AppLovin Corporation (APP) on Q1 2021 Results - Earnings Call Transcript
Operator: Greetings, and welcome to the AppLovin First Quarter 2021 Earnings Call. . As a reminder, this conference is being recorded. It is now my pleasure to introduce Tori Valenzuela, Chief Legal Office and Corporate Secretary for AppLovin. You may begin. Victoria Valenzuela: Thank you, and welcome to the AppLovin earnings call for the quarter ended March 31, 2021. Joining me today to discuss AppLovin's results and key business initiatives are Co-Founder, CEO and Chairperson, Adam Foroughi; and President and Chief Financial Officer, Herald Chen. Adam Foroughi: Thank you for joining us today for our first public company earnings call. I want to begin by thanking our amazing teammates around the world who continue to push relentlessly to execute on our vision. Of course, we wouldn't be here without our partners who trust us as an integral part of their growth and monetization strategy. And thank you for the support from our new investors. We are very much focused on the long term and appreciate that you recognize our competitive advantages and long-term opportunities. We are looking forward to sharing details about AppLovin's first quarter results. Herald Chen: Thanks, Adam, and thanks, everyone, for taking the time to join us. As Adam mentioned, we appreciate that our business model is a bit nuanced. What we hope through this call, our shareholder letter, our first quarter results, our guidance and our financial performance over time is that you come to appreciate that our integrated model is the reason for our strong Q1 and for our confidence in our long-term growth prospects. Before we get to your questions, I want to briefly highlight a few topics. We did have a very strong first quarter with 132% and 110% year-over-year revenue and EBITDA growth, respectively. For those wanting to understand our mix of organic versus inorganic growth, our organic growth was a robust 89%. Next, I want to discuss our software business, which falls under our business revenue. We wanted to provide you additional metrics regarding just our software business to help you understand the scale and growth drivers of that business. The first is total software transaction value, a new metric for us. It measures and helps dimensionalize the scale of our software business. Our software is used by our first-party apps and third-party clients. However, we can't report our own spend on our own software under GAAP rules. So we measure TSTV, or total software transaction value, as the total net value transacted from all clients as if our own studios were stand-alone businesses. In Q1, this TST measure increased by 155% year-over-year to $148 million to nearly a $600 million run rate. That illustrates both the scale and rapid growth of our software platforms. Operator: . Your first question comes from the line of Stephen Ju with Credit Suisse. Stephen Ju: Okay. So Adam, I think it's only been about 9 short months since you switched over from contextual ads to AXON. And it seems like the benefits you get from ML and particularly as you keep feeding it more first-party data should continue to accrete over time. So what inning do you think you are in terms of the overall value you think you can extract? And secondarily, just wondering what the M&A pipeline may look like at this point. Are deals getting more contested now? Or are the private market valuations about where they are? Adam Foroughi: Thanks, Stephen, for the questions. And taking the first one. Really, ML, if you look at the success of all the biggest companies in the world today, whether it's Google or Facebook, you can tie their success over years back to the inflection point where they really executed on putting ML into the core of their platforms and then growing off of it. These systems are built so that as they get bigger, more data feeds into them, more clients come in and the system becomes more and more accurate. Our AXON engine is trying to predict what a consumer will download and engage with in the future, and it does it at exceptionally high accuracy, that every day we go forward, that accuracy improves. And really, when we executed on it, we were trying to execute on the vision of expanding our first-party data, which was speeding it and then unlocking the power of that data with the machine learning engine so as that first-party data continues to grow as well, that engine will only get better. I would say, really, what inning are we in, it's 6 months in, so we think we're very early in it. Tying into Adjust, too, we're just -- we're thrilled to bring that team on. They have great products. But the reality is the strategic benefit for us with that deal that can unlock the most cash flow for us going forward was that to date, we haven't had a sales force. We haven't been selling our product to the marketplace. It's working exceptionally well. And as you look at the growth of both the third-party clients and the TSTV stat, growth rate is second to none in the marketplace, and our enterprise clients are still under 200. The market has over 10,000 potential enterprise clients, and we're excited about Adjust sales force coming in and really help us deliver on more clients into the system, which will continue to help it grow. On the second question around M&A. Our pipeline is always robust because our approach is just different when it comes to the content side of M&A. We're working with our own clients to bring them into effectively our walled garden and help facilitate