MW AppLovin's stock ignites further as company says its AI efforts have only just begun

By Emily Bary

The app-monetization company crushes expectations with latest results and says it's poised for more momentum

AppLovin Corp.'s stock was one of the hottest plays of 2024, and it's poised to get another lift after earnings.

The app-monetization company delivered a revenue forecast for the current quarter on Wednesday that came in above analysts' expectations. AppLovin (APP) models $1.355 billion to $1.385 billion on the top line for the first quarter, while analysts tracked by FactSet were anticipating $1.318 billion.

The company's forecast implies that quarterly advertising revenue is expected to cross $1 billion for the first time after it came up just shy - at $999.5 million - in the latest quarter. AppLovin also derives revenue from its apps business, which is just over a third of the size of its advertising business.

Shares of AppLovin surged 13% in Wednesday's extended session.

AppLovin said it expects to see more traction as it improves its artificial-intelligence advertising models and introduces more personalization to the advertising experience.

"With AI, we aim to scale this process exponentially by creating countless iterations and dynamically selecting personalized creatives for each user," Chief Executive Adam Foroughi said in a shareholder letter. "This will unlock improved consumer engagement and response."

See also: Cisco is basking in its AI moment as earnings show further pickup in demand

The company also sees the potential to broaden the reach of advertisers that it serves, after seeing particular momentum with direct-to-consumer advertising. And the company said it's "exploring" moves in connected-TV advertising.

"While still in its early stages, we believe there's significant potential in applying our targeting technology to connected TV $(CTV)$ for direct-to-consumer brands," Foroughi said. "This is an exciting frontier that could further amplify the impact of our platform."

In the fourth quarter, AppLovin turned in revenue of $1.37 billion, up 44% from a year prior. Analysts were modeling $1.26 billion. Growth picked up relative to the third quarter, when AppLovin saw revenue expand at a nearly 39% clip.

-Emily Bary

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February 12, 2025 16:31 ET (21:31 GMT)

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