10-QPeriod: Q1 FY2022

AppLovin Corp Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 13, 2022For Securities:APP

Summary

AppLovin Corporation (APP) reported its first quarter 2022 financial results, detailing a mixed performance. Total revenue saw a modest 4% increase year-over-year to $625.4 million, driven by a significant 34% surge in Software Platform Revenue, which benefited from strong performance in AppDiscovery and contributions from the MoPub and Adjust acquisitions. However, Apps Revenue experienced a 2% decline, primarily due to a 5% drop in Consumer Revenue, despite a slight increase in Business Revenue from Apps. The company reported a net loss of $115.3 million, a substantial increase from the $10.6 million net loss in the prior year's quarter. This widening loss was driven by a significant increase in costs and expenses, particularly in Cost of Revenue (up 26% to $281.8 million) and Research and Development (up 107% to $126.3 million), largely due to higher amortization expenses from acquisitions and increased personnel and professional services costs. Despite the net loss, Adjusted EBITDA showed a strong improvement, more than doubling to $276.2 million from $131.1 million in the prior year's quarter, reflecting the company's operational leverage and the impact of acquisitions. Significant investments were made in acquisitions, most notably the MoPub business for $1.03 billion, which significantly increased goodwill on the balance sheet. The company ended the quarter with a healthy cash balance of $1.41 billion.

Financial Highlights

53 data points
Beta

Revenue

$625.42M

54.9% Gross Margin

Net Income

-$115.26M

-18.4% Net Margin

EPS (Diluted)

$-0.31

Total Assets

$6.17B

Cash & Equivalents

$1.41B

Free Cash Flow

-$32.00M

Financial Statements
Beta
Revenue$625.42M
Cost of Revenue$281.78M
Gross Profit$343.64M
R&D Expenses$126.25M
Operating Expenses$753.41M
Operating Income-$127.99M
Net Income-$115.26M
EPS (Basic)$-0.31
EPS (Diluted)$-0.31
Shares Outstanding (Basic)371.97M
Shares Outstanding (Diluted)371.97M

Key Highlights

  • 1Total revenue increased 4% year-over-year to $625.4 million.
  • 2Software Platform Revenue grew significantly by 34% to $118.8 million, boosted by AppDiscovery performance and acquisitions.
  • 3Apps Revenue decreased by 2% to $506.6 million, primarily due to a 5% decline in Consumer Revenue.
  • 4Net loss widened to $115.3 million from $10.6 million in the prior year's quarter.
  • 5Adjusted EBITDA more than doubled to $276.2 million, indicating strong operational performance.
  • 6Acquisition of MoPub for $1.03 billion was completed in January 2022, significantly increasing goodwill.
  • 7Cash and cash equivalents remained strong at $1.41 billion as of March 31, 2022.

Frequently Asked Questions

The substantial increase in net loss was primarily driven by a significant rise in operating expenses. Notably, Cost of Revenue increased by 26% due to higher amortization from acquisitions and network infrastructure costs. Research and Development expenses more than doubled, largely due to increased professional services for app development and higher personnel costs, including stock-based compensation. These increased expenses outpaced the revenue growth, leading to the wider net loss.

The acquisition of MoPub, completed on January 1, 2022, for $1.03 billion, was a major event in the quarter. It significantly increased the company's Goodwill on the balance sheet by $632.5 million. While it contributed $44.1 million in revenue during the transitional period included in the quarter's results, it also led to increased amortization expenses and transaction costs. The integration is expected to enhance AppLovin's MAX in-app mediation platform.

AppLovin maintained a strong liquidity position, with cash and cash equivalents totaling $1.41 billion as of March 31, 2022. Management believes this cash balance is sufficient to meet anticipated working capital and capital expenditure needs for at least the next 12 months. However, the company also carries substantial debt ($3.27 billion), and future growth initiatives, including potential acquisitions, may necessitate seeking additional financing.

Software Platform Revenue showed robust growth, increasing by 34% year-over-year, driven by strong performance in AppDiscovery and the recent acquisitions of MoPub and Adjust. This segment is outperforming Apps Revenue, which experienced a slight 2% decline, mainly due to a 5% decrease in Consumer Revenue, partially offset by a modest increase in Business Revenue from Apps. This suggests a strategic shift or a more challenging environment for the Apps segment compared to the Software Platform.