AppLovin’s shares surged by as much as 15% in after-hours trading after the company reported strong earnings for the first quarter and announced the sale of its mobile gaming business. The company exceeded analysts’ expectations for both earnings and revenue, with earnings of $1.67 per share, surpassing the expected $1.45 per share, and revenue of $1.48 billion, which was higher than the anticipated $1.38 billion.
In addition to its strong financial performance, AppLovin revealed that it had agreed to sell its mobile gaming business to Tripledot Studios for $400 million in cash. The deal also includes a 20% ownership stake in Tripledot, which is known for its popular mobile games such as Sudoku Friends, Puzzletime, and Solitaire Classic. The sale is expected to close in the second quarter of 2025.
Despite the positive earnings, AppLovin’s second-quarter advertising sales guidance fell short of analysts’ expectations. The company expects advertising sales to be between $1.2 billion and $1.22 billion, while analysts had forecasted $1.38 billion. This projection likely includes both advertising and app-related revenue, which may explain some of the variance.
For the first quarter, AppLovin posted net income of $576 million, or $1.67 per share, a significant increase from $234 million, or 67 cents per share, in the same quarter of 2024. Total expenses for the quarter reached $820.55 million, reflecting a 14% year-over-year increase.
AppLovin has been focused on its advertising business, which has seen significant growth, partly driven by advancements in artificial intelligence. The company’s apps-related business has become less significant, and sales from this segment fell 14% from the previous year, totaling $325 million. Advertising sales, on the other hand, saw a significant jump to $1.16 billion, compared to $678 million in the prior year.
While AppLovin’s stock has risen sharply in 2024, driven by the AI boom and growth in online advertising, the company’s shares took a hit in February after reports questioned its AI-powered advertising software. In a separate development, AppLovin also discussed its proposal to merge with ByteDance’s TikTok, aiming to address national security concerns and enhance growth potential outside China. However, the company acknowledged that its TikTok plans remain a long shot.
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