Q4 2022 Applovin Corp Earnings Call
We will give the first quarterly guidance one quarter out we are very much focused on the long term and won't manage to near term targets.
Turning to the financials quickly and I won't reiterate all the facts and data that's in the shareholder letter, but I will highlight a few key things first of all the fourth quarter came in at the high end both on the topline and bottom line for where we guided to in the third quarter for the fourth quarter included in that was software platform performance, which grew 24% year.
Over here.
For the entire year 'twenty two we came in at $2 $8 billion of revenue and generated over $1 billion of EBITDA and that equates to a 38% margin.
Then for the first quarter of this coming year, we're guiding to essentially the quarter being flat to the fourth quarter and total revenue as well as total EBITDA.
One note for the next quarter as we are going to change and simplify some of our <unk>.
Kpis that we're reporting in particular with regard to the software platform side of the equation. We believe several of the metrics that we've been offering are a bit confusing and really are not indicative or helpful to understanding our business, but that's because it's software platform apps.
Applications and solutions have become much broader the size of the customers are different as well, so having a singular metric like spec and revenue perspective aren't terribly helpful. So we'll be taking away those two metrics as well as the <unk> TV metric going forward.
Where we do want to focus on the metrics that are meaningful in our biggest business in software platform is the App discovery business plus <unk> and there is a metric that we've been reporting historically will report going forward, but we do think is important.
That's around our revenue per install and the number of installs and we will continue to report those metrics going forward in.
In 'twenty two over 'twenty, one that metric increased 46% in terms of revenue per install for Alex in App discovery and an increase in terms of the number of installs by 24%.
We would.
Guide you to make sure you're focused on those metrics going forward and of course, we will continue to evaluate what are the best metrics to describe our business going forward as other components of our software business grow over time.
In terms of the overall.
Financial performance of our business, we are glad that we had $1 billion of EBITDA and we have now over $1 billion of cash we are very focused on free cash flow as well and you'll see in our shareholder letter we've added a new table. When we've given you. The eight eight trailing quarters of free cash flow performance, we had 260 million of EBITDA in the fourth.
Quarter, and 132 of free cash flow, our definition of free cash flow.
The free cash flow from operations less capex and less finance leases. So we think that's a great indicator of not just EBITDA, but actual free cash flow to the bottom line, which for which we're proud of.
Our financial.
Our financial position allows us to have this resiliency.
And our business, where we can invest in what we wanted to grow as well as find new investments going forward and that can range from M&A, where there's a high bar, but also share buybacks in terms of share buybacks as you can see in 'twenty, two we invested over $340 million against our $750 million authorized buyback.
But in the fourth quarter, we did not buyback any shares as we're continuing to assess our capital allocation policy as well as increase the amount of cash in the quarter. So that we ended it ended the year with over $1 billion of cash.
We think we're well positioned today and going forward given the financial wherewithal of our business to invest in our initiatives. We're excited about as well as consider other investments including share repurchases going forward.
So in summary, we're very glad to have the stability that we have in our business.
As well as the financial Wherewithal that we have we think we've got an amazing team focused on the right things and we're optimistic about the future ahead.
And with that I'll turn it over to Ryan for Q&A.
Yes. Thank you Harold and we will now begin the question and answer portion of the call if you'd like to ask a question you'd be sure to use the raise and function on here's incline.
For those joining by the phone just press star nine.
Be assured of unused equipment before asking your question and we'll get through as many as we can in the time allotted. Please wait a moment, while we compile the roster.
Okay. Our first question will come from the Sealy currency up from Cannonball Research study. Please go ahead.
No.
Ed.
Our prepared remarks and match and connect it to me is one of the growth areas.
So I think investors are that at analyst at this point that the staff that goes with it pretty well.
I understand what you will do the new help us connect.
Exactly you are going to address that market and what Bob said.
We are hoping to.
To perform their.
What kind of revenue opportunity, we're seeing maybe in simple terms would appreciate it. Thank you.
For sure I'll speak to just the product side.
