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What changed in AppLovin Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AppLovin Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+499 added−581 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-26)

Top changes in AppLovin Corp's 2024 10-K

499 paragraphs added · 581 removed · 420 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

54 edited+8 added−14 removed33 unchanged
Biggest changeWurl has built the following products to meet their customers’ needs: • AdPool: is a monetization solution that connects CTV supply with top advertisers and access to exclusive demand. • ContentDiscovery: is an advertising solution that grows audiences, increases engagement, and reduces churn for streaming platforms and apps. 4 Table of Contents • Global FAST Pass (GFP): is a distribution solution that makes it easy to launch Free Ad-supported Streaming TV channels.
Biggest changeThe technology helps companies engage with the highest-value viewers, and ultimately increase their revenue. 4 Table of Contents Wurl has built the following products to meet their customers’ needs: • AdPool: is a monetization solution that connects CTV supply with top advertisers and access to exclusive demand. • TVBits: is an AI-powered interactive, personalized, short-form CTV application that allows viewers to discover content and content companies and streamers the ability to increase viewership, engagement, and revenue. • BrandDiscovery: is an AI-powered CTV advertising tool that identifies contextual segments based on genre, brand safety, and the emotion of each scene to help advertisers deliver the right ad at the right time. • ContentDiscovery: is an AI-powered advertising solution that grows audiences, increases engagement, and reduces churn for streaming platforms and apps. • Global FAST Pass (GFP): is a distribution solution that makes it easy to launch Free Ad-supported CTV channels, monetize them instantly, and access data to grow and retain audiences.
Second, we provide advertisers with monetization 1 Adjust’s marketing platform is operated by our wholly-owned subsidiary and data generated by Adjust's services is not shared with AppLovin or incorporated into or used to optimize its recommendation engine or other technologies. 2 Table of Contents and analytics technology to maximize the value of their advertising inventory by obtaining a high price for each impression.
Second, we provide advertisers with monetization and analytics technology to maximize the value of their advertising inventory 1 Adjust’s marketing platform is operated by our wholly-owned subsidiary and data generated by Adjust's services is not shared with AppLovin or incorporated into or used to optimize its recommendation engine or other technologies. 2 Table of Contents by obtaining a high price for each impression.
Compliance with Government Regulation We are subject to various federal, state, and international laws and regulations that affect companies conducting business on mobile platforms, including those relating to privacy, data protection, and the use and protection of data from employees, users and others (including minors), the internet, behavioral advertising, mobile apps, content, advertising and marketing activities, sweepstakes and giveaways, and anti-corruption.
Compliance with Government Regulation We are subject to various federal, state, and international laws and regulations that affect companies conducting business on mobile platforms, including those relating to privacy, data protection, and the use and protection of data from employees, users and others (including minors), the internet, behavioral advertising, mobile apps, content, advertising and marketing activities, sweepstakes and giveaways, e-commerce and anti-corruption.
They also have access to our in-house creative team, SparkLabs, for expert ad creation and testing strategies. MAX MAX is our in-app bidding software that optimizes the value of publishers' advertising inventory by running a single unbiased, real-time competitive auction, driving more competition and higher returns for publishers.
They also have access to our in-house creative team, SparkLabs, for expert ad creation and testing strategies. MAX MAX is our in-app bidding solution that optimizes the value of publishers' advertising inventory by running a single unbiased, real-time competitive auction, driving more competition and higher returns for publishers.
For the amount of revenue derived from our two segments and other relevant data for the years ended December 31, 2023, 2022 and 2021, as well as other additional information, see Note 14 of our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
For the amount of revenue derived from our two segments and other relevant data for the years ended December 31, 2024, 2023, and 2022, as well as other additional information, see Note 14 of our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Additional laws and regulations relating to these areas likely will be 7 Table of Contents passed in the future, and these or existing laws and regulations may be interpreted or enforced in new or expanded manners, each of which could result in significant limitations on ways we can collect and process data of users, employees and others, communicate with users, and operate our business.
Additional laws and regulations relating to these areas likely will be passed in the future, and these or existing laws and regulations may be interpreted or enforced in new or expanded manners, each of which could result in significant limitations on ways we can collect and process data of users, employees and others, communicate with users, and operate our business.
Advertisers are not only able to attract users that download, but also find a high volume of users that stay and engage with their apps for greater retention and ultimately, increased opportunities for better monetization. Revenue from AppDiscovery comprises a vast majority of revenue from our Software Platform.
Advertisers are not only able to attract users that download, but also find a high volume of users that stay and engage with their apps for greater retention and ultimately, increased opportunities for better monetization. Revenue from AppDiscovery comprises a vast majority of our Advertising Revenue.
We seek to accomplish that objective by establishing intellectual property rights in and protecting those assets through a combination of patents, patent applications, registered and unregistered trademarks, copyrights, trade secrets, license agreements, confidentiality procedures, non-disclosure agreements with third parties, and other contractual measures.
We seek to accomplish that objective by establishing intellectual property rights in and protecting those assets through a combination of registered and unregistered trademarks, copyrights, trade secrets, license agreements, confidentiality procedures, non-disclosure agreements with third parties, and other contractual measures.
Our studios generally focus on the development of easy to learn and play games, which appeal to a broad range of demographics, but our portfolio also includes several games for other genres. We report our operating results through two reportable segments: Software Platform and Apps.
Our studios generally focus on the development of easy to learn and play games, which appeal to a broad range of demographics, but our portfolio also includes several games for other genres. We report our operating results through two reportable segments: Advertising and Apps.
We work to comply with, and to help allow developers and advertising ecosystem partners to comply with, applicable laws and regulations relating to privacy, data protection and information security. This helps underpin our strategy of building trust and providing a strong experience to advertising ecosystem partners and clients.
We work to comply with, and to help allow developers and advertising ecosystem partners to comply with, applicable laws and regulations relating to privacy, data protection and information security. This helps underpin our strategy of building trust and providing a strong 7 Table of Contents experience to advertising ecosystem partners and clients.
As our business expands to further scale our Software Platform and include additional Apps, as we continue to operate our AI-powered advertising engine AXON, and as our operations continue to expand internationally, our compliance requirements and costs may increase and we may be subject to increased regulatory scrutiny.
As our business expands to further scale our Advertising solutions and include additional Apps, as we continue to operate our AI-powered advertising engine AXON, and as our operations continue to expand internationally, our compliance requirements and costs may increase and we may be subject to increased regulatory scrutiny.
Our tools operate at microsecond-level speeds and at vast scale to enhance monetization for developers while preserving the end user experience. • Leverage proprietary data and insights: Advertisers benefit from accessing comprehensive real-time insights through our customized user dashboards, helping them optimize campaigns, improve user engagement, and manage their return on investment. • Automate time consuming and manual processes: Our Software Platform automates marketing and monetization, allowing advertisers to focus on improving their content rather than managing complex go-to-market processes manually. • Seamlessly adapt to industry innovation: Our Software Platform is continuously updated as the advertising ecosystem evolves.
Our tools operate at microsecond-level speeds and at vast scale to enhance monetization for developers while preserving the end user experience. • Leverage proprietary data and insights: Advertisers benefit from accessing comprehensive real-time insights through our customized user dashboards, helping them optimize campaigns, improve user engagement, and manage their return on investment. • Automate time consuming and manual processes: Our Advertising solutions automate marketing and monetization, allowing advertisers to focus on improving their content rather than managing complex go-to-market processes manually. • Seamlessly adapt to industry innovation: Our technology is regularly updated as the advertising ecosystem evolves.
Approximately 53% of our U.S. employees are from one or more diverse groups, including Asian, Hispanic or Latino, Black or African American, Native Hawaiian or Other Pacific Islander, American Indian or Alaska Native, or Two or More Races and approximately 36% of our U.S. employees are female. None of our employees are represented by a labor union.
Approximately 45% of our U.S. employees are from one or more diverse groups, including Asian, Hispanic or Latino, Black or African American, Native Hawaiian or Other Pacific Islander, American Indian or Alaska Native, or Two or More Races and approximately 34% of our U.S. employees are female. None of our employees are represented by a labor union.
AppLovin Apps Today, our Apps consist of a globally diversified portfolio of over 200 free-to-play mobile games across five genres, run by eleven studios located worldwide with a deep bench of talented developers. Our studios have developed and published games across a number of genres including: casual, match-three, card/casino, midcore, and hyper-casual.
AppLovin Apps Today, our Apps consist of a globally diversified portfolio of over 200 free-to-play mobile games across five genres, run by ten studios located worldwide with a deep bench of talented developers. Our studios have developed and published games across a number of genres including: casual, match-three, card/casino, mid-core, and hyper-casual.
Item 1. Business Our mission is to create meaningful connections between companies and their ideal customers. Our software platform provides end-to-end software and artificial intelligence-powered ("AI") solutions for businesses to reach, monetize and grow their global audience ("Software Platform"). We also operate a portfolio of owned mobile apps (“Apps”).
Item 1. Business Our mission is to create meaningful connections between companies and their ideal customers. We provide end-to-end artificial intelligence-powered ("AI") advertising solutions for businesses to reach, monetize and grow their global audience ("Advertising"). We also operate a portfolio of owned mobile apps (“Apps”).
Through our technologies and scaled distribution, advertisers are able to better place content so that it is discovered by the right audience, manage, optimize, and analyze their marketing investments, and improve the monetization of their content.
Through our technologies and scaled distribution, advertisers are able to better place content so that it is discovered by the right audience, manage, optimize, and analyze their marketing investments, and improve the monetization of their content, and publishers are able to better monetize their gaming apps.
Our studios leverage live ops to quickly iterate and increase in-game monetization by optimizing app economies and improving in-game conversion on items and offers. The studios operating our portfolio of Apps utilize our Software Platform to market, scale, and monetize our Apps.
Our studios leverage live ops to quickly iterate and increase in-game monetization by optimizing app economies and improving in-game conversion on items and offers. The studios operating our portfolio of Apps utilize our Advertising solutions to market, scale, and monetize our Apps.
Advertisers are able to set their user acquisition and revenue goals to target the most relevant, highest value users. • Maximize monetization of engagement: Advertisers use our Software Platform to generate incremental revenue by maximizing the monetization of their ad inventory.
Advertisers are able to set their user acquisition and revenue goals to target the most relevant, highest value users. • Maximize monetization of engagement: Advertisers use MAX to generate incremental revenue by maximizing the monetization of their ad inventory.
Advertisers on our Software Platform benefit from this ongoing advancement and optimization and are able to rapidly adapt to industry changes in marketing and monetization without losing focus on content creation. Our Software Platform is primarily made up of four key solutions: AppDiscovery, MAX, Adjust, and Wurl.
Advertisers benefit from this ongoing advancement and optimization and are able to rapidly adapt to industry changes in marketing and monetization without losing focus on content creation. Our Advertising solutions are primarily made up of four key products: AppDiscovery, MAX, Adjust, and Wurl.
We generate our revenue from our Software Platform and our Apps. As more advertisers use our Software Platform to market and monetize their content, we gain access to more data regarding users and user engagement 1 , further strengthening our scaled distribution.
We generate our revenue from Advertising and our Apps. As more advertisers use our Advertising solutions to market and monetize their content, we gain access to more data regarding users and user engagement 1 , further strengthening our scaled distribution.
When these mutually reinforcing elements of our Software Platform are combined, it creates a robust and successful marketing and monetization engine that both sells attractive advertising inventory to advertisers while monetizing it for publishers.
When these mutually reinforcing elements are combined, it creates a robust and successful marketing and monetization engine that both sells attractive advertising inventory to advertisers while monetizing it for publishers.
New and evolving laws and regulations, and changes in their enforcement and interpretation, may require changes to our Software Platform, Apps, or business practices, and may significantly increase our compliance costs and otherwise adversely affect our business and results of operations.
New and evolving laws and regulations, and changes in their enforcement and interpretation, may require changes to our Advertising solutions, Apps, or business practices, and may significantly increase our compliance costs and otherwise adversely affect our business and results of operations.
Our Software Platform also enables publishers to leverage real-time auctions that optimize the value for each impression, while simultaneously enabling them to attain an attractive value for each of the impressions from their advertising inventory.
Our Advertising solutions also enable publishers to leverage real-time auctions that optimize the value for each impression, while simultaneously enabling them to attain an attractive value for each of the impressions from their advertising inventory.
Such advertising platform companies vary in size and include players such as Facebook, Google, Amazon, and Unity Software, as well as various private companies. Several of these platforms, including Facebook, Google, Amazon, and Unity Software, are also our partners and clients. • There are many companies that develop online and mobile games and other mobile apps.
Such advertising companies vary in size and include Facebook, Google, Amazon, and Unity Software, as well as various private companies, several of which are also our partners and clients. • There are many companies that develop online and mobile games and other mobile apps.
Third, we provide developers a set of capabilities to optimize their apps and help streamline their businesses. Additionally, we have entered the CTV advertising market with the integration of Wurl.
Third, we provide developers, who are often also advertisers, a set of capabilities to optimize their apps and help streamline their businesses. Additionally, we have entered the CTV advertising market with the integration of Wurl.
Such regulations include, for example, the European Union General Data Protection Regulation, the Children’s Online Privacy Protection Act, Section 5(a) of the Federal Trade Commission Act, and the California Consumer Privacy Act.
Such regulations include, for example, the European Union General Data Protection Regulation, the Children’s Online Privacy Protection Act, Section 5(a) of the Federal Trade Commission Act, and the California Consumer Privacy Act and similar U.S. state laws.
Our geographic diversification enhances our ability to retain and attract highly skilled talent as well as manage our headcount costs. As of December 31, 2023, approximately 49% of our global employees were located outside of the U.S. and 51% in the U.S.
Our geographic diversification enhances our ability to retain and attract highly skilled talent as well as manage our headcount costs. As of December 31, 2024, approximately 54% of our global employees were located outside of the U.S. and 46% in the U.S.
See the section titled “Risk Factors—Risks Related to Intellectual Property” for more information regarding risks related to intellectual property. Employees and Human Capital Resources As of December 31, 2023, we had a total of 1,745 employees, comprised of 1,717 full-time and 28 part-time/intern employees, located in 17 countries.
See the section titled “Risk Factors—Risks Related to Intellectual Property” for more information regarding risks related to intellectual property. Employees and Human Capital Resources As of December 31, 2024, we had a total of 1,563 employees, comprised of 1,533 full-time and 30 part-time/intern employees, located in 17 countries.
The underlying elastic architecture of our solutions allows us to create, test, and deploy new features rapidly while distributing them globally. We also continue to invest in new and existing Apps. Our research and development team is working on cutting edge technologies, which allows us to attract top talent globally.
The underlying elastic architecture of our solutions allows us to create, test, and deploy new features rapidly while distributing them globally. Our research and development team is working on cutting edge technologies, which allows us to attract top talent globally.
