(Re-)Introducing $APP

Thank You to Saul, the Moderators and to everyone on this board for all you do.

Original introduction by Mekong at Introducing AppLovin (APP)


  • AppLovin products arbitrate between Sellers and Buyers of mobile (“in-App”) advertising space.
  • The Sellers of the advertising space are mobile-App (“App”) Developers.
  • The Buyers of the advertising space are folks who want to advertise their wares on the screens of users using the Apps.
  • They publish and operate tools that assist both Buyers and Sellers.
  • I think the shares are about to land a massive one-two punch on the market: the jab is unforced own-goals committed recently by their only real competition ($U), and the cross is their recently leveled-up AI engine “AXON 2” which is producing excessively good results. I think the revenue numbers (…see charts below) don’t really betray the growth explosion $APP is about to see.

Rapidly improving metrics: Revenue Growth

2019: $0.994B
FY2020: $1.45B

Rev$M Q1 Q2 Q3 Q4
2021 604 669 727 793
2022 625 776 713 702
2023 715 750 864 953
YOY% Q1 Q2 Q3 Q4
2021 132 123 90 ?
2022 4 16 -2 -11
2023 14 23 21 35

Gross Margins

Recurring Revenue model and numbers
“Software Platform revenue”
2021: $700 million
2023: (almost) $2,000 million
(Software platform revenue grew by 76% in 2023.)

Their Sales Pitch
Refer to quotes from CC, below. They have a massive global audience of about a billion people, and the efficiency/effectiveness with which they can market/sell to those billion people has just-now taken a quantum leap forward. Revenue is accelerating rapidly, and they are in the early stages of a huge greenfield opportunity.

They have a much better sales engine than their only real competition ($U), who in any case has recently managed to alienate itself from its Customers (App Developers).

Founder-Led / Inside Ownership
I still need to look into the CEO, Adam Foroughi. I think he owns about 10% of $APP shares, but I need to verify.

From the latest CC:

"…we launched AXON 2, the upgrade of our AI platform in Q2 last year. From that point to Q4, the business – the software business grew almost 50%. And obviously, you know, the impact on margins. We’ve talked about a huge flow through in dollars. The incremental dollars of growth there coming in at 80% roughly in the quarter. This is an early-stage technology. It’s only been live for a little over half a year. It’s growing exceptionally quickly, very high margin. We think the applications of this core technology are much broader than what we do today. "


“Look, I mean, what people don’t understand about our platform, and I guess we don’t tend to articulate to is the MAX business sits on top of over 1 billion daily active users, 1 billion users playing games. So if you think about in the U.S., roughly 170 million daily active users. So you’re talking about the majority of American adults are playing games daily in mobile apps, and we’re able to service them.

Historically, in this channel, the modernization has been very low per 1,000 impressions, compared to what the social networks and the search engines and the video apps have gotten to. And those companies had very sophisticated technology and a lot of data. We’ve been able to get to a point now where our technology has become much more efficient. So we’re just monetizing this audience more effectively.

What gets us really excited is we’re a couple of quarters in. We’re really starting from a low monetization point. The whole market is monetizing these users playing games at a low point. When you have that much reach, 170 million daily actives in the states, these aren’t people that are just playing mobile games. There’s just no way. It’s a very, very widespread audience, predominantly adult that are doing other things.

And as these technologies get to a point of predicting more broader application of advertising to this audience, not only will it get more efficient, it will expand out the reach for a company like ours to other verticals, and it will create more efficiency for the publisher, we should grow everything. And so that’s what gets us really excited is it all comes down to efficiently monetizing a huge audience that we have access to.”

…and the numbers reflect that: incremental revenue growth in their Software segment is dropping straight to the bottom line.

My commentary:
They have a major tailwind that is not accounted for in any of their reported metrics: their main competitor, Unity, recently alienated a huge percentage of their customer base; those customers are flocking to $APP as I type this.

That said, their numbers (low P/E for such good margins etc.) have attracted a LOT of attention; there seemingly is a geometrically increasing number of authors writing up BUY recommendations on SeekingAlpha, including THREE NEW ARTICLES JUST TODAY.

