Business Wire | Aug 11, 2021 04:05PM EDT

AppLovin Announces Record Second Quarter 2021 Financial Results

Aug. 11, 2021

PALO ALTO, Calif.--(BUSINESS WIRE)--Aug. 11, 2021--AppLovin Corporation (NASDAQ: APP) ("AppLovin" or "we"), a leading marketing platform, today announced financial results for the second quarter ended June 30, 2021 and posted a letter to its shareholders on its investor relations website.

"We are pleased to report excellent progress during 2Q21, advancing our software business at record rates resulting in our best financial performance yet," said Adam Foroughi, CEO and co-founder of AppLovin. "Our strong execution and growth this quarter, in spite of anticipated industry headwinds around data privacy, speaks to the tremendous opportunity ahead of us and to the distinct advantages leveraging our ML-based software and proprietary first-party insights to help clients grow."

Herald Chen, CFO of AppLovin said, "In 2Q, we achieved record financial results, with total revenue more than doubling year-over-year to $669 million, and our Adjusted EBITDA more than tripling to $184 million, with Adjusted EBITDA margin improving to 27%. Our Software Platform business had exceptional performance with 2Q21 revenue more than tripling year-over-year organically and up +40% over 1Q21 and grew even faster when including the acquisition of Adjust. Our Apps business saw solid +102% year-over-year growth, and we have several new evergreen titles slated to launch later in 2021. With our strong performance and momentum, we are confident in our annual guidance with additional opportunities for growth in 2H2021."

Second Quarter 2021 Financial Summary and Highlights(All comparisons are versus 2Q20 unless otherwise noted)

* Revenue grew 123% to $669 million with organic growth1 of 97% * Business Software Platform revenue was $146 million, an increase of 256% and organic growth1 of 203%; Year-over-year growth accelerated for the third consecutive quarter driven by our AXON-ML engine. Total Software Transaction Value (TSTV)3 was $219 million, an increase of 361%; our platform exited 2Q at an annualized4 TSTV run-rate of approximately $900 million. Software Platform Enterprise Clients2 grew 218% to 366 and increased 90% compared to 1Q21 * Apps revenue grew 102% to $523 million Business Apps revenue grew to $162 million, an increase of 70% Consumer Apps revenue grew to $361 million, an increase of 122%, with 2.7 million MAPs in the quarter * GAAP Net Income improved to $14 million from a GAAP Net Loss of $22 million; a GAAP net margin of 2% * Adjusted EBITDA grew 202% to $184 million and Adjusted EBITDA margin improved to 27%

Organic growth represents revenue growth from existing Apps owned at the(1) end of the prior period and newly developed Apps from existing Owned and Partner Studios at the end of the prior period. Organic growth also excludes contribution from our acquisition of Adjust.(2) Software Platform Enterprise Clients are third-party business clients from whom we have collected greater than $31,250 of revenue in the three months to a given date, equating to an annual run-rate of $125,000 in revenue. Business Software Platform revenue is from third-party clients using our software platform. We do not recognize revenue from our own spend on our(3) software platform. Therefore, we use TSTV to measure the scale and growth rates of our software platform as it reflects the total value on our software platform including our first-party studios as though they were stand-alone businesses. A reconciliation of TSTV to Business Software Platform Revenue is available at the end of this press release.(4) Represents sum of four periods at same quarterly figure for the respective period Webcast and Conference Calls

AppLovin will host a webcast and conference call today at 2:00 PM PT / 5:00 PM ET, during which management will discuss quarterly results and provide commentary on business performance. A question-and-answer session will follow the prepared remarks.

The live audio webcast may be accessed on the Company's investor relations website. The conference call can be accessed by dialing 1-877-407-9716 for domestic callers or 1-201-493-6779 for international callers. A replay of the call via webcast will be available at: https://investors.AppLovin.com until August 18, 2021.

