Speaker avoids AppLovin due to insufficient understanding of the business, despite acknowledging potential upside.

AppLovin's stock has declined Halfway this year, While revenues grew During the same period, more From 50%, and the flow continued Free cash in growth At a very high rate. In other words, it seems that The problem is not in performance The company, but in performance The arrow.

This is usually The ideal situation that We are looking for him.

I am indeed like that, but There are some aspects in This company that It makes me hesitate, out of spite Regardless of growth High and price Cheap.

what This initially attracted me The company is that it was Ranked first on Yahoo Finance list of companies Which trade at prices Near the lowest Its levels during 52 A week. While AppLovin continues to Growth at astonishing rates.

Revenues are rising marked. It just increased By more than 50% On an annual basis. All of that It happens while it continues Capital efficiency figures In improvement alongside Operating income.

With the difference The main point is that AppLovin Focus more on presentation Ads inside Mobile applications, There is a similarity One is blatant and obvious Exactly, which is that both The two stocks were severely damaged This year because Concerns about the impact artificial intelligence.

But what I want to know Today's topic is "Apple 11". If intelligence Artificial forms a real threat For the business model, and whether This company enjoyed With sufficient quality To deserve a place in Value wallet Essential.

Now, just to give you an idea Regarding the size of "Ab Lovren", Their spending on Promotional advertisements The total exceeds Pinterest revenue Snapchat and Reddit Together.

In reality, The spending has achieved Advertising on "Ab" Lovén is of immense value For advertisers, otherwise why? They were there simply. They would have been in somewhere else.

And "Ab Lovne" wanted Specifically, to be The way to help them To achieve that with Very strong focus on Mobile games Light. Think about games Like Candy Crush, or Solitaire, or Mahjong.

But now, "Ab" is trying Lovren's diversification in Other markets outside the scope Games too.

So, the two products The two basic ones Presented by "Ab Lovne" They bring together publishers And the advertisers. AppLovin works As an intermediary between the two parties, With the aim of increasing efficiency Advertising spending from From the advertisers' perspective, with Submitting the highest possible offer Publisher in exchange for space Advertising in its games on Mobile phone.

Therefore, AppLovin is located in Exactly in the middle, And you profit from the difference between what What the advertiser spends and what The publisher needs to He sued him to achieve a result Specifically for these Advertisers.

actually. actually. Good The company's founder and president Executive, Adam Forouqi He has a proven track record With success. He launched Successfully, two technology companies Two other advertisements, These are LifeStreet Media and Social Hour.

They were both Two companies based on computers The office, and they focused More on Social advertising . So, as you know, it was The indicators suggest that it may Success continues in His third project, Specifically with AppLovin, Which is essentially Technology company Advertising.

In 2011, Launch an app that helps you Finding games The mobile phone that Your friends play it. on For example, let's assume You have a friend who plays Words With Friends game.

He was The app suggests that Play Words With Friends with Your true friends. Therefore, the application, in words Adam was very bad . However, the discovery The main one who reached From that application It was in the algorithm This is the recommendation.

That was When the app suggested A game to play until You might be able to communicate With these friends. The response rate This communication is high Very much so, actually. This It is the essence of what led to Launch of AppLovin, an engine Recommendations.

But the story doesn't end there. Indeed, at this point, Even when they found an engine Recommendations, they began Indeed, with advertisements They focused only on games Mobile phone.

Therefore, The reason was then Simple. In 2012, Game developers mobile phone They are really trying to find out How to convert their games To a profit-driven engine. And it was Advertising is the profit Easy and accessible, and what I still think so today.

So, focus on Using an engine Recommendations only with developers Applications on one hand And advertisers on the other hand . By 2012, they were They are looking for additional funding Furugi then scanned World of Capital Investment to find On someone who helps The company was financed, but it did not He was lucky and content. angel funding round Approximately $25 million.

Yes, he mentioned a few mistakes. In fact, it did not He has a board of directors Until 2018, which is Simply put, the council The administration was the same Only up to that point.

He said the mistakes were It mostly relates In the financial markets and capital accumulation the money. Because of this The situation, if you only look To the sides The positive aspect of the absence of Board of Directors, you will find that He had complete control On to work.

Every decision It passes exclusively through Adam. And I think this was A feature most likely because I helped him build the company The way he saw it Suitable and did not need To rely on opinions Others.

If we looked at the company's history AppLovin, there was Advantages and disadvantages Another reason is the lack of that. The council. If we look Until 2015, the work It grows extremely fast once Others at that time.

That will be a topic Frequently today. And it was The company is about to arrive To approximately 50 million Dollars as profit before Interest and taxes Depreciation and consumption ( EBITDA).

Then she contacted They have a technology company with them in That time. They were Very interested in the company They made an offer of approximately $600 million in cash. In the end, he rejected the offer.

Hoping to obtain An assessment closer to one billion dollar.

From this The starting point, Adam's poetry Indeed, the council The administration perhaps was To his advantage; Because It is believed that they were They will pressure him to accept $600 million offer .

To give you an idea of How huge was that mistake? The company is valued at Today, a little more About $100 billion. And in By the end of 2025, it arrived Its value is around 250 One billion dollars.

As for One of the advantages of having a council Management, he gave an example He said that in 2016 He was offered another sale majority share in that Working for a group Chinese investors For a rating of approximately 1.4 One billion dollars.

Later, It turned out that the buyer was Partially owned company For the state. So, it's over. The matter requires intervention from the authorities. Organizational. They stopped The deal after about a year Based on concerns related National security.

So He felt that if he had Board of Directors in that Time, perhaps, surrounded himself with more people Those familiar with these types Of the deals, and those They would advise him By withdrawing from it at a time Much earlier instead This issue has been dragged towards A whole year.

I think if we shorten The purpose of councils Management from the perspective The theory, therefore, is that Control and balance, Isn't that so? But the existence Board of Directors does not guarantee Indeed, there is censorship on The authority of the chief executive.

And this is where the conversations begin. The most complicated thing about How to structure governance Companies, and who should He is in the council, and every Those things. But without Board of Directors, increasing Decision-making fluctuations At the company's top, and The CEO takes Brilliant decisions on his own When looking at it Later, but he will commit Also, mistakes that could Avoid it.

exactly. There are many From stories about how This work has reached what That's how it is today, but I think the best way Understanding "AppLovin" is simply Disassemble it into its parts, Which was acquired On it or developing it Internally, over time.

So, if you don't understand In the field of advertising, it has lost It can be a little confusing Understanding how "AppLovin" works. In essence, a company consists of "AppLovin" is a four-sector company Different.

It should be noted However, despite AppLovin owns this The four sectors, However, she deals with it All as one unit Within its financial statements. So, if you are looking for Financial details for each sector You won't find it.

First sector He is the advertising manager for "AppLovin". . This is an attraction solution Their users Or what is known as UA. Helps These advertisers, such as Brand name "Athletic" Greens," on paying to attract New customers.

Changed Brand This is why recently from Axon Ads Manager, so I will use The two names interchangeably Throughout this episode.

if The second most Importance of this work It's called Max. This section pertains Publisher's side. He is Publishers are helped in Get the highest price To bid on Their advertising spaces.

If you play a game like Candy I saw an ad. Inside it, it is likely Max works with publishers To view that ad Specifically for you.

Number three We have Adjust, which is a tool Measurement and analysis help In providing data For marketers to improve Marketing their apps.

Fourth, we have Wurl, It is a connected television platform Live broadcast distribution Content companies to attract Viewers and glorification Revenues. This was The field I talked about The Trade Desk, which he mentioned Sean, formerly.

He had AppLovin also works It has its own applications. But they ended up selling it. And get rid of them. We will discuss Today, briefly, to Adjust And Wurl, but put in Considering that the two most important parts In this work they AppLovin Ads Manager is definitely And Max.

Let's imagine you're a sign well-known brands such as Wayfair. You have a budget Advertising and you know that Need to get a type What is the return on this? Investment. naturally, You want to achieve More revenue than You spend it on advertising.

