MW AppLovin shows a different story than other ad-tech names, and the stock rallies

By Claudia Assis

AppLovin stock nearly has quadrupled in the past 12 months

AppLovin Corp. late Wednesday showed that, at least in some corners of the ad-tech and broader tech world, advertising revenue is not a concern.

The mobile-advertising technology company saw advertising revenue jump 71% to $1.16 billion in the first quarter, compared to its own guidance of around $1.05 billion.

And AppLovin (APP) called for even more growth for that business in the second quarter, guiding for advertising revenue between $1.195 billion and $1.215 billion. Shares rallied 13% in after-hours trading.

Investors have grown concerned that ad revenue would take a hit amid economic uncertainty, trade wars and potentially more cautious consumers.

AppLovin reported total first-quarter revenue of $1.48 billion, up 40% from the year-ago quarter and well above Wall Street's expectations of $1.38 billion, according to FactSet.

The company reported GAAP profit of $1.67 a share, compared with consensus for $1.44 a share.

Earlier Wednesday, rival Unity Software Inc. (U) reported quarterly sales of $435 million, also above Wall Street's expectations but a drop from $460 million in the first quarter of 2024.

Unity guided for current-quarter sales of $415 million to $425 million, lower than FactSet consensus for sales of $427 million.

AppLovin had another surprise for investors on Wednesday. It said it has agreed to sell its mobile gaming business to privately held Tripledot Studios for $400 million and an about 20% ownership stake in Tripledot.

In a recent note, analysts at BofA Securities said that AppLovin was one of their top picks among enterprise-software companies,

"We believe several catalysts represent upside risk to already high expectations," the analysts said, including a platform in the works geared toward millions of small e-commerce merchants that does not appear to be already factored in estimates.

Shares of AppLovin have gained nearly 300% in the past 12 months, contrasting with gains of about 9% for the S&P 500 index SPX. The stock has underperformed so far this year, however, off 6% to the S&P's 4% loss.

-Claudia Assis

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May 07, 2025 20:22 ET (00:22 GMT)

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