AppLovin surpasses expectations, soaring 27% after-hours trading

AppLovin's stock soared 27% in after-hours trading, boosted by the company's earnings and revenue that exceeded analyst expectations, and its better-than-expected guidance. The company reported earnings per share of $1.73, well above the expected $1.24; revenue of $1.37 billion, topping the expected $1.26 billion. Net profit grew more than threefold to $599.2 million year-on-year. AppLovin's stock soared more than 700% last year, mainly due to its AI-driven advertising system. The company released an updated version of its advertising search engine, AXON 2.0 in 2023, which can better target ads on its own gaming apps and license to other studios. AppLovin has signed a list of exclusivity terms to sell its app business, which is expected to be worth a total of $900 million, including $500 million in cash and the rest in minority equity in the combined private company. The move is to focus on its rapidly growing advertising business. Advertising revenue grew 73% in the quarter to nearly $1 billion. The company said it would rename the "software platform" category to "advertising" as it accounted for almost all of the segment's revenue. AppLovin expects revenue in the first quarter to be between $1.36 billion and $1.39 billion, topping the average analyst estimate of $1.32 billion. The company said its AI models are still in the early stages, with huge potential for future development.