APP - Earnings call transcript Q2 2022

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Ryan Gee

Okay. Welcome, everyone to AppLovin's earnings call for the second quarter ended June 30, 2022.

Joining me today to discuss our results are: our Co-Founder, CEO and Chairperson, Adam Foroughi; and our President and Chief Financial Officer, Herald Chen. Please note our SEC filings, earnings release and shareholder letter discussing our second quarter performance, are available at investors.applovin.com.

During today's call, we may be making forward-looking statements regarding future events, expectations regarding the market, the future financial performance of the company, our strategic review of our apps portfolio and our proposal to combine with Unity. on no market except obligation by based and and as are law. assume we to statements our assumptions current beliefs, required These update them, the may predicted. materially results from Actual differ results file review the XX-K the in our this our Unity Form fiscal later press We encourage regarding the expect quarter, you risk in which proposed recently for XX, our December ended for and our Form second factors we year release XX-Q filed most XXXX, to week. with to combination This not the an securities to solicitation vote offer of of any or solicitation call buy constitute does sell approval. any or offer or any to No except requirements by offering meeting made of the be of prospectus securities of means Section of the shall a XX U.S. Securities Act of as XXXX amended. proposal a that with to related we combination made a information includes Software. call Unity for transaction business have This In or and furtherance developments, may documents if a to to registration transaction offer the we SEC. or more file tender statements, and future Unity of is statements, statements agreed proposal negotiated X with subject this other proxy investors information security SEC other proxy or read tender to unit statements, proposed and the contain holders such statements statements, we will important file they registration with offer because or to the about combination. documents urge We

reconciliations it With on highlights going our and Q&A. our and Adam, be of Please discussing to GAAP a recorded, sure I'm will non-GAAP go ahead. performance Then second open over be Investor superior context letter outlook. financial IR to turn the to that, and our shareholder results. for for quarter, also will be the or to are the we'll measures shortly. will as website We a some Herald provide Adam on included is available our XXXX non-GAAP intended site. to our to financial review our measures be for measures. our non-GAAP Reconciliations GAAP discuss to up in measures call are being our the substitute and financial available more please This Relations not GAAP conference on replay

Adam Foroughi

you facing with of year-over-year. compounded We this going our was improved things relationships be us Thank technologies. at new driving over from in Software strong few by clients to clients revenue focused which We We'll are can of strong enterprise that the accomplishments. also existing the the acknowledge challenging by want our were Notably, and the team our during performance over our control delivered grew we for ones. continuing the back proposal Ryan. mobile joining onboarding revenue growth and also Software were XXX our appreciate now for the near-term into app deepening second all adoption and spice may XXX% we call. ecosystem, this retention clients we last year-over-year to period come by I'm the on software quarter I by the those weaker want But are period business, proud really our quarter. start bit. the with successfully earnings macro thing I economy. With challenging we improve very headwinds platform net best, and that which same today. We're one to led hyper which to so a our Platform our up saying pleased surpassed year. to a all we Thanks, week, hoping Platform and dollar-based

three of them. highlight me Let

First, shutdown we MoPub. successfully of completed the

over. fully is their MoPub have that developers and MAX Now into integrated moved

through a by mobile MAX the the of strongest relationship goal new our We our the the year. media of rate year a the with MAX for platform on all focused on partners strengthening is transacted platform quarter. of in our billion track is to been have hit in-app $XX end bidding. run

the continuing of Exchange ramped to migration demand we platform. our partners MoPub AppLovin our Next,

Just very they rebuilding a DSPs time. are in that amount economic efforts XX as years give the to in We of of publisher MoPub migrate the and MAX to MoPub we these integration success of for as short publishers back time. MAX, the a want use and with tough to facilitate

So we reduced our AppLovin half. nearly take by rate on Exchange

for While the long-term, flexibility the on maintain ALX thing the economics short-term, to felt was right that we of we in this marketplace. do our

are successfully mobile to and testing AppLovin start CTV. advertising on integrated using gaming we campaigns World tech ad Additionally, already

quarter, results flow strategic apps past early television promising. profitability and bring growth. the stages This to approach cash we're focus the to And updated long-term market. this business for true advertising is While of financial a performance-driven our the and World for excited are still on our we to in testing, approach to segment

have We investment opportunities. both conditions of the current future to level across portfolio and aligned better market our

spend business we me reduces higher our but numbers a For as able Herald We reflected to place, most to over may to in flow. cash the change own much industry now more will in line margins, in believe with it desired of color for of we're value. turn portfolio which produce readjustment some be period revenues mostly to our studios, to let that return our in margins that, effect be and this plan it notable close peers. and our consistent lead is or sell, margins, increased of acquisition increase will goals. To is and restructure revenue, outlook. approach provide apps of stable was our reduction maximize a The our With user the through this in to on guidance,

Herald Chen

points. today. have time time letter just our to hit review shareholder everyone, thanks, key for to had yet, quickly you We I'll some of so know the Thanks, not may Adam, the us join and taking

business increase our know, As we to globe, XX% EBITDA being a growth the we we our margin $XXX to our teams notwithstanding XX% a grow million, adjusted able which the year-over-year is top environment, you year-over-year to around more to resulted XX% That challenging business. in plus led to public. focus equates of already our Software in AppLovin operating posted are growth, improvements are by of Platform given million. since highest a flow EBITDA and which execution $XXX in is line though, normalized That cash the margin, from continue apps

