filings.toolsItem 1. Condensed Consolidated Financial Statements
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Item 1. Condensed Consolidated Financial Statements
AppLovin Corporation
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
| March 31, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 551,024 | $ | 741,411 | |||||||
| Accounts receivable, net | 1,577,812 | 1,414,246 | |||||||||
| Prepaid expenses and other current assets | 238,498 | 156,533 | |||||||||
| Total current assets | 2,367,334 | 2,312,190 | |||||||||
| Property and equipment, net | 161,655 | 160,530 | |||||||||
| Goodwill | 1,639,796 | 1,803,426 | |||||||||
| Intangible assets, net | 855,046 | 896,677 | |||||||||
| Other assets | 682,870 | 696,436 | |||||||||
| Total assets | $ | 5,706,701 | $ | 5,869,259 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 595,219 | $ | 563,427 | |||||||
| Accrued and other current liabilities | 541,381 | 424,206 | |||||||||
| Short-term debt | 200,000 | — | |||||||||
| Deferred revenue | 72,624 | 69,839 | |||||||||
| Total current liabilities | 1,409,224 | 1,057,472 | |||||||||
| Long-term debt | 3,509,964 | 3,508,983 | |||||||||
| Other non-current liabilities | 212,092 | 212,986 | |||||||||
| Total liabilities | 5,131,280 | 4,779,441 | |||||||||
| Commitments and contingencies (Note 4) | |||||||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock, $0.00003 par value—100,000,000 shares authorized, no shares issued and outstanding as of March 31, 2025 and December 31, 2024 | — | — | |||||||||
| Class A, Class B, and Class C Common Stock, $0.00003 par value—1,850,000,000 (Class A 1,500,000,000, Class B 200,000,000, Class C 150,000,000) shares authorized, 338,361,559 (Class A 307,673,018, Class B 30,688,541, Class C nil) and 340,041,739 (Class A 309,353,198, Class B 30,688,541, Class C nil) shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | 11 | 11 | |||||||||
| Additional paid-in capital | 474,642 | 593,699 | |||||||||
| Accumulated other comprehensive loss | (73,185) | (103,096) | |||||||||
| Retained earnings | 173,953 | 599,204 | |||||||||
| Total stockholders’ equity | 575,421 | 1,089,818 | |||||||||
| Total liabilities and stockholders’ equity | $ | 5,706,701 | $ | 5,869,259 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
AppLovin Corporation
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Revenue | $ | 1,484,021 | $ | 1,058,115 | |||||||
| Costs and expenses: | |||||||||||
| Cost of revenue | 271,232 | 294,148 | |||||||||
| Sales and marketing | 182,956 | 226,687 | |||||||||
| Research and development | 122,918 | 155,323 | |||||||||
| General and administrative | 54,501 | 42,398 | |||||||||
| Goodwill impairment | 188,943 | — | |||||||||
| Total costs and expenses | 820,550 | 718,556 | |||||||||
| Income from operations | 663,471 | 339,559 | |||||||||
| Other income (expense): | |||||||||||
| Interest expense | (52,888) | (74,182) | |||||||||
| Other income, net | 7,811 | 2,568 | |||||||||
| Total other expense, net | (45,077) | (71,614) | |||||||||
| Income before income taxes | 618,394 | 267,945 | |||||||||
| Provision for income taxes | 41,975 | 31,762 | |||||||||
| Net income | $ | 576,419 | $ | 236,183 | |||||||
| Less: Net income attributable to participating securities | 144 | 1,451 | |||||||||
| Net income attributable to common stock—Basic | $ | 576,275 | $ | 234,732 | |||||||
| Net income attributable to common stock—Diluted | $ | 576,277 | $ | 234,784 | |||||||
| Net income per share attributable to Class A and Class B common stockholders: | |||||||||||
| Basic | $ | 1.70 | $ | 0.70 | |||||||
| Diluted | $ | 1.67 | $ | 0.67 | |||||||
| Weighted-average common shares used to compute net income per share attributable to Class A and Class B common stockholders: | |||||||||||
| Basic | 339,837,238 | 335,794,739 | |||||||||
| Diluted | 344,877,542 | 348,596,295 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
AppLovin Corporation
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net income | $ | 576,419 | $ | 236,183 | |||||||
| Other comprehensive income (loss): | |||||||||||
| Foreign currency translation adjustment, net of tax | 29,911 | (18,622) | |||||||||
| Other comprehensive income (loss), net of tax | 29,911 | (18,622) | |||||||||
| Comprehensive income | $ | 606,330 | $ | 217,561 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
AppLovin Corporation
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands, except share data)
(Unaudited)
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||
| Class A and Class B Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2024 | 340,041,739 | $ | 11 | $ | 593,699 | $ | (103,096) | $ | 599,204 | $ | 1,089,818 | ||||||||||||||||||||||||
| Stock issued in connection with equity awards | 1,673,751 | — | 5,329 | — | — | 5,329 | |||||||||||||||||||||||||||||
