Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against AppLovin Corporation due to a class action lawsuit alleging breaches of fiduciary duties by the board of directors [1] Group 1: Allegations of Misconduct - The class action lawsuit claims that AppLovin misrepresented the effectiveness of its AXON 2.0 digital ad platform and AI technologies, suggesting they would enhance ad matching and expand into new markets [2] - It is alleged that AppLovin engaged in manipulative practices, including exploiting advertising data from Meta Platforms and implementing a "backdoor installation scheme" to inflate installation numbers and profit figures [2] - Reports from analysts on February 26, 2025, indicated that AppLovin was reverse engineering Meta's advertising data and using deceptive tactics to artificially boost ad click-through and app download rates, leading to a significant drop in share price by over 12% [3]

Core Insights - AppLovin reported $1.48 billion in revenue for Q1 2025, a year-over-year increase of 40.3% [1] - The EPS for the same period was $1.67, compared to $0.67 a year ago, representing a significant improvement [1] - The revenue exceeded the Zacks Consensus Estimate by 7.70%, while the EPS surprised by 15.17% [1] Financial Performance Metrics - Average Revenue Per Monthly Active Payer was $52, surpassing the estimated $48.32 [4] - Monthly Active Payers totaled 1.5 million, slightly below the estimated 1.57 million [4] - Advertising Revenue reached $1.16 billion, exceeding the average estimate of $1.05 billion, with a year-over-year change of +70.9% [4] - Apps Revenue was $325.05 million, slightly below the estimated $331.66 million, reflecting a -14.4% change year-over-year [4] - In-App Purchase revenue was $227.54 million, above the estimate of $223.60 million, showing a -12.2% year-over-year change [4] - In-App Advertising revenue was $97.51 million, below the estimate of $108.31 million, with a -19.1% change year-over-year [4] - Segment Adjusted EBITDA for Apps was $61.80 million, exceeding the estimate of $47.20 million [4] - Segment Adjusted EBITDA for Advertising was $943.23 million, compared to the average estimate of $829.36 million [4] Stock Performance - AppLovin shares returned +29.5% over the past month, outperforming the Zacks S&P 500 composite's +10.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market [3]

Market Overview - Major indexes closed in the green with the Dow up +284 points (+0.70%), S&P 500 up +0.43%, Nasdaq up +0.27%, and Russell 2000 up +0.33% [1] Federal Reserve Update - The Federal Reserve maintained interest rates between 4.25-4.50% for the third consecutive session, with a unanimous vote among members [2] - Fed Chair Jerome Powell expressed concerns over inflation and employment but indicated no immediate policy changes due to lack of hard data [3] - Powell highlighted uncertainty regarding trade policies and stated that the Fed's decisions are unaffected by presidential opinions [3] Q1 Earnings Reports - AppLovin (APP) reported Q1 earnings of $1.67 per share, exceeding expectations of $1.45, with revenues of $1.48 billion surpassing the $1.38 billion forecast, leading to an +18% increase in after-hours trading [4] - Skyworks Solutions (SWKS) posted earnings of $1.24 per share, slightly above consensus, with revenues of $953 million, but shares fell -4% in late trading [4] - Carvana (CVNA) significantly beat earnings expectations with $1.51 per share compared to $0.75 expected, and revenues of $4.23 billion versus $4.04 billion projected, showing +46% year-over-year retail unit growth [5] - MercadoLibre (MELI) reported Q1 revenues of $5.9 billion, exceeding expectations of $5.53 billion, with a +17% year-over-year increase in Gross Merchandise Value (GMV) to $13.3 billion [6]

Financial Performance - AppLovin reported quarterly earnings of $1.67 per share, exceeding the Zacks Consensus Estimate of $1.45 per share, and up from $0.67 per share a year ago, representing an earnings surprise of 15.17% [1] - The company posted revenues of $1.48 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 7.70%, compared to $1.06 billion in the same quarter last year [2] - Over the last four quarters, AppLovin has consistently surpassed consensus EPS estimates and revenue estimates [2] Stock Performance and Outlook - AppLovin shares have declined approximately 5.9% since the beginning of the year, while the S&P 500 has decreased by 4.7% [3] - The company's current consensus EPS estimate for the upcoming quarter is $1.54 on revenues of $1.38 billion, and for the current fiscal year, it is $6.80 on revenues of $5.59 billion [7] Industry Context - The Technology Services industry, to which AppLovin belongs, is currently ranked in the top 26% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact AppLovin's stock performance [5][6]