We you segment Platform also had we to XXX% which regarding progress provide Starting more introduced information segment, Software us quarter, million of revenue, allows of which year-over-year. the the this reporting was up our businesses. with $XXX

a in a our reduced ALX had software quarterly growth, in platform decline was to some revenue to On demand rate ALX, to DSP all aggregate decline take we Twitter's basis, get enterprise which LTM our platform performance Adam a dollars to continue of net our from due XXX along basis. QX, retention customers to mentioned, evidenced pass in the on record solutions takes minus for with We as an an customers which ALX as by time proactively our increase highly quarter-over-quarter DSPs except dollar-based in important more XXX% most from QX of to of to solutions led the of our some And X%. The publishers. ramp. migration to deliver

standpoint, million, year-over-year XX%. from EBITDA our of Platform a $XXX representing cash adjusted Software Importantly, margin grew to XXX% a flow

increases our peers, While margin particular relative function and the during several incurred strong step certainly a in costs. to we quarter, overall,

including we from publishers And from and headcount our have team now MoPub TV we additional demand costs Connected new recently discussed center acquisition. that support infrastructure before, partners we're costs, the including acquired platform. technology to onboarded First, World, data capacity

be previous margin For we software to XXXX, Platform not platform the meaningful XX% importantly, the Software EBITDA our foresee of in expect range. second adjusted cost. our and year, for half between with we do the increases consistent Therefore, XX%

is, software a ability the us largely for the AXON. is Regarding of App software the But improvements for the driver to powered by slower year, double third past over part more of are more platform revenue and continuous revenue course, and year growth business for two business, than against mobile will AXON. by is second In gaming. -- we quintuple in have deliver guidance. driven confidence of over the months our importantly, our slower our past The for the summer years Discovery, the quarter primary performance revenue we than year which

software our at will improvements through increases these more which occur We we our outlook expect do time, technology, and find of flow in to will which over margins. improvements to high supports As we beyond. for year revenue, very meaningful realize this

app side. to the Turning

approach new our described, is to optimizing the managing Adam the on focus financial for to As portfolio return. business

progress are already in and efforts Our numbers. second quarter evident our

from increased million apps QX X% to from million. Our adjusted expanded Margins XX%. EBITDA to $XX in $XX

by potential and spend, we million year. near $XXX out goal and including term, prospects Our we buyback the top Platform we top revenue we at By can in remain so value of where our position solid to our back in average meaningfully billion. apps ability our our healthy to the in apps is our the our $XXX line high-margin and for did in apps any our buy generation were per particular to price the that $XXX line stock earn Closing able million changes our given Software to the cash the impacts have holding business in EBITDA under margins other of To potential. portfolio million creation program business line at an bigger-than-expected guidance, acquisition reduced $X.X and user therefore, we not the higher XXXX, can guidance margin. guidance, long-term to end, We a of now for $XX share. business Overall, model make 'XX approximately our a do in drive stand-alone grow given highly portfolio. top reduction confident midpoint on

Board. Before proposal the this to I we Q&A, address Adam partnership we open Unity to the it it to to week up made turn for back want unique

Adam Foroughi

as the answer but wanted Thanks, Herald. points much happy some to key can be we call, address I of We'll the as now. to on

of operate company create First, time, last for developers. marketing their monetization always had lot has innovative building why businesses. At Unity same what focused the solutions been an app built now? on decade, admiration Over we've for and with a the and we've

help have both helping until operate. path strength ideas past, the But in helped similar, to MAX one the us engine, it giving a a analytics be ad businesses. in-app Up of were years reasons. couple were In the into see creators our app synergies grow bring Unity possibilities was AXON, companies the since. We into economy very machine now meaningful and successful the for as didn't in we and by network years, for to growing Our turn always strategic and their the they it grow of growing creating by platform tech leading added two over we've similar very the could networks. time, business deal, goals companies. powers three their bringing rationale integrated to very companies discussed internally, been because two which over MoPub but tools Unity started monetization the the giving attribution We our the Adjust analyzing at AXON, a the sense When of these our we we to together. ad best together, launched them developers. few In make announced particular, years. by last we ad learning ago, to unlocking just by in ironSource million $XXX of synergies, we XXX% And excited mobile two

a we felt companies our thoughtful also their technologies full ironSource of our now stack are assessed, it they like. necessary clear, synergies Their we proposal open To we clear would merger. put be improving out solution, and made Unity look bid We potential what that a it combined a standalone there to weren't to the in confident sure see prospects. the that would be through of given

data all business to reach, constructed scale, However, offers and and of which correctly, our be market the combined to would shareholders. additional accretive if the

gains it AXON with $XXX compared with did always to us the allows operate the at good revenue. So Unity revenue In growth is $XXX of really and Software it’s about predicting million Software extremely time, arrive million. marketing revenue but our business operate was our the million million we could to full first $XX Simple, our $XXX quarter of million. $XXX our what users excited Unity MAX, at engage reported QX on and of past we will At AXON, get see and which based business our how The together. This XXXX, synergies? monetization quarter, from reporting improved. be solutions. reported fast unlock apps can we us over numbers trend Software apply

data, as on, and have access paths which just this rates improvement: We strengthens one, important to to we've another predictions; improvements lower two continued in our as our our more touched to is error code algorithms.