As our distribution grows, we gain better insights for our AXON recommendation engine, which then further enhances our Software Platform. Our Apps consist of a globally diversified portfolio of over 200 free-to-play mobile games across five genres, run by eleven studios, some of which we own and others that we partner with.
As our distribution grows, we gain better insights for our AXON recommendation engine, which then further enhances the efficiency and effectiveness of our Advertising solutions. Our Apps consist of a globally diversified portfolio of over 200 free-to-play mobile games across five genres, run by ten studios, some of which we own and others that we partner with.
Data Privacy and Security Laws The data we collect and otherwise process is integral to our Software Platform and Apps, providing us with insights to improve our developer tools, to optimize app discovery and monetization and to improve our Apps.
Data Privacy and Security Laws The data we collect and otherwise process is integral to our Advertising solutions and Apps, providing us with insights to improve our AI-powered advertising engine AXON and our developer tools, to optimize app discovery and monetization and to improve our Apps.
Though we rely in part upon these legal and contractual protections, we believe that factors, such as our unique position in the advertising ecosystem, our expertise and determination of our employees, and the functionality and flexibility of our Software Platform in an ever-evolving industry, are also key contributors to our success.
Though we rely in part 6 Table of Contents upon these legal and contractual protections, we believe that factors, such as our unique position in the advertising ecosystem, our expertise and determination of our employees, the speed of our technological development and the functionality and flexibility of our Advertising solutions in an ever-evolving industry, are critical contributors to our success.
As of December 31, 2023, we owned the following trademarks related to the business: 45 registered trademarks in the United States, 10 pending trademark applications in the United States, as well as 477 registered trademarks in non-U.S. jurisdictions, and 11 pending trademark applications in various non-U.S. jurisdictions.
As of December 31, 2024, we owned the following trademarks related to the business: 58 registered trademarks in the United States, 16 pending trademark applications in the United States, as well as 400 registered trademarks in non-U.S. jurisdictions, and 31 pending trademark applications in various non-U.S. jurisdictions.
Our Strategy for Growth We have a comprehensive strategy to continue our growth and further enhance our market position in the advertising ecosystem: • Existing market expansion: We continue to have an attractive market opportunity within our current mobile app segment, which we intend to address through the optimization of our Software Platform. • Enhance and extend AI-based technologies: As we increase our scale and reach, we benefit from compounding improvements to AXON, our AI-powered advertising engine, which in turn improves the efficacy and growth of our Software Platform solutions. • New market expansion: We are confident our technology and expertise are applicable to other market segments and geographies we do not currently address, including: • Non-gaming mobile app segments and industries: One of our long-term objectives is to provide critical tools to mobile app developers across multiple verticals, including, for example, e-commerce and social media. ◦ Other content industries: We believe our deep expertise and capabilities will allow us to successfully apply our solutions to tangential sectors, including with mobile OEMs and carriers through our Array product initiative, as well as the growing CTV industry through our 2022 acquisition of Wurl, LLC.
Our Strategy for Growth We have a comprehensive strategy to continue our growth and further enhance our market position in the advertising ecosystem: • Existing market expansion: We continue to have an attractive market opportunity within our current mobile app segment, which we intend to address through the optimization of our Advertising solutions. • Enhance and extend AI-based technologies: As we increase our scale and reach, our customers benefit from compounding improvements to AXON, our AI-powered advertising engine, which in turn improves the efficacy and growth of our Advertising solutions. • New market expansion: We are confident our technology and expertise are applicable to other market segments and geographies we have not historically addressed, including: ◦ Non-gaming mobile app segments and industries: One of our long-term objectives is to provide critical tools to mobile app developers across multiple verticals, including, for example, e-commerce and social media.
This form of personalized advertising focuses on the end user, enabling the advertisers to find the right users and delivering to users more of what they are likely to be interested in.
This form of personalized advertising focuses on the end user, enabling the advertisers to find the right users and delivering to users more of what they are likely to be interested in. Advertisers set return goals for their campaigns and AppDiscovery targets users to match those goals.
Our clients can analyze by retention periods from initial app download onwards, so that advertisers understand the effectiveness of their marketing investments. • Targeted returns: Advertisers set their goals and target return on ad sales and our algorithms adjust cost and campaign specifics to meet them. 3 Table of Contents AppDiscovery includes the following features: • Advanced campaign management: An interface to create, manage, and automatically optimize campaigns based on return on ad sales goals. • Real-time analytics: An interface to see results and optimize against them with our ROI-based analytics environment. • Lifetime Value ("LTV") reporting: A tool that breaks down campaign results by source and location, allowing advertisers to make real-time, informed decisions about the value and longevity of their campaigns. • High quality and quantity creatives: Advertisers can make and test as many creatives as needed.
AppDiscovery includes the following features: • Advanced campaign management: An interface to create, manage, and automatically optimize campaigns based on return on ad sales goals. • Real-time analytics: An interface to see results and optimize against them with our ROI-based analytics environment. • Lifetime Value ("LTV") reporting: A tool that breaks down campaign results by source and location, allowing advertisers to make real-time, informed decisions about the value and longevity of their campaigns. • High quality and quantity creatives: Advertisers can make and test as many creatives as needed.
We intend to continue to invest in attracting and retaining exceptional talent who share our values and will drive our future growth. • Pursue strategic investments and partnerships: Given our proven track record in strategic transactions, and our long-standing relationships with key industry players, we have earned a reputation as a partner of choice, and will continue to consider and leverage strategic acquisitions, partnerships, and investment opportunities to accelerate our growth.
We intend to continue to invest in attracting and retaining exceptional talent who share our values and will drive our future growth. • Pursue strategic investments and partnerships: Given our proven track record in strategic transactions, and our long-standing relationships with key industry players, we have earned a reputation as a partner of choice, and will continue to consider and leverage strategic acquisitions, partnerships, and investment opportunities to accelerate our growth. 5 Table of Contents Our Customers and Developer Community Our globally diverse customers range from the largest enterprises to small and independent businesses and individuals across a variety of industries.
Our Software Platform is delivered through an integrated and seamless user interface, which provides the following benefits to advertisers: • Reach and attract users at scale: Our Software Platform reaches approximately 1.4 billion users per day, enabling developers to target and find the right users for their content worldwide.
Our Advertising solutions are delivered through an integrated and seamless user interface, which provides the following benefits to advertisers: • Reach and attract users at scale: We provide advertisers with access to approximately 1.6 billion daily active users 2 , enabling developers to target and find the right users for their content worldwide.
Our Apps also work with advertising networks who purchase advertising inventory and consumers who purchase in-app products. We also work with the mobile app publisher community who leverage our mediation solution to monetize their inventory. The scale and breadth of our customers in terms of size and industry provides us with a competitive advantage.
We also work with the mobile app publisher community who leverage our mediation solution to monetize their advertising inventory. The scale and breadth of our customers in terms of size and industry provides us with a competitive advantage. Competition We operate in a fragmented advertising ecosystem composed of divisions of large, well-established companies as well as privately-held companies.
We have multiple incentive programs throughout the organization designed to provide short-term and long-term incentives, including base cash, equity and/or performance cash awards. Our culture and industry success further enable us to successfully hire and retain employees aligned with our mission.
We have multiple incentive programs throughout the organization designed to provide short-term and long-term incentives, including base cash, equity and/or performance cash awards.
AppLovin Software Platform Our comprehensive, end-to-end Software Platform delivers value by helping companies scale their businesses and maximize their revenue. Specifically, our Software Platform, which is powered by AXON, our AI-based recommendation engine, enables advertisers to automate their marketing, engagement, and monetization efforts in three core ways.
AppLovin Advertising Our comprehensive, end-to-end Advertising solutions deliver value by helping companies scale their businesses and maximize their revenue. Specifically, our solutions enable advertisers to automate their marketing, engagement, and monetization efforts in three core ways.
We also have registered domain names for websites that we use in our business, such as www.applovin.com. Finally, as of December 31, 2023, we owned the following patents related to the business: 28 issued U.S. patents and 1 U.S. patent application.
We also have registered domain names for websites that we use in our business, such as www.applovin.com. As of December 31, 2024, we owned seven patents related to our Advertising solutions and four related to our Apps business.
The larger gaming companies in our gaming ecosystem include Activision Blizzard (Microsoft), Tencent, and Zynga (Take-Two 5 Table of Contents Interactive), as well as other public and private companies. Many of these companies are also our partners and clients.
The larger gaming companies in our gaming ecosystem include Activision Blizzard (Microsoft), Tencent, and Zynga (Take-Two Interactive), as well as other public and private companies, many of which are also our partners and clients. We also expect new developers to enter the market and existing companies to allocate more resources to develop and market more mobile games and apps.
Our research and development organization is based in Palo Alto, California with additional resources around the world. 6 Table of Contents Intellectual Property Our success depends in part upon our ability to protect our intellectual property rights with respect to our Software Platform and Apps, and to operate without infringing, misappropriating or otherwise violating valid and enforceable third-party intellectual property.
Intellectual Property Our success depends in part upon our ability to protect our intellectual property rights with respect to our Advertising solutions and Apps, and to operate without infringing, misappropriating or otherwise violating valid and enforceable third-party intellectual property.
Policing unauthorized use of our proprietary rights is difficult and time consuming. Further, our intellectual property rights may be invalidated, circumvented, or challenged.
Despite our efforts to protect our intellectual property rights, unauthorized parties may attempt to copy aspects of our Advertising solutions or Apps or obtain and use information that we regard as proprietary. Policing unauthorized use of our proprietary rights is difficult and time consuming. Further, our intellectual property rights may be invalidated, circumvented, or challenged.
It enables us to adapt, innovate, and thrive in a constantly evolving and competitive landscape. Research and Development Continued investment in research and development is important to advancing our Software Platform and Apps. These advancements are key to attaining our strategic objectives and meeting the evolving needs of our customers.
Research and Development Continued investment in research and development is important to advancing our Advertising solutions, and Apps. The continued development of our AI-powered AXON advertising engine is critical to our future growth and competitive advantage. These AI advancements are also key to attaining our strategic objectives and meeting the evolving needs of our customers.
As of December 31, 2023, we had approximately 950 employees, or 54% of our total headcount, involved in research and development and related activities.
As of December 31, 2024, we had approximately 788 employees, or 50% of our total headcount, involved in research and development and related activities. Our research and development organization is based in Palo Alto, California with additional resources around the world.
Notwithstanding these efforts, there can be no assurance that we will adequately protect our intellectual property or that it will provide any competitive advantage. We take steps to protect our proprietary information, in part, by entering into confidentiality agreements with our employees, consultants, developers, and vendors, and generally limiting access to and distribution of our proprietary information.
We take steps to protect our proprietary information, in part, by entering into confidentiality agreements with our employees, consultants, developers, and vendors, and generally limiting access to and distribution of our proprietary information. However, we cannot assure you that the steps taken by us will prevent misappropriation of our proprietary rights.
Our scaled business model sits at the nexus of the advertising ecosystem, which creates a durable competitive advantage that has fueled our clients’ success and our strong growth. AppLovin is critical to the success of advertisers seeking to solve marketing and monetization challenges.
Our scaled business model is intricately linked to the advertising ecosystem, providing a durable competitive advantage. We generate revenue when our advertisers achieve their return on spend targets with our Advertising solutions, ensuring that their success directly fuels our growth. AppLovin is critical to the success of advertisers and publishers seeking to solve marketing and monetization challenges.
Our Customers and Developer Community Our globally diverse customers range from the largest enterprises to small and independent businesses and individuals across a variety of industries. Our customers comprise multiple groups within the advertising ecosystem including advertisers leveraging our platform to find users and advertising networks using our mediation solution to purchase advertising inventory.
Our customers comprise multiple groups within the advertising ecosystem including advertisers leveraging our platform to find users and advertising networks using our mediation solution to purchase advertising inventory. Our Apps also work with advertising networks who purchase advertising inventory and consumers who purchase in-app products.
Our technology finds the users at that value who are most likely to download and engage with the app. • Global scale: Advertisers can choose to connect with users in different regions around the world, and our technology suggests the best locations based on their parameters. • Retain and engage: Our system is built around optimizing to the advertisers revenue so our algorithms automatically adjust based on the likelihood users will engage.
Our technology finds the users at that value who are most likely to download and engage with the app. • Global scale: Advertisers can choose to connect with users in different regions around the world, and our technology suggests the best locations based on their parameters. 2 We calculate daily active users as the average number of unique device identities that open a mobile app (whether that mobile app our own or a third party’s) which has our software development kit (SDK) on each day in a period.
Our Software Platform includes a comprehensive suite of tools including: • AppDiscovery, our marketing software solution, is the cornerstone of our Software Platform, augmented by our rapidly growing MAX monetization solution.
Our Advertising solutions include a comprehensive suite of tools including: • AppDiscovery, our user acquisition solution, is the cornerstone of our Advertising solutions.
It brings data-driven advertising and measurement to Connected TV. The technology helps companies engage with the highest-value viewers, and ultimately increase their revenue.
It brings data-driven advertising and measurement to Connected TV.
As such, we regularly review our patent portfolio, and have and expect to continue to abandon the prosecution of patents that are not critical to our operations. We intend to pursue additional intellectual property protection to the extent we believe it would advance our business objectives and maintain our competitive position.
We intend to pursue additional intellectual property protection to the extent we believe it would advance our business objectives and maintain our competitive position. Notwithstanding these efforts, there can be no assurance that we will adequately protect our intellectual property or that it will provide any competitive advantage.
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Competition We operate in a fragmented advertising ecosystem composed of divisions of large, well-established companies as well as privately-held companies.
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Return on advertising spend is measured based on third-party attribution, Advertisers are charged for advertising dynamically based on the revenue they receive from acquired users, rather than a simple fixed price per impression or per action (click or installation).
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We also expect new developers to enter the market and existing companies to allocate more resources to develop and market more mobile games and apps.
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We measure this figure through our SDK. An individual who uses an app in more than one country on a particular day will be counted as more than one unique device identity; however, if an individual uses more than one app in the same day, such individual is only counted once.
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We believe we compete favorably with respect to these factors. Our Values Our AppLovin Values capture our company’s culture and guide our approach on how we build and grow our business with all stakeholders: • Think Like an Entrepreneur We take intelligent risks and embrace new challenges as a part of our DNA.
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This figure does not include any users who have opted out of allowing apps to track on their mobile phone . 3 Table of Contents • Retain and engage: Our system is built around optimizing to the advertisers revenue so our algorithms automatically adjust based on the likelihood users will engage.
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We empower our employees to try new things, question the status quo, and constantly innovate.
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Our clients can analyze by retention periods from initial app download onwards, so that advertisers understand the effectiveness of their marketing investments. • Targeted returns: Advertisers set their goals and target return on ad sales and our algorithms adjust cost and campaign specifics to meet them.