more growth off of their business that they've built. Almost every single one of our transactions in the past have been client first outside of banker-run processes early in their evolution, companies that we were able to acquire and then accelerate the growth thereof. And then we just announced in the release 2 deals that we executed on in April for 2 more early but top grossing games that we think we can go quite materially from here: one, West Game; And Two, a slots game that brings the first slots game into our portfolio. These 2 games are at a run rate of $200 million a year revenue, and we paid upfront $300 million for them within some contingent payments that will -- they'll be able to accumulate as they grow their businesses with our platform. Operator: Your next question comes from the line of Alexia Quadrani with JPMorgan. Alexia Quadrani: I just have two questions as well. One, can you discuss the integration of Machine Zone so far and the learnings from operating in the mid-core space? and then with West Game, this does look like you're moving deeper into the space. I guess do you expect synergies you realize in casual can be applied to other genres like mid-core and casino? And then my second question is just if you could maybe elaborate on the full year revenue guide of what your assumption is in that guide for organic growth. Adam Foroughi: Thanks, Alexia. I'll take the first question, and I'll leave the guidance question over to Herald. On the first question, the Machine Zone transaction, we closed actually almost exactly a year ago. And really, integration for us with content studios is pretty straightforward. We want them to focus on creating, and then we want our platform to really be their accelerator of growth. And so it creates a perfect environment to unlock that creative talent that they've got. The Machine Zone transaction for us was interesting for 2 reasons. One was they had a team that was very skilled at building these core games. The -- and we believe that they can unlock that value going forward with future games. But then more importantly, the reason it was interesting to us is they have the biggest pool of first-party data where consumers had transacted in their games, consumers that are interested in these male-centric strategy games, a really high-value segment for advertising. And our content strategy, really, the core reason we got into content was to be able to supply our advertising ecosystem, our platform and our software with first-party data. Machine Zone gave us scaled data second to none. And with West Game, as far as synergies go, the reason we're excited about growing that game particularly is it's much earlier in its life cycle than Machine Zone games. And we've got the data to be able to execute on the machine learning to be able to grow that game through our platform. So we think we're going to be able to grow it quite a lot from where it is today, already one of the top 100 grossing games in the world. Herald, do you want to take the point around or the forecast? Herald Chen: Yes. That's great. Yes. Thanks for the question. In terms of the guidance we've given for the full year, it really takes into consideration just the tremendous opportunities we're seeing across all of our assets. And you can see in our strong first quarter here where we had growth in each one of the businesses, and we also had very, very robust organic growth. And so we see that continuing in our 2021 full year guidance where the majority of it will continue to be from organic measures as well as we will augment that with M&A. As you just mentioned, we just did 2 acquisitions that -- or run rate of about $200 million, which will be included in our guidance. But we still see opportunities for M&A on top of that. But in terms of guidance, our policy is really not to include any additional meaningful M&A, nor do we include any large, new hits from our studios, both of which are very hard to predict. We're certainly pursuing both those things, but notwithstanding, it's hard to project those 2 things. Operator: Your next question comes from the line of Brian Nowak with Morgan Stanley. Brian Nowak: I have two. First one on the software side. AXON has been a big success. Curious to hear about other areas where you see low-hanging fruit improvements to make to that product, to continue to competitively differentiate and win even more market share and just kind of get beyond the AXON lapping. And then secondly, on the first-party consumer business, can you give us examples where are you using any machine learning on that side yet? Or is that sort of something you're still thinking about doing over time to improve the over algorithms on the consumer side? Adam Foroughi: Thanks, Brian, for the questions. On the first point, really, when it comes to machine learning, one, you have to have a data advantage to be able to execute on machine learning at this level. And we had the data advantage. We executed on getting the machine learning to market. We also had invested over the last decade in building our large-scale data infrastructure, which is a key component of machine learning. Now where it is today, once you put these software programs out, there's a couple of areas where you get leverage to grow them. One is just getting more clients into our platform will continue to expand the business model. Two is the first-party data continuing to scale, giving us that exclusive data will continue to power that machine learning to become more accurate and allow us to get