Q2 2025 AppLovin Corp Earnings Call

August 6, 2025

Matt <unk> our CFO.

Please note our SEC filings to date as well as our financial update and press release discussing our second quarter performance are available and investors Dot App love and Dot com.

During today's call, we will be making forward looking statements, including but not limited to the future development and reach of our platform, including the expected timing of product launches are expected growth opportunities the efficiency of our operations the expected future financial performance of the company and other future events.

These statements are based on our current assumptions and beliefs, and we assume no obligation to update them, except as required by law.

Our actual results may differ materially from the results predicted we encourage you to review the risk factors in our most recently filed Form 10-Q for the first quarter ended March 31 2025.

Additional information May also be found on our quarterly report on Form 10-Q for the fiscal quarter ended June 32025, which will be filed today.

We will also be discussing non-GAAP financial measures. These non-GAAP measures are not intended to be superior to or substitute for our GAAP results.

Please be sure to review the GAAP results and a reconciliation of our GAAP and non-GAAP financial measures in our earnings release and financial update available on our Investor Relations site.

This conference call is being recorded and a replay will be available for a period of time on our IR website.

Now I'll turn it over to Adam and Matt for some opening remarks, then we'll have the moderator to take us through Q&A.

Thanks, everyone for joining us today, we appreciate your time and interest in Q2 2000, and twenty-five was another great quarter driven by continued strength in gaming advertising our growth comes from improved technology increased.

Demand as well as from supply side expansion, the Max marketplace creates the supply that drives our growth as well as the growth in the market.

As marketing technologies in the industry continue improving we expect the supply will keep growing quickly.

While we don't disclose exact Max marketplace growth rates. It has consistently been double digits far outpacing growth in the in App purchasing gaming market.

The ongoing improvement in our models drive sustainable growth rates beyond the market growth rates, while we continue to expand our dominant leadership position.

Based on all the opportunity in front of us in our core market. We are confident we can sustain 20% to 30% year over year growth driven by just gaming.

However, what gets us more excited now than ever in our history before is the opportunity to really expand outside our core market reach.

Recently, we took the first step towards opening up our platform broadly quietly launching our new axon ads manager.

Our self service portal, which will serve as the foundation for our next decade of growth.

Our ads manager has many benefits.

It puts day to day controls directly in advertisers' hands, reducing friction.

It enables credit card billing, eliminating the hassle of monthly invoicing.

It provides the architecture for agents they can eventually automate every workflow.

It establishes the framework for automatically generated ads.

It simplifies onboarding through our recently launched Shopify App.

It deepens integrations with attribution providers, giving customers more accurate reporting.

With the rollout going smoothly.

We were ready to widen access on October one 2025, we plan to open the axon ads manager on a referral basis.

Perfectly time for the holiday season.

Feedback from these partners will guide or global public launch in the first half of 2026 to date web advertising campaigns have been limited to the United States.

On October 1st we plan to open our platform to most major international markets.

Now stepping back we have spent the last decade assembling the pieces reach of more than 1 billion users best in class optimization and now a self service interface.

Together, they position us to help any business of any size anywhere in the world grow profitably that.

That is good for our partners, it's good for economies around the world and it's great for job creation the.

The opportunity is so big that we will be launching the platform under its own brand axon.

Once axon is fully open next year, we plan to begin paid marketing to recruit new advertisers, which will drive predictable compounding growth.

We have been building performance driven advertising products longer and better the most anyone.

Operating at our current scale with an incredibly small amount of advertiser relationships highlights the magnitude of the opportunity ahead.

Our strategy is simple build world class products launch them when they meet our high bar and compound from there.

Patient disciplined execution produces durable success and we hope our track record gives you the same confidence we have in our future.

We're incredibly excited about what's ahead.

With that I'll turn it over to Matt for a closer look at the numbers.

Thanks, Adam and thanks to everyone for joining US today Q2 was another exceptional quarter for Apple oven at the end of the quarter. We closed the sale of our apps business to triple that CBS. This quarter. The financial results for the AST business are included within discontinued operations and we will keep our commentary are limited to the advertising business only.

During the quarter revenue increased by a very healthy 77% from last year to approximately $1.260 billion, while adjusted EBITDA nearly doubled to an impressive $1 billion and $20 million, achieving an 81% adjusted EBITDA margin the.

The majority of our revenue growth in the quarter was driven by our core gaming business. While ecommerce continues to perform well we limited onboarding of new customers to focus on the preparation for the self serve launch in Q4.

Quarter over quarter flow through from revenue to adjusted EBITDA was a very strong 81% illustrating our continued dedication to operating lease.

At the end of the second quarter, we had $1 $2 billion in cash and cash equivalents, which includes $425 million and net cash received from the sale of the apps business.

In the second quarter, we generated $768 million in free cash flow up a staggering 72% year over year, our free cash flow was slightly lower than last quarter due to the timing of payments for interest on our bonds, which are semiannual and certain taxes associated with the prior year this quarter, we repurchased and withheld approximately.

900000 shares for a total cost of $341 million funded through free cash flow.

As a result of our ongoing strategic share management activities, we were able to reduce our weighted average diluted common shares outstanding this year from $346 million in the fourth quarter to $342 million this quarter.

Finally, turning to our financial guidance for next quarter.

In the third quarter of 2025 for the advertising business, we anticipate delivering between $1.320 billion and $1 billion $340 million in revenue with adjusted EBITDA between $1 billion, and 70, and $1 billion and $90 million targeting an adjusted EBITDA margin of 81%.

We're confident these targets position us to continue driving strong growth and value for our partners and shareholders now with that let's move to Q&A.

We will now begin the question and answer session. Please be sure to unload and turn on your video before asking your question, we will take as many questions as time permits and since we have many questions today, please be patient as we move to the left.

Our first question will come from Matthew cost from Morgan Stanley.

Hi, everybody. Thanks for taking the question I guess on your plan to start doing paid marketing next year talk to us a little bit about how you arrived at the decision to market to acquire advertisers because I think historically, it's mostly been growth by word of mouth and sort of virality within the gaming industry that people become aware of your of your products.

I guess why is now the right time to start marketing what channels are you going to market through and how are you going to evaluate the return there and then I'm wondering hey, Matt good to see you.

So look like where we've got big aspirations with our platform. The advertising solution right now to web commerce advertisers and more broadly other categories. We've talked about is looking really strong obviously, we have very small penetration in terms of advertiser base against what our global advertisers.

And the way we look at our businesses if the model works. This well at this small amount of penetration what happens when we can really open it up and go service all of the small businesses in the world. Our aspirations are to help any business of any size be able to acquire customers profitably and if we can do that we will achieve the goals that we've set for ourselves.

So.

The value of us being able to go out and performance market. The platform is that we've got one of the most lucrative financial models. The world has ever seen I mean, obviously you can see the amount of cash that we print and we're very good performance marketers. So very good performance marketers, it's plausible that we will be using our own models to recruit advertisers off of our.

