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AppLovin Announces Record Second Quarter 2021 Financial Results

Software revenue grows over +200% organically1 Y/Y and +40% Q/Q

  • Revenue grew +123% Y/Y to $669 million, Organic growth1 increased +97% Y/Y
  • Business Software Platform revenue grew +256% Y/Y to $146 million
  • Achieved record Software Platform Enterprise Clients2 (SPEC) of 366
  • GAAP Net Income improved to $14 million from a Net Loss of $22 million, with GAAP net margin of 2%
  • Adjusted EBITDA grew 202% Y/Y to $184 million and Adjusted EBITDA margin improved to 27%

AppLovin Corporation (NASDAQ: APP) (“AppLovin” or “we”), a leading marketing platform, today announced financial results for the second quarter ended June 30, 2021 and posted a letter to its shareholders on its investor relations website.

“We are pleased to report excellent progress during 2Q21, advancing our software business at record rates resulting in our best financial performance yet,” said Adam Foroughi, CEO and co-founder of AppLovin. “Our strong execution and growth this quarter, in spite of anticipated industry headwinds around data privacy, speaks to the tremendous opportunity ahead of us and to the distinct advantages leveraging our ML-based software and proprietary first-party insights to help clients grow.”

Herald Chen, CFO of AppLovin said, “In 2Q, we achieved record financial results, with total revenue more than doubling year-over-year to $669 million, and our Adjusted EBITDA more than tripling to $184 million, with Adjusted EBITDA margin improving to 27%. Our Software Platform business had exceptional performance with 2Q21 revenue more than tripling year-over-year organically and up +40% over 1Q21 and grew even faster when including the acquisition of Adjust. Our Apps business saw solid +102% year-over-year growth, and we have several new evergreen titles slated to launch later in 2021. With our strong performance and momentum, we are confident in our annual guidance with additional opportunities for growth in 2H2021.”

Second Quarter 2021 Financial Summary and Highlights

(All comparisons are versus 2Q20 unless otherwise noted)

  • Revenue grew 123% to $669 million with organic growth1 of 97%
  • Business Software Platform revenue was $146 million, an increase of 256% and organic growth1 of 203%; Year-over-year growth accelerated for the third consecutive quarter driven by our AXON-ML engine.
    • Total Software Transaction Value (TSTV)3 was $219 million, an increase of 361%; our platform exited 2Q at an annualized4 TSTV run-rate of approximately $900 million.
    • Software Platform Enterprise Clients2 grew 218% to 366 and increased 90% compared to 1Q21
  • Apps revenue grew 102% to $523 million
    • Business Apps revenue grew to $162 million, an increase of 70%
    • Consumer Apps revenue grew to $361 million, an increase of 122%, with 2.7 million MAPs in the quarter
  • GAAP Net Income improved to $14 million from a GAAP Net Loss of $22 million; a GAAP net margin of 2%
  • Adjusted EBITDA grew 202% to $184 million and Adjusted EBITDA margin improved to 27%

(1)

Organic growth represents revenue growth from existing Apps owned at the end of the prior period and newly developed Apps from existing Owned and Partner Studios at the end of the prior period. Organic growth also excludes contribution from our acquisition of Adjust.

(2)

Software Platform Enterprise Clients are third-party business clients from whom we have collected greater than $31,250 of revenue in the three months to a given date, equating to an annual run-rate of $125,000 in revenue.

(3)

Business Software Platform revenue is from third-party clients using our software platform. We do not recognize revenue from our own spend on our software platform. Therefore, we use TSTV to measure the scale and growth rates of our software platform as it reflects the total value on our software platform including our first-party studios as though they were stand-alone businesses. A reconciliation of TSTV to Business Software Platform Revenue is available at the end of this press release.

(4)

Represents sum of four periods at same quarterly figure for the respective period

Webcast and Conference Calls

AppLovin will host a webcast and conference call today at 2:00 PM PT / 5:00 PM ET, during which management will discuss quarterly results and provide commentary on business performance. A question-and-answer session will follow the prepared remarks.