more growth in that business model. And then the third is, of course, we've got data scientists and machine learning engineers working on improving the algorithms all the time. Those three pieces are all really early stages. So we see a lot of upside in that technology. And then you brought up taking market share. We don't look at the ecosystem as we're executing on AXON, and we're taking market share from peers. As you know, a couple of our direct peers have been in the public markets recently and just reported their first quarter earnings. We're all doing very well. The way this ecosystem works is when something like AXON happens, we're driving more value to our clients. And as our clients grow, and as our own studios grow, the TAM just grows with it. And all of the companies in the ecosystem have different models, different algorithms and different data, and all of us end up growing with that. And that's what makes this market so exciting. On the other question around applying AXON or machine learning specifically to games, it's a great point. And frankly, we started our games business 3 years ago. We're really new into content. And the intent of that games business was to get first-party data at scale to power our advertising business. We've been busy building AXON and applying it to the advertising side, so we haven't had the time yet to go apply it to the game side of the business. We think that presents us an immense opportunity for growth as we go forward, and it's work that we're actively working on today. Operator: Your next question comes from the line of Jason Bazinet with Citi. Jason Bazinet: You guys have been pretty consistent in your messaging about wanting to do M&A, and you've done some more today. But I guess my longer-term question is do you feel like it's mostly done on the ad tech side, and more of what you're going to do is more about buying apps or games. Is that the way to think about it? Or do you still think there are other pieces of the puzzle on the tech side? Adam Foroughi: I think the way we look at it is the content side is just natural. If we've got clients on the platform, whether they're gaming or they're nongaming and they've got content and they need a growth partner, then we can be acquisitive and really help facilitate their growth and facilitate our goal of accumulating more first-party data into our engine. On the software side, it's much more opportunistic. If you look at every -- the 3 deals we've done on that side, MAX, SafeDK and Adjust, they were all to go acquire software that our studios used or our platform could utilize to expand the offering to the marketplace. And we'll continue to look for those opportunities that we think there are opportunities to be acquisitive to augment the offering that we've got in the market. Operator: Your next question comes from the line of Ryan Gee with Bank of America. Ryan Gee: Two, if I may. I think the consumer business is very strong, accelerating to over 3x year-over-year, well ahead of our expectations. I think the complacent investor might view that as just a gaming company benefiting from the pandemic. But is there a way that you can maybe tie in how the strength there is actually a direct reflection of the power of your platform to drive monetization and discovery for your first-party apps? And then secondly, just on the outlook real quick. It seems like that was also well ahead of what we were expecting in absolute terms, but regarding the profit margin of the business, can you talk about the factors influencing the year-over-year trends there in margins? How much of this is evolving revenue mix versus incremental investments to grow software or grow apps? Adam Foroughi: Thanks, Ryan. I'll jump on the first, and I'll let Herald handle the second. On the first point, really, of course, we know the pandemic was beneficial for many gaming companies. But I think there's a little bit of a disconnect on the types of games that benefited. Our games are predominantly casual mobile games. If you look at some of the oldest titles in our library that we own, a game like Wordscapes, that game is played on the go. And when we have the pandemic hit, we're all sitting at home, we had plenty more time on our hands. Console gaming really benefited the most. And then the second benefit was to be deeply engaging metaverse-type games on mobile. The casual games didn't see much of an uptick. If you look back at the growth of our content, you could see a direct correlation to when we launched AXON, and we gave you that TSTV stat, too. You can see the acceleration and the difference between the total TSTV and the third-party clients on our platform. That difference is us spending on our own platform to grow our apps. Pre-AXON, frankly, we just weren't as successful at growing our own apps because we didn't have that software at the level of efficiency that it is today. Now, today, with that software running at the capacity it's running at, we're accelerating every part of our business. The content grows because we're able to grow the spend through our own platform and through other channels utilizing our software. And then that content and feedback data, which makes the software more accurate, and then the software grows the content. So we've really unlocked that flywheel effect that we highlighted in our S-1 only dating back 6 months ago, and that's what we're so excited about looking forward. Herald Chen: Ryan, thanks for the second question as well, which I'll address. Yes. Again, in terms of the guidance