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Aug. 11, 2022, 7:45 a.m. EDT

Applovin stock falls after outlook cut amid big offer for Unity Software

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By Wallace Witkowski

Applovin Inc. shares fell in the extended session Wednesday after the app-monetization company said it was rolling back its outlook for the year, a day after it offered to buy Unity Software Inc. for $20 billion.

Applovin /zigman2/quotes/226004863/composite APP +0.30% reported a second-quarter loss of $21.7 million, or 6 cents a share, compared with net income of $13.3 million, or 4 cents a share, in the year-ago period. The company did not list adjusted earnings-per-share figures.

The company reported revenue of $776.2 million compared with revenue of $668.8 million in the year-ago quarter.

Analysts surveyed by FactSet had forecast adjusted earnings of 16 cents a share on revenue of $819.6 million. Using Applovin’s forecast, FactSet calculated that represented adjusted earnings of 15 cents a share.

The Palo Alto, Calif.-based company offers marketing, monetization and analytics software that helps app developers grow their businesses, similar to the software Unity  /zigman2/quotes/221035391/composite U +0.55% sells to videogame makers.

Read:   AppLovin IPO: 5 things to know about the software company valued at nearly $30 billion

Applovin had already pre-warned about results Tuesday, when it eclipsed Unity’s own earnings with a $20 billion offer for the company , which was valued at $15 billion at Tuesday’s close. Applovin’s offer comes just three months after Unity revealed a flaw in its ad-targeting software , a flaw that was “behind us,” according to Unity’s Operate Solutions head Ingrid Lestiyo. Unity shares finished Wednesday up 10.4% at $55.57.

Applovin shares fell about 11% after hours, following a 12.4% gain in the regular session to close at $40.46, putting them 65% off their record closing high of $114.85 on Nov. 11. On Tuesday, shares had fallen 10.3% to finish at $36.01, and climbed 10% Monday to finish at $40.14. In the company’s  April 15 initial public offering , shares priced at $80, but closed down nearly 20% in their debut.

Applovin is no stranger to M&A. In April, it added streaming-video company Wurl in a $430 million cash-and-stock acquisition, following its  $1.05 billion acquisition of app-monetization company MoPub , which closed on  Jan. 3 , and its year-ago $1 billion acquisition of German mobile-app measurement and marketing company Adjust.

The company now sees full-year revenue of $2.84 billion to $3.14 billion, down from a previous $3.14 billion to $3.44 billion, while the Street had been looking for $3.23 billion.

On Tuesday, Applovin confirmed its 2022 software sales outlook of $1.14 billion to $1.29 billion, while lowering the Apps outlook to a revenue range of $1.7 billion to $1.85 billion, down from a previous $2 billion to $2.15 billion. Last quarter, Applovin said it would start treating its apps business as a standalone concern , raising the question on whether the company intended to sell it.

The quarter before that, the company provided  a 2022 forecast that disappointed Wall Street , when it called for full-year revenue between $3.55 billion and $3.85 billion when, at the time, analysts were looking for $3.83 billion.

Applovin Chief Executive Adam Foroughi told analysts on the call that the company considered making the offer for Unity “because the math was so compelling to us” after Unity’s  $4.4 billion offer to buy IronSource.  Unity shares also recently rose on reports that it was lookin g to spin off its business in China.

Applovin’s Foroughi said believes it offers greater scale than IronSource and that the combined data and resources of the companies offer greater growth opportunities.

/zigman2/quotes/226004863/composite
US : U.S.: Nasdaq
$ 20.38
+0.06 +0.30%
Volume: 1.83M
Sept. 27, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$7.53 billion
Rev. per Employee
$1.83M
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/zigman2/quotes/221035391/composite
US : U.S.: NYSE
$ 32.79
+0.18 +0.55%
Volume: 5.74M
Sept. 27, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$9.80 billion
Rev. per Employee
$232,481
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