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Applovin financials see rise driven by new AI investments but declining revenue for apps

The company’s non-gaming related business is on the up even as apps falter
Applovin financials see rise driven by new AI investments but declining revenue for apps

Marketing platform and game publisher Applovin have announced their latest results. Their Q2 2023 financials show revenue of $750m, down from $776m year on year but a continued rise quarter on quarter.

App revenue has lowered to $344m in Q2 2023 from $459m in total (split between in-app purchases and advertising) in Q2 2022.

According to Applovin, “In the second quarter, we remained focused on the long-term financial return for our Apps segment, continuing to balance investment in the studio teams and marketing efforts with overall cash flow,” suggesting that the intention is to maintaining their current portfolio and holdings without making major new investments to correct this change in the short-term.

The main source of growth for overall revenue is attributed to the release of Applovin’s AI-powered advertising engine Axon 2.0. With the company exceeding the higher-end of its revenue forecast, the underperformance of their apps business by comparison may be cause for a rethink on their ongoing strategy, however it seems that acquisitions or major new investments in this segment beyond their long-term outlook are not on the cards.

What’s eatin’ Applovin?

While app performance is down, this does not form the majority of their business, and so it’s unsurprising that other - larger - sectors are outperforming their apps. Applovin themselves predict a continued rise in revenue, up to $800m by Q3 2023, showing good performance overall. In other metrics as the company recently took the top spot for downloads by a US company worldwide.

The drop in advertising and in-app purchases could partially be driven by an ongoing post-Covid slump that is affecting some companies. Playtika in particular have seen rocky financials, more readily apparent due to their sole focus being on games, especially in the otherwise lucrative social casino genre. Overall macroeconomic conditions may be adversely affecting gaming, although Applovin is in a unique position to maintain their foothold in the app world while supporting continued financial growth with their other work.