| Shares withheld related to net share settlement of equity awards | (422,322) | — | (185,667) | — | — | (185,667) | |||||||||||||||||||||||||||||
| Repurchase of Class A common stock | (2,931,609) | — | — | — | (1,001,670) | (1,001,670) | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 61,281 | — | — | 61,281 | |||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | 29,911 | — | 29,911 | |||||||||||||||||||||||||||||
| Net income | — | — | — | — | 576,419 | 576,419 | |||||||||||||||||||||||||||||
| Balances as of March 31, 2025 | 338,361,559 | $ | 11 | $ | 474,642 | $ | (73,185) | $ | 173,953 | $ | 575,421 |
| Three Months Ended March 31, 2024 | |||||||||||||||||||||||||||||||||||
| Class A and Class B Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2023 | 339,886,712 | $ | 11 | $ | 2,134,581 | $ | (65,274) | $ | (812,989) | $ | 1,256,329 | ||||||||||||||||||||||||
| Stock issued in connection with equity awards | 3,936,518 | — | 23,429 | — | — | 23,429 | |||||||||||||||||||||||||||||
| Shares withheld related to net share settlement of equity awards | (1,397,947) | — | (80,144) | — | — | (80,144) | |||||||||||||||||||||||||||||
| Repurchase of Class A common stock | (13,466,397) | — | (752,224) | — | — | (752,224) | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 95,253 | — | — | 95,253 | |||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | (18,622) | — | (18,622) | |||||||||||||||||||||||||||||
| Net income | — | — | — | — | 236,183 | 236,183 | |||||||||||||||||||||||||||||
| Balances as of March 31, 2024 | 328,958,886 | $ | 11 | $ | 1,420,895 | $ | (83,896) | $ | (576,806) | $ | 760,204 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
AppLovin Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating Activities | |||||||||||
| Net income | $ | 576,419 | $ | 236,183 | |||||||
| Adjustments to reconcile net income to operating activities: | |||||||||||
| Amortization, depreciation and write-offs | 79,887 | 112,667 | |||||||||
| Goodwill impairment | 188,943 | — | |||||||||
| Stock-based compensation, excluding cash-settled awards | 61,281 | 95,253 | |||||||||
| Other | 8,086 | 8,540 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (167,382) | (84,836) | |||||||||
| Prepaid expenses and other assets | (51,861) | 26,813 | |||||||||
| Accounts payable | 32,545 | 18,056 | |||||||||
| Accrued and other liabilities | 103,794 | (19,897) | |||||||||
| Net cash provided by operating activities | 831,712 | 392,779 | |||||||||
| Investing Activities | |||||||||||
| Purchase of non-marketable equity securities | (18,678) | (28,333) | |||||||||
| Other investing activities | (3,986) | (3,302) | |||||||||
| Net cash used in investing activities | (22,664) | (31,635) | |||||||||
| Financing Activities | |||||||||||
| Repurchases of common stock | (1,000,911) | (752,224) | |||||||||
| Principal repayments of debt | — | (668,972) | |||||||||
| Payment of withholding taxes related to net share settlement | (185,667) | (80,144) | |||||||||
| Payments of licensed asset obligation | (13,532) | — | |||||||||
| Proceeds from issuance of debt | 200,000 | 1,072,330 | |||||||||
| Proceeds from exercise of stock options | 5,329 | 9,782 | |||||||||
| Other financing activities | (7,436) | (5,384) | |||||||||
| Net cash used in financing activities | (1,002,217) | (424,612) | |||||||||
| Effect of foreign exchange rate on cash and cash equivalents | 2,782 | (2,348) | |||||||||
| Net decrease in cash and cash equivalents | (190,387) | (65,816) | |||||||||
| Cash and cash equivalents at beginning of the period | 741,411 | 502,152 | |||||||||
| Cash and cash equivalents at end of the period | $ | 551,024 | $ | 436,336 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
AppLovin Corporation
Condensed Consolidated Statements of Cash Flows (Continued)
(In thousands)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Supplemental non-cash investing and financing activities disclosures: | |||||||||||
| Acquisitions not yet paid | $ | 20,368 | $ | 13,088 | |||||||
| Right-of-use assets acquired in exchange for lease obligations | $ | 3,967 | $ | 10,232 | |||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Cash paid for interest, net | $ | 2,392 | $ | 71,189 | |||||||
| Cash paid for income taxes, net of refunds | $ | 5,597 | $ | 3,578 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
AppLovin Corporation
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. Description of Business and Summary of Significant Accounting Policies
Description of Business
AppLovin Corporation (the “Company” or “AppLovin”) was incorporated in the state of Delaware on July 18, 2011. The Company is a leader in the advertising ecosystem providing end-to-end Advertising solutions that allow businesses to reach, monetize and grow their global audiences. The Company also has a globally diversified portfolio of apps—free-to-play mobile games that it operates through its owned or partner studios.
