Q4 2021 Applovin Corp Earnings Call

Greetings and welcome to up 11 Corp, fourth quarter and full year 2020 One earnings results conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero on your.

Speaker 1: Good evening. Welcome to AppLemonCorp fourth quarter and full year 2021 earning results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Speaker 1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Ryan Gee, Head of Investor Relations and Strategic Finance for App11. Thank you. Thank you.

Telephone keypad. Please note. This conference is being recorded I will now turn the conference over to Ryan <unk> head of Investor Relations and strategic finance for Apple Evan. Thank you you may begin.

Thank you Sherry and welcome everyone to App loving earnings call for the quarter ended December 31 2021, joining.

Speaker 2: Thank you, Sherry, and welcome everyone to App11's earnings call for the quarter ended December 31st, 2021.

Joining me today to discuss our results are our founder CEO and chair person Adam <unk> and.

Speaker 2: Joining me today to discuss our results are our co-founder, CEO , and chairperson, Adam

And our President and Chief Financial Officer, Carole Chan. Please note our SEC filings earnings release and shareholder letter discussing our fourth Q and 2021 performance are available at investors don't up loving Dot com.

Speaker 2: and our President Chief Financial Officer, Harold Chen. Please note our SEC filings, earnings release, and shareholder letter discussing our 4Q and 2021 performance are available at investors.apploven.com.

During today's call, we may be making forward looking statements regarding future events and the future financial performance of the company. These statements are based on assumptions and beliefs, and we assume no obligation to update them.

Speaker 2: During today's call, we may be making forward-looking statements regarding future events and the future financial performance of the company. These statements are based on assumptions and beliefs, and we assume no obligation to update.

Speaker 2: actual results may differ materially from those results predicted here today.

Actual results may differ materially from those results predicted here today.

Please review the risk factors in our most recently filed Form 10-Q as well as elsewhere in our SEC filings for further clarification.

Speaker 2: Please review the risk factors in our most recently filed Form 10Q, as well as elsewhere in our SEC filings for further clarification.

We will also be discussing our non-GAAP financial measures reconciliations of GAAP to non-GAAP financial measures are included in our earnings press release, our shareholder letter, our 10-Q, and our 10-K to be filed shortly.

Speaker 2: We will also be discussing our non-GAAP financial measures. Reconciliations of GAAP and non-GAAP financial measures are included in our earnings press release, our shareholder letter, our 10Q, and our 10K to be filed shortly.

Please be sure to review those reconciliations as.

Speaker 2: Please be sure to review those reconciliations, as the non-GAAP measures are not intended to be a substitute for or superior to our GAAP results.

The non-GAAP measures are not intended to be a substitute for or superior to our GAAP results.

This conference call is being recorded and a replay will be available on our IR website shortly.

Speaker 2: conference call is being recorded and a replay will be available on our IR website shortly. With that, I will now turn it over to Adam.

I'll now turn it over to Adam.

Thanks, Ryan and thank you all for joining US today I'm pleased to report record fourth quarter financial results I'm, even more excited by where our software business is heading and our potential in 2022 and beyond.

Speaker 3: Thanks, Ryan, and thank you all for joining us today. I'm pleased to report record fourth quarter financial results. I'm even more excited by where our software business is heading and our potential in 2022 and beyond.

I want to highlight two reasons why we confidently raised our software revenue outlook for 2022, and why we believe we can grow to approximately $2 billion in software revenue in 2023.

Speaker 3: I want to highlight two reasons why we confidently raised our software revenue outlook for 2022 and why we believe we can grow to approximately $2 billion in software revenue in 2023.

The compounding of our software platform business exiting 2021.

Speaker 3: First, the compounding of our software platform business exiting 2021.

It's hard to fathom, but we have nearly three times as many clients using our solution to grow their businesses today versus last year and our software platform revenue was larger in the fourth quarter and for all of 2020 and grew 27% quarter over quarter. This marked our third consecutive quarter of double digit.

Speaker 3: It's hard to fathom, but we have nearly three times as many clients using our solution to grow their businesses today versus last year. And our software platform revenue was larger in the fourth quarter than for all of 2020 and grew 27% quarter over quarter. This marked our third consecutive quarter of double digit sequential growth and significantly higher growth than all other industry peers.

So growth and significantly higher growth than all other industry peers.

Discovery continues to perform very well and consistently delivers against our clients' ROI goals.

Speaker 3: AppDiscovery continues to perform very well and consistently delivers against our clients' ROI goals.

Speaker 3: That is why we had over 200% net dollar-based revenue retention for our existing clients.

So that is why we had over 200% net dollar based revenue retention for our existing clients.

Which provides a solid foundation for a robust organic growth rate to persist in 'twenty two and beyond.

Speaker 3: which provides a solid foundation for a robust organic growth rate to persist in 22 and beyond. Also consider our sales force is still ramping and that Axon just turned one year old last quarter.

Also consider our sales force is still ramping and then axon just turned one year old last quarter.

Second the integration of both of them.

Speaker 3: Second, the integration of MoPub. We've seen amazing progress today integrating MoPub features, publishers, and demand partners. The number of apps monetizing with Max is up over 60% since we announced the deal. And over 90% of the largest publishers from MoPub are actively integrating our unified apps.

We've seen amazing progress to date integrating Mopar features publishers and demand partners. The number of apps monetizing with Max is up over 60% since we announced the deal and over 90% of the largest publishers for Mopar are actively integrating our unified offering.

The Apple or an exchange will enable many new DSP and bidders to work with Max These demand partners generated the vast majority of MAU pubs revenue, but they didn't have direct access to Max publishers before as they come online through a unified platform, which will be over twice as big as mope hub, we expect these partnerships to deliver it.

Speaker 3: The Apple Open Exchange will enable many new DSPs and bidders to work with Macs. These demand partners generated the vast majority of MoPub's revenue, but they didn't have direct access to Macs publishers before. As they come online through a unified platform which will be over twice as big as MoPub, we expect these partnerships to deliver a compelling revenue opportunity in 2022 and beyond.

Telling revenue opportunity in 'twenty, two and beyond.

We believe to operate a fast growing business successfully over the long term, we need to be executing against our current opportunities and also be building products that can be catalyst for growth years into the future.

Speaker 3: We believe to operate a fast growing business successfully over the long term, we need to be executing against our current opportunities and also be building products that can be catalysts for growth years into the future.

Speaker 3: I'm very proud of our team because in addition to executing on all of our current initiatives, we're building products in big markets, such as blockchain and NFTs for mobile content, marketing solutions for mobile OEMs and carriers, and enabling performance marketing in the fast growing CTV market. These categories have similarities to the business and technologies we've already built and success in any one of these can meaningfully expand our business.

Very proud of our team because in addition to executing on all of our current initiatives, we're building products and big markets such as block chain in F. T is for mobile content marketing solutions for mobile Oems and carriers and enabling performance marketing in the fast growing CTV market.

These categories have similarities to the business and technologies, we've already built and success in any one of these can meaningfully expand our business.

We look forward to sharing our progress on these initiatives and others as they develop.

Speaker 3: We look forward to sharing our progress on these initiatives and others as they develop.

With that let me turn it over to Harold to provide color on our numbers and outlook.

Speaker 3: With that, let me turn it over to Harold to provide color on our numbers and outlook. Thanks Adam.

Thanks, Adam and thanks to everyone for taking the time to join US as Adam noted, we had a very solid Q4, and an outstanding 2021 and.

Speaker 3: As Adam noted, we had a very solid Q4 and an outstanding 2021. In 2021, we not only had great financial results, where revenue grew more than 90% and adjusted EBITDA grew more than 100%.

2021 we not only had great financial results, where revenue grew more than 90% and adjusted EBIDTA grew more than 100% we were able to fully ramp our axon machine learning platform built critical mass in our first party apps complete strategic acquisitions in both tech and content access the public equity markets and private debt markets and importantly build.

Speaker 3: We're able to fully ramp our Axon machine learning platform, build critical mass in our first party apps, complete strategic acquisitions in both tech and content, access the public equity markets and private debt markets, and importantly, build out our global team and board. This positions our company well for future growth.

Our global team and board this positions our company well for future growth.

Set of reading, our financial and operating metrics for Q4 in 2020 , one which are well laid out in our earnings release and shareholder letter I do want to highlight our outlook for 'twenty, two and software target for 'twenty 'twenty three.

Speaker 3: Instead of reading our financial and operating metrics for Q4 and 2021, which are well laid out in our earnings release and shareholder letter, I do want to highlight our outlook for 22 and software target for 2023.

Speaker 3: First, we plan to grow our scaled software business at over 100% for 2022.

First we plan to grow our scaled software business at over 100 per cent for 2020 two.

Speaker 3: We're projecting software platform remedy for 2022 at just over $1.4 billion at the midpoint of our range, representing 111% year-over-year growth. This is a sizable upward revision from the billion-dollar target we gave you earlier in 2021.

<unk> software platform remedy for 2022 at just over $1.4 billion at the midpoint of our range, representing 111% year over year growth. This.

This is a sizable upward revision from $1 billion target. We gave you earlier in 2020 one.

Our outlook for continued robust growth stems from one our strong finish to 2021 and record Q4, 'twenty one results setting us up well for organic growth in 2022.

Speaker 3: Our outlook for continued robust growth stems from, one, our strong finish to 2021 and record Q4-21 results, setting us up well for organic growth in 2022. And two, as Adam mentioned already, our outlook benefits from the solid progress integrating MoPub into MAP.

