Adam Foroughi, CEO of AppLovin.
CNBC
Apply love Shares of the online gaming and advertising company soared 45% on Thursday after it issued much higher-than-expected guidance and reported better-than-expected earnings and revenue.
The stock jumped above $245 in afternoon trading. The company has gained 515% this year, far outpacing all other technology companies valued at $5 billion or more, according to FactSet. The gains have boosted AppLovin’s market value to more than $80 billion.
According to LSEG, third-quarter revenue grew 39% to $1.2 billion, beating the average estimate of $1.13 billion. Earnings of $1.25 per share beat the average estimate of 92 cents.
AppLovin expects fourth-quarter revenue of $1.24 billion to $1.26 billion, with a mid-term growth rate of about 31%. Analysts expected about $1.18 billion.
AppLovin was founded 12 years ago and went public in 2021, setting off a craze for online gaming in the coronavirus era. Now, the company’s gaming unit is growing relatively slowly, but its online advertising business is booming due to advances in artificial intelligence that improve ad targeting.
AppLovin attributes much of its growth to its artificial intelligence advertising engine called AXON, especially since the release of an updated version 2.0 last year. The technology helps deliver more targeted ads on mobile gaming apps owned by the company and is available to other studios that license the software.
The company said software platform revenue grew 66% in the quarter to $835 million, driven by AXON model improvements.
“As we continue to improve our model, our advertising partners are able to successfully engage in larger spend,” the company said in a statement. Letter to shareholders.
Despite rapid revenue growth, Wall Street is most concerned about AppLovin’s profitability. Net profit for the quarter rose 300% to $434.4 million, or $1.25 a share, from $108.6 million, or 30 cents a share, a year earlier. The software platform has an adjusted profit margin of 78%.
“AppLovin continues to impress with outsized revenue growth and incredible EBITDA conversion,” Wedbush analysts wrote in a note on Thursday. They recommended buying the stock and raised their price target from $170 to $270.
AppLovin Chief Executive Adam Foroughi’s net worth rose by more than $2 billion to about $7.4 billion on Thursday, providing an update on the company’s pilot e-commerce program. The technology allows businesses to serve targeted ads within games.
“This is the best product launch I’ve seen in years that we’ve had, the fastest growth, but it’s still in the pilot phase,” Foroughi said on the earnings call. “E-commerce “looks very strong and we think that’s going to be the key to growth in 2025.” financial impact on the business over the years and beyond.”
—CNBC’s CJ Haddad contributed to this report
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