The First-Party Data Bowl - AppLovin Surging to New Heights

Despite AppLovin's numbers indicating a negative Q4, the company's shares have surged 30% since it reported its earnings on Wednesday, following a disappointing Q4. What gives?

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There is no doubt that AppLovin beat analyst predictions despite its revenue declining by 11% year over year to $702 million. In addition, the company provided optimism about its revenue guidance for Q1, which the company expects to fall somewhere between $685 million and $705 million - topping Q4, which has traditionally been the largest quarter for everyone.

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There is a large portion of AppLovin's revenue (44%) comes from its software business, which grew 24% year over year, thanks mainly to its user acquisition solution and ad exchange, which are the reason for this growth.

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Since Q4 2021, AppLovin has experienced a decline in revenue for its apps business, which includes a portfolio of owned gaming content along with a portfolio of apps, as compared with the same period last year. (It has been reported in the past that AppLovin will restructure its app business and focus more on software in the future.)

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Mobile Dev Memo's Eric Seufert writes that AppLovin's software business "dramatically outpaces" its apps, which suggests the software platform is outperforming the broader mobile market and gaming in particular.

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In the case of Apple's ATT and the return of consumer behavior norms that existed before COVID-19, this is what tends to happen.

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Despite the less-than-favorable economic environment, it will be interesting to watch whether AppLovin can perform as expected in Q1.