AppLovin Corporation (NASDAQ: APP) (“AppLovin”), a leading
marketing platform, today announced financial results for the
quarter ended September 30, 2023 and posted a letter to
shareholders on its Investor Relations website located at
www.investors.applovin.com.
AppLovin’s robust third quarter exceeded the high end of
revenue, Adjusted EBITDA and margin guidance. Outperformance was
driven primarily by the continued performance of AXON 2.0, the
AI-based advertising engine behind the company’s AppDiscovery
platform.
Financial highlights for the third quarter of 2023 include:
- Total revenue grew 21% year-over-year to $864 million, and net
income improved to $109 million at a net margin of 13%
- Adjusted EBITDA grew 63% year-over-year to $419 million at an
improved Adjusted EBITDA margin of 49%
- Net cash from operating activities was $199 million and Free
Cash Flow was $194 million
- Software Platform: Revenue was $504 million, an increase of 65%
year-over-year. Adjusted EBITDA was $364 million, growing 91%
year-over-year, at an Adjusted EBITDA margin of 72%
- Apps: Revenue was $360 million, a decrease of 11%
year-over-year. Adjusted EBITDA was $55 million, a decrease of 18%
year-over-year, at an Adjusted EBITDA margin of 15%
- Year-to-date through the end of the third quarter, the company
repurchased $1.154 billion of Class A common stock at a weighted
average price under $25 per share
Separately, AppLovin announced today that Herald Chen, President
and Chief Financial Officer, will transition from a full-time role
with the company to pursue new career opportunities at the end of
2023. He will remain on the AppLovin Board of Directors and serve
as Advisor to the CEO, where he will continue to work with the
management team on key strategic topics and financial matters.
Matt Stumpf, current Vice President of Finance and FP&A, has
been appointed as Chief Financial Officer, and Dmitriy Dorosh, Vice
President Controller, has been designated Principal Accounting
Officer, both effective January 1, 2024. Stumpf joined AppLovin in
early 2020 and has been an integral leader across all facets of
finance and IR. Dorosh has been a key executive on the AppLovin
accounting team since 2019, having taken over the accounting
leadership role in August 2022.
“We are thrilled to announce our best quarter ever leading to
very strong financial results,” said Adam Foroughi, CEO and
Co-Founder of AppLovin. “We would also like to thank Herald for his
dedication and leadership as he helped us transition to a public
company and build processes to help us deliver significant growth
in our core business. The management team and Board look forward to
working with him in his new role. We are pleased to have Matt
assume the role of CFO and we are confident in his future
success.”
“I am deeply honored to have been a part of the remarkable
AppLovin team since joining the Board in 2018 and in the President
and CFO role since 2019. During this time, we’ve dramatically
enhanced our technology and market position and driven
extraordinary growth in revenue, net income and Adjusted EBITDA as
reflected in this quarter’s record performance,” said Chen.
“Through my continuing role on the Board, and as an Advisor to the
CEO, I look forward to working with Adam, Matt, and the rest of the
AppLovin team on the next phase of growth.”
Webcast and Conference Calls
AppLovin will host a webinar today at 2:00 PM PT / 5:00 PM ET,
during which management will discuss the Company’s third quarter
2023 results and provide commentary on its business performance. A
question-and-answer session will follow the prepared remarks.
The webinar may be accessed on the Company’s investor relations
website or via webinar registration. A replay of the webinar will
also be available under the Events & Presentations section of
our Investor Relations website.
About AppLovin
AppLovin makes technologies that help businesses of every size
connect to their ideal customers. The company provides end-to-end
software and AI solutions for businesses to reach, monetize and
grow their global audiences. For more information about AppLovin,
visit: www.applovin.com.
Source: AppLovin Corp.
Forward Looking
Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act of 1934. Forward-looking statements in
this release include statements regarding expected changes in the
Company’s executive leadership team. These forward-looking
statements are subject to risks and uncertainties, including those
described in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2022 and our Quarterly Report on Form 10-Q for
the period ended September 30, 2023 filed with the SEC on the day
of this press release. The forward-looking statements in this press
release are based on information available to us as of the date
hereof, and we disclaim any obligation to update any
forward-looking statements, except as required by law.
Non-GAAP Financial
Metrics
To supplement our financial information presented in accordance
with generally accepted accounting principles in the United States
(“GAAP”), this press release includes certain financial measures
that are not prepared in accordance with GAAP, including Adjusted
EBITDA, Adjusted EBITDA margin, and Free Cash Flow. A
reconciliation of each such non-GAAP financial measure to the most
directly comparable GAAP measure can be found below.