The Company is headquartered in Palo Alto, California, and has several operating locations in the U.S. as well as various international office locations in North America, Asia, and Europe.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, the unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2025. The condensed consolidated balance sheet data as of December 31, 2024 was derived from the audited consolidated financial statements at that date but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements reflect all normal and recurring adjustments, that are, in the opinion of management, necessary for the fair presentation of the Company’s financial position, results of operations, cash flows and stockholders’ equity for the interim periods presented. The results of operations for the three months ended March 31, 2025 shown in this report are not necessarily indicative of the results to be expected for the full year ending December 31, 2025 or any other period.
Certain prior period amounts reported in the Company's condensed consolidated financial statements and notes thereto have been reclassified to conform to current period presentation.
Basis of Consolidation
The Company's condensed consolidated financial statements include accounts and operations of the Company and its wholly-owned subsidiaries. In accordance with the provisions of Accounting Standards Codification ("ASC") 810, Consolidation, the Company is also required to consolidate any variable interest entities ("VIE") when it is the primary beneficiary. The primary beneficiary has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE, or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company evaluates its relationships with all VIEs on an ongoing basis. All intercompany transactions and balances have been eliminated upon consolidation.
Use of Estimates
The preparation of the Company's condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. The Company bases its estimates on assumptions that are believed to be reasonable under the circumstances. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to fair values of assets and liabilities acquired through acquisitions, useful lives of intangible assets and property and equipment, expected period of consumption of virtual goods, income and indirect taxes, contingent liabilities, evaluation of recoverability of intangible assets and long-lived assets, goodwill impairment, stock-based compensation, fair value of financial instruments. These estimates are inherently subject to judgment and actual results could differ materially from those estimates.
Recent Accounting Pronouncements (Issued Not Yet Adopted)
In December 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes: Improvements to Income Tax Disclosures, which requires disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments will be
effective for annual periods beginning after December 15, 2024. The amendments may be applied prospectively or retrospectively, and early adoption is permitted. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement: Reporting Comprehensive Income-Expense Disaggregation Disclosures, which requires disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. The amendments will be effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The amendments may be applied prospectively or retrospectively, and early adoption is permitted. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.
2. Revenue
Revenue from Contracts with Customers
The Company generates Advertising and Apps Revenue. Advertising Revenue is generated primarily from fees collected from advertisers including advertising networks who use the Advertising solutions. Apps Revenue consists of in-app purchase revenue ("IAP Revenue") generated from in-app purchases made by users within the Company’s apps (“Apps”), and in-app advertising revenue ("IAA Revenue") generated from third-party advertisers that purchase ad inventory from Apps.
Advertising Revenue
The vast majority of the Advertising Revenue is generated through AppDiscovery and MAX, which provide the technology to match advertisers and owners of digital advertising inventory (“Publishers”) via auctions at large scale and microsecond-level speeds. The terms for all mobile advertising arrangements are governed by the Company’s terms and conditions and generally stipulate payment terms of 30 days subsequent to the end of the month. Substantially all of the Company's contracts with customers are fully cancelable at any time or upon a short notice.
The Company’s performance obligation is to provide customers with access to the Advertising solutions, which facilitates the advertiser’s purchase of ad inventory from Publishers. The Company does not control the ad inventory prior to its transfer to the advertiser, because the Company does not have the substantive ability to direct the use of nor obtain substantially all of the remaining benefits from the ad inventory. The Company is not primarily responsible for fulfillment. The Company is an agent as it relates to the sale of third-party advertising inventory and presents revenue on a net basis. The transaction price is the product of either the number of completions of agreed upon actions or advertisements displayed and the contractually agreed upon price per advertising unit with the advertiser less consideration paid or payable to Publishers. The Company recognizes Advertising Revenue when the agreed upon action is completed or when the ad is displayed to users. The number of advertisements delivered and completions of agreed upon actions is determined at the end of each month, which resolves any uncertainty in the transaction price during the reporting period.
Advertising Revenue also includes revenue generated from Adjust's measurement and analytics marketing platform that is recognized ratably over the subscription period of generally up to twelve months. Revenue from other services was not material.
Apps Revenue
In-App Purchase Revenue
IAP Revenue includes fees collected from users to purchase virtual goods to enhance their gameplay experience. The identified performance obligation is to provide users with the ability to acquire, use, and hold virtual items over the estimated period of time the virtual items are available to the user or until the virtual item is consumed. Payment is required at the time of purchase, and the purchase price is a fixed amount.
Users make IAPs through the Company’s distribution partners. The transaction price is equal to the gross amount charged to users because the Company is the principal in the transaction. IAP fees are non-refundable. Such payments are initially recorded as deferred revenue. The Company categorizes its virtual goods as either consumable or durable. Consumable virtual goods represent goods that can be consumed by a specific player action in gameplay; accordingly, the Company recognizes revenue from the sale of consumable virtual goods as the goods are consumed. Durable virtual goods represent goods that are accessible to the user over an extended period of time; accordingly, the Company recognizes revenue from the sale of durable virtual goods ratably over the period of time the goods are available to the user, which is generally the estimated average user life (“EAUL”).