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We accomplish this by optimizing resources, keeping our teams lean, agile, focused, and not slowing down progress with bureaucracy. • Take Initiative, Ownership, and Make an Impact We are proactive, voice ideas, and take action to drive ourselves, our teams, and our business toward continued success.
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On February 12, 2025, we announced that we had entered into a term sheet for the sale of our mobile gaming business to a privately held company for total consideration of $900.0 million, consisting of $400.0 million in shares of the acquirer’s common equity and $500.0 million in cash, subject to customary purchase price adjustments.
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We are not an environment where work is handed to you, instead we trust your ability to take ownership and make an impact. • Hire and Reward “Doers” We hire, develop and reward “doers” who are highly motivated, passionate, and want to work in a collaborative and inclusive environment to take their own careers and our business to the next level.
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For additional information, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments".
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We are not afraid to part ways with underperformers or those satisfied with the bare minimum and will enable them to follow their passions towards a better path. • Move Fast We move quickly and intentionally. We test, iterate and optimize constantly, using data to drive decisions.
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We have made our Advertising solutions available to e-commerce advertisers, and while we are early in this market expansion, our e-commerce customers to date have experienced positive results, demonstrating the flexibility and future growth potential of our Advertising solutions. ◦ Other content industries: We believe our deep expertise and capabilities will allow us to successfully apply our solutions to tangential sectors, including with mobile OEMs and carriers through our Array product initiative, as well as the growing CTV industry through Wurl.
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Together we discover new ways to move beyond accomplishing our objectives and surpassing expectations while maintaining our high standards. Even as we move fast, we act with integrity and transparency.
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We believe we compete favorably with respect to these factors. Seasonality The revenue we generate from our Advertising solutions may experience seasonality in the fourth quarter of the year due in part to seasonal holiday demand. As the breadth of advertisers using our Advertising solutions increases, the impact of this seasonality may become more pronounced over time.
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We do not fear failure because we know that failure often breeds opportunity, and ultimately, success. • Never Stop Learning We are curious and seek to learn more than just what’s in our lanes. Learning the latest technologies and what others are doing around us allows us to identify problems and build products to solve them.
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Our issued U.S. patents, and any patents that may issue from our pending applications, are scheduled to expire at dates ranging between 2033 and 2039, excluding any additional term for patent term adjustments or extensions. We have acquired a number of patents through our acquisitions that are not critical to the combined business on a post-closing basis.
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However, we cannot assure you that the steps taken by us will prevent misappropriation of our proprietary rights. Despite our efforts to protect our intellectual property rights, unauthorized parties may attempt to copy aspects of our Software Platform or Apps or obtain and use information that we regard as proprietary.
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We were named as an Honorary Cynopsis Top Women in Media, 2023; one of the Hottest Adtech Companies of 2021 by Business Insider; and a Certified Great Place to Work in 2021, 2022 and 2023.
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The San Francisco Business Times and Silicon Valley Business Journal awarded us one of the Bay Area’s Best Places to Work in 2019, 2020, 2021 and 2022. Inc. further recognized us as a Best Workplace 2022.
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In recognition of our ongoing efforts to promote diversity, we earned a 2023 Q+ Workplace certification, affirming our dedication to creating an inclusive work environment for all employees. Furthermore, we have been acknowledged by Great Place to Work for Best Workplaces for Parents and by Fortune Best Places to Work in Advertising and Marketing.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor example, these obligations could among other things: • make it difficult for us to pay other obligations; • increase our cost of borrowing; • make it difficult to obtain favorable terms for any necessary future financing for working capital, capital expenditures, strategic acquisitions and partnerships, debt service requirements, or other purposes; • restrict us from making strategic acquisitions and partnerships or cause us to make divestitures or similar transactions; • adversely affect our liquidity and result in a material adverse effect on our financial condition upon repayment of the indebtedness; • require us to dedicate a substantial portion of our cash flow from operations to service and repay the indebtedness, reducing the amount of cash flow available for other purposes; • increase our vulnerability to adverse and economic conditions; • increase our exposure to interest rate risk from variable rate indebtedness; • place us at a competitive disadvantage compared to our less leveraged competitors; and • limit our flexibility in planning for and reacting to changes in our business. 35 Table of Contents In addition, from time to time we have entered into interest rate swap instruments to limit our exposure to changes in variable interest rates.
Biggest changeFor example, these obligations could among other things: • require us to dedicate a substantial portion of our cash flow from operations to service and repay the indebtedness, reducing the amount of cash flow available for other purposes • make it difficult for us to pay other obligations; • increase our cost of borrowing; • make it difficult to obtain favorable terms for any necessary future financing for working capital, capital expenditures, strategic acquisitions and partnerships, debt service requirements, or other purposes; • restrict us from making strategic acquisitions and partnerships or cause us to make divestitures or similar transactions; • adversely affect our liquidity and result in a material adverse effect on our financial condition upon repayment of the indebtedness; • increase our vulnerability to adverse and economic and industry conditions; • increase our exposure to interest rate risk from variable rate indebtedness; • place us at a competitive disadvantage compared to our less leveraged competitors; and • limit our flexibility in planning for and reacting to changes in our business.
Risks Related to Our Business and Industry Our results of operations are likely to fluctuate from period-to-period, which could cause the market price of our Class A common stock to decline.
Risks Related to Our Business, Operations and Industry Our results of operations are likely to fluctuate from period-to-period, which could cause the market price of our Class A common stock to decline.
Errors, bugs, vulnerabilities, design defects, or technical limitations within the software and hardware on which we rely have in the past led to, and may in the future lead to, outcomes including a negative experience for clients and users who use our offerings, compromised ability of our offerings to perform in a manner consistent with our terms, contracts, or policies, delayed product or App launches or enhancements, targeting, measurement, or billing errors, compromised ability to protect the data of our users and/or our intellectual property, or reductions in our ability to provide some or all of our services.
Errors, bugs, vulnerabilities, design defects, or technical limitations within the software and hardware on which we rely have in the past led to, and may in the future lead to, outcomes including a negative experience for clients and users who use our offerings, compromised ability of our offerings to perform in a manner consistent with our terms, contracts, or policies, delayed product or App launches or enhancements, targeting, measurement, or billing errors, compromised ability to protect data and/or our intellectual property, or reductions in our ability to provide some or all of our services.
Further, disruptions in the mobile application industry, financial markets, economic downturns, and poor business decisions may adversely affect our partners and may increase their propensity to engage in fraud or other unlawful activity which could harm our business or reputation, and they may not be able to honor their obligations to us, or we may cease our arrangements with them.
Further, disruptions in the mobile application industry, or financial markets, economic downturns, and poor business decisions may adversely affect our partners and may increase their propensity to engage in fraud or other unlawful activity which could harm our business or reputation, and they may not be able to honor their obligations to us, or we may cease our arrangements with them.
We and our third-party business partners, representatives, and agents may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and we may be held liable for the corrupt or other illegal activities of our employees, third-party business partners, representatives, and agents, even if we do not explicitly authorize such activities.
We and our employees, third-party business partners, representatives, and agents may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and we may be held liable for the corrupt or other illegal activities of our employees, third-party business partners, representatives, and agents, even if we do not explicitly authorize such activities.
Any debt financing that we secure in the future could involve offering additional security interests and undertaking restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
Any debt financing that we secure in the future could involve offering security interests and undertaking restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
Challenges and risks from such strategic acquisitions and partnerships include: • diversion of our management’s attention in the acquisition and integration process, including oversight over acquired businesses which continue their operations under contingent consideration provisions in acquisition agreements; • declining employee morale and retention issues resulting from changes in compensation, or changes in management, reporting relationships, or future performance; • the need to integrate the operations, systems, technologies, products, and personnel of each acquired company, the inefficiencies and lack of control that may result if such integration is delayed or not implemented, and unforeseen difficulties and expenditures that may arise in connection with integration; • costs associated with onboarding clients of an acquired business; • the need to implement internal controls, procedures, and policies appropriate for a larger, U.S.-based public company at companies that prior to acquisition may not have as robust controls, procedures, and policies, in particular, with respect to the effectiveness of internal controls, cyber and information security practices and incident response plans, compliance with privacy, data protection, and other regulations protecting the rights of clients and users, and compliance with U.S.-based economic policies and sanctions which may not have previously been applicable to the acquired company’s operations; • the difficulty in accurately forecasting and accounting for the financial impact of an acquisition transaction, including accounting charges, write-offs of deferred revenue under purchase accounting, and integrating and reporting results for acquired companies that have not historically followed GAAP; • the implementation of restructuring actions and cost reduction initiatives to streamline operations and improve cost efficiencies; • the fact that we may be required to pay contingent consideration in excess of the initial fair value, and contingent consideration may become payable at a time when we do not have sufficient cash available to pay such consideration; • in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries as well as tax risks that may arise from the acquisition; • increasing legal, regulatory, and compliance exposure, and the additional costs related to mitigate each of those, as a result of adding new offices, employees and other service providers, benefit plans, equity, job types, and lines of business globally; and • liability for activities of the acquired company before the acquisition, including intellectual property, commercial, and other litigation claims or disputes, cyber and information security vulnerabilities, violations of laws, rules and regulations, including with respect to employee classification, tax liabilities, and other known and unknown liabilities.
Challenges and risks from such strategic acquisitions and partnerships include: • diversion of our management’s attention in the acquisition and integration process, including oversight over acquired businesses which continue their operations under contingent consideration provisions in acquisition agreements; • declining employee morale and retention issues resulting from changes in compensation or benefits, or changes in management, reporting relationships, or future performance; • the need to integrate the operations, systems, technologies, products, and personnel of each acquired company, the inefficiencies and lack of control that may result if such integration is delayed or not implemented, and unforeseen difficulties and expenditures that may arise in connection with integration; • costs associated with onboarding clients of an acquired business; • the need to implement internal controls, procedures, and policies appropriate for a larger, U.S.-based public company at companies that prior to acquisition may not have as robust controls, procedures, and policies, in particular, with respect to the effectiveness of internal controls, cyber and information security practices and incident response plans, compliance with privacy, data protection, and other regulations protecting the rights of clients and users, and compliance with U.S.-based economic policies and sanctions which may not have previously been applicable to the acquired company’s operations; • the difficulty in accurately forecasting and accounting for the financial impact of an acquisition transaction, including accounting charges, write-offs of deferred revenue under purchase accounting, and integrating and reporting results for acquired companies that have not historically followed GAAP; • the implementation of restructuring actions and cost reduction initiatives to streamline operations and improve cost efficiencies; • the fact that we may be required to pay contingent consideration in excess of the initial fair value, and contingent consideration may become payable at a time when we do not have sufficient cash available to pay such consideration; • in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries as well as tax risks that may arise from the acquisition; • increasing legal, regulatory, and compliance exposure, and the additional costs related to mitigate each of those, as a result of adding new offices, employees and other service providers, benefit plans, equity, job types, and lines of business globally; and • liability for activities of the acquired company before the acquisition, including intellectual property, commercial, and other litigation claims or disputes, security vulnerabilities, violations of laws, rules and regulations, including with respect to employee classification, tax liabilities, and other known and unknown liabilities.
While not material to the operation of our business, management and our board of directors have discussed and assessed, and will continue to discuss and assess, any risks related to international conflicts around the world, such as in Ukraine and the Middle East, as well as, tension between the United States. and China, including but not limited to, risks related to cybersecurity, sanctions, regulatory changes, and personnel based in affected regions to ensure we are prepared to react to new developments or further sanctions as they arise.
While not currently material to the operation of our business, management and our board of directors have discussed and assessed, and will continue to discuss and assess, any risks related to international conflicts around the world, such as in Ukraine and the Middle East, as well as, tension between the United States. and China, including but not limited to, risks related to cybersecurity, sanctions, regulatory changes, and personnel based in affected regions to ensure we are prepared to react to new developments or further sanctions as they arise.
Computer malware (including ransomware), viruses, social engineering (predominantly spear phishing attacks or smishing), and general hacking have become more prevalent in the advertising and mobile app ecosystems. Some of these have occurred on our systems and otherwise in our business in the past, and we expect will continue to occur in the future.
Malware (including ransomware), viruses, social engineering (predominantly spear phishing attacks or smishing), and general hacking have become more prevalent in the advertising and mobile app ecosystems. Some of these have occurred on our systems and otherwise in our business in the past, and we expect will continue to occur in the future.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • our multi-class common stock structure and the Voting Agreement, which provide the Voting Agreement Parties with the ability to determine or significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding common stock; • vacancies on our board of directors may be filled only by our board of directors and not by stockholders; • a special meeting of our stockholders may only be called by a majority of our board of directors, the chairperson of our board of directors, our Chief Executive Officer, or our President; 39 Table of Contents • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; • our amended and restated certificate of incorporation does not provide for cumulative voting; • our amended and restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued by our board of directors, without further action by our stockholders; • after the first date on which the outstanding shares of our Class B common stock represent less than a majority of the total combined voting power of our Class A common stock and our Class B common stock (the "Voting Threshold Date"), our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter; and • certain litigation against us may only be brought in Delaware.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • our multi-class common stock structure and the Voting Agreement, which provide the Voting Agreement Parties with the ability to determine or significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding common stock; • vacancies on our board of directors may be filled only by our board of directors and not by stockholders; • a special meeting of our stockholders may only be called by a majority of our board of directors, the chairperson of our board of directors, our Chief Executive Officer, or our President; • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; • our amended and restated certificate of incorporation does not provide for cumulative voting; • our amended and restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued by our board of directors, without further action by our stockholders; • after the first date on which the outstanding shares of our Class B common stock represent less than a majority of the total combined voting power of our Class A common stock and our Class B common stock (the "Voting Threshold Date"), our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter; and • certain litigation against us may only be brought in Delaware.
While we believe we compete favorably, competition for highly skilled employees is intense, particularly in Silicon Valley, where our headquarters is located. Interviewing, hiring, and integrating new employees has been and will continue to be challenging as we continue to navigate the global remote working environment.
While we believe we compete favorably, competition for highly skilled employees is intense, particularly in Silicon Valley, where our headquarters is located. Interviewing, hiring, and integrating new employees has been and will continue to be challenging as we continue to navigate the global working environment.
For example, the United Kingdom’s Age Appropriate Design Code (“AADC”) is one such regulatory framework that has been adopted in the United Kingdom that focuses on online safety and protection of children’s privacy online, and similar frameworks are being considered for adoption in other jurisdictions.
For example, the United Kingdom’s Age Appropriate Design Code (“AADC”) is one such regulatory framework that has been adopted in the United Kingdom that focuses on online safety and protection of children’s privacy online, and similar frameworks are being considered in other jurisdictions.
In addition, our ability to execute our strategy depends in part on our continued ability to identify, hire, develop, motivate, and retain highly skilled employees, particularly in the competitive fields of game development, product management, engineering, AI, machine learning, and data science.
