas that customers have shared with us this year. In the product suggestion board, our customers vote on what's most important. Based on the number of votes, it goes to the top. With these 107 that we've resolved, that's added up to more than 20,000 votes from our customer base. One example that has kind of bubbled at the top that we've solved for them is we are now refunding security deposits through our electronic payments platform, which the benefit for our customers means no more paper checks. There you go. You'll hear from more from Will on this here in a little bit. The third area of focus is around product innovation. We will focus on continuing to accelerate growth upmarket by delivering solutions through innovation. Orienting our product and engineering teams around market segments to understand the unique needs of our customers in each of those segments, while also having a focus on end-to-end workflows with leasing, maintenance, and accounting, is helping us bring innovation to market faster. Solving new customer problems, helping create new revenue streams for AppFolio Property Manager, and prioritizing our path to profitability, which Fay Sien Goon will touch on here later today. A great example of new revenue streams for AppFolio is AppFolio Stack, our new integration marketplace that we launched in June. AppFolio Stack helps us move upmarket, and it also creates an opportunity to drive more value and revenue. Customers can upgrade AppFolio Property Manager Plus, and that's Stack is included with APM Plus. For our customers using our core AppFolio Property Manager, they can add these capabilities for $0.50 per unit per month or $6 a year, increasing our PU. The fourth area of focus is really around differentiation. With the growth of our customer base, we recognize that one size does not fit all. Continued innovation in data, mobile, and AI is foundational to how we'll operate and win. Data is critical to AppFolio to meet our near- and long-term goals, whether through driving insights, creating new products, helping to develop more efficient processes. Data empowers our ability to drive growth at scale. We are building a data platform capable of supporting a diverse set of customer-facing and internal applications, machine learning models, delivering magical product features and functionality. Turning to mobile, because we've always focused, been 100% SaaS from the beginning, when mobile computing really became mainstream, we were well-positioned to deliver a mobile experience, and we continue to do that. As we expand our capabilities around B2C, we continue to focus on mobile, creating consumer-grade mobile experiences, setting the stage to unlock future resident-focused growth opportunities. For AI, we are at a stage now where AI is assisting in every single one of our customers' key workflows, in marketing and leasing, in maintenance, in accounting, and these are translating into real business outcomes. We no longer think of AI as a product, and we're using our AI development capabilities to solve unmet needs for our customers that not only deliver more value for them, but allow us to capture more value in the future. Today, nearly 40% of all APM customers are actively using at least one AI feature or service, and we want to expand the impact AI can have to help our customers be successful. The fifth area of focus is around partnerships and integrations. The ability to integrate into a single system of record is particularly important for our larger upmarket customers, enabling them to manage complex portfolios and run their entire business from a centralized hub. AppFolio Stack seamlessly integrates our customers' preferred software applications with AppFolio Property Manager, giving customers more choices as they focus on boosting productivity and improving their resident experiences. We announced our initial round of Stack partners back in June, and tomorrow at the customer conference, we're gonna announce 7 more, which means we've more than doubled the partners that are in our AppFolio Stack marketplace over that period of time. We're just getting started here with these integration partnerships, and AppFolio Stack gives our customers a choice to use the tools familiar and extend the capabilities of our platform. It also creates powerful network effects across the board for our customer base by building early customer pipeline, and we see customer wins coming through this and use this to fuel sales and attract more partners to the Stack integration marketplace. Now we've talked about our TAM, we've talked about our opportunities, the challenges we solve for customers, and our areas of focus. All of this builds confidence that we can achieve long-term sustainable growth and deliver exceptional experiences to our growing customer base. It also enables the execution that we have around three strategic pillars. Those pillars are, number one, to win up-market. Number two, to continue our SMB leadership. Number three, to grow value-added services. Let's take a minute, and we'll dive into each one. The first is to win up-market. Our largest growth area is in the corporate segment. We drive growth up-market by expanding our capabilities through additional property types. Examples are affordable housing, like we just talked about. Short-term rentals are another example. Enabling innovation through our platform. I've already discussed these property types, but also, through our integration marketplace as well. It's so critical that we remain the source of record for property-level accounting, and accounting and reporting are the pipes of our customers' business and will continue to remain one of the most important areas of our product investment. We're hyper-focused on delivering more features and themes to make sure that we're delivering automation, centralization, and flexibility for our customers. With our push upmarket, we will continue to position AppFolio Property Manager Plus to our customers to the upper end of mid-market as well as our corporate customers, and for any customer that's poised to take advantage of APM Plus. What we've seen with this push upmarket is that it's actually working and working really well, and Fay Sien Goon will provide more on this shortly. Now, the second strategic pillar is to continue our leadership in SMB. Our history of delivering differentiated experiences for our SMB customers has resulted in great success. The SMB segment represents our largest concentration of customers and units on platform. We also recognize that many customers may start as an SMB customer, but because of their success on our platform, they grow for years and years. Though we are focused on up-market growth, we will continue our SMB leadership by adding capabilities, simplifying the service experience, and driving deep adoption across leasing, accounting, and maintenance workflows. Now, the third strategic pillar is focused on value-added services growth. In addition to our efforts to grow our customer base and unit counts, we also wanna continue to grow our average revenue per unit or ARPU while maintaining high customer retention. We do this by adding and expanding our value-added services, which are designed to enhance, automate, and streamline critical processes and workflows. Our strategy is working. For example, in Q2, we announced that value-added services revenue grew 35% year-over-year, which was more than $80 million in revenue for the quarter. Now, this strategy has been particularly successful with value-added services around payments, screening, and insurance. The combination of these three value-added services represent the most significant revenue coming from value-added services and are currently the fastest-growing of any of the services that we provide. These value-added services will continue to fuel growth for our customers and will continue to grow ARPU for AppFolio overall. Now to give you a sense of the power of our model, I wanna take a look at one of our customers and their experience with us. That customer is Alexander Forrest Investments, or who we call AFI. They're an investment manager with property portfolios across the U.S., and they're a customer in our corporate segment. Having the primary goal of increasing their net operating income, they look to take over management of properties and, in their words, run them to their fullest potential. This goal and mindset has really set them apart, and they have experienced fast, exponential growth in the marketplace, doubling their portfolio size year-over-year. AFI began using AppFolio in 2014. Given the rapid trajectory, it was important that we set them up to handle their growth and success and could also enable their future growth goals. We recently upgraded them to AppFolio Property Manager Plus. This has resulted in AFI being a high adopter of many of our value-added services, including our AI leasing assistant, Lisa. And being an ARPU multiplier in the process, a trend that Fay Sien will also talk more about later when she gets up here. Now through everything that we've described, we're building a competitive moat for AppFolio on our path to being the leader in our residential market segments. One of the ways that we measure our success and awareness is how often organizations search for our brand, because that's often the first step of many steps in the buying process when making a decision. You can see in recent years that AppFolio has started to separate ourselves from the competition. We really separate ourselves because we offer a seamless, modern SaaS platform. We have strong product-led organic growth. We are loved by our customers and users and take a tremendous amount of pride in that. We consistently grow market share for the market segments in which we focus, and we also deliver an exceptional customer experience through product innovation, mobile, AI, and the service that we provide. Now, the strategic bets that we're making are fueling our go-to-market efforts and improving our ability to win. By enabling our go-to-market teams to our strategic pillars, we're able to deliver a cohesive and consistent customer experience across all customer touch points, bringing innovation to market faster and creating both differentiation and productivity along the chain from first engagement to onboarding to retention. We're designing and nurturing our partner marketing strategy and programs to leverage our new PropTech ecosystem partners through AppFolio Stack. By leveraging our property manager partners, we not only look to expand our capabilities, but we also think we can reduce the rate of effort required to create demand in the market. Now, nothing has been more foundational to AppFolio driving focus on differentiation in the customer experience than AppFolio's refreshed and inspiring product vision and product strategy. I wanna bring up Will Moxley, our Senior Vice President of Product, to tell us more about that. Welcome, Will. Shane. Can you all hear me? Yes. Excellent. Hi. The two gentlemen you see here on the slide, they're from the video we showed earlier this morning, and it's Jordan and Joseph. My favorite part of the video is when Joseph says or refers to us as the Swiss Army knife, and because of our versatility and the cutting-edge features that we offer with our one powerful platform. Now, Shane earlier mentioned those three big challenges that our customers face, operational efficiency, growing their revenues and profits, and HR staffing. That's really the problems we're trying to solve with our platform. That's what we're trying to solve for our customers. That's captured in our product vision. Our product vision is to create a world where choosing, living in, owning, and managing communities feels magical and effortless, freeing everyone to thrive. Those people we're freeing are the people that Shane mentioned as our customers, the property managers, the owners, the residents. Now, why does this matter? Why is this our vision? Well, it's because payroll is the number 2 expense that our customers face right now, right after taxes. Anything we can do to make them more operationally efficient and help them with staffing is gonna have a big impact on their business. In fact, 40% of our customers' time, the property managers' time, I should say, is spent doing busy work. One of our customers refers to this as turning the crank. What is turning the crank? It is manually entering invoices. It is typing in work orders. It is backing out erroneous accounting transactions. That's what turning the crank is. It takes them about... It eats up about two days of their week. Our goal is to help them stop turning the crank. That's where that magical and effortless comes in. What we mean by that is we wanna eliminate crank turning for them, so that they can spend their time growing their business, increasing their resident retention rates, and not doing all that manual busy work that they have to spend two days out of the week doing right now. The way we deliver on this vision is through our platform. I'm gonna walk you through what's in the platform. It starts with the foundation, our cloud operations that delivers reliability, performance, and security, and then capabilities to rapidly release new innovation to them. Now, I've worked at companies where we had three releases a year, and then I worked at another company where we had one release every month, but we're releasing brand-new capabilities to our customers every single week. Every week, they're getting something new. In fact, I looked this morning, they got new search capabilities this week, where they can now categorize what area of the product they wanna search. That's just an example of the new innovation that we're constantly adding to the product. We also have something that we refer to as our AI factory, where we're able to rapidly deploy machine learning capabilities to any one of our workflows so that our customers can get new automation and new recommendations in their business. Shane mentioned AppFolio Stack. AppFolio Stack allows them to extend the capabilities of the product with our ecosystem of partners. Now, above that sits our application layer. There's two