AppLovin late Wednesday easily beat Wall Street's targets for the first quarter thanks to strong advertising revenue growth. AppLovin stock jumped on the news.
The app marketing firm earned $1.67 a share on sales of $1.48 billion in the March quarter. Analysts polled by FactSet had expected AppLovin to earn $1.44 a share on sales of $1.38 billion. On a year-over-year basis, AppLovin earnings popped 149% while sales rose 40%.
AppLovin also announced a deal to sell its mobile gaming business to Tripledot Studios, a privately held company, for $400 million in cash and roughly a 20% ownership stake in Tripledot common equity. The transaction is expected to close in the second quarter.
In after-hours trading on the stock market today, AppLovin stock soared more than 14% to 346.65. During the regular session Wednesday, APP stock dipped 0.4% to close at 303.46.
In Q1, AppLovin's advertising revenue surged 71% to $1.16 billion. Meanwhile, its apps revenue declined 14% to $325 million, but that's the business it's selling.
For the second quarter, AppLovin expects ad revenue of $1.2 billion to $1.22 billion.
AppLovin's software platform enables app developers to market, monetize and analyze their apps. The Palo Alto, Calif.-based company also has expanded into advertising-based e-commerce and streaming television services.
Jefferies analyst James Heaney said AppLovin's first-quarter results "should fuel the bull case" for the stock. The company's 71% advertising sales growth was meaningfully ahead of the Street's 55% target, he said.
AppLovin has been a frequent target of short sellers, who have criticized the company's business practices.
AppLovin stock is on the IBD Tech Leaders list.
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