In addition, our ability to execute our strategy depends in part on our continued ability to identify, hire, develop, motivate, and retain highly skilled employees, particularly in the competitive fields of AI development, machine learning, product management, engineering and data science.
General Data Protection Regulation (the "GDPR"), ePrivacy Directive, the California Consumer Privacy Act (the "CCPA") as amended by the California Privacy Rights Act (the "CPRA") and similar U.S. privacy laws in other states, and the Children’s Online Privacy Protection Act (the "COPPA"); • decisions by clients to reduce their advertising due to concerns about legal liability or uncertainty regarding their own legal and compliance obligations, or due to negative publicity, regardless of its accuracy, involving us, our user data practices, advertising metrics or tools, our Software Platform or Apps, or other companies in our industry; and • the impact of macroeconomic conditions, inflation, high interest rates, uncertainty in the global banking and financial services markets, political uncertainty and international conflicts around the world, such as in Ukraine and the Middle East, as well as, friction between the United States and China, and responses thereto, and seasonality, whether in the advertising industry in general, or among specific types of advertisers or within particular geographies.
General Data Protection Regulation (the "GDPR"), ePrivacy Directive, the California Consumer Privacy Act (the "CCPA") as amended by the California Privacy Rights Act (the "CPRA"), similar U.S. privacy laws in other states, and the Children’s Online Privacy Protection Act (the "COPPA"); • decisions by clients to reduce their advertising due to concerns about legal liability or uncertainty regarding their own legal and compliance obligations, or due to negative publicity, regardless of its accuracy, involving us, our user data practices, advertising metrics or tools, our Advertising solutions or Apps, or other companies in our industry; and • the impact of macroeconomic conditions, inflation, high interest rates, uncertainty in the global banking and financial services markets, political uncertainty and international conflicts around the world, such as in Ukraine and the Middle East, as well as, friction between the United States and China, and responses thereto, and seasonality, whether in the advertising industry in general, or among specific types of advertisers or within particular geographies.
Many jurisdictions have enacted breach notification obligations, and our agreements with certain customers or partners may require us to notify them or fulfill other obligations in the event of a security breach.
Many jurisdictions have enacted breach notification obligations, and our agreements with certain customers or partners may require us to notify them or fulfill other obligations in the event of a security breach or incident.
Our income tax obligations are based in part on our corporate operating structure and intercompany arrangements, including the manner in which we develop, value, manage, and use our intellectual property and the valuation of our intercompany transactions.
Our tax obligations are based in part on our corporate operating structure and intercompany arrangements, including the manner in which we develop, value, manage, and use our intellectual property and the valuation of our intercompany transactions.
The perceived in-app value of these virtual goods can be impacted by various actions that we take in the mobile games including offering discounts for virtual goods, giving away virtual goods in promotions, or providing easier non-paid means to secure these goods. Managing virtual economies is difficult and relies on our assumptions and judgement.
The perceived in-app value of these virtual goods can be impacted by various actions that we take in the mobile games including offering discounts for virtual goods, giving away virtual goods in promotions, or providing easier non-paid means to secure these goods. Managing virtual economies is difficult and relies on our assumptions and judgment.
Any theft or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an event could also adversely affect our business, competitive position, and results of operations. Cyberattacks continue to evolve in sophistication and volume, and may be inherently difficult to detect for long periods of time.
Any theft or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an event could also adversely affect our business, competitive position, and results of operations. Cyberattacks continue to evolve in sophistication and volume, and may be difficult to detect for long periods.
Any violation of the FCPA or other applicable anti-corruption laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, suspension or disbarment from U.S. government contracts, substantial diversion of management’s attention, significant legal fees and fines, severe criminal or civil sanctions against us, our officers, or our employees, disgorgement of profits, other sanctions and remedial measures, and prohibitions on the conduct of our business, any of which could adversely affect our reputation, business, financial condition, and results of operations.
Any allegations or violations of the FCPA or other applicable anti-corruption laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, suspension or disbarment from U.S. government contracts, substantial diversion of management’s attention, significant legal fees and fines, severe criminal or civil sanctions against us, our officers, or our employees, disgorgement of profits, other sanctions and remedial measures, and prohibitions on the conduct of our business, any of which could adversely affect our reputation, business, financial condition, and results of operations.
We may not be able to realize tax savings from our international structure, which could materially and adversely affect our results of operations. We recently completed an international restructuring that included the inter-entity license of certain intellectual property and other assets used in the business to our Singapore subsidiary.
We may not be able to realize tax savings from our international structure, which could materially and adversely affect our results of operations. In 2023, we completed an international restructuring that included the inter-entity license of certain intellectual property and other assets used in the business to our Singapore subsidiary.
Although we believe these exclusive forum provisions benefit us by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or any of our directors, officers, stockholders, or other employees, which may discourage lawsuits with respect to such claims against us and our current and former directors, officers, stockholders, or other employees.
Although we believe 39 Table of Contents these exclusive forum provisions benefit us by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or any of our directors, officers, stockholders, or other employees, which may discourage lawsuits with respect to such claims against us and our current and former directors, officers, stockholders, or other employees.
Expanding our international operations may subject us to risks associated with: • recruiting and retaining talented and capable management and employees in foreign countries; • challenges caused by distance, language, and cultural differences; • developing and customizing Software Platform and Apps that appeal to the tastes and preferences of users in international markets; • the inability to offer certain Software Platform or Apps in certain foreign countries; • competition from local mobile app developers with intellectual property rights and significant market share in those markets and with a better understanding of user preferences; • utilizing, protecting, defending, and enforcing our intellectual property rights; • negotiating agreements with local distribution platforms that are sufficiently economically beneficial to us and protective of our rights; • the inability to extend proprietary rights in our brand, content, or technology into new jurisdictions; • implementing alternative payment methods for features and virtual goods in a manner that complies with local laws and practices and protects us from fraud; • compliance with applicable foreign laws and regulations, including anti-bribery laws, privacy laws, and laws relating to content and consumer protection (for example, the United Kingdom’s Office of Fair Trading’s 2014 principles relating to IAPs in free-to-play games that are directed toward children 16 and under); • credit risk and higher levels of payment fraud; • currency exchange rate fluctuations; • protectionist laws and business practices that favor local businesses in certain countries; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws in the United States or the foreign jurisdictions in which we operate; • political, economic, macro-economic climate and social instability, including impacts related to labor, supply chain disruptions, inflation, and as a result of war, terrorism, or armed conflict, including international conflicts around the world, such as between Russia and Ukraine and in the Middle East, as well as, increasing friction between the United States and China and the impacts on their respective regions and the regional and global economy; • public health crises, such as the COVID-19 pandemic, which can result in varying impacts to our employees, clients, users, advertisers, app developers, and business partners internationally; • higher costs associated with doing business internationally, including costs related to local advisors; • export or import regulations; and • trade and tariff restrictions.
Expanding our international operations may subject us to risks associated with: • recruiting and retaining talented and capable management and employees in foreign countries; • challenges caused by distance, language, and cultural differences; • increased risk of loss, data breaches or cybersecurity attacks from our global operations; • developing and customizing Advertising solutions and Apps that appeal to the tastes and preferences of users in international markets; • the inability to offer certain Advertising solutions or Apps in certain foreign countries; • competition from local mobile app developers with intellectual property rights and significant market share in those markets and with a better understanding of user preferences; • utilizing, protecting, defending, and enforcing our intellectual property rights; • negotiating agreements with local distribution platforms that are sufficiently economically beneficial to us and protective of our rights; • the inability to extend proprietary rights in our brand, content, or technology into new jurisdictions; • implementing alternative payment methods for features and virtual goods in a manner that complies with local laws and practices and protects us from fraud; • compliance with applicable foreign laws and regulations, including anti-bribery laws, privacy laws, AI laws, and laws relating to content and consumer protection (for example, the United Kingdom’s Office of Fair Trading’s 2014 principles relating to IAPs in free-to-play games that are directed toward children 16 and under); • credit risk and higher levels of payment fraud; • currency exchange rate fluctuations; • protectionist laws and business practices that favor local businesses in certain countries; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws in the United States or the foreign jurisdictions in which we operate; • political, economic, macro-economic climate and social instability, including impacts related to labor, supply chain disruptions, inflation, and as a result of war, terrorism, or armed conflict, including international conflicts around the world, such as between Russia and Ukraine and in the Middle East, as well as, increasing friction between the United States and China and the impacts on their respective regions and the regional and global economy; • public health crises, such as the COVID-19 pandemic, which can result in varying impacts to our employees, clients, users, advertisers, app developers, and business partners internationally; • higher costs associated with doing business internationally, including costs related to local advisors; • export or import regulations; and • trade and tariff restrictions.
Software Platform Revenue is mostly from AppDiscovery and is generated from our advertisers, typically on a performance-based, cost-per-install basis, then shared with our advertising publishers, typically on a cost per impression model. IAA Revenue generated from our Apps comes from advertisers that purchase ad inventory from our diverse portfolio of mobile games.
Advertising Revenue is mostly from AppDiscovery and is generated from our advertisers, typically on a performance-based, cost-per-install basis, then shared with our advertising publishers, typically on a cost per impression model. IAA Revenue generated from our Apps comes from advertisers that purchase ad inventory from our diverse portfolio of mobile games.
Any failure or perceived failure by us to comply with our terms of service or privacy policy, or with applicable laws, regulations, or legal, contractual, or other actual or asserted obligations to users or third parties, concerning privacy, information security, data protection, consumer protection, or protection of minors; or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personal information or other user data, may result in governmental enforcement actions or other proceedings, claims, demands, and litigation by private parties, or public statements against us by consumer advocacy groups or others and could cause our users to lose trust in us, which could adversely affect our business, financial condition, or results of operations.
Any failure or perceived failure by us to comply with our terms of service or privacy policy, or with applicable laws, regulations, or legal, contractual, or other actual or asserted obligations to users or third parties, concerning privacy, information security, data protection, consumer protection, or protection of minors; or our privacy-related legal obligations, or any compromise of security that results, or is perceived to result, in the unauthorized release or 27 Table of Contents transfer of personal information or other user data, may result in governmental enforcement actions or other proceedings, claims, demands, and litigation by private parties, or public statements against us by consumer advocacy groups or others and could cause our users to lose trust in us, which could adversely affect our business, financial condition, or results of operations.
Numerous factors can influence our results of operations, including: • our ability to maintain and grow our client and user bases; • changes to our Software Platform, Apps, or other offerings, or the development and introduction of new software or development of new mobile apps by our studios or our competitors; • changes to the policies or practices of companies or governmental agencies that determine access to third-party platforms, such as the Apple App Store and the Google Play Store, or to our Software Platform, Apps, website, or the internet generally; • changes to the policies or practices of third-party platforms, such as the Apple App Store and the Google Play Store, including with respect to Apple’s Identifier for Advertisers ("IDFA"), which helps advertisers assess the 10 Table of Contents effectiveness of their advertising efforts, and with respect to transparency regarding data processing; • the diversification and growth of revenue sources beyond our current Software Platform and Apps; • our ability to achieve the anticipated synergies from our strategic acquisitions and effectively integrate new assets and businesses acquired by us; • the success of our strategic review of our Apps portfolio; • the actions of our competitors, both with respect to their own offerings and, to the extent such competitors are also our clients, with respect to their use of our Software Platform; • costs and expenses related to the strategic acquisitions and partnerships, including costs related to integrating mobile gaming studios or other companies that we acquire, as well as costs and expenses related to the development of our Software Platform or Apps; • our ability to achieve or maintain profitability; • increases in and timing of operating expenses that we may incur to grow and expand our operations and to remain competitive; • system failures or outages, or actual or perceived breaches of security or privacy, and the costs associated with preventing, responding to, or remediating any such outages or breaches; • changes in the legislative or regulatory environment, including with respect to privacy, data protection, and AI or actions by governments or regulators, including fines, orders, or consent decrees; • charges associated with impairment of any assets on our balance sheet or changes in our expected estimated useful life of property and equipment and intangible assets; • adverse litigation judgments, settlements, or other litigation-related costs and the fees associated with investigating and defending claims; • the overall tax rate for our business, which may be affected by the mix of income we earn in the United States and in jurisdictions with comparatively lower tax rates; • the impact of changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period; • the application of new or changing financial accounting standards or practices; and • changes in regional or global business or macroeconomic conditions, including as a result of uncertainty in the global banking and financial services markets, political uncertainty and international conflicts around the world, inflation, and high interest rates, which may impact the other factors described above.
Numerous factors can influence our results of operations, including: • our ability to maintain and grow our client and user bases; • changes to our Advertising solutions, Apps, or other offerings, • the timing and efficacy of improvement to our algorithms, models and AI-powered AXON advertising engine generally; 10 Table of Contents • the development and introduction of new solutions, entry into new markets, or the development of new mobile apps by our studios or our competitors; • changes to the policies or practices of companies or governmental agencies that determine access to third-party platforms, such as the Apple App Store and the Google Play Store, or to our Advertising solutions, Apps, website, or the internet generally; • changes to the policies or practices of third-party platforms, such as the Apple App Store and the Google Play Store, including with respect to Apple’s Identifier for Advertisers ("IDFA"), which helps advertisers assess the effectiveness of their advertising efforts, and with respect to transparency regarding data processing; • the diversification and growth of revenue sources beyond our current Advertising solutions and Apps; • our ability to achieve the anticipated synergies from our strategic acquisitions and effectively integrate new assets and businesses acquired by us; • the success of our strategic review of our Apps portfolio; • the actions of our competitors, both with respect to their own offerings and, to the extent such competitors are also our clients, with respect to their use of our Advertising solutions; • costs and expenses related to the strategic acquisitions and partnerships, including costs related to integrating mobile gaming studios or other companies that we acquire, as well as costs and expenses related to the development of our Advertising solutions or Apps; • our ability to achieve or maintain profitability; • increases in and timing of operating expenses that we may incur to grow and expand our operations and to remain competitive; • system failures or outages, or actual or perceived breaches of security or privacy, and the costs associated with preventing, responding to, or remediating any such outages or breaches; • changes in the legislative or regulatory environment, including with respect to privacy, data protection, or AI or actions by governments or regulators, including fines, orders, or consent decrees; • charges associated with impairment of any assets on our balance sheet or changes in our expected estimated useful life of property and equipment and intangible assets; • adverse litigation judgments, settlements, or other litigation-related costs and the fees associated with investigating and defending claims; • the overall tax rate for our business, which may be affected by the mix of income we earn in the United States and in jurisdictions with comparatively lower tax rates; • the impact of changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period; • the application of new or changing financial accounting standards or practices; and • changes in regional or global business or macroeconomic conditions, including as a result of uncertainty in the global banking and financial services markets, political uncertainty and international conflicts around the world, inflation, and high interest rates, which may impact the other factors described above.
