AppLovin Gains 6% Following Q3 Earnings Report

AppLovin (NASDAQ:APP) has been positively highlighted by Benchmark and added to its Top Ideas List, signaling strong growth potential for the company. Analysts point to key catalysts that could sustain and accelerate revenue expansion in the near to medium term.

The company’s AI-driven ad targeting within the gaming sector continues to be a significant revenue driver. Additionally, the emergence of e-commerce advertising, particularly with the anticipated introduction of self-service tools, is expected to unlock new monetization opportunities.

AppLovin's stock is further supported by an ongoing share buyback program, which could enhance earnings per share over time. As the platform sees an influx of non-gaming advertisers, major gaming publishers who were previously hesitant to host competitor ads may reconsider, leading to increased ad inventory and further revenue growth.

With multiple growth levers in play, AppLovin appears well-positioned to capitalize on expanding ad demand across both gaming and non-gaming verticals.

• AppLovin Corporation (NASDAQ:APP) is expected to report earnings per share (EPS) of $1.12 and revenue of approximately $1.26 billion in its upcoming quarterly earnings.
• The company's Software Platform segment is anticipated to drive revenue growth with a 54.8% increase, showcasing the impact of its AXON 2.0 technology.
• Despite a high valuation with a price-to-earnings (P/E) ratio of 112.35 and a price-to-sales ratio of 30.07, AppLovin's strong current ratio of 2.41 indicates its ability to cover short-term liabilities.

AppLovin Corporation, trading on the NASDAQ under the symbol APP, is a prominent player in the mobile technology sector. The company specializes in providing software solutions that enhance mobile app monetization and user engagement. AppLovin's main competitors include companies like Unity Software and IronSource, which also focus on mobile advertising and app development tools.

On February 12, 2025, AppLovin is set to release its quarterly earnings. Analysts expect the company to report earnings per share (EPS) of $1.12 and revenue of approximately $1.26 billion. This release will be closely watched by investors, as it will provide insights into the company's financial health and growth trajectory.

AppLovin's anticipated revenue growth is largely driven by its Software Platform segment, which is expected to generate approximately $892.7 million. This represents a significant 54.8% increase from the same quarter last year, thanks to the advanced AXON 2.0 technology that improves ad targeting and optimization. However, the Apps segment is projected to see a slight decline of 1.8%, with expected revenue of $367.72 million.

Wall Street analysts have revised their EPS estimates upward by 0.9% over the past 30 days, now anticipating earnings of $1.28 per share. This marks a substantial 161.2% increase compared to the previous year. Such revisions often impact investor sentiment and can lead to short-term stock price movements, depending on whether the actual results meet or exceed these expectations.

AppLovin's financial metrics reveal a high valuation, with a price-to-earnings (P/E) ratio of 112.35 and a price-to-sales ratio of 30.07. The company's debt-to-equity ratio stands at 3.74, indicating a significant level of debt compared to equity. Despite these figures, the current ratio of 2.41 suggests that AppLovin has a strong ability to cover its short-term liabilities with its short-term assets.

AppLovin (NASDAQ:APP) shares rose more than 13% intra-day today after BofA Securities analysts increased their price target for the company from $100 to $120, reaffirming a Buy rating on the stock.

After meeting with AppLovin's CEO and CFO in New York, BofA shared insights on why the company remains their top pick. The analysts believe the Software division has the potential to grow by over 20% annually through 2026, significantly outpacing the mobile gaming market’s expected 5% to 10% yearly growth. According to BofA estimates, despite capturing only about a third of the projected ad spend in 2024, AppLovin is well-positioned to generate a majority of new in-app purchase (IAP) revenue for advertisers.

The analysts highlighted that one of the key challenges in the mobile advertising space is effectively matching mobile gamers—an audience of over 3 billion worldwide—with the right games. Currently, mobile ad networks convert around three installs per 1,000 impressions, according to BofA estimates. Even a modest improvement, such as increasing the conversion rate to five installs per 1,000 impressions, could significantly boost industry growth.

Since the first quarter of 2023, AppLovin's AI Engine has proven its ability to enhance install rates, contributing to a 112% growth in the company’s quarterly run rate. The analysts noted that the company’s use of large language models (LLMs) for data collection, still in its early stages, presents further opportunities for long-term growth by continuing to improve matching efficiency.

Shares of AppLovin (NASDAQ:APP) surged more than 6% intra-day today following the announcement of robust earnings for the third quarter.

The company's revenue for the quarter stood at $864.3 million, topping the market's forecast of $798 million. Earnings per share also beat expectations, coming in at 30 cents compared to the predicted 27 cents.

Throughout the year, AppLovin has bought back $1.154 billion of its Class A common stock, with the average purchase price being under $25 per share.

The company also announced that Herald Chen, its President and CFO, will be stepping down from his day-to-day duties by the end of 2023. Despite his transition, Chen will continue to serve on AppLovin's Board of Directors and will become an Advisor to the CEO. Taking over the financial helm, Matt Stumpf, the current Vice President of Finance, has been named the new Chief Financial Officer.

AppLovin (NASDAQ:APP) saw its shares skyrocket by more than 30% intra-day today after posting its Q2 results.

The company outperformed predictions with an EPS of $0.22, surpassing the Street estimate of $0.08. Despite a 3% year-over-year decline, revenue reached $750 million, exceeding the Street estimate of $723.97 million. Notably, the Software Platform division experienced substantial growth, surging 28% year-over-year to reach $406 million—a quarterly record. This rise was fueled by AI advancements integrated into AXON, which led to increased installations and higher revenue per installation compared to the previous quarter.

Looking ahead to Q3, AppLovin anticipates revenue in the $780-$800 million range, surpassing the Street estimate of $741.41 million.

AppLovin Corporation (NASDAQ:APP) shares surged more than 34% on Thursday despite Q1 results coming in worse than the consensus estimates. Quarterly EPS came in at ($0.31) and revenue at $625 million, both missing the Street estimates of ($0.08) and $823.37 million, respectively.

The company lowered its 2022 revenue guidance to a range of $3.14-3.44 billion, below the Street estimate of $3.69 billion, while the adjusted EBITDA estimate was raised to $1.20 billion from $1 billion at the midpoint. The raise reflects the ongoing growth of the Software Platform business and expected operating improvements in Apps.

The rapid growth of the Software Platform and the massive reach post-MoPub acquisition give the company confidence that it is still able to do well with less reliance on first-party data from its games. That means the company will not only reduce UA investments into those games, but also consider divesting the first-party game business if that makes financial sense.