One inventory theres plenty of moms with small businesses and dads with small business is sitting in games playing games all day, they could use our platform to market themselves you can imagine us running ads on Facebook on Linkedin on Tictoc, but it really does come down to the fact that we've got such a lucrative financial model and we try to run lean and auto.

We've set for ourselves so.

The value of us being able to go out and performance market. The platform is that we've got one of the most lucrative financial models. The world has ever seen I mean, obviously you can see the amount of cash that we print and we're very good performance marketers. So were very good performance marketers, it's possible that we will be using our own models to recruit advertisers off of it.

<unk> every step of that process and we believe that if we can automate the onboarding of advertiser flow from when an advertiser can find out about us from an AD all the way through to going live and then scaling on our platform. The model will be very lucrative on an LTV to CAC basis, and we won't have to staff up a large sales force.

Our own inventory theres plenty of moms with small businesses and that is a small business is sitting in games playing games all day, they could use our platform to market themselves you can imagine us running ads on Facebook on Linkedin on Tictoc, but it really does come down to the fact that we've got such a lucrative financial model and we try to run lean and all.

Great. Thank you and then on the supply side you made some comments in the prepared remarks about some strong supply growth that youre seeing.

Given that Max has kind of already starting from such a strong position already is the further growth is that a function of just taking even more share in mediation is it about AD load increasing to the customers you already have I guess worth of supply growth coming from yes.

Automate every step of that process and we believe that if we can automate the onboarding of advertiser flow from when an advertiser can find out about us from an AD all the way through to going live and then scaling on our platform. The model will be very lucrative on an LTV to CAC basis.

We talk a lot about the market and mobile gaming and people fixate on the in App purchasing market and what we're trying to do is just highlight the fact that our business grows from improvements in technology and demand, which drives CPM and expansion of supply. The Max mediation platform is really high penetration into the market. So we're not going to be able to grow it particularly quickly.

And we won't have to staff up a large sales force.

Great. Thank you and then on the supply side you made some comments in the prepared remarks about strong supply growth that youre seeing.

Given that Max has kind of already starting from such a strong position already is the further growth is it a function of just taking even more share in mediation is it about AD load increasing to the customers you already have I guess, where is the supply growth coming from yes.

Taking more mediation.

From other platforms at this point, what we were highlighting was that the base platform just the audience inside Max is growing swiftly double digit growth so multiples greater than what you would expect when people try to size up the gaming market growth rates of 3% to 5%. The other thing that is super valuable to understand and that is that inside that.

Look we talk a lot about the market and mobile gaming and people fixate on the in App purchasing market and what we're trying to do is just highlight the fact that our business grows from improvements in technology and demand, which drives CPM and expansion of supply. The Max mediation platform is really high penetration into the market. So we're not going to be able to grow it particularly.

Marketplace, we historically have always talked about how there is not a share gain concept as the marketing platforms improve that platform grows the eyeballs playing games play more games every single day inventory goes up that drives growth on our platform drives growth on the platforms that are the other bidders inside of that ecosystem and that we buy.

Really quickly by taking more mediation.

Other platforms at this point, what we were highlighting was that the base platform just the audience inside Max is growing swiftly double digit growth so multiples greater than what you would expect when people try to size up the gaming market growth rates of 3% to 5%. The other thing that is super valuable to understand and that is that inside that.

<unk> the most because we're taxing every transaction for the most part that happens outside of us at the Max fee and then obviously our own DSP is a super lucrative business model when we win the inventory.

If you place we historically have always talked about how there is not a share gain concept as the marketing platforms improve that platform grows the eyeballs playing games play more games every single day inventory goes up that drives growth on our platform. It drives growth on the platforms that are the other bidders inside of that ecosystem and we.

Great. Thanks, so much.

Next well hear from Ralph <unk> with William Blair.

Good afternoon, thanks for taking the question.

Two if I could just on the self serve platform Adam.

If you can sort of frame this for us.

The most because we're taxing every transaction for the most part that happens outside of us at the Max fee and then obviously our own DSP is a super lucrative business model when we win their inventory.

Launches coming up public what's coming up which is exciting but because this is.

Pretty material impact to the overall business, obviously as well.

Good scale today, and growing pretty fast, but maybe you can kind of frame the opportunity that I have a follow up. Please yeah sure I mean, let's look back over the last year at our numbers and then I'm going to give me qualitatively sort of what was going on with growth in the business. In Q4, we saw a huge ramp up in the E. Commerce category. When we went into this pilot state recruited hundreds of advertisers.

Great. Thanks, so much.

Okay.

Next we'll hear from Ralph <unk> with William Blair.

Good afternoon, thanks for taking the question.

Two if I could just on the self serve platform Adam.

If you can sort of frame this for us.

That we disclosed and that was a big ramp up in Q4 were in Q1, we got the full benefit of that run rate and if you look back at the quarter over quarter growth Q4, and Q1 were really high growth rates now the reason for that is that the new type of customer that comes into our platform is extremely incremental to our business like we've talked about in the past.

<unk> is coming up public what's coming up which is exciting but could this be a.

Pretty material impact to the overall business obviously.

Good scale and growing pretty fast, but maybe you can kind of frame the opportunity that I have a follow up yes, sure I mean, let's look back over the last year at our numbers and then I'm going to give you quantitatively sort of what was going on with growth in the business. In Q4, we saw a huge ramp up in the E. Commerce category. When we went into this pilot state recruited hundreds of advertisers.

And then since then we knew that we had highlighted a whole bunch of things that we had to go build into the platform to be able to service advertisers at the level that we like to do and we like to set a really high bar for the products. We deliver we wanted to build the ads manager, which we released and we will continue to innovate and iterate through we wanted to build dynamic.

So we disclosed and that was a big ramp up in Q4 were in Q1, we got the full benefit of that run rate. If you look back at the quarter over quarter growth Q4, and Q1 were really high growth rates now the reason for that is that the new type of customer that comes into our platform is extremely incremental to our business like we've talked about in the past.

Product adds that came out in the last couple of quarters, we wanted to do better integrations with attribution companies, which happened inside the quarter and we wanted to launch a shopify app and other apps that allow for seamless integration amongst the advertiser base. So we ended up constraining the advertiser onboarding process for a couple of quarters.

While we made sure that the product was at the level that we wanted to get it to now we're looking at in Q4 talking about our referral base to opening that in itself I'm going to define that for you. So you understand what we're talking about but accounts on the platform, but obviously like our solutions because they are spending substantial amounts of money on our platform, we will get the chance to refer.

Their colleagues into our platform and have them go live in a self service way, we expect that will increase the advertiser count quite quickly and also allow us to go through live examples of advertisers coming in self service all the way to scale on our product assuming all that goes well then we talked about opening up the platform entirely to the world.

