Applovin 3Q25 Quick Interpretation: Overall, it was a slightly better-than-expected strong growth, and the post-market reaction aligned with the extent of the surprise.
Before the earnings report, aside from the SEC's scrutiny risk, there were actually some disputes in the market regarding the actual effectiveness of the self-service platform. Some funds believed that merchant feedback was not as optimistic as expected (the number of merchant brands did not significantly increase, and the click-through rate of the Axon webpage did not show a noticeable spike), leading to a wave of valuation adjustments.
Dolphin Research believes that the current self-service platform is not fully launched and is in a specific range of invitation testing. Therefore, the Q4 guidance cannot fully reflect the true effect of the self-service platform. Attention can be paid to the management's related discussions and specific customer adoption disclosures during the conference call.
1. Revenue growth naturally slowed: Third-quarter revenue was $1.405 billion, up 17% year-on-year. If only looking at advertising, the actual growth rate was 68%, which slowed compared to the previous quarter. Fourth-quarter revenue guidance is $1.57-1.6 billion, calculated at the upper end of the range, up 60% year-on-year, continuing to slow slightly.
2. Profit margin continues to optimize: In the third quarter, due to cost control, the adjusted EBITDA profit margin increased by 1.5 percentage points, reaching 82%. This is evidently an extreme state, with the combined rate of the three expenses only at 10%.
This is the current profit level that Applovin has as a pure advertising intermediary platform. With subsequent cost recognition of the new platform and investment in new market expansion, the space for further improvement is relatively small. $AppLovin(APP.US)