The live audio webcast may be accessed on the Company’s investor relations website. The conference call can be accessed by dialing 1-877-407-9716 for domestic callers or 1-201-493-6779 for international callers. A replay of the call via webcast will be available at: https://investors.AppLovin.com until August 18, 2021.

About AppLovin

AppLovin’s leading marketing software provides developers with a powerful, integrated set of solutions to grow their businesses. AppLovin enables developers to market, monetize, analyze and publish their apps. The company’s first party content includes more than 200+ popular, engaging apps and its technology brings that content to millions of users around the world. AppLovin is headquartered in Palo Alto, California with several offices globally.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “going to,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, priorities, plans, or intentions. Forward-looking statements in this press release include, but are not limited to, statements regarding our future financial performance, including our expected financial results and guidance; our expectations regarding our revenue and Adjusted EBITDA; our expectations regarding future product launches and our expectations regarding our market opportunity and future growth. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties, including changes in our plans or assumptions, that could cause actual results to differ materially from those projected. These risks include our inability to forecast our business due to our limited operating history, fluctuations in our results of operations, the competitive mobile app ecosystem, our inability to adapt to emerging technologies and business models. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2021. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2021. The forward-looking statements in this press release are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward-looking statements, except as required by law.

Non-GAAP Financial Measures

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States (“GAAP”), this press release includes certain financial measures that are not prepared in accordance with GAAP, including Adjusted EBITDA and Adjusted EBITDA margin. A reconciliation of each such non-GAAP financial measure to the most directly comparable GAAP measure can be found below.

We define Adjusted EBITDA for a particular period as net income (loss) before interest expense and loss on settlement of debt, other (income) expense, net, provision for (benefit from) income taxes, amortization, depreciation and write-offs and as further adjusted for stock-based compensation expense, acquisition-related expense and transaction bonuses, loss (gain) on extinguishments of acquisition-related contingent consideration, non-operating foreign exchange (gains) losses, lease modification and abandonment of leasehold improvements, and change in the fair value of contingent consideration. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue for the same period.

We believe that the presentation of these non-GAAP financial measures provides useful information to investors regarding our results of operations and operating performance, as they are similar to measures reported by our public competitors and are regularly used by securities analysts, institutional investors, and other interested parties in analyzing operating performance and prospects.

Adjusted EBITDA and Adjusted EBITDA margin are key measures we use to assess our financial performance and are also used for internal planning and forecasting purposes. We believe Adjusted EBITDA and Adjusted EBITDA margin are helpful to investors, analysts, and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. In addition, these measures are frequently used by analysts, investors, and other interested parties to evaluate and assess performance. We use Adjusted EBITDA, and Adjusted EBITDA margin in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance. These measures have certain limitations in that they do not include the impact of certain expenses that are reflected in our consolidated statement of operations that are necessary to run our business. Our definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, our non-GAAP financial measures should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP.

 

AppLovin Corporation

Condensed Consolidated Balance Sheets

(in thousands, except for share and per share data)

 

June 30,

December 31,

 

2021

 

 

2020

 

Assets

(unaudited)

Current assets:

Cash and cash equivalents

$

1,183,743

 

$

317,235

 

Accounts receivable, net

 

383,133

 

 

296,964

 

Prepaid expenses and other current assets

 

149,969

 

 

48,795

 

Total current assets

 

1,716,845

 

 

662,994

 

Property and equipment, net

 

62,986

 

 

28,587

 

Operating lease right-of-use assets

 

80,092

 

 

84,336

 

Goodwill

 

1,016,074

 

 

249,773

 

Intangible assets, net

 

1,675,669

 

 

1,086,332

 

Other assets

 

47,905

 

 

42,571

 

Total assets

$

4,599,571

 

$

2,154,593

 

Liabilities, redeemable noncontrolling interest, and stockholders’ equity (deficit)

Current liabilities:

Accounts payable

$

192,658

 

$

147,275

 

Accrued liabilities

 

130,485

 

 

95,057

 