We define Adjusted EBITDA for a particular period as net income
(loss) before interest expense and loss on settlement of debt,
interest income and other, net (excluding certain recurring items),
provision for (benefit from) income taxes, amortization,
depreciation and write-offs and as further adjusted for
non-operating foreign exchange (gains) losses, stock-based
compensation expense, acquisition-related expense and transaction
bonuses, publisher bonuses, MoPub acquisition transition services,
restructuring costs, impairment and loss in connection with sale of
long-lived assets, loss (gain) on extinguishments of
acquisition-related contingent consideration, lease modification
and abandonment of leasehold improvements, and change in the fair
value of contingent consideration. We define Adjusted EBITDA margin
as Adjusted EBITDA divided by revenue for the same period.
We define Free Cash Flow as net cash provided by operating
activities, less purchases of property and equipment and principal
payments on finance leases. We subtract both purchases of property
and equipment and payment of finance leases in our calculation of
Free Cash Flow because we believe these items represent our ongoing
requirements for property and equipment to support our business,
regardless of whether we utilize a finance lease to obtain such
property or equipment.
We believe that the presentation of these non-GAAP financial
measures provides useful information to investors regarding our
results of operations and operating performance, as they are
similar to measures reported by our public competitors and are
regularly used by securities analysts, institutional investors, and
other interested parties in analyzing operating performance and
prospects.
Adjusted EBITDA and Adjusted EBITDA margin are key measures we
use to assess our financial performance and are also used for
internal planning and forecasting purposes. We believe Adjusted
EBITDA and Adjusted EBITDA margin are helpful to investors,
analysts, and other interested parties because they can assist in
providing a more consistent and comparable overview of our
operations across our historical financial periods. We use Adjusted
EBITDA and Adjusted EBITDA margin in conjunction with GAAP measures
as part of our overall assessment of our performance, including the
preparation of our annual operating budget and quarterly forecasts,
to evaluate the effectiveness of our business strategies, and to
communicate with our board of directors concerning our financial
performance. We use Free Cash Flow in addition to GAAP measures to
help manage our business and prepare budgets and annual planning,
and we believe Free Cash Flow provides useful supplemental
information to help investors understand underlying trends in our
business and our liquidity.
These measures have certain limitations in that they do not
include the impact of certain expenses that are reflected in our
consolidated statement of operations that are necessary to run our
business. Our definitions may differ from the definitions used by
other companies and therefore comparability may be limited. In
addition, other companies may not publish these or similar metrics.
Thus, our non-GAAP financial measures should be considered in
addition to, not as substitutes for, or in isolation from, measures
prepared in accordance with GAAP.
AppLovin Corporation
Condensed Consolidated Balance
Sheets
(in thousands, except for share
and per share data)
(unaudited)
September 30,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
332,491
$
1,080,484
Accounts receivable, net
849,140
702,814
Prepaid expenses and other current
assets
119,161
155,785
Total current assets
1,300,792
1,939,083
Property and equipment, net
102,156
78,543
Operating lease right-of-use assets
52,998
60,379
Goodwill
1,813,567
1,823,755
Intangible assets, net
1,386,591
1,677,660
Other assets
349,124
268,426
Total assets
$
5,005,228
$
5,847,846
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
281,103
$
273,196
Accrued and other current liabilities
181,679
147,801
Licensed asset obligation
13,389
15,254
Short-term debt
215,000
33,310
Deferred revenue
77,899
64,018
Operating lease liabilities
13,800
14,334
Deferred acquisition costs, current
22,604
31,045
Total current liabilities
805,474
578,958
Long-term debt
2,912,302
3,178,412
Operating lease liabilities,
non-current
46,887
54,153
Licensed asset obligation, non-current
