AppLovin Announces First Quarter 2021 Results

05/12/2021

Revenue up 132% year over year to $604 million; Initiates full year 2021 Revenue and Adjusted EBITDA guidance of between $2.65 and $2.70 billion and between $680 and $700 million, respectively

AppLovin Corporation (NASDAQ: APP) (“AppLovin” or “we”), a leading marketing software company, today announced financial results for the first quarter ended March 31, 2021 and posted a letter to its shareholders on its investor relations website.

“We are excited to deliver record revenue in our first earnings report as a newly public company. Our record growth 1Q21 results are driven by the powerful combination of our integrated business model, incorporating software, content and data. Additionally, in April 2021 we closed on the previously announced acquisition of app measurement leader Adjust as well as completed the acquisitions of two more top grossing games: West Game and Cash Tornado Slots,” said Adam Foroughi, CEO and co-founder of AppLovin. ”As we continue to grow our content portfolio, gain access to data, and improve the efficacy of our marketing software, we see a path to outsized growth for years to come.”

First Quarter 2021 Financial Summary

We achieved our highest revenue and Adjusted EBITDA growth quarter in total and across all parts of our business. All comparisons are versus Q1 2020.

  • Total revenue was $603.9 million, an increase of 132%. Organic revenue growth was 89%.
  • Net loss was $10.6 million compared to net income of $4.7 million in 1Q20.
  • Adjusted EBITDA totaled $131 million, an increase of 110%.

Fiscal 2021 Outlook

  • Total Revenue of $2.65 - $2.70 billion, representing approximately +83% growth.
  • Total Adjusted EBITDA of $680-$700 million, representing approximately +100% growth.

We have not provided the forward-looking GAAP equivalent for our Adjusted EBITDA guidance as a result of the uncertainty regarding, and the potential variability of, certain reconciling items such as stock-based compensation expense. Accordingly, a reconciliation of our Adjusted EBITDA guidance to net income (loss), the corresponding GAAP measure, is not available without unreasonable effort. However, it is important to note that material changes to reconciling items could have a significant effect on future GAAP results. We have provided a reconciliation of historical Adjusted EBITDA to net income (loss) in tables at the end of this release.

(1) Organic growth represents revenue growth from existing Apps owned at the end of the prior period and newly developed Apps from existing Owned and Partner Studios owned at the end of the prior period.

Webcast and Conference Calls

AppLovin will host a webcast and conference call today at 2:00 PM PT / 5:00 PM ET, during which management will discuss first quarterly results and provide commentary on business performance. A question-and-answer session will follow the prepared remarks.

The live audio webcast may be accessed on the Company’s investor relations website. The conference call can be accessed by dialing 1-877-407-9716 for domestic callers or 1-201-493-6779 for international callers. A replay of the call via webcast will be available at: https://investors.AppLovin.com until June 12, 2021.

About AppLovin

AppLovin’s leading marketing software provides developers a powerful, integrated set of solutions to grow their businesses. AppLovin enables developers to market, monetize, analyze and publish their apps. The company’s first party content includes over 200+ popular, engaging apps and its technology brings that content to millions of users around the world. AppLovin is headquartered in Palo Alto, California with several offices globally.

Source: AppLovin Corp.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “going to,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, priorities, plans, or intentions. Forward-looking statements in this letter to shareholders include, but are not limited to, statements regarding our future financial performance, including our expected financial results and guidance; our expectations regarding our revenue and Adjusted EBITDA; and our expectations regarding our market opportunity and future growth. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties, including changes in our plans or assumptions, that could cause actual results to differ materially from those projected. These risks include our inability to forecast our business due to our limited operating history, fluctuations in our results of operations, the competitive mobile app ecosystem, our inability to adapt to emerging technologies and business models. The forward-looking statements contained in this letter to shareholders are also subject to other risks and uncertainties, including those more fully described in our prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on April 15, 2021. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2021. The forward-looking statements in this press release are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward-looking statements, except as required by law.

Non-GAAP Financial Measures

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States (“GAAP”), this release includes certain financial measures that are not prepared in accordance with GAAP, including Adjusted EBITDA. A reconciliation of such non-GAAP financial measure to the most directly comparable GAAP measure can be found below.

We define Adjusted EBITDA for a particular period as net income (loss) before interest expense and loss on settlement of debt, other (income) expense, net, provision for (benefit from) income taxes, amortization, depreciation and write-offs and as further adjusted for stock-based compensation expense, acquisition-related expense, loss (gain) on extinguishments of acquisition-related contingent consideration, non-operating foreign exchange losses, lease modification and abandonment of leasehold improvements, and change in the fair value of contingent consideration.

We believe that the presentation of Adjusted EBITDA provides useful information to investors regarding our results of operations and operating performance, as it is similar to measures reported by our public competitors and are regularly used by securities analysts, institutional investors and other interested parties in analyzing operating performance and prospects.

