AppLovin's Valuation Reflects High Expectations For Monetization Expansion: Analyst

Core Insights - Needham analyst Bernie McTernan reiterated a Hold rating on AppLovin Corp. (APP) and highlighted Axon 2 as a key growth tool for the company, which is an ad optimizer within the DSP [1] - The total number of websites using Axon increased by 3% to 323, with 18 new additions and 7 churns, indicating modest growth [1][2] - Apparel, Footwear & Accessories emerged as the largest category gainer, with 10 new additions and one churn [2] Company Performance - AppLovin reported having 600 e-commerce brands and a $1 billion ad spend run rate as of December [3] - The user count for the Axon pixel remained unchanged at 2,000, with a notable increase from 1,000 to 2,000 between February 28 and March 5 [6] - Projected second-quarter revenue is $1.21 billion with an EPS of $1.86 [6] Market Dynamics - The churn rate increased, with seven websites churning compared to one the previous month, although two of these companies shut down their businesses [2] - Reebok was noted as a significant brand addition to the Pixel, with sales around $5 billion, which is relatively low among the sampled big brands [4] - The valuation of AppLovin has become one of the highest in its coverage group, driven by expectations for monetizing its advertising platform [7]