Investment Rating - The report maintains a "Buy" rating for AppLovin (APP US) with a target price of $213, representing a potential upside of 26% from the current price of $168 55 [4][6] Core Views - AppLovin s 3Q24 revenue reached $1 198 billion, up 39% YoY, surpassing market expectations by 5 9% Net profit was $434 million with a net margin of 36% Adjusted EBITDA was $722 million, exceeding market expectations by 12 4%, with an adjusted EBITDA margin of 60 2%, up 11 7pp YoY [2] - The company provided strong guidance for 4Q24, with revenue expected to be $1 24-1 26 billion, representing a YoY growth of 30-32%, and adjusted EBITDA guidance of $740-760 million, maintaining a 60% margin [2] - AppLovin increased its stock repurchase authorization by $2 billion, bringing the total remaining authorization to $2 3 billion [2] Software Platform Growth - AppLovin s Software Platform revenue in 3Q24 was $835 million, up 66% YoY and 17% QoQ, driven by continuous improvements in the AXON engine The adjusted EBITDA margin for this segment expanded to 78% due to operational leverage and one-time factors such as the renewal of the Google Cloud contract, PSU vesting, and favorable currency exchange rates [3] - The Apps segment revenue was $363 million, up 1% YoY, with an adjusted EBITDA margin of 19% The Apps segment is not a focus area for the company, and its performance is expected to remain stable [3] E-commerce Expansion - AppLovin has initiated pilot projects in the e-commerce sector, achieving promising results comparable to traditional customer acquisition channels The company is integrating resources to scale up its e-commerce business, with plans to fully launch next year This expansion is expected to significantly increase the company s total addressable market and could become a new growth driver [3] Financial Projections - The report raises 2024E/2025E revenue forecasts to $4 6 billion and $5 4 billion, respectively, with adjusted EBITDA margins of 57% and 61% The target price of $213 implies a 2025E EV/EBITDA multiple of 23 5x [4] - Key financial metrics for FY24E include revenue of $4 585 billion, operating profit of $1 803 billion, and adjusted EBITDA of $2 626 billion [5] Valuation and Market Performance - AppLovin s current market capitalization is $59 618 billion, with a 52-week trading range of $35 79-$176 99 The stock has shown strong performance relative to the S&P 500 index [6] - The report outlines optimistic, base, and pessimistic scenarios with target prices of $269, $213, and $160, respectively The optimistic scenario assumes better-than-expected revenue and profit growth, accelerated expansion into new areas, and margin expansion [13]

Core Insights - AppLovin shares surged after the company reported better-than-expected results and a positive outlook, driven by increased digital advertising spending on its AI-powered platform [2][4] - The stock experienced a breakaway gap with the highest trading volume since August, indicating strong buying interest from larger market participants [5] - Technical analysis suggests a potential price target of around $360, approximately 45% above the recent closing price, with a bullish trend expected to continue until late March next year [7][8] Financial Performance - AppLovin reported a 66% increase in software revenue for the quarter, attributed to enhancements in its AXON platform that allowed advertising partners to scale their spending [3] Stock Performance - On Thursday, AppLovin shares rose 46% to $246.53, marking a more than six-fold increase since the beginning of the year, making it the best-performing technology stock in 2024 with a market capitalization of over $5 billion [4] Technical Analysis - The relative strength index (RSI) indicates strong bullish momentum but also suggests overbought conditions, which may lead to short-term profit-taking [6] - Key support levels to monitor include $228 and $172, with the former being crucial to maintain the current bullish trend [9][10]

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 ...