And two as Adam mentioned already our outlook benefits from a solid progress integrating more probably on the Max.

Going forward, we won't be reporting on MAU pub standalone since it is being fully integrated into the Max platform. We continue to believe the moped acquisitions should be highly accretive and strategically impactful investment for our company in the near term and over the long term as evidenced by our software guidance for 'twenty, two and 'twenty, three which I'll come to in a second.

Speaker 3: While going forward, we won't be reporting on MoPub standalone since it is being fully integrated into the Max platform, we continue to believe MoPub acquisition should be a highly accretive and strategically impactful investment for our company in the near term and over the long term, as evidenced by our software guidance for 22 and 23, which I'll come to in a sec.

I do want to call out that we expect to pay approximately $200 million in migration fees to publishers coming onto the Max platform, mostly in the first quarter.

Speaker 3: I do want to call out that we expect to pay approximately $200 million in migration fees to publishers coming onto the Max platform, mostly in the first quarter.

Given these costs related to the MAU pub transaction, we plan to add back a substantial portion of that amount to our adjusted EBITDA.

Speaker 3: Given these costs are related to the MoPub transaction, we plan to add back a substantial portion of that amount toward just Zebedah.

Post the moat pub acquisition, we would not be adding back those fees in the ordinary course.

Speaker 3: Post the MOPOB acquisition, we would not be adding back those fees in the ordinary core.

With regard to our 'twenty three outlook for sulfur given all the progress we've made to date and the many opportunities. We see ahead, we're working hard to reach the $2 billion in software revenue in 2023 of Adam mentioned.

Speaker 3: With regard to our 23 outlook for software, given all the progress we made to date and the many opportunities we see ahead, we are working hard to reach the $2 billion of software revenue 2023 of Adam Mench.

On the outside our outlook is for $2.2 billion in 2022 at the midpoint of our range. It is amazing to say, we had negligible negligible apps revenue just four years ago and now have a multibillion dollar business with an awesome set of studios and developers around the globe.

Speaker 3: On the outside, our outlook is for $2.2 billion in 2022 at the midpoint of our range. It is amazing to say we had negligible apps revenue just four years ago and now have a multi-billion dollar business with an awesome set of studios and developers around the globe.

While we've reached critical mass to drive first party data.

Speaker 3: While we've reached critical mass to drive first party data, the first party data we need for our machine learning engine, we are continuing to make substantial investments in new content and are planning to release new first party apps with evergreen potential over the next several quarters.

First party data, we need for our machine learning engine, we are continuing to make substantial investments in new content and are planning to release, New first party apps with evergreen potential over the next several quarters.

The midpoint of our outlook at $2 2 billion assumes modest revenue from new content, given the inherent difficulty in projecting new content performance.

Speaker 3: The midpoint of our outlook at 2.2 billion assumes modest revenue from new content, giving the inherent difficulty in projecting new content performance. We project our new apps to have a more meaningful impact in the second half of 2022.

Our new apps and having more meaningful impact in the second half of 'twenty two.

Note that if we do have a new hit title, we would ramp our user acquisition to drive revenue as we did with project make over over the last year.

Speaker 3: Note that if we do have a new hit title, we would ramp our user acquisition to drive revenue as we did with Project Makeover over the last two years.

As it relates to our EBITDA for 'twenty, two we're targeting an adjusted EBITDA margins in the high Twenty's percent range up from 21 at 26%.

Speaker 3: As it relates to our EBITDA for 22, we're targeting an adjusted EBITDA margins in the high 20s percent range up from 21 at 26%.

Well, Adam and I are focused on compounding free cash flow over the long term, we are and we'll invest for the long term value creation, rather than near term profitability.

Speaker 3: While Adam and I are focused on compounding free cash flow over the long term, we are and will invest for the long term value creation rather than near term profitability.

Lastly, and importantly, Adam Brian and I would like to thank you for your support in 2021 and please know that we and our App 11 team are working hard to deliver for all of you in 'twenty two and beyond.

Speaker 3: Lastly and importantly, Adam, Ryan, and I would like to thank you for your support in 2021. And please know that we and our App 11 team are working hard to deliver for all of you in 22 and beyond. With that, we'd be happy to take your questions. Thank you.

With that we'd be happy to take your questions. Thank you.

Yeah.

Thank you.

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Our first question is from Stephen Ju with Credit Suisse. Please proceed.

Okay. Thank you so much so Harold just a kind of a follow up on the migration costs of 200 billion for 2022 and it looks like there was about 3 million or thereabouts for the fourth quarter. So can you discuss what this expense actually entails and to your point I guess change in mediation platforms are pretty rare. So can you talk about what's actually going on.

Speaker 4: Okay, thank you so much. So Harold, just to kind of follow up on the migration costs of 200 million for 2022.

Speaker 4: And it looks like there was about $3 million or thereabouts for the fourth quarter. So can you discuss what this expense actually entails? And to your point, I guess change in mediation platforms are pretty rare. So can you talk about what's actually going on underneath the hood in terms of the nuts and bolts?

Underneath the hood in terms of the nuts and bolts for migration.

Adam.

Speaker 4: And Adam, undoubtedly you've seen sort of the latest privacy driven changes that Google is talking about for Android. So can you talk about how things might be the same, or how things might be different versus what Apple did on iOS? Thanks.

Clearly, you're seeing a sort of a latest privacy driven changes that Google was talking about you know for Android. So can you talk about how things might be the same or how things might be different versus.

What Apple did on.

On iOS.

Hey, Stephen Thanks for the question.

You know historically as we said.

Speaker 3: You know, historically, as we said, in the mediation space, there's been little volatility and people wants to run a platform, stay there because it is inherently integrated to all your applications. So very, very sticky and historically, we've not paid these fees in the.

Mediation space, there has been little volatility and people once theyre on a platform stay there because it is inherently integrate into all your applications are very very sticky and historically, we've not paid these fees in the past, but with the acquisition of MAU problem and Mopar being shut down as a service at the end of this quarter a lot of publishers needed to move quickly and theres quite a bit of cost to them.

Speaker 3: For the acquisition of MoPub and MoPub being shut down as a service at the end of this quarter, a lot of publishers needed to move quickly and there's quite a bit of cost to them actually from a revenue standpoint where they potentially can lose revenue given the speed with which they need to migrate. And there's just cost to get the migration done. And so we negotiated these one-time fees to cover...

Actually from a revenue standpoint, where they potentially can lose revenue given the speed with which they need a migraine and theres just cost to get the migration done.

And so we negotiate these onetime fees to cover those costs.

Yeah.

Hey, Stephen It's Adam on your second question around Googles announced privacy changes.

Speaker 5: Steven, it's Adam. On your second question around Google's announced privacy changes, a couple things there. One is,

A couple of things there one is we don't know exactly the direction of these changes will take because the multi year plan and Google works with all the major companies in the sector to ensure that there is not a disruption of performance on advertising targeting and attribution and and then pairs that with a better privacy environment for the consumer.

Speaker 5: We don't know exactly the direction these changes will take because of the multi-year plan. And Google works with all the major companies in the sector to ensure that there's not a disruption to performance on advertising targeting and attribution, and then pairs that with a better privacy environment for the consumer.

So it's just going to take a while to develop that said, we obviously dealt with idea of pay changes coming really quickly to the market in 2021, and you saw our business grow quite considerably on the software side in 'twenty, one going into the changes we talked about the privacy change on Apple being muted for our business.

Speaker 5: So it's just going to take a while to develop. That said, we obviously dealt with IDFA changes, um, coming really quickly to the market in 2021. And you saw our business grow quite considerably on the software side in 2021.

Speaker 5: Going into the changes, we talked about the privacy change on Apple being muted for our business.

You saw it was growing 30% quarter over quarter and Q2, you saw the same trend in Q3 and Q4. So our business is growing quite quickly and these changes actually in a way do benefit us because the core of our our data to drive their machine learning is all first party data achieved and access from our own games. So we believe we're set up.

Speaker 5: You saw us growing 30% quarter over quarter in Q2. You saw the same trend in Q3 and Q4. So our business is growing quite quickly. And these changes actually, in a way, do benefit us because the core of our data that drives our machine learning is all first party data achieved and accessed from our own games. So we believe we're set up very well to perform regardless of any sort of privacy changes or regulatory changes in the ecosystem. Thank you.

Well to perform.

Regardless of any sort of privacy changes irregular regulatory changes in the ecosystem.

Okay. Thank you.

Yeah.

Our next question is from David Karnofsky with J P. Morgan. Please proceed.

Alright, Thank you Adam.

Speaker 6: Thank you. Adam or Harold, can you maybe walk through what's embedded in your guide for expense growth in 2022? Your outlook, I think, has 750 million of software growth at the midpoint, and I know some of that is MoPub, which has a higher expense structure initially, but just trying to understand if your expectation for incremental margins on the underlying software business has changed.

Can you maybe walk through what's embedded in your guide for expense growth in 2020 to your outlook I think has 750 million of software growth at the midpoint and I know some of that is no pub, which has a higher expense structure initially, but just trying to understand if your expectation for incremental margins on the underlying software business has changed at all.

Yeah.

Thanks for the question David It's Harold So yeah. Overall, we think that this isn't a ballpark you know with the $1 billion repay it in this incremental couple of million dollars of good publishers migrated as they are highly accretive as mentioned in strategic deal for us and we do feel very good about that and we do think the flow through on the software side margin structure.

