Applovin (APP) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $1.08 billion, up 44% year-over-year, with Adjusted EBITDA of $601 million, reflecting 80% growth and strong Software Platform performance.

• Net income for Q2 2024 was $310 million, up from $80.4 million in Q2 2023.

• Software business grew 5% quarter-over-quarter, continuing momentum from a significant Q1 step-up.

• Platform remains performance-based, with advertisers seeking measurable returns and high demand exceeding current system capacity.

• Launched pilot web advertising campaigns for e-commerce, showing promising early results and expected to scale in 2025 and beyond.

Financial highlights

• Adjusted EBITDA margin reached 56% in Q2 2024, with an 81% flow-through from revenue to Adjusted EBITDA.

• Free cash flow in Q2 was $446 million, up 15% quarter-over-quarter, with a 74% flow-through from Adjusted EBITDA.

• Software platform generated $711 million in revenue and $520 million in Adjusted EBITDA, maintaining a 73% margin and growing 91% year-over-year.

• Apps revenue was $369 million, up 7% year-over-year, with $81 million in Adjusted EBITDA and a 22% margin.

• Q2 2024 net income: $310 million (net margin 28.7%); Q2 2024 diluted EPS: $0.89, up from $0.22 in Q2 2023.

Outlook and guidance

• Q3 2024 revenue expected between $1.115 billion and $1.135 billion, with Adjusted EBITDA between $630 million and $650 million, targeting a 57% margin.

• Long-term software business growth goal set at 20%-30% annually, driven by model improvements, team enhancements, and expansion into new verticals.

• Management expects continued investment in R&D and expansion into new verticals, including eCommerce and CTV.

• Confident in sustaining 5%-7% quarter-over-quarter growth in the software business for the foreseeable future.

• Plans to further grow global client base and expand outside the U.S., with 43% of Q2 2024 Software Platform and IAA revenue from international clients.