While we made sure that the product was at the level that we wanted to get it to now we're looking at in Q4 talking about our referral base to opening.

That in itself I'm going to define that for you. So you understand what we're talking about but accounts on the platform, but obviously like our solutions because they are spending substantial amounts of money on our platform, we will get the chance to refer their colleagues into our platform and have them go live in a self service way, we expect that we will increase the advertiser count quite quickly and also allow us to.

In first half of next year, we think is the advertiser count grows on our business, especially in categories outside of gaming Youre going to see a lot of upside in the numbers that we are able to report.

Great maybe one more if I can I think historically, you've talked about E com being around 10% or so of the business for this year, maybe just sort of an update if that's current thinking and then I think in your prepared remarks, you talked about limited onboarding to E com customers.

Go through live examples of advertisers coming in self service all the way to scale on our product assuming all that goes well then we talked about opening up the platform entirely to the world and first half of next year. We think is the advertiser count grows on our business, especially in categories outside of gaming Youre going to see a lot of upside in <unk>.

With that sort of limit the growth rate in the quarter had you.

Not limited those customers being on boarded.

First of all I mean, I'll take it in reverse by constraining the advertiser count we're limiting growth now we're focused on growing the cohort that's alive, which we saw growth from the cohort slide that Matt and his prepared remarks said majority of our growth came from gaming. So if you assume a large large amount of the growth in the quarter came from gaming and youre roughly 9% quarter over quarter gaming is still.

The numbers that we are able to report.

Maybe one more if I could I think historically, you've talked about E com being around 10% or so of the business for this year, maybe just sort of an update if that's current thinking and then I think in your prepared remarks, you talked about limited onboarding to E com customers.

30% to 40% grower for us so well above our 20%, 30% long term goals that we've stated now E. Commerce, we went from a state where we ramped it in Q1, and then controlled as I said on the Advertiser Onboarding, while we got these tools ready to go and so where we were at was that sort of 10% range, though.

Sort of limit the growth rate in the quarter had you.

Not limited those customers being on boarded.

Yes for sure I mean, I'll take it in reverse by constraining the advertiser count we're limiting growth now we're focused on growing the cohort that's live which we saw growth from the cohort slide that Matt and his prepared remarks said majority of our growth came from gaming. So if you assume a large large amount of the growth in the quarter came from gaming and youre roughly 9% quarter over quarter gaming is still.

We were targeting for the year, there's no reason to expect it to have grown above that because gaming is growing so quickly and for two quarters. Now we've mentioned the gaming was a big contributor to growth as we go into Q4, that's a huge holiday shopping season. So not only are you going to see the cohort that we have lives spend a lot more youre also going to have new onboarding.

30% to 40% grower for us so well above our 20% to 30% long term goals that we've stated now E. Commerce, we went from a state where we ramped it in Q1, and then controlled as I said on the Advertiser Onboarding, while we got these tools ready to go and so where we were at was that sort of 10% range that.

Happening for the first time in our history at a rate that's much higher than we would have ever seen before so we fully expect that E. Commerce will see a pretty substantial ramp up through that well or you can call a soft launch period and then obviously as we go into a broader global release the impact from that and then the last point to remember is another one of my prepared remarks highlighted the fab.

That we have constrained the advertisers, we even have live today by not allowing them to buy our audience. That's international the vast majority of our user audience is outside the U S. We will be releasing almost all markets. Once we go into this October 1st release, Okay, great. Thanks al.

Happening for the first time in our history at a rate that's much higher than we would have ever seen before so we fully expect that E. Commerce will see a pretty substantial ramp up through that what you can call a soft launch period and then obviously as we go into a broader global release the impact from that and then the last point to remember is another one of my prepared remarks highlighted the fab.

Yeah.

Our next question will come from Omar <unk> with Bank of America.

Thanks. Thanks, So much can you hear me, yes definitely hear you fine okay. Great. Thanks, Thanks for letting me ask a question here.

That we are constrained.

Advertisers, we even have live today by not allowing them to buy our audience. It's international the vast majority of our user audience is outside the U S. We will be releasing almost all markets. Once we go into this October 1st release, Okay, great. Thanks al.

I just wanted to take the conversation in a slightly different direction.

Alright and ask about.

Gaye mentioned data.

And.

One of your competitors, specifically unity, which.

Yes.

Our next question will come from Mark <unk> with Bank of America.

Owns a game engine, which 70% or so of mobile games are built on.

Hi.

Thanks. Thanks, So much can you hear me, yes definitely hear you fine okay. Great. Thanks. Thanks for letting me ask a question here I just wanted to take the conversation in a slightly different direction.

No plans to.

Use Gaye mentioned data for <unk>.

Targeting purposes sometime in 2026.

Does do other companies besides them have access to Gaye mentioned data.

I could ask about.

Okay.

If your customers own their own game engine data and you're able to access it and use it at some point in the future.

<unk> mentioned data.

One of your competitors.

Pacifically unity, which.

Do you think it matters.

The game engine, which 70% or so of mobile games are built on.

Yeah, we can't speak to other People's data I mean, we don't know what game engine data even means but when youre integrated inside an obligation both as a publisher and as an advertiser you have a lot of data points that youre able to extract that or behavioral data points of how the consumer is playing into again, we're obviously very good our models are cutting edge.

Plans to.

Used game engine data for at.

Targeting purposes sometime in 2026.

Does do other companies besides them have access to Gaye mentioned data.

If your customers own their own game engine data and you're able to access it and use it at some point in the future.

<unk> two has shown phenomenal growth for I don't know eight nine quarters now since release you have to assume we're pretty good at using the data we have available to us. So what we don't know as you didn't define game engine data is is there some magical data out there, but our market penetration inside gaming is really large at this point its materially higher than 70% we've got very good.

Do you think it matters.

Visibility into what matters in the gaming category, given how large we'd become what's really going to matter for our business. As we go forward is whether we can go expand out this offering the way we expect to across all businesses of all sizes in any category. If we're able to do that we will have a much better sense of the <unk>.

Exxon two has shown phenomenal growth for I don't know eight or nine quarters now since release you have to assume we're pretty good at using the data we have available to us. So what we don't know as you didn't define game engine data is is there some magical data out there, but our market penetration inside gaming is really large at this point its materially higher than 70% we've got very good.

<unk> on the other side and I do want to remind everyone. We have 1 billion plus users and theyre not gamers. These are human beings doing a whole bunch of things, but the share of wallet from gaming is going to be a minority of the dollars that these people are spending outside of gaming and that's what's really compelling to us as we go to this next chapter in the company if our models that are already.

As good as they are with such a small amount of advertiser penetration now go get visibility into consumer behavior across every category, we're going to be way more predictive about the advertisement that we can show the consumer.

<unk> on the other side.