The EAUL represents the Company’s best estimate of the expected life of paying users for the applicable
game. The EAUL begins when a user makes the first purchase of durable virtual goods and ends when a user is determined to be inactive. The Company determines the EAUL on a game-by-game basis. For a newly launched game with limited playing data, the Company determines its EAUL based on the EAUL of a game with sufficiently similar characteristics.
The Company determines the EAUL on a quarterly basis and applies such calculated EAUL to all bookings in the respective quarter. Determining the EAUL is subjective and requires management’s judgment. Future playing patterns may differ from historical playing patterns, and therefore the EAUL may change in the future. The EAULs are generally between five and ten months.
In-App Advertising Revenue
IAA Revenue is generated by selling ad inventory on the Company's Apps to third-party advertisers. Advertisers purchase ad inventory either through the Advertising solutions or through third-party advertising networks (“Ad Networks”). Revenue from the sale of ad inventory through Ad Networks is recognized net of the amounts retained by Ad Networks as the Company is unable to determine the gross amount paid by the advertisers to Ad Networks. The Company recognizes revenue when the ad is displayed to users.
The Company presents taxes collected from customers and remitted to governmental authorities on a net basis.
Disaggregation of Revenue
The following table presents revenue disaggregated by segment and type (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Advertising Revenue | $ | 1,158,974 | $ | 678,370 | |||||||
| In-App Purchase Revenue | 227,541 | 259,196 | |||||||||
| In-App Advertising Revenue | 97,506 | 120,549 | |||||||||
| Total Apps Revenue | 325,047 | 379,745 | |||||||||
| Total Revenue | $ | 1,484,021 | $ | 1,058,115 |
Revenue disaggregated by geography, based on user location, consists of the following (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| United States | $ | 821,982 | $ | 634,604 | |||||||
| Rest of the World | 662,039 | 423,511 | |||||||||
| Total Revenue | $ | 1,484,021 | $ | 1,058,115 |
Contract Balances
Contract liabilities consist of deferred revenue, which are recorded for payments received in advance of the satisfaction of performance obligations. During the three months ended March 31, 2025 and 2024, the Company recognized $47.8 million and $53.0 million of revenue that was included in deferred revenue as of December 31, 2024 and 2023, respectively.
Unsatisfied Performance Obligations
Substantially all of the Company’s unsatisfied performance obligations relate to contracts with an original expected length of one year or less.
3. Financial Instruments and Fair Value Measurements
Financial Instruments Measured at Fair Value by Level on a Recurring Basis
As of December 31, 2024, the Company held $41.5 million in money market deposit accounts, which were included in cash and cash equivalents and classified as Level 1 within the fair value hierarchy. The balance of such accounts was not material as of March 31, 2025.
Non-Marketable Equity Securities Measured at Net Asset Value
The Company held equity interests in certain private equity funds of $97.7 million and $77.3 million as of March 31, 2025 and December 31, 2024, respectively, which are measured using the net asset value practical expedient. Under the net asset value practical expedient, the Company records investments based on the
proportionate share of the underlying funds’ net asset value as of the Company's reporting date. These investments are included in other assets in the Company’s condensed consolidated balance sheets.
These funds vary in investment strategies and generally have an initial term of 7 to 10 years, which may be extended for 2 to 3 additional years with the applicable approval. These investments are subject to certain restrictions regarding transfers and withdrawals and generally cannot be redeemed with the funds. Distributions from the funds will be received as the underlying investments are liquidated. The Company’s maximum exposure to loss is limited to the carrying value of these investments of $97.7 million and the unfunded commitments of $3.0 million as of March 31, 2025.
During the three months ended March 31, 2025, the Company made total capital contributions of $18.7 million related to these investments. The Company recognized immaterial unrealized gains related to these investments for the three months ended March 31, 2025 and 2024.
Non-Marketable Equity Securities Measured at Fair Value on a Non-Recurring Basis
The Company's non-marketable equity securities are investments in privately held companies without readily determinable fair values. The Company elected the measurement alternative to account for these investments. Under the measurement alternative, the carrying value of the non-marketable equity securities are adjusted based on price changes from observable transactions of identical or similar securities of the same issuer or for impairment. Any changes in carrying value are recorded within other income, net in the Company's condensed consolidated statement of operations.
As of March 31, 2025 and December 31, 2024, the carrying amounts of the Company's non-marketable equity securities were $68.1 million and $68.1 million, respectively, and were included in other assets in the Company’s condensed consolidated balance sheets. Since acquisition, the Company had recorded a cumulative impairment charge of $28.0 million related to these investments.
