Key Takeaways AppLovin shares soared Thursday after the software company's results and outlook topped Wall Street expectations. The stock staged a breakaway gap Thursday on the highest trading volume since August, signaling strong buying conviction from larger market participants. Bars Pattern analysis indicates that AppLovin shares may trend higher to around $360 in a move that may play out until late March next year. Investors should watch key support levels on the stock's chart around $228 and $172. AppL ...

Core Insights - Applovin Corp reported a strong third-quarter performance with revenue of $1.2 billion, a 39% increase year-over-year, surpassing analyst expectations of $1.13 billion [1] - The company has increased its share repurchase program by $2 billion, indicating confidence in its financial position [1] - Fourth-quarter revenue guidance is projected between $1.24 billion and $1.26 billion, reflecting continued growth [1] Analyst Ratings and Projections - JP Morgan analyst Cory Carpenter maintained a Neutral rating but raised the price target from $160 to $200, citing substantial beats in third-quarter results and optimistic fourth-quarter guidance [2][4] - Needham analyst Bernie McTernan reiterated a Hold rating, while Benchmark analyst Mark Zgutowicz maintained a Sell rating with a price target of $66 [2] - McTernan raised adjusted EBITDA estimates for 2025 by 14%, reflecting a 23% year-over-year increase, with minimal contributions from e-commerce [6] Software Segment Performance - The Software Platform achieved a remarkable 17% sequential growth, driven by technology upgrades, particularly in the Axon algorithm [3] - Software revenue grew 66% year-over-year and 18% sequentially in the third quarter, with adjusted EBITDA reaching $653 million, an 80% increase year-over-year [7] - Management attributes this success to the technology's ability to expand the total addressable market and enhance client spending [8] E-commerce Initiatives - Applovin's e-commerce advertising platform pilot is receiving positive feedback, with expectations for significant impact by 2025 [9] - The company anticipates that e-commerce will become a major growth driver, with resources increasingly allocated to this segment [3][9] - McTernan's estimates for fiscal 2024 revenue and adjusted EBITDA were raised by 5% and 9%, respectively, considering long-term benefits from e-commerce expansion [10] Market Position and Valuation - Carpenter's revised price target reflects a multiple of 22.5x on estimated 2025 EBITDA, which, while a premium compared to most ad tech peers, is still a discount relative to The Trade Desk's 48x [4][5] - The stock price of Applovin increased by 44.1% to $242.31 following the positive quarterly results [10]

About this content About Angela Harmantas Angela Harmantas is an Editor at Proactive. She has over 15 years of experience covering the equity markets in North America, with a particular focus on junior resource stocks. Angela has reported from numerous countries around the world, including Canada, the US, Australia, Brazil, Ghana, and South Africa for leading trade publications. Previously, she worked in investor relations and led the foreign direct investment program in Canada for the Swedish government ...

AppLovin shares soared 45% on Thursday after the online gaming and advertising company issued guidance that was well above estimates and reported better-than-expected earnings and revenue.The stock jumped past $245 in early afternoon trading. It's now up 515% this year, far outpacing all other tech companies valued at $5 billion or more, according to FactSet data. The rally has lifted AppLovin's market cap to over $80 billion.Revenue in the third quarter climbed 39% to $1.2 billion, topping the $1.13 billio ...

The company has a viable path to sustaining its impressive profitable growth trajectory.Shares of app monetization company AppLovin (APP 45.29%) are absolutely skyrocketing on Thursday thanks to impressive financial results for the third quarter of 2024. As of 10:30 a.m. ET, AppLovin stock is up about 48% and had hit an all-time high at over $250 per share. For perspective, it traded at under $10 per share at the end of 2022.One of the hottest growth stories out thereIn the prior quarter, AppLovin's managem ...

Key TakeawaysApplovin shares are set to open at a record high Thursday morning after its third-quarter results and fourth quarter projections beat estimates.Revenue rose nearly 40% from the same time last year as the company said its AI-powered advertising tools are improving.The company also announced an additional $2 billion in approved stock buybacks. Applovin (APP) shares are set to open at a record high Thursday morning after the company's third-quarter earnings and outlook for the fourth quarter each ...