Our performance marketing business at its core and what we've done really well in mobile over the last decade is enable advertisers to buy advertising full screen video and high definition and measure all the performance of everything that happens after the fact and be able to buy effectively as arbitrage marketers and connected TV devices really exciting.
For us because as a TV device full screen living room tons of consumption per day is connected to the internet.
And we're not seeing that much performance advertising happening at large scale on our platform, especially when it comes to mobile App developers in the last couple of years, we invested in an attribution company. That's one of the leaders in trying to bring attribution to connected TV device, we invested in world, which has effectively we've talked about.
CDN for streamers for very high profile media companies to bring their content to fast channels. Then we've also got our core performance platform that we think is the leader in mobile marketing and we're going to take that and use world to bring it to market in connected TV and we think it can become a big opportunity as far as revenue number.
<unk>. This is still really early days here, we believe it will become a substantial and growing part of our software platform over years, but we're not ready to talk numbers at this point.
So well give me acting as an aid in the programmatic buys but with.
A format that I think is that the right way to think about it I would think about it as full stack the same way in mobile where an SSP ended DSP world today has a very well performing.
Forming SSP business, we would have 11, our biggest business is our DSP will a couple of those pieces and have a full stack offering for connected TV partners.
Thank you.
Yeah.
Okay.
Okay. Thank you Shelly.
Next we'll go to Ralph Shakur with William Blair.
Ralph Please go ahead.
Brown out here.
Great sorry, Adam in the prepared remarks, you talked about the upgrade that's coming in sometime in 2023 for axon too and I think you said it could have a significant are immense impact maybe just a little bit more color about that will that be something that will phase in over time.
B.
More sort of abrupt in nature, meaning it potentially have a bigger impact in near term just love a little bit more color on that place.
I mean look we released axon one I guess it is a little over it was around three years ago started working on it for years ago business grew tons. Since we did it I think we tenex over that period of time from axon one to today it didn't build over time and that's how these technologies work in the period of time since we built our first technology of.
We all know there's been huge advancements in AI technologies, and we're working on bringing those to our core platform the rollout and potential growth from it. It's just building more efficiency into our system, which will benefit our advertisers they should be able to hit their goals at larger scale, creating more growth for them and in the category and obviously will benefit us.
We don't yet know if it's going to be a step function in continuing to kind of build over time, but we do believe that will be how it will look.
Great and just one more on the macro if I could please in the letter you talked about <unk> being soft, but stable with Q3, and then Q1 being relatively stable and maybe just kind of talk about the linearity. There has it been I guess sort of stable over that period is it improving just anymore color you can add on the macro it'd be great. Thank you.
And so in our business what was directly tied to our revenue the biggest part of our revenue is performance marketing and in particular, the largest part of our segment is game advertisers.
Game advertisers our performance marketers are buying on some sort of return curve that they have an LTV to CAC model that works in today's market. There's a lot more conservative than it was a year and a half ago. When interest rates were near zero as cost of capital went up last year advertisers got conservative and performance can you just can't afford as long a payback as before.
But those values were reset with an expectation of interest rates getting to sort of today's levels and that was done a couple of quarters ago. So what we've seen in our business might be disconnected from what we talked about in the macro economy as a whole, but in the performance marketing sector. The advertiser's got conservative, but they're not getting any more conservative.
We're not seeing material changes in the economy today versus a couple of quarters ago, and so we've seen a lot of stability in our business and continue to do so.
Okay. Thank you.
Thanks Ralph.
Well next go to David Karnofsky with Jpmorgan.
Please go ahead.
Hey, Thank you Adam I guess, the logical question after that last comment.
And what breaks developers out of that conservative mentality is that kind of macro based and then a separate question Harold just regarding your apps portfolio.
Any update on what you think is the right margin for that to run at going forward.
As you listed the sale of assets in the future as a possibility I'm curious to know if you had any expressions of interest from.
A strategic or financial buyers at any point.
Yes so.
On the first question.