About AppLovin

AppLovin's leading marketing software provides developers with a powerful, integrated set of solutions to grow their businesses. AppLovin enables developers to market, monetize, analyze and publish their apps. The company's first party content includes more than 200+ popular, engaging apps and its technology brings that content to millions of users around the world. AppLovin is headquartered in Palo Alto, California with several offices globally.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expect," "plan," "anticipate," "going to," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential," or "continue," or the negative of these words or other similar terms or expressions that concern our expectations, strategy, priorities, plans, or intentions. Forward-looking statements in this press release include, but are not limited to, statements regarding our future financial performance, including our expected financial results and guidance; our expectations regarding our revenue and Adjusted EBITDA; our expectations regarding future product launches and our expectations regarding our market opportunity and future growth. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties, including changes in our plans or assumptions, that could cause actual results to differ materially from those projected. These risks include our inability to forecast our business due to our limited operating history, fluctuations in our results of operations, the competitive mobile app ecosystem, our inability to adapt to emerging technologies and business models. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2021. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2021. The forward-looking statements in this press release are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward-looking statements, except as required by law.

Non-GAAP Financial Measures

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States ("GAAP"), this press release includes certain financial measures that are not prepared in accordance with GAAP, including Adjusted EBITDA and Adjusted EBITDA margin. A reconciliation of each such non-GAAP financial measure to the most directly comparable GAAP measure can be found below.

We define Adjusted EBITDA for a particular period as net income (loss) before interest expense and loss on settlement of debt, other (income) expense, net, provision for (benefit from) income taxes, amortization, depreciation and write-offs and as further adjusted for stock-based compensation expense, acquisition-related expense and transaction bonuses, loss (gain) on extinguishments of acquisition-related contingent consideration, non-operating foreign exchange (gains) losses, lease modification and abandonment of leasehold improvements, and change in the fair value of contingent consideration. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue for the same period.

We believe that the presentation of these non-GAAP financial measures provides useful information to investors regarding our results of operations and operating performance, as they are similar to measures reported by our public competitors and are regularly used by securities analysts, institutional investors, and other interested parties in analyzing operating performance and prospects.

Adjusted EBITDA and Adjusted EBITDA margin are key measures we use to assess our financial performance and are also used for internal planning and forecasting purposes. We believe Adjusted EBITDA and Adjusted EBITDA margin are helpful to investors, analysts, and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. In addition, these measures are frequently used by analysts, investors, and other interested parties to evaluate and assess performance. We use Adjusted EBITDA, and Adjusted EBITDA margin in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance. These measures have certain limitations in that they do not include the impact of certain expenses that are reflected in our consolidated statement of operations that are necessary to run our business. Our definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, our non-GAAP financial measures should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP.

AppLovin Corporation

Condensed Consolidated Balance Sheets

(in thousands, except for share and per share data)

June 30, December 31,

2021 2020

Assets (unaudited)

Current assets:

Cash and cash equivalents $ 1,183,743 $ 317,235

Accounts receivable, net 383,133 296,964

Prepaid expenses and other current assets 149,969 48,795

Total current assets 1,716,845 662,994

Property and equipment, net 62,986 28,587

Operating lease right-of-use assets 80,092 84,336

Goodwill 1,016,074 249,773

Intangible assets, net 1,675,669 1,086,332

Other assets 47,905 42,571

Total assets $ 4,599,571 $ 2,154,593

Liabilities, redeemable noncontrollinginterest, and stockholders' equity (deficit)

Current liabilities:

Accounts payable $ 192,658 $ 147,275

Accrued liabilities 130,485 95,057

Licensed asset obligation 17,856 18,760

Short-term debt 18,310 15,210

Deferred revenue 90,054 86,886

Operating lease liabilities 24,536 22,206

Deferred acquisition costs, current 129,280 212,658

Total current liabilities 603,179 598,052

Non-current liabilities:

Long-term debt 1,733,676 1,583,990

Operating lease liabilities, noncurrent 65,371 71,755

Other non-current liabilities 199,708 59,032

Total liabilities 2,601,934 2,312,829

Redeemable noncontrolling interest 196 309

Stockholders' equity (deficit):

Convertible preferred stock, 100,000,000 and109,090,908 shares authorized, nil and109,090,908 shares issued and outstanding at - 399,589 June 30, 2021 and December 31, 2020;respectively