Adjusted EBITDA is a key measure we use to assess our financial performance and is also used for internal planning and forecasting purposes. We believe Adjusted EBITDA is helpful to investors, analysts, and other interested parties because it can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. In addition, this measure is frequently used by analysts, investors, and other interested parties to evaluate and assess performance. We use Adjusted EBITDA in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance. This non-GAAP financial measure is presented for supplemental informational purposes only and should not be considered as an alternative or substitute to financial information presented in accordance with GAAP. This measure has certain limitations in that it does not include the impact of certain expenses that are reflected in our consolidated statement of operations that are necessary to run our business. Our definition may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Furthermore, Adjusted EBITDA has certain limitations in that it does not include the impact of certain expenses that are reflected in our consolidated statement of operations that are necessary to run our business. Thus, our non-GAAP financial measures should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP.

AppLovin Corporation
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)

 

March 31,

 

December 31,

 

2021

 

2020

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

761,075

 

$

317,235

Accounts receivable, net

 

340,881

 

 

296,964

Prepaid expenses and other current assets

 

82,865

 

 

48,795

Total current assets

 

1,184,821

 

 

662,994

Property and equipment, net

 

22,167

 

 

28,587

Operating lease right-of-use assets

 

78,540

 

 

84,336

Goodwill

 

249,385

 

 

249,773

Intangible assets, net

 

1,036,800

 

 

1,086,332

Other assets

 

49,686

 

 

42,571

Total assets

$

2,621,399

 

$

2,154,593

Liabilities, redeemable noncontrolling interest, and stockholders’ deficit

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

158,023

 

$

147,275

Accrued liabilities

 

95,102

 

 

95,057

Licensed asset obligation

 

17,666

 

 

18,760

Short-term debt

 

18,310

 

 

15,210

Deferred revenue

 

85,892

 

 

86,886

Operating lease liabilities

 

21,726

 

 

22,206

Deferred acquisition costs, current

 

89,877

 

 

212,658

Total current liabilities

 

486,596

 

 

598,052

Non-current liabilities:

 

 

 

Long-term debt

 

2,137,612

 

 

1,583,990

Operating lease liabilities, noncurrent

 

66,604

 

 

71,755

Other non-current liabilities

 

60,309

 

 

59,032

Total liabilities

 

2,751,121

 

 

2,312,829

 

 

 

 

Redeemable noncontrolling interest

 

255

 

 

309

Stockholders’ deficit:

 

 

 

Convertible preferred stock, 109,090,908 shares authorized, issued,

 

 

 

and outstanding at December 31, 2020 and March 31, 2021; respectively

 

399,589

 

 

399,589

Common stock A, $0.00003 par value—386,400,000 shares authorized,

 

 

 

183,800,251 and 184,817,898 shares issued and outstanding

 

 

 

at December 31, 2020 and March 31, 2021, respectively

 

6

 

 

6

Common stock F, $0.00003 par value—43,200,000 shares authorized,

 

 

 

42,564,150 shares issued and outstanding

 

 

 

at December 31, 2020 and March 31, 2021, respectively

 

1

 

 

1

Additional paid-in capital

 

493,465

 

 

453,655

Accumulated other comprehensive income (loss)

 

(117)

 

 

604

Accumulated deficit

 

(1,022,921)

 

 

(1,012,400)

Total stockholders’ deficit

 

(129,977)

 

 

(158,545)

Total liabilities, redeemable noncontrolling interest, and stockholders’ deficit

$

2,621,399

 

$

2,154,593

AppLovin Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

 

Three Months Ended March 31,

 

2021

 

2020

Revenue

$

603,877

 

$

260,178

Costs and expenses:

 

 

 

Cost of revenue

 

223,061

 

 

76,453

Sales and marketing

 

265,513

 

 

128,667

Research and development

 

60,876

 

 

19,112

General and administrative

 

42,962

 

 

10,810

Total cost and expenses

 

592,412

 

 

235,042

Income (loss) from operations

 

11,465

 

 

25,136

Other income (expense):

 

 

 

Interest expense and loss on settlement of debt, net

 

(35,010)

 

 

(18,629)

Other income, net

 

9,790

 

 

1,021

Total other income (expense)

 

(25,220)

 

 

(17,608)

Income (loss) before provision for income taxes

 

(13,755)

 

 

7,528

Provision for (benefit from) income taxes

 

(3,180)

 

 

2,864

Net income (loss)

 

(10,575)

 

 

4,664

Less: Net loss attributable to noncontrolling interest

 

(54)

 

 

-

Net income (loss) attributable to common shareholders

 

(10,521)

 

 

4,664

 

 

 

 

Less: Net income attributable to participating securities

 

-

 

 

(1,677)

Net income (loss) attributable to common stock - Basic

 

(10,521)

 

 

2,987

Net income (loss) attributable to common stock - Diluted

$

(10,521)

 

$

3,004

 

 

 

 

Net income (loss) per share attributable to common stockholders:

 

 

 

Basic

$

(0.05)

 

$

0.01

Diluted

$

(0.05)

 

$

0.01

 

 

 

 

Weighted average common shares used to compute

 

 

 

net income (loss) per share attributable to common stockholders:

 

 