The reality is performance marketing advertisers have an approach they are in an LTV to CAC and they have their own products. So if their products improve they can spend more if interest rates go down they can spend more but what's more in our control and what's going to drive this for our business and our partners are efficiency gains in our core technologies and that's what I'm talking about with axon.
As we all know that these core technologies. These AI based implementations of technology are continuing to evolve as they get more efficient what ends up happening as advertisers have the same goal that you can drive them more scale. They start growing their business. They are reinvesting more and more into it. It's all arbitrage marketing on the front end.
And on the back end the algorithm continues to perform better as the technologies evolve over time and that's a trend we've seen over the last decade, it's accelerating now and it's something that we're very excited about as we look out into our business into the future.
And David Thanks for the question so on the App side as we mentioned we've been in the process of optimizing that portfolio. We do think in the first half of this coming year or this year that that will start to asymptote out in terms of the trough of revenue.
And the margin has gone up as you've noted I would say from there then it really depends on our opportunity to grow the assets. So we're excited that the 11 studios I think all of them have opportunities for growth many of them have some new games that they're thinking about launching this year and so if we haven't hit we will invest in dollars there and will bring down the margin.
Right now obviously in the very high teens and that could that kind of low teens something in that range. If we're investing in new games it really depends.
On on how robust that return is on those dollars. So so I would say.
<unk>.
The revenue side to still come down a bit in the near term, but eventually will reach a steady state and then be thinking about how we grow the business from there, but I would say longer run rate is probably a mid or mid teens type of type of margin for that business and then.
Yeah, and just on the M&A side.
Well look we would we would take an offer if it was the right price for these assets because as we said we've now winnowed it down to these 11 studios that we really like.
We're excited to work with them the markets, obviously difficult given cost of capital out there and so we're going to manage these things as if we own them forever and if people do show up at the right price, we will look to optimize the portfolio.
As we said we went along the way.
Yeah. The only thing I have to add too is we've removed the distraction of weaker performing studios. We're now I'm really proud of the studios that we have the leaders of these studios are exceptional talents they've got great teams underneath them. The pipelines are really strong as studios. So we do look at this this business unit now is something that we're excited about going forward.
Thank you.
Yeah.
Okay.
Thank you David we'll next go to Clark Lamping with BTG.
Please go ahead.
Okay.
Okay.
Thanks, guys I had a question maybe first on competitive dynamics across maybe both sort of gaming, but also brought our AD market in light of I guess more recently sort of peer meritorious, but also.
Some of your peers talking about making progress closing the targeting GAAP relative to sort of pre IDE Esa levels has that had an impact or is that showed up in sort of developer conversation and then maybe a follow up on the axon update are you in the beta stage right now where there are clients actually sort of testing this product for you or.
Could we use the baseball analogy to maybe think about how closely are or what sort of progress you maybe have made.
I guess against the formal launch versus last quarter. Thank you.
Yeah. Thanks, Clarke I'll start with the second one first we're not ready to talk about timing, we do expect it to go full scale in 'twenty, three and obviously, we'd always love products that come to market at large scale faster because this product is super complex really excited about the prospects. It does take time to develop when we first started talking about it a few quarters ago.
All we can tell you today is we think is going to make an impact in 'twenty three and it's also not a rollout to customers.
Effectively taking the old engine and upgrading it so it'll impact our whole business at once when it does go to full scale.
On the first question competition in the ecosystem with M&A or add algorithms improving what we've been in an advertising sector for 12 years now I've been doing this for nearly 20 years advertising is immensely competitive there's a lot of players that are trying to get dollars from advertisers and trying to build algorithms to help those advertisers market themselves.
There's never been a shortage of competition now what we do know about our sector is that if algorithms improve targeting can get back to pre <unk> levels. The category was growing almost double digits every single year consistently for a decade. The idea of FA change impaired that growth prospects. So all of us marketing.
<unk> are really in the business of improving or algorithms and when together the category gets to a point where it was before the category itself will get back to growth. We sit at a leadership point in the category with a market, leading monetization solution and our market leading growth platform without discovery. So we will stand to benefit greatly if that does happen in the marketplace.
