Applovin(US:APP)2023-08-08 16:00Financial Performance - Revenue for the three months ended June 30, 2023, declined 3% year-over-year to $750.2 million, down from $776.2 million in the same period of 2022[94] - Net income for the three months ended June 30, 2023, was $80.4 million, compared to a net loss of $21.8 million in the same period of 2022[94] - Adjusted EBITDA for the three months ended June 30, 2023, was $333.5 million, an increase from $269.7 million in the same period of 2022, resulting in an Adjusted EBITDA margin of 44.5%[106] - Total revenue for the three months ended June 30, 2023, was $750.165 million, a decrease of 3% compared to $776.231 million in the same period of 2022[133] - Software Platform Revenue increased by $88.5 million, or 28%, for the three months ended June 30, 2023, primarily due to a 38% increase in net revenue per installation[134] - In-App Purchases Revenue decreased by $69.6 million, or 23%, for the three months ended June 30, 2023, driven by a 17% decrease in the volume of in-app purchases[134] - Total costs and expenses for the three months ended June 30, 2023, were $618.837 million, down from $722.876 million in the same period of 2022[126] - The effective tax rate for the three months ended June 30, 2023, was 16.1%, compared to 226.5% in the same period of 2022[131] Cash Flow and Investments - Free Cash Flow for the six months ended June 30, 2023, was $503.7 million, significantly up from $62.4 million in the same period of 2022[94] - Net cash provided by operating activities for the six months ended June 30, 2023, was $518,456 thousand, compared to $75,092 thousand for the same period in 2022, indicating a significant increase[108] - Net cash used in investing activities was $(55.2) million for the six months ended June 30, 2023, significantly lower than $(1,351.7) million for the same period in 2022[152] - The company repurchased 30,880,452 shares of Class A common stock for an aggregate amount of $579.8 million during the six months ended June 30, 2023[154] - The company has $3.2 billion of outstanding indebtedness, with interest rate swap agreements fixing borrowing rates on a notional amount of $1.8 billion[160] User Engagement and Market Focus - Monthly Active Payers (MAPs) averaged 1.7 million for the three months ended June 30, 2023, down from 2.3 million in the same period of 2022[102] - Average Revenue Per Monthly Active Payer (ARPMAP) increased to $46 for the three months ended June 30, 2023, compared to $43 in the same period of 2022[102] - In Q2 2023, 42% of revenue from Software Platform and IAA Revenue clients was generated from outside the United States, highlighting the company's global market focus[113] - The company continues to focus on acquiring new clients globally, with significant opportunities outside of mobile gaming as its Core Technologies are relevant to the broader mobile app ecosystem[113] Strategic Initiatives - The company plans to continue expanding its portfolio of apps and enhancing user engagement to drive future revenue growth[94] - The company rolled out its latest AI-based advertising engine, AXON 2.0, in Q2 2023, which improved AppDiscovery performance and returns for advertisers[111] - The company plans to continue investing in research and development to enhance its Core Technologies and Software Platform, expecting R&D expenses to increase in absolute dollars over the long term[122] - The company has performed a strategic review of its Apps portfolio, resulting in divestitures and a focus on optimizing cost structures, which has improved Apps Adjusted EBITDA margin[114] Economic and Regulatory Environment - Current economic conditions, including inflation and rising interest rates, have led to cautious spending from clients, impacting the mobile gaming and app market[118] - The company anticipates that changes in third-party platform policies, such as those from Apple and Google, could adversely affect its business and results of operations[117] Expenses and Cost Management - Sales and marketing expenses decreased by $39.7 million, or 17%, in Q2 2023 compared to Q2 2022, primarily due to a $38.7 million reduction in user acquisition costs[138] - Research and development expenses for the three months ended June 30, 2023, were $137.424 million, slightly up from $141.108 million in the same period of 2022[126] - General and administrative expenses decreased by $15.3 million, or 34%, in Q2 2023 compared to Q2 2022, primarily due to a $13.7 million reduction in personnel-related expenses[141] - Interest expense increased by $14.5 million, or 40%, in Q2 2023 compared to Q2 2022, primarily due to higher interest rates on outstanding debt[142] - Interest income and other, net increased by $14.9 million in Q2 2023 compared to Q2 2022, driven by a $10.4 million increase in interest income from cash and cash equivalents[143] - Provision for income taxes decreased by $23.7 million, or 61%, in Q2 2023 compared to Q2 2022, primarily due to lower non-deductible stock-based compensation expenses[144]