AppLovin stands out in the latest round of quarterly earnings calls
In recent weeks, the ad tech sector’s publicly traded companies released their official earnings figures, offering insights into the industry’s critical underpinning developments.
Yesterday (November 11), Zeta delivered its Q3 earnings call, noting that revenues soared 42% year over year to hit $268 million. It also increased its quarterly earnings guidance to $297 million (up $32 million), noting that its recent purchase of LiveIntent will help buoy earnings.
Earlier during the period, the intuitive talisman of the sector, The Trade Desk, posted its (now expected) quarterly revenue increase – up 27% year on year to $628 million – during the period. Still, it was the performance of AppLovin during the three months to September 30 that (arguably) proved most notable in the latest raft of earnings.
AppLovin’s overall Q3 revenue hit $1.2 billion, representing a 39% year-on-year increase, with the outfit additionally forecasting between $1.24 billion and $1.26 billion in Q4 revenue. As a result, AppLovin’s market capitalization soared in the days following its latest earnings call, with its stock price easily surpassing that of Trade Desk to near $100 billion, with executives there pouring cold water on speculation that it may be exploring inorganic growth.
“We’ve got the largest mediation solution in the sector and our teams built maybe the most innovative advertising technology that the world’s yet seen,” cofounder, chairman, and CEO Adam Foroughi. “And we’re now scaling it out. And so, if you sort of just fast-forward over the quarters and the years from here, we’re going to be able to service tens of thousands to hundreds of thousands to millions of advertisers on our platform to access this audience that they had never accessed before.”
However, AppLovin CFO Matt Stumpf moved to clarify its intention for “growing the organic [advertising] business” when asked about press speculation on potential mergers and acquisitions by analysts. He said, “We have no plans, right, to do any M&A at this point on the advertising side of the business.”
Separately, The Trade Desk Jeff Green underlined how his company has positioned itself as an alternative to the industry’s walled gardens and its shrinking reliance on ad tech’s historic targeting, i.e., third-party cookies, by underlining CTV’s role in its revenues.
“2024 has been a banner year for CTV, and we have further cemented our position as the first-choice platform to help leading brands as they continue to shift their budgets from linear TV and UGC into CTV,” he said, noting how video represented just below half of its overall revenues during the period.
Meanwhile, Magnite posted overall Q3 revenue of $161 million, representing a 9% year-on-year increase, with further revenue guidance between $170 million and $175 million during Q4, with executives there eager to trumpet its CTV efforts and curation efforts.
“For the quarter, our year-over-year growth rate and contribution ex-TAC from CTV accelerated to 23% from a 12% growth rate in Q2,” said Michael Barrett, CEO of Magnite, making a note of its partnerships with Disney, Netflix, Paramount, Rooku, and Warner Bros. Discovery.
“There’s an ongoing industry shift toward curation on the sell side, and it’s being fueled in part by signal loss on the demand side, where data collection is becoming more restricted due to privacy changes in browsers and devices,” said Barrett, noting revenue from this part of its business “has grown over 100% year over year… the sell side, there’s no better home for curation than the SSP, where it’s easiest for premium publishers to lie with their peers to attract spend.”
Elsewhere, Criteo’s leadership touted its partnership with Microsoft as evidence of how its bet on retail media will offset the declines in its traditional (cookie-based) ad retargeting business, which produced an overall quarterly revenue of $459 million, down 2% year over year.
Similarly, LiveRamp was keen to trumpet how its data business saw a boost from Oracle’s exit from the ads business, with revenues coming in at $185 million during the period, a jump from $160 million 12 months earlier.
Meanwhile, DoubleVerify saw revenues increase 18% to hit $196.6 million, although CEO Mark Zagorski noted some of the company’s (and broader sector’s) vulnerabilities to the whims of advertisers and dependence on the policy decisions of platforms such as Google and Meta.
“Six large customers scale back on ad spend that had our most premium products attached to it. In addition, we saw ad dollars incrementally shift from open exchange programmatic to walled gardens, where our activation solutions aren’t yet available,” he told analysts, noting the company closed approximately 70% of the RFPs it acted upon after Oracle’s summer exit from the ad game.
On November 12, DoubleVerify’s main rival, Integral Ad Science — itself the subject of multi-billion dollar takeover speculation — is set to issue its Q3 earnings the same day as PubMatic, which is duking it out with DSPs for more significant sway in the ad market (just like Magnite).
Regardless of the numbers, analysts setting the valuations of such companies will likely pay more interest to the developments in the (almost over) Google ad tech trial coming November 25.
This is when closing arguments from either side are scheduled to take place, the outcome of which could see Google’s sell-side offering broken up in a development that would fundamentally reshape the competitive landscape for each of the above companies.
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