Affected users or government authorities could initiate legal or regulatory actions against us in connection with any actual or perceived security breaches or improper access to or disclosure of data, which has occurred in the past and which could cause us to incur significant expense and liability, distract management and technical personnel, and result in orders or consent decrees forcing us to modify our business practices and to pay fines or penalties.
Affected users or government authorities could initiate legal or regulatory actions against us in connection with any actual or perceived security breaches or incidents or improper access to, or disclosure or other processing of, data, which has occurred in the past and which could cause us to incur significant expense and liability, distract management and technical personnel, and result in orders or consent decrees forcing us to modify our business practices and to pay fines or penalties.
The failure to attract new clients, the loss of clients, or a reduction in spending by these clients could adversely affect our business, financial condition, and results of operations. A significant portion of our revenue is Software Platform Revenue and In-App Advertising ("IAA") Revenue from our Apps.
The failure to attract new clients, the loss of clients, or a reduction in spending by these clients could adversely affect our business, financial condition, and results of operations. A significant portion of our revenue is Advertising Revenue and In-App Advertising ("IAA") Revenue from our Apps.
A vast amount of publishers attempt to use our Software Platform, a number of which may attempt to monetize prohibited, restricted, or inappropriate content, or may engage or attempt to engage in fraudulent or other unlawful activity in violation of our policies, which in turn imposes additional operational costs to protect our platform, may trigger additional law enforcement or other inquiries, may put our reputation at risk, and may otherwise adversely affect our business, financial condition, and results of operations.
A vast amount of publishers attempt to use our Advertising solutions, a number of which may attempt to monetize prohibited, restricted, or inappropriate content, or may engage or attempt to engage in fraudulent or other unlawful activity in violation of our policies, which in turn imposes additional operational costs to protect our platform, may trigger additional law enforcement or other inquiries, may put our reputation at risk, and may otherwise adversely affect our business, financial condition, and results of operations.
If such a disagreement were to occur, and our position were not sustained, we could be required to pay additional taxes, interest, and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our business, with some changes possibly affecting our tax obligations in future or past years.
If such a disagreement were to occur, and our position were not sustained, we could be required to pay additional taxes, interest, and 30 Table of Contents penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our business, with some changes possibly affecting our tax obligations in future or past years.
Further, if the mix of IAPs shifts toward mobile games in which we use licensed intellectual property or if we develop additional Apps that require licensing of third-party intellectual property, our overall margins may be reduced due to royalty obligations. In addition, many of our Apps are built on proprietary source code of third parties, such as Unity Software.
Further, if the mix of IAPs shifts toward mobile games in which we use licensed intellectual property or if we develop additional Apps that require licensing of third-party intellectual property, our overall margins may be reduced due to royalty obligations. 33 Table of Contents In addition, many of our Apps are built on proprietary source code of third parties, such as Unity Software.
We are involved in or may become involved in claims, suits, government investigations, including formal and informal inquiries from government authorities and regulators, and proceedings arising in the ordinary course of our business, including 32 Table of Contents actions with respect to intellectual property claims, securities claims, privacy, data protection, or law enforcement matters, tax matters, labor and employment claims, commercial and acquisition-related claims, and other matters.
We are involved in or may become involved in claims, suits, government investigations, including formal and informal inquiries from government authorities and regulators, and proceedings arising in the ordinary course of our business, including actions with respect to intellectual property claims, securities claims, privacy, data protection, or law enforcement matters, tax matters, labor and employment claims, commercial and acquisition-related claims, and other matters.
The principal factors and uncertainties that make investing in our Class A common stock subject to risk include, among other things: Business, Operational, and Industry Factors • the fluctuation in our results of operations; • security breaches, improper access to or disclosure of data, or other cyber incidents; • our reliance on third-party platforms to distribute our AppLovin Apps and collect revenue; • our reliance on certain key employees and our ability to attract, retain, and motivate key personnel; • our ability to attract new clients, the loss of clients, or reduction in spend by clients; • competition in our industry and our ability to adapt to technological change; • our ability to address or mitigate technical limitations in our systems and to maintain and scale our technical infrastructure; • the impact of macroeconomic conditions and the geopolitical climate; • risks related to the expansion and diversification of our operations, in the United States and globally, and possibly through future strategic acquisitions and partnerships; • risks related to our international operations; • risks related to our strategic acquisitions and partnerships, including integration, managing growth, and tax risks; • our ability to realize the value of our Apps portfolio; • our ability to maintain relationships with our partner studios; • our ability to launch or acquire new AppLovin Apps and successfully monetize or improve them and existing Apps; • our ability to retain existing users or add new users cost-effectively, or if users decrease their level of engagement; • concentration of our revenue sources; • our recent rapid growth, and ability to manage growth; • our ability to increase in-app purchases ("IAPs"), respond to changes with respect to IAPs, and manage the economies in our AppLovin Apps; • our ability to achieve or maintain profitability with increasing operating expenses; • risks related to not having long-term agreements with our clients; • AppLovin apps not meeting user expectations; • our ability to maintain our culture and brand awareness; • our ability to maintain a customer support ecosystem amongst the proliferation of “cheating” programs and scam offers seeking to exploit our mobile games and users; • our reliance on third parties complying with their obligations; Legal and Regulatory Matters • changes in laws and regulations concerning privacy, information security, data protection, consumer protection, AI, advertising, tracking, targeting, and protection of minors; • changes in U.S. and foreign laws, many of which are unsettled and still developing; • the development and use of AI in our offerings and business; 9 Table of Contents • compliance with governmental anti-bribery, export controls and economic sanctions laws; • changes in tax laws or tax rulings or exposure to greater than anticipated tax liabilities; • assertions by taxing authorities that we should have collected or in the future should collect sales and use, value added, or similar taxes; • our ability to realize tax savings from our international structure; • liability for content that is distributed through or advertising that is served through our Software Platform or Apps; • expenses related to legal or regulatory proceedings and settlements or laws and regulations affecting public companies; Intellectual Property Factors • our ability to protect or enforce our proprietary and intellectual property rights or the costs involved in such enforcement; • our involvement in intellectual property disputes; • our use of and compliance with open source software; • our ability to acquire and maintain licenses to intellectual property; Financial and Accounting Matters • our ability to maintain an effective system of disclosure controls and internal control over financial reporting; • our reliance on assumptions and estimates to calculate certain of our key metrics; • the possibility that we may be required to record a significant charge to earnings if our goodwill becomes impaired; • substantial indebtedness under our senior secured credit facilities; • our ability to generate sufficient cash flow to satisfy our significant debt service obligations; • the availability of additional capital on acceptable terms; Ownership of our Class A common stock and Governance • the multi-class structure of our common stock and the Voting Agreement among the Voting Agreement Parties; • our status as a “controlled company” within the meaning of the Nasdaq corporate governance requirements; • volatility of the market price of our Class A common stock; • the possibility that we may not realize the anticipated long-term stockholder value of our share repurchase programs; • the issuance of additional stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise; • provisions of Delaware law, the Voting Agreement, our amended and restated certificate of incorporation, and our amended and restated bylaws could make a merger, tender offer, or proxy contest difficult; and • exclusive forum provisions in our amended and restated bylaws.
The principal factors and uncertainties that make investing in our Class A common stock subject to risk include, among other things: Business, Operational, and Industry Factors • the fluctuation in our results of operations; • security breaches, improper access to or disclosure of data, or other cyber incidents; • our reliance on third-party platforms to distribute our AppLovin Apps and collect revenue; • our reliance on certain key employees and our ability to attract, retain, and motivate key personnel; • our ability to maintain our culture; • our ability to attract new clients, the loss of clients, or reduction in spend by clients; • competition in our industry and our ability to adapt to technological change; • our ability to address or mitigate technical limitations in our systems and to maintain and scale our technical infrastructure; • concentration of our revenue sources; • our future growth into new business opportunities; • the impact of macroeconomic conditions and the geopolitical climate; • risks related to the expansion and diversification of our operations, in the United States and globally, and possibly through future strategic acquisitions and partnerships; • risks related to our international operations; • risks related to our strategic acquisitions and partnerships, including integration, managing growth, and tax risks; • our ability to realize the value of our Apps portfolio; • our ability to maintain relationships with our partner studios; • our ability to launch or acquire new AppLovin Apps and successfully monetize or improve them and existing Apps; • our ability to retain existing users or add new users cost-effectively, or if users decrease their level of engagement; • our recent rapid growth, and ability to manage growth; • our ability to increase in-app purchases ("IAPs"), respond to changes with respect to IAPs, and manage the economies in our AppLovin Apps; • our ability to achieve or maintain profitability with increasing operating expenses; • risks related to not having long-term agreements with our clients; • AppLovin apps not meeting user expectations; • our ability to maintain our brand awareness; • our reliance on third parties complying with their obligations; Legal and Regulatory Matters • changes in laws and regulations concerning privacy, information security, data protection, consumer protection, AI, advertising, tracking, targeting, and protection of minors; • changes in U.S. and foreign laws, many of which are unsettled and still developing; 9 Table of Contents • the development and use of AI in our offerings and business; • compliance with governmental anti-bribery, export controls and economic sanctions laws; • changes in tax laws or tax rulings or exposure to greater than anticipated tax liabilities; • assertions by taxing authorities that we should have collected or in the future should collect sales and use, value added, or similar taxes; • our ability to realize tax savings from our international structure; • liability for content that is distributed through or advertising that is served through our Advertising solutions or Apps; • expenses related to legal or regulatory proceedings and settlements or laws and regulations affecting public companies; Intellectual Property Factors • our ability to protect or enforce our proprietary and intellectual property rights or the costs involved in such enforcement; • our involvement in intellectual property disputes; • our use of and compliance with open source software; • our ability to acquire and maintain licenses to intellectual property; Financial and Accounting Matters • our ability to maintain an effective system of disclosure controls and internal control over financial reporting; • our reliance on assumptions and estimates to calculate certain of our key metrics; • the possibility that we may be required to record a significant charge to earnings if our goodwill becomes impaired; • our substantial indebtedness and obligations thereunder; • our ability to generate sufficient cash flow to satisfy our significant debt service obligations; • the availability of additional capital on acceptable terms; Ownership of our Class A common stock and Governance • the multi-class structure of our common stock and the Voting Agreement among the Voting Agreement Parties; • our status as a “controlled company” within the meaning of the Nasdaq corporate governance requirements; • volatility of the market price of our Class A common stock; • the possibility that we may not realize the anticipated long-term stockholder value of our share repurchase programs; • the issuance of additional stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise; • provisions of Delaware law, the Voting Agreement, our amended and restated certificate of incorporation, and our amended and restated bylaws could make a merger, tender offer, or proxy contest difficult; and • exclusive forum provisions in our amended and restated bylaws.
We face a number of challenges that may affect our ability to sustain our corporate culture, including: failure to identify, attract, reward, and retain people in leadership positions in our organization who share and further our culture and values; the increasing size and geographic diversity of our workforce; competitive pressures to move in directions that may divert us from our culture and values; the continued challenges of a rapidly-evolving industry; the increasing need to develop expertise in new areas of business that affect us; a negative perception of our treatment of employees or our response to employee sentiment related to political or social causes or actions of management; and the integration of new personnel and businesses from acquisitions.
We face a number of challenges that may affect our ability to sustain our corporate culture, including: failure to identify, attract, reward, and retain people in critical technical and leadership positions in our organization who share and further our culture and values; the increasing size and geographic diversity of our workforce; competitive pressures to move in directions that may divert us from our culture and values; the continued challenges of a rapidly-evolving industry; the increasing need to develop expertise in new areas of business that affect us; a negative perception of our treatment of employees or our response to employee 14 Table of Contents sentiment related to political or social causes or actions of management; and the integration of new personnel and businesses from acquisitions.
If we do not successfully or cost-effectively invest in, establish, and maintain awareness of the AppLovin brand, our business, financial condition, and results of operations could be adversely affected. We believe that establishing and maintaining the AppLovin brand is critical to maintaining and creating favorable relationships with, and our ability to attract, new clients, and key personnel.
If we do not successfully or cost-effectively invest in and maintain awareness of the AppLovin brand, our business, financial condition, and results of operations could be adversely affected. We believe that investing in and maintaining the AppLovin brand is critical to maintaining and creating favorable relationships with, and our ability to attract, new clients, and key personnel.
For example, the GDPR, which became effective in May 2018, created new individual privacy rights and imposed worldwide obligations on companies processing personal data of European Union ("EU") users, which has created a greater compliance burden for us and other companies with 26 Table of Contents European users, and subjects violators to substantial monetary penalties.
For example, the GDPR, which became effective in May 2018, created new individual privacy rights and imposed worldwide obligations on companies processing personal data of European Union ("EU") users, which has created a greater compliance burden for us and other companies with European users, and subjects violators to substantial monetary penalties.
In 11 Table of Contents particular, a breach or incident, whether physical, electronic, or otherwise, impacting systems on which source code or other sensitive data are stored could lead to loss, disruption, unavailability, or piracy of, or damage to, our offerings, lost or reduced ability to protect our intellectual property, and diminished competitive position.
In particular, a breach or incident, whether physical, electronic, or otherwise, impacting systems on which source code or other sensitive data are stored could lead to loss, disruption, unavailability, or piracy of, or damage to, our offerings, lost or reduced ability to protect our intellectual property, and diminished competitive position.
The occurrence of any of these or other factors in the future could result in a reduction in demand for our Software Platform and use of our Apps, which may reduce the prices we receive for our advertisements or cause clients to stop advertising with us altogether, either of which would adversely affect our business and results of operations.
The occurrence of any of these or other factors in the future could result in a reduction in demand for our Advertising solutions and use of our Apps, which may reduce the prices we receive for our advertisements or cause clients to stop advertising with us altogether, either of which would adversely affect our business and results of operations.
Anti-corruption and anti-bribery laws have been enforced aggressively in recent years, are interpreted broadly and prohibit companies, their employees, and third party business partners, representatives, and agents from promising, authorizing, making or offering improper payments or other benefits, directly or indirectly, to government officials and others in the private 29 Table of Contents sector in order to influence official action, direct business to any person, gain any improper advantage, or obtain or retain business.
Anti-corruption and anti-bribery laws have been enforced aggressively in recent years, are interpreted broadly and prohibit companies, their employees, and third party business partners, representatives, and agents from promising, authorizing, making or offering improper payments or other benefits, directly or indirectly, to government officials and others in the private sector in order to influence official action, direct business to any person, gain any improper advantage, or obtain or retain business.
The Inflation Reduction Act of 2022 (the "IRA"), enacted on August 16, 2022, imposed a one-percent non-deductible excise tax on repurchases of stock that are made by U.S. publicly traded corporations on or after January 1, 2023, which may affect our share repurchase program.