Yeah.
Yeah.
Clarke did you have a follow up.
All of that thank you guys.
Okay.
Thanks Clarke.
Well that's good to hear.
Well next go to Bernie Mcternan with Needham.
Please go ahead.
Great. Thank you very much for taking the questions. Just two for me first just a broad question Adam.
Any thoughts on Doj suing Google what that means for App love It and then for Harold anything special about the $1 billion in cash just wanted to follow up on the comments and no buyback in the quarter. If if if that $10 billion of cash balances or at a minimum you want to maintain on the balance sheet.
Thank you.
All we can do is speak about our experience with Google, where we're a large cloud customer they launched their bidding solution onto our platform I think it was our first large scale external implementation of bidding they obviously don't monetize.
Publisher inventory with better advertisements than any company, we've ever seen before so with US we are great partners and we look forward to expanding that partnership into the future.
Yeah. Thanks for the question with regard to the $1 billion in the buyback. So there's nothing magical about $1 billion is just a lot of money and we're glad to have it on our balance sheet, but the reality is we're bullish on our business as we've talked about we need to be patient and we think we're going to be stable.
In the short term here.
So we want to be careful with the cash balance and think about our capital allocation in the fourth quarter as well as the third quarter, we had different projects going on the market was changing the financial market was also the cost of capital is changing we feel really good where we are today, we think having over $1 billion of capital on our balance sheet does help we are generating a lot of.
Free cash flow as we highlighted we think that will continue in the first quarter.
And we are investing in all the projects internally as we can.
We will again as we always do with our board think carefully about capital allocation and we still think our stock is a great place to put money to work.
Thank you.
Okay.
Yeah.
Thanks, Bernie well next go to Matt costs with Morgan Stanley .
Matt. Please go ahead.
Yeah.
Hi, everybody. Thanks for taking the question.
There is a perception based on some of the third party data out there about in App purchase behavior at the level of the mobile games market that maybe things are bottoming out exiting 'twenty two into 'twenty, three I guess, you're pretty well positioned to assess both from your view into the market and from your own game, you know whether or not that might be true, but maybe more importantly.
Whether or not the rate of change of consumer spending it's bottoming out when that does ultimately Terry like we've been here a year really weak spending when it turns around is that something you expect to flow through tip to the in app advertising market pretty quickly or is there likely to be more of a lag there.
And then I have a follow up thank you.
So we think what what drove the growth and in App purchasing over the last decade had a lot more to do with the marketing technologies and targeting than it did with the economy consumers need to discover content that they love to be able to go spend in it and the idea if they change really handicap the category and it happens abruptly now it's been a year.
And a half technologies are starting to adapt we just saw this in some other earnings reports you've seen the stability in our earnings reports all of US marketing company that are working on improving our algorithms to be built around with today's era privacy allows you to do it.
It takes time to do that the game developers themselves also are working to create content that is different than what they would have built a year and a half ago whale whale hunting, which is an industry term, but marketing to go by Wales for games that can monetize <unk>.
<unk> is immense levels is just not something that's possible anymore in today's identity free universe, and so game developers have had to go figure out how to make more casual games. That's also a cycle. The other thing that isn't widely known is that a lot of the number the top grossing games and they're not purchasing category come from <unk>.
<unk> in China, and the Chinese development teams have been highly inefficient to zero Covid state and that's just reversed out so you're going to get back to more efficiency. So we think theres a lot of reasons why we're seeing stability and we think there's also growth that will come in the future. We don't know exactly when as the marketing platforms improve and.
As the game developers adapt to this new era.
Great. Thank you and then using the new disclosure if I read it correctly I think that pricing grew at almost double the rate of volume in the quarter. So I'm. Just wondering is that sort of a recovery off of a period of lower auction and bid density.
Is that the way you should think of what happened in the quarter and then are you expecting.
Pricing to be a stronger driver than volume over the course of the coming quarter and year.
Hopefully recover yes, thanks, Matt.
