AppLovin, the digital marketing and advertising company, soared 22% higher to US$57 in pre-market trading as it continues to reap the benefits of its new AI-based engine.
Looking to the first quarter of 2024, the software group is predicting revenue of between US$955 million and US$975 million, adjusted EBITDA of US$475 million – US$495 million, at a margin of 50 to 51%.
Wedbush analysts called the guidance “impressive”, pointing out how if achieved it will bring top-line growth of 2.3% despite facing “unfavourable seasonality”.
The LA bank has therefore increased its own full-year revenue estimates by around US$200 million to US$4.07 billion and upgraded underlying earnings forecasts from US$1.8 billion to US$2.1 billion.
It follows a strong performance in the fourth quarter of 2023, with AppLovin beating guidance to reach sales of US$953 million and underlying earnings of US$476 million.
Much of the success has been driven by AppDiscovery, the group’s AI-based app-scaling software, which provides clients with more efficient ad spend.
Wedbush said: “More efficient spending has resulted in incremental dollars flowing through the company’s ad product suite, which provided a material lift to overall performance through much of 2023.”
Analysts at the investment bank believe AppLovin is also well-positioned to benefit from a decrease in platform fees charged by Google or Apple after it was revealed the latter would begin to allow external app stores for EU users.
AppLovin is rated an ‘outperform’ by Wedbush, which upgraded its share price target to US$67.