Bert published a SA article about them recently as well.

They eat their own dogfood: they have a stable of Apps they have developed, which collectively serve as a flywheel, because as users of their own software they are able to understand, from their Customers’ POV, which challenges most need to be addressed and which can most profitably be monetized.

AppLovin has aspirations to expand into adjacent revenues: Connected TV, Streaming, “Carrier & OEM” and (they assert): “new applications of our AI technologies in the coming quarters and years, which has the potential to significantly broaden our TAM and opportunities.”

They assert that their AI advertising engine (“AXON”) is largely responsible for the re-acceleration of platform growth in 2023. IMO this could be very analogous to the $META, which is benefiting from an acceleration in ad sales driven by a recently improved AI.

They have made some acquisitions (…they even tried/failed to buy $U), and they have a term loan that they recently extended; it matures in 2030.

There’s additional exciting stuff I’ll post, but don’t want to make this one too long.

I’ve taken a (for me) medium-sized position.

  • -intjudo




Thanks for posting @intjudo - I had been meaning to bring back a discussion on AppLovin in the board too.

The image below helps summarize their business. Starting with “first-party content”, AppLovin creates games (leading to $377M in revenue in Q4’23 though barely growing). They also display ads during the game, which they then use to sell to (larger) add agencies (i.e., Google, Meta). They also use the insights they gather through their ad display/clicks for “scaled distribution” i.e., to optimize their software engine, which they use for other app developer to buy so they can monetize their games.

The main driver that has stood out to me is the ramp up (and efficiency) of their “Software Platform Revenue”:

$ Rev Q1 Q2 Q3 Q4
2022 329 318 307 306
2023 355 406 504 576
% YoY Q1 Q2 Q3 Q4
2023 8% 28% 64% 88%
% QoQ Q1 Q2 Q3 Q4
2022 -3% -3% 0%
2023 16% 14% 24% 14%

EBITDA margin on this segment’s revenue has increased from 61% to 73% in the past year. App Lovin doesn’t provide FY guidance, but while their QoQ rates will be difficult to maintain, software revenue is expected to reach >$600M next quarter.

Management also alluded to “expanding software platform reach in 2024” in its investor letter, and indicated on its last earnings call, "we launched AXON 2, the upgrade of our AI platform in Q2 last year. From that point to Q4, the software business grew almost 50%…It’s only been live for a little over half a year. It’s growing exceptionally quickly, it’s very high margin. We think the applications of this core technology are much broader than what we do today. And the team is continuously improving the technology, too…Ultimately, when you’ve got a business that’s growing that quickly on a technology that’s, that new, at the margins we operate at, it’s very hard to understand going forward exactly where we’re going to land, but we’ve never been more excited about the growth prospects we’ve got in front of us.

AppLovin also seems to be gathering momentum across the industry. In a recent note, an Oppenheimer analyst indicated that, “compared to two years ago, we notice AppLovin has taken meaningful mindshare among mobile advertisers and publishers…in many conversations, AppLovin was ranked among the top self-reporting networks such as Alphabet (Google) and Meta.”

It’s also worth noting its valuation, currently at ~25x EV/FCF (LTM) even after its share price has already doubled this year. The unknowns regarding the trajectory of its software revenue and its lumpiness nature are likely contributing to a difficulty in price discovery. In its last ER, management was even asked about this (albeit its stock was trading ~40% lower than today’s price):

Jason BazinetCiti – Analyst
Do you think your multiple is low because of the two divergent businesses that you have between the software platform and first-party games? And does that still make sense to hold these two businesses together given that one is phenomenally attractive and one is just good?

Adam ForoughiCo-Founder, Chairman, and Chief Executive Officer
When it comes to the question of where we trade, why we trade at a certain multiple we trade at? Well we can’t answer that, we’re not traders, and it’s very hard to unpack. Does mobile gaming discount, the overall company valuation? We don’t frankly believe so because the core software business is growing so quickly, and we break out financials. So it’s pretty easy to just say, let’s just look at the software segment. There’s – we think the harder part when it comes to our business is that we were in a no-growth period in '22.