Yeah, just one correction for years. It was it wasn't the quarterly metrics. There is actually the annual metrics from 'twenty two to over 21 was what it was.
The revenue per install is twice the rate of the actual installs and that really has to do a lot with the efficacy of axon and then the increase in the volume boats from our network side as well.
Our ability to bring on more publisher so.
It was really the combination of the two of them and those are metrics that we did report in our public financials, historically and we'll continue to talk about those going forward.
Great. Thank you.
Yeah.
Okay. Thank you Matt we'll take the next question from Franco Granda with D. A Davidson.
Franco Please go ahead.
Yes, good afternoon, everyone two for me today.
So entering last year, you had talked about.
Expectations to have $10 billion transact transact with your carrier platform last quarter, you, obviously stopped talking about it at a macro but what was the actual number for 'twenty two and then what was the number exiting the.
The run rate number exiting the fourth quarter and then the second question.
What what is the magnitude of the investments for that axon to upgrade.
So I think the first question you were talking about our Max monetization platform. How many dollars are flowing through it we're not disclosing exact the Max platform, though has a ton of reach in the industry. They actually recently asked our team to pole top apps in both app stores to see how much.
Usage of our platform there was versus the rest of the market and about two thirds of those apps downloaded apps or monetizing using IMAX solution. So in terms of usage theres been exactly what we expected with that platform market, leading what's changed versus the beginning of last year and today.
<unk> ended the year, our cpm's in particular from brands as the economy became more difficult throughout the year the dollars and the density and the AD auction, which is monetized by many companies more than US has decayed so that would be what threw us off of our production, but the daily active users and the trends to Max usage or.
Exactly where we thought they'd be they're performing very well.
On the magnitude of the axon investment that's all built into our P&L, our R&D investments in.
In line with what I when I mentioned on my talk track around our culture are always going to be lean we've got a core group.
Talent on our on our engineering team and we're adding really exceptional people to that team, but that were adding them in the tens not hundreds or thousands. So you don't see a dramatic R&D expense line in our business yet we do invest heavily into new products that can make big impacts.
Yeah.
Thank you from here.
Next go to Eric Sheridan with Goldman Sachs.
Eric Please go ahead.
Okay.
Can you hear me sorry, just quickly as I could talk to you Sir.
Maybe two if I can one sort of bigger picture question that maybe is a little bit outside the box. You know obviously you talked earlier in the call about connected TV. How do you think about taking the data engine, you've built and I know obviously the central dynamic is still around mobile gaming, but how do you think about taking.
The data engine in the platform and thinking about a wider array of canvases and possibly a wider array of of SKU in industry verticals from the advertiser side, either through your own organic efforts or maybe through a partnership around the broader advertising landscape that'd be number one and you talked a lot on the call about how we've gotten sort of back to a level.
Stability, but probably not full full return from a demand perspective on the advertising side.
Way to frame up the elements of how much of your margin structure is somewhat held back or depressed by a lack of return.
Just sort of pre IBSA or pre pandemic normalization levels in which case, a full recovery could possibly be an extra layer of tailwind to the incremental margin structure. Thanks.
Thanks, Eric I'll answer the first one Harold will take the second on the first one to answer. The question is simply we're super excited about the potential to extend our marketing engine and Valerie rhythms to other platforms. So CTV, obviously being the first and there's nothing that restricts us to the games category games is obviously the largest.
Part of our App discovery solution, but really the limitations. So far has been that our advertisements almost always show up in the games and if youre doing a contextual and behavioral advertisement that signal is very strong to match up the game advertiser in a game publisher well connected TV offer is a completely different landscape for us.
We believe what's missing from that platform is performance marketing and we can do that well, but our engine. Our data is not limited to just gaming. So we think the connected TV screen is going to allow us not only to extend game advertising to that TV device, but also to bring other advertising for other companies. We're all for instance works very.
Closely with a lot of high profile streaming businesses and advertising on a performance basis for those is a huge initiative and big opportunity and we think as we talked about our connected TV business and a couple of years, we're going to be talking about a wide breadth of advertiser types.
Yes on the margin side for our business.
