AppLovin's big profit beat, positive outlook lift the app-monetization stock

By Emily Bary

AppLovin Corp. posted upbeat profit numbers for the latest quarter Wednesday, and shook off an initial decline in after-hours trading.

The company, which makes software for app monetization, posted second-quarter net income of $310 million, or 89 cents a share, compared with $80 million, or 22 cents a share, in the year-earlier period. Analysts tracked by FactSet were modeling 74 cents a share.

AppLovin (APP) also posted adjusted earnings before interest, taxes, depreciation and amortization of $601 million, whereas analysts were looking for $569 million. The company's shareholder letter mentioned "ongoing cost management efforts enabling significant flow-through of revenue growth" to this adjusted earnings metric.

After falling more than 10% initially, shares recovered and ended Wednesday's extended session up 1.2%.

Read: Why Roblox's stock dropped in the face of upbeat results

Revenue rose 44% to $1.08 billion, matching the FactSet consensus. The company hauled in $711 million in revenue from its software platform, which helps marketers target customers and maximize the value of their ad inventory, along with $369 million from free-to-play apps. Analysts were projecting $705 million and $375 million, respectively.

"Our technology contributed to enhanced growth opportunities for our advertising partners at greater scale," the company said in a shareholder letter, in reference to the software business. AppLovin also flagged "reduced user acquisition spend" in the apps business, which helped the segment deliver an Ebitda margin of 22%.

For the third quarter, AppLovin models revenue of $1.115 billion to $1.135 billion, while analysts are looking for $1.102 billion. The company's adjusted Ebitda target calls for $630 million to $650 million, compared with a $586 million FactSet consensus.

-Emily Bary

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08-07-24 2017ET

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