I do want to remind everyone. We have 1 billion plus users and theyre not gamers. These are human beings doing a whole bunch of things, but the share of wallet from gaming is going to be a minority of the dollars that these people are spending outside of gaming and that's what's really compelling to us as we go to this next chapter in the company. If our models that are already as good as they are with such a small.

Thank you very much.

Our next question will come from Chris <unk> with UBS.

Thanks for taking my question here, maybe just on the referral program and how this is going to work functionally are advertisers that are currently on the platform are they going to be given referral bonuses is there going to be any restriction and advertisers that they can earn her you've talked about opening up international inventory will <unk>.

Amount of Advertiser penetration now go get visibility into consumer behavior across every category, we're going to be way more predictive about the advertisement that we can show the consumer.

National advertisers be available to participate in the referral program.

Thank you very much.

Our next question will come from Chris <unk> with UBS.

And just as we think about kind of with line out the door of advertisers you have been talking about for a while but they are going to get any.

Thanks for taking my question here.

Any special look here potentially two to come in here, maybe if they don't get a referral. Thanks, Yeah, Hey, Chris I can't say, we have all the answers to all those questions. You asked we're going to definitely go through an iterative period too on the release of the referral program, but fundamentally we don't think a ticket into our system is really worth paying for.

Just on the referral program and how this is going to work functionally are advertisers that are currently on this platform.

Platform are they going to be given referral bonuses is there going to be any restriction and advertisers that they can.

You've talked about opening up international inventory will international advertisers be available to participate in the referral program.

If someone's a client of ours, they have a lot of benefit from being on the platform people love using social media you have already seen a whole bunch of organic posts about us from Influencers.

And just as we think about kind of this line out the door of advertisers you have been talking about for a while but they're going to get any.

Kind of a walk here potentially to come in here, maybe if they don't get a referral.

And we think as we give them the capacity to invite their peers, they're going to do it on their own because of the platform has been restrictive and exclusive for so long and.

Hey, Chris I can't say, we have all the answers to all those questions. You asked we're going to definitely go through an iterative period too on the release of the referral program, but fundamentally we don't think a ticket into our system is really worth paying for if someone's a client of ours. They have a lot of benefit from being on the platform people love using.

And we see that habit and it's much better organically and beyond that line out the door will still need to most likely yet and invite into the platform from one of our customers to be able to get automatically cleared.

Alright, Okay. Thank you very much.

Social media you have already seen a whole bunch of organic posts about us from Influencers.

Just.

As we're kind of thinking about the <unk> guidance here, maybe a little bit faster than what we've seen in the past couple of quarters is there anything kind of reflected here.

I think as we give them the capacity to invite their peers, they're going to do it on their own because of the platform has been restrictive and exclusive for so long.

<unk> sequential growth associated with the App portfolio divestiture in any sort of quantification around that would be helpful. Thank you yeah sure. So the one the one change we did make Chris this quarter, which is slightly different than kind of our typical cadence that we've been going every quarter was to include the benefit as well that we're going to see from the divestiture of the <unk>.

And we see that happen and it's much better organically and beyond that line out the door will still need to most likely yet.

Right into the platform from one of our customers to be able to get automatically cleared.

Alright, Okay. Thank you very much.

Yes.

As we're kind of thinking about the <unk> guidance here.

<unk> business, where we have a slight pickup in our revenue. So we also incorporated that within the Q3 guide.

A little bit faster than what we've seen in the past couple of quarters is there anything kind of reflected here.

Got it thank you.

The fastest sequential growth associated with the App portfolio divestiture in any sort of quantification around that would be helpful. Thank you yeah sure. So the one the one change we did make Chris this quarter, which is slightly different than kind of.

Hmm.

Your next question will come from Jason Bazinet with Citi.

So I think on the last call you all said that.

Youre definitely working towards building to axon models right, one that's specific to games and one that's.

Our typical cadence that we've been going every quarter was to include the benefit as well that we're going to see from the divestiture of the <unk> business, where we have a slight pickup in our revenue. So we also incorporated that within the Q3 guide.

More focused on the other E. Commerce is a new term now I can't remember what it is but I'll call. It e-commerce, but I know it's more holistic.

When you think about all the data that you had to ingest.

And the models that you had to build to make the gaming model as good as it is what sort of the right runway that you have in your mind before those two could be at parity in terms of efficacy.

Got it thank you.

Your next question will come from Jason Bazinet with Citi.

So I think on the last call you all said that.

Youre definitely working towards building to axon models right, one that's specific to games and one that's.

Like Jason its great question. There is one there is no way to know that right because that's the future looking and we're gonna go acquire a lot of data as we open up the platform, but in terms of architecture of the models. The two models are distinctly different because on the one hand, the users going to our website and on the other hand of users going to App store that offshore isn't even something.

More focused on the other E. Commerce is a new term now I can't remember what it is but I'll call. It e-commerce, but I know, it's more holistic when you think about all the data that you had to ingest.

And the models that you had to build to make the gaming model as good as it is what sort of the right runway that you have on your mind before those two could be at parity in terms of efficacy.

We can measure and so you've got two frameworks and then as you touched on in gaming when we launched axon two we already had pretty good market penetration now we didnt work with the largest customers. So we continue to get better as we broke into the largest customers in the category, but I want to say, we had 50% 60% penetration.

Hello.

Jason It's great question. There is one there is no way to know that right because that's the future looking and we're gonna go acquire a lot of data as we open up the platform, but in terms of architecture of the models. The two models are distinctly different because on the one hand, the users going to a website and on the other hand of users going to App store that offshore isn't even something that we can measure.

And now Martin good penetration in gaming as you all know we're we're almost a requirement at this point given how good we are in.

In E Commerce, when we launched the pilot why we were so excited about the result is that the first beauty shop that went live the model knew nothing about the shopper behavior inside the beauty category and we talked about this that was the big concern could upload Vince Tech actually go out and figure out predictably how to convert our user to go buy from our beauty store with no.

And so.

We've got two frameworks and then as you.

You touched on in gaming when we launched axon two we already had pretty good market penetration now we didnt work with the largest customers. So we continue to get better as we broke into the largest customers in the category, but I want to say, we had 50%, 60% penetration and now market penetration gaming as you. All know we're we're almost a requirement at this point given how good.

Knowledge now.

We've talked about the one disclosure we gave hundreds of of E. Commerce business is live on the platform.

We are.

That's pathetic amount versus the grand scope of how big these categories are I mean, shopify alone has millions of shops right. So you have so much potential for data accumulation and then just to remember the data in our platform is not unique to one or the other part of the business. So we've always felt.

In E Commerce, when we launched the pilot why we were so excited about the result is that the first beauty shop that went live the model knew nothing about the shopper behavior inside of the beauty category and we talked about this that was the big concern could upload <unk> Tec actually go out and figure out predictably how to convert our user to go buy from a beauty store with <unk>.

The games will benefit a lot from our ability to break into these other categories. You can imagine if someone buys a $4000 handbag from a store that person's probably a whale for a match three game now I can tell you that but I can tell you that the technology is going to come up with a lot of cross correlations and conclusions that are a lot more powerful.