incremental with marketing two plus reach combined potential data of billion incremental would give the to of the in to revenue monetization would it business would million compelling. revenue. $X.X data We algorithms to Unity Software separately, That XXX% net generate sets reach our to the over even XXXX, just lifts should flowing $XXX In our solutions, XX% does create revenue. material a and the is the improvement of our more whole? create, $XXX million more be be AXON business material takes drive this be accuracy companies the With only in combined year, into the Unity's of operate flow-through. and our mean projected us And what believe next This with nearly gains as for data industry the businesses.

round, $X of just to gross it in the you So spending synergies. if performance what combined in get spend platform advertisers extra would billion from you up

market sized we for letter. at billion advertising in remember, a you in mobile prior games the Now shareholder $XX

unlock we proposal would and returns synergies position superior did? This a Our the AppLovin the we in whole come. alone proposal their done to know would constructed to did table, Why Unity on in we've our years was Board catalyst and We growth option our current the to the believe So be shareholders. for would the drive best proposal growth X% the to combined just strong market for make we to for find that. Unity market. company need

believe the just our greater. offers flow stronger business, cash at partner in terms is we much great operate superior both We and a a is proposal technology, scale, and strategic ironSource While position. scale

a cash business AXON alone standpoint, could be our also $X good EBITDA whereas contemplates in and have their we generate From the a efficiencies is the and as devices. cash valuable. the for strong can sides with of mobile XXXX. billion combined unquestionable for and people flow at deal. longer-term be strategic We're and prospects on to long is business benefit this growth we believe multiple leader growth unlock in ownership would will flow EBITDA confident joint reaching AppLovin proposal proven in the Importantly, our versus We making price very a strongly a both as This plan will existing shareholders. super synergies impactful year immense. compelling unlock that over Software creating shareholders use standpoint, that our current one-half of really company strength business would the quickly very the pure our From this category

to our could here the unlocking spend in. $XXX around shareholders each proud things. many Ricantello we've decision this strong asking of to on never CEO that platform Unity, teams, in I'm motivated power, with leader will is be work, with face efficiency opportunity continue who built things, company me a gains term build to means potentially building capitalize this innovate. a believe been work John We've willing for to great bigger organization. a contribute success personal I'm be combined our importantly, the be why truly an my there's all motivations I on. because to Now equity huge long here I've years, to to for it take and case, to is my what committed of gets other life's by time a This incredibly to everyone and role. to been I we enterprise, of would My of were and our CEO you a owe step I've but every together business and and backseat needing or our and I that revenue a ensuring excited. known become key the to combined really billion there. would COO integration believe

continue be strongly In what's not we compelling put about strategic the the So our our are. strongly the about grow business, outlined Board, as on shareholder to and of successful the next? find should Unity's three outcome our feel and we focused We shareholders ability offer speculate our are team priorities and we in on to proposal whether going we its feel proposal, our excited on or very not. to we forth this our have AppLovin remains as but letter, an that shareholders we're meantime,

this driven since Software this see to we opportunities company. bold in generation and our but continue platform, went definitely to both to optimizing we're or been with that to deal. we improvements drive passion exceptional an business to exceptional improve and accelerate goal. by been do we billion our We team here our bold we've cash our We've are this that the building our have and since that we excited margin But really, started potential. and without public I merger paths a lead will $XXX of company, can

to Now questions. take happy your

Ryan Gee

questions. to your [Operator We'd like we Instructions] a looks hands. take have be Okay, happy it raise few

So first, at we'll Lampen take from Clark question our BTIG. first

Clark Lampen

Thanks, guys. can me Can Hi, you hear hear me, okay. you okay?

Okay the in big perfect. on picture avenues could. Hey, think of unpack lot. demand, talking a sort ad this with starters, guess, elaborate, Thanks from with as billion the growth guess, quarter? avenues similar could the migration, towards I scaling guess variances you first things cut I the you Or to think right, guess, guess, step the much XQ of if it Thanks, sort strategic way about about Unity take quantify back for a some you for baseline I target. give was of I that the us deal? to deal, I of other of wanted the about, open exploring the just Adam, I maybe being how $XXX rate? was headwind guys. Any just for a of down I maybe maybe long-term talked Would were maybe that software, business space you sort heard we I outside you you quarter? And then Could priorities, to X%. or that of if could you

Adam Foroughi

going answers. Clark. reverse the to I'm Thanks,

Second the one, new past. We're strategic TAM and the that expand really but for in in to That excited aligns our about that expand aspire leadership we've opportunities great initiatives the scale our reach with. that monetization to current in our to, market the expand really about the position our and we've we have potential it, future with potential. to our relationships market get developers got to to the we and both talked

