Growing more than 900% last year, investors continue to love Applevin’s strong growth. Is it too late to buy stocks?
application (NASDAQ: Application) Still one of the hottest stocks around, its stock soared after its fourth-quarter earnings report. As of this writing, the stock has grown more than 900% over the past year.
Appleovin’s main business is an ADTECH platform used by mobile app developers to attract users and better utilize their applications to monetize. It also has its own old product portfolio of its own apps. The company has exploded since the launch of its advertising technology solution based on AXON 2 AI in the second quarter of 2023.
Let’s take a closer look at the latest results for this best performing artificial intelligence (AI) stock to see if it’s too late to buy stocks.
Axon 2 continues to drive Applovin’s growth, with advertising (formerly known as software platform) segment revenue growing 73% to $999.5 million. Meanwhile, its application portfolio revenue fell 1% to $373.3 million. Overall revenue jumped 44% to $1.37 billion, surpassing the consensus of $1.26 billion LSEG.
The company continues to see steady gross margin gains, rising from 71.3% a year ago to 76.7%. Appleovin is able to reduce its sales and marketing spending by 4%. This helps earnings metrics grow faster than revenue.
Earnings per share (EPS) soared to $1.73 from $0.49 a year ago, breaking the consensus of $1.24. Meanwhile, earnings from adjusted interest, taxes, depreciation and amortization (EBITDA) soared 78% to $848 million. Ad-adjusted EBITDA soared 85% to $777 million, while its application business allowed EBITDA to grow 27% to $71.3 million as the company continues to focus on the cost side of the business.
Applovin generates $701 million in operating cash flow and $695 million in free cash flow. It ended with $2.8 billion in net debt.
Looking ahead, Applevin predicts first-quarter revenue to grow between $1.355 billion and $1.385 billion, accounting for 28% to 31%. It is guided by adjusted EBITDA in the first quarter and ranges from $855 million to $885 million, up from $549 million a year ago.
Meanwhile, the company announced it would sell its application business, totaling about $900 million, including $500 million in cash. The deal is expected to close in the second quarter. The deal will make the company a purebred ADTECH company.
The company’s most focused focus in 2025 is developing self-service capabilities for advertisers. This will allow it to increase revenue growth without having to hire more employees.
Appleovin says it has already achieved early success in e-commerce verticals, not just direct-to-consumer brands. But while the company is confident that e-commerce will become a significant contributor in 2025, the exact timing is uncertain. Appleovin also noted that it does not want to compete for the same advertising funding as traditional social media companies, but rather expands the category.
