In the lead-up to Applovin's (APP, Financial) earnings announcement, the trading activity in options is typical, with call options being favored over put options at a ratio of 2:1. The implied volatility indicates that the market is gearing up for a potential price shift of approximately 17.4%, translating to a projected stock price of $52.33 following the results. Historically, the median price fluctuation over the last eight quarters has been 23.8%.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 21 analysts, the average target price for AppLovin Corp (APP, Financial) is $468.80 with a high estimate of $650.00 and a low estimate of $200.00. The average target implies an upside of 55.79% from the current price of $300.92. More detailed estimate data can be found on the AppLovin Corp (APP) Forecast page.
Based on the consensus recommendation from 27 brokerage firms, AppLovin Corp's (APP, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for AppLovin Corp (APP, Financial) in one year is $89.93, suggesting a downside of 70.11% from the current price of $300.92. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the AppLovin Corp (APP) Summary page.
APP Key Business Developments
Release Date: February 12, 2025
- Total Revenue: $1.37 billion, a 44% increase year-over-year.
- Adjusted EBITDA: $848 million, a 78% increase, with a 62% margin.
- Free Cash Flow: $695 million, up 105% year-over-year.
- Cash and Cash Equivalents: $741 million at the end of Q4.
- Advertising Revenue: $999 million with $777 million in adjusted EBITDA, achieving a 78% margin.
- Apps Revenue: $373 million, a 1% decrease from last year, with $71 million in adjusted EBITDA at a 19% margin.
- Annual Revenue: $4.7 billion, a 43% increase from last year.
- Annual Adjusted EBITDA: $2.72 billion, an 81% increase, with a 58% margin.
- Annual Free Cash Flow: $2.1 billion, representing a 76% flow-through from adjusted EBITDA.
- Share Repurchase: 25.7 million shares repurchased for $2.1 billion at an average price of $83 per share.
- Q1 2025 Advertising Revenue Guidance: $1.030 billion to $1.050 billion, with adjusted EBITDA between $805 million and $825 million.
- Q1 2025 Apps Revenue Guidance: $325 million to $335 million, with adjusted EBITDA between $50 million and $60 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AppLovin Corp (APP, Financial) achieved a 44% increase in total revenue year-over-year, reaching $1.37 billion in Q4 2024.
- Adjusted EBITDA increased by 78% to $848 million, with a strong margin of 62%.
- The company generated $695 million in free cash flow, marking a 105% increase year-over-year.
- AppLovin Corp (APP) is expanding its advertising platform beyond gaming, successfully attracting a broader set of advertisers, including e-commerce.
- The company is transitioning to a pure advertising platform, focusing on productivity, automation, and building lean, high-impact teams, with a notable $3 million in run rate adjusted EBITDA per employee in the advertising business.
Negative Points
- AppLovin Corp (APP) is still developing its systems and lacks full self-service capabilities, which limits its ability to handle growth at scale.
- The company experienced a step function increase in data center costs, impacting the flow-through from revenue to adjusted EBITDA.
- There is uncertainty regarding the timing and extent of growth from the e-commerce segment, making it difficult to predict its material contribution in 2025.
- The company is in the process of divesting its Apps business, which could lead to a decrease in revenue from this segment.
- AppLovin Corp (APP) faces challenges in expanding its platform to include non-gaming app advertisers and websites, requiring further development and integration efforts.