Core Insights - AppLovin reported $1.2 billion in revenue for Q3 2024, a year-over-year increase of 38.6% [1] - The EPS for the same period was $1.25, compared to $0.30 a year ago, indicating significant growth [1] - The revenue exceeded the Zacks Consensus Estimate of $1.13 billion by 6.01%, and the EPS surpassed the consensus estimate of $0.95 by 31.58% [1] Financial Performance Metrics - Average Revenue Per Monthly Active Payer was $52, slightly below the average estimate of $52.24 [3] - Monthly Active Payers remained stable at 1.6 million, matching the average estimate [3] - Revenue from the Software Platform was $835.19 million, exceeding the average estimate of $763.44 million, with a year-over-year increase of 65.6% [3] - Revenue from Apps was $363.05 million, slightly below the average estimate of $367.72 million, with a year-over-year change of 0.9% [3] - Revenue from In-App Purchases was $246.34 million, slightly below the estimated $248.93 million, representing a year-over-year decrease of 0.4% [3] - Revenue from In-App Advertising was $116.71 million, slightly below the estimated $118.21 million, with a year-over-year increase of 3.7% [3] - Segment Adjusted EBITDA for Apps was $68.22 million, below the average estimate of $83.17 million [3] - Segment Adjusted EBITDA for the Software Platform was $653.40 million, exceeding the average estimate of $559.26 million [3] Stock Performance - AppLovin shares have returned 15.1% over the past month, outperforming the Zacks S&P 500 composite's 0.7% change [4] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [4]

Financial Data and Key Metrics - Total revenue reached $1.2 billion, a 39% increase YoY, with adjusted EBITDA of $722 million, achieving a 60% adjusted EBITDA margin [14] - Free cash flow grew to $545 million, up 182% YoY and 22% QoQ, with a 76% flow-through from adjusted EBITDA to free cash flow [15] - Software Platform revenue was $835 million, growing 66% YoY, with adjusted EBITDA of $653 million, achieving a 78% margin [16] - Apps revenue was $363 million, a 1% increase YoY, with adjusted EBITDA of $68 million, representing a 19% margin [19] Business Line Performance - The Software Platform segment saw significant growth driven by advancements in AXON technology, contributing to a 66% YoY revenue increase and 79% YoY adjusted EBITDA growth [16] - The Apps business remained stable, with a slight 1% YoY revenue increase, and is expected to continue this trend [19] Market Performance - The company's core advertising business, primarily focused on mobile gaming, continues to dominate, with the Software Platform representing substantially all of its revenue [18] - The e-commerce pilot showed promising results, with advertisers experiencing nearly 100% incrementality from AppLovin's traffic, indicating strong potential for future growth [11] Strategic Direction and Industry Competition - The company is shifting its focus from quarterly to annual shareholder letters to align with its long-term vision, while still providing quarterly financial results and guidance [12] - AppLovin is exploring new verticals, particularly e-commerce, with plans to launch a self-service platform in the coming quarters to expand global opportunities [11] - The company is investing in AI software development, with ongoing research advancements expected to drive further technological improvements [10] Management Commentary on Operating Environment and Future Outlook - Management remains confident in achieving 20% to 30% YoY growth for the foreseeable future, driven by self-learning and market growth, with occasional step changes from AXON enhancements [10] - The e-commerce vertical is expected to scale significantly in 2025, becoming a strong contributor to the company's growth [11] - The company is focused on organic growth, talent acquisition, and technology investment, while managing its capital structure through share repurchases and maintaining a net debt leverage ratio below 2x [20] Other Important Information - The company retired and withheld 5 million shares during the quarter, costing $437 million, and received Board approval to increase its share repurchase authorization by $2 billion [20] - AppLovin expects Q4 2024 revenue between $1.24 billion and $1.26 billion, with adjusted EBITDA between $740 million and $760 million, targeting a 60% adjusted EBITDA margin [21] Q&A Session Summary Question: E-commerce pilot revenue contribution and gaming vs. non-gaming performance [23] - E-commerce is still in pilot and has not yet made a material financial impact, with the step-up in performance this quarter driven entirely by the gaming side [24][25] - The company expects e-commerce to become financially impactful in 2025 and beyond [27] Question: Google Cloud capacity expansion and timing [23] - The renewal of the Google Cloud contract was slightly earlier than planned to support future growth, with the company investing in infrastructure ahead of current consumption needs [28][29] Question: E-commerce ramp and potential challenges [30] - E-commerce is a new category for AppLovin, and while brand awareness is needed, the company is taking a long-term approach, similar to its strategy in gaming [31] - Early data from the e-commerce pilot has been strong, with advertisers seeing significant returns, which could accelerate adoption [32] Question: Expansion beyond e-commerce using AXON technology [34] - The company believes its technology can eventually serve any transactional business, including e-commerce, gaming, and other verticals, with no limitations on the power of its algorithms [35] Question: Capital allocation and M&A strategy [36] - The company has no plans for M&A in the advertising business and remains focused on organic growth, while continuing to buy back shares despite the stock's strong performance [37][38] Question: E-commerce solution timing and go-to-market partners [40] - The e-commerce solution is on track for general availability next year, with early success from pilot advertisers generating significant social media buzz [41][42] Question: DSP ecosystem and arbitrage model [43] - AppLovin's business model focuses on delivering automated advertising to a revenue goal, taking on the risk of media spend, which differentiates it from percentage-of-spend models like Trade Desk [44] Question: E-commerce material contribution timeline [47] - The company expects e-commerce to start making a material contribution in 2025, though the exact timing and scale of the ramp remain uncertain [48][49] Question: AXON licensing and Flip app partnership [50] - AXON licensing remains a longer-term focus, with current resources prioritized for scaling the e-commerce opportunity [51] Question: 2025 growth outlook [53] - The company does not provide long-term annual guidance but expects growth to exceed 20% to 30% if it continues to deliver model enhancements, with e-commerce being an additive opportunity [54][55] Question: GenAI in advertising [56] - Generative AI is on the company's roadmap, with potential for personalized ad creatives to significantly improve response rates, though the timeline and impact remain uncertain [57] Question: Supply expansion beyond mobile games [60] - The company is exploring supply expansion, including CTV through its Wurl acquisition, with plans to tap into additional ad supply categories over the next five years [61] Question: Market share gains in mobile gaming [63] - AppLovin's growth in mobile gaming is driven by unlocking more user acquisition spend rather than market share gains, as the company has already captured a significant portion of the market [64][65] Question: AXON 2's application in e-commerce [67] - The e-commerce opportunity leverages AXON 2's technology with minor tweaks, allowing the company to enter a greenfield market with no direct competition in mobile gaming for non-gaming categories [68][69] Question: Customer response to AXON 2.0 improvements [71] - All advertisers on the platform have the capacity to increase spending in response to AXON 2.0 improvements, with the system being fully automated [71] Question: E-commerce investment and bottlenecks [72] - The company is heavily investing in e-commerce, with no significant bottlenecks other than the need for more human capital and automation to scale the platform [72] Question: Technical step function changes [73] - The frequent technical unlocks are driven by the company's exceptional engineering and research team, which continuously incorporates new research and advancements into the platform [73] Question: Probabilistic billing impact [74] - The switch to probabilistic billing on iOS had a nominal impact on the business, aligning more accurately with advertiser tracking [74]

