Applovin Corp (NASDAQ:APP) stock closed higher by 12% on Thursday after the company reported better-than-expected first-quarter financial results on Wednesday.
AppLovin reported quarterly sales of $1.48 billion, beating the consensus estimate of $1.38 billion and representing a 40% year-over-year increase.
The company reported adjusted earnings per share of $1.67, beating the consensus estimate of $1.45.
The company guided second-quarter advertising revenue of $1.19 billion-$1.21 billion.
Also Read: Muddy Waters Doubles Down On AppLovin In New Short Report Ahead Of Q1 Earnings
Wall Street analysts rerated the stock after the report:
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JP Morgan analyst Cory Carpenter maintained AppLovin with a Neutral and raised the price target from $270 to $355.
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Goldman Sachs analyst Eric Sheridan reiterated a Neutral on AppLovin and raised the price target from $335 to $435.
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BofA Securities analyst Omar Dessouky maintained AppLovin with a Buy and a price target of $580.
JP Morgan: The rerating reflects risk shares could underperform in a weaker macro environment given e-commerce exposure and less advertiser breadth than larger ad platforms.
Applovin revenue grew 40% year over year, and adjusted EBITDA grew 83% year over year, topping management guidance of 29% and 59%. The advertising segment once again drove the upside, with revenue growth of 71% year over year and adjusted EBITDA growth of 92% year over year to a record 81% margin.
Management called out model enhancements and a full quarter contribution of e-commerce ads, with gaming accounting for most of the sequential growth.
Applovin guided to advertising revenue of $1.195-1.215 billion (69% Y/Y) and advertising adjusted EBITDA of $970 million-990 million (88% Y/Y, 81% margin), both well above the consensus of $1.100 billion and $863 million. The outlook implies sequential revenue growth of 3%-5%, which reflects seasonality and resource constraints in onboarding new advertisers until the self-serve platform opens up.
Carpenter projected second-quarter revenue of $1.22 billion and EPS of $2.01.
Goldman Sachs: AppLovin management emphasized key themes in its first-quarter earnings report. Strong advertising revenue performance on the back of continued success with its Axon 2.0 platform and the early scaling of its push into the e-commerce opportunity.
A focus on executing against their advertising opportunity on the back of technological scaling. A focus on driving operational efficiencies with an aim toward the compounded effect of high incremental margins. In addition, AppLovin announced it has reached an agreement to sell its legacy Apps business to Tripledot Studios as it completes its multi-year strategic shift towards advertising.
