Fay Sien Goon: Thank you, Shane. The third quarter demonstrates success in our focus on achieving profitable revenue growth. We delivered revenue growth of 32% year-over-year to $165.4 million and generated free cash flow amounting to 20.3% of revenue. Core solutions revenue was $39.8 million in Q3 a 17% year-over-year increase driven by new customers and additional total units on platform along with continued adoption of AppFolio Property Manager Plus. At the end of the third quarter we managed approximately 7.8 million units from 19,418 customers compared to 7.1 million units from 18,109 customers a year earlier. This represents a 7% increase in customers and a 10% increase in ending units. For Value Added Services, revenue in Q3 grew 39% year-over-year to $123.2 million.
This growth in our payments business was a result of increased online rent payments adoption and higher volume rent transactions paid using a debit or credit card and our decision to stop our eCheck fees. Additionally, risk mitigation and screening grew in line with our seasonal Q3 expectations. Our Q3 results demonstrate our ability to grow profitably in spite of macroeconomic conditions. Our innovation and reach from property managers to investors and owners to vendors and residents makes us resilient. Turning to spending. We exited the quarter with 1,683 employees which is a decline of 4% compared to the third quarter of 2022 and this includes 149 employees that were impacted from our previously announced reduction in force as Shane mentioned earlier.
The mid-quarter restructuring of head count affected all areas of the business and while difficult aligns our structure risk strategy to empower our employees to better serve our customers. Non-GAAP cost of revenue exclusive of depreciation and amortization was 36% of revenue compared to 40% in the third quarter of last year. Turning now to non-GAAP operating expenses. Our year-over-year dollar increase in operating expenses for Q3 is primarily due to employee costs associated with retaining talent, particularly in specialized areas such as R&D. As a percent of revenue combined sales and marketing, R&D and G&A fell to 44% in the third quarter of 2023 from 52% in the third quarter of 2022, due to growth in revenue and our multi-quarter focus on operational efficiency.
Sales and marketing expenses as a percentage of revenue decreased from 19% in the prior year to 15% this year. R&D expenses as a percentage of revenue was 20% in both the third quarter of this year and last year. Our G&A expenses as a percentage of revenue decreased from 13% in the prior year to 10% this quarter. Overall, our non-GAAP operating margin in the third quarter of this year improved to 16.1% compared to 3.7% in the third quarter of last year. Free cash flow this quarter was 20.3% compared to 9.5% in the same quarter last year. We are pleased to be increasing our projected full year 2023 revenue guidance range to $608 million to $612 million. The midpoint of this range represents a full year growth rate of 29%. We expect that full year 2023 cost of revenue exclusive of depreciation and amortization will be higher than Q3 2023 as a percentage of revenue due to a normalization of product mix within our value-added services revenue.
Our 2023 ending head count is projected to be below 2022 ending headcount. As a result of improving operational efficiencies and the increase to our revenue guidance, we are increasing our full year non-GAAP operating margin expectation to 10.5% to 11% of revenue and free cash flow is projected to grow to 10.5% to 11.5% of revenue. Basic weighted average shares outstanding are expected to be approximately 36 million shares for the full year. In summary third quarter results are an excellent example of how AppFolio focus on delivering profitable growth and industry innovation. We are looking forward to sharing more information and seeing many of you in person over [indiscernible] during our November 14 Investor Meeting. Thank you all for joining us today and we look forward to seeing you soon.
Operator this concludes today’s call.
End of Q&A: This concludes today’s conference call. Thank you for participating. You may now disconnect.
