Ray Dalio’s Top 10 Growth Stock Picks with 30+% Revenue Growth

7. AppFolio, Inc. (NASDAQ:APPF)

Number of Hedge Fund Investors  in Q1 2024: 36

1 Yr Revenue Growth: 31%

Bridgewater Associates’ Q1 2024 Stake: $17.5 million

AppFolio, Inc. (NASDAQ:APPF) is one of the more interesting cloud based software providers as it caters to the needs of renters and the broader real estate industry. Its business model makes AppFolio, Inc. (NASDAQ:APPF)’s 31% revenue growth in 2023 surprising since the real estate industry has struggled due to high rates and financing costs as well as high rents. This has partly been attributed to AppFolio, Inc. (NASDAQ:APPF)’s decision to introduce additional services such as payments processing on its platform that target an existing market of renters in America. The firm’s second quarter saw it grow Value Added Services revenue by 44% annually, which also led to the division accounting for 77% of AppFolio, Inc. (NASDAQ:APPF)’s revenue. Looking at ACH’s growth, the segment should prove to be crucial for future share price performance, especially as ACH crossed its one year anniversary in June 2024. At the same time, being a software firm allows AppFolio, Inc. (NASDAQ:APPF) to control its margins, and the firm can maintain growth by earning more revenue from existing users and expanding its market.

Brown Capital Management mentioned AppFolio, Inc. (NASDAQ:APPF) in its Q1 2024 earnings call. Here is what the firm said:

“AppFolio (APPF) and Vericel (VCEL) were among the top contributors to performance during the first quarter.

AppFolio provides cloud-based content management software to U.S. property management clients. AppFolio streamlines and enhances the mostly manual rental process, saving clients time, money and headaches. AppFolio provides small and mid- sized managers with a wide range of user-friendly solutions, seamlessly in a single platform. AppFolio is growing by adding new solutions to the platform and attracting larger clients. In contrast, the largest competitors address larger clients and have older, legacy products or have acquired a patchwork of solutions that are difficult to integrate. AppFolio clients manage 8.2 million rental units in the U.S., which is about a 10% penetration. Given AppFolio’s low market share, we see a long runway for growth.

AppFolio reported stronger-than-expected fourth quarter and fiscal year (FY) 2023 results in January. Fourth quarter revenue grew 39% year over year while FY 2023 revenue grew 31%. The strong revenue growth was driven by 13% rental unit growth, 7% customer growth, growth in average revenue per user and an increase in payments utilization. The company returned to GAAP profitability after two years of higher-than-normal investments. These strong results contributed to the recent price outperformance.”