AppLovin Corp (NASDAQ:APP) shares surged nearly 45% on Thursday, hitting a record high after the mobile advertising company reported impressive third-quarter earnings and a positive outlook for the fourth quarter.
For Q3 2024, AppLovin posted revenue of $1.2 billion, marking a 39% year-over-year increase. The company’s advertising revenue saw a significant 66% jump to $835 million, supported by a 78% adjusted EBITDA margin.
AppLovin’s CEO, Adam Foroughi, highlighted the company’s optimistic growth outlook. "We expect 20-30% year-over-year growth in the coming quarters," he said.
Foroughi also emphasized ongoing advancements in the company’s Axon algorithm and a promising e-commerce pilot set to scale in 2025.
The advertising segment, now branded as the Software Platform, generated $835 million in revenue and $653 million in EBITDA.
Looking ahead, AppLovin projected fourth-quarter revenue in the range of $1.24 billion to $1.26 billion, with EBITDA between $740 million and $760 million, representing a 60% margin. The company anticipates year-over-year revenue growth of 30-32%, with ad revenue expected to rise by over 50% in Q4.
Analysts at Jefferies were particularly impressed with AppLovin’s ability to drive advertising revenue growth, noting that in the last five quarters since the launch of Axon 2.0, the company has consistently achieved double-digit quarter-over-quarter revenue growth.
The analysts pointed out that AppLovin's ability to deliver step-function model enhancements is a long-term competitive advantage, with expectations for continued solid growth in the coming quarters.
“The company’s Q4 guidance suggests sequential growth of about 5% quarter-over-quarter, which is impressive given the challenging comparison from last year,” the analysts wrote.
The company’s focus on e-commerce was another key point of interest for analysts. While still in the early stages, AppLovin’s new e-commerce product is receiving positive feedback, with management noting that it could make a significant contribution to revenue growth in 2025.