We’ve had to come off of that and really focus on execution, which is what we ask of our teams. And now we put together four subsequent quarters of stellar performance. And as you look at that software segment, there’s not a lot of software businesses with 70% plus EBITDA margin, growing at the rate that is, I mean, rule of 140, 150, or whatever. And so it’s just an astounding number, and then we convert a very high percentage of that EBITDA to cash flow as well.

So we think because the technologies are new. It will take a while for investors to understand what we already see, which is not only is this very powerful technology in our core market, we’ve been able to grow much greater than the market is growing because this technology is efficient and in conjunction with that, our partners are growing much faster, too. And you see some of these games that are in the market today at the top of the top grossing, they depend on our marketing channel and they’re growing because our solutions become more efficient. That’s in our core market.

And now we see applications of that technology in multiple adjacent markets. And we think we’re going to be able to go apply it, not only to what we’ve talked about some other applications too that we’ll talk about in the upcoming quarters. And that’s what gets us really excited. So we’re for sure committed to buybacks because we see value and we’re able to unpack the value much more easily today than investors are, and we hope to be able to articulate that narrative in the coming quarters to investors.

In addition to the unknowns regarding the continuation of its software platform growth, another aspect I’m cognizant on is the relatively high debt (>$4B, of which nearly $1B is short-term); though it was recently refinanced on what seems like reasonable terms. Lastly, given the power of the likes of Apple, Google, and Meta in the ad-tech industry, sudden changes in their strategy can lead to drastic changes in the industry’s landscape. Though it does seem that regulators have a closer eye at bigtech’s relationship with anti-trust law.



Putting this together, looks like the software platform business was 60% of total revenue in Q4, vs just 44% a year prior. The non-software platform revenue shrunk from 396m in Q4 2022 to 377m this year.

Bolding mine. Good call outs – thanks @rmtzp. Another thing that gives me pause is how lumpy the “Software Platform Business” has been. Before “Axon 2,” at least. In 2022, it wasn’t growing at all for a while:


In summary, this business just seems like it could either grow 60% next year or drop 25%. Obviously that means this stock could be a big winner, or a loser. I don’t know how to handicap it. Can anyone explain why Axon 2 might make their revenue more predictable going forward? If it’s anything like what they had before (Axon 1?) then it sure seems like it will be a rollercoaster.


PS – Big thanks to @intjudo for bringing it (back) to the board!

PPS – Any acquisitions to note?


Management has been asked about this a couple of times, and they have kept the answer ambiguous. From their Q3 ER, "It’s just better. I mean just the technology is built to scale better, it’s more efficient, more effective. These are predictive technologies at the end of the day. And I’m drawing the analogy to Chat GPT. And the only reason I do that is because we can all type in a box and get a result. And we all know that Chat GPT 3 to 3.5 to 4, 4 was better than 3.5, it was better than 3, right? But we could have seen that.

The closest explanation I’ve been able to find is from a GCP blog in which they highlight AppLovin’s migration to Google’s latest virtual machine infrastructure, which is powered by (drumroll), NVIDIA. The key metrics outlined were “4x performance improvement, significantly improving the price/performance ratio by as much as 40%” by:

  • Improved automation and consistency across their application stack
  • Reduced training time by leveraging GPU hardware
  • Achieved the agility and flexibility to launch in new regions at will

@PaulWBryant I concur that the unpredictability in what’s to come is likely why their valuation seems to be discounted. That said, it’s exciting to see a company in the application/software layer from the use of AI. So far, we’ve seen the massive benefit in semiconductors and infrastructure providers - but it’s clearly still early to see the scale in enterprise SaaS. I give AppLovin’s management a lot of credit for ramping up this business fast, and I am excited to see what’s to come in the coming quarters.

The only one I’m aware of in the past few years is Wurl, and they have implied expanding into connected TV in the coming quarters.



Great post! I was about a day away from writing up this company myself, so you beat me to it. I’ll just add a little more color to what you’ve already provided. I bought a small position when I first started looking at APP. I’ve been researching the company and have increased my position to a fairly significant portion of my portfolio (12+%). I intend to add more shares when I figure out what to sell in order to raise the cash.