In addition, the Inflation Reduction Act of 2022 (the "IRA"), enacted in August 2022, imposed a one-percent non-deductible excise tax on repurchases of stock that are made by U.S. publicly traded corporations on or after January 1, 2023, which may affect our share repurchase program.
If we are unable to continue to expand internationally or manage the complexity of our global operations successfully, our business, financial condition, and results of operations could be adversely affected. 19 Table of Contents We have experienced significant growth through strategic acquisitions and partnerships, and we face risks related to the integration of such acquisitions and the management of such growth.
If we are unable to continue to expand internationally or manage the complexity of our global operations successfully, our business, financial condition, and results of operations could be adversely affected. We have experienced significant growth through strategic acquisitions and partnerships, and we face risks related to the integration of such acquisitions and the management of such growth.
Although we have developed systems and processes that are designed to protect our data, user data, and information from our partners; to prevent data loss, disable undesirable accounts and activities on our Software Platform or Apps; and to prevent and detect security breaches; we cannot assure you that such measures will provide comprehensive security, that we have been or will be able to identify breaches or other incidents or to react to them in a timely manner or that our remediation efforts will be successful.
Although we have developed systems and processes that are designed to protect our data, user data, and information from our partners; to prevent data loss, disable undesirable accounts and activities on our Advertising solutions or Apps; and to prevent and detect security breaches; we cannot assure you that such measures will provide comprehensive security, that we have been or will be able to identify breaches or other incidents or to react to them in a timely manner, or that our remediation efforts will be successful.
We will continue to explore and evaluate additional acquisitions, some of which may be the same size or even larger in scale and investment than our recent acquisitions. Our future success depends in part on our ability to integrate these acquisitions and manage these businesses, partnerships, and transactions effectively.
We will continue to 20 Table of Contents explore and evaluate additional acquisitions, some of which may be the same size or even larger in scale and investment than our recent acquisitions. Our future success depends in part on our ability to integrate these acquisitions and manage these businesses, partnerships, and transactions effectively.
Our clients are not required to enter into long-term agreements with us and may choose to stop using our Software Platform at any time. For example, typically our advertising agreements can be executed in as little as one day and can be terminated for convenience on two days’ notice.
Our clients are not required to enter into long-term agreements with us and may choose to stop using our Advertising solutions at any time. For example, typically our advertising agreements can be executed in as little as one day and can be terminated for convenience on two days’ notice.
The introduction of AI technologies into new or existing products may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality, privacy, data protection, or security risks, ethical concerns, or other complications that could adversely affect our business, reputation, financial condition or results of operations.
Additionally, the introduction of AI technologies into new or existing products or other offerings may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality, privacy, data protection, or security risks, social or ethical concerns, or other complications that could adversely affect our business, reputation, financial condition or results of operations.
We are particularly susceptible to market conditions and risks associated with the advertising ecosystem, including changes in user demographics, the availability and popularity of other forms of entertainment, and critical reviews and public tastes and preferences, which may change rapidly and cannot necessarily be predicted.
We are particularly susceptible to market conditions and risks associated with the advertising ecosystem, including changes in user demographics, the availability and popularity of other forms 18 Table of Contents of entertainment, and critical reviews and public tastes and preferences, which may change rapidly and cannot necessarily be predicted.
To the extent that we do not perform sufficient diligence on a larger acquisition or such a transaction does not generate the expected benefits, our business, financial condition, and results of 18 Table of Contents operations will be harmed, and to a greater extent than would occur with a smaller transaction.
To the extent that we do not perform sufficient diligence on a larger acquisition or such a transaction does not generate the expected benefits, our business, financial condition, and results of operations will be harmed, and to a greater extent than would occur with a smaller transaction.
There is no guarantee that we will not experience a similar erosion of our App users or user engagement levels. Our user engagement patterns have changed over time, and user engagement can be difficult to measure, particularly as we introduce new and different Apps.
There is no guarantee that we will not experience a similar erosion of our App users or user engagement levels. Our user engagement patterns have changed over time, and user engagement can be 23 Table of Contents difficult to measure, particularly as we introduce new and different Apps.
Any failure to develop or maintain effective controls or any difficulties 34 Table of Contents encountered in their implementation or improvement could adversely affect our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods.
Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could adversely affect our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods.
We are subject to a variety of laws and regulations in the United States and abroad relating to cybersecurity and data protection, a number of which provide a private right of action.
We are subject to a variety of laws and regulations in the United States and abroad relating to cybersecurity and data protection, some of which provide a private right of action.
Our Software Platform and Apps, as well as our internal systems, rely on software and hardware that is highly technical, and any errors, bugs, or vulnerabilities in these systems, or failures to address or mitigate technical limitations in our systems, could adversely affect our business, financial condition, and results of operations.
Our Advertising solutions and Apps, as well as our internal systems, rely on software and hardware that is highly technical, and any errors, bugs, or vulnerabilities in these systems, or failures to address or mitigate technical limitations in our systems, could adversely affect our business, financial condition, and results of operations.
This review resulted in the divestiture or closure of certain studios, a reduction of headcount, restructuring of earn out arrangements, and other changes to our Apps portfolio, such as restructuring of certain assets or choosing to make changes to optimize the cost structure of certain Apps rather than investing in revenue growth.
This review resulted in the divestiture or closure of certain studios, reductions in headcount, restructuring of earn out arrangements, and other changes to our Apps portfolio, such as restructuring of certain assets or choosing to make changes to optimize the cost structure of certain Apps rather than investing in revenue growth.
To invest in a new technology or expand our offerings, we must invest financial resources and management attention. We may invest significant resources in a new offering or in a strategic acquisition or partnership, which could prove unsuccessful or prevent us from directing these resources towards other opportunities.
To invest in a new technology, enter a new market or expand our offerings, we must invest financial resources and management attention. We may invest significant resources in a new offering, entering a new market or in a strategic acquisition or partnership, which could prove unsuccessful or prevent us from directing these resources towards other opportunities.
Our Software Platform and Apps, as well as our internal systems, rely on software and hardware, including AI technologies, that are highly technical and complex. In addition, our Software Platform and Apps, as well as our internal systems, depend in part on the ability of such software and hardware to store, retrieve, process, and manage immense amounts of data.
Our Advertising solutions and Apps, as well as our internal systems, rely on software and hardware, including AI technologies, that are highly technical and complex. In addition, our Advertising solutions and Apps, as well as our internal systems, depend in part on the ability of such software and hardware to store, retrieve, process, and manage immense amounts of data.
Our revenue is driven in part by discretionary consumer spending habits and preferences, and by advertising spending patterns. Historically, consumer purchasing and advertising spending have each declined during economic downturns and periods of uncertainty regarding future economic prospects or 17 Table of Contents when disposable income or consumer lending is lower.
Our revenue is driven in part by discretionary consumer spending habits and preferences, and by advertising spending patterns. Historically, consumer purchasing and advertising spending have each declined during economic downturns and periods of uncertainty regarding future economic prospects or when disposable income or consumer lending is lower.
If we are unable to identify and complete strategic acquisitions or partnerships or realize the anticipated benefits from such transactions, our business, financial condition, and results of operations could be adversely affected. Our international operations are subject to increased challenges and risks.
If we are unable to identify and complete strategic acquisitions or partnerships or realize the anticipated benefits from such transactions, our business, financial condition, and results of operations could be adversely affected. 19 Table of Contents Our international operations are subject to increased challenges and risks.
Our development and marketing efforts are focused on improving the experience of our existing Apps, developing new Apps, and successfully monetizing our Apps. Our Apps generate 21 Table of Contents revenue primarily through the sale of advertising, a substantial portion of which comes from other mobile gaming clients, and IAPs.
Our development and marketing efforts are focused on improving the experience of our existing Apps, developing new Apps, and successfully monetizing our Apps. Our Apps generate revenue primarily through the sale of advertising, a substantial portion of which comes from other mobile gaming clients, and IAPs.
Our efforts to protect our data, user data, and information from clients, partners, and other third parties, and to disable or otherwise respond to undesirable activities on our Software Platform, Apps, or other offerings, may also be unsuccessful due to software bugs or other technical defects, errors, or malfunctions; employee, contractor, vendor, or partner error or malfeasance, including defects or vulnerabilities in information technology systems or offerings; cyberattacks, attacks designed to disrupt systems or facilities, or breaches of physical security of our facilities or technical infrastructure; or other threats that evolve.
Our efforts to protect our Advertising solutions, Apps, and other offerings, our systems and other systems used in our business, and our data, user data, and information from clients, partners, and other third parties, and to disable or otherwise respond to undesirable activities on our offerings, may also be unsuccessful due to software bugs or other technical defects, errors, or malfunctions; employee, contractor, vendor, or partner error or malfeasance, including defects or vulnerabilities in information technology systems or offerings; cyberattacks, attacks designed to disrupt systems or facilities, or breaches of physical security of our facilities or technical infrastructure; or other threats that evolve.
While this transparency framework has not had a significant impact on our overall business, it may in the future, including with respect to the effectiveness of our advertising practices and/or our ability to efficiently generate revenue for our Apps. We rely in part on IDFA to provide us with data that helps our Software Platform better market and monetize Apps.
While this framework has not had a significant impact on our overall business, it may in the future, including with respect to the effectiveness of our advertising practices and/or our ability to efficiently generate revenue for our Apps. We rely in part on IDFA to provide us with data that helps our Advertising solutions better market and monetize Apps.
In particular, it is difficult to predict if, when, or how newly-launched software may begin to generate revenue or decline in popularity. Further, we cannot be certain if a new App will become popular amongst users and generate revenue.
In particular, it is difficult to predict if, when, or how newly-launched products, software or new markets may begin to generate revenue or decline in popularity. Further, we cannot be certain if a new App or product will become popular amongst users and generate revenue.
To the extent we are unable to utilize IDFA or a similar offering, or if the transparency changes and any related opt-in or other requirements result in decreases in the availability or utility of data relating to Apps, our Software Platform may not be as effective, we may not be able to continue to efficiently generate revenue for our Apps, and our revenue and results of operations may be harmed.
To the extent we are unable to utilize IDFA or a similar offering, or if the transparency changes and any related opt-in or other requirements result in decreases in the availability or utility of data relating to Apps, our Advertising solutions may not be as effective, we may not be able to continue to efficiently generate revenue for our Apps, and our revenue and results of operations may be harmed.
We and many other companies may need to implement different or additional measures to establish or maintain legitimate means for the transfer and receipt of personal data from the European Economic Area, Switzerland, the United Kingdom, or other jurisdictions to the United States, and we may, in addition to other impacts, experience additional costs associated with increased compliance burdens, and we and our clients face the potential for regulators to apply different standards to the transfer of personal data from the European Economic Area, Switzerland, the United Kingdom, or other jurisdictions to the United States, and to block, or require ad hoc verification of measures taken with respect to, certain data flows.
We and many other companies may need to implement different or additional measures to establish or maintain legitimate means for the transfer and receipt of personal data from the EEA, Switzerland, the United Kingdom, or other jurisdictions to the United States, and we may, in addition to other impacts, experience additional costs associated with increased compliance burdens, and we and our clients face the potential for regulators to apply different standards to the transfer of personal data from various jurisdictions to the United States and to block, or require ad hoc verification of measures taken with respect to, certain data flows.
Our success depends in part on our ability to satisfy our advertising partners. 14 Table of Contents Revenue could also be impacted by a number of other factors, including: • our ability to attract and retain clients; • our ability to improve the effectiveness and predictability of our advertising and maintain and improve our AI-powered advertising engine AXON; • our ability to maintain or increase advertiser demand and third-party publisher supply, the quantity, or quality of advertisements shown to users, or our pricing of advertisements; • our ability to continue to increase user access to and engagement with our Apps; • mobile app changes or inventory management decisions we may make that change the size, format, frequency, or relative prominence of advertisements displayed on our Apps; • our ability to recruit, train, and retain personnel to support continued growth of our Software Platform; • our ability to establish and maintain our brand and reputation; • loss of market share to our competitors, including if competitors offer lower priced, more integrated, or otherwise more effective products; • the development and success of technologies designed to block the display of advertisements or block our ad measurement tools, which have in the past impacted and may in the future impact our business, or technologies that make it easier for users to opt out of behavioral targeting; • the availability, accuracy, utility, and security of analytics and measurement solutions offered by us or third parties that demonstrate the value of our Software Platform to advertisers, developers and publishers, or our ability to further improve such tools; • government actions or legislative, regulatory, or other legal developments relating to advertising, including developments that may impact our ability to deliver, target, or measure the effectiveness of advertising; • changes that limit our ability to deliver, target, or measure the effectiveness of advertising, including changes to policies by mobile operating system and third-party platform providers, and the degree to which users opt in or opt out of certain types of ad targeting as a result of changes and controls implemented in connection with such policy changes and with the E.U.
Revenue could also be impacted by a number of other factors, including: • our ability to attract and retain clients, including, for example, in new markets such as e-commerce and social; • our ability to improve the effectiveness and predictability of our advertising and maintain and improve our AI-powered advertising engine AXON; • our ability to maintain or increase advertiser demand and third-party publisher supply, the quantity, or quality of advertisements shown to users, or our pricing of advertisements; • our ability to continue to increase user access to and engagement with our Apps; • mobile app changes or inventory management decisions we may make that change the size, format, frequency, or relative prominence of advertisements displayed on our Apps; • changes in measuring or pricing of mobile or other advertising markets; • our ability to recruit, train, and retain personnel to support continued growth of our Advertising solutions; • our ability to establish and maintain our brand and reputation; • loss of market share to our competitors, including if competitors offer lower priced, more integrated, or otherwise more effective products; • the development and success of technologies designed to block the display of advertisements or block our ad measurement tools, which have in the past impacted and may in the future impact our business, or technologies that make it easier for users to opt out of behavioral targeting; • the availability, accuracy, utility, and security of analytics and measurement solutions offered by us or third parties that demonstrate the value of our Advertising solutions to advertisers, developers and publishers, or our ability to further improve such tools; • government actions or legislative, regulatory, or other legal developments relating to AI or advertising, including developments that may impact our ability to deliver, target, or measure the effectiveness of advertising; • changes that limit our ability to deliver, target, or measure the effectiveness of advertising, including changes to policies by mobile operating system and third-party platform providers, and the degree to which users opt in or opt out of certain types of ad targeting as a result of changes and controls implemented in connection with such policy changes and with the E.U.
If we become liable for these types of claims as a result of the content that is included in our Apps or the advertisements that are served through our Software Platform, then our business may be adversely affected. Litigation to defend these claims could be costly and the expenses and damages arising from any liability could adversely affect our business.
If we become liable for these types of claims as a result of the content that is included in our Apps or the advertisements that are served through our Advertising solutions, then our business may be adversely affected. Litigation to defend these claims could be costly and the expenses and damages arising from any liability could adversely affect our business.