Speaker 3: Thanks for the question, David. It's Harold. So yeah, overall, we think the acquisition of Bowpub with the billion dollars we paid and the incremental couple hundred million dollars to get publishers migrated is a highly accretive, as mentioned, and strategic deal for us. So we do feel very good about that. And we do think the flow through on the software side margin structure is high. There is, as you note, more infrastructure to be built. And as we're scaling and doubling the size of our software business, we're having to keep up with that.

Is high there there is as you note more infrastructure to be built and as we're scaling in doubling the size of our software business you were having to keep up with that for sure and we're bringing on a lot of new D. S piece and a lot of new publishers simultaneously.

Speaker 3: for sure and we're bringing on a lot of new DSPs and a lot of new publishers simultaneously.

I think for our guide for the year, maybe just taking a bigger picture look at it.

Speaker 3: I think for our guide for the year, maybe just taking a bigger picture, look at it in the high 20s EBITDA margin, as mentioned, we want to be investing for growth in the business and we think our ability to continue to grow the business over the long term at scale requires that investment, so we're trying to include what we think are some new projects in that EBITDA number. We are investing quite a bit into

And the high Twenty's EBITA margin.

As mentioned, we want to be investing for growth in the business and we think our ability to continue to grow the business over the long term at scale requires that investments where we're trying to include what we think are some new projects in that EBITDA number we are investing.

Quite a bit into our.

Speaker 3: Studios as well, I think you know that we acquired a number of studios at the end of last year. We're scaling the investment into those studios.

Studios as well I think you know that we acquired a number as soon as the end of last year. We're scaling the invest those studios to ensure that they've got the right resources to deliver content on the back end.

Speaker 3: to ensure that they've got the right resources to deliver content on the back end. So we can certainly drive the business in a different direction in terms of overall margin given the flow through, but there's so many opportunities for us to invest both on software and apps where we'd like to invest.

So we could certainly drive the business in a different direction in terms of overall margin given the flow through but.

There's so many opportunities for us to invest both on software and apps, where we'd like to invest.

And both of them.

Okay.

Speaker 6: I mean, Adam, you're prepared to mention some areas for investment, like marketing solutions for OEM or blockchain. I was wondering if you could expand on this, are there investment costs against that in 2022? And if you can provide any specific details, you know, why are these the right opportunities to invest in?

Adam in your prepared remarks, you mentioned some areas for investment like marketing solutions for OEM or blockchain. Just wondering if you could expand on this at our other investment costs against that.

2022, and if you can.

Provide any specific details you know why are these the right opportunities to invest in.

Yeah. So when we look at anything that's new we'd do that incremental to what our current opportunities are but we do want them to be related to the expertise that we have both in terms of the technology platform audience and data. So that we have a higher likelihood of success. So if we do invest in something and so the three areas I mentioned.

Speaker 5: Yeah, so when we look at anything that's new, we do that incremental to what our current opportunities are. But we do want them to be related to the expertise that we have, both in terms of technology platform, audience, and data, so that we have a higher likelihood of success if we do invest in something. And so the three areas I mentioned, the carrier and OEM space,

The the carrier and OEM space.

Marketing solutions to really enable manufacturers to generate more from their device sales than they currently generate from the solutions. They have available is something that is a natural extension of our machine learning demand and software platform. The N F T and block chain marketplace and solutions. There are just incremental ways to help monitor.

Speaker 5: marketing solutions to really enable manufacturers to generate more from their device sales than they currently generate from the solutions they have available is something that's a natural extension of our machine learning demand and software platform.

Speaker 5: The NFT and blockchain marketplace and solutions there are just incremental ways to help monetize mobile gamers. And we've got 200 million of them playing our games. And then across our audience network, we access 2 billion of them every single month. And so because of our penetration in the mobile ecosystem, we think helping enable developers to expand their monetization opportunity with solutions there is beneficial to all parts of our business.

It's mobile gamers and we've got $200 million of them, playing our games and then across our audience network. We access 2 billion of them every.

Every single month, and so because of our penetration in the mobile ecosystem, we think helping enable developers to to expand their monetization opportunity with solutions. There is beneficial to all parts of our business. So it makes sense to invest there and then finally the connected TV space very similar to what we do today, we're serving full screen immersive video ads.

Speaker 5: so it makes sense to invest there. And then finally, the connected TV space, very similar to what we do today. We are serving full-screen immersive video advertisements on mobile devices and extending that in the performance models to TV.

Ties minutes on mobile devices, and extending that and the performance models. The T V.

As a new and fast growing digital access point for content feels like a natural extension for our of our platform. All of these are covered in the guidance that we've given you in terms of cost.

Speaker 5: as a new and fast-growing digital access point for content feels like a natural extension of our platform.

Speaker 5: All of these are covered in the guidance that we've given you in terms of cost.

Speaker 5: if any of them hit and frankly hitting on a new business is always hard, but these are so related to what we do, that if any of them hit it dramatically widens and expands our market opportunity and growth opportunities for years to come and that's why we're investing there. Thank you.

Any of them hit in and frankly hitting on our new business is always hard but these are so related to what we do and if any of them hit it dramatically widened.

And it expands our market opportunity and growth opportunities for years to come and that's why we're investing there.

Thank you.

Yeah.

Our next question is from Tim Nolan.

With Macquarie. Please proceed.

Hi, everyone. Thanks, very much I'd like to ask about the kind of components of the software platform growth. If I could so you know you had very very very strong growth, especially in Q2, and Q3 and really kind of building up from axon you know rolling on to the to the to be a contributor to that sort of a starting you know a year ago, which is.

Speaker 6: Hi everyone, thanks very much. I'd like to ask about the components of the software platform growth, if I could. So, you had very, very, very strong growth, especially in Q2 and Q3, and really kind of building up from Axon rolling on to be a contributor to that service starting a year ago, which, as you mentioned, you've now lapped against.

You mentioned, you've now lapped against so not surprising that that rate of growth has slowed from the super high rates in Q2, and Q3 I'm. Just wondering in Q4, if you can give us an idea of like what wasn't organic versus an exxon related figure if that's possible to do and then looking ahead to the 'twenty two guidance a nice big number there is it possible to give us an update on what the mole type contribution would be to that versus.

Speaker 6: So not surprising that that rate of growth has slowed from those super high rates in Q2 and Q3. I'm just wondering in Q4 if you can give us an idea of like what was an organic versus an axon related figure, if that's possible to do? And then looking ahead to the 22 guidance, nice big number there. Is it possible to give us an update on what the MoPub contribution would be to that versus any axon versus any other element?

Is any axon versus any other any other elements.

Okay.

Hey, Dan on the first part Oh do you want to.

Speaker 5: On the first part, our software business is pretty much all organic. Really, Adjust was the only material acquisition we've had before we announced closing MoPub in January . And in Q4, we saw 27% quarter-over-quarter growth.

First part Harold Yarns I've been on the site. So on the first part our software business is it pretty much all organic really adjust was the only material acquisition, we'd had before we announce closing Moe pub in January and in Q4, we saw a 27% quarter over quarter growth.

Speaker 5: Obviously, the numbers are getting bigger each quarter, and yet the quarter-over-quarter growth is much higher than anything anyone sees in the industry on the software side, and it's kept up. And what we're seeing, even though Axon's maturing, and we left the prior year's numbers with Axon, is that advertisers who are using our solution are investing more dollars every single quarter.

Obviously, the numbers are getting bigger each quarter and yet the quarter over quarter growth is much higher than anything anyone sees in the industry on the software side and has kept up and what we're seeing even though axons maturing and we lap the prior year's numbers with axon is that advertisers who are using our solution are investing.

More dollars every single quarter.

So the platform because of the data builds and they can validate that the performance results are very strong they want more and more of it and that's why you saw a huge step up in dollars perspective in the quarter and we expect to continue to see axon improve over time, because these machine learning systems as they get more data in there.

Speaker 5: into the platform, because as data builds and they can validate that the performance results are very strong, they want more of it. And that's why you saw a huge step up in dollars per spec in the quarter. And we expect to continue to see Axon improve over time because these machine learning systems, as they get more data and they get more scale, benefit from that and become more and more accurate on behalf of the customers that are using it.

Got more scale benefit from that and become more and more accurate on behalf of the customers that are using it going forward more pub presents an opportunity for for continued expansion more access to demand and then obviously a large expansion of access to audience on a marketing platform Max and most of it is the as.

Speaker 5: Going forward, MoPub presents an opportunity for continued expansion, more access to demand, and then obviously a large expansion of access to audience on our marketing platform Max. And MoPub as of last year had a very strong year.

Last year had a very strong year.

And then coming into January was doing very well, but it is going to be completely rolled in to our solution. We're gonna take those demand partners. The D. S p's and advertisers that were buying through remote pub to gain access to the mobile audience and we're integrating them into our Max solution to give them direct access to the unified offering which is now going to be over twice as big as moca.

Speaker 5: And then coming into January was doing very well, but it is going to be completely rolled into our solution. We are going to take those demand partners, the DSPs, and advertisers that we are buying through MoPub to gain access to the MoPub audience, and we are integrating them into our Max solution to give them direct access to the unified offering which is now going to be over twice as big as MoPub was. So we think that's going to present an opportunity to create revenue growth from that access point for possibly years to come.

So we think that's going to present, an opportunity to create revenue growth from that access point for possibly years to come and we're very optimistic about the <unk> acquisition, because we've seen so little churn as mentioned, 90% plus of all top publishers are migrating over to our platform.