elements here I wanna talk about. First is these common components. These are things like our reporting engine, our mobile capabilities, our communication capabilities to send SMS, for example, document management and our workflows. These are all capabilities that are consistent throughout the entire application, so that customers get a consistent user experience, which is one of the reasons that our customers love us. Then above that, we have support for various property types. Each property type has its own unique requirements that we need to meet. To give you an example, in affordable housing, there's all these compliance requirements that they have to file with, state government or federal government, and we build specific capabilities to meet the needs of their compliance needs in affordable housing. Now, the three main workflows that all of this enables are leasing, which is really just marketing for property managers. That's really what it is. Maintenance and accounting. This is the work that a property manager has to do, and all this foundation is really around solving for these three key workflows that encapsulates all the work they have to do. We provide one consistent interface and one application that they log into to do all of those workflows, and they're all integrated. Some of our legacy competitors take a different approach, and they maybe make you log into different modules for each one of these. They put a single sign on, a thin layer of integration on top of a series of acquisitions. We instead give you one application you log into to achieve all of those capabilities. On top of those three workflows, we layer our Value Added Services, which are the ability to send and receive payments, the ability to screen a new applicant or make sure that your properties are insured, or resolve a customer issue in maintenance, right? We layer these on top of all of these workflows. Certain Value Added Services are relevant to certain workflows. Now, my goal over the past two years has been to rapidly increase the pace of innovation. As you can see, we've been releasing more and more capabilities each year, and my goal is to continue this trajectory, to continue to add new capabilities every year at a faster pace than ever before. Now, what are our innovation themes? What are we focused on? You're gonna hear a lot of the same things that Jason and Shane talked about. I'm gonna speak about three in particular here, which is expanding upmarket, winning in that corporate segment. What are we doing there? How we're using AI to differentiate our product, and I'll dig into some of the new features that we're gonna be talking about this week that we're doing to deliver on that AI vision. How are we focused on the customer experience? How are we improving our customer experience to remove this busy work that eats up so much of their time? First, we're gonna talk about expanding upmarket, and there's three things I'm gonna cover here in expanding upmarket. The first is adding new property types, so I'm gonna dig into that. The second is STACK. STACK is really important for increasing that product market fit with our larger customers. The third thing I'll talk about is just basic product market fit, new features that are really relevant to that upmarket customer, and that's another area. Let's dig into each of these. We'll start with property types. Earlier, we mentioned the short-term rentals. One of the new products we'll be talking about at the conference this week is AppFolio Stay Manager, which is our new capability to manage short-term rentals. Now, the short-term rental space has been growing tremendously because of the changing attitudes about remote work. Last year, the average revenue for a short-term rental grew 35% according to AirDNA. This is a research firm there. It's expected to grow about 14% again this year. Our customers are leveraging short-term rentals to really grow their business. Some short-term rentals, that's all they are. They're always a short-term rental. Other times, a property manager will take a conventional unit and convert it into a short-term rental, and then they might convert it back. Having that integrated experience where they have the flexibility of switching property, the use of a property, and tracking it all in one system is really important to our customers. By adding this property type, we can get more customers upmarket with these mixed portfolios. Now, another property type that we're investing in is affordable housing. Now we've had affordable housing capabilities, but we're going deeper, and we're investing more to support things like HUD project-based Section 8 housing and enhancing other types of programs like low-income housing tax credits. Sometimes we refer to that as Low-Income Housing Tax Credit. If you hear that term, that's what it stands for. Then housing choice vouchers. We're investing new capabilities here because as you go upmarket, the majority of affordable housing units are in that upmarket segment. If you wanna acquire these larger customers that have affordable housing units, you really need to have this be part of your platform. It's another property type we're adding so that we can address more of these mixed portfolios and acquire more corporate and upmarket customers while staying compliant with the government programs, of course. That's what it's all about with affordable housing. Now, I've mentioned STACK. As we go upmarket, and we get into the corporate space, customers are more sophisticated. They use third-party property technology, and they expect you to be able to integrate these solutions. We knew that, and that is really what drove Stack, is to win these customers that wanna use these cutting-edge partners that we offer. Earlier this year, we announced AppFolio Stack, where we launched with six partners, I should say, at the NAA conference, and we're adding seven more partners here. It's been really well-received by our customers. We now have hundreds of thousands of our units leveraging Stack, and it's driven some customers to upgrade to APM Plus, and that's an important point. Stack is offered as a part of APM Plus, so it's one of the reasons you might wanna upgrade in addition to other ones. It can be purchased separately for $0.50 a unit a month so that you can access the partners that are part of Stack. Now we don't just let anyone sign up to be a Stack partner. It's a curated list, and the way we curate it is based on customer demand. What are the partners that our customers are telling us they want us to integrate with? That's how we prioritize the partners. How does it complement our existing product set? Is it complementary? Is it something that makes sense? Then we work with the partners to build that great customer experience. We work in conjunction with them to build that integration, define the workflows we wanna support to make sure that the experience is phenomenal because that's one thing we don't wanna happen. Sometimes when you do integrations people take shortcuts on the experience, and we do not wanna do that. We want to keep that great customer experience whether you're leveraging a partner or not. Now I'm gonna switch over into new capabilities that we're building to be a better fit for the corporate customer. There's been a trend, there's some trends in the property management space as you go upmarket, and some of those are centralization and automation. Before you might have a leasing team and a maintenance team and maybe an accounting team at each property. Now increasingly, companies are centralizing those functions, and they're saying, "Let's have one leasing team that handles all properties that we manage. Let's have one maintenance team that handles all properties that we manage." With these changes, there's more complexity, there's more requirements that customers have, and some of those have come in the accounting space. We've been enhancing our accounting capabilities to meet these new increasing complexity features that customers need. Things like cost centers, things like loan tracking, managing your loans, and things like project budgeting as well. We've been adding these throughout the course of the year. We're gonna continue to add more capabilities like this to meet their accounting requirements. Another area that larger, more sophisticated customers need is reporting. They have more sophisticated reporting requirements. We've always had an extensive set of reports for everything you wanna access, and they can be customized. Sometimes customers wanna go further. They wanna take data from different reports and different tables, combine it together into a new type of report. We're announcing at the conference our report builder, where customers with a few clicks can build a the brand-new report and then save it and use it again later so that they never, ever have to build that report again. We're gonna actually show you a quick demo of what this looks like. I'm gonna switch over. All right, this is our report screen, and I'm gonna bring up a report here called the rent roll. Rent roll shows all the units, who's renting them, how much they're paying in rent, et cetera. You'll notice there's no contact information. There's no email, there's no phone number, and there's no security deposit amount. Let's say that one of my owners wants that information. Well, normally, I'd have to download three different reports, combine them in Excel, and then send them the results. Now with the report builder, you go in and you select your base report. We're gonna start with that same report, the rent roll report. I wanna find their phone number and their email, their contact information, so I search for that, and I'm able to then pull that in off of another report called the tenant directory. I pick the phone number. I'm gonna add their email contact as well. Let's say that the owner that I need to provide this report to also wants to know how much they have in security deposit. I go ahead and pick those fields, and now I just constrain it down to the property that this owner has, and I run my report. When the results come up here, you'll see that over on the right now, we've added the phone number, we've added the email, we've added that security deposit amount. If I need to do this report and send it to this owner repeatedly, I can just go ahead and save this, so I never, ever have to do this again. I've made this new report that solved this particular issue that my owner has, and I'm able to save that and reuse it from now on. Again, they'll never need to do this again. This is a one-time thing, and that's work that we've just taken off their plate. Back to the slide. That's the report builder, which we'll be talking about tomorrow, and I think it's gonna be quite popular. Now I'm gonna switch over to AI differentiation and what are we doing with AI to really differentiate our product. AI, I use that word magical and effortless in the product vision. AI brings a lot of that magic. When Lisa, which is our AI leasing assistant, first scheduled a showing without any human involved, that felt magical. When Smart Bill Entry scanned a bill and then automatically did the accounting entries for you, that felt magical to our customers. When Smart Maintenance prioritized an urgent customer need without a human being involved, just automatically did it, that felt magical to our customers. We've been working over the past few years on building something we refer to internally as our AI factory, which is the ability to apply machine learning, AI, to every one of our workflows and for every single segment. We're now at a point where in leasing, in maintenance, in accounting, we're applying some capabilities of AI to improve that customer experience, to remove that busywork, to make that crank-turning I talked about disappear. I'm gonna give you two examples of things we're gonna talk about this week where we've applied AI to make our customers' lives easier. The first one is the bank feed. Bank reconciliation is just a typical process that property managers have to go through all the time, but it is no fun and it's a lot of manual work, and you have to manually match transactions that happen in the bank account with the transactions that happen in AppFolio in the accounting system. What the bank feed does, it's applying AI to automatically match transactions that happen in the banking system or in your bank account with what's happening in AppFolio. It also will take transactions that happen inside of the bank but aren't captured in AppFolio and automatically create those accounting entries for you. It is gonna remove a lot of the manual matching process and the manual data entry processes that were there. It's gonna dramatically simplify this bank reconciliation process, which our customers, quite frankly, do not enjoy doing, right? This is gonna remove a lot of time off their plate. It's gonna make their lives easier, and it's an example of how AI can really create that more effortless and magical experience that we talk about. Another example is Smart Insure. When many of the property managers will require you to have liability insurance for a tenant when they move into a property, and they allow the tenant to upload their own insurance policy. Maybe they have a renter's insurance policy or some other policy that covers that liability. Well, they'll say, "Okay, if you have your own insurance, please upload it." What typically then happens is the property manager has to load up that document, read through it, make sure that the dates still apply, that the policy covers what it needs to cover. Now with Smart Insure, you upload it, and AI scans that document and lets you know whether it's valid or not. Property managers no longer need to go in and read through that document to make sure that they have liability coverage for the particular unit. It's just taking care of it for them. That's an enhancement we've added to our insurance products, applying AI to remove work off their plate. Now I'm gonna transition over and talk about some of the other capabilities we're enhancing to be a better need for all of our customers. It doesn't always take AI, and these