AppLovin Corporation(APP.US)2025年第一季度业绩电话会
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会议摘要
In Q1 2025, Apple Living reported a 40% revenue increase to $1.5 billion and an 83% rise in adjusted EBITDA to $1 billion, driven by advancements in AI technology and successful diversification into web advertising. The company repurchased 3.4 million shares for $1.2 billion, reduced outstanding shares to 338 million, and announced the sale of its games business for $400 million and a 20% stake in the new entity. Focusing on advertising, Apple Living anticipates Q2 2025 revenue between $1.195 billion and $1.215 billion and an adjusted EBITDA margin of 81%. Key priorities for 2025 include enhancing machine learning, advancing eCommerce and web solutions, and improving ad testing and creation.
会议速览

Apple Living discusses its first quarter 2025 financial performance, future development plans, growth opportunities, and the proposed sale of its games business during an earnings call.

The company experienced significant growth in Q1 2025, driven by technological innovations and machine learning improvements, despite seasonality challenges. They've addressed short seller scrutiny and are focusing on three key priorities: enhancing machine learning models, advancing eCommerce and web advertising solutions, and improving ad testing and automated ad creation. Additionally, they've announced the sale of their games business to sharpen focus on advertising and are optimistic about the potential of alternative payment systems in the App Store.

In Q1 of 2025, the company reported a 40% increase in total revenue to $1.5 billion and an 83% rise in adjusted EBITDA to $1 billion, with a significant 600 basis point increase in EBITDA margin. Free cash flow surged 113% year-over-year to $826 million. The company repurchased 3.4 million shares for $1.2 billion, reducing outstanding shares to 338 million. Advertising revenue reached $1.16 billion, with an impressive 81% adjusted EBITDA margin. The company signed an agreement to divest its apps business to Triple Dot Studios for $400 million in cash and a 20% ownership stake. For Q2, guidance is provided solely for the advertising segment, expecting revenue between $1 billion and $1.215 billion and adjusted EBITDA between $970 million and $990 million.

The discussion addresses concerns about slower sequential growth guidance, emphasizing the unique seasonality and the transformative impact of machine learning and new advertiser dashboards on future ad revenue growth.

The company is focusing on improving its web advertising model and self-service tools rather than aggressively expanding into new categories. Despite high demand, the small team aims to automate processes and integrate better attribution and platform integrations, aspiring to achieve the same success in web advertising as in games.

A discussion on leveraging generative AI to create tailored ad content, aiming to significantly enhance user response rates and advertiser growth by dynamically generating personalized videos for campaigns.

Discussion highlights the current perspectives on advertiser churn within the eCommerce sector post-pilot scaling, along with insights into trends in spend per advertiser and their potential seasonality effects.

The company acknowledges early-stage challenges in web advertising, noting low churn rates among high-spending advertisers and aiming to become an indispensable marketing platform. It clarifies that year-on-year growth in net revenue per install doesn't include actions driven by e-commerce advertisers, focusing instead on revenue from web-based advertisers amid stagnant installation volumes.

The discussion highlights the ongoing development of web-based advertising technology, emphasizing improvements in return on ad spend (RoAS) and scale since the release of Axon 2. There's a focus on the potential for significant enhancements in model predictability and advertiser scale, alongside the consideration of offering exclusionary audiences based on advertiser feedback.

The focus lies on scaling product effectiveness in digital advertising through improved audience matching, with plans for potential exclusionary targeting features as the model advances and addresses advertiser feedback.

The pace of onboarding new web advertisers has slowed due to limited resources, with the team currently at 20 people handling sales, engineering, integration, and more. To accelerate onboarding, the focus is on developing a self-service dashboard and automated tools. Testing with the dashboard is underway, and it's expected to significantly speed up the onboarding process once fully implemented and rolled out globally.

The discussion highlights challenges in attributing sales of high-cost items with long consideration periods due to limited attribution methods, emphasizing the need for optimizing earlier funnel actions like phone calls or email registrations.

The discussion focuses on the anticipation of an upcoming self-service model launch for advertisers, with expectations for gradual budget increases as effectiveness is proven. There's a significant opportunity for global expansion, especially outside China, and the model aims to quickly increase the audience for ads while integrating with current advertiser systems.