11,794
26,970
Other non-current liabilities
132,981
106,676
Total liabilities
3,909,438
3,945,169
Stockholders’ equity:
Preferred stock, $0.00003 par
value—100,000,000 shares authorized, no shares issued and
outstanding as of September 30, 2023 and December 31, 2022
—
—
Class A and Class B Common Stock, $0.00003
par value—1,700,000,000 (Class A 1,500,000,000 and Class B
200,000,000) shares authorized, 335,783,928 (Class A 264,621,306
and Class B 71,162,622) and 373,873,683 (Class A 302,711,061 and
Class B 71,162,622) shares issued and outstanding as of September
30, 2023 and December 31, 2022, respectively
11
11
Additional paid-in capital
2,174,658
3,155,748
Accumulated other comprehensive loss
(93,657
)
(83,382
)
Accumulated deficit
(985,222
)
(1,169,700
)
Total stockholders’ equity
1,095,790
1,902,677
Total liabilities and stockholders’
equity
$
5,005,228
$
5,847,846
AppLovin Corporation
Condensed Consolidated
Statements of Operations
(in thousands, except per share
data)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Revenue
$
864,256
$
713,099
$
2,329,826
$
2,114,751
Costs and expenses:
Cost of revenue
265,049
300,988
785,584
886,697
Sales and marketing
212,352
196,785
607,755
719,014
Research and development
159,288
122,059
441,563
389,417
General and administrative
41,249
44,000
116,231
144,988
Total costs and expenses
677,938
663,832
1,951,133
2,140,116
Income (loss) from operations
186,318
49,267
378,693
(25,365
)
Other income (expense):
Interest expense and loss on settlement of
debt
(78,583
)
(48,627
)
(204,081
)
(117,141
)
Interest income and other, net
1,490
969
27,062
3,501
Total other expense, net
(77,093
)
(47,658
)
(177,019
)
(113,640
)
Income (loss) before income taxes
109,225
1,609
201,674
(139,005
)
Provision for (benefit from) income
taxes
586
(22,053
)
17,196
(25,570
)
Net income (loss)
108,639
23,662
184,478
(113,435
)
Less: Net loss attributable to
noncontrolling interest
—
(109
)
—
(201
)
Net income (loss) attributable to
AppLovin
$
108,639
$
23,771
$
184,478
$
(113,234
)
Less: Net income attributable to
participating securities
804
122
963
—
Net income (loss) attributable to AppLovin
common stockholders:
Basic
$
107,835
$
23,649
$
183,515
$
(113,234
)
Diluted
$
107,869
$
23,653
$
183,545
$
(113,234
)
Net income (loss) per share attributable
to AppLovin common stockholders:
Basic
$
0.32
$
0.06
$
0.51
$
(0.30
)
Diluted
$
0.30
$
0.06
$
0.50
$
(0.30
)
Weighted average common shares used to
compute net income (loss) per share attributable to AppLovin common
stockholders:
Basic
341,435,759
369,389,170
357,009,609
371,736,763
Diluted
356,906,222
378,462,207
368,259,513
371,736,763
AppLovin Corporation
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended September
30,
2023
2022
Operating Activities
Net income (loss)
$
184,478
$
(113,435
)
Adjustments to reconcile net income (loss)
to operating activities:
Amortization, depreciation and
write-offs
369,897
445,507
Stock-based compensation
275,058
143,943
Change in operating right-of-use asset
11,732
13,725
Amortization of debt issuance costs and
discount
9,663
9,685
Loss on settlement of debt
4,337
—
Other
(3,906
)
2,133
Changes in operating assets and
liabilities, net of effect of acquisitions:
Accounts receivable
(146,796
)
(139,350
)
Prepaid expenses and other current
assets
28,695
(70,242
)
Other assets
(58,179
)
(4,616
)
Accounts payable
7,955
(7,881
)
Operating lease liabilities
(12,253
)
(15,345
)
Accrued and other liabilities
32,416
(2,645
)
Deferred revenue
14,425
(11,905
)
Net cash provided by operating
activities
717,522
249,574
Investing Activities
Acquisitions, net of cash acquired
(51,816
)
(1,335,698
)
Purchase of non-marketable equity
securities
(16,934
)
(56,546
)
Capitalized software development costs
(6,523
)
(4,546
)
Purchase of property and equipment
(4,002
)
(621
)
Proceeds from sale of assets
8,250
3,657
Net cash used in investing activities
(71,025
)
(1,393,754
)
Financing Activities
Repurchases of stock
(1,153,593
)
(338,880
)
Principal repayments of debt
(490,494
)
(17,482
)
Payment of withholding taxes related to
net share settlement
(115,846
)
—
Payments of licensed asset obligation
(15,254
)
(17,374
)
Principal payments on finance leases
(16,191
)
(18,099
)
Payments of deferred acquisition costs
(11,503
)
(104,998
)
Payment of debt issuance cost
(4,545
)
—
Proceeds from issuance of debt
210,281
—
Proceeds from revolving credit
facility
185,000
—
