Applovin(US:APP)2025-08-06 22:02Financial Data and Key Metrics Changes - In Q2 2025, revenue increased by 77% year-over-year to approximately $1.26 billion, while adjusted EBITDA nearly doubled to $1.02 billion, achieving an 81% adjusted EBITDA margin [13][14]. - Free cash flow reached $768 million, up 72% year-over-year, with a slight decrease from the previous quarter due to timing of bond interest payments and taxes [14][15]. - The company ended the quarter with $1.2 billion in cash and cash equivalents, including $425 million from the sale of its apps business [14]. Business Line Data and Key Metrics Changes - The majority of revenue growth was driven by the core gaming business, which continues to grow at a rate of 30% to 40% [14][36]. - E-commerce, while performing well, was constrained in onboarding new customers to prepare for the self-serve launch, maintaining around 10% of the business [36][37]. Market Data and Key Metrics Changes - The Max Marketplace has consistently shown double-digit growth, outpacing the in-app purchasing gaming market growth rates of 3% to 5% [6][24]. - The company plans to open its platform to most major international markets on October 1, 2025, expanding its reach beyond the United States [10][38]. Company Strategy and Development Direction - The company is focused on expanding its platform with the launch of the Axon Ads Manager, which aims to simplify the advertising process and enhance user experience [8][11]. - The strategy includes building world-class products and launching them when they meet high standards, with a goal of achieving 20% to 30% year-over-year growth driven by gaming and expanding into new markets [6][12]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining strong growth rates due to improvements in technology and demand, with expectations of significant opportunities outside the core gaming market [5][7]. - The company anticipates a substantial ramp-up in e-commerce as it opens its platform to new advertisers, particularly during the holiday shopping season [36][37]. Other Important Information - The company has been actively managing its share count, reducing the weighted average diluted common shares outstanding from 346 million to 342 million [15]. - The self-service platform is expected to significantly increase advertiser count and revenue, with a referral-based opening planned for Q4 2025 [32][33]. Q&A Session Summary Question: Plans for paid marketing to acquire advertisers - Management indicated that the decision to start paid marketing is driven by the strong performance of their platform and the potential to reach small businesses globally [18][20]. Question: Supply growth and mediation share - Management clarified that supply growth is driven by improvements in technology and demand rather than taking share from other platforms, with the Max mediation platform experiencing swift growth [23][24]. Question: Impact of self-serve platform on overall business - Management expects the self-serve platform to have a material impact, particularly as it allows for rapid onboarding of new advertisers and increased revenue [28][33]. Question: E-commerce contribution to growth - Management confirmed that e-commerce remains around 10% of the business, with growth limited by the onboarding process but expected to ramp up significantly in Q4 [36][37]. Question: International expansion and customer onboarding - Management anticipates a gradual increase in international customer onboarding, leveraging existing relationships and referrals from current advertisers [109][110]. Question: User acquisition spend changes post-Apple vs. Epic lawsuit - Management noted no immediate changes in user acquisition spend from gaming companies, expecting a gradual impact over the next few quarters [97][99]. Question: Capital allocation strategy - The company plans to continue investing in organic growth initiatives and return capital to shareholders through share buybacks [101]. Question: Differences in onboarding international customers - Management indicated that onboarding will be broad-reaching, with no constraints on the types of advertisers as the platform opens up [111][112].