Knowledge now we have we've talked about the one disclosure we gave hundreds of E. Commerce business is live on the platform.

That's pathetic amount versus the ski Grand scope of how big these categories are I mean, shopify alone has millions of shops right. So you have so much potential for data accumulation and then just to remember the data in our platform is not unique to one or the other part of the business. So we've always felt.

And that so.

In terms of opportunity for us not only this is opening up the platform get us more demand, which is going to be massively accretive and incremental to our business. It gives us more data and so every single quarter youre going to have the flywheel effect that then paired with our engineers' ability to take out of data and improve the technology and its <unk>.

The games will benefit a lot from our ability to break into these other categories. You can imagine if someone buys a $4000 handbag from a store that person's probably a whale for a match three game now I can tell you that but I can tell you. The technology is going to come up with a lot of cross correlations and conclusions that are a lot more.

Appreciation of that data creates a real strong foundation for growth for a long time to come.

Thank you very much.

And that so.

Next we'll go to Rob Sanderson with loop capital.

Yes, good afternoon, gentlemen, thanks for taking my question.

My question is on just improving performance for your web based advertisers as we speak two pilot customers. Obviously, we hear you are highly effective at driving conversions.

Really lacks a lot of basic targeting functions like small things like just excluding existing customers et cetera. They see this seems pretty simple the software, but maybe not when your multi app inventory I don't know the questions really.

<unk> of that data creates a real strong foundation for growth for a long time to come.

Very much yes.

Next we'll go to Rob Sanderson with loop capital.

You're targeting and other improvements that web based customers are asking for are these largely things that you've already seen in software for gaming customers and just takes time to collect feedback and work optimizations into the product et cetera, where you're really solving for like a whole new set of challenges maybe some of both.

Yes, good afternoon, gentlemen, thanks for taking my question.

Questions on just improving performance for your web based advertisers as we speak two pilot customers, obviously, we hear youre highly effective at driving conversions, but.

Lacks a lot of basic targeting functions like small things like just excluding existing customers et cetera.

Yes, great question. So look when we got into this space it surprised us how much of the market meta advertising was and the D to C space and it was.

This seems pretty simple the software, but maybe not when your multi app inventory I don't know the questions really.

The majority and when you have one platform that's that big everyone wants every other platform to give them. The same exact tools now we don't have an email address or that persistent identifier that matches up with their audience data. So tactically doing and exclude is not going to be as accurate as what <unk> can deliver to these advertisers there are other new.

Yes, great question. So look when we got into this space it surprised us how much of the market meta advertising was in the D to C space and it was the majority and when you have one platform that sandburg everyone wants every other platform to give them. The same exact tools now we don't have an email.

<unk> and differences, we serve a full screen advertisement and then we can pair the video with a dynamic product ads that creates more intent for the shoppers. So the vast majority of all the transactions, we drive happened within an hour or two and the vast majority of the transactions meta drive they take attribution for a much longer timeframe. So there are these differences between platforms.

Dress or that persistent identifier that matches up with their audience data. So tactically doing and exclude is not going to be as accurate as what <unk> can deliver to these advertisers. There are other nuances and differences we serve a full screen advertisement and then we can pair the video with dynamic product ads that creates more intent for the shoppers. So the vast majority.

Advertisers like comfort that's like what they know they want to stick in the same processes. What we believe because we can see at our ads drive a lot of intent and drive to conversion very very quickly and we've been able to extract a lot of value out of the space. I mean, if you take the disclosure that I gave you.

The of all the transactions, we drive happened within an hour or two and the vast majority of the transactions meta drive they take attribution for much longer timeframe. So there are these differences between platforms that advertisers like comfort like what they know they want to stick in the same processes. What we believe because we can see at our ads drive a lot of <unk>.

In Q I think it was Q1 hundreds of advertisers I believe it was in the six hundreds.

And $1 billion run rate the market penetration in terms of market of scale of advertisers to total market is probably 1% or less in that number and to get to $1 billion run rate clearly even if they are complaining about feature missing the money is showing up at a level that you wouldn't expect for that little market Penn.

And drive Chew conversion very very quickly and we've been able to extract a lot of value out of the space. I mean, if you take the disclosure that I gave you.

<unk>. So then as you go extrapolate to getting new customers on we think the products that we deliver work we think their mindsets will change overtime, because they'll realize platforms are different and thats. Good for their business is not bad for their business now the last thing I'll leave you with is we do believe in automation entirely throughout the funnel we don't allow.

Q I think it was Q1 hundreds of advertisers I believe it was in the six hundreds.

Gaming companies to use any sort of manual targeting in our platform. The platform allows them to input a goal put it in the budget and get that result, and that's what they pay us for the technology being extremely precise and removing the human mind out of the equation. We bring the same view to this category all.

<unk>. So then as you go extrapolate to getting new customers on we think the products that we deliver work we think their mindsets will change over time, because they will realize platforms are different and thats. Good for their business, that's not bad for their business now the last thing I'll leave you with is we do believe in automation entirely throughout the funnel we don't allow.

All these technologies in advertising going to move to AI automating most of this funnel in the future we've already done that in our largest part of our business and we are committed to doing that in this category and not allowing people to override what is a smarter system than the human being.

<unk> companies to use any sort of manual targeting in our platform. The platform allows them to input a goal put it in our budget and get that result, and that's what they pay us for the technology being extremely precise and removing that human mind out of the equation. We bring the same view to this category all.

If I could ask a follow up.

<unk> said in previous calls that youre going to be patient and.

We want great experience for our customers before you open up and you said I think 80% or having good outcomes, but maybe 20% aren't an EV product performing around <unk> things like this in the past that.

These technologies in advertising, you're going to move to AI automating most of this funnel in the future we've already done that in our largest part of our business and we are committed to doing that in this category and not allowing people to override what is a smarter system than the human being.

First obviously, you still referral base, so you're not completely opened but it's definitely a big step forward. So can.

Can we infer that it's largely improving performance that's informing that decision to go bigger.

If I could ask a follow up.

And if so kind of how would you grade that or how are you doing better than the year on year any commentary on performance. So last call I laid out a list that I thought it would take quarters and our team knocked out most of that list in a single quarter, we got the Shopify App integration live we.

Said in previous calls that youre going to be patient and.

We want great experience for our customers before you open up and you said I think 80% or having good outcomes, but maybe 20% arent an EV product performing around <unk> things like this in the past, but so October 1st obviously, you still referral base, so you're not completely open, but it's definitely a big step forward. So can.

We don't announce these things, but you can find the up and the Shopify App store. It creates one quick integration, we got dynamic product ads lives that made a material uplift to the ability for the advertiser or on a video plus inventory add to them transact the user in a very short amount of time.

Can we infer that it's largely improving performance that's informing that decision to go bigger.

