AppLovin : Revenue up 132% year over year to $604 million; Initiates full year 2021 Revenue and Adjusted EBITDA guidance of between $2.65 and $2.70 billion and between $680 and $700 million, respectively (Form 8-K)

Revenue up 132% year over year to $604 million; Initiates full year 2021 Revenue and Adjusted EBITDA guidance of between $2.65 and $2.70 billion and between $680 and $700 million, respectively

PALO ALTO - May 12, 2021 - AppLovin Corporation, (NASDAQ: APP) ('AppLovin' or 'we') a leading marketing software company, today announced financial results for the first quarter ended March 31, 2021 and posted a letter to its shareholders on its investor relations website.

'We are excited to deliver record revenue in our first earnings report as a newly public company. Our record growth 1Q21 results are driven by the powerful combination of our integrated business model, incorporating software, content and data. Additionally, in April 2021 we closed on the previously announced acquisition of app measurement leader Adjust as well as completed the acquisitions of two more top grossing games: West Game and Cash Tornado Slots,' said Adam Foroughi, CEO and co-founder of AppLovin. 'As we continue to grow our content portfolio, gain access to data, and improve the efficacy of our marketing software, we see a path to outsized growth for years to come.'

First Quarter 2021 Financial Summary

We achieved our highest revenue and Adjusted EBITDA growth quarter in total and across all parts of our business. All comparisons are versus Q1 2020.

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Total revenue was $603.9 million, an increase of 132%. Organic revenue growth was 89%.

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Net loss was $10.6 million compared to net income of $4.7 million in 1Q20.

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Adjusted EBITDA totaled $131 million, an increase of 110%.

Fiscal 2021 Outlook

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Total Revenue of $2.65 - $2.70 billion, representing approximately +83% growth.

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Total Adjusted EBITDA of $680-$700 million, representing approximately +100% growth.

We have not provided the forward-looking GAAP equivalent for our Adjusted EBITDA guidance as a result of the uncertainty regarding, and the potential variability of, certain reconciling items such as stock-based compensation expense. Accordingly, a reconciliation of our Adjusted EBITDA guidance to net income (loss), the corresponding GAAP measure, is not available without unreasonable effort. However, it is important to note that material changes to reconciling items could have a significant effect on future GAAP results. We have provided a reconciliation of historical Adjusted EBITDA to net income (loss) in tables at the end of this release.

(1) Organic growth represents revenue growth from existing Apps owned at the end of the prior period and newly developed Apps from existing Owned and Partner Studios owned at the end of the prior period.

Webcast and Conference Calls

AppLovin will host a webcast and conference call today at 2:00 PM PT / 5:00 PM ET, during which management will discuss first quarterly results and provide commentary on business performance. A question-and-answer session will follow the prepared remarks.

The live audio webcast may be accessed on the Company's investor relations website. The conference call can be accessed by dialing 1-877-407-9716 for domestic callers or 1-201-493-6779 for international callers. A replay of the call via webcast will be available at: https://investors.AppLovin.com until June 12, 2021.

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About AppLovin

AppLovin's leading marketing software provides developers a powerful, integrated set of solutions to grow their businesses. AppLovin enables developers to market, monetize, analyze and publish their apps. The company's first party content includes over 200+ popular, engaging apps and its technology brings that content to millions of users around the world. AppLovin is headquartered in Palo Alto, California with several offices globally.

Contacts:

Investors

[e-mail]

Press

Emelyne Interior

[e-mail]

Source: AppLovin Corp.

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Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as 'may,' 'will,' 'should,' 'expect,' 'plan,' 'anticipate,' 'going to,' 'could,' 'intend,' 'target,' 'project,' 'contemplate,' 'believe,' 'estimate,' 'predict,' 'potential,' or 'continue,' or the negative of these words or other similar terms or expressions that concern our expectations, strategy, priorities, plans, or intentions. Forward-looking statements in this letter to shareholders include, but are not limited to, statements regarding our future financial performance, including our expected financial results and guidance; our expectations regarding our revenue and Adjusted EBITDA; and our expectations regarding our market opportunity and future growth. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties, including changes in our plans or assumptions, that could cause actual results to differ materially from those projected. These risks include our inability to forecast our business due to our limited operating history, fluctuations in our results of operations, the competitive mobile app ecosystem, our inability to adapt to emerging technologies and business models. The forward-looking statements contained in this letter to shareholders are also subject to other risks and uncertainties, including those more fully described in our prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on April 15, 2021. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2021. The forward-looking statements in this press release are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward-looking statements, except as required by law.

Non-GAAP Financial Measures

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States ('GAAP'), this release includes certain financial measures that are not prepared in accordance with GAAP, including Adjusted EBITDA. A reconciliation of such non-GAAP financial measure to the most directly comparable GAAP measure can be found below.