Financial Performance - Revenue was $148 billion, a 40% increase compared to 1Q24[4] - Net Income reached $576 million, resulting in a net margin of 39%, compared to $236 million and a 22% net margin in 1Q24[4] - Adjusted EBITDA increased 83% to $101 billion, with an Adjusted EBITDA margin of 68%[4] - Free Cash Flow was $826 million in 1Q25[4] Segment Performance - Advertising revenue grew 71% to $116 billion[4] - Apps revenue decreased 14% to $325 million[4] - Advertising segment Adjusted EBITDA increased 92% to $943 million, an 81% margin[4] - Apps segment Adjusted EBITDA increased 9% to $62 million, a 19% margin[4] Key Metrics for Apps Segment - Monthly Active Payers (MAPs) decreased from 18 million in 1Q24 to 15 million in 1Q25[15] - Average Revenue per Monthly Active Payer (ARPMAP) increased from $48 in 1Q24 to $52 in 1Q25[15]

Financial Data and Key Metrics Changes - Total revenue increased by 40% year-over-year to $1,500,000,000, while adjusted EBITDA rose by 83% to $1,000,000,000, achieving a 68% adjusted EBITDA margin [18] - Free cash flow reached $826,000,000, up 113% year-over-year, with a quarter-over-quarter growth of 19% [18][19] - The company repurchased 3,400,000 shares for a total cost of $1,200,000,000, reducing total outstanding shares to 338,000,000 [19] Business Line Data and Key Metrics Changes - The advertising business generated $1,160,000,000 in revenue and $943,000,000 in adjusted EBITDA, achieving an 81% margin [19] - Revenue growth was driven by enhancements in AI-driven technology and the full quarter impact of web-based advertising solutions [20] Market Data and Key Metrics Changes - The company reported that over 90% of its advertising revenue comes from mobile games, which are not directly impacted by tariffs [13] - The web advertising segment is still in its early stages, with less than 0.1% market penetration, indicating significant growth potential [12][14] Company Strategy and Development Direction - The company is focusing on three key priorities for 2025: improving machine learning models, advancing e-commerce and web advertising solutions, and enhancing ad testing and automated ad creation [10] - A definitive agreement has been signed to sell the games business, allowing the company to sharpen its focus on advertising [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to grow despite macroeconomic changes, citing low market penetration and a strong demand for advertising services [14][16] - The management team emphasized the importance of continuous improvement in technology and the potential for significant growth in the web advertising space [39][40] Other Important Information - The company is set to launch a self-service dashboard for select customers, which is expected to unlock a massive opportunity for growth [12] - The adjusted EBITDA per employee in the advertising business has risen to approximately $4,000,000 annually, reflecting operational excellence [16] Q&A Session Summary Question: Guidance for next quarter and potential sequential decline in ads revenue - Management clarified that the current guidance reflects typical seasonality and that past performance is not indicative of future growth trends [29][30] Question: Category exposure and onboarding new advertisers - Management indicated that they are not actively pushing into new categories but are focused on improving self-service tools to onboard existing demand [37][39] Question: Churn among advertisers and spend per advertiser - Management reported a sub 3% churn rate for advertisers spending $250,000 annually, indicating strong retention [50][51] Question: Velocity of new web advertiser additions - Management noted that the pace of new advertiser additions has slowed due to resource constraints but expects to ramp up onboarding with the new self-service dashboard [70] Question: Self-service model expectations - Management anticipates that advertisers will gradually build budgets as they prove the effectiveness of campaigns on the new platform [83][84] Question: Contribution of non-gaming audience to total advertising revenue - Management remains optimistic about the e-commerce business potentially exceeding the previously estimated 10% contribution to total revenue [100]

Applovin (APP) Q1 2025 Earnings Call May 07, 2025 05:00 PM ET Speaker0 Welcome to AppLovin's earnings call for the first quarter ended 03/31/2025. I'm David Shao, head of investor relations. Joining me today to discuss our results are Adam Frueghi, our cofounder, CEO, and chairperson, and Matt Stumpf, our CFO. Please note our SEC filings to date as well as our financial update and press release discussing our first quarter performance are available at investors.app11.com. During today's call, we will be mak ...

