Revenue Rising Rapidly
AppLovin reported its third-quarter 2024 earnings on Wednesday, November 6, showcasing rapid growth and profitability that exceeded analyst expectations. The company generated $1.2 billion in revenue, marking a stunning 39% year-over-year increase, well above analyst projections of $1.13 billion. This growth outpaces almost every competitor and the broader programmatic advertising industry. For comparison, The Trade Desk, until recently the top independent AdTech vendor, generated $628 million in Q3, growing 27%—just over half of AppLovin’s revenue.
High Profitability
Profitability metrics were equally impressive. Net income reached $434 million, up from $109 million in the same quarter the previous year, surpassing analyst expectations of $319 million and representing a nearly 300% growth rate. AppLovin’s net income in Q3 represented 36% of revenue, up from 13% a year earlier. In contrast, The Trade Desk’s net income was $95 million, with a margin of 15%—less than half of AppLovin’s.
These figures underscore AppLovin’s disciplined cost management and operational efficiency. Just how efficiently Applovin operates one can see from their revenue per employee number. For 2024, revenue per employee is estimated to reach $4 million, outperforming even giants like Google ($2 million per employee) and Meta ($1.4 million), as well as The Trade Desk ($0.6 million).
Stock Market delighted
The market rewarded these outstanding results with a huge 49% jump in Applovin’s stock price the day after the earnings report. The price has only continued to rise since: on November 12, the stock price had increased by 72% versus the pre-earnings quote. This has also catapulted Applovin’s market capitalization way above that of The Trade Desk ($95 billion vs. $63 billion). This marked a year-to-date increase of over 600% – there is a new heavyweight in town.
How Did They Do it?
The company’s revenue is divided into two main segments: the Software Platform and the Apps segment. Initially focused on helping app developers with user acquisition, monetization, and in-app purchases (Apps segment), AppLovin has since transformed into a comprehensive advertising platform with demand-side capabilities (Software segment). In 2019, the Apps business stood for no less than 80% of total revenue. In Q3 2024, it is the Software business that generates nearly 80% of the revenue.
That shift will continue: For the Q3 results, the Software segment provided 99% of year-on-year revenue growth, whereas the App segment contributed 1% of growth. The company itself forecasts the App business to just be “stable”. (As for the Software segment, it will soon be renamed to the “Advertising platform”, reflecting that almost all revenue in this segment is now AdTech revenue.)
Several factors have contributed to the meteoric rise of AppLovin’s AdTech business:
- Applovin credits the growth to AXON, its AI-based ad targeting technology, which reportedly enhances ad efficiency and attracts more ad campaigns. AXON received a major update only a year ago and continues to be trained on ongoing campaigns.
- Expanded Advertising Solutions: Strategic acquisitions have bolstered AppLovin’s offerings. The Wurl acquisition (April 2022) added Connected TV (CTV) capabilities, Mopub (January 2022) brought end-to-end SSP and DSP functionality, and Adjust (April 2021) added advanced measurement tools. The company also completed a successful retail media pilot project.
- Many in the industry credit “Applovin getting Mopub right” (as opposed to previous owner Twitter), creating the platform needed for programmatic advertising trading.
- Weak competition: Many mobile app companies that could have been contenders are struggling. Unity has a hard time digesting Ironsource and revenue will likely decline this year (2024). Digital Turbine’s revenue will also likely shrink and is way too headcount-heavy. Perion forecasts $500 million in revenue this year, down from $743 million in 2023.
Revenue by Geography
There’s more good news. AppLovin, founded in the U.S., has successfully expanded internationally, reducing vulnerability to regional disruptions. In 2019, only 33% of revenue was from outside the U.S.; by 2024, that figure is estimated to reach 42%, providing more revenue upside from international markets.
Cash Reserves
At the close of Q3, AppLovin reported $568 million in cash reserves. This substantial cash position not only supports ongoing R&D and talent acquisition but also provides flexibility for potential acquisitions to enhance its technology stack. Moreover, the company announced a $2 billion increase in its share repurchase program, further signaling confidence in its financial health.
Looking Ahead
AppLovin has significant growth opportunities ahead. It has only begun to tap into the high-growth sectors of CTV and retail media, providing traditional vendors with new competition as AppLovin expands its reach.
AppLovin’s Q3 2024 results reflect a company on a strong growth trajectory, powered by technological innovation and a strategic focus on profitability. As it expands into e-commerce and rebrands its core platform, AppLovin is poised to solidify its standing in the digital advertising space. Looking forward, with a strong cash position and ongoing AI advancements, AppLovin’s future growth potential appears promising.
About Applovin
AppLovin Corporation is a leader in advertising technology, connecting businesses with audiences worldwide through AI-driven advertising solutions. For more information, visit www.applovin.com.
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