And if so kind of how would you grade that or how are you doing better or any commentary on performance last call I laid out a list that I thought it would take quarters and our team knocked out most of that list in a single quarter, we got the Shopify App integration life we.

More in depth integrations with the attribution companies, which we talked about last time was really important so that we can report the same way that the advertiser looks at data and then let the model and interpret data that way, we're continuously improving the core underlying model. So as we looked at the advertisers that we have the.

We don't announce these things, but you can find the up and the Shopify App store it creates one click integration.

Dynamic product ads live that made a material uplift to the ability for the advertiser to run a video plus inventory add to them transact the user in a very short amount of time.

The growth rate that they are seeing is substantial enough and the feedback that we're getting is strong enough that we have no reason not to open up our platform as soon as we can.

Alright, Thanks, Adam Yeah.

More.

Depth integrations with the attribution companies, which we talked about last time was really important so that we can report the same way that the advertiser looks at data and then let the model and interpret data that way, we're continuously improving the core underlying model. So as we looked at the advertisers that we have the.

Our next question will come from Clark <unk> with BTG.

Thanks, Good evening.

I have.

Obviously, I guess some follow ups on the <unk> launch, but I wanted to see I guess as you guys are thinking about taking on more of the customers that are in backlog.

The growth rate that they're seeing.

Is substantial enough and the feedback that we're getting a strong enough that we have no reason not to open up our platform as soon as we can.

Onboarding, new set of cohorts and vertical next year in the near term is there any significant difference I guess, if we think about the customers that are coming on from a size or product vertical standpoint, and then from as we think about I guess the referral dynamic.

Alright, Thanks, Adam.

Our next question will come from Clark <unk> with BTG.

Thanks, Good evening.

I have.

Does that have any impact on <unk>.

Obviously, I guess some follow ups on the Seltzer launch, but I wanted to see I guess as you guys are thinking about taking on more of the customers that are in backlog onboarding, new set of cohorts and vertical next year in the near term is there any significant difference I guess, if we think about the customers that are coming on from <unk>.

Expenses are sort of margins will those customers given.

Credits or any sort of compensation for bringing on I guess peers.

Yes, the second one first Clark I mean, obviously the incremental value of a dollar in our business is worth a ton.

So if we decided to pay referral.

Ms or product vertical standpoint, and then from as we think about I guess the referral dynamic.

You know that we like to make money. So I wouldn't expect you'll even see it in the margin number. It's just the business is way too big but it's very likely that what we look at is what I mentioned earlier the chance for our clients to tell their peers to come on our platform. While we've been exclusive for this long is a perkin itself. So we're not going to see much of a need to go pay for that.

That had any impact on <unk>.

Expenses are sort of margins will those customers given credits or any sort of compensation for bringing on I guess peers.

Yes, the second one first Clark I mean, obviously the incremental value of a dollar in our business is worth a ton.

Client acquisition.

And then on the first question.

So if we decided to pay referral.

Don't mind quick recap.

Yes.

You know that we like to make money. So I wouldn't expect youll, even see it in the margin number. It's just the business is way too big but it's very likely that what we look at is what I mentioned earlier the chance for our clients to tell their peers to come on our platform. While we've been exclusive for this long is a perkin itself. So we're not going to see much of a need to go pay for that.

Yes, it'll it'll vary because we're going to open up to much more account. So so far we've gone through a period, where at first I think we were constrained to $25 million to $30 million of GMB, we dropped it down for a little bit we raised it up this quarter to 100 million plus to really constrain what's coming on the platform as we open up the <unk>.

Client acquisition.

<unk> that we have is to see the any small business of any type to market on our platform. If we clear that goal. We know we're going to be a product that can be very important to economies and job creation around the world. That's our goal now if we don't see that we're going to work on that but we think the product is ready for that we've seen cases of <unk>.

And then on the first question.

You don't mind quick recap.

Yes.

It will vary.

We're going to open up to much more accounts. So so far we've gone through a period, where it first I think we were constrained to $25 million to $30 million of GMB, we dropped it down for a little bit we raised it up this quarter to $100 million plus to really constrain what's coming on the platform as we open up the goal that we have is to see the any small.

Regardless of size customers just plug in and it works. So you can find their customers. They can measure the way they need and they get the results that they would expect to grow their business and so if we see that in this referral state then we're gonna be quickly on our way to opening up the business and really pushing it hard.

This of any type to market on our platform. If we clear that goal. We know we're going to be a product that can be very important to economies and job creation around the world. That's our goal now if we don't see that we're going to work on that but we think the product is ready for that we've seen cases of regardless of size customers just plug it in.

Okay and then.

Not that this is something that I guess, a huge priority right now, but in terms of I guess sort of long run supply expansion. I think you guys that you have more model improvement will unlock supply across the existing gaming footprint, but when do you think I guess maybe years down the road.

It works. So you can find their customers they can measure the way they need and they get the results that they would expect to grow their business and so if we see that in this referral state then we're going to be quickly on our way to opening up the business and really pushing it hard.

Where would it make sense I guess are there ways, you sort of expand back sort of logically outside of the gaming ecosystem.

Okay and then.

I don't think it's going to be years down the road. If we're able to go get the demand that has broad reaching and drive up the client count substantially over the coming quarters.

Not that this is something that I.

I guess, a huge priority right now, but in terms of I guess sort of long run supply expansion.

Thank you guys. Thank you.

Pretty quickly we're going to look at new supply sources as well there is absolutely no reason why we wouldn't want to plug into other properties, even if they're large social networks music apps news apps sports apps websites. The audience itself again, this gamer audience as a human being that's doing a whole bunch of other things in.

More model improvements will unlock supply across the existing gaming footprint, but when do you think I guess maybe years down the road.

Where would it make sense I guess are there ways to surface.

Mac.

Logically outside of the gaming ecosystem.

I don't know.

It's going to be years down the road, if we're able to go get the demand that has broad reaching and drive up the client count substantially over the coming quarters.

<unk> are probably somewhere in the neighborhood of 10% to 15% of their time spent on mobile and if we can access them outside of the largest walled gardens that won't let us and everywhere else and we know them and we have data on them, we want to show that add to them every chance, we get and we think that'll be a very lucrative transaction moment for us in the advertiser.

We're going to go after that and so I wouldn't expect that that's a year's out.

Our into the future initiative.

Thank you.

Yes.

<unk> are probably somewhere in the neighborhood of 10% to 15% of their time spent on mobile and if we can access them outside of the largest walled gardens that won't let us and everywhere else, we know them and we have data on them. We want to show that adds to them every chance, we get and we think that'll be a very lucrative transaction moment for us in the advertiser.

Okay.

<unk> with Jefferies.

Great. Thank you guys.

Adam have you seen any changes in overall user acquisition spend.