You mentioned that they “eat there own dogfood” which is very true. True enough such that they report two revenue streams, software platform and applications (about 200 games on mobile devices).

The application portion of the revenue was 56.4% in 2022 and 43.9% in 2023 which is a good thing. The software segment reported 73% EBITDA margin for 4Q23 while the application EBITDA margin was 15% for the same quarter.

They have 1.8 million monthly active players. An active player is defined as a player of one of their games who made one or more in-app purchases during the month.

I’ve not yet looked into the history of this company, but I get the impression that they started out as a game developer. I think they developed the software platform in order to support their own marketing and advertising and later determined that they could monetize the software.

Free cash flow has grown rapidly from $388,028 million reported for 2022 to $1,037,094 million for 2023. Earnings per a fully diluted share went from -$0.52 in 2022 to $0.98 in 2023. They have an ongoing share repurchase program. Share count dropped from 371,568,011 for 4Q22 to 347,492,545 for 4Q23.

I’ve got a lot more digging yet to do, but everything I’ve seen so far looks pretty good. The main thing that does not look so good is 1Q24 forecast of total revenue growth. This is only 2% sequential growth at the high end. But, it is about 36% YoY which is about the same rate as YoY growth for 4Q23.


Thanks @intjudo for bringing up this company again! I had looked at them a year or two ago and liked their financials, but I had trouble understanding the durability of their product.

Fast forward to today and it looks like their AXON-2 is an absolute game changer in terms of revenue and earnings growth. From what they are saying, the system is learning, improving, and driving bigger ROIs for their users, so they end up spending more with the platform. Here’s a passage from their last earnings report,

We launched AXON 2, the upgrade to our AI platform in Q2 last year. From that point to Q4, the software business grew almost 50%

So the product is only 6 months old, and it’s already growing revenue at a rate which would be 100% YoY! EBITDA margin has gone from 62% → 67% → 72% → 73%.

Addressing a couple threads from above and concerns @PaulWBryant had,

In summary, this business just seems like it could either grow 60% next year or drop 25%. Obviously that means this stock could be a big winner, or a loser. I don’t know how to handicap it. Can anyone explain why Axon 2 might make their revenue more predictable going forward? If it’s anything like what they had before (Axon 1?) then it sure seems like it will be a rollercoaster.

There were two analyst questions about their business model and upcoming changes to iOS and Android platforms. Specifically the analyst called out “the deprecation of the Google Android ID” and then the “iOS 17.4” update. Also there’s something called the Digital Market Act (DMA) from Europe which will have changes.

The DMA issue implies there could be lower app fees in Europe, but it would be a positive for app development, and that Apple may add a fifty cent charge.

Foroughi the CEO replied while they don’t know the full impact of the changes they are very nimble and have a history of adapting very well to these types of changes. The overall take from the CEO is there will be benefits to content developers from these prices changes and in turn they will spend more on AppLovin.

Discussing the huge potential change of Apple going from a 30% fee to a 15% fee, the CEO said this,

If that one day went to 15%, you could go take that and say, every developer now makes 20% more? And how much of that are they going to be willing to put in a marketing budget? A large part of it, which would be greatly beneficial to a platform like ours.

My take away is this company is very experienced on navigating these changes, and they’ve run into roadblocks in the past. Because they’ve still gotten around these roadblocks and re-accelerated the business, it gives me some confidence on their ability here.

Any acquisitions to note?

There’s two significant ones to note,

  • Acquired Twitter’s MoPub for 1.05B announced October 6, 2021. Provides real time bidding, integrates 130 DSPs (Demand Side Platforms). Core features of MoPub were moved into AppLovin’ product
  • Acquired WURL, $430M purchase (55% cash, 45% equity), software platform in CTV, completed April 4, 2022. Enables A&E, AMC, Bloomberg, Scripps to distribute stream video to 300M TVs. CTV advertising products: Wurl AdPool, Wurl Platform

