10-QPeriod: Q2 FY2023

AppLovin Corp Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 9, 2023For Securities:APP

Summary

AppLovin Corporation (APP) reported a decrease in revenue for the three months ended June 30, 2023, down 3% year-over-year to $750.2 million. However, the company achieved profitability with a net income of $80.4 million, a significant improvement from a net loss of $21.8 million in the same period last year. Adjusted EBITDA also saw a strong increase of 24% to $333.5 million, indicating improved operational efficiency. The Software Platform segment was a key driver of this performance, with revenue up 28% year-over-year, benefiting from strong growth in AppDiscovery. Conversely, the Apps segment experienced a 25% revenue decline, attributed to reduced user acquisition spend and strategic portfolio optimization. Despite the dip in the Apps segment, the company's overall financial health appears robust, highlighted by a substantial increase in net cash provided by operating activities and a significant rise in Free Cash Flow.

Financial Highlights

52 data points
Beta

Revenue

$750.16M

65.5% Gross Margin

Net Income

$80.36M

10.7% Net Margin

EPS (Diluted)

$0.22

Total Assets

$5.48B

Cash & Equivalents

$876.23M

Free Cash Flow

$226.04M

Financial Statements
Beta
Revenue$750.16M
Cost of Revenue$258.57M
Gross Profit$491.59M
R&D Expenses$137.42M
Operating Expenses$618.84M
Operating Income$131.33M
Net Income$80.36M
EPS (Basic)$0.22
EPS (Diluted)$0.22
Shares Outstanding (Basic)356.96M
Shares Outstanding (Diluted)366.34M

Key Highlights

  • 1Revenue for Q2 2023 was $750.2 million, a 3% decrease compared to $776.2 million in Q2 2022.
  • 2AppLovin reported a net income of $80.4 million for Q2 2023, a significant turnaround from a net loss of $21.8 million in Q2 2022.
  • 3Adjusted EBITDA increased by 24% to $333.5 million in Q2 2023 from $269.7 million in Q2 2022.
  • 4Software Platform revenue grew by 28% year-over-year to $406.1 million, driven by AppDiscovery performance.
  • 5Apps revenue declined by 25% year-over-year to $344.1 million, due to reduced user acquisition spend and portfolio optimization.
  • 6Net cash provided by operating activities for the first six months of 2023 was $518.5 million, a substantial increase from $75.1 million in the same period of 2022.
  • 7The company repurchased $579.8 million of its Class A common stock in the first six months of 2023.

Frequently Asked Questions

AppLovin reported a 3% decrease in revenue to $750.2 million for the second quarter of 2023 compared to the prior year. However, the company demonstrated a strong return to profitability, posting a net income of $80.4 million, a significant improvement from a net loss of $21.8 million in the same quarter of 2022. Adjusted EBITDA also showed robust growth, increasing 24% to $333.5 million.

The Software Platform segment showed strong growth, with revenue increasing 28% year-over-year to $406.1 million, primarily driven by the AppDiscovery platform. In contrast, the Apps segment experienced a 25% decline in revenue to $344.1 million. This decrease was attributed to the company's strategic decision to reduce user acquisition spend and optimize its app portfolio.

AppLovin's cash flow from operations significantly improved. For the first six months of 2023, net cash provided by operating activities was $518.5 million, a substantial increase from $75.1 million in the comparable period of 2022. Free Cash Flow also saw a significant boost, reaching $503.7 million for the first six months of 2023 compared to $62.4 million in the first six months of 2022.

The company repurchased $579.8 million of its Class A common stock during the first six months of 2023, indicating a focus on returning capital to shareholders. The substantial increase in operating cash flow and free cash flow provides the company with financial flexibility for reinvestment and capital allocation.