AppLovin shares pop on earnings beat, mobile gaming business sale

AppLovin shares soared as high as 15% in extended trading after the company reported earnings and revenue that beat expectations and announced the sale of its mobile gaming business.

Here’s how the company did compared to LSEG consensus estimates:

• Earnings: $1.67 per share vs $1.45 per share expected
• Revenue: $1.48 billion vs $1.38 billion expected

AppLovin also agreed on Wednesday to sell its mobile gaming business to Tripledot Studios in a deal worth $400 million in cash considerations.

The advertising tech company will also obtain a roughly 20% ownership stake in Tripledot Studios, which makes mobile games like Sudoko Friends, Puzzletime and Solitaire Classic. The deal is expected to close in the second quarter of 2025.

AppLovin said it expects second-quarter sales in the range of $1.2 billion to $1.22 billion, trailing analyst expectations of $1.38 billion.

The company reported first-quarter net income of $576 million, or $1.67 per share, up from $234 million, or 67 cents per share, in the same quarter of 2024.

AppLovin’s total costs and expenses for the first quarter came in at $820.55 million, representing a 14% increase from the previous year during the same quarter.

The ad-tech firm said in February that it had signed a term sheet to sell its apps business for “total estimated consideration” of $900 million, which included $500 million in cash.

AppLovin’s business has been split between advertising and apps, which is primarily made up of game studios that the company has acquired over the years. With the historic growth in its advertising unit, due to rapid advancements in artificial intelligence, the apps business had become much less important.

Sales of the company’s apps-related business for the quarter came in at $325 million, which was a 14% decline from the prior year.

The company logged $1.16 billion in first-quarter advertising sales, up from $678 million a year ago.

AppLovin’s stock surged over 700% in 2024 and was the top performer in the sector, thanks to the AI boom and growth in online advertising.

But the company’s shares dropped 12% in February after short sellers published reports casting doubt on its AI-powered AXON advertising software.

Separately, AppLovin published a blog post on Wednesday, describing a proposed deal with ByteDance’s TikTok. The company said it would not buy the TikTok U.S. operations but rather merge with the social media company, allowing it to cover “all assets outside China.”

“We see this as a true partnership, leveraging our strengths to address security, data, and content challenges while unlocking massive potential,” the company said in the blog post.

AppLovin CEO Adam Foroughi previously told CNBC’s “The Exchange” in April that its proposal involving TikTok represented a “much stronger bid than others.”

Last month, President Donald Trump extended the deadline a second time for ByteDance to sell TikTok to an American buyer or be effectively banned in the country.

“If you pair our algorithm with the TikTok audience, the expansion on that platform for dollars spent will be through the roof,” Foroughi said at the time.

Although Foroughi on Wednesday characterized AppLovin’s TikTok proposal as “a long shot.” But he said the company goes “after long shots,” which “shouldn’t be surprising to our shareholders at this point.”

Foroughi said that AppLovin’s TikTok plans would involve overseeing the app’s U.S. business and its operations in other parts of the world, but not China.

“We think the biggest priority is to solve national security concerns with regards to biases in the algo and data in the U.S., but that’s important outside of China everywhere,” Foroughi said. “And to do that, you really, truly do have to have operational control.”

WATCH: Activist Robby Starbuck on why he’s suing Meta for defamation