AppLovin Corporation (NASDAQ:APP) Q2 2023 Earnings Call Transcript

Herald Chen: And Franco, on your second question, as you tell our Software Platform is performing well because we are delivering great solutions and delivering advertising that’s effective for those customers and so we are doing the same thing for our Apps portfolio. So I wouldn’t say we have any outperformance in the Apps portfolio for the second quarter, but we do believe in the second half of this year as we invest more in user acquisition and more on our own platforms, that we should be able to drive additional growth for those Apps.

Franco Granda: Great. Thank you.

Operator: And moving on to Martin Yang with OpCo.

Martin Yang: Hi. Thanks for taking question. If AXON has performed in line with your expectation, can you give us a sense of where the outperformance came from in the second quarter results relative to your guidance?

Adam Foroughi: Relative to our guidance, we rolled out the technology towards the second part of the quarter, right? So this is a brand new technology. We thought it was going to be really powerful. It is very, very hard to measure the impact of a new technology to replace — entirely replace an old one, right? So we were very pleased with the short-term impact. We are more excited about the long-term implications on our overall business. And again, this is a — it’s an infancy stage. It’s only a couple of months old of the technology. We think it’s going to get a lot stronger over time and we think it’s going to be able to fuel our growth for quarters and years, but we are going to be excited to see what that looks like as we go forward.

Martin Yang: And my follow-up question on AXON 2 is, throughout, should we expect a continuous improvement throughout the third quarter and when you say Axon 2 is being fully rolled out, does that mean the performance improvement will may come from better algorithm instead of being implemented across more ad inventories?

Adam Foroughi: Yeah. As we go forward, the technology will continue to fuel growth from a couple of different vectors. One is, at the level of scale that we operate at, we drive billions of transactions a year. We are able to — the technology itself will learn and self-improve. Our team, obviously, is working on improving the technology every step of the way. So that also happens in parallel, obviously, core of our engineering focus is on this part of our stock. And then you have got the more interesting long-term dynamic that, if this technology is so good that we are one of the largest channels, if not the largest, for all of our gaming partners and it’s now working within gaming and outside of gaming. It opens up the door to the possibility of a lot of advertiser expansion, which will create more density in our auction, create more scale to the business.

And then to your last point, more inventory will come online as well. We are in a — we operate and really with MAX being a core driver, but more broadly in the mobile app ecosystem in a real-time environment. If our systems are better than they were, in theory, we will get more inventory and our systems will be able to predict more accurate transactions and we are really excited about how all of this will compound over time and create a much bigger opportunity to market for our core business.

Martin Yang: Thank you.

Operator: We have Bernie McTernan with Needham has the next question.

Bernie McTernan: Great. Thanks for taking the questions. On the App discovery announcement that came out on Monday in terms of new products, how should we think about which of those should be most impactful? And then can you just remind us on the sales process or the process of signing up other advertisers outside of mobile games. It’s probably pretty clear that as you guys are more successful in increasing return on ad spend for mobile games, they are just going to spend more with you guys, but for a new advertiser to come in, what’s that process of getting them on the platform?