Some other notes I have and reasons to like the company,

  • Q4 Adj EBITDA was 10% higher than management expections
  • Software platform Q4 had 576M revenue, EBITDA 420M, or 73% EBITDA margin
  • Ongoing market shift to real time bidding platforms
  • Early contributions from Array business
  • Seeing expansion in advertiser base + advertiser budgets
  • FCF was 1B on the year, representing 69% flow through from Adj EBITDA of 1.5B
  • Expanding into non-gaming and CTV (Increased TAM)
  • 1.2B authorized of stock buybacks (they’ve already done many at prices much lower than now)
  • Rule of 140 or 150! (By the standard “Rule of 40” metric)
  • Growing so much because technology is efficient, partners growing much faster too
  • Non-gaming now growing faster than gaming (gaming is their main business)
  • MAX Business sits on top of over 1B DAUs, 1B users playing games, US alone has 170M DAUs
  • Technology has become much more efficient and monetizing more effectively
  • predominantly global advertisers
  • non-gaming has no margin difference with gaming, going into the new non-gaming market they will still see the same profitability
  • real time bidding clears an auction faster
  • 5% take when doing real time bidding, no take if the user is inactive - Devs love this
  • AI driven enhancements in the marketing technologies
  • Increasing head count, but always operate efficiently and lean
  • New CFO Matt Stumpf, replaced Herald Chen
  • Not giving 2024 full year guidance (adds some uncertainty here)
  • AXON-2 is an early stage technology, it’s over been live for a little over half a year
  • No change in mix of customer concentration (asked about Chinese market)
  • A lot of content coming out of China does benefit advertising related businesses, good trend which is continuing to expand
  • Management asked by analysts which the low valuation on the company, response is that maybe a stigma around mobile gaming, but they clearly see the value in the company hence the share buybacks
  • Analysts asking question, “Why is AXON 2 doing better perhaps than you expected?”
  • Do not see a lot of difference of EBITDA margins domestically (USA) versus rest of world (Getting the same profitability around the world!)
  • Brands and performance advertisers are more willing to invest marketing dollars currently, improving CPM growth in the industry
  • We’re not brand advertising at all (When have you ever heard a company say that?)
  • Our growth is entirely due to technological efficiency

Also looked the previous year’s quarterly reports and the story is pretty consistent throughout. They have big expectations for the platform and saw outsized growth for the platform against their huge optimism for the platform.

The company does talk about their problems they have a year+ ago. Sounds like they are past that phase, and AI is accelerating their business.

Biggest outstanding question I have if anybody knows but why are they doing share buybacks before paying down their debt? I’m surprised they are keeping any debt at all with this level of EBITDA growth.

Why not pay off the debt first? Or does management see their stock as such a good deal right now that they’d get better shareholder value by buying their own stock instead?

Some concluding thoughts on the valuation,

  • The are projecting revenue next Q at 965M, which would be 35%+ growth year over year
  • Adj EBITDA is projected at 475-495M or 50% EBITDA margin
  • This company does no marketing about their own brand!

The is one of the few software companies out there that is talking about EBITDA and earnings in these terms, the bottom line is growing fantastically.


Fantastic post – you covered a ton, but I’d love to hear you expand on this. It’s tough for me to see their rough 2022 and believe that was a one time roadbump.

What strikes me is that this is a company that since 2021 has had quite a bit of revenue. More revenue than Crowdstrike! Not a small operation. Not quite as profitable on the bottom line, but getting there – especially if adj EBITDA is any kind of indicator. So what’s my concern? Kind of a big one: growth is a big question mark. What were the factors that hurt them in 2022 and are they likely to happen again?

From the CEO: What we saw in Q4 was that just coming off of weak comps in '22 when every part of the economy was fearful and this sector was particularly fearful – we saw brands and performance advertisers more willing to invest in marketing dollars [in Q4 2023]. Now what we don’t know about that is are the AI-driven advancements in the marketing technologies that you’ve seen implied by our numbers and our performance and technology and what Facebook has done and what Google have done over the last year driven that acceleration? Or is it just the economy recovering? And we think it’s a function of both. And we actually think because we’re not brand advertising at all, ours is entirely due to the technology efficiency.

Bolding mine. I guess my issue is, if the 36% YoY growth in Q4 (and was 75% economy recovering and 25% what they’ve done to attract more spend…can we maybe expect less growth going forward?