AppLovin (APP) came out with quarterly earnings of $1.25 per share, beating the Zacks Consensus Estimate of $0.95 per share. This compares to earnings of $0.30 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 31.58%. A quarter ago, it was expected that this mobile app technology company would post earnings of $0.77 per share when it actually produced earnings of $0.89, delivering a surprise of 15.58%.Over the last four quarters ...

Revenue Growth - Revenue increased 39% year-over-year to $1.20 billion for the three months ended September 30, 2024, compared to $864.3 million in the same period in 2023[68] - Total Revenue for Q3 2024 was $1.198 billion, a 39% increase compared to Q3 2023, with Software Platform Revenue contributing $835.2 million, up 66% year-over-year[101] - Revenue for the nine months ended September 30, 2024, was $3,336,469 thousand, compared to $2,329,826 thousand in the same period in 2023[96] - Total Revenue for the nine months ended September 30, 2024, was $3.336 billion, a 43% increase compared to the same period in 2023[101] Net Income and Profitability - Net income for the three months ended September 30, 2024, was $434.4 million, up from $108.6 million in the same period in 2023[68] - Net income for the nine months ended September 30, 2024, was $980,572 thousand, compared to $184,478 thousand in the same period in 2023[96] - Adjusted EBITDA for the three months ended September 30, 2024, was $721.6 million, compared to $419.3 million in the same period in 2023[68] - Adjusted EBITDA margin was 60.2% for the three months ended September 30, 2024, compared to 48.5% in the same period in 2023[79] - Software Platform Adjusted EBITDA increased by $289.3 million (79%) in the three months ended September 30, 2024, and $810.2 million (95%) in the nine months ended September 30, 2024, compared to the same periods in 2023, driven by higher revenue[114] - Apps Adjusted EBITDA increased by $13.0 million (24%) in the three months ended September 30, 2024, and $34.9 million (20%) in the nine months ended September 30, 2024, compared to the same periods in 2023, driven by higher revenue and lower user acquisition costs[114] Revenue Composition - Software Platform Revenue represented 70% of total revenue, while Apps Revenue accounted for 30% for the three months ended September 30, 2024[69] - In-app purchase (IAP) revenue represented 68% of total Apps Revenue, while in-app advertising (IAA) revenue accounted for 32% for the three months ended September 30, 2024[72] - 47% of revenue from Software Platform and IAA Revenue clients was generated from outside the United States during the three months ended September 30, 2024[86] - Software Platform Revenue increased by $330.7 million, or 66%, in Q3 2024 compared to Q3 2023, driven by improved AppDiscovery performance with a 22% increase in net revenue per installation and a 39% increase in installation volume[101] - Apps Revenue for Q3 2024 increased by $3.2 million compared to Q3 2023, with In-App Advertising Revenue up $4.2 million (4%) due to an 8% increase in advertising impressions[101] - Software Platform Revenue for the nine months ended September 30, 2024, increased by $959.3 million (76%) compared to the same period in 2023, driven by a 64% increase in installation volume and an 11% increase in net revenue per installation[101] - Apps Revenue for the nine months ended September 30, 2024, increased by $47.3 million (4%) compared to the same period in 2023, with In-App Advertising Revenue up $23.5 million (7%) due to a 53% increase in advertising impressions[102] User Metrics - The company had 1.6 million Monthly Active Payers (MAPs) with an Average Revenue Per Monthly Active Payer (ARPMAP) of $52 for the three months ended September 30, 2024[72] - The company's Software Platform provides access to over 1.4 billion daily active users[71] - The Software Platform provides advertisers with access to over 1.4 billion daily active users[85] Expenses and Costs - Cost of Revenue for Q3 2024 increased by $4.6 million (2%) compared to Q3 2023, primarily due to a $27.9 million increase in network infrastructure expenses, offset by a $23.4 million decrease in amortization