The company anticipates a long-term growth rate of 20-30%, attributing 3-5% quarterly to stable, predictable reinforcement learning and about 10% annually to directed enhancements from model upgrades, expecting at least one significant increase per year.

During an investor update call, technical issues mute one participant; another from FBN Securities awaits his turn to speak.

The discussion focuses on prioritizing initiatives for non-gaming app-to-app user acquisition and dynamic personalized ad creative, aiming for significant contributions to revenue in 2025 and beyond. There's optimism about expanding the advertising business, particularly targeting e-commerce, with potential for it to exceed 10% of total advertising revenue this year due to model enhancements and self-service dashboard implementations.

The discussion highlights the independent learning and enhancement processes of AI models in mobile gaming and e-commerce, emphasizing the potential for significant quarterly improvements and the early stage of e-commerce model development.

The company experienced significant sequential growth in the advertising segment, driven by efficiency improvements in models and strong performance in gaming. The guidance for the second quarter does not include any expected uplift from legacy studio spend post-divestiture.

The discussion highlights the potential benefits of reduced App Store fees for mobile game developers, leading to increased marketing spend and revenue uplift. With a focus on the largest platform for mobile gaming customers, the scenario assumes a fee reduction from 30% to 15%, resulting in a 20% increase in developers' revenues. This uplift is expected to be reinvested into marketing platforms, driving competitive bidding and benefiting the advertising ecosystem, ultimately boosting the platform's bottom line and shareholder value.

The company discusses leveraging a large, static inventory base by improving advertising technology and algorithms, aiming for increased transaction rates and growth through personalized ad content. Additionally, they highlight the resilience of their diverse gaming business model against economic changes.

The company plans to roll out the Self Surf dashboard in stages, starting with current customers in a feedback group, aiming to improve efficiency and model performance with increased data. The ultimate goal is to ensure high-quality service for all clients before scaling up to thousands, emphasizing the importance of perfection and personalized recommendations in driving business growth.

The discussion covers a proposal to address TikTok's global operations beyond China, emphasizing the importance of solving national security concerns. Additionally, it explores the company's strategy for maintaining efficiency and growth in revenue margins through lean operations and the implementation of a self-serve platform, while managing data center costs.

