01—Abstract
Summary
Summary of the 10-K filed February 28, 2023. Cited figures are marked; the original filing is the authoritative source.
AppLovin Corporation's 2022 10-K filing reveals a company operating in the dynamic mobile app ecosystem with two core segments: Software Platform and Apps.
The Software Platform segment, driven by AppDiscovery and MAX, saw significant revenue growth of 56%a year-over-year, indicating strong adoption and increasing revenue per enterprise client. Conversely, the Apps segment experienced a revenue decline of 17%, primarily due to a decrease in In-App Purchases (IAP) and In-App Advertising (IAA). This decline is attributed partly to a strategic shift in user acquisition spend within the Apps portfolio to focus on profitability over growth.
Despite the Apps segment's revenue dip, the company's overall revenue remained relatively flat year-over-year, with strong Adjusted EBITDA growth to over $1 billionb, demonstrating operational efficiency and profitability beyond net income. The company also continues to actively manage its portfolio, including potential divestitures of certain app assets.
02—Key points
Key Highlights
- AppLovin reported stable overall revenue for 2022, with a slight increase of 1% to $2.82 billion, driven by robust growth in its Software Platform segment.
- The Software Platform segment experienced significant revenue growth of 56% year-over-year, reaching $1.05 billion, fueled by strong performance in AppDiscovery and MAX, and acquisitions like Adjust and Wurl.
- The Apps segment saw a 17% decrease in revenue, totaling $1.77 billion, attributed to a reduction in user acquisition spend aimed at optimizing profitability and strategic portfolio review.
- Adjusted EBITDA surged by 77% for the Software Platform segment to $808.4 million, and declined slightly by 5% for the Apps segment to $254.8 million, resulting in a total Adjusted EBITDA of $1.06 billion.
- The company generated strong Free Cash Flow of $388 million, indicating healthy operational cash generation.
- AppLovin continues to focus on strategic acquisitions and partnerships to enhance its capabilities, with significant investments made in 2022 in MoPub and Wurl.
- The company is actively optimizing its Apps portfolio, which has involved divestitures and restructuring to focus on financially optimal assets.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2022, AppLovin Corp lost $0.07.
- Revenue$2.82B100.0%
- Cost of revenue−$1.26B44.6%
- Gross profit$1.56B55.4%
- Operating costs−$1.61B57.1%
- Operating income−$47.8M1.7%
- Interest, other & tax−$145.2M5.2%
- Net income−$193.0M6.9%
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 28, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $2.82B$2.79B | +0.9% |
| Cost of Revenue | $1.26B$988.10M | +27.1% |
| Gross Profit | $1.56B$1.81B | −13.5% |
| R&D Expenses | $507.61M$366.40M | +38.5% |
| Operating Expenses | $2.86B$2.64B | +8.4% |
| Operating Income | -$47.79M$150.02M | −131.9% |
| Interest Expense | $172.18M— | — |
| Net Income | -$193.00M$35.00M | −651.4% |
| EPS (Basic) | $-0.52$0.10 | −620.0% |
| EPS (Diluted) | $-0.52$0.09 | −677.8% |
| Shares Outstanding (Basic) | 371.57M324.84M | +14.4% |
| Shares Outstanding (Diluted) | 371.57M342.76M | +8.4% |
05—Questions
Frequently Asked Questions
How did AppLovin's two business segments perform in 2022?
AppLovin operates two segments: Software Platform and Apps. The Software Platform segment showed strong growth, with revenue increasing by 56% year-over-year to $1.05 billion. This growth was driven by strong performance in AppDiscovery and MAX, along with contributions from recent acquisitions. The Apps segment experienced a revenue decline of 17% year-over-year, totaling $1.77 billion. This decrease was primarily due to a strategic shift to reduce user acquisition spend to focus on profitability and a review of the app portfolio.
What is AppLovin's overall financial performance in 2022?
Overall, AppLovin's total revenue remained relatively flat, increasing by 1% to $2.82 billion in 2022. While the company reported a net loss of $192.9 million, its Adjusted EBITDA significantly increased by 47% to $1.06 billion, demonstrating strong operational profitability. The company also generated substantial Free Cash Flow of $388 million.
What is AppLovin's strategy regarding its Apps portfolio?
AppLovin is actively engaged in a strategic review and optimization of its Apps portfolio. This involves focusing on assets that contribute most to financial performance, which has led to divestitures or closures of certain studios and a reduction in user acquisition spend. The goal is to manage the portfolio for financial return, while remaining open to restructuring or selling assets. This strategic shift has impacted the Apps segment's revenue but is aimed at improving overall profitability.
What are the key growth drivers and future strategies for AppLovin?
AppLovin's key growth drivers include continued investment in its Software Platform's technology and innovation, retaining and growing existing clients, and acquiring new clients globally. The company also intends to continue pursuing accretive strategic acquisitions and partnerships to expand its capabilities and market reach. Future strategies also involve optimizing the Apps portfolio and exploring new market extensions, such as the CTV industry.
06—Continue