Therefore, Axon Ads Manager By building this algorithm The prediction that spoke About her a little while ago. This It helps their advertisers To improve their spending Basically.

Let's assume You work in the field of Marketing for Wayfair. You want to use Axon Ads Manager to determine type The return you want from Your advertising objectives. A good measure of this is what It is called the return on Advertising spending or ROAS.

It basically means Total amount revenues that You receive it as a percentage From your advertising spending. Let's assume you spent 100 Dollar on Ads I received about 500 Dollars as a total Revenues, then it will be Return on investment Your advertising is worth 500%.

There are many Other measures, But I don't want to burden We are burdened by it, but you know, There are things like Downloads, clicks, And the times of appearance, or procedures.

But in The bottom line is, advertisers They just want to achieve Real revenues from Their advertisements.

Something else It is worth mentioning that AppLovin discloses that the part Larger than revenues The fees collected come advertising spending On Axon Ads Manager. in In reality, they don't disclose About the fine details For this sector or even Other sectors.

Therefore, Axon will help them in Setting goals. The fact is that "Axon" has a price tag dynamic. Therefore, no There are fixed fees. The cost is proportional Directly with value Users who Axon helps advertisers in Find them.

Axon will help them return Model calibration with More flow Data. This helps In turn, increasing the rate Transformation towards a goal Return on investment Advertising. Finally, Axon also possesses capabilities Very in-depth reports, She can explain to you Things like value The permanent one that it achieved A specific group instead of Just the number of people Those who saw an advertisement Specific.

So, my understanding is that the manager Axon ads are what It is known as the side platform demand. This means that they They work with the signs The commercial that wishes Buying advertising space From the publishers, and from here The term "demand" came up.

Therefore, Axon is trying as a sector Focus on the aspect The buyer, but as a company, AppLovin represents both Both sides. Therefore, If there is anyone Trade Desk knows this very well, This will be a point An interesting comparison Interest in how Their difference.

Do not submit AppLovin's services Not just for advertisers, but For publishers as well, it is The presentation aspect of this The equation, where they sell Their advertising spaces.

The service will discover MAX from AppLovin, and let's say you I decided to try it. in Basically, the method works As follows: each time The player finishes Level in the game Solitaire , For example, The app will display Announcing it, and you will get Solitaire game on In return for that, a financial payment The advertisement that was shown For its users.

It can This is done through a company Ads like AppLovin, or via Google, Meta, or some smaller companies The other.

Now, all of these Companies are ready to pay For the developer to display ads In its area, but from It is clear that an announcement Only one is the one That would suit the place.

The traditional way Old to determine The winner is called "The Waterfall" waterfall). This method It is a list Fixed priorities, not Based on a system Bidding. Here's how This method will work.

The game of solitaire By order of companies Advertisements from the top Downwards based on Historical averages To whoever pays more. Let's assume For example, that Google in First place, AppLovin ranked Second, and Meta in Third place. now Let's assume that the area Advertising has become Vacant.

The game will continue Solitaire then with Google, which usually pays Higher amounts, And she asks them if they They want to buy an appearance Advertising at a fixed price. Now, let's say Google, For whatever reason, I have refused the offer.

Perhaps they didn't get Simply on the price that They want it to achieve Their goals. Then Solitaire will contact Apple App Lovin's company Next step. if, The demand is primarily transferred To the next company in The list and so on Like the flow of water from The waterfall, and that's where it came from.

Named "The Waterfall". Therefore, Those who answer with approval In that fixed order He will win the advertising space that.

Yes, that's exactly it. The type of problem he tried "Max" product from "Abb" Lovren solved it. What he does is... Max's point is that he changes Fixed sequence method To an auction in time The actual one.

This means Simply put, whenever it is available Advertising space in a game Solitaire, Max will request From all companies Bidding Ads On it all at once. And from The highest bidder wins That area Advertising.

This That goes beyond the arrangement Constants and delays,

Which is clear, as You mentioned, Sean, it costs Solitaire, some money The truth. example This solitaire is good because In fact, a case study True. As it ended The order is from Triple.

Dot," which owns the game Solitaire, by transforming from The waterfall method for experiencing " Max." And she showed Their data already shows Their average revenue per Daily active user It rose by approximately 20% AB tests via Their toy collection Entirely.

Therefore, as Learn, for the developer Increased revenue Instant ads A 20% figure is not a certainty. By God, definitely. Especially considering the number They have users. when Analyzing that increase in Revenues, we find that It came mainly from These two areas.

Represents First in reducing Lost impressions, And the second is high Price per impression.

And now To me, it doesn't seem "Ab Lovén" is close by any A state of monopoly, But we will address that. Later. But, let's Let's take a look at the two sectors of " "The other fathers of Lovren" The two I did not discuss Many people today, and they are " Adjust" and "Whirl".

Specified by AppLovin. Revenues depend on Wurl

For AppLovin, How does the company make money? Its exact revenues from Facilitating these exchanges? I mean, I assume there are margin between the amount Which advertisers want He paid for it with AppLovin via Axon platform, and what he sees The publishers said that We are ready to accept it from The winning bid from On their side. But, is there More details About this matter?

Yes, you are absolutely right. In this, Sean. It does AppLovin reporting Its revenues based on Pure, therefore it is considered Agent in the transaction And it is not authentic, which means The revenues that You can see it in the income statement.

It is actually net what I paid it to the publishers.

this In fact, it is the treatment The most accounting As a reservation, but it means Also, we cannot Note this margin Which AppLovin achieves between Advertisers and publishers Directly.

This is a It's somewhat annoying because It would be good to know Those numbers, but they They keep it as information Confidentiality, so you must Relying on the best Your estimates.

Estimates The general public I encountered It was in the range of 30 to 40%. This estimate represents Basically, the difference between what The advertiser pays for it, and what happens It is the publisher's responsibility.

Let's assume We used 100 Dollars spent by the advertiser, The publisher will then $60 of it While AppLovin retains The remaining $40.

What I find Interesting about AppLovin is that it can Theoretically, obtaining a part Larger than this margin Over time without pressure Actually, it's up to the advertisers Or the publishers.

So, if AppLovin was able to Continuing to improve Matching between the two sides The best service The results for both, Advertisers will be more In preparation for paying amounts Additional.

And if they manage Finding an advertiser Ready to pay, to transfer Cost per thousand impressions $20 instead of $13 For dollars, AppLovin You will keep part of this the difference.

And so, this is a wheel This growth the job. Therefore, The best match creates Greater value, allowing For AppLovin to get Higher profit margin or attraction More publishers And advertisers, and this It gives them more data.

And improves their abilities to Perform this matching.

MAX reaches 1.4 1 billion active users Daily across more than 140 A thousand applications, and here They obtain liquidity. Because it depends on an auction Unified instead of a system The waterfall, every bidder gets Eligible for a chance To compete for every appearance From these appearances.

The winner can come From anywhere. No It is limited to one side only AppLovin.

It's good to see that AppLovin It seems she protected herself Good from those risks potential regulatory Which was on Google Dealing with it. Yes, I really think so. And I know you're not a fan Subject companies Strict regulatory oversight Hey Shawn.

It seems that on The least at the moment AppLovin is in safe mode Extremely.

But I think The real advantage of AppLovin lies in how Axon's advertising manager reacted With MAX. Axon takes a budget The advertiser and his materials Creativity and define Suitable publishing venues To put it in.

Because it It has this feature The structure represented in Accessing MAX data, She gets a set Very rich data To determine performance Specific ads on MAX Comparison using the platform Outside MAX.

As we discussed In the previous example, MAX does a great job in Publishers are given the best A possible deal, which Often higher With many alternatives. So It all comes down to That wheel that I just mentioned it.

If it AppLovin does it all Correctly, it will be Advertisers more than Desiring to continue Payment for AppLovin In exchange for more Using Axon, simply Because the appearances that They will get it, it will be More value on AppLovin Compared to any alternative, Because rates The conversion has the best By a lot.

