By Adam Levine
AppLovin stock soared late Wednesday on strong first-quarter earnings results.
Earnings per share rose to $1.67 versus Wall Street's consensus estimate of $1.44, according to FactSet, and up from 67 cents last year. Revenue for the quarter reached $1.48 billion, above expectations of $1.38 billion, and up 40% on the year.
It was another quarter of exceeding expectations in AppLovin's ad business. Ad revenue was up 71% from a year ago, with adjusted Ebitda, or earnings before interest, taxes, depreciation, and amortization up by 92%, coming out to an 81% margin, up from 73% in 2024.
AppLovin has sold its apps business, and the deal is set to close in the current quarter, the company said.
The company's second-quarter ad business guidance was strong and ahead of analyst expectations. The midpoint of its revenue outlook came in at $1.2 billion, up 69% on the year, with adjusted Ebitda rising by 86%.
AppLovin stock was up 17% in late trading following the release.
AppLovin's questions headed into earnings were headlined by a series of short seller reports in the first quarter. AppLovin stock is down 20% since the first of those negative reports were published in February, with the S&P 500 off 6% over the same period.
AppLovin provides an ad exchange for app-makers, e-commerce, and streaming video. The short sellers have made a range of accusations related to the company's ad practices, including that they may violate the terms of the app stores from Apple and Alphabet's Google.
AppLovin has said "claims of financial and accounting improprieties are factually incorrect and have no basis whatsoever." Neither Apple nor Google has responded to the accusations.
Since February, analysts have lowered price targets, and the consensus projection is down from $542 to $472, which represents an upside of 58% from current levels. Over three-quarters of analysts have a Buy or equivalent rating, according to FactSet. Just two out of 31 analysts have a Sell or equivalent rating.
Write to Adam Levine at adam.levine@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 07, 2025 16:38 ET (20:38 GMT)
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