Applovin Corporation

Greetings and welcome to the Applovin third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Ryan Gee, Head of Investor Relations and Strategic Finance for Applovin. Thank you, Mr. G. You may begin.

Thank you, Jason, and welcome everyone to Applovin's earnings call for the quarter ended September 30th, 2021. Joining me today to discuss our results are our co-founder, CEO, and chairperson, Adam Ferroghi, and our president and chief financial officer, Harold Chen. Please note our SEC filings, earnings release, and shareholder letter discussing our 3Q performance are available at investors.applovin.com. During today's call, we may be making forward-looking statements regarding future events and the future financial performance of the company. These statements are based on assumptions and beliefs, and we assume no obligation to update them. Actual results may differ materially from the results predicted. Please review the risk factors in our most recently filed Form 10-Q, as well as elsewhere in our SEC filings for further clarification. We will also be discussing non-GAAP financial measures. Reconciliations of our GAAP and non-GAAP financial measures are included in our earnings press release, shareholder letter, and our 10-Q. Please be sure to review these reconciliations as the non-GAAP measures are not intended to be a substitute for or superior to our GAAP results. A reminder, this conference call is being recorded, and a replay will be available on our IR website shortly. With that, I will now turn it over to our CEO, Adam Ferroghi.

Thanks, Ryan. Our headline results and our shareholder letter outline our strong Q3 performance, so I'm going to keep my comments brief to allow more time for Q&A. I want to emphasize three things that really speak to the platform we are building and how our differentiated model is driving our success. First, consider how fast we are growing. Our software platform revenue just grew 385% year over year to $193 million. Our growth has been accelerating for four quarters in a row now. largely organic. We quadrupled our new specs and our net dollar base retention was 255%. Second, consider the massive opportunity still ahead of us. As the market absorbed IDFA changes, most advertising platforms saw modest sequential gains. Yet our software business grew 32% quarter over quarter. We were growing fast before platform changes and continue to do so after, which is a testament to the strength of our team and our technologies. Our customers are performance-driven. That means our growth and our scale is a direct reflection of the strong performance of our integrated platform. Our exceptional growth rate is continued proof of the advantages created by our business model and machine learning platform, Axon. You may not realize it, but Axon is only a year old. and we've seen rapid acceleration in customer performance and adoption. That's why we're so excited about our future. We think we have a path to grow our software business for 30% plus year over year for many years to come. Now, there's clearly a lot of execution ahead, but just imagine what it would take for us to grow like that for the next decade. It would only take adding 20% more specs a year and growing the dollar per spec 10% per year. Today we have 280 specs on App Discovery and Macs accounting for $587,000 per quarter each of GAAP reported software revenue. The count of specs just grew 18% versus Q2 and our dollar per spec just grew 13% versus Q2. We just brought on a Salesforce for the first time. We have just begun selling our platform Axon. Our performance is exceptional for our existing clients and we have a huge opportunity to attract new ones. It isn't hard to imagine us being a $10 billion software business in 10 years. And remember, all the incremental dollars are almost all margins. Lastly, consider the potential combination of Max and Mopub. Max is already one of the largest and fastest-growing ad exchanges, powering around $5 billion in media spend. A year ago, 10,000 apps were using Max as a software platform to manage their ad monetizations. As of the end of Q3, that number is almost 30,000 and growing rapidly. We believe our unified platform should surpass $15 billion in advertiser spend across all industry bidders entering 2023. This would make our exchange one of the largest advertising ecosystems in the world. With that, I'll hand it off to Harold to walk you through our financial details.