Subject to compliance with applicable rules and regulations, we may issue shares of Class A common stock or securities convertible into shares of our Class A common stock from time to time in connection with a financing, acquisition, investment, our equity incentive plans, or otherwise.
Subject to compliance with applicable rules and regulations, we may issue shares of Class A common stock or securities convertible into shares of our Class A common stock 38 Table of Contents from time to time in connection with a financing, acquisition, investment, our equity incentive plans, or otherwise.
To the extent such errors, bugs, vulnerabilities, or defects impact our Software Platform or the accuracy of data in the Software Platform, our clients may become dissatisfied with our offerings, our brand and reputation may be harmed, and we may make operational decisions, such as with respect to our Apps using such Software Platform or any future strategic acquisition, that are based on inaccurate data.
To the extent such errors, bugs, vulnerabilities, or defects impact our Advertising solutions or the accuracy of data in the Advertising solutions, our clients may become dissatisfied with our offerings, our brand and reputation may be harmed, and we may make operational decisions, such as with respect to our Apps using such Advertising solutions or any future strategic acquisition, that are based on inaccurate data.
Some state attorney generals as well as other international regulatory bodies have brought and may continue to bring legal actions against social casino app developers and the third-party distribution platforms for such apps. Further, several jurisdictions have been regulating and continue to regulate the use of loot boxes in mobile games.
Some state attorneys general as well as other international regulatory bodies have brought and may continue to bring legal actions against social casino app developers and the third-party distribution platforms for such apps. Further, several jurisdictions have been regulating and continue to regulate the use of loot boxes in mobile games.
We may not achieve the desired strategic, operational, and financial benefits of any divestiture or other strategic transaction, or any other action taken as a result of our strategic review, and we may incur near term impacts to our results of operations due to our strategic review.
We may not achieve the desired strategic, operational, and financial benefits of any 21 Table of Contents divestiture or other strategic transaction, or any other action taken as a result of our strategic review, and we may incur near term impacts to our results of operations due to our strategic review.
Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.
Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports that are filed with the SEC.
For example, 22 Table of Contents we have reduced our user acquisition spend for our portfolio of Apps as we increased our desired return goals, which has contributed to a decline in MAPs compared to periods before such adjustments.
For example, we have reduced our user acquisition spend for our portfolio of Apps as we increased our desired return goals, which has contributed to a decline in MAPs compared to periods before such adjustments.
Our operating expenses may continue to rise over the long term as we implement additional initiatives designed to increase revenue, potentially including: developing our Software Platform and technology stack, launching Apps, strategic acquisitions and partnerships, international expansion, hiring additional employees, and taking other steps to strengthen and grow our company.
Our operating expenses may continue to rise over the long term as we implement additional initiatives designed to increase revenue, potentially including: developing our Advertising solutions and technology stack, launching Apps, strategic acquisitions and partnerships, international expansion, hiring additional employees, and taking other steps to strengthen and grow our company.
As the result of any court judgment or settlement, we may be obligated to alter our Software Platform or Apps, in a particular geographic region or worldwide, pay royalties or significant settlement costs, purchase licenses, or develop substitutes. In certain of our agreements, we also indemnify our licensees and other business partners.
As the result of any court judgment or settlement, we may be obligated to alter our Advertising solutions or Apps, in a particular geographic region or worldwide, pay royalties or significant settlement costs, purchase licenses, or develop substitutes. In certain of our agreements, we also indemnify our licensees and other business partners.
Factors that could cause fluctuations in the market price of our Class A common stock include the following: • price and volume fluctuations in the overall stock market from time to time, including fluctuations due to general economic uncertainty or negative market sentiment; • volatility in the market and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • sales of shares of our Class A common stock by us or our stockholders; • rumors and market speculation involving us or other companies in our industry; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • actual or perceived significant data breaches involving our Software Platform or Apps; • the financial or non-financial metric projections we may provide to the public, any changes in those projections or our failure to meet those projections; • third-party data published about us or other mobile gaming companies, whether or not such data accurately reflects actual levels of usage; • announcements by us or our competitors of new products or services; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • fluctuations in the trading volume of shares of our Class A common stock or the size of our public float; • short selling of our Class A common stock or related derivative securities; • actual or anticipated changes or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally; • our issuance or repurchase of shares of our Class A common stock; • litigation or regulatory action involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws, regulations or app store policies or new interpretations of existing laws, regulations or app store policies applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; • major catastrophic events in our domestic and foreign markets; • any significant change in our management; and • general economic conditions and slow or negative growth of our markets.
Factors that have in the past caused and could in the future cause fluctuations in the market price of our Class A common stock include the following: • price and volume fluctuations in the overall stock market from time to time, including fluctuations due to general economic uncertainty or negative market sentiment; • volatility in the market and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • sales of shares of our Class A common stock by us or our stockholders; • rumors and market speculation involving us or other companies in our industry; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • actual or perceived significant data breaches involving our Advertising solutions or Apps; • the financial or non-financial metric projections we may provide to the public, any changes in those projections or our failure to meet those projections; • third-party data published about us or other advertising or mobile gaming companies, whether or not such data accurately reflects circumstances; • announcements by us or our competitors of new products or services; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • fluctuations in the trading volume of shares of our Class A common stock or the size of our public float; 37 Table of Contents • short selling of our Class A common stock or related derivative securities, and the publication of short seller reports; • actual or anticipated changes or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally; • our issuance or repurchase of shares of our Class A common stock; • litigation or regulatory action involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws, regulations or app store policies or new interpretations of existing laws, regulations or app store policies applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; • major catastrophic events in our domestic and foreign markets; • any significant change in our management; and • general economic conditions and slow or negative growth of our markets.
In order to continue to grow our Software Platform, we must consistently provide offerings that clients see as valuable and choose to use. If we fail to maintain our relationships with our clients, or if the terms of these relationships become less favorable to us, our results of operations would be harmed.
In order to continue to grow our Advertising solutions, we must consistently provide offerings that clients see as valuable and choose to use. If we fail to maintain our relationships with our clients, or if the terms of these relationships become less favorable to us, our results of operations would be harmed.
If we are unable to do any of the foregoing, we may not be able to develop our Software Platform and Apps effectively or achieve our expected product roadmap on a timely basis, which could adversely affect our business, financial condition, and results of operations.
If we are unable to do any of the foregoing, we may not be able to develop our Advertising solutions and Apps effectively or achieve our expected product roadmap on a timely basis, which could adversely affect our business, financial condition, and results of operations.
Changes in our Software Platform or Apps, or future changes in export and import regulations may create delays in the introduction of our products and the underlying technology in international markets, prevent our clients with global operations from deploying our products globally, or, in some cases, prevent the export or import of our products to certain countries, governments, or persons altogether.
Changes in our Advertising solutions or Apps, or future changes in export and import regulations may create delays in the introduction of our products and the underlying technology in international markets, prevent our clients with global operations from deploying our products globally, or, in some cases, prevent the export or import of our products to certain countries, governments, or persons altogether.
As of December 31, 2023, the Voting Agreement Parties collectively held approximately 85% of the voting power of our outstanding capital stock in the aggregate. This voting power includes shares of Class A common stock deemed beneficially owned in accordance with Rule 13d-3(d)(1) under the Exchange Act.
As of December 31, 2024, the Voting Agreement Parties collectively held approximately 68% of the voting power of our outstanding capital stock in the aggregate. This voting power includes shares of Class A common stock deemed beneficially owned in accordance with Rule 13d-3(d)(1) under the Exchange Act.
Additionally, as certain of our clients are also our competitors, these clients may choose to invest in their own offerings rather than continue to use our Software Platform. Any failure to maintain our relationships with clients could adversely affect our business, financial condition, and results of operations.
Additionally, as certain of our clients are also our competitors, these clients may choose to invest in their own offerings rather than continue to use our Advertising solutions. Any failure to maintain our relationships with clients could adversely affect our business, financial condition, and results of operations.
We use open source software in our Software Platform and Apps and expect to continue to use open source software in the future. In addition, we contribute software source code to open source projects under open source licenses or release internal software projects under open source licenses, and anticipate continuing to do so in the future.
We use open source software in our Advertising solutions and Apps and expect to continue to use open source software in the future. In addition, we contribute software source code to open source projects under open source licenses or release internal software projects under open source licenses, and anticipate continuing to do so in the future.
If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could experience significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our Class A common stock.
Also, if we raise additional funds through future issuances of equity or equity-linked securities, our existing stockholders could experience significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our Class A common stock.
Any number of factors can adversely affect user growth and engagement, including if: • users increasingly engage with mobile apps offered by competitors or mobile apps in categories other than those of our Apps; • we fail to introduce new Apps or features that users find engaging or that achieve a high level of market acceptance or we introduce new Apps, or make changes to existing Apps that are not favorably received; • users feel that their experience is diminished as a result of the decisions we make with respect to the frequency, prominence, format, size, and quality of advertisements that we display; • users have difficulty installing, updating, or otherwise accessing our Apps as a result of actions by us or third parties; • we are unable to continue to develop Apps that work with a variety of mobile operating systems and networks; and • questions about the quality of our Apps, our data practices or concerns related to privacy and sharing of personal information and other user data, safety, security, or other factors.
Any number of factors can adversely affect user growth and engagement, including if: • users increasingly engage with mobile apps offered by competitors or mobile apps in categories other than those of our Apps; • we fail to introduce new Apps or features that users find engaging or that achieve a high level of market acceptance or we introduce new Apps, or make changes to existing Apps that are not favorably received; • users feel that their experience is diminished as a result of the decisions we make with respect to the frequency, prominence, format, size, and quality of advertisements that we display; • users have difficulty installing, updating, or otherwise accessing our Apps as a result of actions by us or third parties; • we are unable to continue to develop Apps that work with a variety of mobile operating systems and networks; • there are changes mandated by legislation, government and regulatory authorities, or litigation that adversely affect our products or users; and • questions about the quality of our Apps, our data practices or concerns related to privacy and sharing or other processing of user data, safety, security, or other factors.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor additional information regarding whether any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, are reasonably likely to materially affect our company in the future, including our business strategy, results of operations, or financial condition, see Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K, including the risk factor entitled “Security breaches, improper access to or disclosure of our data or user data, other hacking and phishing attacks on our systems, or other cyber incidents could harm our reputation and adversely affect our business.” Governance One of the key functions of our Board of Directors is informed oversight of our risk management process, including risks from cybersecurity threats.
Biggest changeFor information about these risks, see Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K, including the risk factor entitled “Security breaches, improper access to or disclosure of our data or user data, other hacking and phishing attacks on our systems, or other cyber incidents could harm our reputation and adversely affect our business.” Governance One of the key functions of our Board of Directors is informed oversight of our risk management process, including risks from cybersecurity threats.
Our Head of Information Security and Compliance and the InfoSec Team are informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents through their implementation and oversight of safeguards, including through the use of automated tools and manual processes, like security event monitoring, vulnerability scanning, threat analytics, security awareness and training, endpoint security, bug bounty program, offensive security testing, and third-party risk and monitoring.
Our Head of Information Security and Compliance and our InfoSec management team are informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents through their implementation and oversight of safeguards, including through the use of automated tools and manual processes, like security event monitoring, vulnerability scanning, threat analytics, security awareness and training, endpoint security, bug bounty program, offensive security testing, and third-party risk and monitoring.
As part of our overall risk management system, we monitor and test our safeguards, in collaboration with human resources, IT, and management. Personnel at all levels and departments are made aware of our cybersecurity policies and educated about cybersecurity best practices through annual company-wide cybersecurity training, regular phishing simulations, and role-based training, as appropriate.
As part of our overall risk management system, we monitor and test our safeguards, in collaboration with human resources, IT, and management. Personnel at all levels and departments are made aware of our cybersecurity policies and educated about cybersecurity best practices through annual company-wide cybersecurity training, regular phishing simulations and cybersecurity reminders, and role-based training, as appropriate.
Our Head of Information Security and Compliance and the InfoSec Team, in partnership with our Legal Privacy Team, oversee our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.
Our Head of Information Security and Compliance and our InfoSec management team, in partnership with our legal privacy team, oversee our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.
We routinely assess material risks from cybersecurity threats, including any potential unauthorized occurrence on, or conducted through, our 40 Table of Contents information systems, that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein.
We routinely assess material risks from cybersecurity threats, including any potential unauthorized occurrence on, or conducted through, our information systems, that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein.
To date, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected our company, including our business strategy, results of operations, or financial condition.
To date, we have not identified any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect our company, including our business strategy, results of operations, or financial condition.
The Audit Committee provides updates to the Board on such reports. The Company has adopted an escalation process for review of cybersecurity incidents, based on severity level, by an internal cyber task force with oversight by the Audit Committee.
The Audit Committee provides updates to the Board on such reports. The Company has adopted an escalation process for review of cybersecurity incidents, based on severity level, by an internal cyber task force with oversight by the Audit Committee. In addition, our Head of Information Security and Compliance provides annual briefings to the Board on our cybersecurity program and risks.
Our Head of Information Security and Compliance and the InfoSec team are primarily responsible for assessing and managing our material risks from cybersecurity threats. Our Head of Information Security and Compliance has over two decades of experience leading cybersecurity, data privacy and risk management programs for large, multi-national organizations and Fortune 500 companies, and CISSP and CRISC certifications.
Our Head of Information Security and Compliance has over two decades of experience leading cybersecurity, data privacy and risk management programs for large, multi-national organizations and Fortune 500 companies, and CISSP and CRISC certifications.
Our Board of Directors is responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible for the day-to-day management of the material risks we face. Our Board of Directors administers its cybersecurity risk oversight function directly as a whole, as well as through the Audit Committee.
Our Board of Directors is responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible for the day-to-day management of the material risks we face.
We engage consultants and third parties in connection with our risk assessment processes. These providers assist us in evaluating our cybersecurity program, provide support for threat monitoring and detection, and scan for vulnerabilities and other related security events which may pose a risk to the company.
These providers assist us in evaluating our cybersecurity program, provide support for threat monitoring and detection, and scan for vulnerabilities and other related security events which may pose a risk to the company. We utilize our third-party risk management program to evaluate the cybersecurity posture of our third-party service providers based on risk, including data and systems access.
We utilize our third-party risk management program to evaluate the cybersecurity posture of our third-party service providers based on risk, including data and systems access. These processes assist us in identifying and mitigating risks from cybersecurity threats associated with our use of third-party service providers.
These processes assist us in identifying and mitigating risks from cybersecurity threats associated with our use of third-party service providers.
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In addition, our Head of Information Security and Compliance provides annual briefings to the Board on our cybersecurity program and risks. 41 Table of Contents
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Our cybersecurity risk management program is closely based upon recognized frameworks established by the National Institute of Standards and Technology, the International Organization for Standardization and certain other applicable industry standards. In 2024, we obtained our ISO/IEC27001 certification. We engage consultants and third parties in connection with our risk assessment processes.
