Naughty and Nice ER Review: APP

AppLovin Corp - Software-based Platform for Mobile App Developers for Marketing and Monetization Goals.

APP last Reported with Q1 2022 on May 11:

  • Revenue was $625 million. The total amount of non- recurring publisher bonuses recorded as contra-revenue was $210 million and that figure combined with revenue was $835 million: ATTA BOY!

The ATTA BOY here is based on the premise that without the one time $210m publishing bonus total Revenue Growth would have been a healthy 38.2%.

Note: Speaking to the desire to integrate MoPub into their MAX platform: Given the short window of time to move toward a unified platform, we made the decision to payout $210 million in onetime publisher bonuses. Because the MoPub related fees are non-recurring, we add it back to adjusted EBITDA and any non MoPub related publisher bonuses as we would see after Q1 we will not be adding back to adjusted EBITDA, so therefore, it is just a onetime occurrence in this quarter, in this past quarter.

  • Our guidance for the software platform business is to generate over $1 billion of revenue in a second through fourth quarter this year. Based on an estimated margin for that business was 70% and a flow through the cash of another estimated 70% that business alone will generate over $0.5 billion of unlevered free cash flow in the next three quarters alone: Muy Grande ATTA BOY!

  • On a cash flow side, Adam mentioned, we had good record of $276 million in EBITDA with a reported margin of 44%. When normalizing revenue for the publisher bonuses, our adjusted EBITDA margin was 33%, which you can see in purple here that we think is the normal run rate of the business. And that is a 500 basis point increase over 28% in the fourth quarter of 2021: ATTA BOY!

  • We have 258% net dollar based revenue retention in the quarter over prior year showing the resiliency of our customers and continued increase in the use of our software solutions: ATTA BOY!

  • We also had a solid increase in the number of new customers. Our normalized SPEC count reached 519, an increase over 58 customers, but we still believe that a small percentage of customers available to us in the marketplace: ATTA BOY!

  • On top of the more customers we saw the average revenue increase on average from all of our SPECs reaching normalized $603,000, a steady increase over the past three quarters: ATTA BOY!

  • In the near and medium term, that may include lowering our investment and user acquisition will drive up – which will drive up margins for lower overall growth. We will also do a review of our app portfolio which could lead to a wide array of transactions or no change at all. Based on this new approach, we’re lowering our revenue guidance by $200 million. And now targeting a range of $2 billion to $2.15 billion in revenue from apps in ‘22: OH POOP!

  • The combination of our changes in software and app guidance leads to our revised total guidance of $3.14 billion to $3.44 billion on a GAAP basis. With regard to adjusted EBITDA, given a record performance and strong margins, we’re raising adjusted EBITDA guidance to midpoint target of $1.2 billion. This target again represents a 65% increase over the prior year. This is also an increase from our previous guidance of high 20% margin against the total revenue forecast at midpoint for $3.7 billion, which equated to just over $1 billion: ATTA BOY!

Market Reaction to Report: ATTA BOY…


LIST and RANKING Assignment: NICE #4

All the Best,

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