4. Commitments and Contingencies
Commitments
As of March 31, 2025, the Company's non-cancelable minimum purchase commitments were primarily related to a multi-year contractual arrangement with a cloud services provider. In August 2024, the Company amended its agreement with the provider, committing to spend a minimum of $1.3 billion over a three-year period. By March 31, 2025, the Company had made cumulative payments of $228.8 million towards this commitment.
Contingencies
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated.
Letters of Credit
As of March 31, 2025 and December 31, 2024, the Company had outstanding letters of credit in the aggregate amount of $6.3 million and $6.3 million, respectively, which were issued as security for certain leased office facilities under the Credit Agreement. These letters of credit have never been drawn upon.
Legal Proceedings
The Company is involved from time to time in litigation, claims, and proceedings. The outcomes of the Company’s legal proceedings are inherently unpredictable and subject to significant uncertainty, and could, either individually or in aggregate, have a material adverse effect.
The Company records a liability when it is probable that a loss has been incurred and the amount can be reasonably estimated. If it is determined that a loss is reasonably possible and the loss or range of loss can be estimated, the reasonably possible loss is disclosed. The Company evaluates developments in legal matters that could affect the amount of liability that has been previously accrued, and related reasonably possible losses disclosed, and makes adjustments as appropriate. Significant judgment is required to determine the likelihood of matters and the estimated amount of a loss related to such matters. To date, losses in connection with legal proceedings have not been material.
The Company expenses legal fees in the period in which they are incurred.
Indemnifications
The Company enters into indemnification provisions under agreements with other parties in the ordinary course of business, including certain customers, business partners, investors, contractors and the Company’s officers, directors and certain employees. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. To date, losses recorded in the Company’s condensed consolidated statements of operations in connection with the indemnification provisions have not been material. As of March 31, 2025, the Company did not have any material indemnification claims that were probable or reasonably possible.
Non-income Taxes
The Company may be subject to audit by various tax authorities with regard to non-income tax matters. The subject matter of non-income tax audits primarily arises from different interpretations on tax treatment and tax rates applied. The Company accrues liabilities for non-income taxes that may result from examinations by, or any negotiated agreements with, these tax authorities when a loss is probable and reasonably estimable. If a loss is reasonably possible and the loss or range of loss can be estimated, the Company discloses the reasonably possible loss.
5. Goodwill and Intangible Assets
The following table presents the changes in the carrying amount of goodwill by reporting unit (in thousands):
| Advertising | Apps | Total | |||||||||||||||
| Balances as of December 31, 2024 | $ | 1,457,685 | $ | 345,741 | $ | 1,803,426 | |||||||||||
| Goodwill impairment | — | (188,943) | (188,943) | ||||||||||||||
| Foreign currency translation | 25,313 | — | 25,313 | ||||||||||||||
| Balances as of March 31, 2025 | $ | 1,482,998 | $ | 156,798 | $ | 1,639,796 |
The Company evaluates goodwill for impairment at the reporting unit level on an annual basis, or more frequently if events or changes in circumstances indicate that goodwill may be impaired.
On February 12, 2025, the Company entered into a non-binding term sheet to sell its mobile gaming business to Tripledot, a privately held company. On May 7, 2025, the Company and certain of its subsidiaries entered into a definitive agreement with Tripledot and its affiliates to sell the Company’s mobile gaming business for total consideration consisting of $150.0 million in cash, a $250.0 million secured promissory note, and equity representing approximately 20% of Tripledot’s fully diluted equity capitalization at closing, subject to customary purchase price adjustments. The closing of the transaction is subject to regulatory approvals and other customary closing conditions.
The Company identified the non-binding term sheet combined with negotiations throughout the first quarter of 2025 to sell the mobile gaming business as an indicator of impairment for the Apps reporting unit and performed an interim quantitative goodwill impairment test as of March 31, 2025. Based on this assessment, the Company determined that the carrying amount of the Apps reporting unit exceeded its estimated fair value and recorded a non-cash goodwill impairment charge of $188.9 million in its condensed consolidated statement of operations for the three months ended March 31, 2025.
At the time the interim impairment test was performed, the Company had not yet determined the fair value of the total consideration, which is subject to a valuation of the equity consideration at the closing of the transaction. As a result, the Company estimated the fair value of the Apps reporting unit using the discounted cash flow method of the income approach. Key valuation inputs included projected future cash flows, risk-adjusted discount rates and long-term growth rates, which are based on management’s estimates and assumptions believed to be reasonable and reflective of known market conditions as of the interim impairment test date. The resulting fair value measurement is classified as Level 3 within the fair value hierarchy due to the use of significant unobservable inputs.
Upon closing, the Company will recognize a gain or loss on the sale of the mobile gaming business based on the difference between the total fair value of the consideration received, including the equity consideration, and the carrying amount of the mobile gaming business’s net assets.