<unk> company post the Apple versus I think last season, and conceptually should be a great tailwind for your business, but instead, if youre seeing any benefit playing out currently not yet I think I've mentioned this on the last call, but we sort of expect this one to be take longer than people expect certainly some apps or bypassing the app store now to cut their rates.

We're going to go after that and so I wouldn't expect that Thats a year's out.

Out into the future initiative.

Thank you.

Okay.

Next.

<unk> with Jefferies.

But the biggest gaming companies tend to move really slowly and tend to operate in fear of the big platforms and so in order to really do it I think it's going to take a few quarters for them to optimize the user experiences and go Banquette and then from there you'll start seeing it compound pretty quickly in terms of benefit to us as an AD platform because once the very large.

Great. Thank you.

Adam if you can answer.

Changes in overall user acquisition spend.

The company post the Apple versus I think last season, and conceptually should be a great tailwind for your business, but instead, if youre seeing any benefit playing out currently not yes, I think I mentioned this on the last call, but we sort of expect this one to be take longer than people expect certainly some apps or bypassing the app store now to cut their rates.

Leaders start doing it.

Searching the smaller to mid sized ones really pick it up quickly so no impact yet.

I would guess it will probably take two to four quarters from some impact and by four to eight quarters, you're going to go get pretty material impact in pricing on our platform.

But the biggest gaming companies tend to move really slowly and tend to operate in fear of the big platforms and so in order to really.

Great and then maybe just another one on capital allocation I mean, it looks like without the asset you are generating a 60% plus free cash flow margin is essentially to hear how youre thinking about use of cash.

Yes.

The approach that we're going to take James going forward is very consistent with what we've done in the past I mean, obviously first.

Continuing to you to allocate capital towards organic initiatives continuing to hire on very high quality engineering and business development talent to help to continue to grow the organic business and then after that then to continue to return capital to shareholders via share buybacks so that.

That's the approach going forward as well.

Thank you.

Our next question will come from Martin Yang with Opco.

Hi, Thank you for taking my question.

One question on international expansion.

Can you give us a sense of how do you view the size of the U S market versus international when it comes to your ideal target.

In the near term and I have a follow up.

Yes, I mean, one let's let's divide it into two things one there is international businesses.

Local shop in Japan.

Domestic U S businesses second there's the traffic and for us historically.

Because we've grown word of mouth getting customers there were local to markets was always tricky. So it was much easier for us to get companies that were international buyers and the revenue was driven by whereas the audience and how monetize able as the audience and so today I'm going to say this off the top of my head and Mac and correct, if I'm wrong, but it's roughly half half on <unk>.

Domestic U S versus rest of world and remember, we don't tend to operate inside China and so you start with that you go okay well.

Have a.

And the the only disclosure we've given you on the e-commerce vertical that $1 billion run rate I look at that and go Wow. If we open up all these other countries for the most part is one going to become to overnight probably not because most of these western companies can't go out and buy Japan, and Korea and things that are really localized in language, but theres a lot.

Auto markets that look and feel similar to the U S. So once we open it up one's going to become much more than one we just don't know where it's going to land and then as we open up the platform that local Japanese company should be able to come into our platform and like we said if we don't see them organically coming in we're going to market to them and ensure they are coming in the one in Korea is going to come on the platform and we will start getting penetration and every.

One of the market that our users are in and that incremental advertiser in these categories as I touched on the revenue from that is worth so much to us that we have the type of financial model that will allow us to go get coverage all over the world.

Got it thank.

Thank you my follow up question on that is.

<unk>.

The pace of Onboarding International customers do you see a pent up demand among dose. So when it comes to pacing should we see a southern uptake similar to <unk> not sure in the U S.

Our international Onboarding will be a more gradual in line with the overall rollout.

I can't say I know I haven't looked at the Q of domains you'd have to infer where the company's base and we don't even athletes like country of.

Of origin.

But the reality is as we open up the platform.

The customers that we have inside gaming are global so they invite their peers their beers are going be wherever their headquarters alright. So theres coverage all over the world. The companies that are alive inside of E. Commerce are predominantly U S. So probably their peers are going to be in western markets.

And so you'll have a mix of referrals going out and I don't think its going to be like.

Everyone's focused on the user only in the U S to invite it's gonna be broad, reaching and there is no constraints that William you're setting as we start opening the platform up.

Got it thanks.

Our next question will come from Jim Callaghan with Piper Sandler.

Alright, thanks, guys for taking the question.

On E Commerce, who are working with a lot of different types of advertisers with different bidding goals and purchased windows.

We learned through that process. So far that's informing the self served kind of tool set.

I mean, it is much more fragmented when it comes to attribution and then.

Integration than the mobile App ecosystem, the mobile App ecosystem has two major mmp's mobile measurement partners, we own one of them. So integration is pretty easy across the advertiser base and everyone has the same attribution model everyone looks at things on a last quick basis and so everything is standardized when we got into <unk>.

Web not only do we have to contend with the fact that most of the media buying what's happening on meta so everyone wanted things the way they looked at things on meta secondarily, we had to contend with the fact that the space was completely fragmented. So this was one of the bigger lifts that we had to go accomplish over the last quarter or two will do all of those integrations that I laid out in the lab.

Call to get us ready so that we can go out and really open up the platform, we wouldn't be able to if every shop by shop came onto our platform and couldn't integrate one click that's how they integrate everywhere else. So we needed to have that deal struck and have that app integrated in their store and already approved and functional we needed to ensure that we were integrated with the major attribute.

Companies the numbers line up and advertisers can see things the way they need and also the model against the data that it needs to be able to go optimize on their behalf. So those things where the harder points and we've gotten through it we've seen obviously positive reception, which gives us the confidence to get going on our journey to open up the platform.

Great. That's helpful and just on core gaming in the quarter anything to call out in terms of like model enhancements tweaks performance improvements.

Nothing like double digit step function, but look the numbers are getting bigger now. So we're now in a place where we continue to put up big numbers every single quarter Q2 isn't particularly strong seasonally in the category, but we still grew at a really healthy rate. We continue to have iterative lifts and we continue to deliver to advertisers a lot of value to every <unk>.

They come back to reinvest more as they continue to see strong return on AD spend on our platform. So what gives us confidence is as our numbers are getting bigger and without some something thats, what we would call. The next big model enhancement, we're still growing at really healthy rates. So everything else. So we're talking about just creates this upside off.

Opportunity on the business not only the incremental data flywheel from a new category of the new demand from the new category, but also the fact that inside gaming, there's more improvement to our technology to come and some of that improvement at times will be those model enhancement substantial lifts that no one expects.

Great. Thank you.

Our next question comes from Bernie Mcternan with Needham <unk> company.

Great.

Thanks for taking the questions.

Incremental margins of the business are obviously pretty incredible should there be any changes that we expect.

As e-commerce expand whether from marketing to acquire advertisers or the economics. If you look at to plug into other supply sources.

Is 9100% incremental margins is that still the right way to think about the business.