Class A, Class B and Class F common stock,$0.00003 par value-1,700,000,000 (Class A1,500,000,000, Class B 200,000,000, Class Fnil) and 429,600,000 (Class A 386,400,000,Class B nil, Class F 43,200,000) sharesauthorized, 372,165,319 (Class A 224,357,697, 11 7 Class B 147,807,622, Class F nil) and226,364,401 (Class A 183,800,251, Class B nil,Class F 42,564,150) shares issued andoutstanding as of June 30, 2021 and December31, 2020, respectively

Additional paid-in capital 3,015,233 453,655

Accumulated other comprehensive income (loss) (9,305 ) 604

Accumulated deficit (1,008,498 ) (1,012,400 )

Total stockholders' equity (deficit) 1,997,441 (158,545 )

Total liabilities, redeemable noncontrolling $ 4,599,571 $ 2,154,593 interest, and stockholders' equity (deficit)

AppLovin Corporation

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Revenue

$

668,806

$

299,331

$

1,272,683

$

559,509

Costs and expenses:

Cost of revenue

245,853

118,051

468,914

194,504

Sales and marketing

265,463

135,319

530,976

263,986

Research and development

77,462

29,702

138,338

48,814

General and administrative

45,050

15,170

88,012

25,980

Lease modification and abandonment of leasehold improvements

-

7,851

-

7,851

Total costs and expenses

633,828

306,093

1,226,240

541,135

Income (loss) from operations

34,978

(6,762

)

46,443

18,374

Other income (expense):

Interest expense and loss on settlement of debt

(19,030

)

(18,809

)

(54,040

)

(37,438

)

Other income (expense), net

(1,570

)

3,157

8,220

4,178

Total other income (expense)

(20,600

)

(15,652

)

(45,820

)

(33,260

)

Income (loss) before income taxes

14,378

(22,414

)

623

(14,886

)

Provision for (benefit from) income taxes

14

(703

)

(3,166

)

2,161

Net income (loss)

14,364

(21,711

)

3,789

(17,047

)

Add: Net loss attributable to noncontrolling interest

59

320

113

320

Net income (loss) attributable to AppLovin

14,423

(21,391

)

3,902

(16,727

)

Less: Net income attributable to participating securities

(1,128

)

-

(807

)

-

Net income (loss) attributable to common stock-Basic

13,295

(21,391

)

3,095

(16,727

)

Net income (loss) attributable to common stock-Diluted

13,349

(21,391

)

3,137

(16,727

)

Net income (loss) per share attributable to common stockholders:

Basic

$

0.04

$

(0.10

)

$

0.01

$

(0.08

)

Diluted

$

0.04

$

(0.10

)

$

0.01

$

(0.08

)

Weighted average common shares used to compute net income (loss) per share attributable to common stockholders:

Basic

335,619,207

213,440,147

279,326,624

212,169,247

Diluted

353,857,814

213,440,147

298,506,265

212,169,247

AppLovin Corporation

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Revenue $ 668,806 $ 299,331 $ 1,272,683 $ 559,509

Costs and expenses:

Cost of 245,853 118,051 468,914 194,504 revenue

Sales and 265,463 135,319 530,976 263,986 marketing

Research and 77,462 29,702 138,338 48,814 development

General and 45,050 15,170 88,012 25,980 administrative

Leasemodificationand - 7,851 - 7,851 abandonment ofleaseholdimprovements

Total costs 633,828 306,093 1,226,240 541,135 and expenses

Income (loss)from 34,978 (6,762 ) 46,443 18,374 operations

Other income (expense):

Interestexpense andloss on (19,030 ) (18,809 ) (54,040 ) (37,438 )settlement ofdebt

Other income (1,570 ) 3,157 8,220 4,178 (expense), net

Total otherincome (20,600 ) (15,652 ) (45,820 ) (33,260 )(expense)

Income (loss)before income 14,378 (22,414 ) 623 (14,886 )taxes

Provision for(benefit from) 14 (703 ) (3,166 ) 2,161 income taxes

Net income 14,364 (21,711 ) 3,789 (17,047 )(loss)