Licensed asset obligation

 

17,856

 

 

18,760

 

Short-term debt

 

18,310

 

 

15,210

 

Deferred revenue

 

90,054

 

 

86,886

 

Operating lease liabilities

 

24,536

 

 

22,206

 

Deferred acquisition costs, current

 

129,280

 

 

212,658

 

Total current liabilities

 

603,179

 

 

598,052

 

Non-current liabilities:

Long-term debt

 

1,733,676

 

 

1,583,990

 

Operating lease liabilities, noncurrent

 

65,371

 

 

71,755

 

Other non-current liabilities

 

199,708

 

 

59,032

 

Total liabilities

 

2,601,934

 

 

2,312,829

 

Redeemable noncontrolling interest

 

196

 

 

309

 

Stockholders’ equity (deficit):

Convertible preferred stock, 100,000,000 and 109,090,908 shares authorized, nil and 109,090,908 shares issued and outstanding at June 30, 2021 and December 31, 2020; respectively

 

-

 

 

 

399,589

 

Class A, Class B and Class F common stock, $0.00003 par value—1,700,000,000 (Class A 1,500,000,000, Class B 200,000,000, Class F nil) and 429,600,000 (Class A 386,400,000, Class B nil, Class F 43,200,000) shares authorized, 372,165,319 (Class A 224,357,697, Class B 147,807,622, Class F nil) and 226,364,401 (Class A 183,800,251, Class B nil, Class F 42,564,150) shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

 

11

 

 

7

 

Additional paid-in capital

 

3,015,233

 

 

 

453,655

 

Accumulated other comprehensive income (loss)

 

(9,305

)

 

604

 

Accumulated deficit

 

(1,008,498

)

 

 

(1,012,400

)

Total stockholders’ equity (deficit)

 

1,997,441

 

 

(158,545

)

Total liabilities, redeemable noncontrolling interest, and stockholders’ equity (deficit)

$

4,599,571

 

 

$

2,154,593

 

 

AppLovin Corporation

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenue

$

668,806

 

 

$

299,331

 

 

$

1,272,683

 

 

$

559,509

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of revenue

 

245,853

 

 

 

118,051

 

 

 

468,914

 

 

 

194,504

 

Sales and marketing

 

265,463

 

 

 

135,319

 

 

 

530,976

 

 

 

263,986

 

Research and development

 

77,462

 

 

 

29,702

 

 

 

138,338

 

 

 

48,814

 

General and administrative

 

45,050

 

 

 

15,170

 

 

 

88,012

 

 

 

25,980

 

Lease modification and abandonment of leasehold improvements

 

-

 

 

 

7,851

 

 

 

-

 

 

 

7,851

 

Total costs and expenses

 

633,828

 

 

 

306,093

 

 

 

1,226,240

 

 

 

541,135

 

Income (loss) from operations

 

34,978

 

 

 

(6,762

)

 

 

46,443

 

 

 

18,374

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense and loss on settlement of debt

 

(19,030

)

 

 

(18,809

)

 

 

(54,040

)

 

 

(37,438

)

Other income (expense), net

 

(1,570

)

 

 

3,157

 

 

 

8,220

 

 

 

4,178

 

Total other income (expense)

 

(20,600

)

 

 

(15,652

)

 

 

(45,820

)

 

 

(33,260

)

Income (loss) before income taxes

 

14,378

 

 

 

(22,414

)

 

 

623

 

 

 

(14,886

)

Provision for (benefit from) income taxes

 

14

 

 

 

(703

)

 

 

(3,166

)

 

 

2,161

 

Net income (loss)

 

14,364

 

 

 

(21,711

)

 

 

3,789

 

 

 

(17,047

)

Add: Net loss attributable to noncontrolling interest

 

59

 

 

 

320

 

 

 

113

 

 

 

320

 

Net income (loss) attributable to AppLovin

 

14,423

 

 

 

(21,391

)

 

 

3,902

 

 

 

(16,727

)

Less: Net income attributable to participating securities

 

(1,128

)

 

 

