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Earnings Results: Applovin stock falls 5% following earnings miss, another outlook cut

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Applovin Inc. shares fell in the extended session Wednesday after the app-monetization company’s results and outlook cut disappointed Wall Street.

Applovin
APP,
-9.49%

shares fell more than 6% after hours, following a 9.5% drop in the regular session to close at $13.74. Year to date, shares are down about 85%, about the same drop from their April 15, 2021 initial public offering that priced at $80 and closed down nearly 20% on the first day of trade. In comparison, the S&P 500 index
SPX,
-2.08%

is down 21% this year, and the tech-heavy Nasdaq Composite Index
COMP,
-2.48%

is off 34%.

Applovin reported second-quarter net income of $21.7 million, or 6 cents a share, compared with net income of $13.3 million, or 4 cents a share, in the year-ago period. The company reported revenue of $713.1 million compared with revenue of $727 million in the year-ago quarter.

Analysts surveyed by FactSet had forecast adjusted earnings of 7 cents a share on revenue of $728.2 million.

The Palo Alto, Calif.-based company offers marketing, monetization and analytics software that helps app developers grow their businesses, similar to the software Unity Software Inc.
U,
-9.51%

sells to videogame makers. Unity also reported results after the bell Wednesday, posting revenue that fell short of the Street consensus.

“The mobile-app industry is facing several headwinds,” Applovin said in a shareholder letter. “While overall consumption of mobile gaming apps remains stable, consumer spending is down compared to last year.”

Applovin also cut its full-year revenue outlook again, this time to a range of $2.8 billion to $2.81 billion, down from a previous range of $2.84 billion to $3.14 billion, which itself was down from an earlier outlook of $3.14 billion to $3.44 billion. Meanwhile, the Street forecast a consensus of $2.93 billion.

Read: AppLovin IPO: 5 things to know about the software company valued at nearly $30 billion

The company also forecast fourth-quarter revenue of $685 million to $700 million, while the Street had forecast $794.2 million.

The company continued its review of its apps business as revenue fell 24% to $407 million in the third quarter from a year ago. Back in May, Applovin said it would start treating its apps business as a standalone concern.

“During 3Q22, this included redirecting investment in new games toward key studios, the sale of non-strategic assets, reducing our user acquisition spend and optimizing across the portfolio, further reducing the overall headcount of the Apps business, and evaluating restructuring of earnout arrangements,” the company said in a shareholder letter.

Applovin is no stranger to M&A. In April, it added streaming-video company Wurl in a $430 million cash-and-stock acquisition, following its $1.05 billion acquisition of app-monetization company MoPub, which closed on Jan. 3, and its year-ago $1 billion acquisition of German mobile-app measurement and marketing company Adjust.

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