AppLovin Just Beat Earnings And Shares Are Flying — But What Do The Analysts Think?

Mobile app tech company AppLovin Corp APP reported its first-quarter results on Wednesday at the closing bell, beating revenue expectations while missing on earnings. The stock is also flying higher.

By The Numbers: The company posted revenues of $715.4 million, beating consensus estimates of $693.51 million. The company reported a loss of 1 cent per share, falling short of the expected earnings of 7 cents per share.

The company generated $289 million of cash from operating activities and $283 million of free cash flow during the quarter. It also repurchased $202 million of its common stock year-to-date and ended the quarter with $1.2 billion in cash and equivalents.

Looking ahead, AppLovin expects second-quarter revenue to be between $710 million and $730 million, with adjusted EBITDA projected to be between $280 million and $300 million.

More on the earnings here.

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The William Blair Analyst: Ralph Schackart was optimistic about Applovin’s future due to its shift to growth initiatives including upgrading AXON technology, expanding into Connected TV (CTV) and extending its marketing platform.

Notably, the software returned to sequential growth after two quarters of declines. The decline in monthly active players from 2.7 million in the first quarter of 2022 to 1.8 million in the first quarter of 2023 was highlighted.

The Oppenheimer Analyst: Martin Yang reiterated an Outperform rating and rose the price target to $25 from $20. Yang noted Applovin's impressive 16% quarter-over-quarter growth of Software Platform in the first quarter, and said it’s expected that the rollout of AXON 2 will drive incremental sales growth in the full year 2023.

The Needham Analyst: Bernie McTernan maintained a Hold rating, highlighting a first-quarter beat that led to an increase in full year 2023 and full year 2024 adjusted EBITDA estimates.

Like Yang, McTernan noted Applovin’s software platform, as well as an expectation of further tech improvements with the launch of Axon 2.0.

The Morgan Stanley Analyst: Matthew Cost had an Equal Weight rating with a $28 price target. Cost said there’s a potential for the recovery of the mobile app economy, but it might not be until the first half of 2024.

In relation to Applovin, the analyst highlighted the strong return to ad growth, crediting it to a shift in advertiser mentality towards growth and improved platform performance.

APP Price action: Shares of AppLovin are trading 24.31% higher to $22.14, according to Benzinga Pro Thursday at publication.

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