We define Adjusted EBITDA for a particular period as net income (loss) before interest expense and loss on settlement of debt, other (income) expense, net, provision for (benefit from) income taxes, amortization, depreciation and write-offs and as further adjusted for stock-based compensation expense, acquisition-related expense, loss (gain) on extinguishments of acquisition-related contingent consideration, non-operating foreign exchange losses, lease modification and abandonment of leasehold improvements, and change in the fair value of contingent consideration.

We believe that the presentation of Adjusted EBITDA provides useful information to investors regarding our results of operations and operating performance, as it is similar to measures reported by our public competitors and are regularly used by securities analysts, institutional investors and other interested parties in analyzing operating performance and prospects.

Adjusted EBITDA is a key measure we use to assess our financial performance and is also used for internal planning and forecasting purposes. We believe Adjusted EBITDA is helpful to investors, analysts, and other interested parties because it can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. In addition, this measure is frequently used by analysts, investors, and other interested parties to evaluate and assess performance. We use Adjusted EBITDA in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance. This non-GAAP financial measure is presented for supplemental informational purposes only and should not be considered as an alternative or substitute to financial

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information presented in accordance with GAAP. This measure has certain limitations in that it does not include the impact of certain expenses that are reflected in our consolidated statement of operations that are necessary to run our business. Our definition may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Furthermore, Adjusted EBITDA has certain limitations in that it does not include the impact of certain expenses that are reflected in our consolidated statement of operations that are necessary to run our business. Thus, our non-GAAP financial measures should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP.

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AppLovin Corporation

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

		March 31,			December 31,
		2021			2020
Assets
Current assets:
Cash and cash equivalents		$	761,075			$	317,235
Accounts receivable, net			340,881				296,964
Prepaid expenses and other current assets			82,865				48,795
Total current assets			1,184,821				662,994
Property and equipment, net			22,167				28,587
Operating lease right-of-use assets			78,540				84,336
Goodwill			249,385				249,773
Intangible assets, net			1,036,800				1,086,332
Other assets			49,686				42,571
Total assets		$	2,621,399			$	2,154,593
Liabilities, redeemable noncontrolling interest, and stockholders' deficit
Current liabilities:
Accounts payable		$	158,023			$	147,275
Accrued liabilities			95,102				95,057
Licensed asset obligation			17,666				18,760
Short-term debt			18,310				15,210
Deferred revenue			85,892				86,886
Operating lease liabilities			21,726				22,206
Deferred acquisition costs, current			89,877				212,658
Total current liabilities			486,596				598,052
Non-current liabilities:
Long-term debt			2,137,612				1,583,990
Operating lease liabilities, noncurrent			66,604				71,755
Other non-current liabilities			60,309				59,032
Total liabilities			2,751,121				2,312,829
Redeemable noncontrolling interest			255				309
Stockholders' deficit:
Convertible preferred stock, 109,090,908 shares authorized, issued, and outstanding at December 31, 2020 and March 31, 2021; respectively			399,589				399,589
Common stock A, $0.00003 par value-386,400,000 shares authorized, 183,800,251 and 184,817,898 shares issued and outstanding at December 31, 2020 and March 31, 2021, respectively			6				6
Common stock F, $0.00003 par value-43,200,000 shares authorized, 42,564,150 shares issued and outstanding at December 31, 2020 and March 31, 2021, respectively			1				1
Additional paid-in capital			493,465				453,655
Accumulated other comprehensive income (loss)			(117	)			604
Accumulated deficit			(1,022,921	)			(1,012,400	)
Total stockholders' deficit			(129,977	)			(158,545	)
Total liabilities, redeemable noncontrolling interest, and stockholders' deficit		$	2,621,399			$	2,154,593

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AppLovin Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

		Three Months Ended March 31,
		2021			2020
Revenue		$	603,877			$	260,178
Costs and expenses:
Cost of revenue			223,061				76,453
Sales and marketing			265,513				128,667
Research and development			60,876				19,112
General and administrative			42,962				10,810
Total cost and expenses			592,412				235,042
Income (loss) from operations			11,465				25,136
Other income (expense):
Interest expense and loss on settlement of debt, net			(35,010	)			(18,629	)
Other income, net			9,790				1,021
Total other income (expense)			(25,220	)			(17,608	)
Income (loss) before provision for income taxes			(13,755	)			7,528
Provision for (benefit from) income taxes			(3,180	)			2,864
Net income (loss)			(10,575	)			4,664
Less: Net loss attributable to noncontrolling interest			(54	)			-
Net income (loss) attributable to common shareholders			(10,521	)			4,664
Less: Net income attributable to participating securities			-				(1,677	)
Net income (loss) attributable to common stock - Basic			(10,521	)			2,987
Net income (loss) attributable to common stock - Diluted		$	(10,521	)		$	3,004
Net income (loss) per share attributable to common stockholders:
Basic		$	(0.05	)		$	0.01
Diluted		$	(0.05	)		$	0.01
Weighted average common shares used to compute net income (loss) per share attributable to common stockholders:
Basic			222,408,568				210,898,346
Diluted			222,408,568				214,053,440

