Applovin(APP) - 2024 Q2 - Quarterly Report

Revenue and Financial Performance - Revenue increased 44% year-over-year to $1.08 billion for the three months ended June 30, 2024, compared to$750.2 million in the same period in 2023[85] - Net income for the three months ended June 30, 2024, was $310.0 million, up from$80.4 million in the same period in 2023[85] - Adjusted EBITDA for the three months ended June 30, 2024, was $601.2 million, compared to$333.5 million in the same period in 2023[85] - Free Cash Flow for the six months ended June 30, 2024, was $833.1 million, up from$503.7 million in the same period in 2023[85] - Revenue for the six months ended June 30, 2024, was $2.14 billion, compared to$1.47 billion in the same period in 2023[114] - Net income for the six months ended June 30, 2024, was $546.2 million, compared to$75.8 million in the same period in 2023[114] - Total Revenue for Q2 2024 reached $1,080.1 million, a 44$25.0 million (7%)[121] - Net income as a percentage of revenue improved to 29% in Q2 2024, up from 11% in Q2 2023[119] Revenue Breakdown and Composition - Software Platform Revenue represented 66% of total revenue, while Apps Revenue accounted for 34% for the three months ended June 30, 2024[86] - 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 June 30, 2024[89] - 43% of the company's revenue from Software Platform and IAA Revenue clients was generated from outside the United States during the three months ended June 30, 2024[103] - Software Platform Revenue increased by $305.0 million (75$8.1 million (7%) in Q2 2024, driven by a 56% rise in advertising impressions, partially offset by a 31% decrease in price per impression[121] Expenses and Costs - The company's cost of revenue for the six months ended June 30, 2024, was $576.7 million, compared to$520.5 million in the same period in 2023[114] - The company's research and development expenses for the six months ended June 30, 2024, were $319.2 million, compared to$282.3 million in the same period in 2023[114] - Cost of revenue increased by $24.0 million (9$35.2 million rise in network infrastructure expenses, partially offset by a $12.1 million decrease in amortization of intangible assets[124] - Sales and marketing expenses rose by$9.7 million (5%) in Q2 2024, driven by a $12.4 million increase in personnel-related expenses, partially offset by a$6.2 million decrease in user acquisition costs[125] - Research and development expenses increased by $26.5 million (19$20.3 million rise in personnel-related expenses and a $5.4 million increase in professional services costs[126] - General and administrative expenses grew by$10.2 million (33%) in Q2 2024, mainly due to a $10.1 million increase in personnel-related expenses[127] - Total stock-based compensation for Q2 2024 was$98.7 million, up from $81.3 million in Q2 2023[115] - Total amortization expense related to acquired intangibles was$100.5 million in Q2 2024, down from $112.9 million in Q2 2023[116] - Provision for income taxes increased by$30.5 million (183%) in H1 2024 compared to H1 2023, driven by higher pre-tax income and global intangible low-taxed income[131] Cash Flow and Financial Position - Net cash provided by operating activities for the six months ended June 30, 2024, was $847.3 million, compared to$518.5 million in the same period in 2023[85] - Net cash provided by operating activities for the six months ended June 30, 2024, was $847.3 million, compared to$518.5 million in the same period in 2023[98] - Free Cash Flow for the six months ended June 30, 2024, was $833.1 million, compared to$503.7 million in the same period in 2023[98] - Net cash provided by operating activities was $847.3 million in H1 2024, a 63$518.5 million in H1 2023[136] - Net cash used in investing activities was $100.0 million in H1 2024, primarily consisting of$76.3 million in purchases of non-marketable equity securities[138] - Net cash used in financing activities was $785.6 million in H1 2024, primarily consisting of$752.2 million in share repurchases and $677.9 million in debt repayments[139] - The company repurchased 13,466,397 shares of Class A common stock for$752.2 million in H1 2024[141] - The company had $460.4 million in cash and cash equivalents as of June 30, 2024, sufficient to meet anticipated needs for the next 12 months[135] Adjusted EBITDA and Margins - Adjusted EBITDA margin for the three months ended June 30, 2024, was 55.7$247.6 million (91%) in Q2 2024 compared to Q2 2023, driven by a $305.0 million increase in Software Platform revenue[133] - Apps Adjusted EBITDA increased by$20.1 million (33%) in Q2 2024 compared to Q2 2023, driven by a $25.0 million increase in Apps Revenue[133] User Metrics and Engagement - Monthly Active Payers (MAPs) averaged 1.6 million for the three months ended June 30, 2024, with an Average Revenue Per Monthly Active Payer (ARPMAP) of$52[89] Strategic Investments and Acquisitions - The company has invested approximately $4.1 billion in 33 strategic acquisitions and partnerships from the beginning of 2018 through June 30, 2024[104] - The company plans to continue investing in its AI-powered advertising engine AXON, AppDiscovery, Adjust, and MAX to improve effectiveness for advertisers[100][101] - The company expects to enter new verticals outside of gaming, such as eCommerce, CTV, OEM, and carrier-related markets[101] Interest and Other Financial Metrics - Interest expense increased by$23.7 million (46%) in Q2 2024 compared to Q2 2023, driven by a net gain of $21.4 million related to interest rate swaps in the prior year period[128] - Other income, net decreased by$6.5 million (42%) in Q2 2024 compared to Q2 2023, primarily due to a $6.0 million decrease in interest income[129] Market Risk and Portfolio - No material changes in market risk from the information presented in the Annual Report for the year ended December 31, 2023[147] - The company's portfolio of apps consists of over 200 free-to-play mobile games across five genres, run by ten studios[85]