and the margin structure and how that progresses, we're confident in our top line growth rates across the board. As we mentioned, again, we show that in this quarter with 90% on software, 57% on business apps and 215% growth on consumer apps. And so as we build out the year, we see each one of those businesses continuing to grow. And as we're able to grow and scale over our cost structure, our margins do expand. And so composition is important to follow as well, and certainly, in this first quarter, with Project Makeover, we had more, as you noted, more consumer app revenue, which did increase that side and also increased cost of goods sold on that piece of revenue. So we see for our full year guidance, at 26% margin, we do see our software business accelerating relative to the other businesses, as you also saw in the first quarter and I think relative to most of your models that you published earlier this week. And so we're confident in the top line, just given all the aspects of the business that we're executing against and then having margins expand as we continue to scale over our cost structure as well as the mix of the business continues to accelerate on the software side. Operator: Your next question comes from the line of Youssef Squali with Truist Securities. Youssef Squali: Great. Guys, congrats on your inaugural earnings call. So two questions, if I may. First, for games you acquire, can you just speak to maybe a typical lift in growth to their revenues, how long until they peak? I realize it's probably early until most of the peak, but to those that may have had -- and what's kind of the decline curve for some of these maybe earlier games? That's a question that we've actually gotten from a number of investors earlier this week. And then second, can you speak to the nongaming opportunity, especially now that you own Adjust? How quickly do you start moving in that direction? And Any verticals that excite you? Or I guess what are the verticals that excite you the most? If you can comment on that. Adam Foroughi: Thanks, Youssef. On the acquisition side, we put in the S-1 data around the acquisitions that we had for over a year. But we are just so fresh in the strategy. So we haven't had a lot of time with a lot of the games in the portfolio. We typically, in the first 12 months, when we measure it on average, grow these businesses over 100% once they come on to the platform. Now there's something interesting about our acquisition strategy is that we don't buy to sit on top of the EBITDA that they previously had. Most gaming companies don't operate in an aggressive marketing fashion because they're sensitive to generating cash flow. Our objective with the content business is not to generate cash flow or material cash flow from the content business yet. The objective from the Content business is to grow the games to as large as possible to get as much transactional data that we can get from the customers playing our games and use that data in a behavioral and privacy safe manner in our ad algorithm, which accelerates our business and has exceptionally high software margins. And so we operate that way. We're going these games through their life cycle where when they're early, they can grow to a ceiling in revenue. Eventually, the cohorts that you're accumulating stack up on top of each other, and the games become cash flow businesses. So over time, as our game business continues to become bigger and bigger, we will get to a point where it will also become a high contributor of margin to the business. But right now, we're focused on growth, and we've been able to execute on that strategy across almost every single one of the acquisitions we've made. On the second question, when it comes to nongaming, of course, exclusively, for most of the company's history, we've been focused on gaming companies. That's not because our technology was specifically geared towards gaming. It's also not because our data or machine learning is geared towards gaming. The data that we have in our business is built on top of this casual audience that we have across all of our games and then also that male-centric strategy player, which is a very high-value category of consumer for many advertisers outside gaming. But the nongaming businesses require companies to sell into them, to explain to them that there's an opportunity on our platform for them to go execute a growth strategy. To date, we've never had a sales force, and Adjust brings us 300 seasoned salespeople who know how to sell software in the ecosystem. They have over 3,000 clients, and 40% of those enterprise clients are nongaming companies. We're already executing on the strategy there of being able to bring nongaming companies onto our platform. It's the fastest-growing category of company that's coming on to the platform today. And just to give you a sense of one case study of why we were really excited about the Adjust transaction and the potentially leveraged financial profile that we can build off of that sales force cross-selling our product against their clients, when we went and assessed that transaction, we did one case, to really build the case internally on why this is potentially so valuable. We took a health and fitness subscription app and took that, put it on our platform. The company is paying Adjust today $3,000 a month. They went live on our platform about 90 days ago, and they're now yielding us close to $500,000 a year or $40,000 a month. We're not to say that every one of Adjust's clients that amount to over $100 