Applovin(US:APP)2024-05-08 21:01Revenue Growth and Financial Performance - Revenue increased 48% year-over-year to $1.06 billion for the three months ended March 31, 2024, compared to $715.4 million in the same period in 2023[82] - Revenue for Q1 2024 was $1,058.1 million, a 48% increase from $715.4 million in Q1 2023[112] - Total Revenue increased by $342.7 million, or 48%, reaching $1,058.1 million, driven by growth in Software Platform Revenue and a 5% increase in Apps Revenue[119][120] - Net income for Q1 2024 was $236.2 million, compared to a net loss of $4.5 million in Q1 2023[82] - Net income for Q1 2024 was $236.2 million, compared to a net loss of $4.5 million in Q1 2023[112] - Income from operations for Q1 2024 was $339.6 million, a significant increase from $61.0 million in Q1 2023[112] - Adjusted EBITDA for Q1 2024 was $548.8 million, up from $273.7 million in Q1 2023, with an Adjusted EBITDA margin of 51.9%[82][94] - Free Cash Flow for Q1 2024 was $387.6 million, compared to $283.1 million in Q1 2023[82][96] - Software Platform Adjusted EBITDA increased by $273.3 million, or 125%, driven by higher Software Platform Revenue, partially offset by increased network infrastructure expenses[130] - Apps Adjusted EBITDA increased by $1.7 million, or 3%, due to higher Apps Revenue, partially offset by increased user acquisition costs and third-party payment processing fees[131] Software Platform and Apps Revenue - Software Platform Revenue accounted for 64% of total revenue in Q1 2024, while Apps Revenue represented 36%[83] - Software Platform Revenue increased by $323.6 million, or 91%, primarily due to improved AppDiscovery performance with a 5% increase in net revenue per installation and an 87% increase in installation volume[120] - In-app purchase (IAP) revenue represented 68% of total Apps Revenue in Q1 2024, while in-app advertising (IAA) revenue accounted for 32%[87] - In-App Purchases (IAP) Revenue increased by $7.9 million, or 3%, due to a 4% increase in purchase volume, partially offset by a 1% decrease in price per purchase[120] - In-App Advertising (IAA) Revenue increased by $11.2 million, or 10%, driven by a 113% increase in advertising impressions, partially offset by a 48% decrease in price per impression[120] User Metrics and Engagement - Average Monthly Active Payers (MAPs) remained stable at 1.8 million in Q1 2024, with an Average Revenue Per Monthly Active Payer (ARPMAP) of $48, up from $46 in Q1 2023[87][90] Cost and Expense Management - Cost of revenue for Q1 2024 was $294.1 million, representing 28% of revenue, down from 37% in Q1 2023[112][117] - Cost of Revenue increased by $32.2 million, or 12%, primarily due to a $35.5 million increase in network infrastructure expenses, offset by an $8.6 million decrease in amortization of intangible assets[122] - Research and development expenses for Q1 2024 were $155.3 million, representing 15% of revenue, down from 20% in Q1 2023[112][117] - Sales and marketing expenses for Q1 2024 were $226.7 million, representing 21% of revenue, down from 28% in Q1 2023[112][117] - General and administrative expenses for Q1 2024 were $42.4 million, representing 4% of revenue, down from 6% in Q1 2023[112][117] Investments and Acquisitions - $4.1 billion invested in 33 strategic acquisitions and partnerships from 2018 through March 31, 2024, including MAX, Adjust, MoPub, and Wurl[102] - Significant investments in the Software Platform, including AI-powered advertising engine AXON, AppDiscovery, Adjust, and MAX, to enhance effectiveness and enter new verticals outside of gaming[98][99] - The company invested $10.0 million in the first tranche of Series C preferred stock financing of Humans, Inc. in February 2024[139] - The company committed to invest an additional $40.0 million in the second tranche of Series C preferred stock financing of Humans, Inc. as of March 31, 2024[139] Shareholder Returns and Financial Position - The company repurchased shares of its Class A common stock, reflecting its strong financial position and commitment to shareholder returns[82] - The company repurchased 13,466,397 shares of Class A common stock for $752.2 million during the quarter[137] - Net cash provided by operating activities was $392.8 million, primarily consisting of $236.2 million of net income adjusted for non-cash items, including $112.7 million in amortization and depreciation[134] - Net cash used in financing activities was $424.6 million, primarily due to $752.2 million in stock repurchases, partially offset by $1,072.3 million in debt issuance proceeds[136] Debt and Credit Facilities - The company amended its Credit Agreement in March 2024, reducing the interest rate margin for SOFR loans from 3.1% to 2.5% and for base rate loans from 2.0% to 1.5%[138] - The company increased the aggregate principal amount of the 2030 Term Loan to $2.09 billion and reduced the 2028 Term Loan to $1.46 billion[138] - The company drew down an additional $418.7 million from the revolving credit facility in March 2024 to fund share repurchases[138] - The company repaid the entire outstanding amount under the revolving credit facility of $603.7 million by March 31, 2024[138] - KKR Corporate Lending (CA) LLC provided revolving credit commitments of $15.0 million under the company's revolving credit facility[138] International Revenue - 41% of revenue from Software Platform and IAA Revenue clients was generated from outside the United States in Q1 2024[101] Portfolio and Tools - The company's portfolio includes over 200 free-to-play mobile games across five genres, managed by ten studios[82] - Key software tools like AppDiscovery, MAX, Adjust, and Wurl drive revenue growth through user acquisition, ad optimization, and analytics[86] Accounting and Risk Management - The company's condensed consolidated financial statements are prepared in accordance with GAAP, requiring estimates and assumptions that affect reported amounts[140] - There were no material changes to the company's critical accounting policies and estimates during the three months ended March 31, 2024[141] - There were no material changes in market risk from the information presented in the Annual Report on Form 10-K for the year ended December 31, 2023[144]