According to data compiled by Bloomberg, analysts project around $1.263 billion in Q4 revenue and $1.25 in adjusted EPS, reflecting a 32% and 155% YoY increase, respectively.
AppLovin is set to report earnings on Wednesday, February 12, 2025 after the U.S. stock market closes.
Revenue in the third quarter climbed 39% to $1.2 billion, topping the $1.13 billion average estimate, according to LSEG.
Earnings per share of $1.25 exceeded the 92-cent average estimate.
Net income in the quarter increased 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 had an adjusted profit margin of 78%.
AppLovin's revenue boost from its AI-powered advertising-technology software, Axon 2.0, could push 4Q growth above the mobile app marketing company's 30-32% guidance, particularly if it officially launches the product to e-commerce clients.
Enhancements to the tool's algorithm is helping to better match advertisers with publishers, boosting the software platform business (to be renamed advertising).
Adjusted Ebitda margin in 4Q might not widen beyond 3Q's 60% amid potential expenses related to stock-based compensation and data-center capacity from Google Cloud.
Free cash flow, which hit a record-high $545 million in 3Q, supports its expansion of a share-buyback program by $2 billion to $2.3 billion.
APP has rallied a massive 466.5% in the past six months, significantly outperforming the industry's 78.3% rally. This is in line with its competitors in the in-game mobile advertising space, as Alphabet Inc. GOOGL has gained 20.5%, and Meta Platforms META has surged 45.6% in the same time frame.
Despite such an impressive rally, the stock is in the undervalued zone. Based on training 12-month EV-to-EBITDA, APP is trading at 66.21X, way below the industry’s 96.27X.
AppLovin's recent financial results underscore its strong fundamentals and impressive growth trajectory. The company has achieved remarkable revenue growth by leveraging its AXON 2.0 technology and strategic expansion in gaming studios. In the third quarter of 2024, revenues increased 39% year over year and 11% sequentially, reflecting robust operational performance and market demand.
The company's profitability metrics also demonstrate significant improvement. Adjusted EBITDA surged 72% year over year and 20% sequentially during the quarter, underscoring the efficiency of its business model. Net income saw an exceptional 300% increase from the same quarter in 2023, along with a 40% sequential rise, highlighting AppLovin’s ability to convert revenue growth into bottom-line gains effectively.
For 2023, the company reported a 76% year-over-year revenue increase and a 41% rise in adjusted EBITDA. These figures highlight its capacity to capitalize on market opportunities, especially within the gaming and in-app advertising segments, while maintaining operational efficiency.
However, potential risks persist. The growth in the in-game advertising segment may face challenges, and the uncertain impact of the company’s ventures outside gaming could introduce volatility. Nonetheless, AppLovin's strategic focus on innovative technology and expansion within the gaming industry positions it well for sustained growth. With AXON 2.0 driving operational efficiencies and a diversified approach to revenue generation, the company is poised to maintain its growth momentum, making it an attractive option for long-term investors.
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