Welcome to our Tweet of the Week, where we spotlight insightful, thought-provoking, maybe even weird tweets from the world of adtech. Every Saturday, we’ll bring you one tweet that captures important trends, shares valuable data, or offers unique perspectives on the market.
This week’s tweet comes from Jeromy Sonne, CEO of Daypart, an AI-powered platform that helps optimize digital ad campaigns. (Here’s an image — full tweet via the link.)
In it, Jeromy wonders what the hell makes AppLovin so special following the company’s insanely good Q3 earnings report on Wednesday.
In that report, AppLovin shared some eye-popping growth:
- Total revenue reached $1.2 billion, essentially a 40% increase year-over-year, beating expectations of $1.13 billion.
- The Software Platform segment of AppLovin’s business grew by two-thirds (!) year-over-year to $835 million. That segment is basically all ad revenue, so the company also shared it will be renaming it to its “Advertising” segment moving forward. (We got a win!)
Of course, the report was well-received, and AppLovin’s stock price exploded afterward, with shares up by nearly 50%. In total, the company’s stock is up 650% year-to-date, from $38 per share to $290 today.
In response to the earnings report and the stock surge, adtech investor and GP of Aperiam Ventures Eric Franchi tweeted, “When the market opens, AppLovin officially becomes the most valuable publicly traded ad tech company. Incredible.”
But what’s driving the growth, wonders Jeremy. Do “they have some model better than everyone else,” or do “they have some special data source,” he asks.
Jeromy’s tweet also raises an interesting point about AppLovin. No one outside of the great Eric Seufert ever covers the company. AppLovin has essentially become the largest independent adtech company in the U.S. (and world?), but there has been little interest across trades or media, in general. Not that it has mattered, but the lack of interest is… weird. Maybe the mobile-centric nature of the business, plus the company’s decision to frame its revenue as SaaS, has confused some?
In any event, Jeromy’s tweet got good responses from people like Ari Paparo, Myles Younger, Jordan Bentley, James O’Connor, Seyi Taylor, and others. Our take: It’s likely a combination of AI and data. AppLovin has access to vast data through its tech stack, plus its own suite of over 200 free-to-play mobile games, which strengthens their AI capabilities. That supports their customers, driving better performance.
There was an analyst question on the Q3 earnings call that also warrants inclusion here to help summarize what’s at play and explain the success:
Omar Dessouky — Analyst
Awesome. Thank you. And so, just one more like educational question. Now the market cap of your stock has gone up much higher and is a lot closer and has eclipsed some online advertising and ad tech stocks that have been widely followed by investors for a long time.
Some of them are in the open web, and I was wondering if you could explain, what are some aspects of the DSP ecosystem that you’re in that lend itself to an arbitrage model, which is what I understand how it’s run, as opposed to a percentage of gross ad spend model like we see in open web DSPs?
Adam Foroughi — Co-Founder, Chairman, and Chief Executive Officer
Yeah. I guess, more specifically you’re referencing Trade Desk versus our business models. Like, it’s just two different approaches to the market. They’ve targeted the big agencies and taken a very smart software-as-a-service type of approach.
And we’ve targeted brands and direct-to-consumer and e-commerce, gaming, game developers on the gaming side. And what these companies care about is not the media dollars or percentage markup. They care about optimization and automated advertising to a revenue goal. And that’s really like what our system’s predicated on is that we take all the risk on the media side.
We have to deliver really compelling performance on the technology side. And I guess like what’s most exciting for me on what we’ve built and where we are in terms of, like, you said, market cap and scale as a business today is we’re on top of 1.4 billion daily actives. So it’s really easy to forget the scale of the audience reach that we have on our platform. We’ve got the largest mediation solution in the sector and our teams built maybe the most innovative advertising technology that the world’s yet seen.
And we’re now scaling it out. And so, if you sort of just fast-forward over the quarters and the years from here, we’re going to be able to service tens of thousands to hundreds of thousands to millions of advertisers on our platform to access this audience that they had never accessed before. And now, mobile devices, you think about the four hours to five hours a day of time spent, this is a 45-minute component of that four hours that is untapped for most of these advertisers. Our technology can now unlock it for them.
And this was never possible historically on any platform. So it gives us a lot of excitement that not only are we performing today, we’ve got a long runway to expand this platform and become one of the strongest companies the world’s seen.
Again, check out Jeromy’s tweet and be sure to chime in with your take. Also, if you’re an AppLovin shareholder and are now rich, feel free to gloat.