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AppLovin Corporation

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

		Three Months Ended March 31,
		2021			2020
Net income (loss)		$	(10,575	)		$	4,664
Other comprehensive loss, net of tax:
Foreign currency translation			(721	)			(36	)
Interest rate swap-unrealized gain (loss), net of tax provision for (benefit from) of nil and $0.5 million, respectively			-				(1,867	)
Total other comprehensive loss			(721	)			(1,903	)
Less: Net loss attributable to noncontrolling interest			(54	)			-
Total comprehensive income (loss) attributable to common shareholders		$	(11,242	)		$	2,761

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AppLovin Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands, except per share data)

(Unaudited)

		Three Months Ended March 31,
		2021			2020
Operating Activities
Net income (loss)		$	(10,575	)		$	4,664
Adjustments to reconcile net income (loss) to operating activities:
Amortization, depreciation and write-offs			88,817				32,279
Amortization of debt issuance costs and discount			4,303				1,421
Stock-based compensation			29,959				3,462
Change in operating right-of-use asset			5,796				1,184
Loss on settlement of debt			16,852				-
Net unrealized gains on fair value remeasurement of financial instruments			(11,214	)			-
Net gain on foreign currency remeasurement			(1,305	)			(49	)
Changes in operating assets and liabilities:
Accounts receivable			(43,917	)			(3,435	)
Prepaid expenses and other current assets			(18,775	)			4,450
Other assets			472				53
Accounts payable			9,370				5,352
Operating lease liabilities			(5,631	)			(1,098	)
Accrued and other liabilities			(1,339	)			(2,942	)
Deferred revenue			(994	)			346
Net cash provided by operating activities			61,819				45,687
Investing Activities
Purchase of property and equipment			(121	)			(200	)
Acquisitions, net of cash acquired			(4,152	)			(54,499	)
Purchase of non-marketable investments and other			(14,000	)			-
Net cash used in investing activities			(18,273	)			(54,699	)
Financing Activities
Proceeds from debt issuance, net of issuance costs			844,729				49,835
Payments of debt principal			(302,327	)			(3,053	)
Payments of finance leases			(840	)			(1,669	)
Proceeds from exercise of stock options			12,882				145
Payments of deferred acquisition costs			(152,245	)			(11,019	)
Repurchase of common stock			-				(760	)
Payments of deferred IPO costs			(1,825	)			-
Net cash provided by financing activities			400,374				33,479
Effect of exchange rate on changes on cash and cash equivalents			(80	)			7
Net increase in cash and cash equivalents			443,840				24,474
Cash and cash equivalents at beginning of the period			317,235				396,247
Cash and cash equivalents at end of the period		$	761,075			$	420,721

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AppLovin Corporation

Condensed Consolidated Statement of Cash Flows (continued)

(In thousands)

(Unaudited)

		Three Months Ended March 31,
		2021			2020
Supplemental non-cash investing and financing activities disclosures:
Acquisitions not yet paid		$	32,161			$	5,370
Deferred IPO costs not yet paid		$	1,834			$	-
Assets acquired under finance leases		$	445			$	1,419
Supplemental disclosure of cash flow information:
Cash paid for interest on debt		$	15,662			$	15,837
Cash paid for income taxes		$	221			$	2,056

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AppLovin Corporation

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(Unaudited and in thousands, except per share data)

The following table provides our Adjusted EBITDA and Adjusted EBITDA margin and a reconciliation of net income (loss) to Adjusted EBITDA:

		Three Months Ended March 31,
($ in thousands)			2021				2020
Revenue		$	603,877			$	260,178
Net income (loss)		$	(10,575	)		$	4,664
Interest expense			35,010				18,629
Other (income) expense, net			(8,626	)			(1,110	)
Provision for (benefit from) income tax			(3,180	)			2,864
Amortization, depreciation and write-offs			88,817				32,279
Non-operating foreign exchange gain			(1,281	)			-
Stock-based compensation			29,959				3,462
Acquisition-related expense			938				1,657
Total adjustments			141,637				57,781
Adjusted EBITDA		$	131,062			$	62,445
Adjusted EBITDA Margin			21.7	%			24.0	%

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