Intangible assets, net consisted of the following (in thousands):
| Weighted- Average Remaining Useful Life (in years) | As of March 31, 2025 | As of December 31, 2024 | |||||||||||||||||||||||||||||||||||||||
| Gross Carrying Value | Accumulated Amortization | Net Book Value | Gross Carrying Value | Accumulated Amortization | Net Book Value | ||||||||||||||||||||||||||||||||||||
| Apps | 3.3 | $ | 1,848,037 | $ | (1,462,940) | $ | 385,097 | $ | 1,828,036 | $ | (1,419,559) | $ | 408,477 | ||||||||||||||||||||||||||||
| Customer relationships | 7.0 | 516,319 | (175,328) | 340,991 | 511,125 | (160,810) | 350,315 | ||||||||||||||||||||||||||||||||||
| User base | 1.0 | 68,817 | (59,064) | 9,753 | 68,817 | (56,626) | 12,191 | ||||||||||||||||||||||||||||||||||
| License asset | 2.8 | 60,707 | (59,332) | 1,375 | 60,707 | (59,207) | 1,500 | ||||||||||||||||||||||||||||||||||
| Developed technology | 2.4 | 206,604 | (130,760) | 75,844 | 204,286 | (120,808) | 83,478 | ||||||||||||||||||||||||||||||||||
| Other | 2.0 | 69,673 | (27,687) | 41,986 | 66,020 | (25,304) | 40,716 | ||||||||||||||||||||||||||||||||||
| Total intangible assets | $ | 2,770,157 | $ | (1,915,111) | $ | 855,046 | $ | 2,738,991 | $ | (1,842,314) | $ | 896,677 |
The Company recorded amortization expenses related to acquired intangible assets as follows (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cost of revenue | $ | 53,488 | $ | 88,142 | |||||||
| Sales and marketing | 17,255 | 16,819 | |||||||||
| Total | $ | 70,743 | $ | 104,961 |
6. Equity
In February 2022, the Company's board of directors authorized a stock repurchase program for the Company's Class A common stock. As of December 31, 2024, $2.3 billion remained available for repurchases under the program. During the three months ended March 31, 2025, the Company repurchased and subsequently retired 2,931,609 shares of Class A common stock for an aggregate amount, including commissions and fees, of $1.0 billion. As of March 31, 2025, $1.3 billion remained available for repurchases under the program.
Repurchases may be made from time to time through open market purchases or through privately negotiated transactions, subject to market conditions, applicable legal requirements and other relevant factors. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company may also, from time to time, enter into Rule 10b-5 trading plans, to facilitate repurchases of shares. The repurchase program does not obligate the Company to acquire any particular amount of Class A common stock, has no expiration date and may be modified, suspended, or terminated at any time at the Company's discretion.
The Company retires its Class A common stock upon repurchases, and records the excess of repurchase price over par value for shares repurchased to retained earnings to the extent the Company has retained earnings. If the Company has an accumulated deficit, the Company records the excess of repurchase price over par value for shares repurchased first to additional paid-in capital, to the extent the Company has additional paid-in capital, until depleted, and then to accumulated deficit in the Company’s consolidated statements of redeemable noncontrolling interest and stockholders’ equity.
7. Stock-based Compensation
The Company maintains three equity compensation plans that provide for the issuance of shares of its common stock to the Company’s employees, directors, consultants and other service providers: the 2021 Equity Incentive Plan (the "2021 Plan"), the 2021 Partner Studio Incentive Plan, and the 2021 Employee Stock Purchase. There were no material equity award issuances during the three months ended March 31, 2025.
Stock-based compensation expense included in the Company's condensed consolidated statements of operations is as follows (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cost of revenue | $ | 1,125 | $ | 1,468 | |||||||
| Sales and marketing | 16,325 | 21,963 | |||||||||
| Research and development | 29,662 | 59,446 | |||||||||
| General and administrative | 14,271 | 12,376 | |||||||||
| Total | $ | 61,383 | $ | 95,253 |
8. Earnings Per Share
The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to 20 votes per share. Each share of Class B common stock is convertible into one share of Class A common stock voluntarily at any time by the holder, and automatically upon certain events. The Class A common stock has no conversion rights. As the liquidation and dividend rights are identical for Class A and Class B common stock, the undistributed earnings are allocated on a proportional basis and the resulting net income per share attributable to common stockholders will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis.