The discussion explores the evolving integration of app and web advertising, highlighting the transition towards a unified model that caters to advertisers' diverse needs regardless of platform. It emphasizes the goal of achieving at least a 10% contribution from web-based advertising to overall net revenue, while addressing challenges related to self-attribution and third-party dependencies. The conversation underscores the company's efforts to adapt to market demands and technological changes, aiming to become a major advertising channel for clients.
要点回答
Q:What are the key topics discussed during the Apple Living earnings call?
A:During the Apple Living earnings call, the key topics discussed included the company's robust first quarter performance, technological innovations that revived the gaming industry, the definitive agreement to sell the games business, strategic priorities for 2025, potential impacts of tariffs, the competitive landscape, and operational efficiency within the advertising business.
Q:How is Apple Living's platform contributing to the growth of the gaming industry?
A:Apple Living's platform is contributing to the growth of the gaming industry by empowering media buyers with its technological innovations, resulting in robust advertising spend and enabling mobile gaming companies to scale their campaigns.
Q:What are the three key priorities for Apple Living in 2025?
A:The three key priorities for Apple Living in 2025 are: (1) improving machine learning models, (2) advancing eCommerce and web advertising solutions, and (3) developing a self-service dashboard, ad testing, and automated ad creation.
Q:How does Apple Living intend to focus its operations following the sale of its apps business?
A:Following the sale of its apps business, Apple Living intends to focus all resources on enhancing its advertising business, refining machine learning models, advancing eCommerce and web advertising solutions, developing a self-service dashboard, and improving ad testing and automated ad creation.
Q:How does Apple Living plan to enhance its web advertising solutions?
A:Apple Living plans to enhance its web advertising solutions by refining its models, developing a self-service dashboard, and improving integrations with third-party vendors. These efforts aim to bring more efficiency and to allow new advertisers to set objectives and optimize campaigns.
Q:What measures is Apple Living taking to ensure operational efficiency?
A:Apple Living is focusing on operational efficiency by launching a self-service dashboard for select customers, enhancing integrations with third-party vendors for a seamless measurement experience, and developing a robust model for AI-based businesses, which has resulted in a run rate adjusted EBITDA per employee of approximately $4 million annually.
Q:What is Apple Living's stance on the potential impacts of tariffs on its business?
A:Apple Living believes it is well-positioned to grow through macroeconomic changes like tariffs without any visible impact on its business trajectory. The company primarily works with mid-market web advertisers rather than large e-commerce businesses, which reduces exposure to potential impacts from tariffs.
Q:What is Apple Living's position on potential changes to the App Store's payment systems?
A:Apple Living views potential changes to the App Store's payment systems as positive, as lower fees for content developers and customers can lead to more investment in user acquisition, which benefits the platform.
Q:What financial guidance has Apple Living provided for the second quarter of 2025?
A:Apple Living has provided financial guidance for the advertising segment of its business for the second quarter of 2025, anticipating revenue between $1.0 billion and $1.95 billion, with adjusted EBITDA between $970 million and $990 million, targeting an adjusted EBITDA margin of 81%.
Q:What is the projected sequential growth for the next quarter?
A:The projected sequential growth for the next quarter is 3 to 5%.
Q:What was the reason for the decline in ad revenue in Q2 of the previous year?
A:The decline in ad revenue in Q2 of the previous year was not indicative of future growth trends because the business had not yet stabilised and was in a transformational phase.
Q:What is the benefit of the new dashboard that is being released to select advertisers?
A:The new dashboard, which is being released for feedback to select advertisers, will facilitate a transition to a full self-served state, opening up the platform to the entirety of the advertising market. This is expected to be a transformational moment for the business, greatly impacting its growth.
Q:What are the new categories that the advertising business is exploring?
A:The advertising business is not actively pushing into new categories at this time but has a line of customers waiting to join the platform and is focusing on improving self-service tools to handle the process more efficiently.
Q:What is the plan for web advertising and how does it compare to the mobile advertising model?
A:The plan for web advertising is to continue developing the model, which is still in its infancy, and to pair it with self-service tools and improved integrations to make the platform more seamless for advertisers. The company expects to reach a stage similar to its success in mobile advertising, where advertisers across various categories can achieve their return on ad spend goals effectively.
Q:Is the company experiencing any churn among its advertisers and what is their approach to addressing this?
A:The company is experiencing some churn among advertisers as the web advertising product is in its early stages. However, the churn rate for advertisers with a spend run rate of $250,000 or more per year is sub-3%, which is considered acceptable. The company aims to be a required marketing destination for any type of advertiser with a website or app, similar to its success in the gaming industry, and is working on improving the model and integrations to reduce churn.
Q:What is the impact of e-commerce advertisers on net revenue per install?
A:E-commerce advertisers drive actions rather than installations, so the metric 'net revenue per install' is not inclusive of the actions driven by e-commerce, but rather includes the revenue associated with web-based advertisers.
Q:What are the positive outcomes of the new version of the technology and the growth in the gaming industry?