million a year SaaS business are going to convert at 13x revenue dollars to our platform, but we're very excited about the cross-sell opportunity, especially when it comes to nongaming. Herald Chen: Youssef, if I can go back to your question on the game side, you'd asked about just the decline rate. What we're finding with these casual games is -- once we get them launched, we do grow them. Once we own them, launch new games. They reach peaks. They do plateau at some level. But they do last for a very long period of time. You'll see in our letter for Q1, we show existing studios from Q1 of 2020 to Q1 of '21. Existing studios were able to grow at a 91% rate. And so even after a year, they continue to grow because of our software and because of our marketing expertise. And so we're trying to build these cohorts. As Adam said, we're only 3 years into this. So we start layering these annual cohorts, and they start building up. The great thing behind that, too, is that the content business then starts to generate even higher margins because we're not going out and have to buy a lot of that revenue stream that's been already paid for. overall, the games business grew, for those 2, to 141%. So still the new pieces that we've added that we acquired added more growth but at 91% growth on existing games. We think those -- that type of layering will allow us to continue to compound growth on the content side. Operator: . Your next question comes from the line of Martin Yang with Oppenheimer & Company. Unidentified Analyst: My first question is on your acquisition targets. When you think about the content you're going to acquire and how that aligns with your first-party data strategy, do you intentionally pick out like the missing genres or trying to sell out the full spectrum of the most popular genres for mobile games? Adam Foroughi: Martin , yes, that's a good point and a good catch. If you look at our acquisition strategy historically, we've targeted a whole bunch of different genres, and that wasn't by coincidence. Fundamentally, we want content that's appealing to every single one of the 400 million-plus daily active users we see on the platform so that we can build first-party data relationships with those consumers. And we've been able to execute on that strategy really efficiently. We're at a point now where we've got content for everyone. And so now the strategy is just scaling that content. The bigger we get on the content side, the better our software gets. The better our software gets, the more growth we get on the content side. And so we're really excited about getting to this point where now we've got titles after the Slots transaction that we just announced across every single major genre in mobile gaming. Unidentified Analyst: Got it. So related to that question, do you apply the same strategy with maybe different geographies? Because in my understanding, some -- player behavior might differ a little bit in between different regions. Adam Foroughi: Yes. That's for sure true. International is actually one of our big growth vectors. So far, the U.S. has made up a majority of our revenue. Tier 1 English-speaking markets is the focus. Japan is actually our second biggest market. And to your point, some games will overlap with the Japanese audience, but culturally, there are some games that are specific to it. And then China is a whole another vector that's just unique to itself, half the world's gaming audience an opportunity but contained within the country. We think these international expansion points present a big opportunity for growth in the future for us. Unidentified Analyst: One more question, if I may. Can you maybe comment on the user acquisition environment in the first quarter, whether you see anything unique or different than usual as most publishers are preparing for the IDFA impact? Adam Foroughi: We haven't seen any changing trends. If you look at our TSTV stat, you'll see a lot of our user acquisition does flow through our own platform. So that does make us a little bit unique in terms of having this perspective, but we do spend a lot on other channels as well. I would say the marketplace itself continues to expand in potential applications that can market on marketing platforms. And this is why we're really excited about potentially new clients and new categories on our software platform. Things like fintech have been exploding in competitiveness in ad auctions with crypto-based apps spending a lot of money. And these are just all new concepts to us in our software platform. We haven't gone out and sold these companies to buy with us yet, but we're actively executing on that strategy when it comes to our platform. Operator: Your next question comes from the line of Ralph Schackart with William Blair. Ralph Schackart: On the Consumer business, which overall was much stronger than expected, in particular, at least relative to our model, you had a very strong MAP number. Just curious how much of that might have been driven by Project Makeover versus just the broader portfolio set of games performing well versus, perhaps, any improvements that you had in the software platform. Adam Foroughi: Yes. So I can handle that. And then if Herald knows the exact split, he can give it to you. But for the most part, the way we look at our content portfolio is at any given time, the content that's newer, that's fresher is going to be what we're going to be able to accelerate the growth of. And Project Makeover launched in November. It accelerated to -- today, it's a top 15 