Yes, it makes sense. They are absolutely capable To create value as an intermediary Here, because we see mediators They participate in many two-way industries Starting with real estate As we mentioned earlier, Reaching the advertisements The digital we talk about About it today.

But what I just described it as Advertiser matching And the publishers seem to me Also reproducible Easily, and I say that with My realization that it might seem To put it simply.

However, what prevents it? Advertising companies giants like Google or Meta from intervention And acquiring this The market and doing that Better than AppLovin? Yes, as you know, if I was honest, I think that This is the side that This is where understanding AppLovin begins It becomes more difficult, The least for a person gay.

So, as I mentioned Just now, I think it's It seems very straightforward Looking at the offers AppLovin products, and Logical from each perspective From the advertiser and the publisher Using AppLovin products.

But, as you know, if AppLovin could To do that, what Google or Meta prohibits Unity is just a repetition Strategy, and why AppLovin did not acquire A larger market share than Does she already have it?

Unfortunately, AppLovin already has a number From the competitors Ad sides And the publishers. For example For example, Google Competitor on both sides That competition too.

So, it's really difficult Gaining an advantage in Advertising field via The internet, given the presence of Technology giants These are like Google and Meta, They have strong control Very much in this field.

This makes it difficult for competitors create any A type of status with The intended size that They can protect it and repel The competition for it, with Market value reached For AppLovin, up to 250 One billion dollars at a stage Yes, it has certainly begun.

In reaching this The size that may be Their specialization has an impact on The economics of some of these Tech giants.

Yes, I mean that's true completely. Even if We ignored giants Big technology For a moment, we must take in Consideration also includes the presence smaller competitors They managed to seize a share Good for themselves, and they They are not on their way To disappear.

And I think that There must be a reason for that. Isn't that right? namely, There must be a reason. In The end, if it was a company Like AppLovin is bad, why She was able to double Its revenues as a percentage Approximately 40% with the benefit From the operational lever On top of that.

So, what AppLovin stands out and makes it Sustainable trade to a certain extent What with rapid growth and expansion In its ability to generate Margins plus cash flow ?

I think to answer Therefore, we first need to He understood that AppLovin had done Excellent at understanding its customers, That's what I think The key to its features competitiveness that You own it now.

I mentioned Previously, AppLovin was She owns a number of companies Games that I sold in the end. Well, I didn't This is done simply because they want it In entering the gaming industry. Frogy stated that He doesn't like games at all.

Yes, I was wondering about This matter. I mean, it seems It's strange to me that they Own studios Then they sold these games. And that did not appear to be a principle Essential for AppLovin, But I think there's a story Good background behind the reason Their purchase of it in the first place the first.

Yes, there certainly is A good reason for that. I have They ended up buying These studios Because they are in the days of AppLovin First, they needed Basically to collect Data from their publishers.

When AppLovin was a company Emerging, they did not have Of course, it's possible Accessing data Owned by a company like "Meta" through Its special use of " "pixels" is a term About an embedded software component It is used by advertisers To generate analyses.

Although this is wonderful For advertisers and Meta.com However, it does not offer A lot for a company like "Abu" AppLovin, which is from It is clear that she does not have Direct access to That data For use with Its clients.

So, instead From the store's closure, They decided to buy The studios themselves To create their data Special about games Which they control. This will help them Viewing actual performance For their own tools such as Axon and Max In real time. as This data helped in Feeding the recommendation engine, Which clearly led to Improved targeting For advertisers and increase Profits for their developers, Not just for studios Owned by the company, but For other companies that They were working as agents She too.

As you know, it's over The order is from the "Ab Lovin" company. Selling studios These games to " Triple Dot in 2025 with a total value It amounted to approximately 800 million Dollars in cash and shares.

I think this helped them Truly on re-employment Capital in parts With higher profit margins than Their own businesses. as It served as a means It helped them focus More only on works Advertising, and reducing Being preoccupied with anything else It might distract them from that The specific goal.

And now, I believe that the truth They own a share in "Triple Dot" was a step It's also a strategy. So, this helps in Maintaining the relationship Among these studios And Max, without The need for investment Capital or time in The gaming industry.

Since I got Accessibility This data, no I can only assume that they They took advantage of the ability To make a profit from it. That's what I'm sure of. Help support numbers The amazing growth that We saw it from the company.

But perhaps that Because I find this field Extremely confusing. I... I am still not convinced With competitive advantages For AppLovin.

on the one hand, I think so, yes, their success It indicates that they They were clearly able to book A special status that could not be achieved Alphabet and Meta from Acquiring it.

but On the other hand, whenever They grew and proved that this It can be a field Highly profitable For them, you have to She wonders if That will attract attention The competitors.

So, I think That is the challenge Any dominant player faces In a specialized field, while It expands and begins to harass Large companies. to learn, Often This leads to Acquiring the player The specialist, but if The cost of acquisition Expensive to the buyer.

Competitors may try Building their businesses Parallel from zero, That will be a problem Genuine AppLovin.

if, Using the story above We can see that AppLovin has built its features Over a period of time It lasted for several years. Isn't that so? So, even If a new competitor comes along, Let's move to the budget Billions of dollars, He wanted to compete with AppLovin.

It will take time It takes so long that it reaches The same level of range that AppLovin reached him on Over the course of these years.

So If I have to limit Competitive advantage in One thing here, perhaps I choose economics The range and perhaps the ring Learning based on Data. with regards Regarding the second point, it is It comes from a decade of building Distribution and relationships Advertisers, in addition To learning systems The automatic, which generates Today a huge influx from the data New comments Which they were able to achieve Profit from it.

But this Types of features The competition remains fierce. To be honest, It kind of scares me, because It is clear to me that there Other companies believe that You can replicate some success AppLovin.

Therefore, One study found Regarding that, starting from 2025, They found that MAX was gaining ground Approximately 55% One of the most popular games Profit that is achieved Profits from advertising Compared to approximately 25% for LevelPlay From Unity and about 13% for AdMob.

So, as you know, they have A very large market share. However, it will be To be fair, as We have previously discussed this The episode is about the issues The lawsuit filed against Google, that Google's vertical integration Through the advertising package, Historically, some Conflict of interest To put it mildly.

AppLovin was more Vertical integration in the previous. It was She has a large portfolio of Mobile apps This mobile phone provided First party data And the fans who I helped them improve Advertising technology Their own.

But now After that disappeared, from Theoretically, it allowed That's for AppLovin conversion Her entire focus is on Advertisements. This led to Abstraction from investments to Reducing some of the integration Vertical to AppLovin.

Therefore, It no longer manages Publishers who have verified Its platform generates profits from Their advertising inventory also. So, at least Structurally, AppLovin is now less Vertical integration of Publishers' side of what It was on him previously.

There are perhaps fewer Conflict of interest, and number Less than the marks Possible red For regulatory bodies. Therefore, that does not AppLovin makes it neutral completely. Her request is still pending Private advertising It competes within MAX, but AppLovin says its request does not He receives treatment preferential treatment and the highest-ranking individual Giving is what wins.

And of course, they say That's true, but I suppose that There is some truth in that. Yes, I think MAX is powerful. Because it is located in a layer That mediation between Publishers and networks Competing advertisements.

Therefore, for each An impression is achieved Profit from it through MAX, AppLovin really sits in Mid-taking process That decision.

Therefore, progress Qualified demand sources These bids at the time The actual one. MAX compares those Bids alongside any Source of request not provided Bids, then they decide Simply the advertisement that It will be shown.

But AppLovin It also participates in the side Demand from those auctions like that. So, in fact, She manages the market while They compete within it.

She says AppLovin, its special request He doesn't get treated Preferential, as I just said The highest bid is Whoever wins. As for what It relates to the entities Organizational, and according to what I see it, they say The truth in this regard.