A:The positive outcomes include the model becoming more predictive, customers achieving better Return on Ad Spend (RoAS) and increased scale, and the web-based platform performing really well. The gaming industry has grown significantly, with ad spend on the platform roughly quadrupling since the release of the new technology.
Q:How does the platform plan to handle exclusionary targeting for advertisers?
A:The platform is in the early stages and the focus is not on exclusionary targeting but on scaling at desired RoAS by improving the model's matching capabilities. While the team has experimented with exclusionary targeting, it is not a current focus area due to the early stage of the product.
Q:What is the status of the self-serve model and how is it expected to scale?
A:The self-serve model's pace has slowed due to limited resources. The team is working on a self-service dashboard and automated tools to accelerate onboarding, aiming to achieve the same pace as before. This will eventually facilitate quicker onboarding and allow the platform to open up globally.
Q:What challenges are associated with converting high-value products with longer sales cycles?
A:The platform faces challenges attributing sales to short cookie windows, especially on browsers like Safari. This forces the model to drive quick actions, which is suitable for most advertisers but presents difficulties for those selling high-value products that require longer consideration windows.
Q:How does the company expect advertisers to react to the launch of the self-service model?
A:Advertisers are expected to cautiously build up budget over weeks and months as they test the new system and see if it achieves their goals. The company is the last big advertising company without a self-service dashboard, so once it is released, there is an expectation that agencies and advertisers will readily adopt it.
Q:Is the historical growth rate of 20% to 30% still a suitable framing for the company's model?
A:Yes, the company continues to believe that a long-term growth rate of 20% to 30% is appropriate. This growth is composed of ongoing reinforcement learning and predictable model enhancements, as well as unpredictable, step-function increases from new model versions.
Q:Is the non-gaming audience plus business still expected to contribute more than 10% of total advertising revenue by 2025?
A:Yes, the non-gaming audience plus business is still expected to be a significant contributor, potentially more than 10% of total advertising revenue by 2025. While it's difficult to predict exact revenue contribution due to the performance of the mobile gaming business and the impact of model enhancements, there is an outlook for substantial growth, including from the launch of the self-serve model which could lead to outpacing the previously provided 10% metric.
Q:What are the priorities for the next few years in terms of non-gaming app user acquisition and dynamic personalized ad creative?
A:The priorities for the next few years include executing on the list mentioned in the talk script, focusing on self-service dashboard, automated media buying, and launching significant model enhancements. This is expected to lead to immense growth and the company becoming a marketing-based business, running up 11 ads for small businesses. It also includes continued improvement of dynamic ad creative and self-learning systems, which are seen as vectors for growth.
Q:Are the learning processes for gaming and e-commerce models the same, or do they operate independently?
A:The learning processes for gaming and e-commerce models are separate. Both models are undergoing reinforcement learning, and there are teams working on each model simultaneously. However, these teams also collaborate, with a small cross-functional team that is constantly testing potential changes to enhance either model. Consequently, improvements in the gaming model and the e-commerce model can occur independently of each other.
Q:What is the impact of the latest model iterations and improvements on the company's growth?
A:The latest model iterations and improvements are having a significant impact on the company's growth. They are resulting in step-function increases in efficiency and are expected to drive double-digit growth in revenue within a quarter or even more frequently, as seen with the incremental changes in the past. The company is continuously working on these AI technologies, which are expected to remain a focus area for a long time due to the vast opportunity available.
Q:What is the current status of the e-commerce model in comparison to the gaming model in terms of efficiency and data feedback loops?
A:The e-commerce model is in a relatively early stage compared to the gaming model. The gaming model has received multiple iterations and has benefitted from a longer time to evolve, whereas the e-commerce model has only been live for a few quarters and has a smaller data feedback loop due to lower impressions and transaction scale. Consequently, the e-commerce model's efficiency improvements may not be as pronounced as those in the gaming model, which has a more robust data-driven feedback mechanism for ongoing enhancement.
Q:How did the advertising segment perform in Q1, and what factors contributed to the sequential growth?
A:The advertising segment within the company showed significant sequential growth in Q1, which was ahead of the typical low to mid single digits rate. This growth was driven by better efficiency in the models, constant improvement by the team, and the contribution from e-commerce advertisers that had a full quarter of run rate compared to the prior quarter. The majority of the growth came from the gaming side, and the company is still at a low conversion rate per thousand impressions, indicating there is significant room for further improvement and future growth.
Q:Does the guidance for the second quarter include any upside or recognition from legacy studio spend?
A:The guidance for the second quarter does not specifically mention any upside or recognition from legacy studio spend. It's unclear from the provided text whether such an impact is included in the guidance numbers or if it is considered material at this point. For a more detailed understanding, further context or specific information from the company's guidance call would be needed.
Q:What are the expectations regarding the impact of the divested apps business on the company's financials?