The following table sets forth the computation of basic and diluted net income per share attributable to common stockholders (in thousands, except share and per share data):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Basic EPS | |||||||||||
| Numerator: | |||||||||||
| Net income | $ | 576,419 | $ | 236,183 | |||||||
| Less: | |||||||||||
| Income attributable to options exercised by promissory notes | (144) | (726) | |||||||||
| Income attributable to common stock subject to share repurchase agreements | — | (724) | |||||||||
| Income attributable to unvested early exercised options | — | (1) | |||||||||
| Net income attributable to common stockholders—Basic | $ | 576,275 | $ | 234,732 | |||||||
| Denominator: | |||||||||||
| Weighted-average shares used in computing net income per share—Basic | 339,837,238 | 335,794,739 | |||||||||
| Net income per share attributable to common stockholders—Basic: | $ | 1.70 | $ | 0.70 | |||||||
| Diluted EPS | |||||||||||
| Numerator: | |||||||||||
| Net income | $ | 576,419 | $ | 236,183 | |||||||
| Less: | |||||||||||
| Income attributable to options exercised by promissory notes | (142) | (700) | |||||||||
| Income attributable to common stock subject to share repurchase agreements | — | (698) | |||||||||
| Income attributable to unvested early exercised options | — | (1) | |||||||||
| Net income attributable to common stockholders—Diluted | $ | 576,277 | $ | 234,784 | |||||||
| Denominator: | |||||||||||
| Weighted-average shares used in computing net income per share—Basic | 339,837,238 | 335,794,739 | |||||||||
| Weighted-average dilutive stock awards | 5,040,304 | 12,801,556 | |||||||||
| Weighted-average shares used in computing net income per share—Diluted | 344,877,542 | 348,596,295 | |||||||||
| Net income per share attributable to common stockholders—Diluted: | $ | 1.67 | $ | 0.67 |
The following table presents the forms of antidilutive potential common shares:
| As of March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Stock options exercised for promissory notes | 85,000 | 85,000 | |||||||||
| Early exercised stock options | — | 559 | |||||||||
| Stock options | — | 12,265 | |||||||||
| Unvested RSUs | 645 | 2,006,934 | |||||||||
| ESPP | 31,203 | — | |||||||||
| Total antidilutive potential common shares | 116,848 | 2,104,758 |
As of March 31, 2024, the table above excludes any unvested PSUs since the related market conditions had not yet been met. There were no unvested PSUs as of March 31, 2025.
9. Income Taxes
The Company is subject to income taxes in the U.S. and in foreign jurisdictions. The Company bases the interim tax accruals on an estimated annual effective tax rate applied to year-to-date income and records the discrete tax items in the period to which they relate. Each quarter, the Company updates the estimated annual effective tax rate and makes a year-to-date adjustment to the tax provision as necessary. The Company’s calendar year 2025 annual effective tax rate differs from the U.S. statutory rate primarily due to jurisdictional mix of earnings, global minimum tax, foreign tax credits, foreign derived intangible income deduction, and global intangible low-taxed income.
During the three months ended March 31, 2025, there were no material changes to the Company's unrecognized tax benefits, and the Company does not expect material changes in unrecognized tax benefits within the next twelve months.
10. Segments
The Company determines its operating segments based on how its chief operating decision maker ("CODM") manages the business, allocates resources, makes operating decisions and evaluates operating performance. The Company’s CODM is the Chief Executive Officer. The Company's two operating and reportable segments are as follows:
-
Advertising*:* Revenue is generated primarily from fees paid by advertisers for the placement of ads on mobile applications owned by Publishers.
-
Apps*:* Revenue is generated when a user of one of the Apps makes an in-app purchase ("IAP Revenue") and when clients purchase the digital advertising inventory of the Company's portfolio of Apps ("IAA Revenue").
The CODM evaluates the performance of each operating segment using revenue and segment Adjusted EBITDA. The Company defines segment Adjusted EBITDA as revenue less expenses, excluding depreciation and amortization and certain items that the Company does not believe are reflective of the operating segments’ core operations. Expenses include indirect costs that are allocated to operating segments based on a reasonable allocation methodology, which are generally related to sales and marketing activities and general and administrative overhead. Revenue and expenses exclude transactions between the Company's operating segments.
The CODM uses segment Adjusted EBITDA to allocate resources during the annual budgeting and forecasting process. The CODM considers segment Adjusted EBITDA when making decisions on operating and capital resource allocation. Additionally, the CODM uses segment Adjusted EBITDA to evaluate operating strategy and assess segment performance by comparing the results of each segment.
The CODM does not evaluate operating segments using asset information, and, accordingly, the Company does not report asset information by segment.
The following table provides information about the Company's reportable segments and a reconciliation of the total segment Adjusted EBITDA to income before income taxes (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Advertising: | |||||||||||
| Revenue | $ | 1,158,974 | $ | 678,370 | |||||||
| Less: | |||||||||||
| Data center costs | (122,358) | (94,133) | |||||||||
| Personnel related expenses | (52,282) | (56,808) | |||||||||
| Other expenses1 | (41,106) | (35,409) | |||||||||
| Advertising Adjusted EBITDA | 943,228 | 492,020 | |||||||||
| Apps: | |||||||||||
| Revenue | $ | 325,047 | $ | 379,745 | |||||||
| Less: | |||||||||||
| User acquisition costs | (111,447) | (150,636) | |||||||||
| Payment processing fees | (62,427) | (75,611) | |||||||||
| Professional services costs | (61,420) | (58,831) | |||||||||
| Other expenses2 | (27,954) | (37,916) | |||||||||
| Apps Adjusted EBITDA | 61,799 | 56,751 | |||||||||
| Total Segment Adjusted EBITDA | $ | 1,005,027 | $ | 548,771 | |||||||
| Interest expense | $ | (52,888) | $ | (74,182) | |||||||
| Other income, net | 9,042 | 3,397 | |||||||||
| Amortization, depreciation and write-offs | (79,887) | (112,667) | |||||||||
| Goodwill impairment | (188,943) | — | |||||||||
| Loss on disposal of long-lived assets | — | (1,646) | |||||||||
| Non-operating foreign exchange gain (loss) | 40 | (106) | |||||||||
| Stock-based compensation | (61,383) | (95,253) | |||||||||
| Transaction-related expense | (6,005) | (369) | |||||||||
| Restructuring costs | (6,609) | — | |||||||||
| Income before income taxes | $ | 618,394 | $ | 267,945 | |||||||
1 Other segment items for the Advertising reportable segment include professional services costs, facilities costs, advertising costs, software costs, and other individually insignificant costs.
