AppLovin moons as profitability crushes expectations in Q1, with management signaling more of the same in Q2
Traders are 🎶 ba da ba ba ba 🎶 AppLovin the first-quarter earnings from the aforementioned ad tech firm.
AppLovin shares are more than 18% higher in post-market trading after the company reported Q1 adjusted earnings per share of $1.67, blowing past the consensus estimate of $1.46, on sales of $1.48 billion that outstripped expectations by about $100 million.
As the much bigger earnings beat compared to sales tells us, margins massively surprised to the upside, with an adjusted EBITDA margin of 81% (estimate: 76.6%).
Management expects that advertising revenues and EBITDA will be between $1.195 billion and $1.215 billion and $970 million to $990 million, respectively, both above the Street’s estimates of $1.1 billion and $863 million.
It’s a robust set of results for a company that has been targeted by prominent short sellers who allege that its purported ad tech breakthroughs are really an exploitative farce.
The company also announced that it’s selling its mobile gaming business to privately held Tripledot Studios for $400 million in cash and a 20% ownership stake in the company.
Ahead of these results, Wedbush analyst Michael Pachter highlighted AppLovin as a potential big beneficiary of a court-ordered commission ban leveled against Apple on off-app purchases made in mobile games.