-

 

 

 

(807

)

 

 

-

 

Net income (loss) attributable to common stock—Basic

 

13,295

 

 

 

(21,391

)

 

 

3,095

 

 

 

(16,727

)

Net income (loss) attributable to common stock—Diluted

 

13,349

 

 

 

(21,391

)

 

 

3,137

 

 

 

(16,727

)

Net income (loss) per share attributable to common stockholders:

 

 

 

 

 

 

 

Basic

$

0.04

 

 

$

(0.10

)

 

$

0.01

 

 

$

(0.08

)

Diluted

$

0.04

 

 

$

(0.10

)

 

$

0.01

 

 

$

(0.08

)

Weighted average common shares used to compute net income (loss) per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

335,619,207

 

 

 

213,440,147

 

 

 

279,326,624

 

 

 

212,169,247

 

Diluted

 

353,857,814

 

 

 

213,440,147

 

 

 

298,506,265

 

 

 

212,169,247

 

 

AppLovin Corporation

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Net income (loss)

$

14,364

 

 

$

(21,711

)

 

$

3,789

 

 

$

(17,047

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

Foreign currency translation gain (loss), net of tax effect of $2.6 million for the three and six months ended June 30, 2021

 

(9,188

)

 

 

96

 

 

 

(9,909

)

 

 

60

 

Interest rate swap gain, net of tax effect of $0.4 million and $1.0 million for the three and six months ended June 30, 2020

 

-

 

 

 

2,455

 

 

 

-

 

 

 

588

 

Total other comprehensive income (loss)

 

(9,188

)

 

 

2,551

 

 

 

(9,909

)

 

 

648

 

Add: Net loss attributable to noncontrolling interest

 

59

 

 

 

320

 

 

 

113

 

 

 

320

 

Total comprehensive income (loss) attributable to AppLovin

$

5,235

 

 

$

(18,840

)

 

$

(6,007

)

 

$

(16,079

)

 

 

 

 

 

 

 

 

AppLovin Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Six Months Ended June 30,

 

 

2021

 

 

 

2020

 

Operating Activities

 

 

 

Net income (loss)

$

3,789

 

 

$

(17,047

)

Adjustments to reconcile net income (loss) to operating activities:

 

 

 

Amortization, depreciation and write-offs

 

195,973

 

 

 

83,704

 

Amortization of debt issuance costs and discount

 

6,380

 

 

 

3,414

 

Stock-based compensation

 

57,103

 

 

 

8,494

 

Change in operating right-of-use asset

 

12,267

 

 

 

3,578

 

Lease modification and abandonment of leasehold improvements

 

-

 

 

 

7,851

 

Loss on settlement of debt

 

16,852

 

 

 

-

 

Net unrealized gains on fair value remeasurement of financial instruments

 

(9,855

)

 

 

(2,940

)

Net gain on foreign currency remeasurement

 

952

 

 

 

203

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(69,881

)

 

 

7,708

 

Prepaid expenses and other current assets

 

(92,851

)

 

 

(16,840

)

Other assets

 

5,269

 

 

 

2,598

 

Accounts payable

 

33,936

 

 

 

(5,713

)

Operating lease liabilities

 

(12,083

)

 

 

(2,828

)

Accrued and other liabilities

 

6,752

 

 

 

(2,839

)

Deferred revenue

 

(2,327

)

 

 

15,915

 

Net cash provided by operating activities

 

152,276

 

 

 

85,258

 

Investing Activities

 

 

 

Purchase of property and equipment

 

(653

)

 

 

(1,183

)

Acquisitions, net of cash acquired

 

(1,017,012

)

 

 

(523,202

)

Purchase of non-marketable investments and other

 

(14,000

)

 

 

-

 

Proceeds from other investing activities

 

10,000

 

 

 

-

 

Capitalized software development costs

 

(1,517

)

 

 

-

 

Net cash used in investing activities

 

(1,023,182

)

 

 

(524,385

)

Financing Activities

 

 

 

Proceeds from issuance of common stock in initial public offering, including cost reimbursement