So, going back to Our example here, let's say that Google can offer And indeed, the model has advanced A very similar mediation from During AdMob, while providing Meta-order for publishers External through Audience Network Network).

Therefore, the advantage competitiveness is not Google or Meta is technically incapable About simulating the MAX platform. I think the most important question It is whether the scope of work AppLovin in mediation Publishers grant it Data and liquidity Improvement and strategy Distribution makes it difficult More and more on Competitors trying Overcoming it.

It seems to me that Meta and Google Two rivals in certain ways, But they do not constitute direct competition Equivalent for the reasons that We just discussed it. And it was There is something else that surprised me Really, when I was doing My own research for preparation This presentation is about AppLovin, And that is my desire to talk About some of its advantages competitiveness and simplicity Its operations.

footnotes Earnings before interest Taxes and depreciation And consumption (EBITDA) - which is Approximate measure of profit Operating costs before operating expenses Debt financing and other related matters It is a more accurate measure For the company's profitability.

I have This percentage exceeded 79% During the two months The past ten years.

This It is clearly a company Very lightweight assets. There aren't many items It appears on the income statement This reduces their profitability, which is Very good For shareholders and capacity The company is creating value For them over time.

Yes, profit margins in This company is among The best I've seen Absolutely, and there Another statistic that amazed me also.

If you look at twelve months In the past, you find that the average Employee revenue One in AppLovin was 7.6 One million dollars, and Profit margins approaching 65%, The employee's profits One also reaches Millions of dollars.

And now, like most companies Software, you can on Most likely, the source is known. Many of these cranes Operational. They don't understand. They need a lot of Additional expenses To expand the number range Advertisers and publishers Those who use Their platform already exists.

Therefore, With the increasing number of their customers And increase their spending Financially, they receive That powerful push of Operating leverage.

The other part of this I think it's deeply rooted Also in the personality of their manager The executive, Adam Frogin. It was mentioned that they preserved On a very simple structure Absolutely on purpose. on For example, they They limit the number of managers To ensure no passage With many layers bureaucracy that It can clearly affect On the margins,

and I think That this is a very good feature Compared to a competitor who believes He can simply Hiring 5000 people to try Overcoming them, so who It is likely to be Economics of their units Much worse than AppLovin's economics, which is What I think helps in Enhancing AppLovin's position To some extent competitive.

As we look at this Special graph At AppLovin, we note Significant fluctuations in margins Their operating profit, And I hope you will be able to Providing some context about This matter.

From 2022 By 2023, it had increased Margins from 17.7% to About 70%. This is a change Very large during the 12-month period For a month, and they maintained These high margins As it grows over The past two years, But what explains it? That was truly a leap Enormous in one year?

Yes, I think there are A few things explain this. The first thing that explains Some margin pressure That, in my opinion, It is related to some processes The acquisition they made In it.

The MoPub deal Perhaps one of the biggest Their deals, which I believe It exceeded 500 million Dollar, and this was in In reality, usage Very good for capital Where he added a lot of Talents to the team Their work, but he added Also, more expenses Accounting principles Generally Accepted (GAAP) Such as consumption And extinguishing.

Then they added A few acquisitions Others are smaller compared to MoPub, which also led to increase expenses They had firefighters, and they helped That also puts pressure Their profit margins for some the time.

But I think if We looked to the side Other things And we saw what the reason was Which prompted them to expand Instead of shrinking? I think one of the developments The main one was the Axon 2.

It was She talked about an advertising manager AppLovin, and over time They had versions And new generations of that The program, and I think it The most significant differences Very much in their ability to attract more and more Advertisers to use Their product, simply because It got better and better.

Therefore I think this is probably What really helped them Increase it significantly. So it was a mix From the Axon 2 model, I think Also, they did not With many operations Mergers and acquisitions Over the course of the last few years The past.

So, I think That this also helped in Keeping them a lean company,

It is clear that when It performs a merging process and acquisition with a larger company You have to bring New employees. It is clear This adds expenses and It takes some Time to find out who they are People you need Truly, to keep them in The company and they will achieve for you Greatest return for what Spend it, and who can Do without them.

And so It takes some the time. Therefore, you will face slight delay period also.

Good. I think that Listeners can My feeling of hesitation regarding " AppLovin is here. However, you It definitely helps me Better work appreciation By a lot. In fact, I can say that part What is the reason for my inclination to be somewhat critical It is that we are trying to understand why Having a company with a growth rate Compound annual revenue For 3 years it is 55%.

I mean, truly amazing growth It is traded at a rating Very modest compared By the amount of growth And the profitability that was able The company is showing it.

Thus, at first glance It doesn't seem like Logically. But, as You can deduce from Our analysis so far, There are many dynamic factors in A company like "Ab Lovin". And I truly believe that it is It is essential to feel that You understand them all if you You want to be Owner of this business.

But, even if we exclude Growth from this work Yes, a thought experiment, no There is still another measure It's somewhat unbelievable here. literally. This is the return On capital investor in the company The one I referred to.

And if I went to "Fiscal AI", which One of our favorite tools For use, Return on capital Private Investor (ROIC) They are listed at 113% For the company "Ab Lovin". This In fact, the number is rising Since the public offering First.

Yes, it's a number Another one looks more beautiful than It's real. Yes, and I think there are Some complications in this Work, and that's why I believe he has Doubled, I won't say Low, even double Reasonable.

We will discuss That's soon, but I I really want to take a look Deeper on that number The astrologer for the return on the head The invested money that I just mentioned it because When I saw him, he turned out My attention, definitely also.

So, there Certainly some things Which must be taken into consideration here . Firstly, given that "father Lovin is a software company. It does not necessarily possess Huge opportunities for re- Investment.

You know, This is not "Google" that She can invest hundreds billions of Dollars in structure New infrastructure for intelligence Artificial. But, as You know, they did some Acquisitions in The past, let's be honest This might be better A way for them to continue Capital investment.

but, Listen to this. In First half of 2026 AppLovin spent Amount of $1.8 million Only on property facilities and equipment, Against revenues of 3.8 One billion dollars.

Therefore, as You know, it doesn't really seem that The administration is interested in hiring Many people. all The computing power that The company uses it Fully rented. that it It is not owned by her.

So, even And if AppLovin Returns on capital The investor's share exceeds 100%. It should not be assumed that you You will get returns soon From that number, because in At most, it is possible for AppLovin Reinvestment Approximately 500 million annually In organic growth Additional through matters Such as research and development, And computing power, And the employment of engineers, And perhaps some initiatives The smaller interior.

Therefore, Even if the return On high capital It's wonderful to see this The number, due to a lack of opportunities Reinvestment, It becomes difficult to consider AppLovin as a growth engine The compound.

I mean, if We went back 10 Years and we looked at what They have now reached him. It will be clear that The answer is yes, it is like that. But now, it has become It's really hard to know Where will they return?

Investment and what type The returns they will receive She has that Investments.

Okay, this is the face The other is for Saif companies Software. If we learn Anything like this Program and companies Which we have researched, then Good companies, and the best companies The software will achieve this Exceptional returns On capital.

But Because these works do not It requires a lot of head Money, that means There are only a limited number of ways To employ criticism in development Their current work, and There are clear places Many to reinvest That's capital. as Learn, essentially, Your ability to pay depends Profit growth and value Shareholders and value Essential on returns The capital that it generates and the percentage of profits that You can return Invest in it.

So, if You were achieving high returns Very much so, but you don't have Key investment opportunities The business may continue to grow. Limited and uninspiring in Revenues and profits.

And once again, This is the challenge that He is facing the "Up Lovin" company (AppLovin), or at least My perception is that they Capable of generating Very high returns on Capital when they find Opportunities to do so.

The question is, can they? Continuing to find Opportunities within their sphere of competence Basic or are they They will end up By drifting into fields Others in the market through Time in pursuit of self The type of returns, To end up Due to poor capital allocation.

Yes, and you know, it That's a really good question about Data center angle. I mean, they use The data, therefore theoretically Would it make sense? For them to proceed This trend?