Later, when we plug in will be net revenue reported right because still we're going to report revenue rack at the same way.

Former will be a cost line item, but as you've seen we're really responsible with the dollars that we spend.

One youll see the sales and marketing line. So we'll talk about it as we go and test it to we'll test it and three were only going to spend the dollars on performance marketing them for printing cash on the other side and it's creating this growth upside that we expect so it's going to be.

Cost line item that wouldn't have existed before that will and one that I think everyone, who the shareholders are going to love to see growing because it will imply we're going to make a huge spread on the LTV at a cost of user acquisition on the other side.

Thank you.

Great.

Our next question comes from <unk> <unk> with Wolfe.

Hey, Thanks for taking my question Adam.

Reintroducing the advanced mobile measurement and adjust supporting it do you see that maybe as an opportunity to showcase like apps.

And Jim and incremental performance for ecommerce campaigns versus meta and could your advertisers that are opting in drive stronger traction with ecommerce advertisers, especially with like the referral based rollout in October is that timing of that rollout also so keeping that 10% of that revenue being ecommerce intact for the year and then Matt just a quick follow up.

After you Blitz those questions.

And is there a ran together so let's start with.

Advanced mobile measurement, and then lets jump into that actually.

Advanced mobile measurement.

We don't comment on other company's measurement of integrations, but they've always been integrated as a self attributing network with adjust adjusted no different than apps fire, we run that business completely separately. So they do support attribution models across all of these companies I don't think there's any overlap with our business on these integrations.

At least not that we've ever seen in the past.

And therefore, that's something that happens on a team that we don't closely manage and really runs their business to maximize the SaaS business that they have.

I think your second question was percentage of E com revenue in the future correct like we're starting to see.

Now we've said I think on the last earnings call I think I said, 0.5% market penetration is probably I mean, we're certainly sub 1% of meta reports over 10 million advertisers and we're going after all businesses of all sizes. We don't have a lot of advertisers so no.

And the opportunity in that category, both in terms of advertiser count and in terms of scale of Tam is much greater than gaming. So as we go forward. If we're doing our job right and performances as we would expect based on the data that we have so far it's going to quickly become more and more of our business and will one day, our business become 90%.

Web based advertising, 10% mobile gaming I don't know, but what I think because of the data flywheel in the system the benefits both sides and the improvements that we continue to have on gaming as a gaming is going to get bigger in that other other categories and you get really big.

Got it and then Matt just on the actual guide so I think 5% sequential growth conservatism last quarter was four <unk>.

Just say hey, the incremental point, that's kind of the UA spend tied from the studio is paying off.

Look and getting some of that revenue is that fair I mean, historically, what we were doing was trying to guide towards that component of growth rate that we feel very confident and that's very predictable, which is when you look at kind of the components of overall growth in our technology rights.

The directed model enhancements that Adam mentioned changes that the engineers are making and then the ongoing reinforcement learning within the model and that ongoing reinforcement learning has generally trended towards the 3% to 5% per quarter. So the difference between that and then the guide this quarter is the incremental uplift from the additional revenue that we're going to get.

From the apps divestiture got it thanks Youre welcome.

Our final question comes from Alexander <unk> with.

Wells Fargo.

Perfect. Thanks.

Thanks, So much for the question I think when everybody is trying to figure out is.

When self service goes live on October <unk>, a referral basis or a perhaps broader general availability next year.

Some notable amount of latent demand waiting to get into the program right advertisers that are asking to join but maybe it didn't meet the GMP thresholds on where perhaps you have the capacity to onboard in the past can you maybe help us understand how big that was to advertisers as you mentioned the Q in response to a previous question. So it seems like Theres. Some theres some amount of demand that you have.

Already identified equating to the program.

Look the referral program is to make sure that our advertisers who find success on our platform. Thus far are effectively curating. The next set of advertisers and prior to that it was our team doing that and we were very very restrictive. So we think our advertisers are going to cause and all.

Onboarding moment that'll be multiples bigger than what we were manually curated now what it is.

Not necessarily true that we're gonna take our Q, that's built over the last year and just say everyone. You're in there's still going to have to get invited to get into the platform. So it will be still curated onboarding.

The reality is like Q4 is going to end up being a fun quarter, you've got the advertiser cohort that we didn't have last Q4 that was growing in the quarter to the point, where you know we reported huge numbers and then had huge numbers in Q1, but we're going to have those advertisers primed and ready to go for the full Q4, we're not those advertisers inviting their friends under our platform.

In Q4, and we're going to be opening up international all at the same time, so theres going to be a lot of fun moment moments for us and our customers in this e-commerce or web based category that'll set sort of a new baseline for that business and then obviously then we will go through hopefully another inflection when we really truly open up the platform in and try to get in.

To say, where we're more stable long term.

And then maybe just one more if I could you've kind of articulated a vision for the self service ads manager, where theres a lot of each end to capabilities built in.

The campaign is that live on October one was October 1st version of the product that has a credit card that has measurement, but then we had kind of the AI stuff later, maybe yes parts I mean look there's different levels of agents. There is an agent that can respond and answer questions and give you responses to those questions and help you along.

Sort of Onboarding widget that whether we want to call. This AI or not now AI has made it a lot more capable.

It's something that there's probably going to be in present early in the release of this product.

The more complex level is an agent that does everything for you you're an advertiser and you wonder how Youre campaign is doing analyze the performance talk to me about the odds of them running that's a complex agent task analysis tax task at the advertiser level is not trivial that'll be on the way too and then you've got a third form.

And I wouldn't call it I call it tools, but I keep referencing this generative AI based on our creative tools, we're going to give our customers the ability to automatically create advertisements whether video or end card what that will do is create way more diversity of advertisement on our platform for the model to go use to personalize AD to the other side and hopefully much higher response.

Right from the consumer.

In particular small businesses don't have the resources.

To go build ads that adapt for our platform given the ads that adapt for our platform tend to engage the user for 30 to 60 seconds instead of three to six seconds like they do on social and so we want to give them those tools. So that they can have the same capacity the larger brands do so they can buy at the maximum capability that their business just.

Suffice on our platform all of these things will come and then we'll talk about the next tools behind it because no product in our world stops being iterative. We launched we then add tools, we try to make the advertisers like seamless and fully automated and we will keep giving them tools that we think will benefit them, which in turn benefits consumers and us.

Thank you so much.

And that concludes the question and answer session for this quarter. We thank you all for joining us today have a good afternoon.

Brands do so they can buy at the maximum capability that their business justifies on our platform. All of these things will come I mean, and then we will talk about the next tools behind it because no product in our world stops being iterative. We launch. We then add tools, we try to make the advertisers like seamless and fully automated and we will keep giving them tools that we think will bend.

Thanks, everyone.

Fit them, which in turn benefits consumers and us.

Thank you so much.

Q2 2025 AppLovin Corp Earnings Call

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