 

Basic

 

222,408,568

 

 

210,898,346

Diluted

 

222,408,568

 

 

214,053,440

AppLovin Corporation
Condensed Consolidated Statements of Comprehensive Loss
(In thousands)
(Unaudited)

 

Three Months Ended March 31,

 

2021

 

2020

Net income (loss)

$

(10,575)

 

$

4,664

Other comprehensive loss, net of tax:

 

 

 

Foreign currency translation

 

(721)

 

 

(36)

Interest rate swap—unrealized gain (loss), net of tax provision for (benefit from) of nil and $0.5 million, respectively

 

-

 

 

(1,867)

 

 

 

 

Total other comprehensive loss

 

(721)

 

 

(1,903)

Less: Net loss attributable to noncontrolling interest

 

(54)

 

 

-

Total comprehensive income (loss) attributable to common shareholders

$

(11,242)

 

$

2,761

AppLovin Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands, except per share data)
(Unaudited)

 

Three Months Ended March 31,

 

2021

 

2020

Operating Activities

 

 

 

Net income (loss)

$

(10,575)

 

$

4,664

Adjustments to reconcile net income (loss) to operating activities:

 

 

 

Amortization, depreciation and write-offs

 

88,817

 

 

32,279

Amortization of debt issuance costs and discount

 

4,303

 

 

1,421

Stock-based compensation

 

29,959

 

 

3,462

Change in operating right-of-use asset

 

5,796

 

 

1,184

Loss on settlement of debt

 

16,852

 

 

-

Net unrealized gains on fair value remeasurement of financial instruments

 

(11,214)

 

 

-

Net gain on foreign currency remeasurement

 

(1,305)

 

 

(49)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(43,917)

 

 

(3,435)

Prepaid expenses and other current assets

 

(18,775)

 

 

4,450

Other assets

 

472

 

 

53

Accounts payable

 

9,370

 

 

5,352

Operating lease liabilities

 

(5,631)

 

 

(1,098)

Accrued and other liabilities

 

(1,339)

 

 

(2,942)

Deferred revenue

 

(994)

 

 

346

Net cash provided by operating activities

 

61,819

 

 

45,687

Investing Activities

 

 

 

Purchase of property and equipment

 

(121)

 

 

(200)

Acquisitions, net of cash acquired

 

(4,152)

 

 

(54,499)

Purchase of non-marketable investments and other

 

(14,000)

 

 

-

Net cash used in investing activities

 

(18,273)

 

 

(54,699)

Financing Activities

 

 

 

Proceeds from debt issuance, net of issuance costs

 

844,729

 

 

49,835

Payments of debt principal

 

(302,327)

 

 

(3,053)

Payments of finance leases

 

(840)

 

 

(1,669)

Proceeds from exercise of stock options

 

12,882

 

 

145

Payments of deferred acquisition costs

 

(152,245)

 

 

(11,019)

Repurchase of common stock

 

-

 

 

(760)

Payments of deferred IPO costs

 

(1,825)

 

 

- -

Net cash provided by financing activities

 

400,374

 

 

33,479

Effect of exchange rate on changes on cash and cash equivalents

 

(80)

 

 

7

Net increase in cash and cash equivalents

 

443,840

 

 

24,474

Cash and cash equivalents at beginning of the period

 

317,235

 

 

396,247

Cash and cash equivalents at end of the period

$

761,075

 

$

420,721

AppLovin Corporation
Condensed Consolidated Statement of Cash Flows (continued)
(In thousands)
(Unaudited)

 

Three Months Ended March 31,

 

2021

 

2020

Supplemental non-cash investing and financing activities disclosures:

 

 

 

Acquisitions not yet paid

$

32,161

 

$

5,370

Deferred IPO costs not yet paid

$

1,834

 

$

-

Assets acquired under finance leases

$

445

 

$

1,419

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

Cash paid for interest on debt

$

15,662

 

$

15,837

Cash paid for income taxes

$

221

 

$

2,056

AppLovin Corporation
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(Unaudited and in thousands, except per share data)

The following table provides our Adjusted EBITDA and Adjusted EBITDA margin and a reconciliation of net income (loss) to Adjusted EBITDA:

 

Three Months Ended March 31,

($ in thousands)

2021

2020

Revenue

$

603,877

$

260,178

Net income (loss)

$

(10,575)

$

4,664

Interest expense

 

35,010

 

18,629

Other (income) expense, net

 

(8,626)

 

(1,110)

Provision for (benefit from) income tax

 

(3,180)

 

2,864

Amortization, depreciation and write-offs

 

88,817

 

32,279

Non-operating foreign exchange gain

 

(1,281)

 

-

Stock-based compensation

 

29,959

 

3,462

Acquisition-related expense

 

938

 

1,657

Total adjustments

 

141,637

 

57,781

Adjusted EBITDA

$

131,062

$

62,445

Adjusted EBITDA Margin

 

21.7%

 

24.0%

 

Investors
ir@applovin.com

Press
Emelyne Interior
press@applovin.com

Source: AppLovin Corp.