Speaker 5: And we are very optimistic about the acquisition because we've seen so little churn. As mentioned, 90% plus of all top publishers are migrating over to our platform.

I'll hand, it off to Harold for the second part.

Yes, Tim I think a lot of the foundational growth drivers that are mentioned there for 'twenty. Two look we we have a great organic business and you know quarter over quarter from Q3 to Q4, right that was 28% increase.

Speaker 3: Yeah, Tim, I think a lot of the foundational growth drivers Adam mentioned there, you know, for 22, look, we have a great organic business. And, you know, quarter of a quarter from Q3 to Q4, right, that was 28% increase.

Which is all organic right.

Speaker 3: which is all organic, right, that's a pretty big move. Rolling into 22 then, we have the app discovery continue to improve with underlying Axon. We also have Adjust doing well and good SaaS business growing at the rates that we'd hoped.

A pretty big move rolling into 'twenty two than we have you know the App discovery continues to improve with underlying axon. We also have adjust you know doing well and in good SaaS business growing at the rate you know rates that we'd hope.

Speaker 3: As mentioned, it's difficult then to parse out, you know, the impact of MoPub and Max and exactly how that lays out. I know previously we gave a number that the run rate of MoPub.

As mentioned, it's difficult to parse out the impact of Mo pub, and Max and exactly how that lays out I know previously we gave a number that the run rate of of both of them would be in the mid two hundreds by the end of the year, we still remain very confident in that and frankly, probably believe there's upside to that one important note.

Speaker 3: It would be in the mid 200s by the end of the year. We still remain very confident in that. And frankly, probably believe there's upside to that.

Speaker 3: One important note was we did give guidance on that revenue the way we did because it takes time to ramp, as mentioned before, migrate from one mediation platform to another, one to get the publishers to migrate and then to get the demand side to migrate.

We did give guidance on that that revenue the way we did because it takes time to ramp as mentioned before migrate from one mediation platform to another but wanted to get the publishers to migrate and then to get the demand side to migrate and so we're going through that process now as you know.

Speaker 3: And so we're going through that process now, as you know, but the impact of that in terms of the actual revenue booked in the year, therefore, you know, will be less than the 250. It's more of a 250 run rate was the target when we announced the deal. Now that we're well into it, you know, we feel very good about that number as well.

But the impact to that in terms of the actual revenue booked in the year and therefore will be less than the $2 50, its more of a $2 50 run rate was the target when we announced the deal now that we're well into it we feel very good about that number as well so that led us to you know what is I guess not a small range in terms of software targeted at the high end of our 15 at 1.5.

Speaker 3: So that led us to what is, I guess, not a small range in terms of software target at the high end of 15, at 1.5 billion, midpoint just over 1.4 billion.

Billion midpoint, just over $1 4 billion, and then where you can really see the impact overall is the guide to our target of trying to hit the $2 billion number in 'twenty three.

Speaker 3: And then where you can really see the impact overall is the guide to our target of trying to hit the $2 billion number in 23 just goes to the fact that we've got a lot of confidence in putting these things together.

It just goes to the fact that we've got a lot of confidence in putting these things together and then the ecosystem building around that.

Speaker 3: And then the ecosystem building around that should allow us to drive pretty significant growth for this year and that.

It should allow us to drive pretty significant growth for this year and next.

Thanks, and if I could just follow up quickly I think last quarter, you gave us some indication of the adjust contribution to revenues is there a similar type of number you can give us now.

Speaker 6: Thanks and if I could just follow up quickly, I think last quarter you gave us some indication of the adjust contribution to revenues, is there a similar type of number?

Yeah, just when we acquired it was around $100 million and it's growing at a solid double digit rate. We will continue to do that we think for 'twenty two 'twenty three as well.

Speaker 3: Yeah, just when we acquired it, it was around $100 million, and it's growing at a solid double-digit rate. We'll continue to do that, we think, for 2022 and 2023 as well.

Thanks.

Okay.

Our next question is from teaching.

Speaker 1: from Jason Vazniat with Citigroup. Please proceed. Thanks.

<unk> with Citigroup. Please proceed.

Thanks, just one quick question you guys have done so much M&A and been very successful doing it.

I just wonder if you sort of look at the landscape do you feel like most of those sort of acquisitions are behind you and it's now more about investing organically in the assets that you have or.

Or do you think there are other sort of interesting assets that you could you could plug into your existing portfolio.

Hey, Jason it's Adam and thanks for the question. So it three years ago, when we got into gaming, we made it strategic and focused and obviously gaming super fragmented, but it became a strategic to us because we wanted to accumulate content across every single category of gaming. So that we can have that data to feed into the software platform.

Speaker 5: Hey Jason, it's Adam. And thanks for the question. So three years ago when we got into gaming, we made it strategic and focused, and obviously gaming is super fragmented. But it became strategic to us because we wanted to accumulate content across every single category of gaming, so that we can have that data to feed into the software platform and execute on obviously what you are seeing flow out of our numbers today. We've checked the box on gaming. So we've got enough of a gaming business and enough audience and data.

And execute on obviously, what you're seeing flow out of our numbers today, we've checked the box on gaming. So we've got enough of a gaming business and enough audience and data.

The software business can do its thing and obviously as you've seen this year the exceptional growth of the software business proves that there and then in the last year, we announced two materials software acquisitions, which we think strengthened our current offering.

Speaker 5: that the software business can do its thing. And obviously, as you've seen this year, the exceptional growth of the software business proves that.

Speaker 5: And then in the last year, we announced two material software acquisitions which we think strengthen our current offering. And obviously, we're in the middle of integrating those. So that will take us forward on an organic basis for quite some time on current initiatives.

And obviously, we're in the middle of integrating those so that'll take us forward on an organic basis for quite some time on current initiatives and then when we look at new initiatives. What we really think about is is there a possible acquisition to go do to accelerate our ability to extend our platform our audience and our data to something new in those <unk>.

Speaker 5: Then when we look at new initiatives, what we really think about is, is there a possible acquisition to go do to accelerate our ability to extend our platform, our audience, and our data to something new in those categories that I talked about in my script? And then separately, when we look at those new categories, we wonder, should we build? And so that build versus buy decision is always going to be one that's top of mind. But I would say what's strategic for us now is a lot different than what's been strategic for us the last few years as we went through a whole bunch of acquisitions to get that data intact.

<unk> that I talked about in my script, and and then separately when we look at those new categories. We want to make sure we built and so that build versus buy decision is always going to be one that is top of mind, but I would say what strategic for US now is a lot different than what it's been strategic for US. The last few years as we went through a whole bunch of acquisitions to get that.

Data intact.

Speaker 5: to power the software business to become what it has as a market-leading platform.

The power of the software business to become what it has a market leading platform.

Okay. So enough one P data, but maybe something on the NFC or blocking side from an M&A standpoint, that's helpful. Thank you.

Our next question is from Clarke Lampkin with B P. I G. Please proceed.

Speaker 1: Our next question is from Clark Lampin with BTIG, please proceed.

Hi, guys good evening.

Speaker 7: Hi guys, good evening. I've got one on the software business. As we are thinking about software segment performance not only in 22, but years past that in 23 and beyond, can you remind us

I've got one on the software business as well.

Thinking about I guess software segment performance not only in 'twenty, two but you know years past that and trying to think beyond can you remind us.

You may have just answered this at them, but how does the gaming portfolio sort of affect you know software growth in concert with one another to see incremental swing you know, whether it's positive or negative with the gaming business meaningfully impact.

Speaker 7: You may have just answered this, Adam, but how does the gaming portfolio sort of affect software growth in concert with one another? Does the incremental swing...

Speaker 7: whether it's positive or negative with the gaming business, meaningfully impact.

Speaker 7: your ability to continue growing or achieving those out-year targets. And then separately on the margin outlook for 22, excuse me for asking a dense question, but I just want to confirm that the $200 million in migration costs that's associated with MoPub is embedded within that high 20s margin outlook. Is that correct or incorrect?

The ability to continue growing or achieving your targets and then separately on the margin outlook for 'twenty two excuse me for asking that question, but I just wanted to confirm that the $200 million and migration costs. That's associated with ballpark is embedded within that high 20 margin outlook is that correct or incorrect.

Oh, what Harold answer part two maybe first because I think it's quick and then I'll answer part one we've assumed we're gonna add back.

Speaker 5: I'll let Harold answer part two maybe first, because I think it's quick, and then I'll answer part one. We've assumed we're going to add back a substantial part of that $200 million to adjusted EBITDA, and therefore that is excluded in the guidance at the high 20s.

Part of that 200 million to adjusted EBITDA and therefore that is.

Excluded in the guidance at the high Twenty's margins.

Yeah on the first part really what you're asking about is like how important is gaming and gaming growth to the software growth and what really what we knew going in as we built out this machine learning system. As these types of software solutions are built on having really good data and then being able to extend that data into <unk>.

Speaker 5: Yeah, on the first part, really, what you're asking about is like, how important is gaming and gaming growth to the software growth and what really what we knew going in as we built out this machine learning system is.

Speaker 5: These types of software solutions are built on having really good data and then being able to extend that data into predictive lookalikes across the whole audience. And we've got 200 million monthly active users and 2 billion that we see across the platform. And that ratio is working really well for us today.

<unk> of local eggs across the whole audience and we've got 200 million monthly active users and 2 billion that we see across the platform and that ratio is working really well for us today longer term and we've said this repeatedly over the last year, we're not a games company. We're a software company really helping our partners grow and as you look at our software revenue has expanded dramatically.

