AppLovin CEO sees benefits from Apple-Epic fallout as stock pops on earnings
The stock popped 11% and is now up 34% for the year after soaring more than eightfold in 2024. Wall Street has piled into the company due to its growth from artificial intelligence technology that's given advertisers more ways to target users in mobile games.
CEO Adam Foroughi suggested on the earnings call that another wave of growth is likely on the way due to the legal saga between Apple and Epic Games.
In April, a judge in Oakland found that Apple had violated the court's original order from a case that was originally decided in 2021, which forced the iPhone developer to make limited changes to its linking out policy under California law.
In June, Apple was dealt a blow in the U.S. Court of Appeals for the Ninth Circuit, as a panel of judges denied the company's emergency application to halt changes to its App Store that resulted from the legal battle.
Foroughi, who founded AppLovin in 2012 and took it public nine years later, was asked on Wednesday if gaming companies have changed the way they spend money to acquire users due to the Epic case. Foroughi said the company hasn't seen an impact yet, and that it will "take longer than people expect," with a big benefit coming within four to eight quarters.
The idea is that developers are no longer being forced to pay Apple's 15%-30% take because purchases can be paid outside the App Store, so they'll be willing to spend more on advertising to find new users. That plays into AppLovin's market.
"You'll start seeing it compound pretty quickly in terms of benefit to us as an ad platform," Foroughi said on the call with analysts. "Once the very large leaders start doing it, you'll start seeing the smaller to mid-sized ones really pick it up quickly."
For the time being, results appear good enough for investors when it comes to the present. Net income more than doubled to $819.5 million, or $2.39 a share, from $310 million, or 89 cents a share a year earlier. Earnings sailed past analysts' estimates of $2.03, according to LSEG.
Revenue increased 77% to $1.26 billion, with that growth figure excluding last year's revenue from the company's gaming business, which it sold in June. Analysts expected revenue of $1.27 billion.
While AppLovin's stock has been a Wall Street darling in recent years, multiple firms don't believe the story and have been public in their criticism.
In March, a third short-selling firm raised concerns about the company's digital ad technology and claimed that it is breaking app store rules. That report, from Muddy Waters Research, said that AppLovin's ad tactics "systematically" violate app stores' terms of service by "impermissibly extracting proprietary IDs from Meta, Snap, TikTok, Reddit, Google, and others."
A month earlier, Fuzzy Panda Research and Culper Research critiqued AppLovin's AXON software, which drove its earnings growth and stock surge. A
fter the initial short reports were published, Foroughi wrote a blog post, defending his company's technology and practices, and taking aim at those trying to profit from AppLovin's decline, calling them "nefarious short-sellers" who were "making false and misleading claims aimed at undermining our success, and driving down our stock for their own financial gain."
Analysts at Wedbush still recommend buying the shares and wrote in a report after the latest results that the fallout of the Apple-Epic case will likely become "a tailwind for AppLovin next year."
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Verge
27 minutes ago
- The Verge
Sam Altman is right and wrong about the future of photos
I'm annoyed, not for the first time, by something Sam Altman has said. But this time it's because I'm annoyed at how much I agree with what he's saying — even though I think his statement is kind of bullshit. In a recent interview, journalist Cleo Abram asked Altman how people will be able to tell what's real and what's not in an age of convincing AI-generated content. Specifically, she references the bunnies. You know the ones I mean: caught in some Ring-camera-ish footage of a backyard, discovering and jumping on a trampoline. So cute! So wholesome! So completely AI-generated! The video went viral, almost certainly before the people liking and sharing it realized that it was AI. So what happens as the technology improves and AI content is everywhere? How will we know what's real? Eh, we might not, Altman seems to say. By way of an example, he points a finger at something I spend a lot of time thinking about: phone cameras. 'Even a photo you take out of your iPhone today, it's like, mostly real but it's a little not,' he tells Abram. So much processing happens between the photons hitting an image sensor and the final image, he says, and what we end up with is a kind of optimized version of reality. And sure, he's right. Any old digital camera makes a million decisions about a scene: contrast, sharpness, which pixels should be red and which ones are green. A phone camera goes a lot further, combining data from different frames, deciphering what's the ground and what's the sky, and brightening faces to look a little more flattering. Altman's point is that we accept this level of manipulation as 'real,' even though we know there's more going on. As AI content becomes more commonplace, 'I think the threshold for how real does it have to be to be considered to be real will just keep moving,' he says. That's when I started clenching my jaw. For starters, there's a big difference between a photo that starts with photons hitting a sensor and one that is fabricated from scratch with generative AI. If they exist on a spectrum, then it's