2 Other segment items for the Apps reportable segment include personnel related expenses, data center costs, facilities costs, software costs, and other individually insignificant costs.
11. Debt
In March 2025, the Company borrowed $200.0 million under its revolving credit facility pursuant to the credit agreement entered in 2024 to fund share repurchases under the Company's repurchase program. For additional information regarding the share repurchases, see Note 6 - Equity. As of March 31, 2025, $793.7 million remained available for borrowing under the facility, net of $6.3 million in outstanding letters of credit. The Company repaid $100.0 million of the outstanding borrowings in April 2025 and the remaining $100.0 million in May 2025.
12. Restructuring
For the three months ended March 31, 2025, the Company implemented certain workforce reduction measures and recorded total restructuring charges of $11.0 million, consisting of $7.7 million related to the Advertising segment and $3.3 million related to the Apps segment. These charges primarily consisted of one-time termination benefits and stock-based compensation expenses recognized due to the accelerated vesting of equity awards in connection with employee terminations.
As of March 31, 2025, unpaid liabilities related to one-time termination benefits were $1.5 million. The Company did not incur restructuring costs during the three months ended March 31, 2024.
13. Related Party Transactions
In February 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with KKR Denali, and BofA Securities, Inc., acting for themselves and as representative of other underwriters
(collectively, the “Underwriters”), in connection with a secondary public offering (the “Offering”) of 19,866,397 shares of the Company's Class A common stock by KKR Denali. Pursuant to the Underwriting Agreement, on March 6, 2024, the Company repurchased from the Underwriters 10,466,397 shares of Class A common stock sold to the Underwriters by KKR Denali in the Offering at a price per share of $54.46, the same per share price paid by the Underwriters to KKR Denali in the Offering. In connection with the Offering, KKR Denali converted 16,000,000 shares of Class B common stock to Class A common stock.
In February 2024, the Company entered into an agreement to invest $50.0 million in the Series C preferred stock financing of Humans, Inc., the developer of the Flip Shop social shopping app ("Flip Shop"). In February 2024, the Company also entered into an arm's length commercial agreement with Humans, Inc. related to its use of the Company's advertising recommendation engine, AXON, under a revenue share model. No transactions have occurred to date under this commercial agreement. Eduardo Vivas, a member the Company's board of directors, serves as the Chief Operating Officer of Humans, Inc., and a member of its board of directors.
During the three months ended March 31, 2025, the Company recognized $0.4 million in Advertising Revenue from Humans, Inc. related to their use of the Company’s Advertising solutions. The transactions were conducted at arm’s-length pricing and under standard contractual terms.
In March 2019, the Company entered into a promissory note with Rafael Vivas, the brother of Eduardo Vivas, a member of the Company's board of directors, for the purpose of advancing him funds to allow him to early exercise his stock options (“Vivas Note”). The Vivas Note was issued in the amount of $2.3 million at an interest rate of 2.59%, and later amended on August 7, 2020 to lower the interest rate on the outstanding balance of such note to the then applicable IRS annual mid-term rate of 0.41%. On March 8, 2024, the principal amount due under the Vivas Note plus accrued interest, or $2.3 million, was repaid in full to the Company and the Vivas Note was extinguished.
The Company had no other material related party transactions for the three months ended March 31, 2025 and 2024.
14. Subsequent Events
On May 7, 2025, the Company and certain of its subsidiaries entered into a definitive agreement with Tripledot and its affiliates to sell the Company’s mobile gaming business for total consideration consisting of $150.0 million in cash, a $250.0 million secured promissory note, and equity representing approximately 20% of Tripledot’s fully diluted equity capitalization at closing, subject to customary purchase price adjustments. The closing of the transaction is subject to regulatory approvals and other customary closing conditions.
The Company determined that the pending sale constitutes the disposal of substantially all of its Apps segment and represents a strategic shift that will have a major effect on its operations and financial results. Accordingly, the Company concluded that the Apps segment meets the criteria for classification as a discontinued operation under ASC 205-20, and will reflect the results of the Apps segment as a discontinued operation beginning in the second quarter of 2025.
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