grossing game. So certainly, it's feeding a whole bunch of consumers that are transacting back into our systems. But it launched in November, and that was 3 months after we launched AXON. And really, the growth in that game was facilitated from how well our software is performing, and it just fed back into the system. So what we're really excited about is that you see that MAP number grow. The most important data that really drives the success of ad algorithms for any company is if you can accumulate scaled transactional data. When you understand what the consumer is interested in purchasing, you can give them much more relevant advertising. And when consumers purchase in Project Makeover, we're able to take that MAP data, anonymize it and use that behavioral signal back in our ad algorithm, and that facilitates expansion in everything. And that's why you're seeing our business growing so quickly in Q1. Herald Chen: Ralph, it's Herald. Yes, Certainly, Product Makeover had a big impact in our first quarter in consumer revenue. But even when excluding Project Makeover from consumer in the quarter, we still grew it at a very, very high rate. So almost a triple-digit -- maybe actually to slightly over triple-digit rate on everything else. And that's really due to the fact, what Adam is referring to, the overall platform also improved, right, at the same time, with the launch of AXON underlying a lot of our own marketing spend. And we increased our percentage of our own spending on our platform. Instead, that improves the consumer base overall, but certainly nice to have Project Makeover included to get to that 200%- plus growth rate. Operator: Ladies and gentlemen, there are no further questions at this time. I would like to turn the floor back over to management for closing comments. Adam Foroughi: We just wanted to thank everyone for spending time with us and really getting to know our business, and we'll look forward to talking to you all more on callbacks and at next quarter's earnings call. We are thrilled with where our business is at. We don't know of many other companies in this environment that are growing revenue and EBITDA triple digits this Q1 versus last year's Q1. We're executing on all cylinders, and we see a road map to growth for many years to come, and we're excited for you all to learn more about our business as we go forward. Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you all for your participation.
AppLovin Corp (NASDAQ: APP) Performance and Financial Highlights
- AppLovin's stock has risen by 532% since its public debut, marking it as a top growth stock.
- The company's share price experienced a significant decline of over 35% after reaching an all-time high, due to a pending class action lawsuit and reports from short sellers.
- Despite challenges, AppLovin reported better-than-expected first-quarter results, leading to a 10% increase in its stock price earlier this month.
AppLovin Corp (NASDAQ: APP) is a prominent player in the tech industry, known for its software solutions that enhance marketing and monetization for online advertisers. Since its public debut in 2021, AppLovin has seen its stock rise by 532%, marking it as a top growth stock for investors. Despite recent challenges, the company remains a favored tech stock in the market.
On May 21, 2025, Valenzuela Victoria, the Chief Legal Officer and Corporate Secretary of AppLovin, sold 600 shares of Class A Common Stock at $366.50 each. This transaction comes amid a significant decline in AppLovin's share price, which dropped over 35% after reaching an all-time high of $525.15 in February. The decline was due to a pending class action lawsuit and reports from short sellers.
Despite these challenges, AppLovin reported better-than-expected first-quarter results, leading to a 10% increase in its stock price earlier this month. Currently, the share price is 13.2% higher than at the start of the year and has surged 336.1% compared to the same time last year. This performance significantly outpaces both the S&P 500 and the Nasdaq.
AppLovin's financial metrics reveal a price-to-earnings (P/E) ratio of approximately 63.43, indicating that investors are willing to pay over 63 times the company's earnings for its shares. The price-to-sales ratio stands at about 23.61, suggesting the market values the company at over 23 times its annual sales. The enterprise value to sales ratio is around 24.23, reflecting the company's total valuation in relation to its sales.
The company has a high debt-to-equity ratio of 6.45, indicating significant use of debt compared to equity. However, the current ratio of approximately 1.68 suggests a relatively healthy liquidity position, with current assets being 1.68 times current liabilities. Despite a challenging environment, AppLovin continues to focus on its core business, maintaining its position as a leading tech stock.
Jefferies Reaffirms Buy Rating on AppLovin Ahead of Earnings Announcement
Jefferies reiterated its Buy rating and $460 price target on AppLovin (NASDAQ:APP) ahead of the company’s upcoming first-quarter earnings on May 7, expressing confidence in both near-term results and the broader ad market backdrop.
The firm highlighted strength in AppLovin’s gaming ad segment and growing traction with e-commerce advertisers as key drivers of potential revenue upside in Q1 and guidance strength in Q2. Initial concerns about tariff-related headwinds have eased, thanks to reassuring results from Meta, Google, and Reddit, which suggest advertising demand remains solid.