Financial Performance - For the three months ended March 31, 2025, revenue increased 40% year-over-year to $1.5 billion, up from $1.1 billion in the same period of 2024[105] - Net income for the same period was $576.4 million, compared to $236.2 million in the prior year[105] - Adjusted EBITDA reached $1.0 billion, an increase from $548.8 million year-over-year[105] - Revenue for the three months ended March 31, 2025, was $1,484,021, a 40.2% increase from $1,058,115 in 2024[128] - Net income for the same period was $576,419, representing a net margin of 38.8%, up from 22.3% in 2024[128] - Adjusted EBITDA for Q1 2025 was $1,005,027, with an Adjusted EBITDA margin of 67.7%, compared to $548,771 and 51.9% in Q1 2024[128] - Free Cash Flow for the three months ended March 31, 2025, was $825,731, an increase from $387,593 in 2024[130] - Advertising Revenue increased by $480.6 million, or 71%, primarily due to improved AppDiscovery performance, with net revenue per installation up 49% and installations up 22%[157] Revenue Breakdown - Advertising Revenue accounted for 78% of total revenue, while Apps Revenue represented 22%[106] - The average Monthly Active Payers (MAPs) across the Apps portfolio was 1.5 million, with an Average Revenue Per Monthly Active Payer (ARPMAP) of $52[115] - In-app purchases (IAP) generated 70% of total Apps Revenue, while advertising inventory purchases (IAA) contributed 30%[114][116] - 45% of revenue in Q1 2025 was generated from outside the United States, indicating significant global market opportunities[135] Cash Flow and Investments - The company generated net cash provided by operating activities of $831.7 million, compared to $392.8 million in the same period of 2024[105] - Free Cash Flow for the three months ended March 31, 2025, was $825.7 million, up from $387.6 million in the prior year[105] - Cash and cash equivalents as of March 31, 2025, were $551.0 million, with $793.7 million of remaining availability under the 2024 Credit Agreement[172] - Net cash provided by operating activities for Q1 2025 was $831.7 million, up from $392.8 million in Q1 2024, representing an increase of 111%[174][175] - Net cash used in investing activities decreased to $22.7 million in Q1 2025 from $31.6 million in Q1 2024, a reduction of 28.8%[176] - Net cash used in financing activities increased significantly to $1,002.2 million in Q1 2025 from $424.6 million in Q1 2024, an increase of 135%[177][178] - Stock repurchases in Q1 2025 totaled $1.0 billion, with 2,931,609 shares repurchased, leaving $1.3 billion available for future repurchases[180] Expenses and Charges - Total costs and expenses for Q1 2025 were $820,550,000, representing 55% of revenue, down from 68% in Q1 2024[155] - Goodwill impairment charge of $188.9 million was recorded in Q1 2025, accounting for 13% of revenue, with no impairment in the prior year[164] - Research and development expenses decreased by $32.4 million, or 21%, to $122,918,000, primarily due to a reduction in stock-based compensation[162] - General and administrative expenses increased by $12.1 million, or 29%, to $54,501,000, driven by higher professional services costs[163] - Interest expense decreased by $21.3 million, or 29%, to $52,888,000, due to lower interest rates on debt[165] Strategic Initiatives - The company has invested approximately $4.1 billion in 33 strategic acquisitions and partnerships since 2018 to enhance its Advertising solutions[136] - The company plans to continue investing in AI-powered advertising technologies, including the AXON recommendation engine, to improve effectiveness for advertisers[132] - The company aims to retain and grow existing clients, as growth from existing clients has been a primary driver of revenue[134] - The company is exploring strategic partnerships and acquisitions, including a preliminary indication of interest to purchase TikTok in markets outside of China[137] Market Challenges - The company expects to continue facing challenges from changes in third-party platform policies that could impact advertising effectiveness and revenue generation[138] Accounting and Risk - There were no material changes to critical accounting estimates during the three months ended March 31, 2025[184] - The company reported no material changes in market risk from the previous year[188] - There were no other material changes to contractual obligations since December 31, 2024[181]

Applovin shares soared as high as 15% in extended trading after the company reported earnings and revenue that beat expectations and announced the sale of its mobile gaming business.Here's how the company did compared to LSEG consensus estimates:Earnings: $1.67 per share vs $1.45 per share expectedRevenue: $1.48 billion vs $1.38 billion expectedApplovin also agreed on Wednesday to sell its mobile gaming business to Tripledot Studios in a deal worth $400 million in cash considerations. The advertising tech c ...

Exhibit 2.1 CONFIDENTIAL Execution Copy PURCHASE AGREEMENT TRIPLEDOT, TRIPLEDOT GROUP HOLDINGS LIMITED, ETON GAMES, INC., APPLOVIN CORPORATION by and among MOROCCO, INC. and APPLOVIN GMBH MADE AND ENTERED INTO AS OF MAY 7, 2025 TABLE OF CONTENTS | | | Page | | --- | --- | --- | | Article I THE PURCHASE | | 2 | | 1.1 | Purchase and Sale | 2 | | 1.2 | Closing & Closing Deliveries | 3 | | 1.3 | Equitable Adjustments | 6 | | 1.4 | Preparation and Delivery of Pre-Closing Statement | 6 | | 1.5 | Purchase Price Al ...