One payments. as a an reach. of a we're developers really these really, a reach can transfer execute create about on and and for Then and take OEMs payment we them customers. the deliver as transaction as expansion past, fast-growing we about runway our our many now on we We to talking also can working and just TAM idea blockchain. a would I then positive to of that cycle big product ownership to in all create marketing already. released into native growth. the And ourselves will life results initiatives, advertising of OEMs well. But be Array. flow and audience carriers there. -- those sharing If customers that It's blockchain think of new with NFTs. those carriers with their in and for We're revenue many, platform, It's we is initiatives, initiative. announcement of we're on tapping new Array a a into around solution platform giving transfer new expands the good on new is our CTV were now and live marketing digital talked early to through the mechanism, touched a be to capacity And the there years allow give we're we NFTs executing of their a script, to the to and to seeing them about to the and to get ownership a better It's give the still expanding own stage.

of we confidence current our in business. said, a lot have that Now

results technology that forward, For by we platform, in expansion multiple The upside a more we and make flow to forward. for create bigger core The we're improving ability made that drive better bigger our this sequential quarters be in going as That we're to we've our growth advertisers. of That's we'll from TAM we that AXON. influence through came opportunity on now, improvements had lot expand the in unlock on the able business dollars carried that business, the going AXON going efficiencies be well. the an of have and market and in the able creates forward to to today.

cut DSPs think, to with migration. a migration over, the I the ongoing of impact. couple the that's in transitioning question a We impact understanding more by by sized period, has be, wanted would around a want to because rate, at the talk by driven MoPub was be MoPub other our process business little publisher by the to bring our to that we short-term originally, but divide ecosystem. into gone focus that two offset and cases. now frankly, and in to ramp the in our are that economy on four did was a a and publishers really, bit touched about when, then down, of yield in DSPs. platform. down and due We ramp. be an eco a coming little call we and quarterly on, million less reinvesting stsytem, MoPub back let's We're less the decision $XXX did get we to And want get your way it But and the in then importantly at publisher what brand our then around own onto ongoing DSP dollars bit have flow successful than make back We so business MAX the of I time scale DSPs half. transitional don't MoPub by platform it, as you we ALX short-term over Again, under to was more DSPs. to dollars take moment. that’s a the Clark, And around a DSPs will reasons. QX getting One,

million. So neighborhood $XX in of the call it somewhere

Ryan Gee

the Clark, Thanks, Matt. Okay. for Morgan go ahead, Go Cost Stanley. next We'll to question. Matt with

Matt Cost

ALX taking Thanks question on MoPub question. for the Clark's migration. the Great. about Maybe piggyback I'll

I to understand. So just want

So transition have the to this, quarter for publishers combined onto platform were that inventory last bonuses sale. me I'm publisher the wrong had and publisher people get MAX the MoPub correct if -- please about bonuses to and

for to are working you're has DSPs enough now bidding to move guess, you into So mean, over order in inventory get into platform? holding previously them that And were I then And observed they from take what looking the were they to or that start I that that over noticed that's to the back to if have already have MAX. I to been one correct, them new follow-up. transitioning? if is cutting through rate process. move bidding to that inventory get what

Adam Foroughi

Yes. Good question, Matt.

don't that the reach the mobile the publishers, given But the look, largest supply of us follow. once audience That's bonuses publisher off strength that So then the yield in dollars we we And DSPs for went publishers. MAX to platform. the will creates platform. get

And effort so we the But exchange over to to do have go the technical one DSPs, these have pipes MAX. over migrated MoPub of now. reconnecting a through new to XX%

it, DSPs years. into Secondarily, their were new the these five-plus over Data, let's inventory. learn have years, most XX last on models to of call plugged MoPub

is the to because platform paired it exchange port at. MoPub way the the MAX on for levels of increase well now spend tons So through take MAX on that them cutting they a over bigger the with exchange had has rate. to We're to get that just to the learning we but platform was their that

we the that the the seeing, ensure with at. in pushing strong the publishers at consistent trends have as publisher platform from the a looking short-term cut business. we're CPMs the brand we're publishers digital So entire macro MAX gone that, is MAX that And our But to a the we're have not that down. has through to it to put We're landscape. that's yield to at and revenue. And decayed just DSPs dollars potential that to level with keep bound goal decided

then helps dollars the back So we it and judgments whatever more baseline felt our business. publisher, to revenue good economics need flow improves to responsibility them to a And like we was which the can our of streams flow in their at we standard on economy ecosystem, the maintain make in the business. into dollars different these as

Matt Cost

is And that then there And assumption that? just a has underlying market you. guidance Or for platform, changed that Thank has changed? the growth on year-to-date? software how Great. the

Herald Chen

Obviously, growth we're as driven operating to obviously we the think year mostly driver. control a tougher destiny has few in AXON we years. a able actually technology. But own overall that's our improve own We which key engine, we're environment. our our do to over If past said, and now extraordinary the

summer slower. So look, months are the

on our more platforms. the to quarter, to own Third importantly, fourth our technology probably similar quarter but seasonality, see will we efforts be but second do acceleration the in to due quarter due

Matt Cost

Great. you. Thank

Ryan Gee

Martin for Thanks, great. first, unmute you Oppenheimer. Martin. Matt, question. device sure next Please Yang go the Okay, make We'll to at your

Martin Yang

CEO, great and role in strategic address side afternoon. synergy rest its Hi, how can if about think you of the your taking with the good question. AppLovin's business, creates you with the would business were of you Adam, rationale you Unity's longer-term Thank my a for future? for of the

