Back in November, we published a post titled “For AppLovin, as Earnings Soar, Scrutiny Follows.” And, well, that turned out to be pretty accurate, especially after the company’s latest blockbuster earnings report.
On Wednesday, yeah, AppLovin reported killer earnings. Total revenue for Q4 reached $1.37 billion, which was a 44% (!) year-over-year increase. For the full year, revenue hit $4.71 billion, up 43% YoY.
The bulk of the growth comes from AppLovin’s ad business, of course, which surged 73% YoY, while revenue from its app business declined 1%.
Immediately following the earnings report, AppLovin’s stock jumped over 30%.
Why This Matters:
AppLovin signals a potential shift away from The Trade Desk’s focus on the “premium internet”—an SPO-focused strategy that hasn’t necessarily landed with investors in the wake of its disastrous earnings call (the stock is still down by one-third). Instead, AppLovin’s vision of the internet—what you might call the “performance internet”—might be the key.
That said, AppLovin did mention a premium channel on their earnings call, noting that it sees CTV as a future opportunity. The company is exploring “extending… creative onto the big screen,” though it acknowledged the challenges involved (attribution, namely, which is important for its DTC users).
AppLovin also indicated plans to broaden its focus, not just vertically but potentially with bigger brands. As Co-Founder, Chairman, and CEO Adam Foroughi put it on the earnings call:
“Q4 results show that our models can perform in other categories in addition to continuing to improve performance for our gaming customers. This breakthrough is only the beginning. We’ve now also validated that our platform success isn’t only limited to direct-to-consumer brands. Early pilots have shown positive outcomes for a range of advertisers suggesting that any business in any vertical can harness the power of our platform.
This opens up a massive opportunity as there are over 10 million businesses worldwide who advertise online that could eventually use our platform profitably.”
Experts React:
Back to the “knives out” piece. Following AppLovin’s stellar earnings, several industry voices called for greater scrutiny of the company, or have questioned its practices (these tweets aren’t necessarily direct examples of that, but are pointing to examples within them).
This follows some questions from November:
But will this concern AppLovin’s DTC brand clients, who are mostly focused on performance. Maybe? But for now, it looks like they’re seeing real gains, which may outweigh any concerns.
One of the more opaque aspects of AppLovin’s business has been its gaming studio and app library. However, the company said on the earnings call that the apps business will be sold off. Per the CEO:
“I want to emphasize to our teams, you’ll soon be part of a company that specializes in and champions game development. While it’s bittersweet to part ways, we’re excited for your future and immensely grateful for your role in getting us to where we are today.”
Our Take:
Leave AppLovin alone!
No, but, seriously, the company is, as the kids say, cooking. If the performance and growth are real—and they seem to be right now—let’s tip the cap and keep it moving, as the kids also say.
At the same time, heavy is the crown and fair analyses are always welcomed.