Proceeds from exercise of stock
options
17,807
21,733
Proceeds from the issuance of common stock
under the Employee Stock Purchase Plan
2,071
3,663
Net cash used in financing activities
(1,392,267
)
(471,437
)
Effect of foreign exchange rate on cash
and cash equivalents
(2,223
)
(11,379
)
Net decrease in cash and cash
equivalents
(747,993
)
(1,626,996
)
Cash, cash equivalents and restricted cash
equivalents at beginning of the period
1,080,484
2,570,504
Cash and cash equivalents at end of the
period
$
332,491
$
943,508
AppLovin Corporation
Reconciliation of Net Cash
Provided By (Used In) Operating Activities to Free Cash
Flow
(in thousands)
The following table provides a
reconciliation of net cash provided by operating activities to free
cash flow for the past eight quarters:
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
Net cash provided by (used in) operating
activities
85,015
(31,719
)
106,811
174,482
163,199
288,662
229,794
199,066
Less:
Purchase of property and equipment
(428
)
(285
)
(115
)
(221
)
(41
)
(70
)
(3,749
)
(183
)
Principal payments on finance leases
(5,581
)
(6,176
)
(6,150
)
(5,773
)
(5,984
)
(5,447
)
(5,468
)
(5,276
)
Free Cash Flow
$
79,006
$
(38,180
)
$
100,546
$
168,488
$
157,174
$
283,145
$
220,577
$
193,607
Net cash provided by (used in) investing
activities
$
(8,678
)
$
(1,059,743
)
$
(292,001
)
$
(42,010
)
$
22,286
$
(12,975
)
$
(42,217
)
$
(15,833
)
Net cash provided by (used in) financing
activities
$
1,446,939
$
(65,424
)
$
(269,622
)
$
(136,391
)
$
(55,411
)
$
(111,415
)
$
(556,698
)
$
(724,154
)
AppLovin Corporation
Reconciliation of Net Income
(Loss) to Adjusted EBITDA
(in thousands)
The following table provides our
Adjusted EBITDA and Adjusted EBITDA margin and a reconciliation of
Net Income (Loss) to Adjusted EBITDA for the periods presented:
3Q22
4Q22
1Q23
2Q23
3Q23
Revenue
$
713,099
$
702,307
$
715,405
$
750,165
$
864,256
Net income (loss)
$
23,662
$
(79,512
)
$
(4,518
)
$
80,357
$
108,639
Net Margin
3
%
(11
)%
(1
)%
11
%
13
%
Interest expense and loss on settlement of
debt
48,627
54,722
74,511
50,987
78,583
Interest income and other, net
(3,604
)
(10,174
)
(9,771
)
(15,817
)
(771
)
Provision for (benefit from) income
taxes
(22,053
)
13,340
1,165
15,445
586
Amortization, depreciation and
write-offs
136,094
129,313
128,208
119,892
121,797
Impairment and loss in connection with
sale of long-lived assets
27,736
100,156
—
—
—
Non-operating foreign exchange loss
(gain)
(406
)
1,519
(672
)
126
(613
)
Stock-based compensation
42,147
47,669
82,966
81,253
110,839
Acquisition-related expense and
transaction bonus
4,317
227
517
247
231
Restructuring costs
1,117
2,340
1,292
1,024
—
Total adjustments
233,975
339,112
278,216
253,157
310,652
Adjusted EBITDA
$
257,637
$
259,600
$
273,698
$
333,514
$
419,291
Adjusted EBITDA Margin
36
%
37
%
38
%
44
%
49
%
AppLovin Corporation
Segment Information
(in thousands)
The following table provides
selected financial data for our reportable segments for the periods
indicated:
3Q22
4Q22
1Q23
2Q23
3Q23
Revenue:
Software Platform
$
306,592
$
306,195
$
354,758
$
406,063
$
504,452
Apps
406,507
396,112
360,647
344,102
359,804
Total Revenue
$
713,099
$
702,307
$
715,405
$
750,165
$
864,256
Segment Adjusted EBITDA:
Software Platform
$
190,256
$
185,860
$
218,694
$
272,886
$
364,117
Apps
67,381
73,740
55,004
60,628
55,174
Total Segment Adjusted EBITDA
$
257,637
$
259,600
$
273,698
$
333,514
$
419,291
Interest expense and loss on settlement of
debt
(48,627
)
(54,722
)
(74,511
)
(50,987
)
(78,583
)
Interest income and other, net
3,604
10,174
9,771
15,817
771
Amortization, depreciation and
write-offs
(136,094
)
(129,313
)
(128,208
)
(119,892
)
(121,797
)
Impairment and loss in connection with
sale of long-lived assets
(27,736
)
(100,156
)
—
—
—
Non-operating foreign exchange gain
(loss)
406
(1,519
)
672
(126
)
613
Stock-based compensation
(42,147
)
(47,669
)
(82,966
)
(81,253
)
(110,839
)
Acquisition-related expense and
transaction bonus
(4,317
)
(227
)
(517
)
(247
)
(231
)
Restructuring costs
(1,117
)
(2,340
)
(1,292
)
(1,024
)
—
Income (loss) before provision for tax
$
1,609
$
(66,172
)
$
(3,353
)
$
95,802
$
109,225
Segment Adjusted EBITDA Margin:
Software Platform
62
%
61
%
62
%
67
%
72
%
Apps
17
%
19
%
15
%
18
%
15
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108254921/en/
Investors David Hsiao ir@applovin.com
Press Kim Hughes press@applovin.com
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