Adam Foroughi

really stages for Thanks, waiting Martin. We And proposal. obviously, we're a response. We'll a early here. made be

conceptually we're the business. deep we've of type so say just I've time been But whole because analysis. I known into too building this Unity the not will this And business

this XD in technological world in the the have complicated it and kinds the a majority of And proposal business. And were Create learning value more content of this technologies of of a the manner. complex powerful why Create technology most machine real-time of it today. better, impressive over about in creators the making enables the respect does online and data. underlying one if excited to in built we AXON, us for games. lot to it's very and it has that is mobile Frankly, and all that We -- technology, bring is their we've

access the about think you if Unity compelling. has is that very contextual So data to that, is

the why is able that path and of in games and unlock of could unlock ecosystem a to technologies, that's on us mobile compelling. we could the of synergies being technologies lot a through reach these of lot. two very be to but important lot And also MAX complicated see this Create a which We nature complementary combination the AppDiscovery, our by why

Herald Chen

to we're that. Again, early just in I'd very discussion. that add

get And one-way business where business, we'd synergies with business. And the market heavily precipice generation. free been So chase for a where is Create our is in But how cash the Operate using have It cash it's on of different It invested positive can on that Create transactions far, they over the than operated very Adam on the side, our anybody flow discussion. difficult a a being them we've technology beauty is business. we of definitely business. our the model said, tremendous migrating flow to are down very, to they've very now. leader. very, is the AXON

flow, long also medium ultimately free our excited growth very that, in to and about. So term, very, the view software cash that's that's which will a contributing we're asset and be high unique

Martin Yang

intact? billion with Herald. confirm you. still software Can for platform maybe that target Thank I a you have 'XX follow-up is your $X

Herald Chen

-- target. some and becomes made, some Obviously, today, that given a been privacy and that new we've our target. our acquisitions target. target higher But our headwinds with still the the internal position remains we've of changes That's macro strategic industry in the of investments making,

Adam Foroughi

Yes. I'll to that. add

gain engage ops technology goal and error see built rate, of can revenue. will to of we and to download of quarters is up the about an technology more four on can top with. technology, going Every error lot and we users error understand which predict and were improvements rate, in to a last and accurate. it the go the that the we to that's is these want enhancements the we investors to predictive piece control I in growth, sequential our where you've And Each step-ups. AXON those a to time an data predictions those our that had important have make This truly predictive function Every really seen technology. business is we one to that's accuracy is a the rate. do have business own the think reduce step of our that

for step function. so about we will hard the slow to a business why it what be is get be will excited and won't our When a increase one, and find increase. we work teams It So lifts. those look it

of So a the going accuracy that more in enhancements. that scale to will today. this us And find given more these given give at operating confidence those business of we're lifts, of numbers in time, we're bigger lot

Martin Yang

it. you. Got Thank

Ryan Gee

Stifel. the for Martin, next go question. you, David, David Pang to go Thank at ahead. We'll

David Pang

hear Can Thanks. Great. me? you

Adam Foroughi

Great, Yes. David.

David Pang

MAX joining thoughts about in the question. bidder? proposal? capital for as And talk thanks of Google just as you follow-up, So your you the the about implications a merger Can a on of talk Unity can the midst allocation

Adam Foroughi

Herald one, to will about I'll second and the Yes, first the talk talk one.

platform But open, platforms into So of that one is auction. a Google When we're transparent three MAX, built with was time weren't for yet. for we in ad there we an real-time on fair bidding, to mediation our first they're for the and create industry announced technologies us. of externally obviously, This lot bidding a ever. truly the the it exciting intent

make day not create the reality, entire all the a exchange bidding, for way of where being already platform bidding the the the good in into advertiser really to a tip the to were to best and bidding we've got our real-time and the amount market Google efficiency is the one company, that we goal and but have go big publisher, we the consumer. one market, market constituents biggest this they for envision initial Now the on

still And MAX, disclosed economics dollars period so in with this step, ramps, it we've our our the of X% them we a from in giant. taking they're of course, the and our as that beta We're on testing. is we platform. through the midst on But of take. bidder, And Google a think, ecosystem flow

any business, our we're material not generating say, we're which for any bidding, the today, I that scale So from Google our material excited platform. And should about. a day will can become revenue dollars, they or into stream dollars it

Herald Chen

We're strategy, for Yes, the focused remain as think always of with shareholders. then been. we to we we've create long-term do regard on the best shareholder how allocation our all capital I same value

different through from really projects. we where operating the a have for in believe market well we've do our obviously an amazing and development basically of large it. portion industry, on system our case They the it in a of partnership do well them equal, gaming that do our we engine a essentially one That voting, the team attack different also Unity, mobile little stand-alone very know I on That's through little extremely the have together. But that's been we with is that is interesting. gaming fairly that's outside with as what partnership industry, and a combination model business focused. pursuing different cash them, been go basis, So that specifically mentioned a a just the we've We offered the flow and a investing doing the acquisitions, that applicable essentially to economics. which with is

behind operate will powerful go we're it business, other a business, the combined our very side, with and to On that. their be excited capital ours, very, put

our Or sheet reserve in things. on said, go leaning to we've do. in that doing as when find, reinvesting past, certainly been So will, been we We're the the we've we'd combined to stand-alone do if balance business. acquisitions no-brainer those for I rather capacity in the cash, business investing you leverage as

Ryan Gee

for Okay. Thanks, Suisse. go to please Ju next Credit Stephen, David We'll ahead. Stephen question. with go the

Stephen Ju

you Can hear you. Thank me?