Add: Net lossattributableto 59 320 113 320 noncontrollinginterest

Net income(loss) 14,423 (21,391 ) 3,902 (16,727 )attributableto AppLovin

Less: Netincomeattributable (1,128 ) - (807 ) - toparticipatingsecurities

Net income(loss)attributable 13,295 (21,391 ) 3,095 (16,727 )to commonstock-Basic

Net income(loss)attributable 13,349 (21,391 ) 3,137 (16,727 )to commonstock-Diluted

Net income(loss) pershare attributableto commonstockholders:

Basic $ 0.04 $ (0.10 ) $ 0.01 $ (0.08 )

Diluted $ 0.04 $ (0.10 ) $ 0.01 $ (0.08 )

Weightedaverage common shares used tocompute netincome (loss)per shareattributable to commonstockholders:

Basic 335,619,207 213,440,147 279,326,624 212,169,247

Diluted 353,857,814 213,440,147 298,506,265 212,169,247

AppLovin Corporation

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Net income (loss)

$

14,364

$

(21,711

)

$

3,789

$

(17,047

)

Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss), net of tax effect of $2.6 million for the three and six months ended June 30, 2021

(9,188

)

96

(9,909

)

60

Interest rate swap gain, net of tax effect of $0.4 million and $1.0 million for the three and six months ended June 30, 2020

-

2,455

-

588

Total other comprehensive income (loss)

(9,188

)

2,551

(9,909

)

648

Add: Net loss attributable to noncontrolling interest

59

320

113

320

Total comprehensive income (loss) attributable to AppLovin

$

5,235

$

(18,840

)

$

(6,007

)

$

(16,079

)

AppLovin Corporation

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

Three Months Ended June Six Months Ended June 30, 30,

2021 2020 2021 2020

Net income (loss) $ 14,364 $ (21,711 ) $ 3,789 $ (17,047 )

Other comprehensive income (loss), net of tax:

Foreign currencytranslation gain (loss),net of tax effect of $2.6 (9,188 ) 96 (9,909 ) 60 million for the three andsix months ended June 30,2021

Interest rate swap gain,net of tax effect of $0.4million and $1.0 million - 2,455 - 588 for the three and sixmonths ended June 30, 2020

Total other comprehensive (9,188 ) 2,551 (9,909 ) 648 income (loss)

Add: Net loss attributable 59 320 113 320 to noncontrolling interest

Total comprehensive income(loss) attributable to $ 5,235 $ (18,840 ) $ (6,007 ) $ (16,079 )AppLovin



AppLovin Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Six Months Ended June 30,

2021

2020

Operating Activities

Net income (loss)

$

3,789

$

(17,047

)

Adjustments to reconcile net income (loss) to operating activities:

Amortization, depreciation and write-offs

195,973

83,704

Amortization of debt issuance costs and discount

6,380

3,414

Stock-based compensation

57,103

8,494

Change in operating right-of-use asset

12,267

3,578

Lease modification and abandonment of leasehold improvements

-

7,851

Loss on settlement of debt

16,852

-

Net unrealized gains on fair value remeasurement of financial instruments

(9,855

)

(2,940

)

Net gain on foreign currency remeasurement

952

203

Changes in operating assets and liabilities:

Accounts receivable

(69,881

)

7,708

Prepaid expenses and other current assets

(92,851

)

(16,840

)

Other assets

5,269

2,598

Accounts payable

33,936

(5,713

)

Operating lease liabilities

(12,083

)

(2,828

)

Accrued and other liabilities

6,752

(2,839

)

Deferred revenue

(2,327

)

15,915

Net cash provided by operating activities

152,276

85,258

Investing Activities

Purchase of property and equipment

(653

)

(1,183

)

Acquisitions, net of cash acquired

(1,017,012

)

(523,202

)

Purchase of non-marketable investments and other

(14,000

)

-

Proceeds from other investing activities

10,000

-

Capitalized software development costs

(1,517

)

-

Net cash used in investing activities

(1,023,182

)

(524,385

)

Financing Activities

Proceeds from issuance of common stock in initial public offering, including cost reimbursement

1,744,240

-

Proceeds from debt issuance, net of issuance costs

844,729

331,346

Payments of debt principal

(706,905

)

