Massive earnings from Applovin:
- Revenue of $2.18 billion, up 54.6% YoY, 13.5% QoQ
- Net income of $1.44 billion, up 72.1% YoY, 13.6% QoQ
- 66% net income margin
- 84% Adjusted EBITDA margin
The stock surged 25% after hours and finished up 31.04% at eod today in the middle of a market crash.
The ad business hurts my head, but I did manage to get through the earnings call transcript this evening. Overall a really confident presentation and Q&A from CEO Adam Foroughi.
Model Rollout
The main highlight was the new model rollout, which was described “as significant as Axon 2”, and is particularly suited to the consumer ads that they are moving into. A couple of key quotes from Adam Foroughi:
This was a partial rollout. The transition is still in front of us, and the new generation gives us meaningfully more room to optimize than the architecture it replaces. It also improves performance most where data is sparser, newer advertisers, smaller advertisers, newer categories, exactly where our consumer vertical lives. As always, model gains won’t land on a perfect quarterly schedule, and we won’t promise a cadence, but the headroom is real, and we’re still very early.
Consumer had another strong quarter, and with Q4 now underway, the seasonal peak for these advertisers, consumer is set up very well heading into the biggest spending season of the year. On the long term, nothing has changed. We run one auction across multiple advertiser categories. Gaming keeps improving, consumer keeps adding runway, and we believe this business can compound at roughly 30% annually over the long term.
Connected TV
On CTV, pilot campaigns are still in progress. Looking promising but early days and not accretive yet.
Share Buybacks
2Q saw repurchase of 1.14 million shares for $551 million (average price $483.33)
3Q saw repurchase of 4.1 million shares for $1.4B (average price of $341.46)
The BoD increased the repurchase authorization by another $3.2B for a total of $3.6B.
As per the CFO Stumpf, “That was us opportunistically ramping up the buyback because we saw this dislocation in the stock price versus the actual intrinsic value of the company. So, we have the ability to do that going forward as well.”
Todays closing price was $356.10, so looks like we’ve got a pretty solid floor for the stock price.
Guidance
Q4 revenue guide of $2.395 (top-end), which they typically beat, so should be in double digits QoQ again.
All in all a great report!