Adam Foroughi

Yes.

Stephen Ju

great. Adam Herald. Alright, Hi, and

dig calculation inputs wanted it in I out synergy bit to lay So on earlier. the to a the you little

to XX% a about accuracy talked net an you incremental lift in $XXX potentially revenue. generate to So

easy of that or from or to a drive engineering but in, the us So be investors science outside data conceptualize background, looking how to accuracy it's -- difficult will it hard an without lift. and kind for

do? the and been are or XXX% practical thinking So potentially room also, sitting What the be? day should So with to from need be consummated zero, lift what can you better to in about, a and XX% Thanks. talk potential could about merger materially a And first? accuracy John. you're what even perspective, XX% or than the has you doing we you

Adam Foroughi

look, this excited mean, about I opportunity. Yes. is what gets us most frankly, really, the

get was scale very it very, As at AXON all our to materially was over that business the the than advertising to a different on know, time. short us was that you so enabled what trajectory and

little really to what of a AXON. unpack is bit I like Now

do big the a scale, same underlying take the same allow that So But Unity you is we data customer underlying a data. last data entire our of platform decade. have we've also data customers synergies look can unlock expertise for to proven and could MAX. able same we're the tap extremely look them platform. what apply those businesses of And for and says, the well. That's we tools from We And data coming sorts to in platform, same machine with AXON take are allow them It's This Obviously, with unlock know business. very decade over data when advertisement. that their tap can bunch into complex. I a Then be where top. reach, of you've our users place. and apps more and into platform technology more. complex. more more a predict, ton if engage and the contextual modeling scaled that I market over be Operate. and our the how everything on and and and and us. got top for devices, already the is It's on algorithms on very math be is sources. successful into them data data to very, that data platform what all is into the relevant last is math learning advertising It's infrastructure the we I underlying potentially deals to huge. I which of extremely We so that and to data, all two a the to the engagement built the going And ingest it is have show is math reporting we this that built comes That all this

your obviously, it's to or XX%, So be XXX%. if XX% going point to XX% or we of don't know

over quarters. was it us, For X XXX% in

a had own of there huge the a put conservative it we impact. So number our what think out we power technologies. because is We know

Herald Chen

and We're larger they're maybe high-level One, bigger more obviously two obviously, And a their lot partner just $XXX discussing a from transaction, for million. overlap. a it current taking them, much perspectives. on lot business

base just business it probably of software billion that But to $X down. over you million, Adam $X.X billion cost of our $X.X mentioned So having side clear moment, the a of or combined operate that's top just revenue platform talking baseline cost think a in at revenue cost could a would costs. probably for have whether wasn't about billion about the synergies. $XXX

some two reasonable opportunity considering all get efficiencies, any corporate that, alone, obviously, there's really public apply the so and office And percentage an together. of coming to companies back functions let normal

million on revenue done. ability think do we the to cost we lift synergy, that's the given a So the achieve to EBITDA the lot think be work then have $XXX But achievable. we side of and on side,

Stephen Ju

Thank you.

Ryan Gee

Schackart go Blair. Thanks, ahead. go William Ralph with Ralph, next Stephen. please to We'll

Ralph Schackart

for Great. the question. Thanks taking

nature more First just item. take on one in the rate short-term

about benefits of thinking sort then Just have curious you for I And were the that? how of that of, intended you're a for? Herald. the that, are of duration kind on And sort looking you seeing follow-up

Adam Foroughi

are is markets dollars in digital on necessity ecosystem, we mean, brand got own look, we've these because us see Yes. really macro right today, now like I and a reinvesting supply chain up this ultimately, issues. into our the it the while and dried

forward, eases a up as have that on toggle system a is a for expand in take have to thriving rate our just it. something As business. we it keep where decision What's the that's system. That's go our us ensuring publishers is that more or we make, the important manual

improves back more and frankly, there, this the So go driver make of part our when growth dollars But we'll system, business, as as biggest get the of our economy into isn't we business. the decision. the in

goals on advertisers. ad system Our is for return spend automated around entire

plug you they and the as our So goals. achieve those think to in advertisers us AXON again, platform, goals want about go

dollar our little We've platform. XXX% churn over on net very have got retention. We

to generate have So these the that spending, on bad spent a their revenue flowing is economy in brand the advertisers those still problem but dollars other are decreases because side less dollars it. they of ability

yield into the will back the of bids, increase dollars advertiser we're will come as And our bigger brand that. a automatically the in scale our will our the ecosystem, and part AppDiscovery increase systems platform. to much increase offsetting business way So of for

the that's way. going with other up economy hopefully And end longer when to we much the So too two here. turns not benefits take

Ralph Schackart

it on Herald, a primarily Great. Unity sort conversation. one-way offer, that been the had And then, comment of

Sort of Are that? add be will all? you sharing dialogue comfortable to Or color you're could at any anything appreciated. you in

Herald Chen

we're proposal, Thanks, and back. Ralph. in we waiting our to No, put hear

Ralph Schackart

Okay. Thank you.