of intangible assets[103] - Sales and Marketing expenses for Q3 2024 decreased by $6.6 million (3%) compared to Q3 2023, primarily due to a $9.7 million reduction in user acquisition costs[104] - Research and Development expenses for Q3 2024 decreased by $9.3 million (6%) compared to Q3 2023, driven by reduced stock-based compensation related to PSUs[105] - General and Administrative expenses for Q3 2024 decreased by $3.4 million (8%) compared to Q3 2023, primarily due to a $5.9 million reduction in bad debt expense[108] - Research and development expenses for the nine months ended September 30, 2024, were $469,209 thousand, compared to $441,563 thousand in the same period in 2023[96] - Sales and marketing expenses for the nine months ended September 30, 2024, were $634,547 thousand, compared to $607,755 thousand in the same period in 2023[96] - General and administrative expenses for the nine months ended September 30, 2024, were $120,880 thousand, compared to $116,231 thousand in the same period in 2023[96] Cash Flow and Financial Position - Free Cash Flow for the nine months ended September 30, 2024, was $1.38 billion, up from $697.3 million in the same period in 2023[80] - Net cash provided by operating activities for the nine months ended September 30, 2024, was $1,398,008 thousand, compared to $717,522 thousand in the same period in 2023[81] - Free Cash Flow for the nine months ended September 30, 2024, was $1,378,198 thousand, compared to $697,329 thousand in the same period in 2023[81] - Net cash provided by operating activities was $1,398.0 million for the nine months ended September 30, 2024, compared to $717.5 million in the same period in 2023, driven by higher net income and non-cash adjustments[118] Investments and Acquisitions - The company has invested approximately $4.1 billion in 33 strategic acquisitions and partnerships from the beginning of 2018 through September 30, 2024[87] - The company committed to spend a minimum of $1.26 billion over three years under an amended agreement with a cloud services provider as of September 30, 2024[124] Share Repurchases - The company repurchased 16,081,408 shares of Class A common stock for $981.3 million during the nine months ended September 30, 2024, and authorized an additional $2.0 billion share repurchase program in October 2024[122] Interest and Other Income - Interest expense decreased by $3.4 million (4%) in the three months ended September 30, 2024, compared to the same period in 2023, primarily due to a $4.3 million loss on debt settlement in the prior year[109] - Interest expense increased by $20.0 million (10%) in the nine months ended September 30, 2024, compared to the same period in 2023, driven by a $15.8 million net gain from interest rate swaps in the prior year and increased debt outstanding[109] - Other income, net increased by $6.5 million in the three months ended September 30, 2024, compared to the same period in 2023, primarily due to third-party costs related to term loan refinancing in the prior year[110][111] - Other income, net decreased by $7.6 million (28%) in the nine months ended September 30, 2024, compared to the same period in 2023, driven by lower interest income due to reduced interest rates and cash balances[111] Taxes - Provision for income taxes increased by $32.7 million in the three months ended September 30, 2024, and $63.1 million (367%) in the nine months ended September 30, 2024, compared to the same periods in 2023, driven by higher pre-tax income and global intangible low-taxed income[113] Accounting and Financial Reporting - No material changes to critical accounting policies and estimates during the nine months ended September 30, 2024[125] - Financial statements prepared in accordance with GAAP, requiring estimates and assumptions affecting reported amounts[125] - Estimates based on historical experience and reasonable factors, evaluated on an ongoing basis[125] - No material changes in market risk from the information presented in the Annual Report for the year ended December 31, 2023[128] Apps Portfolio - The portfolio of Apps consists of over 200 free-to-play mobile games across five genres, run by ten studios[68]