Speaker 5: Longer term, and we've said this repeatedly over the last year, we are not a games company. We are a software company really helping our partners grow. And as you look at our software revenues, it's expanded dramatically. On the game side, the vast majority of our user acquisition spend which is the core driver of gaming growth is on our own platform.

On the game side, the vast majority of our user acquisition spend which is the core driver of gaming growth is on our own platform, but as we continue to expand our relationships on the software side and.

Speaker 5: But as we continue to expand our relationships on the software side and really get more dollars from –

And really get more dollars from third parties, we're going to take the third part of your reported revenue number and convergent with that T. S. T V number because we expect our software platform to be able to grow much faster than our desire to spend on user acquisition on the games portfolio, because we already have the data that we need to power the software platform.

Speaker 5: We're going to take the third-party reported revenue number and converge it with that TSTV number, because we expect our software platform to be able to grow much faster than our desire to spend on user acquisition on the games portfolio, because we already have the data that we need to power the software platform. So you'll see our focus is going to be to continue

So you'll see our focus is going to be to continue to expand the dollars that third parties are paying us on the software side, whether it's through Max whether it's through the demand side relationships that we're going to inherit through most of them or the vast majority of the revenue the direct relationships with advertisers buying on a performance basis on our platform.

Speaker 5: The dollars that third parties are paying us on the software side whether it's through Max whether it's through the demand side relationships that we're going to inherit through mobile or the vast majority of the revenue the direct relationships with advertisers buying on a performance basis on our platform.

Got it and Adam is there a vertical you know sort of adjacent to do anything that you guys would sort of like to attack you know snacks I guess, we can feel comfortable that we have a solid business and a solid assortment of first party data. There is there is there.

Speaker 7: Adam, is there a vertical sort of adjacent to gaming that you guys would sort of like to attack next, I guess, if you feel comfortable that you have a solid business and a solid first party data there? Is there something that I guess just sort of is at the top of your focus?

Something that I guess, just sort of is at the top of your focus.

Yeah, you know we've talked about this before the nice thing about gaming data is that it expands to other markets and we're seeing non gaming as a fast growth factor in our business and we've seen it over the last year and if you think about the data what data do we collect today what is the first party data well if someone pays $50 in the last week and a game like project makeover.

Speaker 5: We've talked about this before. The nice thing about gaming data is that it expands to other markets. And we are seeing non-gaming as a fast growth factor in our business, and we've seen it over the last year. And if you think about the data, what data do we collect today? What is the first party data? Well, if someone pays $50 in the last week in a game like Project Makeover, that tells you a lot about that person. But they are not only playing Project Makeover, and they are not only playing games.

Tells you a lot about that person, but theyre not only playing project make them rather not only playing games, they're doing a lot more than that they might be in the shopping apps they might be into a fashion designer they might be in their home design out food delivery et cetera, and our systems can figure that out with the datasets that we have so expansion cross vertical to other app category is that something that.

Speaker 5: They are doing a lot more than that. They might be into shopping apps. They might be into a fashion design app. They might be into a home design app, food delivery, etc. And our systems can figure that out with the data sets that we have. So expansion cross vertical to other app categories is something that we've been excited about, we are seeing traction with, and we continue to be excited about going forward.

We've been excited about we're seeing traction with them, we continue to be excited about going forward.

Thank you.

Our next question is from the Sealy Castro with Cannonball Research. Please proceed.

Speaker 1: Our next question is from Vasili Kassarov with Cannibal Research. Please proceed.

Thank you good afternoon, I had a question about the Max and all of the new publishers coming on board. So would it be fair to say that there was some publishes that only use mediation and there are some that use mediation and real time bidding come on it does bake inventory. So my question is number one.

Speaker 8: Thank you. Good afternoon. I had a question about Max and all the new publishers that are coming on board. So would it be fair to say that there are some publishers that only use mediation and there are some that use mediation and real-time bidding?

Speaker 8: to monetize their inventory. So my question is, number one, do you try to steer publishers towards one or the other option?

Do you try to steer publishes towards why might they have the option and if yes or no Y and then my second question is about the take rate I understand that could take you only have the take rate for.

Speaker 8: And if yes or no, why? And then my second question is about the take rate. I understand that you only have the take rate.

For the real time bidding auctions, but how do you.

Speaker 8: for the real-time bidding auctions, but how do you...

See that going forward do you do you expect it to be stable do you think it can go up.

Speaker 8: see that going forward? Do you expect it to be stable? Do you think it can go up? Are you prepared to seek a contraction in there? I would appreciate your feedback.

Are you prepared to seek a contraction in there so.

Appreciate your thoughts on this.

Yeah. So a couple of things embedded in there when we launched Max we did it because we wanted to facilitate real time bidding for the marketplace quicker and we fundamentally we believe that the AD ecosystem should be traded in real time, its no different than a stock trading floor. That's gone programmatic over the last 20 years.

Speaker 5: Yeah, so a couple of things embedded in there. When we launched Mac...

Speaker 5: We did it because we wanted to facilitate real-time bidding to the marketplace quicker. And fundamentally, we believe that the ad ecosystem should be traded in real-time. It's no different than a stock trading floor that's gone programmatic over the last 20 years. And when it becomes real-time, it enables companies with a data advantage and a technology advantage to win their share of inventory and make whatever margins they deserve to make, but it maximizes, truly, the dollars that the publisher earns.

And when it becomes real time and enables companies with a data advantage and a technology advantage to win their share of inventory and make whatever margins they deserve to make but it maximizes truly the dollars that the publisher earns. So today Max is the furthest ahead in the marketplace delivering that real time bidding to the public.

Speaker 5: So today, Max is the furthest ahead in the marketplace, delivering that real-time bidding to the publisher and to the end consumer to get that best ad out there on the device. It is a hybrid solution. It's bidding plus mediation.

Sir and to the end consumer to get that best side out there on the device. It is a hybrid solution that's bidding plus mediation, we got paid one company's bid on Max they pay for a seat on our marketplace. We don't win with mediation. So overtime Max's economics continue to improve now we wanted to facilitate bidding.

Speaker 5: We get paid when companies bid on Max. They pay for a seat on our marketplace. We don't with mediation. So over time, Max's economics continue to improve. Now, we wanted to facilitate bidding.

We are a bidder on Max we'd been a bidder in the marketplace for a couple of years, where we're very good at it obviously you've seen the growth of our software business expand dramatically, but we don't target a specific take rate from any of the ads. We serve we can make a penny on the dollar were making an extra dollar an extra penny of revenue and we're reporting to you.

Speaker 5: We are a bidder on Max. We've been a bidder in the marketplace for a couple of years. We are very good at it. Obviously, you've seen the growth of our software business expand dramatically, but we don't target a specific take rate from any of the ads we serve. If we can make a penny on the dollar, we are making an extra penny of revenue, and we are reporting to you on a net revenue basis. This is one thing that's important to understand.

<unk> on a net revenue basis. So there's one thing that's important to understand when we talk about our revenue this past quarter or even we're talking about $2 billion of software revenue in 'twenty. Three that's net revenue reported software revenue. So its exceptionally high margin and the cost to the publisher have already been taken out of the dollars that the advertiser.

Speaker 5: quarter, or even we're talking about $2 billion of software revenue in 23, that's net revenue reported software revenue, so it's exceptionally high margin.

Speaker 5: The costs to the publisher have already been taken out of the dollars that the advertiser passed.

Pat.

So really any sort of constriction on take rate doesn't impact at all what we're going to report to you because we're not operating afraid of that.

Speaker 5: So really, any sort of constriction on take rate doesn't impact at all what we're gonna report to you because we're not operating afraid of that today and we're seeing continued growth in that software business and we're very confident about the continued growth of it going into 22 and 23.

Today, and we're seeing continued growth in our software business and we're very confident about the continued growth of it going into 'twenty, two and 'twenty three.

Yeah.

Our next question is from Ralph <unk> with William Blair. Please proceed.

Speaker 1: Our next question is from Ralph Sheckler with William Blair.

Hi, Thanks for taking the question on the upside of the business as it relates to the 2022 guide up I think to your point to 2.35 billion of Rob's talked about modest revenue contribution from new content and I think more so contribution second half of the year, but any color you could add or help us think about how the relative growth rate of the can.

Speaker 2: Hi, thanks for taking the question on the outside of the business as it relates to the 2022 guide of I think 2.2 to 2.3, 5 billion.

Speaker 2: We talked about modest revenue contribution from new content, and I think more so contribution second half of the year. But any color you could add or help us think about how the relative growth rate of consumer apps might compare or differ versus the business apps, you know, was the conservatism more on the consumer side, or was it more about the revenue side?

Zimmer apps.

Compare different versus the business apps, you know, what's the conservatism on the consumer side or was it more broad based.

Yeah. So we were Oh go ahead, Harold do you want to jump in and say.

Speaker 5: Go ahead, Harold. Do you want to jump in? Go ahead, Adam. Go ahead.

Uh huh.

I was going to say like we don't operate the games as business apps or consumer apps, they're just games and apps and they monetize with IAP plus ads. So a lot of these these products are hybrid there, they're making money from advertisement to users and then some users will pay within the games for content as well fundamentally though like again.

Speaker 5: I was going to say, we don't operate the games as business apps or consumer apps. They're just games and apps, and they monetize with IAP plus ads.