Ryan Gee

ahead, Securities. Thanks, Ralph, Squali go at Go next Youssef Truist to We'll Youssef. for the question.

Youssef Squali

Excellent. Can you hear me?

Adam Foroughi

Yes.

Youssef Squali

All right.

notice that how on in that have quarters? And important transaction? the looking high at offer. the guess that of to and So Unity how performance own I consuming a something that XXXX, guess maybe guys you about is the business, expectation under last level, that grow recent then considering line And for I two important that you Can XX-XX? most you the margins. the Apps in then, you earlier your you in at there, voting top are just what control? that that quick still to couple business me. quarter the expect proposed in assumption stabilized ones you is to you you said Herald, philosophically, by How gives confidence

Herald Chen

take Yes, those, worse. happy both of ever maybe to

offer. voting to unsolicited non-binding, On reality We look, we partner a want is the it's be a the structure, friendly of Unity theirs. think very

a the to make would reality they is combined stake one wanted we that. controlling have The no business. So really sure understood in

would base, would first really And we seat one our the me? liquid control and that goal be shareholder -- a remind was have no And highly diversified really so there. in then question was

Youssef Squali

it Was the around apps business?

Herald Chen

yes. Yes,

a business apps there. look, change the had we've leadership On of side,

deeply the each different applications studios managing We we're of I now Adam portfolio. completely themselves. the are at have and how digging of a quite and lens

we ways, into coming are going some a ‘XX get in healthy to and with want business. to what left pick we cherry and -- so we that be And to be

least come it's is price market that an improves the could financial if do And very sure that. have XX% and XX%, at us the industry-type we'll healthy, we margins, has pay EBITDA growing in want make is and to and as return, said, someone is course, which Of we that's a we a on we right business non-strategic. for that, Otherwise, attractive if that think basis.

Adam Foroughi

Yes.

would point were for People that because than that on now couple is the add the lot more not other games of the were of in more overconsumption really games. of are years, period we're And think we growth. was the talking growth, point industry when People period the we and think you anywhere. just go they exceptional about can't a I like, growth about consuming last typically during COVID. were there spending they dollars frankly, content to

because site. entertainment. started Now COVID, are gaming suns business consumption having the We eventually period XXXX. in the everyone's most traveling, back a We'll of past we're are form traffic just mobile of in this out, patterns and in affordable people under to get is normal fun and and people most still accessible

business, ROA then to ecosystem. norms grow industry couple where stabilize seeing be We're standard and business based we taken goals user realistic a more what a gaming we've trends are. much that minimized, of mobile both which we the that will the on And been we the seeing we've of all in back Once or our fully lines be to just acquisition revenues now apps we've COVID to the patterns, patterns, normal growth a traffic period business category. this expect traffic the get and So had spend anomalies. quarters period down to we've now on all today's front expect with

Youssef Squali

have on was proposed guys the them And with announced? -- just discussions quickly, before very, back Did was transaction. you the any IAS there Unity very deal

Adam Foroughi

without answering for JR known of the long they lot Operate. we've I hope it he answer time. No. over respect known because I've built what here. a I Unity respect have that a team with for have have years too for over built and and directly, can And Create we've I mean, Unity look, for mutual what

we a looking there It too But really that we bid over in that course, really pieces we're at we've seen because So started couple ironSource to years, didn't until And unsolicited. we of together. answer Unity that in deal, they as we assess what offer we today like -- impressed can't the lot over well for of this -- they then teams compelling complementary very parties, were math putting us pieces, growth together so the our stack past. a been would it the of the put really saw the the together. We're our busy synergy with think be companies, technology analysis. the that announce we was just and was we'd because in felt many put lot years, out business. the math QX with was doing put about of out putting a business a discussions bid years, over saw in MoPub, last a but stop to past very the way, what and need I there had we right? can't and And own made then And clearly appropriate we've both a shareholders. And we to thoughtful

Youssef Squali

Got it. Thank Thank you. you, both.

Ryan Gee

go Youssef, ahead, to for Thank at you, We'll Tim. Tim Macquarie. next the question. Go Nollen

Tim Nollen

combined comments to company. the Thanks things. same it. question. sounds it of a the last to into app you're want previous would lot. make? time, like something previous that business the wondering be might much the any follow-up But to the useful gaming Herald. sell And I'm It selling I Unity couple on just to also very that going the how from point, does of them, be effort factor decision at was Hi, Hi, Adam. might process to A a which

that like ahead decision you? into actually wonder make factor to how just I go any with would Unity would that So

Adam Foroughi

Yes.

first. that answer Let's one

together, incredibly MAX Software Operate. the They be that are truly, large scale. need and in core. And parts Adjust two other last of as become able businesses the mobile address to our that But were the decided we business to decisions put AXON So companies would of what and parts, can't our If look, and scale. Software be would our large strategically be wasn't business. focus side. we These would gaming has business critical would people's we like their Software the components Software and so business that, Create be at it on quarter, don't

flow-generative But would businesses. just one we do think process a the would we business around good largest, the changes Software when games world's fastest-growing, operate would don't business materially still I like cash the most of any the independently. combined so And as thought in be way business

Tim Nollen

Yes.