That 2022 Q4 really was a trough. If you pencil in 800m or more (as what revenue should have been if the economy wasn’t so skittish last year), the Q4 growth in 2023 would have been less than 20%. Now that said, Q1 guide is great, and they could do another 35%+ YoY quarter or two here. But I don’t see that as a normal thing for them. Just easy comps.

They shot down other suggestions that one time factors like China advertiser strength and/or weakness from their competitor Unity were the big reason for a strong 2023 Q4. The strong Q1 2024 guide sure implies it is indeed not a one-time spike, but I wonder if it’s just a new plateau rather than exploding growth. I also wonder if their customers are at all loyal and it’s just a question of spend appetite, or if they’re constantly churning and having to find new customers. Anyone have any data points on that? Here’s one (I think), and I don’t love it:

So back to my question: What were the factors that hurt them in 2022 and are they likely to happen again? The main factor seems like sector/economy weakness, so it’s almost surely just a matter of time until they see that again. But maybe 2024 will be a strong year. I mean who knows, maybe the strong Q1 guide implies more growth to come. Maybe.


PS – I also see from the CC transcript AppLovin (APP) Q4 2023 Earnings Call Transcript | The Motley Fool (which I’m gracious our beloved Motley Fool provides) show that the Fool has no position in AppLovin. I prefer companies the Fool recommends. Usually a decent marker of quality. At the bottom of the page:


I’m looking in Koyfin and it looks like AppLovin is significantly more profitable than Crowdstrike.

Koyfin has for Q4 of 2024 for both companies,

revenue 845M
gross profit 636M
net income 54M

revenue 953M
gross profit 680M
net income 172M

From these numbers AppLovin has over 6x the EBITDA (389M vs 60M), and over 3x the amount of net income (172M vs 54M).

Considering the market cap of Crowdstrike is 75B and the market cap of AppLovin is 25B, it looks like the price of AppLovin is significantly discounted towards Crowdstrike and SaaS in general.

However, Crowdstrike has never had sequentially down quarters before and the revenue is more predictable. This is similar for a lot of the other traditional SaaS companies, that while their revenue growth rate is slower it’s always been sequentially up on overall revenue amount.

What were the factors that hurt them in 2022 and are they likely to happen again?

This site has an excellent summary of the successes and challenges of AppLovin over the past couple of years,

Some take aways from that article and a couple other sources,

  • IDFA (Identifier For Advertisers) was the big industry change that hurt companies like Facebook when Apple change their mobile iOS policies
  • The rules for data collection and user targeting changed dramatically
  • AppLovin started to divest titles and studios that were no longer sustainable in the post-ATT (App Tracking Transparency)
  • Reduced number of studios they have from 20 to 11
  • AppLovin made a public bid to merge with Unity in 2022 which Unity shot down, the offered about a 20% premium on the shares where AppLovin would be the acquirer
  • ironSource, owned by Unity is the biggest competitive threat to Unity, but Unity has mismanaged their own business
  • AXON-2 works where a user will be controlling multiple apps each going to different variants of ads
  • AppLovin is the third largest mobile gaming app behind Google and Meta
  • AppLovin changes on a CPI or cost per click
  • game publisher keeps 20-30% of the ad revenue
  • MAX is running real time competitive auctions for the ad slot
  • MAX is free of charge to publishers, charges advertisers 5% fee
  • MAX doesn’t drive as much revenue as AppDiscovery, but has advantage of seeing competing ad networks and gathering data (they use this to power AI)
  • “Adjust” product is new, SaaS, tracks installs and user engagement
  • Apps accounts for 44% revenue, 15% of EBITDA
  • Casual, match-three, card & casino games are the most popular games


  • game studio acquisition spree
  • grew own games first, used first party data to train algorithm
  • “perceived conflict of interest” (they were using their own ad platform on own games)
  • Launch of Axon because of IDFA changes (significant because new platform is optimized for the current situation)