Speaker 5: So a lot of these products are hybrid. They are making money from advertisement to users, and then some users will pay within the games for content as well. Fundamentally though, like again, we've said this a lot of times,

We we've said there's a lot of times, we're not a games company the games serve a purpose for us in our business, we've gotten them to scale 2 billion dollar plus business, which is great. More importantly, we're getting data first party on 200 million monthly active users and the games and growth in the games are driven strictly by what we're spending on user acquisition.

Speaker 5: The games serve a purpose for us in our business. We've gotten them to scale, $2 billion plus business, which is great. More importantly, we're getting data first party on 200 million monthly active users.

Speaker 5: And the games and growth in the games are driven strictly by what we are spending on user acquisition. That's what drives mobile gaming businesses outside of acquisitions and M&A which we haven't done recently in the games business, and are less inclined to do so now that we have the data that we needed.

That's what drives mobile gaming businesses outside of of acquisitions, and M&A, which we havent done recently in the games business and are less inclined to do so now that we have the data that we needed. So do you think about what matters to us in our business. We're talking about software software growth one of the fastest growing software businesses on the face of the planet today scaling this business to a couple of billion.

Speaker 5: So as you think about what matters to us in our business, we're talking about software, software growth.

Speaker 5: We're one of the fastest-growing software businesses on the face of the planet today, scaling this business to a couple billion dollars next year. And that's important because...

Next year and that's important because today, we report to you that T. S. T V number which is a lot bigger than the software. Our reported revenue would give you that delta is a spend for own games on our own platform well as our software business goes from where it is and we talked coming into this year at a $1 billion projected for this year, we just re.

Speaker 5: Today we report to you that TSTV number which is a lot bigger than the software reported revenue we give you. That delta is the spend for our own games on our own platform.

Speaker 5: Well, as our software business goes from where it is, and we talked coming into this year, a billion dollars projected for this year. We just raised that up 40%. And we are now talking about $2 billion next year. As that continues to grow, that's all going to be dollars from third parties. We are not going to be able to double the amount that we are spending on our current games, because they just don't justify that kind of expansion.

Is that up 40% and are now talking about 2 billion next year as that continues to grow that's all going to be dollars from third parties, we're not gonna be able to double the amount that we're spending on our current games because they just don't justify that kind of expansion and so you'll see the third party number it converge would that T. S. T. V. Number then that gives us a lot.

Speaker 5: And so you'll see the third-party number converge with that TSTV number. And that gives us a lot of room to grow the dollars we are collecting, and the margin that we are able to make from the business, while focusing on what we care about which is software, not necessarily the games part of our business.

A room to grow the dollars we're collecting in the margin that we're able to make from the business wildfowl guessing on what we care about which is software not necessarily the games as part of our business.

Great. That's helpful. Thanks Al.

Okay.

Our next question is from David Pang with T phone. Please proceed.

Speaker 1: Our next question is from David Pang with Cecil. Please proceed. Great. Thanks, everyone.

Hey, Thanks, everyone. Just wanted to follow up on the in that bidding question could you talk about what portion of the AD transactions on Max was in that bidding and how should we think about that mix changing over the next few years with the addition of mop up thanks.

Speaker 9: talk about what portion of the ad transactions.

Speaker 9: in that bidding and how should we think about that mixed change?

Yeah. So in the past obviously, a couple of years ago. When we launched that to the market had no bidding where you've gotten max to probably half bidding at this point.

Speaker 5: Yeah. So in the past, obviously, a couple of years ago, when we launched Max, the market had no bidding. We've gotten Max to probably half bidding at this point. And we expect by the end of the year, the vast majority will be bid real time.

And we expect by the end of the year the vast majority will be bad real time.

Speaker 5: Mopub allows us to access Mopub demand, which is more of exchange-based demand. Real-time bidding takes two forms. One is from header bidding networks. These are companies.

Pub allows us to access more pump demand.

Which is more of a exchange base demand real time bidding is it takes two forms one is from header bidding networks. These.

These are companies such as ourselves.

I'm a Facebook was one of the first adopters of bidding so think the platforms with SD case, and then there's another aspect to the market, which is demand side platforms or D. S piece, they plug into exchanges to use someone else's SDK to access the audience and been in real time as well with no pub, we're unifying the.

Speaker 5: Facebook was one of the first adopters of bidding, so think the platforms with SDKs.

Speaker 5: And then there's another aspect of the market which is demand-side platforms or DSPs. They plug into exchange

The demand side bidders that are our AD networks traditionally thought of.

As well as the DSP into one unified marketplace, one unified real time auction and so bringing those D. S. P lives through our access point to this massive audience on Max plus mope hub is what we're excited about that drove most pubs revenue. The platform itself unified is over twice as big as most of it ever was and so that gives us a lot of <unk>.

Speaker 5: DSPs into one unified marketplace, one unified real-time auction. And so bringing those DSPs live through our access point to this massive audience on Max plus MoPub is what we're excited about. That drove MoPub's revenue. The platform itself, Unified, is over twice as big as MoPub ever was. And so that gives us a lot of access to growth in these demand side partnerships as they come online. Our next question is from Martin Yang with...

Access to growth and these demand side partnerships as they come on line.

Okay.

Our next question is from Martin Yang with Oppenheimer and company. Please proceed.

Speaker 1: Our next question is from Martin Yang with Oppenheimer and Company. Please proceed.

Oh Hi, Thank you for taking my question first question is on your natural extension on the knee and initiatives can you clarify are you.

Speaker 10: The first question is on your natural extension on the initiatives. Can you clarify, are you providing software solutions to the non-gaming apps, or are you thinking about publishing non-gaming apps?

Providing software solutions to the non gaming apps or are you thinking about publishing no.

No gaming apps yourself or both.

But I don't think we spoke about non gaming ops. We're we're focused on building software platform technologies for these bigger markets.

Speaker 5: I don't think we spoke about non-gaming apps. We're focused on building software platform technologies for these bigger markets.

Speaker 5: Connected TV is obviously one. We think performance marketing and an extension of our current demand and data into the connected TV world can be very impactful. When it comes to blockchain and NFTs, both for gaming and non-gaming, if we can help facilitate the ability for users to engage with content and really take ownership over that content through our software platform and our relationships.

Connected television is obviously, one we think performance marketing and an extension of our current demand in data into the connected TV world can be very impactful when it comes to blockchain and Ftes both for gaming and non gaming. If we can help facilitate the ability for users to engage with content and <unk>.

Take ownership over that content through our software platform and our relationships. We think we can expand the monetization opportunity in mobile apps, which is very impactful for all of our partners and ourselves.

Speaker 5: We think we can expand the modernization opportunity in mobile apps which is very impactful for all of our partners in our –

And then lastly, we talked about taking our marketing solutions machine learning of demand and enabling carriers and device manufacturers to generate more from the handsets that they sell to the consumer by doing partnerships with our platform and so those are the three big areas that we're really focused on all software centric.

Speaker 5: And then lastly, we talked about taking our marketing solutions, machine learning, and demand, and enabling carriers and device manufacturers to generate more from the handsets that they sell to the consumer by doing partnerships with our platform. So those are the three big areas that we are really focused on at AllSoftwareCenter.

So my question is really referring back to your comment on checking the box on gaming.

Speaker 10: So, my question is really referring back to your comment on checking the box on gaming, but there are still pretty substantial in-app marketing and advertising opportunities in

But.

There are still pretty substantial in gay app.

Marketing and advertising opportunities in non gaming apps. So would you do something similar.

Speaker 10: So would you do something similar to obtain first party data from non-gaming apps if you orient your software solution to other publishers?

For her to obtain the first party data from dunking apps, if you Orient yourself, our solution to other publishers, either not knocking off game publishers.

Oh I got you I think the answer is no for the reason I gave you before which is we've got so much first party data now when you know someone paid the $50 in project make over you know a lot of things about them and one of those things you know for certain just just conceptually. We know is human beings that person doesn't only play a project make over 24 hours a day they do a lot of other things.

Speaker 5: Oh, I got you. I think the answer is no for the reason I gave you before which is we've got so much first-party data now. When you know someone paid the $50 in project makeover, you know a lot of things about them.

Speaker 5: And one of those things you know for certain, just conceptually we know as human beings, that person doesn't only play Project Makeover 24 hours a day. They do a lot of other things. If they've got $200 a month to spend in a fashion design game, they are probably spending a lot of money on fashion, e-commerce apps.

If they've got $200 a month to play it spend in a fashion design game, they're probably spending a lot of money on fashion E Commerce apps food delivery ops rideshare apps, a whole bunch of other things that had to the households tender in Boston and the machine learning can figure that out and enable non gaming companies to market through our platform to and we've talked about the cat.

Speaker 5: food delivery apps, ride share apps, a whole bunch of other things that heads of households tend to invest in. And the machine learning can figure that out and enable non-gaming companies to market through our platform too. And we've talked about the category as being a fast-growing category. It's still not a big part of our business, so we don't talk about it broken out.

Corey as being a fast growing category, it's still not a big part of our business. So we don't talk about it broken out.

But it's an area that we're excited about because we've already seen success in the other part of that that's important is a lot of the non gaming spend that happens in mobile and then just on digital in general It comes from demand side platforms, but the big demand side platforms, Omnichannel, where agencies will spend dollars through are not an area that we had any exposure to them.

Speaker 5: but it's an area that we're excited about because we've already seen success in. The other part of that that's important is a lot of the non-gaming spend that happens in mobile and then just on digital in general comes from demand-side platforms.