get it. Okay, I

as mentioned privacy and weighing now. that's Secondly, right an separately, you of kind on things issue

talked haven't privacy an You about really before. concerns issue being

three had Or like can you IDFA more or by all bit would Are mean about what to we think none, a it app just what or that about talking game ago, you I and quarter business two little talk implications? playing I on the and privacy side impact down? were if that's the on worried just more have think. you the

Adam Foroughi

the the we're that, But We're more our slowdown the is for core gaming away, Yes. And in constricting you contextual gaming when didn't growth To was lower now seeing capacity target course, it the away. category to much to that in as gaming it do its privacy opportunities to sector. business. so category impact at effectively the on has channel there's growth. all of macro with But really go mobile IDFA specific have direct trends. the take And companies unpack IDFA a whole you channels. on taken

spend. companies And effects or four to as they we're in mobile eventually efficiently not money has of able used able So advertisers, their growth. all that quarters five gaming to on to as spend be to being

post catalyst itself We to And will today. for the actually synergy Unity, mobile a the the in and bigger synergies consumption on this it's is consumption growth privacy If able advertisers inputs performance these seeing could into of make spend so we'd just the game issue. this an Together, together, compelled billions that's out a be more the because why we frankly, reverse we we do over so is able dollars. to And this gaming year that dollars lower this one of the be able reasons of math in be that we're this impactful think for spend ecosystem. merge that to COVID bid manner. a more the ecosystem to with think to were unlock one is one one hangover were really fact period

IDFA Of own, has to more offset course, on doing but some that. as of losses causing our come too, as from ecosystem our scale. shares large TAM been with really to needs quickly that gotten to our of just the expansion business we've that and We're grown these AXON platform,

Tim Nollen

Okay, thanks.

Ryan Gee

the D.A. Davidson. our last Franco for Tim, Thanks, from Okay. Granda go question please question. We'll take ahead. with Franco,

Franco Granda

[Technical for thanks Hi, Difficulty]

Adam Foroughi

we you Franco. lost Hey

Franco Granda

hear me you Can now?

Adam Foroughi

you Now bet.

Franco Granda

heer. question my taking for Thanks Awesome. Okay.

well. Your software is business clearly doing very

and pass So well, you're of a customers attributing to unchanged. potential is to the seeing moment some keep outlook this in on that self big where networks fact, revenue And headwinds. during your the are your able

to then outreach during you AppDiscovery? about speak margins? you in are customers simply active introduction that quarter. is driving the Is of of So first? Adam, secondly, clients Or the will the what improvements your what your focusing And to can is on potential be recommendations? performance due you And thoughts to what there? it Array What talked

Adam Foroughi

Okay.

second Herald, answer I'll the one. take the and, maybe you will So first one,

things. never contextual has growth of always a on platform. the really, a traditionally, couple first, So the data we've We've known user. from our And come been one,

user. users What know not care device. the name, the don't matter our mobile game data of off the that engagement we fact, of the need background, things models. is the user's about In demographics for to These are we

And built so been have our around always models that.

consumer to that which the data, was of bigger the baseline this these much lot the changes took definitely to inferior prior to IDFA of era advertising direct have platforms we person. all more personalized Now an and with in of privacy a relationships

The only this up over And every to we that These not to in net since we This company. expect on the better. have because ever we've one really, that are much is data somehow system access that the now going retention dollar are just it the way. why dollars AXON. in. to is together more when platform advantages just what forward. they in business is we has that our put more data in accurate with shifted much accurate system And revenue more we that That's put built It so complicated. we're to advertising our math and device. we Then that's so five carry our system getting But together, we XXX% ecosystem right today. reflected we advertisers our last is put AXON the drivers, data started got the And really disappear. put can made and that the this more that what's And really value quarters. to more our of had thriving just paired

Herald Chen

your question a we of quickly, capabilities, product. ad still a with then It got very we're course. tech small build doing style, about team leverage We've does excited very, Array, super but can good Yes, really our team, early. still an regarding it, very where AppLovin great it's move existing nimble

same They're build build them product And OEMs asked about you dialogues helping of good providers map. base, that key customer so a certain ones. there. the helping several hours. We're and only really go are I think started out those us the there. number we'll after road There's with we've But already

to hope meaningful a we really meaningful more it And something 'XX, ‘XX. terms of getting so from more scaling ‘XX in be in and standpoint up something revenue started to

Franco Granda

Thanks. helpful. That’s

Ryan Gee

Okay. like we all today. the back have questions we or closing like turn to call. the Adam that's for for it before It looks to conclude I'd Herald any remarks conference

Adam Foroughi

time. taking it is period I an Look, industry. the know thanks, everyone, interesting in our

their full-stack be a to interesting. We interesting be think as super that think different about did can so path, then and business. we a as according both about strategically We would our place accretive we scale in superior in is that need partner shareholders. built to stack a we've Unity, but into proposal solution. If contract, just stand-alone the of integrate in are -- that, to proposal we a could price. a terms We a ways, excited of prospects put many well which sides our also also just very the think be to very That's absolute

all So heads extent can our we'll in meantime, the keep process. informed business. everybody we're certainly down to own But on that we focused the on

time. the for thanks So

Ryan Gee

That's everyone. it. Thanks,

Herald Chen

Thank you.

AppLovin (APP) 11 Aug 222022 Q2 Earnings call transcript