QV Alert – Applovin, Oh My God, This Stock Is Hot!

Applovin is an incredible, wonderful, ambitious business I struggle to understand fully. I just know it is amazing.

Over the last few years, our team has achieved extraordinary things. We’ve built an advertising model as powerful as any advertising AI model in the world, delivering measurable success for our partners. Early adopters in gaming and direct-to-consumer commerce have already seen the impact of our technology, and our mission is clear: to onboard every business that wants to drive measurable growth. We are driven by the belief that our technology can positively impact the global economy. By helping businesses of all kinds efficiently connect with their audiences, we unlock their potential to grow and thrive. Given the opportunities in front of us our team is as hungry as ever to execute on our vision. Together, we will continue to deliver results that make a difference—for our customers, our shareholders, and the world.

Adam Foroughi, CEO and co-founder, Applovin, Q4 2024, 12 February 2025

Study the graphic above and you will see a snapshot of a business on fire. Applovin is a classic company having a day in the sun moment and, if you don’t hold the shares, the sooner you buy them the better.

The opportunity for the business is mouthwatering.

Q4 was a major milestone, arguably our most foundational period since the AXON upgrade in 2023. For the first time, we captured meaningful holiday shopping advertising dollars and witnessed the impact of an advertising category beyond solely gaming contributing to our growth. I’m sure many of you are curious about how much revenue our e-commerce category contributed.

While we’re not breaking out revenue by vertical because that’s not how we view our business, I’d like to provide some perspective. We operate a platform that reaches over a billion people in mobile games daily with their engagement times comparable to social networks. Historically, most of our ads focused on advertising for other games. But now, we’re attracting a broader set of advertisers.

Q4 results show that our models can perform in other categories in addition to continuing to improve performance for our gaming customers. This breakthrough is only the beginning. We’ve now also validated that our platform success isn’t only limited to direct-to-consumer brands. Early pilots have shown positive outcomes for a range of advertisers suggesting that any business in any vertical can harness the power of our platform.

This opens up a massive opportunity as there are over 10m businesses worldwide who advertise online that could eventually use our platform profitably. By delivering incremental value, we position ourselves as an engine for growth. It’s a win-win for brands, consumers, and shareholders. These early results solidify our vision of building one of the most influential marketing platforms in the world.

Where we once focused on gaming, we’re now positioning ourselves to serve the entire global advertising economy. Importantly, the users engaging with our network aren’t just shifting existing purchases. They’re discovering new products while playing the games they love, generating truly incremental demand. By enabling these discoveries, we’re expanding the global economy for consumers and advertisers alike.

Adam Foroughi, CEO and co-founder, Applovin, Q4 2024, 12 February 2025

This company is so exciting it is a rival even to my beloved Palantir.

The quality of this business is spectacular.

I’d like to highlight our favorite metric going forward, adjusted EBITDA per employee. As we’re transitioning to a pure advertising platform, our focus will be on productivity, automation, and building lean, high-impact teams.

In Q4, we had approximately $3m in run rate adjusted EBITDA per employee in our advertising business, and we expect that number to rise as we refine processes and scale our business. This metric underscores our commitment to operational excellence. Thank you for your continued support and partnership as we enter this next phase of growth. I’m more confident than ever that we’re building a platform with the potential to transform global marketing.

Adam Foroughi, CEO and co-founder, Applovin, Q4 2024, 12 February 2025

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But when we put the platform together, we really strategically made a choice to go after DTC [direct to consumer] commerce. But what we knew is that if the tech works there, it’s going to work on everything.

And so, sort of privately and quietly as we’ve gotten onboarding from clients and other categories across a wide range of categories, we’ve been seeing that the models are working there. And what I was announcing just a couple of minutes ago is that we’re seeing success across any category that comes on to the platform, which gives us a lot of confidence that as we go through the year, we release more tools and really go into more of a self-service and open state. We’re going to be in a position to go after the very, very large set of advertisers that are in the 10m-plus range in the world over the next coming quarters, years, and decade plus. This is something that we aspire to do, and we’re going to take our time on it because I do want to caveat it with an important point that ties back to our culture.

We’re spending quite a lot of time trying to build tools to automate the entire system so that we’re not looking at a massive revenue opportunity in front of us and suggesting that we have to go hire people to go after it. We’re going to continue to stay diligent and lean, and we’re going to use tools and AI and automation to deliver the same type of solution and success for advertisers that come on board in the future, but make sure they come on board into a platform that hasn’t changed anything from the cultural values that have gotten us to this point.

Adam Foroughi, CEO and co-founder, Applovin, Q4 2024, 12 February 2025

It looks as though the nascent e-commerce business is exploding.

We’ve got seasonality in Q4, which traditionally we’ve never been able to take advantage of, and that’s built around shopping and shopping behavior.

And that, this quarter, we were able to take some advantage of because we’re starting to see the e-commerce product really take off. The other part of it is that in Q4, you also have people having more time to spend on mobile devices, especially during the holidays. And during that time, people are more likely to consume and transact in mobile games. So, naturally, every single year Q4 is a very good healthy quarter for marketing mobile games.

So, it was a combination of the baseline, which is just our models are continuously getting smarter on their own, some team effort on an incremental improvements on the models and then seasonality across both our existing games business and our new up-and-coming e-commerce business.

Adam Foroughi, CEO and co-founder, Applovin, Q4 2024, 12 February 2025

I have seldom read a quarterly meeting with analysts so ablaze with excitement.

our business predictably has got 20pcis year-over-year growth in it. And that’s from just the baseline of operating within the category that we’ve always traditionally operated in. Then, you’ve got these things that can drive material upside. That’s really exciting for us.

They’re unpredictable. And when things are unpredictable, a lot of times, people assume they’re going to be unpredictably bad. Well, in our business, we’ve got two things that can be unpredictably really good. One is these model enhancements.

We’re really, really early still in AI development and research, both inside our company and then, obviously, externally, too. This is not a field that’s mature, It’s early in its existence. It’s only going to get better. And when our models get better, we’ve all seen the impact to revenue.

And the other piece is we’ve always been a closed managed platform specifically for mobile games. We now have a lot of proof of life in e-commerce. You’ve seen it on Twitter, yet, a lot of the noise is from customers that are in. But we have not let a lot of customers onto the platform yet as we’ve been on pilot.

As we go more and more open and start attracting thousands and tens of thousands, hundreds of thousands of customers to come on stream over the coming quarters and years, the business is going to continue to show compelling growth. We look at it as one single business and better monetizing the billion-plus daily actives that we see. We don’t think about it as revenue from each category matters.

Adam Foroughi, CEO and co-founder, Applovin, Q4 2024, 12 February 2025

What do I suggest you do with this stock? Buy some immediately and then keep buying. Don’t go mad on the leverage but some leverage is good because a rising share price funds further purchases.

The shift toward a self-service model could be a game changer.

Nothing has changed through the holidays. The teams are just bombarded with work. They had to work a ton during Black Friday. But other than just the really the sheer volume that we’re trying to process on helping clients get onto the platform and see that positive result, there’s nothing else that’s changed or will change until we get the tools out the door that will allow any customer to come in a self-service manner and be able to unlock the same type of result that the folks right now are getting with our managed support.

Adam Foroughi, CEO and co-founder, Applovin, Q4 2024, 12 February 2025

WOW!