pretty god damn big spectrum. I also think that most people aren't aware of what kind of processing happens when they take a picture with a phone, and it's not as liberal as his statements suggest. Your iPhone camera isn't in the business of changing details or adding things that weren't there. Even when it seems to be doing something screwy, the explanation is usually pretty simple. Sure, sometimes demon face happens. AI moon is one thing, and you can get wild with Google Photos' gen-AI editing tools. But I haven't seen evidence of the cameras themselves going rogue and adding elements that weren't there in the last five years of testing every major phone on the US market. Invoking phone camera processing as an example of an acceptable un-reality is annoying, but I think Altman is generally right. Our understanding of what is real and what isn't changed when Photoshop took off. I know all kinds of staging and editing goes into a magazine cover photo, but I still accept a picture of Sarah Jessica Parker on the cover of Vogue as 'real.' This understanding has already changed in the AI era when we look at a picture on social media, or an ad, or a product listing — and that will only continue. But Altman implies that as our definition of 'real' or 'real enough' changes, we'll appreciate it all the same as something we see with our own eyes. After all, we enjoy science fiction movies even though we know they're not real, he points out. But I think that we're still going to care whether something is real or not and calibrate our enjoyment accordingly. The video of the bunnies on the trampoline is so much less enjoyable when you know it's not real. The whole premise of the the thing is 'look at the funny thing these rabbits did.' That's only funny if it's real! If social media becomes awash with cute but unreal videos, I don't think I'm going to stop caring and just enjoy them. I think I'm going to stop enjoying that social media app. Who knows? Maybe I'll be spending more time with an LTE smartwatch and less time with my phone in the from this author will be added to your daily email digest and your homepage feed. See All by Allison Johnson Posts from this topic will be added to your daily email digest and your homepage feed. See All AI Posts from this topic will be added to your daily email digest and your homepage feed. See All Analysis Posts from this topic will be added to your daily email digest and your homepage feed. See All OpenAI Posts from this topic will be added to your daily email digest and your homepage feed. See All Report Posts from this topic will be added to your daily email digest and your homepage feed. See All Tech
Engadget
29 minutes ago
- Engadget
Fortnite is coming back to iOS in Australia after legal win against Apple
Epic has spent the last five years fighting Apple's in-app purchase policies. Now, after half a decade, the Epic Games Store and Fortnite will once again be available on iOS in Australia. A judge has found Apple's conduct likely diminished competition, in part for not allowing alternative payment methods, the Australian Financial Review reports. In a post on X (formerly Twitter), Epic announced, "An Australian court just found that Apple and Google abuse their control over app distribution and in-app payments to limit competition. There are 2,000+ pages of findings that we'll need to dig into to fully understand the details. This is a win for developers and consumers in Australia!" Epic started this battle when it bypassed Apple's in-app purchasing method, using its own. The move meant Apple lost its 30 percent cut of all sales. Apple banned Epic and a lengthly legal back-and-forth followed. In April, a judge in the US ruled that Apple could no longer collect commissions on purchases not paid through the App Store. Epic Games and Fortnite returned to the US App Store in May. It's unclear when exactly Epic Games and Fortnite will return to iOS in Australia and if this battle is finally coming to an end.
Engadget
29 minutes ago
- Engadget
Elon Musk feels Apple favors OpenAI over xAI in App Store rankings
Elon Musk has accused Apple of committing an "unequivocal antitrust violation" by favoring OpenAI in the App Store rankings. In a post on X, he claimed that Apple has made it impossible for other AI companies to reach number one in those rankings and that xAI "will take immediate legal action." Musk didn't clarify what he meant by that, and he also didn't provide evidence that would prove Apple's supposed antitrust violation. In an earlier post on X that's currently pinned to the top of his profile, however, he tagged Apple, asking the company why it "[refuses] to put either X or Grok in [its] "Must Have" section. He said X is "the #1 news app in the world," while Grok is ranked number five among all apps. "Are you playing politics? What gives?" he continued. We've asked Apple for a comment, but the company has yet to respond. Meanwhile, OpenAI CEO Sam Altman posted a response to Musk's accusation on X, calling it a "remarkable claim," given that he has heard allegations that Musk manipulates "X to benefit himself and his own companies and harm his competitors and people he doesn't like." To note, Chinese AI chatbot DeepSeek became the top-rated free app on Apple's App Store back in January, overtaking even ChatGPT. While Musk didn't mention it, Apple has an ongoing partnership with OpenAI. The company has integrated ChatGPT into Apple Intelligence to power cloud-based queries for its platforms. More recently, the company said that Apple Intelligence will leverage the capabilities of OpenAI's GPT-5 in iOS 26, iPadOS 26 and macOS Tahoe 26, which are set to arrive sometime in September.