I don't know. But, I think, given the lack AB stock price stabilizes Lovren recently, from It is likely not to be considered To do so positively if They decided to proceed with that.

The direction. But, I think Also, they have what Enough of their obligations Currently, so the wire This road will work on Most likely as a distractor Attention. As we have seen With the elimination of Game studios, I'm not sure this It will be something they will want. Doing it in practice.

but The point I would like The explanation here is that AppLovin, in my opinion Achieve the highest scores Possible with regard to With returns on capital The investor. Mother, but from Obviously, when it comes to The matter efficiently.

Money, that's not a decision. Capital allocation The only one who has to The administration took this decision. there Also distributions Profits and operations Repurchase. No need To talk about distributions profits because they don't They pay it, which is a matter I find it perfectly logical.

But, I think things It becomes interesting Truly, in terms of operations Repurchase.

Yes, and regarding For listeners who They follow this program Regularly, it is likely You are tired of hearing I am not among the most severe Fans of distributions Profits for reasons Tax.

We may discuss To talk about the reason The exact details, but as You know, maybe it won't change. This is until we reach the years Retirement, and she still Far from both of us, on I don't think so.

But in Right now, we want Focus on models Businesses that can Maximize its investments in The same, and usually This is through opportunities for reinstatement. Smart investment or Through re-processing Purchase.

Yes, and you might think that it is from Strange for the company Technology with growth rates In terms of revenue, it is similar Startups that You are repurchasing Her shares, but in order to be Honestly, the program Private Repurchase They are very useful For the value to shareholders, At least in their years First.

So, we can Somewhat like a division of operations Repurchase to These two periods The two different time periods . The first period extended From approximately 2022 until The year was 2024.

The time when I was created Repurchase operations A lot, a lot of Value. During this During that period, AppLovin spent Approximately $2.5 billion To cancel approximately 70 million share.

And they did that With an average price of approximately $35. Now, price The stock today, once again After it decreased by 50% It amounts to approximately 314 Dollars. Therefore, from It is clear that this was A huge boost And very large for value Shareholders.

Just looking To this first period It's hard not to give Frogy and the management team "A+" rating in header allocation the money. In 2023 alone They spent 1.4 billion Dollar to repurchase Approximately 41 million shares.

Today, the value of that The share is approximately 12.6 billion dollar. Perhaps it was better Part of the re- Buying these helped Also in providing Liquidity for one Their first investors Without causing market panic.

For example, AppLovin purchased a group of Shares from KKR, one of Its early investors. This allowed them to avoid KKR's release of those Stocks in the market Open. And so, AppLovin managed to acquire it And prevented a situation from occurring Panic due to selling pressure The increasing number that can To occur frequently. but rather They are actually during During this period they borrowed A little to fund some Repurchase operations To help increase the number The shares they can Buy it, which I believe It's a very clever use For debts.

I must salute Ferrari Apple's management team in general General, and I think they They deserve applause. Because Yes, the timing of the operations Accurate repurchase Very successful.

Despite That reliance on Debt is causing concern Always, since this Work generates a lot of Liquidity, I can I understand why it is considered Borrowing to boost Buyback Program A defensible decision About him.

But you mentioned that there A second part to the story? No It looks as good as the part the first. Yes, this is correct. So, by In 2025, the stock rose More than 30 times since Start of the re-program Buy in 2022 when Its lowest levels.

But It is clear that they did not They precisely define the bottom with any One way or another. but If you look at the drawing The graph since the beginning of the year By 2025, you will find that the share price It has experienced sharp fluctuations, Where it exceeded $700 It then dropped back to 314 Dollars today. gesticulate What makes this surprising is revenue and cash flow Free criticism was They are growing at a rate exceeding 40% During this period, but Repurchase operations It continued at an average price of $425 compared At today's price, which is higher A little over $300.

And here things get It's a bit complicated. as You know, I think Buffett He said it repeatedly Share buyback It only makes sense When your shares Undervalued The truth. And if I have to guess, so who It is likely that the administration does not She still believes her shares Undervalued But we might need to More time to see How will the program end?

Repurchase this. if We came back after two years, for example. The stock was trading at Over $600 Reconstruction operations will be This purchase is very useful For value. This may happen Theoretically, if you believe The company said it can Achieving growth in Annual revenue A compound with a concentration of 30%.

Although This represents a retreat from Their growth rates Historically, however, no It's still a high number Very much for a company that Its market value is 100 One billion dollars.

However, I would like to say that The administration was perhaps A little hasty in Timing of re-operations Purchase. In that The first period was There are times when they buy It includes shares with a multiple Operating profitability (EV/EBITDA) Its value is 10 times, which is the price very good.

But during The second period, arrived This rate is 40 Weakness. So, as you know, I think there is a discrepancy Very large in The evaluation is here, and as you As an investor, you would prefer Of course, they should keep this The multiplier is low. Possibility.

Well, one of the results The logic of head efficiency Money is religion, where It can be used to improve Your returns if used Cleverly. And considering Smart use For the religion in the re- What if you buy that?

We took a closer look at What is the status of AppLovin's debt? What is your assessment of that?

Yes, and I think this is in The reality is perhaps one Key strengths of This work. The matter Simply put, as I mentioned, She really doesn't need it to a lot of debt Whether for growth or for management the job.

Therefore, considering From the last quarter, They have about 3.5 billion Dollars of long-term debt For a while, but they keep Also with 3.1 billion Dollars in cash and what It equals it, making the net The debt is $400 million. only. and the debts that They have long-term bonds Term with interest rate Very reasonable, it's worth it.

A series of payments on Madar, let's say, 25 years Other. Therefore, there is no " A huge wall of Debt obligations Which will be resolved soon. Now, you also Compare that to what it produces AppLovin is actually from streams Cash.

So, in half Only the first of 2026, They made $2.1 billion from cash flows Operational. Therefore, They can actually pay Their net debt several times Through what they achieve Cash flows in half Just one year.

So, as I see it, There really aren't any Risk indicators related With debt.

I think AppLovin is a company conservatively funded Very clearly. And given Because the work does not require A lot of capital Apart from what they can return Investing in themselves I don't think I see A great need for debt Which they currently have.

So, this raises the question, Why do they keep it? originally? I think that The answer lies in the form My major is in two fields. The first one, which we covered Indeed, it is a repurchase Stocks.

They returned Buying shares worth 2.2 one billion dollars a year The past alone. So, if The share price fell, as That is the case now, Having extra cash For use other than Current criticism in Balance sheet It could be a step Smart.

Another reason Which we did not address It is truly for purposes Mergers and acquisitions.

Yes, so If there is a company Like AppLovin and It can acquire On other companies that own In turn, efficiency rates Capitalism close to Its rates in price Currently, it makes sense.

Going forward completely Acquiring those Companies. So, since the year In 2021, they spent approximately 2.8 billion dollars on Mergers And acquisition. So, this A company with experience in field of integration And acquisition.

I mentioned Previously the Adjust private sector With them. This was a company Buy them all Directly. as Also buy MoPub from Twitter, as I mentioned Previously, then CTV Whirl.

As for creating the largest A certain amount of value, perhaps That was thanks to Max. It was completed Buy Max earlier A little, so it doesn't It is actually calculated within the amount $2.8 billion.

But the really important part It is that Max was in The reality is a startup company. Small, founded by one Co-founders For MoPub. Therefore, The acquisition of MoPub was Essentially just a means To help with transportation More talent to Max. But I think that

But I think that The largest company that tried AppLovin Buy it, which perhaps Be the most exciting Interestingly, TikTok is in US. So I think this proposal Very interesting And that the agreement was That makes perfect sense.

as Learn, AppLovin could Taking advantage of Axon on TikTok's massive platform For the users. It will help That is in achieving returns Larger advertising. But we We know clearly that it was There are many Regulatory audit Regarding TikTok, it has been Quietly exclude him from any Additional conversations from AppLovin's point of view, where He faced many offers The competition and he did not succeed in the end.

