First post on the board - thank you all for creating this space for people to learn - APPS is a large part of my holdings so I’d like to provide my 2c based what I saw.
IMO their financials are impeccable - what jumps out is the 53% pro forma growth, up from 28% last q. I would take the 116% YoY growth with a grain of salt because although they acquired Mobile Posse with cash and no dilution in stocks, it is not organic growth but more of a revenue increase from acquisition. 53% pro forma growth is organic.
There gross margin is in the 40%-45% range which is much lower than the SaaS companies discussed on this board.
App install, as GolfCaddy4PLynch mentioned, has inherent risk that comes from working with big telecom companies. So I like that they have increased their recurring revenue business (acquired through the $75M cash purchase of Mobile Posse) is now $21M quarterly and 40% of their total revenue, up from 10% from the same quarter last year.
Their $72-$75M Q3 guidance is likely sandbagging again - one of the analysts asked if they have factored the macroeconomics and flat US phone sales trend into the guidance and the CEO basically said yes and we are optimistic about our products.
Some thoughts on the call
In the call the CEO said their App install business saw 50% YoY, with 30% YoY growth in the US, while US Android phone sales has been flat. This to me is a good sign because it means they are able to generate more revenue per phone. He did say that the company expect flat phone sales in the next few q’s in the US due to macro condition. IMO this is a plus on their execution - they can’t control phone sales but were able to generate more revenue.
They also said 34% of their US app-install revenue came from clients from outside of US e.g. Alibaba, Tencent, TikTok. I am unsure what to make of it but it seems like they are able to generate more revenue per app slot by acquiring international customers.
The biggest point in the call to me was that they increase recurring revenue from $14M to $21M - a 50% QoQ increase!! - that the CEO attributed to better execution and rebounding macro conditions. He hinted that there will be a lot more cross-selling down the road but they haven’t even started yet. From the call I expect the proportion of recurring revenue continues to rise and takes up more and more of the company’s total revenue.
So far I’m very impressed with the CEO’s ability to execute and create new revenue streams. Really want to see what the “television offerings in 2021” is about.
About the company
The CEO has a 91% rating on Glassdoor from employees.
In the Q1 call he called out that the company is generating more than $1M revenue per employee - sounds like a big plus to me in terms of execution but I’m not sure how that compares to other companies on the board.
The CEO’s base salary from their 10-K is $500K per year + stock grants. APPS is not CEO led but a large portion of compensation is tied to stock - which also sounds like a big plus to me.
I don’t have much issue with the app install ad business per say - I think the app companies (Pandora, Pinterest, TikTok, …) needs ways to acquire customers and pre-install app makes sense for many countries outside of the US.
My biggest problem as an investor is that I have not had a chance to “use” their product - unlike Facebook I have no idea what kind of content they are pushing. For example, CEO mentioned Chrome in the recurring revenue business and I haven’t found how they monetize off Chrome yet, which sounds cross-platform to me but I haven’t validated yet.
As of writing it’s trading at -7% so there could be red flags in the call that I haven’t noticed. Any thought or insight or counterargument welcome.