In its annual report, AppLovin Corporation reveals its focus on building a software-based platform for mobile app developers to enhance marketing and monetization. The company's software solutions include AppDiscovery, Adjust, MAX, and Wurl, catering to a diverse clientele of advertisers, internet platforms, and others. The company's revenue grew 17% year-over-year from 2022 to 2023, reaching $3.28 billion in 2023, with net income of $356.7 million. The company generated Adjusted EBITDA of $1.5 billion in 2023, showcasing strong financial performance.
AppLovin's business model is based on two reportable segments: Software Platform and Apps. Software Platform Revenue accounted for 56% of total revenue, primarily derived from fees paid by advertisers using the platform to grow and monetize their content. The Apps segment, generating 44% of total revenue, includes revenue from in-app purchases and digital advertising inventory.
Key metrics used by AppLovin to evaluate business health and performance include Monthly Active Payers (MAPs) and Average Revenue Per Monthly Active Payer (ARPMAP). The company had an average of 1.8 million MAPs in 2023, with an ARPMAP of $46.
AppLovin also reported non-GAAP financial measures, such as Adjusted EBITDA and Adjusted EBITDA margin, which are used to assess financial performance and aid in internal planning and forecasting. Adjusted EBITDA for 2023 reached $1.5 billion, with an Adjusted EBITDA margin of 45.8%.
Check out the company's full 10-K submission here.
AppLovin Corporation is a company with strong revenue growth, but some concerning financial metrics. The company's revenue of $3.03 billion is growing at an impressive rate of 29.1% annually, indicating a healthy top-line expansion. However, its operating margins of 11.8% are lower than the industry average, which may be a cause for concern.
AppLovin's capital expenditures are increasing at a rate of 5.2%, showing significant reinvestment of profits back into the business. However, the company has a poor record of retained earnings, with a value of $-985.22 million.
In terms of valuation, AppLovin's P/E ratio of 60.2 is higher than the Technology sector average of 35.0, but its expected earnings of $3.11 per share indicate a lower forward P/E ratio of 19.0. This suggests that the company's future earnings may support its current valuation.
On the balance sheet side, AppLovin's current ratio of 1.61 indicates that its current assets of $1.3 billion exceed its current liabilities of $805.47 million, suggesting it has enough short-term assets to cover its short-term obligations.
In conclusion, while AppLovin shows strong revenue growth and a healthy current ratio, its low operating margins and poor retained earnings are concerning. The stock may be overvalued based on its high P/E ratio, but its future earnings potential could support the current valuation. Investors should carefully consider these factors before making an investment decision in AppLovin Corporation.
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Revenue (M) | $994 | $1,191 | $2,793 | $2,817 | $3,032 |
| Operating Margins | n/a | -5.0% | 5.0% | -2.0% | 12.0% |
| Net Margins | n/a | -11.0% | 1.0% | -7.0% | 3.0% |
| Net Income (M) | n/a | -$125 | $35 | -$193 | $105 |
| Net Interest Expense (M) | $62 | $78 | $103 | $172 | $259 |
| Depreciation & Amort. (M) | $8 | $14 | $431 | $547 | $471 |
| Diluted Shares (M) | 212 | 215 | 343 | 372 | 357 |
| Earnings Per Share | n/a | -$0.58 | $0.09 | -$0.52 | $0.3 |
| CAPEX (M) | $3 | $3 | $1 | $1 | $4 |
| Current Ratio | n/a | 1.11 | 5.05 | 3.35 | 1.61 |