examples don't take AI, but they're things that our customers really value that we've been working on. Shane talked earlier about security deposit alternatives. This is just what the name says. It's an alternative to security deposit. Renters don't like security deposit because it locks up cash, right? It locks up a lot of cash. Sometimes they don't have it, and sometimes they just want access to it. This is an alternative product that allows them to pay a smaller fee up front and then not have to pay a security deposit. This is something we partnered with to deliver a new V Plus. This is a new V Plus we're making available to our customers. It's attractive to property managers because it makes their properties more competitive. If you don't have to supply a security, a security deposit, that's great for them because it makes it more attractive to residents, and residents like it because they don't lock up all their cash, especially at low interest rates. I was joking yesterday that interest rate's a little better, but still not good enough. This is a new V Plus that we're pretty excited about and our customers are excited about, and it's just another one of the new services we're making available to our customers. We've also been investing a lot in the customer payment experience. What is the experience for them? On the payable side, one of the new capabilities we're adding is security deposit refund. Instead of having to write a check do a paper check and mail it out, and then the resident has to go take it to the bank and deposit it, they can just now do the whole thing electronically, right? This is fantastic for the property manager because they don't need to go through that process and for the resident because they get their cash back earlier. You know, this was I think Shane referred to this. This is a top idea on the product suggestion board. This is one of the things our customers were asking. I think it was like number two or three on the list. We saw that, we wanna make customers happy, and we delivered this. It drives usage of our payables capabilities. We've also been enhancing the receivables capability with Apple Pay support. Now when a resident wants to pay their rent, they don't need to type in their credit card information. They can just click twice on their phone, and they pay. It removes friction in that payment process, which is great for the property manager 'cause they get they're getting their rent. It's great for the resident, because all they have to do is just do two clicks, and they can pay their rent. This removes friction in that payment process, and that will drive adoption of our payments platform. That's why we're excited about it, and customers are excited about it because of the great experience. Then finally screening is one of our really critical Value Added Services, and we recently introduced income verification capabilities to it. We've enhanced those income verifications even more recently to drive more adoption of it. What this does is, in the screening process, a resident have to provide some proof of income so that you know that they can pay the rent. This is a high-friction process. You know, people have to upload pay stubs, you have to go do calculations, et cetera. We're automating this away with the income verification service so that we do all the validations and make sure that they have the right coverage to be able to pay this. You know, one of... Our customers have shared with us in part of our interview process here that one customer in particular told us that 75% of time saved in the application review process, they're saving a lot of that application review process time because of this. This is another example of removing that busywork, removing that manual repetitive task so that they can focus on more important things like growing their business or making their residents happy or making their owners happy. Just to recap, expanding upmarket, AI differentiation, and just the customer product experience. Those are the three areas we're focusing on. With that, I'll turn it back to Lori. Thank you, Will. We'll take about a 15-minute break and get set up for our customer panel. There are coffee and snacks in the hallway, and if you're streaming, please note that we'll get started in 15 minutes. We're gonna get started here in about one minute. All right. We are live. Who's ready to hear from some customers? Pretty excited to have our customers here. We've talked a lot about our values this morning and how listening to customers is in our DNA. The reason that's important is we obviously wanna solve challenges for them and stay very close and make sure we're delivering value for them each and every day. We're honored to have our trusted partners up here with this group of customers. Our goal is really to create space so they can focus on what matters most, running their business and delivering for their customers. Thrilled to welcome five customers here that we really see as trusted partners, both in how they leverage our platform, but also how they hold us accountable to making sure we're delivering value now and in the future. With that, let's go ahead and get started, and we'll meet our panelists. I'm gonna start by asking each of you as we go around, I'll call your name out, your organization, talk about your business, to give some background, and then share just one top business goal that you have, for this year as we go across. Let's go ahead and jump into it. First, we'll start with Brooks Baskin, founder and CEO of 2B Living. Brooks, go ahead. Hi, everyone. Brooks Baskin, founder and CEO of 2B Living. Nice to meet everyone. We're a San Francisco Bay Area-based property management company, a little over 3,000 units right now and growing. I think I have the designation of being one of the few people who actually loves property management, which I get asked all the time what's wrong with me. But I love the business. One objective of ours this year, we call it our SBO or single big objective, is stable foundation. Business is growing. We're doing very well. That obviously dovetails a lot with our relationship with AppFolio. Yeah, excited to chat with you today. Thank you, Brooks. Appreciate it. Next up is Gozen Hartman, co-founder and CEO of Fairlawn Real Estate. Gozen, why don't you go ahead? Hi. Gozen Hartman, co-founder and chief operating officer of Fairlawn Real Estate. We are based in Champaign, Illinois. We founded the company in 2015 with just under 300 units, and we have under 5,000 today. It's been massive growth. We joined AppFolio in 2019, and AppFolio has really been a trusted partner. Thank you very much for that. Thank you very much. All right. Now let's meet John Morrison, President of Horizons Asset Management. Go ahead, John Morrison. Hi. Yeah, my name is John Morrison out of Columbus, Ohio. We do multifamily for conventional residents, and our goals for the next year are really to expand. You know, last few years, we kind of shrunk a bit to try to centralize our management and the help that AppFolio has given us gives us the ability to run with that smaller focus, and we've made a little nest egg that we can start grabbing some more properties now, so we're ready to take care of the market. That's great. Thank you very much, John Morrison. Now, Ross Nelson, CEO and Broker with Marshall Reddick Real Estate. Go ahead, Ross. Hi, guys. I started with Marshall Reddick Real Estate in 2009. I actually was a realtor. It's been my first and only job since college, so it's been a lot of fun. 2014, Marshall retired. I had the opportunity to acquire the company. At that time, we only did real estate investment sales. Since then, 2017, we started property management. 2014, we started private lending. 2020, we started investment funds. We have 8 offices across the country. Property management represents about 25% of our business. In terms of goals for this year, AppFolio property management major goal is to finish integrating their API into our CRM. As far as unit count, we'd like to end the year at about 3,500 units. For AppFolio Investment Manager, major goal for us is working with their product team to complete the waterfall calculation, and then have $75 million in client capital invested. Great. Thank you, Ross. Appreciate it. Last but not least, let's meet Marco Vartanian, President and CEO of Sullivan Property Management. Go ahead, Marco. Thanks, Shane. Good morning, everyone. My background through 2012 was on the private equity side, and then all in real estate operations. In 2012, I joined a company called Waypoint Homes, which was an early adopter of single-family rental. We scaled that company through a mix of M&A. I finished as EVP of operations with a company called Invitation Homes, which is the ultimate entity that we ended up with. All along that ride was questioning, well, why hasn't. I mean, why haven't we institutionalized small multifamily in the same way that, as an analog to what we did in single family? At the end of 2018, I acquired a small management company based in Orange County, California, which is about 800 units. Three years later, we've scaled that to about 5,000 units using a very similar playbook that we scaled operationally with the single-family company. Great. Top business goal? Top business goal. I would just say scale creates digestion problems. Our goal in the near term is develop mastery at 5,000 units, plateau there, and then build our ecosystem. We have aspirations to get to 25,000-30,000 homes under management pretty quickly. Exciting. Thank you very much, Marco. Appreciate it. All right. Now that we've had a chance to meet everyone, I'd like to dive into a few questions before we open up to our audience. We'll go through some questions and then we'll do a Q&A. The first question, I'm gonna ask Marco and Gozen to answer. The question is, no industry is without its challenges, and property management certainly has its share of challenges. What would you say is the biggest challenge your business faces today? Gozen, we'll start with you, and then we'll finish with Marco. Sure. The biggest challenge that we face today is probably finding and retaining talent. It used to be that we would get floods of applications for every open role. That is not really the case anymore. Now, we have to worry about things like, are people going to show up to the interview? Are they going to show up to their first day of work once they've accepted an offer? Really, it's made it all the more important that when we do find the right people, that we are taking care of them in the best way. That means having a really robust onboarding process, training them in the right things, and basically creating a really fulfilling day-to-day for each of our team members. Great. Gozen. Thank you. Yeah. I think about our business challenge, as we look at, again, the single-family space where we owned all 82,000 units, and we have the dynamic of a third-party owner client. Their aspirations for their property don't always perfectly align with what our goals are. Being able to satisfy that cohort in a scalable way is a challenge for us. On the resident side, the technology adoption has been outstanding. The resident expects the types of technology tools that AppFolio provides. Our owner clients. It takes time. They wanna build trust. They ask the question, "Well, why do I need this?" Once they see the benefits and build that trust, then they're all in with us. We just continue to communicate that the very best residents today, they expect that technology engagement. That's one. The other piece is omni-channel communication. I think we have a mix of call, text, chat, email, and so being able to equip our team to handle all that inbound communication flow. Once again, AppFolio does a good job of giving us that information we need. Last piece is speed. The expectation of delivery for what we all do today from our residents and our owners is immediate. Again, once again, AppFolio helps us there because the expectation of service is right away. Well, thank you. Next question I'm gonna ask Brooks, first to answer and then Ross. Creating exceptional experiences for our residents is one of our top priorities here at AppFolio. What are your customers' top goals and needs, and what are you focusing on to exceed their expectations? A little bit what Marco was talking about. As a third-party PM company, we kinda have two masters, if you will. We have our owners and our tenants. We try to pride ourselves on being a tenant-focused management company. It's very interesting for us being kind of in Silicon Valley Bay Area where there's very high expectations on technology and customer service. What we've focused on is not so much taking the people out of property management, which is a little bit of a trend going on. We think it's very important that people are delivering great customer service, but it's a very hard job. That's part of what we've been very successful of leveraging AppFolio, is that by having really good tech that's easy to use used by our entire team nearly 100 people from maintenance tech to property manager, we're able to make their job easier, give them more time, and they can actually focus on good customer service and responsiveness. It really is crazy, like the demands on speed, it's really hard. Like, tenants expect immediate responsiveness on everything from maintenance to rent to other things, which has put huge challenge on the operation. That's really where strong companies who've leveraged technology, particularly AppFolio, have been able to thrive, like we have. Great. Thank you very much. Ross, why don't you go ahead? All right. Because property management and investment management are service industry, our biggest cost is labor. I'm constantly trying to retain the best talent, and the best way to do that is to eliminate mindless busywork. The more mindless busywork, the more employees quit. We're looking at making the business more efficient, so we can not only have happier staff, but we can have higher profit margin. We're constantly looking at number of units we managed per employee, as well as number of dollars of capital invested per employee without declining