Speaker 5: The big demand-side platforms, Omnichannel, where agencies will spend dollars through, are not an area that we had any exposure to in our business prior to MoPub. As we integrate these MoPub partnerships into our unified offering and give them access to over twice as much of the eyeballs,

Business prior to mope hub as we integrate these mopar partnerships into our unified offering and give them access to over twice as much of the eyeballs, where we expect to see a lot of dollars flow through our platform direct to the consumer from those types of advertisers as well, which would qualify as non game.

Speaker 5: We expect to see a lot of dollars flow through our platform direct to the consumer from those types of advertisers as well, which would qualify as not game. Got it.

Got it.

Another but just two questions. If I may is there any migration piece you would expect after 122.

Speaker 10: if I may, is there any migration fees you expect after 1Q22?

No we really like our business long term may have some sort of nominal migration fees, we've had them in a nominal way in the past the big amount in the quarter is specifically for most part publishers switching off of a platform that is just going to go offline one of the big issues of the platform that goes offline, which really.

Speaker 5: No, really, like, look, our business long term may have some sort of nominal migration fees. We've had them in a nominal way in the past. The big amount in the quarter is specifically for MoPub publishers.

Speaker 5: switching off of a platform that is just going to go offline. One of the big issues of the platform that goes offline which really doesn't happen, this is a decade old software platform, is that in the mobile app ecosystem you can either update an app or not update an app. And a lot of old devices are set not to update. And so a lot of these publishers stand to lose.

It doesn't happen. This is a a decade old software platform is that in the mobile app ecosystem, you can either updating up or not updated not and a lot of old devices are setting out to update and so a lot of these publishers stand to lose an annuity value of revenue on users that chose not to update and then most of it was gonna go offline so they're no longer going.

Speaker 5: an annuity value of revenue on users that choose not to update, and then MoPub is going to go offline. So they are no longer going to be able to advertise to those customers, and you just cross off a stream of revenue.

To be able to advertise to those customers and you're just cross off a stream of revenue and so we're taking this fund to make that not a problem for these publishers because ultimately we looked at the mobile.

Speaker 5: And so we are taking this fund to make that not a problem for these publishers because ultimately, we looked at the MoPub deal. It's access to publishers and the demand side. It was a very cost effective deal for us, but we didn't want the publishers to lose in the middle of that transaction. So we are covering the cost of that loss of annuity due to the quick shutdown of this platform. And that ends up being a very unique case related to this acquisition which is something you just don't tend to see in technology where a huge platform goes offline.

Access to publishers and the demand side. It was a very cost effective deal for us, but we didn't want the publishers to lose in the middle of that transaction. So we're covering the cost of that lost annuity do the quick shutdown of this platform and that ended up being a very unique case related to this acquisition, which is something you just don't tend to see.

And technology, where a huge platform goes offline.

Got it thank you.

Yes.

Our next question is from Matthew.

Speaker 1: from Mass.

Please proceed.

Hi, everyone. Thanks for taking the question maybe the first one is for you Adam.

Speaker 11: Hi everyone, thanks for taking the question. Maybe the first one is for you Adam. You've mentioned a couple of times basically, if I'm interpreting it correctly, this idea of once you have the data in place and you feed it into Axon, there's a lot that you can do with it. So I guess I just want to understand, does that mean that when you reach a certain audience size in terms of your portfolio of apps that that yields enough data on an ongoing basis that you can do what you need to do with it

You've mentioned a couple of times basically if I'm interpreting you correctly. This idea of once you have the data in place and you feed it into axon. There. There's a lot that you can do with it and so again I just want understand does that mean that when you reach a certain audience side in terms of your portfolio audience size in terms of your portfolio of apps that.

Yields enough data on an ongoing basis that you can do what you need to do with it you don't need to keep scaling the app portfolio beyond a certain point cause you maintain $200 million and they use and have all the data that you need I guess, what do you mean by that and then I have a follow up.

Speaker 11: scaling the app portfolio beyond a certain point, could you maintain 200 million MAUs and have all the data that you need? I guess, what do you mean by that?

Yeah, that's 100% right. That's why we've been talking about for the last year like the games business may grow it may not grow it doesn't matter because it's scaled enough where it's fueling the massive growth in the software business and so you sort of have today, 10% actual data what we have perfect data on their own apps and then 90% is pre.

Speaker 5: Yeah, that's 100% right. That's why we've been talking about for the last year, like the games business may grow. It may not grow. It doesn't matter because it's scaled enough where it's fueling the massive growth in the software business. And so you sort of have today 10% actual data, what we have perfect data on our own apps, and then 90% is predicted look-alike.

Addicted local eggs being at a scale that we're at today with the technologies and data platform and machine learning and algorithms that we've built you you're obviously seeing a software platform that's growing much much faster than any other platform in our industry and so you can tell that that tenant to the tax ratio of.

Speaker 5: Being at a scale that we're at today with the technologies and data platform and machine learning and algorithms that we built, you're obviously seeing a software platform that's growing much, much faster than any other platform in our industry. And so you can tell that that 10x ratio of lookalikes to actual data works.

Local likes to actual data works now if we can get data on 2 billion mobile devices, we would take it actual data is always better than local eggs, but we know that it's exceptionally hard to go scale a platform to get that much direct first party data there. There's maybe only one company in the history of the world that's gotten that much scale to consumers right, but we.

Speaker 5: data on 2 billion mobile devices, we would take it. Actual data is always better than look-alikes, but we know that it's exceptionally hard to go scale a platform to get that much direct first-party data. There's maybe only one company in the history of the world that's gotten that much scale to consumers, right? But we've proven that at $200 million, we're very, very good on the software side, so we're excited with where we're at on the data side of this.

We've proven that a $200 million, we're very very good on the software side. So we're excited with where we're at on the data side of this business.

Great. Thank you and then maybe this one for Harold I'm, just thinking about like the growth in stacks over the course of this year I think excluding adjust you guys added around 40, plus a little over $40 million or sorry, not 40 million 40, specs and QQ and <unk> and I think that that number if I have it right was about.

Speaker 11: Great, thank you. And maybe this one is for Harold. Just thinking about the growth in specs over the course of this year, I think excluding Adjust, you guys added around 40 plus, a little over 40 million, or sorry, not 40 million, 40 specs in 2Q and 3Q. And I think that number, if I have it right, was about 7 in 4Q. So I guess again, excluding Adjust, what are kind of the dynamics behind spec ads over the course of this year?

And for Keith I guess again, excluding adjust what are kind of the dynamics behind that adds over the course of this year.

Yeah, Thanks, Matt for the questions.

Yeah again, the software business as you know has grown tremendously over the course of the year and we're projecting it to continue to do that and you know when we gave the spec number to try to give a little more granularity into the Bill you know price volume wise.

Speaker 3: Yeah, again, the software business, as you know, has grown tremendously over the course of the year, and we're projecting it to continue to do that. And we gave a spec number to try to give a little more granularity into the build, price volume-wise. And of course, it's grown considerably, price volume, more in the fourth quarter in terms of people scaling quite rapidly, particular X Adjust to $757,000. Yeah. Yeah.

What aspects and of course, it's grown considerably you know price volume more in the fourth quarter in terms of people scaling quite rapidly particular X adjust to southern and $57000 in.

In the quarter, so a pretty significant amount of money of increase but what what was slower and that paired with the actual spec count and that's really due to the fact that in the third quarter. We were we added a lot of specs that were testing and whatnot and didn't add as many of those in the fourth quarter.

Speaker 3: in the quarter, so a pretty significant amount of money of increase.

Speaker 3: What was slower in that period was the actual spec count. And that's really due to the fact that in the third quarter we added a lot of specs that were testing and whatnot, and didn't add as many of those in the fourth quarter. So we still feel very good about the customer growth, obviously with all the migrating customers from MoPub. Again, it'll be hard to

So we still feel very good about the customer growth, obviously with all the migrating customers from O pub again, it'll be hard to distinguish you know who's who's a max customer, whose mobile customer because it's all going to be Max customers. We're highly confident in the software line growing and therefore, you know price quantity has to follow that.

Speaker 3: distinguish who's a Max customer, who's a MoPub customer, because it's all going to be Max customers. We're highly confident in the software line growing, and therefore, price quantity has to follow that.

One footnote to that and it is in our letter but didn't want to highlight it just wanted to keep things clear for this week.

Speaker 3: One footnote to that, and it is in our letter, but didn't want to highlight it, just wanted to keep things clear for this. In our letter on the upfront side, we kept the spec numbers the same.

Our letter on the upfront side, we kept a spec numbers. The same one very detailed point as our spec definition was based on a run rate per quarter.

Speaker 3: One very detailed point is our spec definition was based on a run rate per quarter. They had to get to $125,000 of run rate in the quarter.

But they had to get to $125000 of run rate in the quarter.

Going forward, we'll continue to report that metric for a little bit, but we're really going to focus more on an LTM basis to have $125000 of revenue. The reason I point that out is that'll get rid of some of the volatility there.

Speaker 3: Going forward, we'll continue to report that metric for a little bit. But we're really gonna go focus more on an LTM basis to have $125,000 of revenue. The reason I point that out is that'll get rid of some of the volatility that is inherent if you use just a quarterly run rate number of specs coming and going. And given the scale of the customers we're talking about, we think that'll be a much, much better metric going forward.