(56,690

)

Payments of finance leases

(4,621

)

(4,356

)

Proceeds from exercise of stock options

17,888

262

Payments of deferred acquisition costs

(157,565

)

(11,020

)

Repurchases of common stock

-

(1,766

)

Net cash provided by financing activities

1,737,766

257,776

Effect of foreign exchange rate on cash and cash equivalents

(352

)

9

Net increase (decrease) in cash and cash equivalents

866,508

(181,342

)

Cash and cash equivalents at beginning of the period

317,235

396,247

Cash and cash equivalents at end of the period

$

1,183,743

$

214,905

AppLovin Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Six Months Ended June 30,

2021 2020

Operating Activities

Net income (loss) $ 3,789 $ (17,047 )

Adjustments to reconcile net income (loss) to operating activities:

Amortization, depreciation and write-offs 195,973 83,704

Amortization of debt issuance costs and discount 6,380 3,414

Stock-based compensation 57,103 8,494

Change in operating right-of-use asset 12,267 3,578

Lease modification and abandonment of leasehold - 7,851 improvements

Loss on settlement of debt 16,852 -

Net unrealized gains on fair value remeasurement (9,855 ) (2,940 )of financial instruments

Net gain on foreign currency remeasurement 952 203

Changes in operating assets and liabilities:

Accounts receivable (69,881 ) 7,708

Prepaid expenses and other current assets (92,851 ) (16,840 )

Other assets 5,269 2,598

Accounts payable 33,936 (5,713 )

Operating lease liabilities (12,083 ) (2,828 )

Accrued and other liabilities 6,752 (2,839 )

Deferred revenue (2,327 ) 15,915

Net cash provided by operating activities 152,276 85,258

Investing Activities

Purchase of property and equipment (653 ) (1,183 )

Acquisitions, net of cash acquired (1,017,012 ) (523,202 )

Purchase of non-marketable investments and other (14,000 ) -

Proceeds from other investing activities 10,000 -

Capitalized software development costs (1,517 ) -

Net cash used in investing activities (1,023,182 ) (524,385 )

Financing Activities

Proceeds from issuance of common stock in initial 1,744,240 - public offering, including cost reimbursement

Proceeds from debt issuance, net of issuance 844,729 331,346 costs

Payments of debt principal (706,905 ) (56,690 )

Payments of finance leases (4,621 ) (4,356 )

Proceeds from exercise of stock options 17,888 262

Payments of deferred acquisition costs (157,565 ) (11,020 )

Repurchases of common stock - (1,766 )

Net cash provided by financing activities 1,737,766 257,776

Effect of foreign exchange rate on cash and cash (352 ) 9 equivalents

Net increase (decrease) in cash and cash 866,508 (181,342 )equivalents

Cash and cash equivalents at beginning of the 317,235 396,247 period

Cash and cash equivalents at end of the period $ 1,183,743 $ 214,905

AppLovin Corporation

Condensed Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)

Six Months Ended June 30,

2021

2020

Supplemental non-cash investing and financing activities disclosures:

Issuance of convertible security related to acquisitions

$

342,170

$

-

Acquisitions of business through issuance of common stock and common stock warrants

$

-

$

38,167

Acquisitions not yet paid

$

119,256

$

9,169

Deferred IPO costs not yet paid

$

986

$

-

Assets acquired under finance leases

$

2,658

$

2,780

Right of use assets acquired under operating leases

$

-

$

6,937

Supplemental disclosure of cash flow information:

Cash paid for interest on debt

$

31,767

$

30,236

Cash paid for income taxes

$

32,737

$

1,866

AppLovin Corporation

Condensed Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)

Six Months Ended June 30,

2021 2020

Supplemental non-cash investing and financing activities disclosures:

Issuance of convertible security related to acquisitions $ 342,170 $ -

Acquisitions of business through issuance of common stock $ - $ 38,167and common stock warrants

Acquisitions not yet paid $ 119,256 $ 9,169

Deferred IPO costs not yet paid $ 986 $ -

Assets acquired under finance leases $ 2,658 $ 2,780

Right of use assets acquired under operating leases $ - $ 6,937

Supplemental disclosure of cash flow information:

Cash paid for interest on debt $ 31,767 $ 30,236

Cash paid for income taxes $ 32,737 $ 1,866

AppLovin Corporation

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands)

(unaudited)

The following table provides our Adjusted EBITDA and Adjusted EBITDA

margin and a reconciliation of Net income (loss) to Adjusted EBITDA:

Three Months Ended June 30,

2021

2020

Revenue

$

668,806

$

299,331

Net income (loss)

$

14,364

$

(21,711

)

Net Margin

2.1%

(7.3%

)

Interest expense

19,030

18,809

Other (income) / expense, net1

1,671

(3,413

)

Provision for (benefit from) income taxes

14

(703

)

Amortization, depreciation and write-offs

107,156

51,425

Non-operating foreign exchange losses

6

40

Stock-based compensation2

29,435

5,032

Acquisition-related expense and transaction bonus

12,056

3,554

Lease modification and abandonment of leasehold improvements

-

7,851

Total adjustments

169,368

82,595

Adjusted EBITDA

$

183,732

$

60,884

Adjusted EBITDA Margin

27.5%

20.3%

AppLovin Corporation

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands)

(unaudited)



The following table provides our Adjusted EBITDA and Adjusted EBITDA

margin and a reconciliation of Net income (loss) to Adjusted EBITDA:



Three Months Ended June 30,

2021 2020

Revenue $ 668,806 $ 299,331

Net income (loss) $ 14,364 $ (21,711 )

Net Margin 2.1% (7.3% )

Interest expense 19,030 18,809

Other (income) / expense, net^1 1,671 (3,413 )

Provision for (benefit from) income taxes 14 (703 )

Amortization, depreciation and write-offs 107,156 51,425

Non-operating foreign exchange losses 6 40

Stock-based compensation^2 29,435 5,032

Acquisition-related expense and transaction bonus 12,056 3,554

Lease modification and abandonment of leasehold - 7,851 improvements

Total adjustments 169,368 82,595

Adjusted EBITDA $ 183,732 $ 60,884

Adjusted EBITDA Margin 27.5% 20.3%

______________________________1

Excludes recurring operational foreign exchange gains and losses.2

The three and six months ended June 30, 2021 includes $2.3 million of bonus compensation settled in stock outside of the scope of ASC 718. Key Metrics

We review the following key metrics on a regular basis in order to evaluate the health of our business, identify trends affecting our performance, prepare financial projections, and make strategic decisions.

Quarterly Key Metrics

Total Software Transaction Value. Business Software Platform revenue is from third-party clients using our software platform. We do not recognize revenue from our own spend on our software platform. Therefore, we use TSTV to measure the scale and growth rates of our software platform as it reflects the total value on our software platform including our first-party studios as though they were stand-alone businesses. Below is a reconciliation of our Business Software Platform Revenue to Total Software Transaction Value.

______________________________^1 Excludes recurring operational foreign exchange gains and losses.

^ The three and six months ended June 30, 2021 includes $2.3 million of bonus2 compensation settled in stock outside of the scope of ASC 718.

Key Metrics

We review the following key metrics on a regular basis in order to evaluate the health of our business, identify trends affecting our performance, prepare financial projections, and make strategic decisions.

Quarterly Key Metrics

Total Software Transaction Value. Business Software Platform revenue is from third-party clients using our software platform. We do not recognize revenue from our own spend on our software platform. Therefore, we use TSTV to measure the scale and growth rates of our software platform as it reflects the total value on our software platform including our first-party studios as though they were stand-alone businesses. Below is a reconciliation of our Business Software Platform Revenue to Total Software Transaction Value.

($ in thousands) 2Q 2021 2Q 2020

Business Software Platform Revenue $145,664 $40,909

Software Platform fee collected from AppLovin Apps $73,414 $6,637

Total Software Transaction Value $219,078 $47,546

View source version on businesswire.com: https://www.businesswire.com/news/home/20210811005715/en/

CONTACT: Investors Ryan Gee ir@applovin.com

CONTACT: Press Emelyne Interior press@applovin.com