our quality of service. In terms of our customer, we're also in California. I view our customer as the owner investor. I think from property managers, investment managers, you guys, AppFolio employees, at the end of the day we always tell our staff, like, "Who writes our paycheck?" Our paycheck is written by the landlord, right? The owner of the asset. If that individual decides to not work with us, literally everybody in this room doesn't get a paycheck. We're constantly looking at that as our customer. Our customer's number one goal is collecting as much money as possible with as little effort as possible. If they have to talk to us, that's a bad thing, right? The less communication, the better, because that means that we've provided that to them upfront. We've anticipated that need. In terms of my customer's top need, it's real-time communication. The number one reason that owners, landlords, investors fire property managers and investment managers is hands down communication. It's the quality of communication and the timeliness of communication. A faster response with no answers equals an angry owner, right? A slow response with answers equals an angry owner. What am I focusing on to provide that real-time owner communication? Sorry, it's a technical question, and you guys are technical people, so I want to give you a technical answer. We really are focusing this next year on automating owner notifications. How are we doing this? We use SuiteCRM and directly integrate that with AppFolio API to notify our owners when key activities occur. If an owner is not notified, the owner will be angry. What are examples of that? Key activities, key events. Tenant payment being received, tenant rent past due, tenant three-day notices, receiving tenant notices to vacate, lease renewals, tenant leases coming due, owners low on maintenance funds, work orders. I mean, we literally have hundreds of these. These are all automatable, transactional emails that we have all the activity, and we have all the triggers in AppFolio. We just need to provide that in real time, and that'll accomplish two things. One, it will give our owners real-time communication on activities that are happening with their assets. Number two, it's gonna eliminate my labor, so it's gonna increase my profit margin because now my staff is happier 'cause they're not sending out these mindless, brain dead emails constantly about we received your rent, right? Or we didn't receive your rent. The software will just do that automatically, for us through that API integration. That's my answer. That's a very good answer. Thank you. I enjoyed listening to you. All right. Next question I'm gonna ask John Morrison to answer first and Gozen then why don't you know, finish the answer with your answer. Each of you are leveraging AppFolio in unique and innovative ways. How has AppFolio helped you the most, and what are the things that really enable you and your teams to be successful? For us, it really goes back to our staff and how we can communicate with them, with the tenants in a timely fashion. You know, some of the big things that we started out the year or even last year with that AppFolio wasn't really providing to us, but with working with them, they were able to get up is the Smart Maintenance module, where when we got work order requests, like emergency requests or whatnot, to get them out to the proper tech that's on duty. You know, we don't want one tech on duty all the time throughout the night. To be able to have that cascading tree, get the right information to the right people and in a very timely fashion was not something that was real nice in AppFolio about a year or so ago. With working with them and helping them out on that, we came to a beautiful situation where comes in, we get texts directly to everybody that's in the tree that has assigned to the work order. We got buying power that's already there. If they need to get an emergency vendor out for a plumbing situation or whatever, it's just now the employee is empowered to get on site, get the job done, and get back to their family, which again, is all part of the great culture that we're trying to build in our company by taking those tasks, automation of any of the reports, those kind of things off of them, where they can focus on their relationship, they can focus on their home life and wanna come to work every day. Great. Thank you. It's very, very similar to us. I mean, AppFolio has meant an integration of so much of what we do versus our previous solution. Really in the end, it means that we're taking these manual cumbersome tasks off of our front line because they are busy, and it is a really demanding role. You know, it's really changed the nature of people's day-to-day within our company. For example, we subscribe to the maintenance call center. There was a time not very long ago, where there might be 10 technicians across our entire system who are on call, and they could receive calls directly from residents in the middle of the night. Now we actually have the AppFolio's maintenance call center to vet what is an emergency and what isn't, therefore relieving that front line. We subscribe to Lisa, the artificial intelligence leasing agent. She has completely changed the nature of our leasing agents, so they can focus on a different part of the sales funnel, and really focus on the tour and then everything that goes beyond that, the experience. Our accounts payable specialists, we use Smart Bill Entry, and they used to spend a significant portion of their time literally scanning in and loading in invoices. How boring, right? Now that has freed up tons of time, and they're able to focus again on the most meaningful tasks, which hopefully makes for a more fulfilling day-to-day. Thank you. I have to say it's so fun for me to listen to you, all the things you're using with AppFolio and the value you're getting from it, so it's exciting for me. Not that it's about me. Okay. Well, you've heard some great examples of how our customers are leveraging AppFolio. The next question is really for you all to answer, so we'll start with Brooks at the end here. What's something that's coming up in the real estate industry that AppFolio should be thinking about in the future? I think one of the interesting trends going on right now is real estate and PropTech. I think kind of a hot industry, and there's lots of innovative software companies popping up. I think AppFolio made you know a very smart decision, in my opinion, to become a more open software and integrate with other softwares and not just rely on being able to build everything themselves. It's very exciting what's happening in our industry. Frankly, it's long overdue. You wouldn't normally say property management is a you know tech-forward type of industry, which is really changing. I think to me that's AppFolio's biggest opportunity is to be able to leverage not just themselves but leverage their platform to enable customers like us to really be using best-in-breed technology for every single vertical. Yeah, I think it. Something that we're thinking a lot about is the downturn and how to maximize performance in the downturn. You know, with AppFolio, I think that there's maybe a couple of things. Number one is on the analytics side. How can we use data to help? And then also just again, some of the things we have been talking about is how can you do more with less, right? And that could be through. I mean, there is some artificial intelligence incorporated into the product, but where can we do that more, again, to free up our staff to do the most meaningful activities? Yeah, definitely on that aspect of doing more with the artificial intelligence. You know, we're looking at more centralized management, trying to get our staff focusing on what they do best of closing residents or servicing residents and the paperwork, the analytics, all the other stuff. Try to keep that to some higher tier people who just config the inputs in there. The more that that AI grows and the more that we can make our people more effective in the tasks that actually make us money versus the support aspect, which we wanna keep everybody happy, but the easier that we can keep our team happy, that helps out. And then of course, the integrations. Opening that up just so that AppFolio's great in a lot of things, but some things are a little maybe clunky and not more efficient. We can look now to other events where other programs where they can bring them in using the database we already have, not having a big headache of having to have double information. You know, that's the stuff we're really excited for and what we wanna use. All right. One thing that I think is coming is large, sophisticated residential property management companies are coming. They're coming as private companies, they're coming as public companies, they're coming as build for rent, REITs, private equity. Residential property managers are evolving from this small mom-and-pop local companies to these large, professionally managed national companies. No one wakes up, graduates college, gets their MBA and says, "I'm gonna go be a residential property manager," right? Usually. Right? Everyone's laughing 'cause it's true. Like, you fall into it. I looked at commercial real estate and I looked at residential real estate, and I was like, "Wow, everyone's intelligent, everyone's hardworking, everyone has their MBAs in commercial real estate. I'm gonna love residential real estate. This is awesome. Like, I got no ones to compete with." Until recently. That's starting to change. There's a lot of money, there's a lot of talent, there's a lot of resources that are moving into the residential management space, and I've not seen that before. I'm starting to recruit a lot of talent from other industries, which has been really, really fun, and they just have a passion for residential real estate investing. Large companies are gonna be much more sophisticated users. Their software needs and expectations will be significantly higher than these traditional mom-and-pop managers. These large management companies are gonna want automated owner, tenant, and staff notifications. They're gonna want really robust APIs for custom integrations. They're gonna want in-depth customer reporting. They're gonna want customizable dashboards. Their user roles are going to be very different. Their user roles are gonna be multiple offices, multiple teams, multiple staff members, multiple properties, multiple portfolios. Those need to be highly customizable with reporting, just because they're running such a large organization, and their KPIs are gonna be so much more complicated. That's something I think we need to look at in the near future. That's great. Marco? I think automation it'll be tested as the market is shifting. Automation will be tested because successful operations historically has been a roll up your sleeve, boots on the ground business. The automation is great. If you think of like a leasing funnel, it's awesome to have self-show, but the question is, if there's not as much pull-through demand or tailwind in the market, do you need that human to get that lead over the hump to lease from us? I think that's something to watch. To go to Gozen's point, I think BI tools, analytics, expense containment ratios at the property level due to the surge in inflation, so having better analytics to drive decisions. We have all the data, so I think AppFolio's ability to give us more of those tools to custom report and export information that we can digest and use will be very valuable as the market shifts. Great. Thank you very much. Thank you for all of your answers. Very thoughtful and we're very grateful. Now with the time we have left, we wanna open up this conversation for questions from the audience. For those of you that are here in person, we have two kind of microphone runners as we'll call them. Shayo is over here, and Luca is over here. So if you have a question, let us know and they'll provide a microphone. For those of you joining us remotely, just type your question into the chat panel and we'll add it to the queue. Ross, maybe one for you is just what do you feel is best in class units per employee, and you know, sort of how much room do you have between an average operation and a best in class operation on that metric? How do you bake a chocolate cake? There's a lot of different recipes to go about this. A good rule of thumb I have found is 100 units per employee. Some managers tend to be more siloed. They literally have somebody who does everything, leasing, maintenance, renovations, owner communication, tenant communication. Other companies tend to be more of an apartment model, and they're gonna run off of more teams. That team is gonna have a team lead, a property manager, and then everyone will follow suit, so tenant coordinators, maintenance managers, maintenance coordinators, et cetera. One of the tricky things that I've found is that management role up top is really going to define the quantity of units per employee managed. I've found that average employees with a high performing leader can bump that up to around 125-130 units per employee. I've also found that a low performing manager, regardless of their staff, is gonna be more around that 80 units per employee. Something to that. Yeah. Something to that. Yeah. We generally think of it in terms of 100 units. For us, that's really sort of frontline staff at the property. We think about the people. If you have a property that's its own operating bubble, right, 300 units, traditionally, you might have a property manager and assistant property manager and a part or full-time leasing specialist. That's the number that you're talking about, those sort of office-based management staff and leasing staff. On the maintenance side, we generally look at about 100 units per maintenance technician. It is very hard to hire maintenance technicians right now. I'm not sure if anyone else is experiencing that. It also depends on how you manage your property. You might have each property be its own bubble, or you might have a scattered site operation, which I think some of you guys have as well. There you can