That is inherent if you use just a quarterly run rate number of specs coming and going and given the scale of the customers. We're talking about we think that'll be a much much better metric going forward.

Great. Thank you.

Our next question is from Omar Saad ski with Bank of America. Please proceed.

Speaker 1: Our next question is from Omar Dasowsky with Bank of America. Please.

Alright, thank you.

Speaker 12: Thank you. How would the Open App Markets Act, as currently written, affect your business strategically? And are you playing any role, direct or indirect, in how the law is being?

How would the open App markets Act as currently written affect your business strategically and are you playing any role direct or indirect and how the laws being written.

I will be honest I'm reading up on what the law is right now can you give us a little insight into specifically, what you're talking about and then I'll answer it.

Speaker 5: I will be honest, I'm reading up on what the law is right now. Can you give us a little insight into specifically what you're talking about and then I'll answer it?

Yeah. So you know I think it's it's pretty well known that Ah <unk>.

Speaker 12: Yes, so you know, I think it's it's pretty well known that

Major players.

Speaker 12: Major players that own platforms are able to advantage themselves in certain ways or at least that's the view of some market participants and it appears that legal interests are potentially going to try to make it a more.

That own platforms are able to advantage themselves are in certain ways or at least that's the view of some market participants.

And you know it appears that our legal.

Interests are.

Potentially going to try to make it a more competitive industry and.

I'm just wondering you know what you guys think about and you know how it might reshuffle, the potentially the attribution ecosystem or or the.

Speaker 12: I'm just wondering what you guys think of that and how it might reshuffle potentially the attribution ecosystem or the...

Speaker 12: the actual targeting ecosystem itself in your favor or not.

Targeting ecosystem itself in your favor or not.

Got it yeah and this is you're talking about like the actual operating systems, the App store tax and any other rule changes they make that they could be seen as benefiting themselves.

Speaker 5: Got it. This is you're talking about like the the actual operating systems the app store tax and any other Rule changes they make that they could be seen as benefiting themselves. This is what you're talking about

You're talking about.

Ah yes.

Speaker 13: Yeah, yeah, so so the app store app store fees obviously they're not going up and

Yeah.

So the App store App store fees, obviously, they are all going up and that's it.

I think a lot of people are hopeful that alternatives can be introduced or the actual tax for me afterwards goes down overall, where we're in a good position because one our Ams business is paying a hefty amount in the 30% every single year, but more importantly, these types of added competition to a marketplace make the pricing that goes.

Speaker 5: I think a lot of people are hopeful that alternatives can be introduced or the actual tax from the app stores goes down. Overall, we are in a good position because one, our apps business is paying a hefty amount in the 30% every single year. But more importantly, these types of –

Speaker 5: added competition to a marketplace, make the pricing that goes to the end developer.

Through the end developer stronger and so if that happens you sort of take the dollar becomes 70 cents today and say tomorrow. It becomes 85 cents, that's 20% more L. T V that advertisers can go spend on a platform like ours. So that would just immediately mean in the competitive marketplace like ours that you'd see a step function up.

Speaker 5: Stronger and so if that happens you sort of take if a dollar becomes 70 cents today and say in tomorrow becomes 85 cents. That's 20% more LTV that advertisers can go spend on a platform like ours. So you that would just immediately mean in the competitive marketplace like ours that you see a step function up.

In terms of the dollars that companies are willing to spend to go acquire new users because they have those kinds of economics that they get in their favor when it comes to other rule changes on the platforms do provide an immense amount of value. So we operate within the rules of the platforms and we can't predict where they go but competition is always good for the Zika.

Speaker 5: in terms of the dollars that companies are willing to spend to go acquire new users.

Speaker 5: because they have those kinds of economics that they get in their favor. When it comes to other rule changes, the platforms do provide an immense amount of value. So we operate within the rules of the platforms, and we can't predict where they go. The competition is always good for these ecosystems. And I think when we look at this, we know that we are one of the leaders in the market on the app side, and we are undoubtedly the largest advertising platform outside of the Facebooks and the Googles on mobile today that exist independently.

<unk> systems and <unk>.

I think when we look at this we know that we're one of the leaders in the market on the upside.

And we're undoubtedly the largest advertising platform outside of the the Facebooks and the googles on mobile today that exists independent and so we're set up really well to benefit from some of the disintermediation that might happen added competition and better economics for the content creators.

Speaker 5: And so we're set up really well to benefit from some of this disintermediation that might happen, added competition, and better economics for the content creator.

Our final question is from Frank a.

Speaker 1: Our final question is from Franco Grundo with D.A. Davidson.

Granda with D. A Davidson. Please proceed.

Hi, everyone just a yeah. Thanks, thanks for taking my questions here.

Speaker 9: Hi, everyone. Thanks for taking my questions here. Just following up on an early question, I was hoping you could speak about your progress in non-gaming revenues on your software platform. What was the growth rate of non-gaming revenues in 2021? And then, now that MoPub has closed and you're integrating it, what does that mix look like?

Just following up on an earlier question I was hoping you could speak about your progress in non gaming revenues in your software platform.

What's the growth rate of non gaming revenues in Q1, and then now that most of them has closed and you're integrating it what does that mix look like.

Yes, so that's not something that we break out yet, but I'll say really the the area. That's a big opportunity is both that direct app market are on our platform getting access to more of them through the adjust sales force, bringing more not giving customers into our ecosystem as we've touched on but more importantly, its something we havent talked on that I referenced earlier.

Speaker 5: Yeah, so that's not something that we break out yet, but I'll say really the area that's a big opportunity is

Speaker 5: both that direct app marketer on our platform, getting access to more of them through the JustSalesforce, bringing more non-gaming customers into our ecosystem as we've touched on. But more importantly, something we haven't talked on that I referenced earlier is you end up with these omni-channel DSPs, TradeDesk obviously being a famous one, but there's very big companies here that route non-gaming demand, specifically agency and brand dollars into mobile applications.

Is you end up with these Omnichannel D. S piece trade desk, obviously being a famous one but there's very big companies here.

That route non gaming demand, specifically agency and brand dollars into mobile applications with.

With the Max plus no pub unified platform, we've got the biggest supply side platform that the mobile app ecosystem has ever seen and one place where the where the but the direct access to the consumer and these agencies and as Omnichannel D. S. Peas are really going through this this shift in mindset to try to optimize supply.

Speaker 5: With the Max Plus MoPub Unified platform, we've got the biggest...

Speaker 5: supply-side platform that the mobile app ecosystem has ever seen in one place. We're the direct access to the consumer.

Speaker 5: And these agencies and those omni-channel DSPs are really going through this shift and mindset to try to optimize supply path so that they get direct to the consumer. Well, they are going to be able to do it through our platform at massive amounts of scale now as they go and integrate into the Max marketplace directly through us. And we think that's going to facilitate a lot of dollars in non-gaming to move into our ecosystem which will be to the benefit of our publishing partners, but also to the benefit of us as the trading partners.

Ipass so they go direct to the consumer while they're gonna be able to do it through our platform at massive amounts of scale now.

They go and integrate into the Max marketplace directly through us and we think that's going to facilitate a lot of dollars in non gaming to move into our ecosystem, which will be to the benefit of our publishing partners, but also to the benefit of us as the trading floor.

Alright, Thanks, Adam and then as it relates to some of the new opportunities in the software side that you talked about such as in Ftes and C. T V.

Speaker 9: Thanks, Adam. As it relates to some of the new opportunities in the software side, that you talked about, such as NFTs and CTV, I was curious about your approach there. Are you approaching talent from the respective industries or are you moving resources from within the company to help you build out those strategies?

I was curious about your approach there are you pushing challenge from there.

Respective industries or are you moving resources from within the company to help you go back and strategies.

Yeah, I mean look when we look at our new business, where we're actually like all of our core team has been here for since we started the business a decade ago and so we're very entrepreneurial and the best New business. There's always start with a few people that put together an idea and if it sticks and it hits. It can it can really expand now that's a traditional startup.

Speaker 5: Yeah, I mean, look, when we look at a new business, we're actually all of our core team has been here for since we started the business a decade ago. And so we're very entrepreneurial. And the best new businesses always start with a few people that put together an idea, and if it sticks and it hits.

Speaker 5: it can really expand. Now that's a traditional startup. We have advantages with our scale data platform, our algorithms, and the demand access and data access that we have. And so we picked categories where our relationships and our technologies will give us an advantage to Head Start.

We have advantages with our scaled data platform, our algorithms and the demand access and data access that we have and so we picked the categories, where our relationships and our technologies will give us an advantaged headstart, where entrepreneurial. So we're building a lot of the core technologies ourselves, but we will look to buy a potentially if it makes sense. We'll also look.

Speaker 5: We're entrepreneurial, so we're building a lot of the core technologies ourselves.

Speaker 5: But we will look to buy potentially, if it makes sense. We'll also look to staff from the outside in. And in particular, with a couple of these businesses, we brought people.

Pissed off from the outside and and in particular with a couple of these businesses. We brought people from the outside to come in and run these businesses for us to give us even more confidence in executing them over the coming years.

Speaker 5: from the outside to come in and run these businesses for us to give us even more confidence in executing them over the coming years.

Alright, thank you.

This does conclude our conference.

Speaker 1: This does conclude our conference. Thank you for your participation. You may disconnect your lines at this time. Thanks, everyone.

You for your participation you may disconnect your lines at this time.

Okay.

Thanks, everyone.

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Yeah.

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Okay.

Right.

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Speaker 14: M.

Yeah.

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