Jefferies noted that new advertiser additions—a key growth metric—appear to be exceeding the expected pace of 100 per month, which could provide further momentum. The firm also pointed to growing evidence that AppLovin is becoming a top-three advertising channel for many e-commerce brands, with some allocating more than 10% of their ad budgets to the platform.
If the company reports over 60% year-over-year ad revenue growth in Q1 and offers at least mid-single-digit sequential revenue growth guidance for Q2, Jefferies expects the stock to respond positively—especially given its 40% decline since early February.
Jefferies Reaffirms Buy Rating on AppLovin Ahead of Earnings Announcement
Jefferies reiterated its Buy rating and $460 price target on AppLovin (NASDAQ:APP) ahead of the company’s upcoming first-quarter earnings on May 7, expressing confidence in both near-term results and the broader ad market backdrop.
The firm highlighted strength in AppLovin’s gaming ad segment and growing traction with e-commerce advertisers as key drivers of potential revenue upside in Q1 and guidance strength in Q2. Initial concerns about tariff-related headwinds have eased, thanks to reassuring results from Meta, Google, and Reddit, which suggest advertising demand remains solid.
Jefferies noted that new advertiser additions—a key growth metric—appear to be exceeding the expected pace of 100 per month, which could provide further momentum. The firm also pointed to growing evidence that AppLovin is becoming a top-three advertising channel for many e-commerce brands, with some allocating more than 10% of their ad budgets to the platform.
If the company reports over 60% year-over-year ad revenue growth in Q1 and offers at least mid-single-digit sequential revenue growth guidance for Q2, Jefferies expects the stock to respond positively—especially given its 40% decline since early February.
BofA Stands Firm on AppLovin Buy Rating Despite Short-Seller Allegations
BofA Securities kept its Buy rating and $580 price target on AppLovin (NASDAQ:APP), reaffirming confidence in the mobile ad tech company following a short-seller report that questioned its business practices and long-term viability.
Analysts responded to a recent critical report from Muddy Waters, which alleged that AppLovin faces elevated risks of being removed from major platforms like iOS, Android, or Meta, and that its flagship product Audience+ lacks differentiation and meaningful value to advertisers.
In a blog post published by AppLovin’s CEO on March 27, the company defended Audience+, asserting that its data collection practices align with industry norms and that the product complements rather than replaces existing ad channels.
After conducting its own review and consulting with an independent expert, BofA concluded that the concerns raised reflect typical competitive dynamics within the online advertising ecosystem, not structural red flags.
BofA continues to view AppLovin as a top pick in the sector, citing its rapid EBITDA growth trajectory—forecasted at a 50% compound annual rate over the next two years—and a valuation multiple of just 17x EV/2026 EBITDA, which the firm sees as undervalued.
Despite headline volatility, the bank believes AppLovin remains well-positioned for sustained expansion, supported by its tech stack, scale advantages, and ongoing innovation in ad targeting.
BofA Stands Firm on AppLovin Buy Rating Despite Short-Seller Allegations
BofA Securities kept its Buy rating and $580 price target on AppLovin (NASDAQ:APP), reaffirming confidence in the mobile ad tech company following a short-seller report that questioned its business practices and long-term viability.
Analysts responded to a recent critical report from Muddy Waters, which alleged that AppLovin faces elevated risks of being removed from major platforms like iOS, Android, or Meta, and that its flagship product Audience+ lacks differentiation and meaningful value to advertisers.
In a blog post published by AppLovin’s CEO on March 27, the company defended Audience+, asserting that its data collection practices align with industry norms and that the product complements rather than replaces existing ad channels.
After conducting its own review and consulting with an independent expert, BofA concluded that the concerns raised reflect typical competitive dynamics within the online advertising ecosystem, not structural red flags.
BofA continues to view AppLovin as a top pick in the sector, citing its rapid EBITDA growth trajectory—forecasted at a 50% compound annual rate over the next two years—and a valuation multiple of just 17x EV/2026 EBITDA, which the firm sees as undervalued.
Despite headline volatility, the bank believes AppLovin remains well-positioned for sustained expansion, supported by its tech stack, scale advantages, and ongoing innovation in ad targeting.
AppLovin Gains Momentum as AI and E-Commerce Ads Drive Growth
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 Gains Momentum as AI and E-Commerce Ads Drive Growth
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.