get a little bit more efficient with your centralized office managing those, scattered site operations where you don't actually have staff who are physically based at the properties. I completely agree with that. Those numbers I was providing were for people that are touching the property. That number does not include back-end staff, and that number does not include maintenance workers. That is just staff touching the property. I completely agree. Another question. Hi. This is Devin Au from KeyBank, here for Jason Celino. Thanks for doing this, first of all. Maybe a question that's applicable to everyone on the panel. Wanna ask about macro, just given the rising interest rate and potential recession happening. How do you think that would impact your budget and spend with AppFolio, but also how do you think that would impact units additions and units growth in the near term? Thanks for the question. I think one interesting part about property management is I think it's a very good downmarket business. Certainly for us, we actually see even more opportunity now than we did before. Obviously, there's additional pressures on things, particularly labor. For us, like, our spend on AppFolio, if anything, I think would go up and not down, with, call it, an inflationary market, because we find it to be very good value for what it's providing, in particular when you're making the trade between software and labor. Which that's the hardest thing in our business right now is finding talent, but also just the cost of labor is also going up. Excites me, that's one of the things I'm very excited about our industry. I think it performs well in inflationary times, right? Rents are going up. A lot of our fees are tied to that. At least we found, especially the last couple of years with all kinds of challenges, there's been a surge in demand for good property management, and good property management goes hand in hand with companies that leverage technology. Anything to add on this one? I think Brooks is correct. What we do with AppFolio and the continued evolution of their tech stack, that's table stakes. At a 5,000 unit operator and above, we're hungry for every new release, every new product. If you think about all of our collective businesses, it's a large payroll. Anything we can do at the margins with AppFolio to help us reduce that payroll, whether that be for hourly or salary employees, we're all for. There's major cost benefit for us. I would see us, to Brooks' point, expanding, as we get tighter on payroll. I just wanna mention something about macro data. We're coming into this recession or in a recession, depending on the sources of data. One thing to look at is 2008, 2009, we had 40% of all residential one- to four-unit mortgages were ARM products. Today, that's sitting at 2%. The other thing we're looking at is today 40% of all residential one- to four-unit mortgages are below a 4% interest rate. We're not gonna talk about brokerage today 'cause that's a little bit depressing, but we usually sell about 800-900 investment properties a year. That's obviously down about 60% right now for us. With that said, why is that down? We're having a ton of listings right now where traditionally the seller wants us to sell it. Great. Lower the price, lower the price, lower the price. Why is that? Because their mortgage payment, their PITI, is significantly higher than the rent. They're gonna take a $1,000, $2,000 dollar a month negative. If you look at, like, a 2008 dynamic, you had a ARM loan that maybe was a $5,000 dollar a month mortgage payment, and when that was adjusting, that mortgage payment might go up to $8,000. Now, the market rent for that was $4,000. What does that mean? If that owner didn't sell that property, they're gonna be feeding a $4,000 dollar a month negative. Now let's look at today's dynamic with today's recession. You have a 3% interest rate. You have a $4,200 a month mortgage payment. You have a $6,000 a month market rent. As a listing, when that seller's not getting what they want, they say, "Fine. Manage it. Rent it out for 2 or 3 years. Let's put it on the market later. I'll just make $2,000 a month in positive cash flow." I think we're going to see a huge boom on the macroeconomics of property management because there is so many positive cash flow houses right now, and there's nowhere else to place that capital, and you have this 15- or 30-year fixed mortgage that just is free money below the rate of inflation. That's something that we're looking at with our data. Thank you. Okay. Okay. The next question comes from the web. Ryan Tomasello. Did you consider other property management tech providers before getting AppFolio? If so, which ones, and why did you choose AppFolio over the competition? We started in 2015, and we had a property management software that worked well for smaller operators. We were growing really fast, and we knew that we needed to choose something different and better. We did actually at the time look at a few different solutions. Yardi and Entrata were two of the major ones we looked at at the same time as AppFolio. AppFolio's sales process, number one, now that doesn't always correlate to customer service later on, but AppFolio's sales process was really amazing. They were vested early on and made it very clear that this would be a partnership. That was just really enticing for us because we were growing really fast, but so was AppFolio. We thought, "Okay. Well, we can potentially grow together and give feedback on products and that sort of thing." One of the other solutions we looked into felt like a dinosaur in comparison. We could barely get calls back. When we had meetings, they were several weeks out and short and uninformative. I think that the other solutions that we looked at were very narrow in terms of the services that they offered. Another thing that was exciting about AppFolio was its flexibility. I mean, we were coming in, we own the bulk of our assets, but we also do third-party management, so we do have management clients. We manage everything from single-family homes to larger communities. We do student. We do commercial. It allows us to really be nimble. We needed a solution that could do it all. Yeah. I'd say that's. When we were looking at it, we were looking at Yardi, we were looking at OneSite, and the biggest thing is, like you were saying, that it has a lot of different functions built into it that are very user-friendly, very fast, able to do with your mobile phone. A lot of the other companies didn't have that at the time. Being able to add that, being able to have. Not having to pay an extra $10,000 to add another feature, add this feature. That just to make it to your specific liking, and then when you try to call tech support, it's hard for them to help you out because you have such modifications from the original source. We get great support on both ends because it's together now with this new integration, the way that they're handling that. We're able to add these third parties, and because that integration is a little bit more limited for an M-API, but because of that it's very locked down, and it has been working very well for the few that we've added, at least at my company. We were on a mix of Salesforce and Yardi at the large public, and we used Salesforce as really the operational tool, the logistics piece of getting people where they were supposed to go. Yardi was our partner for back-end accounting and reporting. My expectation when I started down the path along with my current company was that we would have something like that. I think AppFolio really excels at the logistics side of our business. Our business is not complicated. It's more of a logistics business than a real estate business, if you think about it. The things we do each day are not that hard, but it's doing them in a standardized manner over and over consistently. AppFolio, I was very surprised, was the right partner for us, and again, so far has been great. The other piece I wanna share is AppFolio does a great job of listening. I'll give you an example. I was at NAA in San Diego, and I got an email from Shane. I'd never met Shane. Shane says, "Hey, Marco, I hear you're doing some interesting things. I'd like to meet you at NAA." We spent an hour, and he just asked about the company, what we were doing, how AppFolio could help us, and that's cultural. That's something Jason and Shane and team are doing at the very top, and we see that at every level of my company, whether it's our director of maintenance. He's constantly on with AppFolio trying to figure out how Smart Maintenance can be improved, how we can do more together, and so that's a cultural differentiator for the team. Thank you. I keep giving you the mic. Dude, I love being your cup holder, bro. Oh, I think Brooks's- Oh, yep. I just wanted to add one other thing on that I think might be interesting. We did a big expansion last year in the summer and added about 1,200 units, and that portfolio was all on Yardi. We did a pretty exhaustive review. There's a little bit of a narrative in the market of once you get to a certain size, you need to you need to use Yardi, which I actually think AppFolio is helping to upend. I actually think it's kind of a false premise out there. We stacked the two up against each other very thoroughly, and we've never been more happy with our decision to stay with AppFolio. We're actually not impressed at all with Yardi's offering. It was actually kind of a muddled and confusing sales process. We ended up migrating those 1,200 units from Yardi over to AppFolio. We have been very happy doing it, and I think that's part of my almost challenge to our team at AppFolio 2 or 3 years ago was, "Hey, we have visions of being a much larger company, 5,000, 10,000 units and up, and frankly, we want nothing to do with changing software, but we wanna see that you're capable of doing large portfolio management," and we've been very happy with AppFolio's growth since then. Wait for another. I'm not getting paid to say this, and I'll provide data behind it, but AppFolio is definitely best in class. We were on Propertyware previously. Propertyware is a RealPage company that used to be public, which recently went private. RealPage has a reputation of acquiring software companies and absolutely killing the R&D and software development, but who needs software development as a software company, right? They outsource that overseas. They had significant database issues. I mean significant. We have software teams on staff, and I'm very well-versed in software development. Simple examples of this. You couldn't have multiple tabs open on a browser. Like, literally, you could have one tab. That's absolutely insane. We have multiple offices, so you have to have multiple Propertyware accounts for multiple offices. That makes absolutely no sense, right? Why wouldn't it all just roll up into one software platform? Even worse, if you had a client that had an email address with property manager A in Texas and you were a competing property manager at property management B, they share databases, meaning you can't have the email address as a unique identifier with that landlord on two separate companies. Your client's literally creating email addresses just for you to manage it if you're using Propertyware. Absolutely insane. Rent Manager isn't even a browser-based software. They were created on servers way back when, and they just haven't overhauled it. Yardi is the exact same way, and they're trying to become browser-based, but I think AppFolio had an extreme competitive advantage because they started way after everybody when technology had come so much farther along. Their platform, the technologies they're using are significantly more robust and built for mobile and remote application. Love the passion and enthusiasm, of course. Sorry. I don't drink coffee either, believe it or not. Could you imagine if I drink coffee? That'd be bad. We can see why you're leading your company. That's good too. We're gonna extend our time about another five minutes, so we'll go to about 11:15. For the remaining questions that come up, we ask that we limit it to one or two of you answering, and that's for the audience and your ass as well. Go ahead. Yeah. We'll get through a few more. Let's take one more from the floor here, and then we've got one more on the internet. Great. Thanks. Marco, I wanted to follow up on your answer earlier. If you had to think about ROI from what you get from the core or from APM Plus, and then the value you're getting from the Value Added Services, like, how would you characterize the value or the ROI from the Value Added Services versus the core? Thanks. Yeah. As I said earlier, I think for you know, if you're running a 300- to 500-unit operation, then maybe the base product works. Once you step into whether that's adding ancillary tools, tech tools that you wanna bolt in to what we talked about earlier, where you're trying to do some analytics, BI, it's really required the Plus tool. We've been very happy with it, and there was a lot of decision-making that went in to convert to Plus. The support has also been great at every level. We can train more quickly, we can onboard staff, and they can get going more quickly because of the support of Plus to get them familiar with the tool. I'll let you down, dude. I got you. Yeah. Sorry, I was also looking for the Value Added Services, so things like lease screening, you know. As far as, well, of course, yeah. Anytime, whether it be Lisa, the screening products, we're definitely able to place value on them. That's why we use them. We do like the opportunity of testing products through AppFolio and through strategic accounts. They've been great about saying, "Hey, test drive this for 30 days." Some of it hasn't worked for us, and that's been okay. Thank you. You can pass. Let's go ahead and go to the next question online, comes from John Campbell. Outside of the property management solution, what are the top two or three ancillary products, i.e., payments and screening, that you view as the must-haves? I intended in screening, absolutely. We've gotta have that. Protecting our asset is our number