Applovin (APP) – What An Impressive Quarter! Shares +28% to $216! HOLDING NOW, Way Too Rich For Me.
I first bought and recommended AppLovin on July 5th, at $84, here’s a link to the first article on Seeking Alpha, and I continue to hold 70% after taking profits of around $150.
But hats off for an amazing quarter, Applovin’s Q3 GAAP EPS of $1.25 beats by $0.32 – This looks like some serious sandbagging.
Revenue of $1.2B (+38.8% Y/Y) beats by $70M. We forget that AppLovin is a $5Bn revenue company, and with these growth rates in a competitive Ad-Tech market, it is seriously behaving like a $1Bn start-up!
What is AppLovin’s secret sauce?: It introduced the new version of its AI-backed ad mediation platform AXON in q1-2023, and the results have been astounding since then. Advertising mediation platforms depend on the strength of the black box that matches targeted customers with relevant ads in real-time, with the best return on investment for the advertiser. It isn’t called performance marketing without reason. You’re only as good as the value that you executed immediately for the publisher or advertiser, which is vastly different from brand building. Clearly AXON has performed for its advertising clients, and this quarter’s outperformance was proof that AXON is the real deal.
From the CEO’s letter to shareholders:
“Our AXON models continue to improve through self-learning and, more importantly, this quarter, from technology enhancements by our engineering team. As we continue to improve our models our advertising partners are able to successfully spend at a greater scale. We’re proud to be a catalyst for reinvigorating growth in our industry.”
In Q3, AppLovin had these amazing metrics:
- Revenue of $1.20 billion 39% YoY growth
- Net income of $434 million 300% YoY growth at a net margin of 36%
- Adjusted EBITDA of $722 million (+72% YoY) at an Adjusted EBITDA margin of 60%.
- Net cash from operating activities of $551 million (+177% YoY)
- Free Cash Flow of $545 million (+182% YoY).
Financial Guidance Summary 4Q – 24
Total Revenue $1,240 to $1,260 million – Previously $1,180 – At the midpoint that’s a very impressive upward revision of 6%.
Adjusted EBITDA $740 to $760 million
Adjusted EBITDA Margin 60%
AppLovin is sharing this wealth with its shareholders having bought back a total of 5.0 million shares for a total cost of $437Mn, last quarter. The board also authorized an incremental $2.0 billion for buybacks, increasing the total aggregate remaining authorization to $2.3 billion.