 

1,744,240

 

 

 

-

 

Proceeds from debt issuance, net of issuance costs

 

844,729

 

 

 

331,346

 

Payments of debt principal

 

(706,905

)

 

 

(56,690

)

Payments of finance leases

 

(4,621

)

 

 

(4,356

)

Proceeds from exercise of stock options

 

17,888

 

 

 

262

 

Payments of deferred acquisition costs

 

(157,565

)

 

 

(11,020

)

Repurchases of common stock

 

-

 

 

 

(1,766

)

Net cash provided by financing activities

 

1,737,766

 

 

 

257,776

 

Effect of foreign exchange rate on cash and cash equivalents

 

(352

)

 

 

9

 

Net increase (decrease) in cash and cash equivalents

 

866,508

 

 

 

(181,342

)

Cash and cash equivalents at beginning of the period

 

317,235

 

 

 

396,247

 

Cash and cash equivalents at end of the period

$

1,183,743

 

 

$

214,905

 

 

AppLovin Corporation

Condensed Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)

 

Six Months Ended June 30,

 

2021

 

2020

Supplemental non-cash investing and financing activities disclosures:

Issuance of convertible security related to acquisitions

$

342,170

 

$

-

Acquisitions of business through issuance of common stock and common stock warrants

$

-

 

$

38,167

Acquisitions not yet paid

$

119,256

$

9,169

Deferred IPO costs not yet paid

$

986

$

-

Assets acquired under finance leases

$

2,658

$

2,780

Right of use assets acquired under operating leases

$

-

$

6,937

 

Supplemental disclosure of cash flow information:

Cash paid for interest on debt

$

31,767

$

30,236

Cash paid for income taxes

$

32,737

 

$

1,866

 

AppLovin Corporation

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands)

(unaudited)

 

 

 

 

The following table provides our Adjusted EBITDA and Adjusted EBITDA

margin and a reconciliation of Net income (loss) to Adjusted EBITDA:

 

 

 

 

 

Three Months Ended June 30,

 

 

2021

 

 

2020

 

Revenue

$

668,806

 

$

299,331

 

Net income (loss)

$

14,364

 

$

(21,711

)

Net Margin

 

2.1%

 

 

(7.3%

)

Interest expense

 

19,030

 

 

18,809

 

Other (income) / expense, net1

 

1,671

 

 

(3,413

)

Provision for (benefit from) income taxes

 

14

 

 

(703

)

Amortization, depreciation and write-offs

 

107,156

 

 

51,425

 

Non-operating foreign exchange losses

 

6

 

 

40

 

Stock-based compensation2

 

29,435

 

 

5,032

 

Acquisition-related expense and transaction bonus

 

12,056

 

 

3,554

 

Lease modification and abandonment of leasehold improvements

 

-

 

 

7,851

 

Total adjustments

 

169,368

 

 

82,595

 

Adjusted EBITDA

$

183,732

 

$

60,884

 

Adjusted EBITDA Margin

 

27.5%

 

 

20.3%

______________________________

1

Excludes recurring operational foreign exchange gains and losses.

2

The three and six months ended June 30, 2021 includes $2.3 million of bonus compensation settled in stock outside of the scope of ASC 718.

Key Metrics

We review the following key metrics on a regular basis in order to evaluate the health of our business, identify trends affecting our performance, prepare financial projections, and make strategic decisions.

Quarterly Key Metrics

Total Software Transaction Value. Business Software Platform revenue is from third-party clients using our software platform. We do not recognize revenue from our own spend on our software platform. Therefore, we use TSTV to measure the scale and growth rates of our software platform as it reflects the total value on our software platform including our first-party studios as though they were stand-alone businesses. Below is a reconciliation of our Business Software Platform Revenue to Total Software Transaction Value.

($ in thousands)

2Q 2021

2Q 2020

Business Software Platform Revenue

$145,664

$40,909

Software Platform fee collected from AppLovin Apps

$73,414

$6,637

Total Software Transaction Value

$219,078

$47,546

 

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