one responsibility. You know, additional items that are outside. ACH. Anyway, yeah, being able to collect money from different areas, being able to be online, be on the website, that kind of stuff, but that's all included in Core and things like that. I'm trying to think of Bill pay. Oh, yeah. These are all the extra added-on services. Absolutely. I thought you were thinking outside. Yeah, AI, absolutely. Lisa helping out. She's definitely worth every penny that you put into there versus the staff you have and running 24 hours is awesome. Yeah. Well, just to plug on Lisa, she enables us to do things that we could never do before. People want immediate answers. Most people are searching for housing at night, on the weekends, and our best case scenario before, if somebody clicked on one of our listings, let's say on a Saturday, was maybe that a human would get back to them on Monday afternoon. I used to think that Mondays were just, nobody wanted to tour on Mondays, but it turns out that we were just not booking tours because nobody was communicating with people in a way that they could book for Monday. She has completely changed the dynamic. She's accountable for the top of the sales funnel, and so she is taking that repetitive lead follow-up off of the plates of our frontline leasing staff. They used to spend probably half of their time following up with leads that would never materialize into anything, and that can be demoralizing, and it results in less satisfaction in your role. You know, we were one of the test customers of Lisa in fall 2019, and we were really, really happy going into the pandemic that we had her because we were ahead of all of our competitors because she was able to keep working through everything. Thank you. A follow on from John. One more thing. Can you talk about your appetite for marketing spend relative to the various points in the cycle? How much do you turn the dial as occupancy drops? For us, we keep our marketing spend up. I mean, Apartments.com, things like that. You know, more the on-demand or the per click. We still wanna keep our voice out there, our ads out there, just to make sure that we honestly keep having people coming in. We always wanna have that waiting list. To do that, we've gotta always be present. For us, we pretty much lock in what we do for the year, and very rarely do we change that, and we find that fluctuating it back and forth really doesn't achieve the same thing as just sticking to the plan. Thank you. Uh- Go ahead. Okay. I mean, there's two different ways to look at that. One is marketing spend for tenants, one is marketing spend for landlords or prospective landlords. We found that with tenants, the two main websites are Zillow and realtor.com. There's a lot of other websites, but as long as you have it on those two, you're gonna be just fine. In terms of occupancy only declines if you're not at market rent, you don't answer the phone. I know that sounds weird, but a lot of people think you can lease properties without answering the phone, or condition of the property. In terms of ad spend, as long as you're on realtor.com, as long as you're on Zillow, that's gonna cover 99% of your prospective tenants. On landlords different businesses scale differently, so ad spend and budget is all over the place. Great. Thank you. I think we have time for one more question. Hey, it's Stephen Sheldon from William Blair. Marco, I had a question for you. I think you talked about going from 800 units to 5,000. I think you talked aspirationally about getting to 25,000-30,000. What do you need to get right to do that? How does AppFolio play into that? Are there any concerns that you have about AppFolio's ability to scale with you as you target that? Yeah, no concerns about AppFolio's ability to scale with us. If you think about our operational business, and we think about every day, people, process, and tech. Tech's the foundation of that feeds processes that then informs employees what the heck to do each day when they show up to work. We feel very good about the foundation with AppFolio. As I said at the outset, like digestion scaling a company, we went from about 1,200 units, my last company, to 82,000. Operationally, that creates chaos. Most days we're focused on scale, plateau, and digest, and then gear up to scale again, plateau and digest rinse and repeat. Last piece is standardization of activities. You break out what roles can I standardize and do centrally? AppFolio helps us with a lot of that. Then there are certain manual tasks that are regionally focused that just have to be done boots on the ground. Every day you're trying to deconstruct the best way and most efficient to tackle those. Great. Can I? Lisa wants to try it. Yeah. When we joined AppFolio, we had 1,000 units, and we were adding 1,000 more at the time, which really triggered the change, and we're at just shy of 5,000 today. You ask about confidence in AppFolio scaling. I mean, even in the 3 years, which is not a lot of time, I feel that AppFolio has scaled a lot. The product has changed. They listen to our feedback. There are very simple things that are being tweaked all the time that make meaningful differences in what we do. Just the way we manage as well we're testing some more remote management type of things, which we don't think that we would be able to do with other solutions. Looking at different ways to manage properties, and AppFolio has been with us every step of the way. Well, this is gonna conclude our customer panel. Thank you for all your questions in the room and online, and thank you for all of your answers. Round of applause. We are truly grateful for this, and it's an honor. With that, we'll let our customers exit the room, and we look forward to seeing you over the next 48 hours here. All right. Now for the final presentation of the morning, I'm delighted to welcome our Chief Financial Officer, Fay Sien Goon. Fay Sien, take it away. Thank you. Well, thank you, Shane, and welcome, everybody. It's good to be back here after three years. Before I get started, I just want to thank everyone here for your interest in AppFolio, for investing in us, for covering us, and for being here. Thank you all for making the journey here. It's really good to see you. Lastly, I want to just thank you for the time that you've spent with me in the past year while I get up to speed. The feedback and input that you have provided has been very helpful and insightful. I'm coming up to my one-year anniversary here at AppFolio in the next few days, and I've learned a lot in the past year. The one thing that has stood out for me the most is just how resilient this company is and how resilient this business is. You heard our customers talk about being a good downmarket business. I will share a little bit more of opportunities in front of us and what this means. Let's get started. Before I get started, in today's presentation, I won't be discussing or updating our guidance. I won't be providing color on our Q3 results. We'll cover Q3 in about two weeks. Let's check back on that. Okay. I'll cover three areas today. The first area, I'll talk about what moving upmarket means to our revenue. Then I'll talk about the resiliency of our business and our industry. We'll talk about the path to profitability. You've heard Shane and Jason talk about land, expand, grow, retain, and scale. I'll dive into more specifics on how these elements contributed to our 30% revenue CAGR. Land and grow. You heard Jason mention that we are landing new customers at a 9% CAGR. We're adding new units to our property to our platform at a 17% CAGR. Shane went over our strategy on winning upmarket and continuing our lead in SMB. We are just getting started in our move upmarket. I'll show you in the next slide. We're adding ARPU at or growing ARPU at a 12% CAGR, and the increase is due to mainly the increase in our value-added services usage, specifically payments, screening, and insurance, and the adoption of our APM Plus product. I'll double-click on what this means when we move upmarket. This slide shows our ending active units on platform from Q1 2020 to Q2 2022. You see a 17% CAGR over that time. Our move upmarket can be seen in the bottom row in the dark blue. As you can see, we are just getting started. It is our fastest growing segment. We are also growing very nicely in the other segments. Will spoke about our continued mission to bringing value to all our customers through AI and just through more innovation. At the top, I want to just point out the yellow bars. Community association units. It is important that we continue meeting our customers' needs in different property types, and community association is an example of that. Community association is more limited in scope compared to residential units, and so the ARPU is generally lower, but we still see good success here. Our focus and investments, however, will be more focused on the residential units. This slide shows you just how much room we have in our ARPU. You see a wide spread between the customers buying just our platform at the low end to the heavy use of value-added services at the high end. The customers at the high end are usually APM Plus customers. This slide is what gets me most excited about our move-up market. Our corporate customers adopt APM Plus six times more than the customers in the other segments. APM Plus, as you have heard from our customers earlier today, has features that are very important for the corporate customers. They like the dedicated support, the customizable workflow, the AI-enabled tools. Now we have AppFolio Stack in there. AppFolio Stack is a gateway to our point solution ecosystem. What APM Plus gets us is 60% more ARPU than the core APM customers. APM Plus customers are generally 60% higher in ARPU than APM Core customers. This difference in ARPU is more than the pricing differential between APM Plus and APM Core. It is really the heavier usage of our value-added services. What this means is our APM Plus customers are more deeply embedded within our ecosystem. You saw earlier, we are just scratching the surface with the corporate segment. With 6 times more penetration of corporate customers in APM Plus and 60% more ARPU in the APM Plus customers, we have a long journey of growth ahead of us. Switching gears now. You heard from our customers earlier about the impact of the macroeconomic environment on the industry. We have high inflation, high interest rates. SMB is said to be the most at risk during a recession. You heard from them, we are also in times of high occupancy and higher rent prices. Both those factors are good for property managers. This is why the property management industry is resilient. This slide shows you how AppFolio is resilient. Our product is deeply embedded within the real estate life cycle. Our product drives efficiencies from the investors and owners to the property managers, to the vendors that they work with, and to the residents. Our product's ease of use, as you have heard from our customers, and our ability to scale with our customers, make it compelling for them to switch to AppFolio, especially in these times where there's a labor crunch. This slide is another view of our impact of our product on the real estate life cycle. This is a slide that is showing the revenue mix between our residents and the property managers and owners. This is a testament of the resiliency of AppFolio. Look at our balance sheet. We have a debt-free balance sheet with a healthy cash position. Okay, now we talk about profitability. I know you all want to know how much and when, but we are not getting into those details today. We will be talking about what we're doing and how we'll get there. Profitability is very important for us as we continue our growth journey. We have taken steps, actively taken steps, to reverse our negative free cash flow. We believe we will be able to reverse our negative free cash flow in the short term. We will continue taking steps to increase our free cash flow margin to a healthy level, but that journey will take a few years. The path to profitability is a company-wide initiative to be more lean and efficient. We will share some examples of what we've been doing and how we're thinking about it. You'll hear a theme of process optimization and automation. Customer service, which is part of our cost of revenue, is no different. We're increasing the use of self-service and standardization to bring value to our customers quicker. We will continue scaling customer service. Sales and marketing. We are using technology and data-driven insights to drive higher quality pipelines. We're also working to increase usage on our value-added services through in-app optimization so that we can increase our pool without spending more on sales costs. You heard Will talk about his personal goal of increasing the rate of innovation, and you saw the list of new products that we are introducing. We will be increasing the rate of innovation. In G&A, we will also be optimizing and scaling G&A. We started with our office footprint. In this hybrid environment where we're working remotely and in the office, we have taken this opportunity to rightsize our office footprint. We have made some of our offices available to be subleased. We're also optimizing our processes in finance specifically. You saw last quarter that we released our financials 11 days earlier than before. The 11 days that we got back is really increasing the capacity of the finance team. We shared some examples here of what we're doing. We will continue optimizing our processes and automating to scale the company. I want to reiterate that getting to a healthy free cash flow margin is important to us in our journey through our growth. We started actively taking this journey of optimizing and scaling, and we believe we will be able to reverse our negative free cash flow margin in the short term. The journey to a healthy free cash flow margin is multiyear. Okay, let's bring this all together. Long-term growth starts with keeping our existing customers happy. Listening to our customers is what we do well. We are investing in our platform and in our product to scale with our customers. We are