  • Marked by poor financial results but strong execution
  • Best data sources post-IDFA
  • Decoupling of software business form slowing Apps segment
  • Advertisers and publisher attitudes improving as they realized the benefits of sharing more data with Axon
  • 2022 was result of companies pulling ad spending as they adjusted to covid hangover and post-IDFA reality
  • Unity’s self inflicted wounds (Unity had a massive data loss issue too)
  • Apple and Google continue to step up to protect privacy
  • IP tracking for identity benefitted AppLovin over Facebook which relied on IDFA
  • Apple has indicated it intends to crack down on “fingerprinting”, forced adoption of SKAN would require AppLovin’s machine learning to relearn on 60-65% of users who opt out of IDFAs and currently use fingerprinting
  • Increasing scrutiny of Apple and Google’s “anti-steering” practices is likely to be investigated for violating monopoly rules (implies this could be a big tailwind is Congress acts on this)
  • “Ad-tech is competitive”
  • AppLovin offered 20B to acquire Unity

My overall impression is the company is hugely discounted to the market because investors question the durability of their model. It’s surely not as consistent revenue as most SaaS companies, but they now have an new AI tailwind.

It is a huge risk that almost all their revenue relies on policies related to Apple iOS and Android. Although looks like their platform can diversify into CTV as well, and makes me wonder if they could compete with The Trade Desk.

The market is pricing in a lot of risk because the category has traditionally not built a ton of profitable companies in mobile gaming. I think other investors may be skeptical of the business model because they make the games in addition to advertise within their own games. From the current valuation, there’s just so much risk priced in, that I like buying a very profitable company at these levels.


Here are my summarized thoughts so far:

  1. Per @rmtzp, “The non-software platform revenue shrunk from 396m in Q4 2022 to 377m this year” and IMO this means we can basically disregard non-software revenue for our objectives when modelling $APP revenue.
  2. Also per @rmtzp, "The main driver that has stood out to me is the ramp up (and efficiency) of their “Software Platform Revenue”; I agree 100%
  3. The tabular data posted by rmtzp clearly demonstrates the deceleration of SPR throughout 2022, and its re-acceleration throughout 2023
  4. @PaulWBryant has asserted, and demonstrated with numbers (…and commentary from quarterly CCs) that we do not know for sure why revenue decelerated in 2022, nor do we know for sure why revenue re-accelerated in 2023. He argues persuasively that we have nothing defensible with which to make any assertion about future revenue.

And last but not least, Bear posted numbers demonstrating that “net revenue per installation” has been trending overall DOWNWARDS, starting in 2022 and continuing in 2023? What to make of this last point?

Well, per the above, I suggest we remove non-software revenue from the model. And we consider that Software Platform Revenue is a function of the number of installations, and the revenue per installation.

Now we’re getting somewhere!

Next we consider that Software Platform Revenue is trending UP in 2023, and also consider that revenue-per-installation is trending DOWN across 2022 and 2023. We can now deduce that the number of installations must be going UP; this is confirmed in the numbers Bear posted…up 29% in Q323, up 66% in Q423.

So this is how we can model the recent PAST:
A. Overall, revenues have gone UP,
B. …even though revenue-per-installation has gone DOWN,
C. …because the recent INCREASE in the number of installations has compensated for a DECREASE in revenue-per-installation

So how to model revenue going forward?
For revenue to continue to go UP:
I. We need revenue-per-installation to go UP, and/or
II. We need number-of-installations to keep INCREASING.

My main concern is that revenue-per-installation seems to be in a downward trend spanning 2022 and 2023. If there is a good ROI for $APP’s services, which supposedly is powered by a leveled-up AI mechanism, then how is it possible that revenue-per-installation is going DOWN? Compensating for falling revenue-per-installation with more-and-more installations can’t possibly be sustainable long term.

Also I wonder about the churn rate of installations? Could be pretty high, considering the ruthlessly demanding and unpredictable tastes of Gamers.

a. For me personally, I’m more on the fence than I was.
b. I’m still compelled enough by the story and the numbers to hold my position in $APP for now, but it’s clear I need to know more.
c. IMO the most important thing to learn more about, and monitor, is their revenue-per-installation. It seems analogous to same-store-sales in the Retail world: once you’ve built out your stores, the only way to increase revenue is to increase per-store revenue.


Where are you and @PaulWBryant finding this revenue per installation metric? I haven’t seen the company mention it or finding the word “install” even once in any of their last conference calls.

