AppLovin reported strong first-quarter earnings of $1.67 per share, beating estimates between $1.44 and $1.45. Revenue for the quarter reached $1.48 billion, a 40% increase compared to last year, and higher than the expected $1.38 billion. Ad revenue grew by 71% year-over-year, leading to an adjusted EBITDA margin of 81%.
Following these positive results, AppLovin’s stock jumped 17% in late trading. The company plans to complete the sale of its apps business in this quarter.
Despite recent challenges, AppLovin posted these strong results. The stock had dropped around 20% since February when several short seller reports raised concerns about the company’s ad practices, alleging potential violations of app store rules by Apple and Google. AppLovin denied these claims, stating they are incorrect.
Wall Street generally remains optimistic about AppLovin. Over three-quarters of analysts recommend buying the stock, and only two out of 31 analysts have a sell rating.
Looking ahead, AppLovin expects strong revenue for the second quarter, projecting about $1.2 billion, which would be a 69% increase from the same period last year. Adjusted EBITDA is expected to rise by 86% in the second quarter.
CEO Adam Foroughi addressed concerns about possible tariff impacts, clarifying that the company focuses on mid-sized web advertisers, not large Chinese e-commerce businesses affected by tariff changes.
This is the fourth quarter in a row that AppLovin has surpassed earnings estimates. Although shares have underperformed overall this year, with a 5.9% decline compared to the S&P 500’s 4.7% drop, these strong results could help improve this trend.
Analysts have a current price target of $472 for AppLovin, suggesting a potential upside of 58% from current prices. This target was lowered from $542 after the short seller reports.
AppLovin provides an ad exchange platform for app developers, e-commerce companies, and streaming video services. The latest quarterly results show continued strong growth in its advertising technology business.