providing our customers exceptional customer service. We are moving upmarket to accelerate landing new customers and adding new units to our platform. We're adding new property types, affordable units to win upmarket and to have that market product fit, the product market fit. We are introducing new products and entering into adjacent markets, short-term rentals for now. We're growing ARPU while driving efficiencies for our customers. Underlying the growth strategy is a foundation of operational excellence and scale to drive to a healthy free cash flow margin. As you have seen, AppFolio is a resilient business in a resilient industry. The strategy that we walked you through is set up for us to have a long journey of growth ahead of us. On behalf of all AppFolians, I want to thank you for the confidence you have in us and for being on this journey with us. Before I close out, I want to give a shout-out to the team that have put this event together and made this event a success. Lori Barker and Shayo from The Blueshirt Group, Carrie, Stephanie, Alina and Ryan Harris, and Susie from our comms team. Thank you all. Thank you, Fay Sien Goon. I'd like to welcome the AppFolio management team back to the stage for question and answers. For those of you in the room, you can let us know when you have a question, and we'll come to you for the microphone so that everybody on the webcast can hear your questions. For those of you on the webcast, please type your questions in, and I'll be reading them out to the group. As you ask your question, please let us know your name and company name. If we could start with one question and as time permits, we'd be happy to circle back around with people. All right. Let's take the first one from the our in-person audience. The first question comes from over there. Hey, thanks. curious the average revenue or units per customer has been trending a lot higher pretty consistently over the last 5 years. How much of that we've had a lot of customers up here that have been talking about going from three-digit number of units to you know, well into the thousands. I guess how much of the unit per customer growth is being driven by your customers organically expanding the units covered versus maybe landing with larger customers than you have historically? If there's a way to break that out. Well, thanks for that question. No, we currently don't break out the expansion from our customers. It is a healthy level between the expansion and the new units. As you heard from our customers, they are expanding as well in this environment. Maybe Jason, I could ask you to share about what you have heard from our customers as they think about the expansion opportunities they have. Yeah. I think there's a mix happening there, driving the expansion of units per customer. I think you heard very much this is commonly what we see customers start at a certain level and then grow over time. That is certainly happening. Our expansion upmarket and targeting larger customers is bringing on larger unit counts. I think there's also an underlying trend when we brought in the CA business. CA customers have larger unit counts, that's how their economics work. I think those are the three factors driving that. Devin Au from KeyBank here. Great to hear the strong traction of Stack and more integrations to come. Maybe just one quick clarifying question. For the non-APM Plus customers who wants to buy or get the integration separately, do they get charged on a per integration basis? Secondly, the question I have is, for customers who aren't using Stack, what's driving them or what's stopping them from building the integrations themselves? What's the strategy there to, like, get more customers from that group of people to hop on Stack? I think we shared earlier our pricing on Stack. You could get it through APM Plus. Or we could charge separately $0.50 per unit per month. Maybe I'll get Will to share some about the integration efforts that our customers have. Yeah. When you get access to Stack, you get access to all the integrations. Without Stack, you don't get the read-write API that you need to do that, so they can't do it on their own. We did all the integration work for them. Once they get access to Stack, they can access all the integrations that are on Stack. Thanks. The next question comes from Peter Heckmann. Can you discuss penetration rates for complementary solutions like tenant screening, payments, insurance, and online leasing? Yeah. Penetration rates payments, screening, and insurance are our biggest value-added services products. We don't separately disclose our penetration rates for any of our value-added services. As you heard from our customers, they value our value-added services, and it's table stakes, as I mentioned. I think I would add. I don't know if you noticed some of the customers. They don't speak V Plus like we speak V Plus, and that's a really good thing. Payments is something that is just part of the platform. They don't consider that an add-on. In fact, you have to opt out to not get payments. Screening some of our insurance products, we aim to provide value, right? Value to the customer, value to their customers. It should be a no-brainer in our mind that you're adding on these services. From the beginning, we've always focused on adoption of the value-added service and then use of the value-added service. Good. Another question coming from Will Thompson: How much are you spending on developing AppFolio Investment Manager? You know, the adjacent growth is our growth strategy. We don't separately disclose the amount that goes to each one of our business units. You know, maybe Jason, you can touch on just our adjacent growth strategy. Yeah. To be clear, the majority of investment is going to the core real estate property management platform. We're testing out the idea that we can sell other services to users on the ecosystem beyond the platform. That's what investment management is. We started with that because we had clear overlap in customers. We had customers using AppFolio Property Manager who were also doing investment management. You heard some of that on our customer panel as well. Our thinking there is that gives us expanded opportunity to provide new services and new products to that ecosystem. You mentioned a lot of great information about the ARPU differences between the APM Plus customers and non. Can you explain the drivers of that difference in terms of attach rate, penetration of the customers using the value-add services amongst the clients will have six times higher ARPU. How much is that driven by those that use the value-add services? Yeah. So just to clarify, the corporate customers are using APM Plus 6 times more, and APM Plus is driving 60% more ARPU. Some of the 60% is made up by the pricing differential, but there's also another layer in which the APM Plus customers are using more value-added services. The question on why they're using more value-added services, then you heard from our customers that it's just more complex for them, and they need the help that they could get from the technology to be able to scale. Shane, maybe you can add to that. I also think the added level of attention that our Plus customers get, given the dedicated services that Plus provides, really focuses on helping them be really successful really quickly. I think overall, all of our customers find very fast success, but we find our Plus customers really do because of the level of one-to-one attention that we provide. Obviously the more successful people are, the more likely they are to add on or adopt more services in the future. That would be the connection there. Hi. Thanks. Sorry, I'm a little under the weather. I'm wondering, now that Klaus is taking a step back from the company, and we've heard from a lot of ex-employees over the years that the energy he brought, specifically to the engineers and the culture that he helped spearhead at the company for over a decade was just wonderful. I'm wondering, who at the company sort of fills that void? 'Cause I think it's a void. Two, I'm wondering why now is the right time to, like, it appears, create the new role that this new gentleman, Jay Choi, was hired to fill. Those two questions. Why the new role creation? Why him specifically? Who fills Klaus' void, now that he's obviously not here and he's taken a step back? Thanks. I'll take that one. For those of you who know Klaus, you'll know that he's a unique individual. There's no one who's going to be the next Klaus. He was, of course, for those of you who don't know, co-founder, along with Jon Walker. Jon Walker is still part of the company, engaging in growth activities, building new products, working with the engineering team. Klaus is now a board member. He's still actively involved in the company. He comes by the office, he talks to engineers. I think what Klaus would say if he was up here talking is, it's not about an individual, it's about the culture that we've worked at since the very earliest days that I've been lucky to be a part of. Those values, we do try to live those. How we approach engineering and product, I think you heard Will and Shane both talk about it. You know, this is very much in line with how we've been doing things from the very beginning, the market validation process, how we work to empower engineering decision-making, how we push our customers directly with our product and engineering team to build empathy. All of these things are lessons Klaus taught us that we've been carrying forward. I think he would say, if he was up here, we've built on those things and gotten even stronger. Replacing his. So he, his title was Chief Strategy Officer. That was an important role as we looked out into the future and thought how we can apply leverage and how we can continue growth beyond the current time horizon. While we didn't replace him right away, I was always thinking about replacing that position because I do think it's an important role for us. Jay's coming on board. He's got a lot to learn, but I think he brings the right skill set to help us really cast that horizon out for the long-term objectives that we put out there. Hi, thank you. As you guys continue to open up the platform with third-party integrations for example, partnering with Conservice on the utility side and selling WegoWise, like, how do you sort of balance whether there's any channel conflict between the internal services that you monetize in-house, like screenings and payments, et cetera, versus the desire for someone to use another screening or another utility management function? Yeah. Shane, do you wanna take that? Yeah. The way we've approached this is opening up our platform has allowed us to prioritize and focus what's most important to us. There are certain areas that we're gonna continue to focus on and build, and we've opened up our platform to things that our customers are asking for that are really kind of outside of those areas. We haven't run into a situation in these early days where there is a conflict. As much as we can, we'll always kind of assess over time on what do we continue to wanna own and what might change, or where we wanna compete. I think at the end of the day, we're gonna follow our customers and what they're asking for so we can be more valuable to them. If they're asking for partners down the line, we'll certainly add those partners, if it makes strategic sense for us as well. Just as a quick follow-up, the decision to sell WegoWise, was that a recognition that the service was such a superior product for the customer? Or what was the sort of thinking behind it? Can you repeat the question for the recording? Oh, do you wanna repeat it? I can repeat it. Just the decision to sell WegoWise and partner with Conservice, what was the thinking behind that? Yeah. I mean we are always looking at ways to prioritize and focus, and so this is one of the main ways that we're focusing on our resources. But Jason, maybe you could provide some color. Yeah. I think you hit it right on. focus a good strategy is built by the things you say no to, more important sometimes than the things you say yes to. If you've known us for a long time, you know that we're constantly trying to refocus and make sure we're looking at the most important things. Maybe Shane, I'll ask you to comment on the channel conflict and how you're thinking about that. You know, right now we're not seeing channel conflict, like I said earlier. In the event that our customers are looking for something, it not only offers us to provide them more value, but us to improve the offerings that we have as well. We think there's more than enough room for our partners that we choose to work with and for the solutions that we provide. I think in this particular area, though, it was really more about, hey, we're doing a lot, and we're innovating at a rapid pace, as we've discussed today. As much as we can harness our resources and focus on things that we really wanna deliver for our customers versus what we think, the PropTech ecosystem is at a different stage than we are, and we can bring that in, we wanna do that. It's both good for our customers, but it's really good for us. Can you talk about the mix of greenfield versus rip and replace on net new units added? Really more just thinking about how much runway there is on the greenfield today, and just the customer acquisition costs of a greenfield versus a rip and replace sale. Yeah, I mean we are adding new customers at a 9% CAGR, as we mentioned earlier. The customer dynamics, the competitor dynamics are different between the segments. Shane, maybe I could get you to elaborate more on what that looks like. I think in the segments that we focus in, just about every one is on something. Now, greenfield this level of sophistication can be very different. You may find at the lower end, you're in an Excel situation or QuickBooks or something like that, and that's. We'd classify that more as greenfield. As you kind of go upmarket, what I would say the mid-market and all the way through corporate, they're typically on someone already, and you heard that experience from our customers. Given their growth trajectory or the