APP: 600% YTD return, how this bull stock made?

The mobile software advertising platform $AppLovin Corporation(APP)$ which has been hitting record highs so far this year, has once again greatly exceeded expectations in its Q3 2024 earnings report, which came in after the bell on Nov. 6, jumping nearly 30%.So far this year, it has risen more than 5x!

Q3 Financial Performance

1. Revenue Growth: Total revenue for the third quarter reached $1.20 billion, up 39% year-over-year and exceeding expectations of $1.13 billion.Revenue growth was particularly notable in the software platforms segment, which reached $835 million, up 66 percent year-over-year.

   

2. Earnings: The company delivered net income of $434 million and earnings per share of $1.25 in the quarter, both of which greatly exceeded market expectations, as the company continued to improve on its profitability.Adjusted EBITDA was $722 million, a year-over-year increase of about 72%, as the company's success in controlling costs and improving operational efficiency

   

Reasons for earnings beat

1. AI technology-driven: the success of AppLovin's AI-driven ad tech software, AXON, was an important factor in the significant improvement in performance. aXON not only improved the accuracy of ad delivery, enabling it to complete large-scale ad auctions within a few microseconds, it significantly boosted advertisers' return on investment, thus attracting more clients to its platform.Included:

   1. Precise user identification;

   2. Self-optimization capabilities

   3. Enhanced network effects

2. Strong market demand: As the digital advertising market recovered, AppLovin benefited from an increase in overall market demand.In particular, the company gained more market share in mobile advertising and in-app purchases.

3. Diversified product line: The company's expanding product line, which includes game development, advertising technology and data analytics, enables it to generate revenue in different areas and reduces the risk of volatility in a single business.

Investment Highlights

In the market competition with $Meta Platforms, Inc.(META)$ $Alphabet(GOOG)$ $Alphabet(GOOGL)$ , it can maintain the market share, and obviously has its own advantages.own advantages. For the advertising industry, efficiency is the first drug, so it is of utmost importance to cope with the competition through continuous innovation and provision of quality services, and to invest in technological research and development to enable it to quickly adapt to market changes and meet the growing needs of customers.

Secondly, the incremental CTV ads in these quarters are also very full, being related to the incremental placements by advertisers in gaming, social media, short videos, e-commerce, etc., which is evident in the GOOG $Netflix(NFLX)$ $Snap Inc(SNAP)$ $Roku Inc(ROKU)$ and other earnings reports.

Meanwhile, the company expects to continue to realize steady growth and maintain good margins in the coming quarters.With the introduction of new products and increased market demand, the next few quarters are likely to see stronger financial performance.

In addition, the Company intends to authorize a shareholder repurchase program and is actively pursuing a shareholder repurchase program that will be adjusted based on market conditions to maximize shareholder benefits.