AppLovin (NASDAQ:APP), the artificial intelligence-powered mobile advertising company, posted first-quarter revenue and earnings that exceeded Wall Street expectations, supported by continued strong demand for its advertising offerings and AI-enabled tools.
The stock gained more than 2% in premarket trading Thursday following the results.
The company operates a platform that powers digital advertising across mobile applications, particularly within the gaming sector.
Earnings and revenue top forecasts
Adjusted earnings for the first quarter reached $3.56 per share, marking a 59% increase from the same period last year and surpassing analyst expectations of $3.42 per share by $0.14.
Quarterly revenue totaled $1.84 billion, ahead of the consensus estimate of $1.78 billion. Advertising revenue increased 11% from the previous quarter, outperforming the company’s target growth rate of 6%.
Analysts highlight eCommerce and gaming momentum
“Investor expectations for eCommerce have come down considerably. We think that largest pool of marginal buyers is looking for an eCommerce inflection to signal that AppLovin is on its way to becoming the third largest GTM channel behind Google and Meta,” BofA analysts had said in a note.
Morgan Stanley analysts separately said ad revenue growth was “driven by a model breakthrough in ecommerce and continued innovation in gaming.”
“We see a long runway for tech improvements and higher conversion rates ahead, with self-serve and new ad inventory still catalysts ahead,” they added.
Second-quarter outlook remains upbeat
AppLovin projected second-quarter revenue of as much as $1.95 billion, exceeding analysts’ expectations of $1.9 billion and signaling continued business momentum.
However, BofA analysts said they do not expect a General Availability rollout of AppLovin’s self-serve eCommerce platform to have a major near-term impact on revenue, noting that “newly onboarded advertisers don’t spend much in the first few months after joining.”
More about AppLovin
AppLovin operates a technology platform focused on mobile app monetization and advertising. The company provides developers and advertisers with tools powered by artificial intelligence to drive user acquisition, improve engagement, and optimize ad performance across mobile ecosystems, with a strong presence in gaming and expanding exposure to eCommerce advertising.