We're at a steady state and stable as we talked about.
But we are excited by the fact that if we can lift for example, our biggest business in particular on the App discovery side with axon 2.0 implementation at some point.
Those are very high margin dollars to flow through the block to the bottom line and that would be pretty meaningful increase in EBITDA for the segment EBITDA for the overall business, but what does offset that is there is infrastructure costs do increase but obviously at a much slower rate potentially and then we do have an incremental head count that we're hiring as Adam said more on the.
Tens and twenties not not hundreds to go after some of these new initiatives that are pretty big whether it be CTV, our endeavor into a business called array, which is focused on the OEM carrier space.
So that could bring down margins to some degree, but we're comfortable with the margins we run out today and we think it's more incremental on the upside in particular for our biggest business to extent, we can get that to grow great.
Great. Thanks, so much.
Thank you Eric.
Well next go to Omar <unk> with Bank of America Omar. Please go ahead.
Hi, Thank you for taking my question.
One of the large hyper casual publishers that reported earlier this week appeared to be implying.
But they would be reducing advertising spend.
And I was wondering number one.
How consequential is the hyper casual market to your AD platform.
And number two are you seeing that as a as a kind of trend in the fourth quarter and potentially going forward and then I have a follow up on hyper casual.
Yeah. So that we've got a lot of density of advertisers no single category makes up a huge part of our business.
As you saw in our numbers in Q4 numbers were really stable and then Q1, we're guiding to similar numbers for Q4, both for topline and Bottomline, implying that our software business is really healthy right now so yes certain categories, especially those that are dependent on ads might perform worse on the flip side when you have a super day.
<unk> auction and your work with tons of advertisers across a lot of different genres, and you've got a good targeting engine that doesn't create exposure for you in your business.
Great. Thanks, and then the follow up question is.
That.
According to industry experts Google's began sending rejection notices for AD exposures in formats that are not compliant with its new better ads experienced this policy.
This policy allows interrupted interstitial ads among other practices and I was wondering whether there.
This is something.
The industry is over already or.
Is it something.
That is the solution to this problem within Apple oven technology stack or is it at the kind of studio level.
And again is it affecting have you seen any of the effect of this policy on hyper casual.
Yes, we actually don't expect any effects from the policy we didn't see any early on we don't expect any going forward because the best apps the ones with a lot of users. So they don't tend to show ads out of place. The policy itself was explicitly written to prevent a publisher from showing an AD when a user expected something else. So for example, you go quicker.
Play the game button and you get a pop up AD, that's disruptive and Google doesn't want that will the highest quality publishers in the ones that are at scale that we work with are no with no personally are bigger customers Lincoln number run ads like that because users usually churn out of those games. So it's certainly a policy to clean up the App store the Google play App store has millions of <unk>.
And at the ones that are large scale apps never never engaged in those types of practices.
Excellent Super helpful. Thank you.
Thank you Omar.
Well next go to Stephen Ju with Credit Suisse. Steven. Please go ahead.
Okay. Thank you so I guess.
That's a lot of time talking about potentially expanded opportunity then.
In the past.
Talked about the advertising opportunity outside the games vertical.
I get that this is probably a tough market to go after new business, but I was wondering if you can comment on where you may be seeing greater traction because I would love to see the games as a percentage of AD revenue D index overtime and other performance oriented budgets starting to Florida.
<unk>. Thanks.
Yeah. Thanks Steven.
And expansion there.
On the connected TV screen and also with the carrier OEM product. Both of these are our advertisements in a placement without context, but when you're selling an advertisement and again, it's really hard to suggest that you could go, especially as the world goes to more contextual with some some data.
In order to drive relevant advertisements, but with more of a contextual signal, it's really hard to suggest that it's a good strategy to go outside of the gaming sector and the publisher side. We do believe that these other categories of advertising will become very big businesses for us over time, and we also have a gateway into that category with that adjust team and all of the non gaming adverse.
As they work with if you recall when we first did that transaction, we talked about the majority of their 4000 plus customers are non gaming customers and these are the types of customers that are really excited about our connected TV offer.
