AppLovin erupts 30% on revenue, guidance beat; MS sees signs of stability By

© Reuters. AppLovin (APP) erupts 30% on revenue, guidance beat; MS sees signs of stability

By Senad Karaahmetovic

Shares of AppLovin (NASDAQ:) are up about 30% in pre-market Thursday after the mobile application technology company delivered better-than-expected revenue and forecast for the first quarter of a new fiscal year.

APP a loss per share of $0.21 on revenue of $702 million, which compares to the analyst consensus for a loss per share of $0.05 on revenue of $691.5M. Despite the EPS miss, the adjusted EBITDA came in at $259.6M, beating the $253.7M consensus.

“Our business performed as expected in the fourth quarter with steady results in our Software Platform segment and the operational optimization of our Apps segment nearing completion. Underlying trends in the mobile gaming and app market remained soft but stable as compared to the third quarter. We continue to invest in our strong team who are expanding our leading ad solutions, improving our Apps portfolio and pursuing several growth initiatives,” the company said in a letter to shareholders.

On the guidance front, the company sees Q1 revenue at $695M (up or down $10M), beating the consensus for revenue of $687.2M. The company also sees Q1 adjusted EBITDA in the range of $250-270M.

Morgan Stanley analysts said shares are up sharply higher as the Q4 earnings report and guidance show signs of business stability.

“APP’s solid 4Q results were modestly ahead of expectations, but sequential stability in the 1Q guidance came as a positive surprise. While we remain cautious on the in-app advertising market in ’23, stability counts as a win in this environment and is a modestly positive read-through for U,” the analysts wrote in a note.

BTIG analysts added:

“The mobile gaming market appears to be in a holding pattern with “soft, but stable” trends translating to steady q/q Software performance and better-than-feared forward guidance.”

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