APP - AppLovin Q1: Primed For Market Share Expansion

2024-05-15 12:34:13 ET

Summary

• AppLovin operates two main segments: a software platform (or an advertising exchange) that connects advertisers with publishers and a gaming portfolio with over 200 mobile games.
• APP's key competitive advantage is AXON, its AI model that enhances matches between advertisers and publishers, increasing ROI and monetization, thus strengthening the network effect.
• In 1Q24, AppLovin reported substantial growth in software platform revenue, driven by new and existing advertisers, enhanced by AXON's performance.
• My forward 1-year valuation implies a 25% upside.
• I'm recommending AppLovin as a "buy"

Brief Overview of AppLovin

AppLovin Corporation ( APP ) operates through two distinct business segments. Firstly, its software platform, also known as APP's advertising exchange, serves as a bridge connecting advertisers with publishers. This platform primarily assists advertisers in automating, optimizing, and managing their marketing efforts for advertisers while also enabling publishers to monetize their ad inventories. APP earns revenue through commissions from successfully facilitating these transactions, representing higher-margin revenue streams. The second segment encompasses its game portfolio, boasting over 200 free-to-play mobile games, where APP generates revenue through in-app purchases or by monetizing its app's ad inventory....

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