So it was purchased TikTok in the United States United in the end from Before this alliance of Other investors do not They have nothing to do with it.

In the case of AppLovin, no I think allocating a head Money is a motivating factor for us The desire to own The stock unless we feel that Business activity The basics are very, very strong. .

In order to continue Our analysis of AppLovin, What if we spent some Time in conversation Specifically about Adam Forge Because it was clear The central character in AppLovin.

However, I assume You are facing a type of Risks of relying on The main character. permission, What do you think of Frogy and how far? Its compatibility with interests Shareholders?

Yes, regarding In terms of interests, if we look To those in the know as a whole, they understand They own about 13% of Class "A" shares, but They also have shares Category "B", which retains Only those in the know. To give them voting power.

Class "B" shares which Adam possesses it and gives it to them Approximately 62% of rights Vote. Therefore, by collecting Both types of stocks Frogy himself possesses what Approximately 9% as a share Economical in the company, That is what I see as fate.

Very good from the property Insiders of a company the size of My market is worth one hundred billion dollar.

And when we move Regarding salaries, it seems They are all interesting honestly. Basically, if I looked at all Executive directors, They all received Basic salary of Four hundred thousand dollars, This number has not been Raising or changing it since Company offering for subscription The year;

Which means that Most compensation packages They take the form of arrows, and She was without any performance incentive It is related to it.

There is a point Another point is that they do not They have an incentive plan Annually, which you can To say that he keeps them More focused on Long term on At least. But numbers Power of Attorney for 2023 It makes me feel... A little relief certainly.

Table appears Summary of compensation: Frogy earned over 83 Two million this year, With the technical director's On approximately 67 million, But it is very important Note that the amount of 83 One million dollars is not cash.

He actually put it in his pocket. It's simply value Accounting for a grant Performance on the date it was awarded Which was possible Technically, it equals zero.

. Remember the power of attorney document Frankly, these amounts Compensation does not reflect Which were received virtually.

So, the truth Actually, it's a kind of worse. what. What ended up being His achievement was in The actual number is higher Many of those 83 One million dollars. Ugh. This seems like compensation Big for one year, but I think we need Also, to find out the reason He received this amount Exactly, because if We looked at the years The last few, It seems to be an exception.

I have Frogy got an average Total compensation of 12 One million dollars in The past two years. permission That surge in 2023 You should have been part of it. From a previous incentive plan.

Do This is correct? That's exactly what happened. So, he had a basic foundation. This huge grant Based on performance.

Now, the details are here. Interesting Extremely. In March 2023, The stock price was fluctuating In the middle range Around the twenties, The company was clearly Outside of market interests, Just like our situation now Or perhaps a little worse.

Thus, shares witnessed The company declined It actually exceeded 90%. Here, the board of directors decided Farouki and even the director granted Executive Technology Some performance units.

I have These units were designed To be paid in five installments Equal, but only if The stock achieved certain milestones It ranges between double up to six times the price Grants during a five-year period Years.

But, in a way that Believe it or not, the stocks have rebounded. At an incredible speed during The following year or thereabouts that.

Therefore, it was Making those payments The five are basically through consecutive quarters, which is This explains the occurrence of these gains Huge. The total amount Issued shares approximately 17 million shares, or a percentage A reduction of 5%, which is Not the lowest number, but when Looking at the drawing long-term graph For their existing shares, they did not It was just a fluke Very small.

Okay, what can I do? His conclusion now seems They don't have Incentives based on Performance for management. And I I actually like incentives Based on performance. And in a work that focuses clearly Based on the data, it is expected They have a lot From different scales which they can stimulate The administration based on it Apart from the share price only.

Yes, this confuses me Also, but the administration, As you know, I have created A large amount of Value.

Something else, no I like the structure The incentive is that the shares The exporter is granted every year Then you deserve everything in full A quarter of a year, then it's repeated Its structure in the year the next.

I feel that the period The longer entitlement will be Much better for alignment Long-lasting.

However, At least, it was determined The maximum amounts increase A little over 12 million, Therefore, the risk of dilution The future of those Payments are very low That's something I appreciate. but, Honestly, regarding With this incentive structure, I don't really like him. maybe I would give him a grade like "D" This may seem harsh. Very much so, but simply not Inspiring to me.

Much better to see an incentive Long-term application. I imagine something like, as Learning, a goal for the margins Profitable. It is clear They achieved good results Very much so in this regard.

Perhaps some kind of goal related to head efficiency Money, and perhaps a goal For free cash flow. I think this will be A very good plan, I think The company already realizes Those standards, and it will be It makes sense to use it To help unify Management goals and shareholders in the future.

I agree with you on that. And again, let's continue. Our conversation is to pass the time. I think you know the types The risks I like to I think about it better After we presented a number of The episodes together over The past months in Company analysis.

Therefore, I don't think you'll be surprised Absolutely, with my desire to Delving into the aspects The organization with more The more detailed the details, the more We discussed this work And the truth of his connection With things like apps Software and its relationship somehow With my companies Alphabet and Meta.

My question is whether There are regulations that constitute a type One of the risks of this The company. Yes, and I think this The work is related to a group From the huge companies The other that is subject Also under strict control.

As I mentioned earlier, When the company "Ab" Lovên is only thinking about Finding a buyer, The deal turned into The end result is a forced case The organizers of the intervention Because of this involvement Chinese.

So, there Certainly some risks Related to this work. As of the quarter Lastly, they also By settling a case that lasted A year with the paperwork committee Financial and Exchange Commission (SEC) Regarding practices Collecting private data With them.

The investigation began because Seller reports on The exposed, as I expected, Which claims that "father Lovren violated Partner Service Agreements Its platform. The reports Published by Fuzzy Panda and "Calber Research", and in a way The reports were basic Which bets on a decline The stock relates to companies Others like Apple and Google And Meta.

Published by Fuzzy Panda and "Calber Research", and in a way The reports were basic Which bets on a decline The stock relates to companies Others like Apple and Google And Meta.

It was alleged that Reports that they They used fingerprinting technologies Unauthorized collection More data than before They are allowed to collect it virtually.

However, considering From the last quarter, They stated that the investigation had It was closed and it was not Are there any recommended procedures? In it. Such issues can To be scary, especially When sellers put them up They are openly characterized With aggression.

I heard Many stories on Years have passed since the sellers They were exposed They were wrong in the end. But they are paid To be right Because they profit from The stock price has fallen, and this may Makes them do everything Types of things in gray area Morally, frankly.

But there must be More on the story behind Stocks are currently declining By about 60%, and its decrease By approximately 30% since Second quarter profits in August 5th, which seemed to me Very good on a high level The year, isn't it?

I have They achieved an annual increase in Revenues by 53% And profit growth By 55%. So, at first glance The first one seems difficult Justifying the reason for the price decline A company of this size yet It was a strong quarter to some extent.

This is correct. And as for For your point about the sellers Out in the open, I believe in In fact, they do have a role. Good in the system Investment.

As you know, They have a point of view that is not It is a matter of consensus, and I believe Unfortunately, they may fabricate They either make things worse or exaggerate them.

Sometimes, but they They also reveal things It might end up By harming investors or Their customers.

Therefore, taking Everything is taken into consideration. You have to deal with what They say it with some caution And to truly delve into what Do you agree with them or no; Or if you don't You believe you are capable of Forming an opinion because of that It will take a long time You can consider that Good sign to avoid The arrow.

But, going back To your point about the decrease the price. I agree with you somewhat. It seems Strange to me Also, since AppLovin The company was not on the list My private surveillance, I had to dive In-depth analysis to understand the cause of the incident That and trying to understand it.

So, I don't know what If there is a specific reason Because of the decline in stocks this fate. Perhaps that will return Due to a number of factors Different. I see three Very strong probabilities I think it set the market On high alert.

The first was a decrease Revenue from Agreed expectations On it. The second was that Third quarter forecast For the future, things have slowed down. To a small extent. And the third It is that they also reduced Their profit margin forecasts.