Thank you.
Okay.
Okay.
Okay. Thank you Steven we'll take our next question from Martin Yang with Oppenheimer. Martin. Please go ahead.
Yeah.
Hi, Good afternoon. Thank you for taking my question.
Can you hear me, yes, we got to mine sorry.
Sorry.
Thanks. So my first question is on new games released environment, you talked about potential.
Growth opportunity from the 11th studios, where new games can you maybe comment out.
This new game release environment changed over time versus pre pandemic.
<unk> and <unk>.
Are there any signals that gave you confidence that those new games.
Can test well and then released onto market.
As expected.
Look with the changes in marketing the bar has gone way up for new games traditionally you could create iterations of working concepts in the market now developers have to be a lot more innovative to get a new game to grow in our studios have made the same shift the ones that we've retained have really strong development teams and are working on games that.
The ones that are in soft launch it will get tested longer now we'll make sure that the.
The data looks strong before we release it to market, but it'll be something that we're confident in and the ones that are developing are no longer developing the way they would have a year and a half ago. They are developing in a new format and we think this is where the whole market is going to go is youre going to take longer term bets that are more innovative there might be less likelihood of success to new.
The game. So you don't expect one out of every two games to hit maybe it's one out of every four or five.
Creating innovative new concepts it can expand the market over time, and so that's where we're investing and we think we have the teams to do that well.
Got it.
Question on gains is can you maybe comment broadly.
<unk> do you see a higher success rate in this market.
And what type of business model within the gains is it hybrid in gay purchase plus advertising advertising only purchase yes.
Coming back to us.
We think as a requirement now for developers to make hybrid just as he said if you can't go and market to the whales.
Well, you've got to monetize the whole audience and traditionally the IAP category, 95% of the users were on monetized.
5% were whales. They funded this $100 billion in growing space now you can't go find those users as successfully as before.
So you've got to monetize the 95% to subsidize the cost of acquiring the five that's actually really good for us in our Max business in our App discovery business because it brings more inventory online and we're starting to see some of those trends.
Thank you.
Yeah.
Thank you Martin.
We'll take our last question from Mark <unk> with benchmark Mark go ahead. Please.
Mark Please check the eve and muted your equipment.
Oh, sorry, thanks, guys.
We look at your software platform clients and the revenue for that client over the last four quarters, it's consistently.
Down sequentially.
And I'm just wondering what is the sort of the driver of that.
Trend line and sort of why that is not.
I guess consequential to your results going forward any more thank you.
Im sorry, Mark I'm, not sure, which metrics, you're referring to our spec metric went up from Q3 to Q4 from 532 accounts with 566 accounts. So.
So they're trying to looking at quarter over quarter growth.
Just declining sequentially over the last four.
Orders for both of those.
You're talking about pricing. It's just the composition is hugely different than it was before or two we've added on world. We've added an adjust we added on the <unk>. So the composition has changed so much that those metrics aren't very comparable anymore to the past and they're not very predictive of the business going forward and that's why we decided this quarter to <unk>.
Okay.
Not just the software.
Apart from enterprise by itself that number.
<unk> growth in that number going forward in terms of a year.
You're a software platform revenue, yeah again, Mark that number has gone up in the actual the average revenue per software client has remained steady around $1 9 million and also the net dollar retention went up over 160%, but he is exactly the reason why we're going to move these metrics from a reporting because theyre not indicative.
<unk>.
No I'll give you a better sense for how the software.
Business is performing which is obviously flat essentially flat from Q3 to Q4.
But as Adam said, we're excited and optimistic about the platform. We think the market is reasonably stable we are investing a lot to improve our market leading tools in the category.
So as we're able to launch new capabilities and hopefully the market returns to growth we should be in a good spot.
For both topline and Bottomline growth in that segment. Okay. Thanks, guys I appreciate it.
Thank you Mark and that does conclude the question and answer session for this quarter. We thank you all for joining us today have a good afternoon.
It has stopped.
Okay.