A:The company does not expect the divestiture of the apps business to have a material impact on its business. The closure of the transaction with Triple Dot is expected towards the end of the quarter and it will not assume any incremental uplift from having the divested studios as external parties.
Q:How might regulatory changes affect the App Store and mobile game spending?
A:The company believes it will be a significant beneficiary of potential regulatory changes that affect the App Store and mobile game spending. Fee relief for mobile games is anticipated to lead to a 20% revenue uplift for developers, which is expected to return to a scaled marketing platform like the company's. This dynamic auction system will drive more spending and growth in the ecosystem, benefiting the advertising business and ultimately the company's bottom line.
Q:What is the potential impact of new ad features and the launch of the Ecom platform on inventory monetization?
A:The company has a large static base of inventory and is seeing improvements in matching algorithms that are expected to increase transaction rates from 1% to 2-5% over time. New ad features, such as full-screen video ads that capture user attention, are anticipated to be impactful. The launch of the Ecom platform is expected to bring in more content and consumer response, further improving the effectiveness of ads and helping both publishers and partners. The company foresees this catalyzing growth that could span years and decades.
Q:What is the status of the company's diversity and geographic reach in the gaming market?
A:The company's gaming business is diverse and not heavily dependent on any single game. Some geographic launches have been significant, but the company does not foresee any weakness in the results due to studio launches or geographic focus. The free-to-play gaming model is considered quite insulated from economic changes, suggesting the company's confidence in its market position.
Q:How is the Self-serve dashboard being rolled out to customers?
A:The Self-serve dashboard is being rolled out in stages. Initially, it is available to the company's feedback group of current customers. Once feedback is received and the feedback group is passed, it will open up to all current customers. Eventually, several quarters from now, it will be completely open to new types of clients, with an emphasis on maintaining high-quality interactions and a bug-free platform before expanding further.
Q:Could the Self-serve dashboard data and capacity help improve the performance of the web app business?
A:The company believes that having more customers will improve the performance model and is expected to be better at providing recommendations and personalization as the diversity of products increases. Although the model is not perfect yet, the company is striving to create the best performance product for its customers. Once the platform is ready to handle more customers without issues, it will catalyze growth for the long term.
Q:What is the company's position on the potential acquisition of thousands, tens of thousands, or even hundreds of thousands of customers?
A:The company recognizes that opening up to a large number of customers will significantly increase the scale of the business, potentially making it multiples larger than it is today with phenomenal growth rates. However, the company sets a high bar for perfection and is not there yet. Therefore, it wants to ensure that the platform works for everyone before expanding widely, which is expected to catalyze a lot of long-term growth.
Q:What is the company's strategy regarding TikTok and how does it address national security concerns?
A:The company's strategy regarding TikTok focuses on solving national security concerns with regards to biases in the algorithm and data in the U.S. They propose operational control of the U.S. app to ensure compliance with national security standards, which they believe they are the only ones capable of doing with their knowledge of models and proposal put forth. The company also sees themselves as the best long-term operator of this business.
Q:What potential benefits could arise from the partnership structure mentioned?
A:The potential benefits from the partnership structure include the possibility of unlocking immense economic potential and value for shareholders by combining a performance advertising AI model with a large-scale audience like TikTok's.
Q:What is the expected growth trend for data center costs as the company increases revenue?
A:The company expects data center costs to grow on an annual basis, increasing at least around 10% of overall revenue growth, which is in line with past revenue growth trends.
Q:What is the company's vision for its product in relation to the platforms it operates on?
A:The company envisions its product as adaptable to various platforms including apps and websites, with advertisers being able to specify their return on ad spend targets, cost per purchase, budget, and create personalized advertising content. The company foresees a merging of web and app use cases over time.
Q:What percentage of net revenue does the company expect the web-based advertising solution to contribute?
A:The company expects the web-based advertising solution to contribute at least a 10% to the overall net revenue of the advertising solution.
Q:What are the company's current strategies for handling identity and attribution issues in advertising?
A:The company has lots of demand and opportunity in front of it and is not currently hampered by identity and attribution issues since its products can attribute with third-party companies like Apps飞 and Adjust. The company's self-attesting platform is built for web-based attribution and is not limited to lower consideration, high turnover products. The company aims to provide a specific value within a short window, allowing advertisers to see more incrementality in their advertising spend.
Q:How does the company plan to ensure advertisers have confidence in their advertising spend?
A:The company plans to work on integrations in the web space so advertisers can have multiple reference points and feel confident in the dollars they spend. The goal is to become either the biggest or second biggest channel for advertisers, and ensuring advertiser confidence in their advertising spend is key to achieving this.

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