Honestly, if I put myself AppLovin's contributors' place, from It is possible that all of this A society that will terrify me a little. to retreat The revenue seems to me least impactful on Most likely.

It was less From the forecast of 20 One million or 2%. So, I I don't give much importance to it. Therefore.

But slowing growth And slowing profit margins It is certainly something I see It might scare Investors, because you may She thinks: "Well, maybe this It is the normal situation The new one, and perhaps it will continue In the future decline"

While I was researching this The company, there are a few points Others worth mentioning in My opinion. The first was ambiguity Their disclosures. It is rare Very much a vision of a technology company Without a presentation For investors.

But, "Lovren's father" is not She has an offer for investors That's something I found Very strange.

I mean, it's probably bigger I have a fear, and this is based on Only to the fact that "father Lovén is essentially a work Good because she has this Type of algorithm Very good that It needs improvement Continuously.

But I don't I know, there's something I don't I really like this That's because it seems to me As if another company could Simply writing A better algorithm, and suddenly Your business model is collapsing Entirely.

At least with "Abu Lovne" "I realize it's not It's that simple because they They clearly possess a collection Their personal data. So In fact, even if A competitor managed to create A better algorithm, because they They might exploit intelligence More artificial It is likely that The algorithm is It is equally beneficial to them Simply because they don't They own a group The data I collected "Abu Lovne" is here on the way Years.

But, I think I will be transparent here I say it's impossible Almost for me Understanding the model issue This data, by what means A genuine conviction. So I think this makes me Not qualified to provide an opinion The most accurate information about this The specific topic.

but Given the risk Another thing I have an opinion about, It is simply that any work Commercial achieves growth rates Capital efficiency and margins Such an incredible profit! It will inevitably attract competition.

I mean, yes, they have Private data, but as Learn, if a company wants Other ways forward And building an algorithm, no There is a lot of It prevents them from doing that .

This leads us to something Another, which is that they are facing Indeed, a lot Competition. This is a field Highly competitive, and no It contains any field To rely on what it has achieved From the glories.

Therefore, no I think Apple's 11 Do that in any way The circumstances, but from It's good that work is coming Here you go, without having to To exhaust yourself with searching About new works Continuously, as well as Countering smart competition Very well funded.

While The situation with the "Apple 11" seems It's like proof of Technology, while Google and Meta have More diverse business models This is what makes them Two exceptional companies.

While with "Apple 11," something might happen For its algorithm within a quarter A year or so, then What we are witnessing now is happening. Where it ends The market is in a state of panic.

So I know that despite My belief is that Apple 11 It has some advantages Certainly, but it Not as strong as Al-Kafi, if you compare it With a company like Meta or Google.

So, I would like Addressing the danger here Another, I think, is perhaps He was a key factor in Quarterly panic The last one we witnessed, That is, the works may It reaches the saturation stage In terms of volume generation.

As I mentioned a little while ago Regarding their disclosures, from Difficult to obtain Really meaningful data But there are two points Valid data And they are useful. We can Get the size Installations and revenues .

We can see that in Third quarter of the year Two years ago, in 2024, the size Installations increased by 39%. So, you know, they were They get more And more volume there . But, as you know, since This year, it was The numbers are negative in both cases.

The two quarters. So, it seems that The size of the installations is moving in The wrong direction.

And so that Let's be clear, we don't have In fact, any idea of Mounting base size The actual reality, because they do not They disclose it; But they They tell us if The size of the installations increases Or it decreases on a quarterly basis Annually, and I believe this Truly valid data To consider it.

I think that The fact that they continue to grow With reduced size means At least they are reaping the rewards More money from Other areas of work. e-commerce It was something they imposed The light on it in Their last call As a growth engine last.

This is not a problem Terrible, but if it continues Your size is decreasing, it has You reach a point where you can't It solves the problem simply Price increases alone. If we look at the numbers Tenjin, specializing in Marketing analytics, understanding They claim that Apple controls Even at slightly less than 40 % of transfer revenues iOS Ads and Acquisition Users of games Mobile phone.

It works Max brokerage platform on Operating approximately 55% of Top-grossing games And more than 73% of games mobile phone The pioneer. As you can see, it has They broke into this market Indeed, to a large extent.

This explains most of the reason Their pursuit of diversification and attraction Customers in other sectors.

I think, on the one hand, that they They penetrated the market in a way Clearly good, this He gives them hope of space Long to continue achieving Profit from that share Market-driven.

But on the one hand Other, it could be Having a market share A major challenge Ironically, for reasons Which I just discussed, Isn't that so? If not They are able to acquire On more of the share Marketability, so volumes will dry up Sales to some extent, Which forces them to try Finding growth in size in somewhere else.

Let's see how they will continue. Its development because of the increase Revenues at a rate of 50% Annual basis is not important Easy, and this is a high ceiling. They put it very for themselves in front of Investors.

Part of the reason I think AppLovin I grew a lot because of him. They were taking over On sales volumes of During their increased share in The market. But now as You already said, on them Searching for other ways For growth.

So, while I think AppLovin will be Most likely a generator Criticism for many years Coming, I think Investors are interested Clearly alongside growth There's much more on AppLovin.

So, one way to diversify They have an app to create New social media It is called Just from Zero. So, I don't think Adam Frogey intends to This application is Instagram or TikTok The one coming in any case from The situation, frankly, is He doesn't need that. To get what he wants From him.

My guess is that Just Something he can use In a similar way His ownership of studios Mobile games Those, as you know, are just Buy the final product Which one uses it The actual users, Data is collected from The platform then checks profits from that Data for improvement Their algorithm is even more advanced.

Because many Development and research work And development flows through Cost of goods Sold, we don't know The amount they spent on Create Just, but if He could have helped them In achieving growth for a few Other years through Continuing to improve Their matching capabilities It seems like an investment It's worth the cost.

Yes, and considering that AppLovin is not actually Media Applications Company Socially, I will have Very low conviction that This will expand to become Something very big, But they did a good job With studios Games, and through what I saw it, Just reviewed it Very well.

She was Exciting initiative To be concerned because it did not You enjoy any kind of Loud advertisements.

I actually discovered It's through my friend Who did some research Online. from It's rather strange that They discuss this matter. But I think it reflects "Ab Lovén's" ongoing approach In limited disclosure.

It seems speculative Extremely so at this stage But I can imagine A world where they can Expansion and acquisition The data that They want it, which may strengthen Their growth paths.

But Again, with few Available information For us, it is very difficult Forming a strong conviction With this idea.

And now, There is another growth engine For the company "Ab Lovin", which is E-commerce. This has been a growth engine Strong so far, where This sector grew by approximately 28% In the last quarter Exceeding the peak Holidays, although it is usually Which is a quarter weaker.

But, you know, this It also creates another problem That is, it is not from The core of "Ab Lovén's" specialization Live. For example For example, when you display " "Ab Lovne" advertisement in It's a mobile game, so it tends to Until it continues for a period of time It ranges from 15 to 30 second.

But advertisers, For transfer in trading companies small electronic And the average, they tend To use still images or product catalogs Designed dynamic Specifically for Meta ads Or "Google."

That said, It may take some Time so that they can Improving ads in This sector to suit Specifically, mobile games.

As you know, it will be necessary Change the format, and in order This market is viable To continue, those must be blocked. The gap at the end The circumambulation. So, there A question looms The question is: Are the companies small and medium Ready to change the way Announcing it?

And if They thought they could Get a better return On advertising spending Using "Axon", it lost They are heading in that direction, but this He still creates some The difficulties they face in producing Specifically optimized ads

I think it's good The company's vision is to possess Multiple growth drivers, But I know that "father Lovên relies heavily Larger than the "Axon" model If the form is submitted Best for advertisers Prices on spending The advertiser, they will choose him Emphasizing alternatives.

But the other problem is That is because they They update the algorithm Constantly, it may pass periods in which Performance was below expectations That seems to be the case - according to For the administration - that it has happened Just in the last quarter.

