TLDR
- AppLovin delivered Q3 revenue of $1.41 billion, exceeding the $1.34 billion analyst estimate with 68% year-over-year growth.
- The company reported EPS of $2.45, beating the $2.38 consensus and growing 96% from the prior year period.
- Q4 revenue outlook of $1.57-$1.60 billion surpassed Wall Street’s $1.55 billion forecast.
- AppLovin added $3.2 billion to its share buyback program, raising total authorization to $3.3 billion.
- The stock climbed 6.4% in after-hours trading despite facing an SEC investigation.
AppLovin shares rallied 6.4% in extended trading Wednesday after the company reported third-quarter results that beat analyst expectations across key metrics. The mobile advertising technology company posted revenue of $1.41 billion versus the Street’s $1.34 billion estimate.
Revenue grew 68% compared to the same quarter last year. Management attributed the performance to its Axon Advertising platform, which uses AI to optimize ad placement and targeting for mobile app developers.
The company earned $2.45 per share in the quarter, beating the consensus estimate of $2.38. This represented 96% growth from the year-ago period.
AppLovin has gained 91% year-to-date through Wednesday’s close. The stock faced pressure over the past month, declining about 10% after reports emerged of an SEC investigation into the company’s data-collection practices.
Fourth Quarter Projections Exceed Forecasts
Management guided fourth-quarter revenue between $1.57 billion and $1.60 billion. Analysts had projected $1.55 billion for the period.
The company expects adjusted EBITDA of $1.29 billion to $1.32 billion in Q4. The outlook reflects continued momentum in the advertising platform business.
AppLovin’s operating margin reached 76.8% in the third quarter, up from 44.6% a year earlier. Free cash flow margin improved to 74.7% from 61.3% in the previous quarter.
The company’s customer acquisition payback period came in at 2.8 months. This rapid timeline indicates efficient marketing spending and strong product demand.
Over the past five years, AppLovin has grown revenue at a 35.2% compound annual rate. The company has maintained similar momentum recently, with 34.9% annualized growth over two years.
Buyback Program Gets Boost
AppLovin increased its share repurchase authorization by $3.2 billion. The company now has $3.3 billion in total remaining buyback capacity as of October’s end.
During the third quarter, AppLovin bought back 1.3 million shares for $571 million. The expanded program shows management’s view on the stock’s value and business prospects.
The company operates a portfolio of over 200 free-to-play mobile games. It also provides software tools that help developers market, monetize, and grow their applications through data-driven advertising solutions.
Wall Street maintains a Strong Buy consensus rating on AppLovin stock. The rating combines 18 Buy recommendations and two Hold ratings from analysts covering the company.
The average analyst price target stands at $682.56, suggesting 10.6% upside from current levels. These targets may be revised as analysts update their models following the quarterly report.
AppLovin’s market capitalization sits at $205.9 billion. The company continues executing its growth strategy while managing regulatory scrutiny from the SEC investigation, which Bloomberg reported was triggered by a whistleblower complaint and short-seller reports.
Analysts project 26.9% revenue growth for AppLovin over the next 12 months. This forecast represents a deceleration from recent years but still indicates strong expected performance.
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