level of sophistication or the things they're trying to accomplish, that forces them to take a look outside. We often find going upmarket, we're replacing. There's another element too, which you heard from one of our customers talk about buying a portfolio that's on an existing system. Yeah. Right? That happens both ways. Customers will buy an AppFolio property, managed property, and then sometimes they'll run two systems for a while before they consolidate. That gives us a chance to, as you heard, kinda show our mettle, provide support, show that we're partnerships. That's also a growth opportunity. You also heard customers, "Hey, I started my company four or five years ago." Right? They're starting from a low unit count, and we might call that greenfield, right? They're just new customers, and they're gonna need something. As they grow, we're trying to be in that conversation every step of the way, so when it's appropriate, we're right there. Thanks. The next few questions will come from the web. Ryan Tomasello. How are you thinking about balancing organic versus inorganic growth, particularly the prospect for acquisitions in this environment where subscale private companies may be more willing sellers? Jason, you wanna take that? Yeah. Our focus has always been on organic growth, right? I talked about getting to the point where we added 1 million net new units over the year-over-year basis, right? This is something that we've invested heavily in and feel is a big driver to future success. That will always be front and center. However, we are open to opportunities that expand the platform, add more value to our customers, or expand our technology platform, and we've done these types of acquisitions in the past, and we remain open to them. Relative to the payments offering in value-added services, are you paid on a flat fee basis, or is that tied to a spread on the payment amount? For credit payments, for payments on a credit card, it's based on a percentage. Debit card, it's a flat fee, as mentioned. What I can say, you've heard me say this before. It's surprising how often you run into a potential customer using very old, very outdated solutions. It's hard to switch software, and I think you all know and understand that, so people tend to hold on. They're constantly evaluating. Constantly trying to get into conversation to see what's out there. You know, even to this day, you heard a mention of Rent Manager. I mean, these are very old solutions. They were old solutions when we started the company, but people are still on these solutions. Thanks. Hey. It seems like you guys have quite a bit of latent pricing power in the business across whether it be just the core software or the V Plus on multiple levels. As we enter a high inflationary period, I was wondering, are your thoughts evolving on when is the right time to take that pricing power? Well, thank you for thinking that we also have pricing latency. I'll get Shane to maybe elaborate on our pricing. Yeah. I mean, we're always evaluating our pricing and packaging model. We never wanna raise price just to raise price. I think we've always been focused on if we're going to change or make a difference in pricing, it's relative to the additional value that we're delivering for our customers. That's where our focus has been. That's not to say we haven't done pricing increases in recent history. Certainly, you've heard in the past that we made some changes to our payments pricing. Previous year to that, we made some changes to our core pricing. For us, there's an inflationary environment. It's really about value we deliver, which reflects the value that we can capture. Hi. This is for the new faces. I was here in 2019. I'm curious, you guys have achieved a lot of success in your careers coming from some pretty great companies. What motivated you to join AppFolio? Maybe you can start first. Yeah. Well, I can start first. You know, AppFolio is a very special company. It's a company that is growing fast, and it's a company that values the employees. The culture in AppFolio is contagious, and you can feel it when you join the company. That is what brought me to the company. Really good people to work with. Shane? Yeah. Thanks for the question. Previous to the last company I was at, I was at another company that was in the industry. I spent eight years or something in this industry, so I was very familiar with all the players in this industry. As I got to know AppFolio, I really noticed a difference in terms of how they listen to their customers, how we build product. You know, a lot of the players out there that I had been accustomed to are just brick-and-mortar. They've been around for 30 years or longer or whatever. They're really real estate people that have gotten into technology. Connecting with AppFolio, they were really technology people that were getting into real estate, and that felt very different for me. When you get into the culture and kind of the rapid pace of innovation and the just connection and relationship we have with our customers, it reminded me of the last company I was at, in the early days and that kind of excitement and enthusiasm. It's just an excellent opportunity, to build something really special and continue what Klaus and Jason and Jon Walker have already built. That's really what attracted me. Will? A lot of the same points that everyone else has brought up. Like, for me, culture was really, really important, and the values of the company was really important, and enjoying what I do on a daily basis. I thought the company had a great product culture, too, a really innovative product culture, and very strategic in the way AppFolio approached products, and that was very attractive to me. Obviously, I only wanna work at a high-growth company in a place that's gonna grow, and I thought there was good potential there, and so that was very interesting to me as well. Thank you. In regards to focus, can you comment on your payment stack and whether or not to keep that in-house or to outsource that to a third-party player considering the amount of innovation and speed in the payment space? Sure. Yeah. Shane, do you want to, or maybe Will. I mean, I right now, yes, it is in-house, we think it's working great for us, and we're excited about the potential. Sometimes we do partner for certain offerings that are you might consider payment-like related. For the most part, we're really happy with the innovation we've been doing in our payment space, and we'll continue to use our technology for that. Lori, can we do one more question right here? Sure. Let's do one more in the front, and then I'll take the rest in the back. Great. Thank you. On the topic of growth, could you all talk about how you think through how you manage the potential tug of war between, on one hand, wanting to be profitable and on one hand, wanting growth? How do you decide how much money to put into growth? If you had awesome opportunities, would you have negative 20% free cash flow margins? Would you forgo good opportunities to preserve your free cash flow breakeven, et cetera? How do you think about that? Yes. We talk about that a lot in our meetings. I would say that we are a growth company first. We prioritize the revenue growth. As I mentioned earlier, free cash flow is important for us to continue growing. When we look at opportunities, it needs to be able to deliver on both, so that we can continue our journey of long-term growth. Jason, anything else you'd like to add? I think that's a great answer. We've always focused on the long term and building relationships with our customers that we can measure lifetime value in a lot of years over time. If we see growth opportunities, we wanna invest in them as long as they're achieving our goals of being providing value to the customer, to building on the strengths that we have and everything we talked about today. We'll continue to focus on growth. As Fay Sien Goon talked about, free cash flow and the focus on that is the foundation for a healthy company. Would it be reasonable to think of it maybe in terms of your sort of free cash flow, just how you're determined to be free cash flow breakeven or better, and then, if you're there, then you'd pursue any growth opportunities that seem to offer an attractive return or that seem logical? Versus like, would you go very free cash flow negative to accelerate growth or I'm just curious quantitatively if you have any- Nicole. Sure. Yeah, the question was a follow-on question about guardrails around free cash flow. Growth, yeah. Growth. The free cash flow between, growth and negative free cash flow. Look, we strongly believe that for us to continue our long-term growth, as Jason mentioned, we are focused on the long-term growth, that we need free cash flow to continue growing. We are taking steps to reverse our negative free cash flow in the short term. Within a short time, we should be able to turn that corner and then be able to continue growing. It's one where maybe the problem is, will take care of itself, in the short term. Okay. Our next question comes from Ryan Tomasello. Prior to this investment cycle, adjusted EBITDA and operating margins peaked in 2018 in the 15%-20% range. Should we view that op margin profile as a reasonable, immediate, intermediate-term profitability target over the next several years? Yeah. With regards to just our long-term operating model and the how much and when, we're not in a position of stating that at this time. Thanks. I'd just like to follow up on the pricing question earlier. At this event in 2019, you talked about Lisa as a value plus product, so you're getting pricing for that. You talked today about some of the other AI products you've released in maintenance, and you gave us an example as well in accounting. Can you explain whether those are value plus services or whether you've rolled those into the core products? Therefore, does that give you additional pricing leverage or maybe... Yeah. Shane, you want to just- The two that you just mentioned are value-added services. I think historically, and I mentioned this earlier in my presentation, that I think early on, we looked at AI as a product. Let's develop some products. And the whole point behind that was not just the product, but to really develop the capabilities so we can develop AI at a much more broad, impactful way for our customers. We are now pivoting off of AI as a product and really focused on how we can embed those capabilities and kind of see those insights and those benefits throughout the entire platform. Now, there may be things down the line that are value-added service, and it's less about AI or non-AI. It's like, "Hey, what's the best way to go solve that problem in a way that benefits our customers?" That's how we're gonna leverage AI in the future. I can add two things. The two examples I talked about today, the bank feed for bank reconciliation, that's just in the product. Everyone gets that. Smart Ensure is part of our insurance-related products that you get with those products. We're always evaluating and using it. Sometimes it's in a V Plus, and sometimes it's not. The theme there is we're always adding value to the core platform as well. That gives future opportunity. As we run out of time here, I'm gonna take two more questions from the web and two more from the audience, and then we'll be breaking. Okay, the next question comes from Mike Ryback. You guys have been doing a fantastic job of adding managers and units. In what macro or micro scenario would you expect to see a slowdown in your incremental unit additions? Well, I think you heard from our customers today that we are a good downmarket business. They see an opportunity in the market to continue growing in this real estate space. Shane, are you hearing anything from the customers? From a macro or micro perspective, I'm not hearing anything. The biggest thing that could impact our ability to be successful is if we don't lean into our values and continue to listen to our customers. That's something I'm confident we're always gonna continue to do, because it means so much to our success and theirs. Jason, you had something you wanted to add? I would just echo what Shane said. I mean, there could be short, small micro impacts. I think when COVID first hit everybody kinda locked down and said, "Oh, I'm gonna pause talking to salespeople and bringing on." But that opened back up really fast for us. so we've been through. We started in 2006, so we've seen a few cycles here. One thing that seems to be true through all the cycles is people need a place to live. Our next question comes from Nikhil Vijay. What's the length of the standard contract? How sticky are the prices? And what flexibility do you have to increase prices going further? Yeah, our standard contract is one year. In terms of pricing, I think you heard Shane talk about just first adding value to our product and then capturing the value of the product. Anything else you'd like to add? No? No. I think that's it. Okay. We've got time for two more questions now. Okay. My question was around, just in general, do you have plans to improve on your ability to communicate more often with investors and as we know that you don't really hold any Q&A sessions during earnings calls. Do you have any plans to improve on that? Yeah. Yeah. You know, we have increased our transparency of our financial information. We are having this meeting with you. We're also taking callbacks after every call. You know, we are definitely listening to you, and we will continue evaluating the method in which we interact with you. Okay. Our last question today. Possible to get an update on gross and net retention and specifically logo retention? Retention is not a metric that we disclose, but it's a good number. Jason, do you have anything else to add to that? I think you said it. It's a good number. Perfect. Well, I think that was a good last question to end the day. Well, thank you all for your interest in AppFolio, and thank you all for being here. For those of you online, this concludes our meeting, and for those of you in the room, I'd like to invite you to join us for lunch out in the patio. Thank you.