Finchat IO has this KPI,

Average Revenue per Monthly Active Payer, which for the last 4 quarters is,
46 → 46 → 46 → 47 (not sure what units this is in)


4Q23 Shareholder letter

…in the section labeled “Software Platform Update”


The net revenue per installation growth has been trending downwards. The numbers in the table are for year over year growth. Taking a look at that table with the net revenue per installation and installations, it has the last quarter as,

net revenue per installation, +20% yoy
installations, +66% yoy

It would be great if somebody knows the actual numbers we could plug in here. Wondering if the company lists these somewhere?

Let’s take some example numbers though, if net revenue per install was $100 on the previous year, and they had 10M installs it would be 1B in revenue.

With the growth rates they posted, $100 → $120 per install, and 10M installs → 16.6M installs. 16.6M * 120 = 1.99B, or revenue doubled year over year.

Since the net revenue per installation is still growing, I’m not entirely clear why this would be a huge concern. Seems like the bottom line number of total installs is the more important, but the top line one inching up helps too. This is probably why the EBITDA margin on the software business is going from low 60s to low 70s in one year. The revenue per installation is still growing.

Here’s a passage from the recent 10-K on the yearly performance of installations, no raw numbers found though,

For the twelve months ended December 31, 2023, our Software Platform Revenue increased by $792.6 million, or 76%, from the prior year period primarily due to publisher bonuses of $209.6 million accounted for as a reduction to revenue in the prior year period. The increase in Software Platform revenue was also due to improved AppDiscovery performance, where installations increased 17% and net revenue per installation increased 35% compared to the prior year period. We do not recognize Software Platform Revenue from transactions with our studios.

So for 2022->2023, installs increased 17%, but the current quarter is 66% growth in what’s probably the more important number, that seems pretty good actually?


This has been a huge factor IMO. I had a pretty large stake in Ironsource and Unity took them out at a disappointing valuation. And has done nothing but bungle from there. I had also a smaller investment in AppLovin at the time and got out of both.

The Applovin CEO acted quite childish during the whole episode, publicly begging for Ironsource to sell to AppLovin. In hindsight, I should have stayed in it, but it was impossible to figure out what was happening with the business, IDFA, and competitive situations. Pretty much the opposite sort of leadership as we see with Jeff Green at TTD. Perhaps a childish CEO is to be expected in the video-game segment of the economy, but I scored his public behavior very low.

My impression is that Unity (U) made changes that absolutely infuriated the customer base driving them directly to APP, who used a ChatGPT driven program to allow customers to move from U to APP pretty seamlessly, and they did. Huge market share gains took place the last 2 quarters but is that sustainable?

At the same time, APP was shutting down some of their game dev studios, that will result in improving margins as they de-emphasize that business, while the revenue remains close to flat. But that also is a short term one-time margin improvement.


I got interested in APP based on a Reuters article I read not long ago (I don’t remember exactly when). As I studied the business and read more SA articles I got more enthusiastic (overly enthusiastic might be a better way of putting it) about it as an investment and quickly built up a position.

But I too got concerned about churn and what kind of glue there was in order to keep the customers that they had won. All I could find was that at present, they have the best mousetrap. There appears to be very little switching cost. As noted above Unity was/is their chief competitor. Unity has committed numerous unforced errors and customers have scurried to Applovin (how did they come up with that name?).

I’ve read more about this company on SA as well as their own financial documents. I also read Bear’s insightful commentary and became even less confident about my investment in this company. I can’t see any moat whatsoever. If anyone else sees what I don’t, please correct my perception.

However, I have found that they form partnerships with the same companies with which they compete. They have partnerships with Alphabet (Google) and Meta. Obviously, these partners see an advantage from these arrangements. They give them access to the walled garden but benefit from the increased advertising that App brings to the platform. App bought Wurl in order to enter the CTV market and shortly thereafter formed a partnership with Trade Desk. It’s not clear to me how TTD benefits, but apparently they do.

Anyway, I sold over half my position - fortunately just before the stock took a dive. I still have a position but it’s quite a bit smaller than it was not long ago.