So, theoretically, if They released an update after The second quarter directly, The model provided a return Higher on spending Advertising, they may witness A tangible improvement in Their revenue figures For the next quarter and beyond .

Yes, that's part of the job. Which you can consider Positively and negatively in At one time. It is positive because The algorithm creates Clearly a more productive product Efficiency for advertisers, but It's also negative because if The model lagged behind its competitor Or if the rhythm The update is unstable.

You will get numbers like The ones we saw recently.

Therefore, Other growth drivers The two I would like to mention here They are expanding the side platform the offer. Fields The three he mentioned Ogilvy is the apps Unrelated Games and the web Open, then Connected television. in At the present time, it does not seem That this is a priority Major, and unspecified A real timeline for him.

So, it's worth it Follow-up, but it seems Currently as a priority Very low.

then There is, as you know, a percentage Deduction. I mentioned Previously, the price that It's paid for by advertisers, not by him. What a developer gets actual advertising space Because "Ablofen" gets On a share of this amount.

Again, we don't know What is this number, and who is it from? Clearly, we cannot His knowledge from the reports Finance, and I doubt that we We will find out in the future what You had no information Interior.

Ablofen Recording revenue As an agent, after deducting what You pay it to the publishers. Therefore, The total amount is not shown. never. There is no item For total invoices, No payment clause Publishers, and details Revenues categorized by Geography only.

Therefore, You can't even detach "Max" (MAX) About the advertising platform The actual situation.

once again, The estimate that ranges Between 30 and 40% is just A guess, not something. I can extract it Actually from "Ablofen". The only thing that The administration addressed it.

This quarter is that the market Max grew by Double on a quarter basis annual, while it grew Ablofen revenues Net at only 4.4%.

We might be tempted to explain that That "Ablofen" takes More, but the matter It actually refers to The opposite. If money Publishers are growing rapidly Faster than money "Ablofen," this means That "Ablofen" gets in The reality is on a smaller share of Total returns.

I will be Be careful even in this The conclusion is that "Max" A market that carries "meta" orders Google and Unity In addition to requests Aplofen's own. So, Publishers' profits can To definitely grow Hurry just because Competitors are bidding With greater power inside "Max".

And I would like to say that It is an indicator of density Competition is more than just being An indicator of the percentage Deduction. Therefore, I submitted Frogy, that's proof of The games category has In good health, and may be That's true, but it's not Tell us anything about The deducted share.

It will be It's great to get More data about This is true, but it's difficult. Truly, asserting anything Due to their disclosures Mysterious. Well, it was a day It's been a long time, guys.

I think time The current one is the most suitable To reach our estimation intrinsic value For the company "Ab Lovin". Therefore, I'll leave the field to you. Kyle will take care of it.

Yes. Okay, I'll start By saying that "Ab Lovén" It's an exciting company Very interesting. that A company growing this fast It trades at a cheap price. A very rare occurrence in The markets, but it happens Sometimes, and if you discover The market is completely wrong Regarding the company, you can Then, a substantial profit will be achieved. very.

Regarding my case Basically, I assume that The company will continue to Achieving cumulative growth in Its revenues are decreasing by a percentage A little over 17%. This This means that the revenues It will continue to slow down.

This is what we saw in the market He doesn't like it. This is an assumption Very conservative where Management anticipated growth By approximately 47% in the long term Short, but I look To a horizon of 5 years, I assume the size It will continue to decline And that trade Electronic will not provide Except for a very slight payment, If you presented it in the first place.

I assume that the margins Earnings before interest Taxes and depreciation and consumption (EBITDA) It will stop expanding It will remain around the 77% range. This is a decrease of a few Percentage points for the months The past twelve.

A slight decline is possible Because computing constitutes A larger part of Revenues, and increase Existing compensations On shares as a percentage Percentage of revenues, In addition to increasing Competition for their product Max.

Finally, I will apply Enterprise Value Multiplier To profits before Interest and taxes Depletion and consumption By approximately 13 times, which is Includes reassessment Further towards a decrease With the continued slowdown Growth figures.

This is a step Large down from the level The 19 times that are He is trading now.

But I think that It aligns with a type of The bottom for their multiples When the stocks were not Highly preferred Previously, and it is a result I think it's very likely in the future.

So, with These assumptions and margin 30% safety, with Consider the degree of volatility The enormousness of this work, Get a price of Approximately $480, which Provides annual growth rate Compound at a concentration of 9%.

And by the way, if you want Try the model yourself. You can find Link in notes The episode below, as You can register in Our newsletter Free from value Al-Jawhariya via the website theinvestorspodcast.com for Based on in-depth analyses For the companies we cover In the podcast.

We will put the registration link in Newsletter in Episode notes also

But Cal, where does he stand? This job is for you Today's perspective My investment? And should We need to add it to Value portfolio Our core values? Yes, in very brief terms, My opinion on this work is I will avoid him.

I believe Although Work definitely provides Lots of potential Upward trend, and I see that There is a path to achieving Returns in the middle Dozens, or perhaps as many as To the twenties, under conservative assumptions Extremely.

But I don't I think I will feel With sufficient comfort Regarding this work To add it to the wallet Intrinsic value or Even to my personal account.

As you know, there are obstacles Reality in the face of continuity Their growth has been damaged. Previously from companies with High growth rates I assumed it would fade away Slowly, to find the growth rate It stops completely, and it was Reduced complications The evaluation is painful Extremely.

So, it It's a better experience not to repeat. . And part of the reason is My making this mistake Perhaps it was my lack of understanding To work adequately Which should have He has to take that Investing in the first place First, and the truth is that I I feel very similar Regarding this work as well.

If this work is successful Performing well, it is one Those cases that I will applaud the shareholders. Certainly, but I won't I feel no regret for Staying away from Participation.

I think that There are other companies I covered it, it looks more That makes sense to me. Where the results Expected after a few clearer years For me.

companies with Different business model Exactly like AppLovin, such as Lift, Go, or Wise, it seems to me Companies that may not own Same capabilities AppLovin's upward trend, but Its basic state Much easier for me To understand it, and for this reason It is located in a wallet intrinsic value Not AppLovin.

Yes. Yes, exactly. I Personally, I think this The work is extremely difficult For me. He may feel People smarter than me know that They understand the details of the sector Programmatic advertising enough to own Strong conviction to buy AppLovin shares after the operation Last sale.

And the great thing In investment, it means that You can choose opportunities Which it captures, and that is something Another thing we like to say a lot In this program. Many stocks can To achieve outstanding performance Without meaning that you won't You can achieve success.

But what you cannot tolerate It is committing serious mistakes In companies that don't understand The nature of her work.

exactly. i believe you You will continue to see us We achieve our fair share of Gains and losses in Companies that never end By possessing it, as You know, because we We look at a lot of Companies.

So, I think That when it comes Through modeling, we must We take into account not Not just the price, but also How comfortable we are with our understanding Due to the nature of the company's work.

I've heard some investors They say the value is not There is a company that is "no" Never definitive, because if The price was cheap. That's enough, you can always Finding a way to justify Own it.

But personally, I don't think I agree with This proposal. If you I lack the ability to Understanding the workings of a company Good, unless I get It's almost free. I will consider the lack Investing in it is a mistake I will abstain and choose Stay away. That's all.

We have it for you today, but As is our custom before we conclude, I would like to leave you with quote. This quote From the CEO For Applebee's, Adam Furugi. I never believed By saving money for a while Intensity.

I feel that I believe I am very keen on what we are building. I believe in the direction that We walk towards it. So, if I believed in the future We are a high-yielding company From cash liquidity, We must always "Repurchasing our shares."

I think this is a quote Wonderful, and I see that Adam did Doing very well in Repurchase operations yet. It will be necessary We need to follow up during The few years Let's see how it goes next.

Replays will The last purchase, but With continued growth Business, I think it It will be looked at In a positive way too.