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However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced cybersecurity incidents.
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Our Board of Directors administers its cybersecurity risk oversight function directly as a whole, as well as through the Audit Committee. 40 Table of Contents Our Head of Information Security and Compliance and our InfoSec management team are primarily responsible for assessing and managing our material risks from cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that our facilities are suitable to meet our current needs. However, we intend to expand our facilities and add new facilities as we add employees and enter new geographic markets, and we believe that suitable additional or alternative space will be available as needed to accommodate any such growth.
Biggest changeWe believe that our facilities are suitable to meet our current needs. However, should we need to expand our facilities and add new facilities, we believe that suitable additional or alternative space will be available as needed to accommodate any such growth. If we choose to expand our facilities or locations, we expect to incur additional expenses.
Item 2. Properties Our corporate headquarters is in Palo Alto, California, where we currently lease approximately 72,812 square feet under a lease agreement that expires in May 2028.
Item 2. Properties Our corporate headquarters is in Palo Alto, California, where we currently lease approximately 72,812 square feet under a lease agreement that expires in May 2028. We also lease and license additional facilities in the United States and internationally, including in Beijing and Shanghai, China; Berlin and Frankfurt, Germany; and Singapore.
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We also lease and license additional facilities in the United States in Palo Alto, San Francisco, Santa Monica, Los Angeles, California; Las Vegas, Nevada; Bellevue, Washington; New York, New York; and Richardson, Texas; and internationally in Toronto, Canada; Beijing, Hangzhou and Shanghai, China; Limassol, Cyprus; London, England; Paris, France; Berlin and Frankfurt, Germany; Jakarta, Indonesia; Herzliya, Israel; Tokyo, Japan; Seoul, South Korea; Singapore; Bangkok, Thailand; Izmir, Turkey; Haarlem, Netherlands; and Ho Chi Minh City, Vietnam.
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We expect to incur additional expenses in connection with such new or expanded facilities.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring the three months ended December 31, 2023, we issue d 61,136 shares o f our Class A common stock upon the vesting of RSUs under our 2021 Partner Studio Incentive Plan. The foregoing transactions did not involve any underwriters, any underwriting discounts or commissions, or any public offering.
Biggest changeRecent Sale of Unregistered Securities and Use of Proceeds Recent Sale of Unregistered Securities During the three months ended December 31, 2024, we issue d 36,557 shares o f our Class A common stock upon the vesting of RSUs under our 2021 Partner Studio Incentive Plan.
The graph below compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the Standard & Poor's 500 Stock Index ("S&P 500") and the S&P 500 Information Technology Index ("S&P IT") through December 31, 2023.
The graph below compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the Standard & Poor's 500 Stock Index ("S&P 500") and the S&P 500 Information Technology Index ("S&P IT") through December 31, 2024.
Holders of Record As of December 31, 2023, there were approximately 64 stockholders of record of our Class A common stock, 10 stockholders of records of our Class B common stock and no holders of record of our Class C common stock.
Holders of Record As of December 31, 2024, there were approximately 39 stockholders of record of our Class A common stock, 8 stockholders of records of our Class B common stock and no holders of record of our Class C common stock.
All recipients had adequate access, through their relationships with us or otherwise, to information about us. The issuance of these securities was made without any general solicitation or advertising. Use of Proceeds None. Issuer Purchases of Equity Securities None. Item 6. [Reserved]
All recipients had adequate access, through their relationships with us or otherwise, to information about us. The issuance of these securities was made without any general solicitation or advertising.
Because many of our shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Because many of our shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. All shares of Class B common stock are beneficially held by Adam Foroughi and Herald Chen, collectively with certain affiliated trusts.
Stock Performance Graph This performance graph shall not be deemed "soliciting material" or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of AppLovin Corporation under the Securities Act of 1933, as amended (the "Securities Act").
Dividend Policy We have never paid cash dividends on our capital stock and we do not anticipate paying any cash dividends in the foreseeable future. 41 Table of Contents Stock Performance Graph This performance graph shall not be deemed "soliciting material" or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of AppLovin Corporation under the Securities Act of 1933, as amended (the "Securities Act").
The graph uses the closing market price on April 15, 2021 of $65.20 per share as the initial value of our Class A common stock.
The graph uses the closing market price on April 15, 2021 of $65.20 per share as the initial value of our Class A common stock. The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A common stock.
Removed
All shares of Class B common stock are beneficially held by Adam Foroughi, Herald Chen, and KKR Denali Holdings L.P., collectively with certain affiliated trusts. Dividend Policy We have never paid cash dividends on our capital stock and we do not anticipate paying any cash dividends in the foreseeable future.
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The foregoing transactions did not involve any underwriters, any underwriting discounts or commissions, or any public offering.
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The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A common stock. 42 Table of Contents Recent Sale of Unregistered Securities and Use of Proceeds Recent Sale of Unregistered Securities During the three months ended December 31, 2023 , we issued RSUs covering 7,802 shares of our Class A common stock under our 2021 Partner Studio Incentive Plan.
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Use of Proceeds None. 42 Table of Contents Issuer Purchases of Equity Securities The following table summarizes the share repurchase activity for the three months ended December 31, 2024: Period Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) (in thousands) (in thousands) (in millions) October 1 - 31 — $ — — $ 2,272 November 1 - 30 — $ — — $ 2,272 December 1 - 31 — $ — — $ 2,272 Total — — (1) In February 2022, our board of directors authorized a repurchase program of up to $750.0 million of our Class A common stock.
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In 2023, our board of directors authorized an increase to the repurchase program of $743.6 million. In 2024, our board of directors authorized increases to the repurchase program of an aggregate amount of $3.3 billion.
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Repurchases may be made from time to time through open market purchases or through privately negotiated transactions, subject to market conditions, applicable legal requirements and other relevant factors. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18.
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We may also, from time to time, enter into Rule 10b-5 trading plans to facilitate repurchases of shares. The repurchase program does not obligate us to acquire any particular amount of our Class A common stock, has no expiration date and may be modified, suspended, or terminated at any time at our discretion.
Added
See Note 10 - Equity of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to share repurchases. (2) Average price paid per share includes commissions and fees associated with the repurchases under our repurchase program. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

104 edited+27 added−84 removed43 unchanged
Biggest changeThe increase in tax benefit was driven by an increase of $52.7 million due to the tax impact on the pre-tax loss of $205.2 million in 2022 as compared to $46.3 million of pre-tax income in 2021, an increase of $14.7 million related to capital loss, an increase of $7.2 million due to higher foreign-derived intangible income deduction, and an increase of $5.1 million due to higher research and development credit, offset by a decrease of $30.1 million related to decrease in stock-based compensation benefit, a decrease of $15.7 million due to higher US-foreign rate differential, a decrease of $5.6 million due to higher foreign income inclusion and a decrease of $5.2 million due to higher valuation allowance. 53 Table of Contents Comparison of our Segment Results of Operations The following table presents the results for our Software Platform and Apps segment adjusted EBITDA for the periods indicated: Years Ended December 31, 2022 to 2023 % change 2021 to 2022 % change 2023 2022 2021 (in thousands, except percentages) Software Platform Adjusted EBITDA $ 1,275,705 $ 808,415 $ 457,302 58 % 77 % Apps Adjusted EBITDA $ 226,953 $ 254,795 $ 269,512 (11) % (5) % Twelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 2022 The $467.3 million, or 58%, increase in Software Platform Adjusted EBITDA for 2023 was primarily driven by an increase in Software Platform revenue of $792.6 million, partially offset by an increase of $49.5 million in expenses associated with our network infrastructure and an increase of $46.6 million in personnel-related expenses related to an increase in stock-based compensation expense as a result of an increase in headcount.
Biggest changeThe increase in tax provision was primarily driven by an increase of $119.0 million due to the tax impact on the pre-tax income of $380.6 million in 2023 as compared to pre-tax loss of $205.2 million in 2022, offset by $65.7 million related to foreign rate differential and income inclusion, an increase of $16.5 million related to increase in Global Intangible Low-Taxed Income offset by an increase in foreign tax credit, an increase of $25.9 million of stock-based compensation benefit, and an increase of $13.3 million in the research and development credit. 52 Table of Contents Comparison of our Segment Results of Operations The following table presents the results for our Advertising and Apps segment adjusted EBITDA for the periods indicated: Year Ended December 31, 2023 to 2024 % change 2022 to 2023 % change 2024 2023 2022 (in thousands, except percentages) Advertising Adjusted EBITDA $ 2,442,597 $ 1,275,705 $ 808,415 91 % 58 % Apps Adjusted EBITDA $ 277,008 $ 226,953 $ 254,795 22 % (11) % Twelve Months Ended December 31, 2024 Compared to Twelve Months Ended December 31, 2023 The $1.2 billion, or 91%, increase in Advertising Adjusted EBITDA for 2024 was primarily driven by an increase in Advertising Revenue of $1.4 billion, partially offset by an increase of $141.3 million in expenses associated with our network infrastructure and an increase of $33.3 million in personnel-related expenses.
Revenue from Adjust is primarily generated from an annual software subscription fee. Software Platform clients use Wurl's CTV platform to distribute streaming video, maximize advertising revenue, and acquire and retain viewers or subscribers. Revenue from Wurl is primarily generated from content companies, typically on a usage-based model.
Revenue from Adjust is primarily generated from an annual software subscription fee. Advertising clients use Wurl's CTV platform to distribute streaming video, maximize Advertising Revenue, and acquire and retain viewers or subscribers. Revenue from Wurl is primarily generated from content companies, typically on a usage-based model.
Other income (expense), net, primarily includes interest earned on our cash and cash equivalents, fair value adjustments relating to our non-marketable equity securities, and foreign currency gains and losses. Provision for (benefit from) income taxes. We are subject to income taxes in the United States and foreign jurisdictions in which we do business.
Other income, net, primarily includes interest earned on our cash and cash equivalents, fair value adjustments relating to our non-marketable equity securities, and foreign currency gains and losses. Provision for (benefit from) income taxes. We are subject to income taxes in the United States and foreign jurisdictions in which we do business.
These third-party platforms have significant market power and discretion to set platform fees, select which apps to promote, and decide how much consumer information to provide to advertising networks that enable our Software Platform to target users with personalized and relevant advertising and allocate marketing campaigns in an efficient and cost-effective manner.
These third-party platforms have significant market power and discretion to set platform fees, select which apps to promote, and decide how much consumer information to provide to advertising networks that enable our Advertising solutions to target users with personalized and relevant advertising and allocate marketing campaigns in an efficient and cost-effective manner.
We capitalized on our success and understanding of the mobile app ecosystem by entering into the mobile game apps industry in 2018. Our global diversified portfolio of apps now consist of over 200 free-to-play mobile games across five genres, run by eleven studios.
We capitalized on our success and understanding of the mobile app ecosystem by entering into the mobile game apps industry in 2018. Our global diversified portfolio of apps now consist of over 200 free-to-play mobile games across five genres, run by ten studios.
Our founders, who were mobile app developers themselves, quickly realized the real impediment to success and growth in the advertising ecosystem was a discovery and monetization problem—breaking through the congested app stores to efficiently find users and successfully grow their business. Their first-hand experience with these challenges led to the development of our infrastructure and Software Platform.
Our founders, who were mobile app developers themselves, quickly realized the real impediment to success and growth in the advertising ecosystem was a discovery and monetization problem—breaking through the congested app stores to efficiently find users and successfully grow their business. Their first-hand experience with these challenges led to the development of our infrastructure and Advertising solutions.
Revenue is generated from our advertisers, typically on a performance-basis, and shared with our advertising publishers, typically on a cost per impression model. Software Platform clients use MAX to optimize purchases of app advertising inventory. The MAX tool suite provides insights to manage against key performance indicators, understand the long-term value of users, and help manage profitability.
Revenue is generated from our advertisers, typically on a performance-basis, and shared with our advertising publishers, typically on a cost per impression model. Advertising clients use MAX to optimize purchases of app advertising inventory. The MAX tool provides insights to manage against key performance indicators, understand the long-term value of users, and help manage profitability.
Software Platform Revenue also includes fees generated based on a percentage of client spend through MAX and subscription fees for Adjust's measurement and analytics marketing platform. Revenue from other services under Software Platform was not material.
Advertising Revenue also includes fees generated based on a percentage of client spend through MAX and subscription fees for Adjust's measurement and analytics marketing platform. Revenue from other services under Advertising was not material.
Components of Results of Operations Revenue We generate Software Platform Revenue primarily from fees collected from advertisers spending on AppDiscovery, typically on a performance basis, then shared with our advertising publishers, typically on a cost per impression basis.
Components of Results of Operations Revenue We generate Advertising Revenue primarily from fees collected from advertisers spending on AppDiscovery, typically on a performance basis, then shared with our advertising publishers, typically on a cost per impression basis.
By increasing the number of users and their engagement, as well as better matching ads with the appropriate target audience, we are able to increase our revenue from IAA clients that purchase advertising inventory from our Apps. IAA Revenue represented 31% of total Apps Revenue for the twelve months ended December 31, 2023.
By increasing the number of users and their engagement, as well as better matching ads with the appropriate target audience, we are able to increase our revenue from IAA clients that purchase advertising inventory from our Apps. IAA Revenue represented 32% of total Apps Revenue for the twelve months ended December 31, 2024.
Software Platform clients include a wide variety of advertisers, from indie developer studios to some of the largest global internet platforms, such as Facebook and Google. We see multiple opportunities to gain new Software Platform clients, and to increase spend from existing clients, as we help them grow their businesses and make them more successful.
Advertising clients include a wide variety of advertisers, from indie developer studios to some of the largest global internet platforms, such as Facebook and Google. We see multiple opportunities to gain new Advertising clients, and to increase spend from existing clients, as we help them grow their businesses and make them more successful.
As we improve our Software Platform and Apps, we can attract additional spend from these clients. Our clients include indie studio developers and some of the largest advertising platforms in the world. We believe there is significant room for us to further expand our relationships with these clients and increase their usage of our Software Platform.
As we improve our Advertising solutions and Apps, we can attract additional spend from these clients. Our clients include indie studio developers and some of the largest advertising platforms in the world. We believe there is significant room for us to further expand our relationships with these clients and increase their usage of our Advertising solutions.
We use Adjusted EBITDA and Adjusted EBITDA margin in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of 45 Table of Contents our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance.
We use Adjusted EBITDA and Adjusted EBITDA margin in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance.
Our clients leverage a broad set of high-performing mobile ad formats, including playable and rewarded video, and are able to match these ads with relevant users resulting in a better return on their advertising spend.
Our clients leverage a broad set of high-performing mobile ad formats, including playable and rewarded video, and are able to match these ads with relevant users resulting in a better return on their advertising 44 Table of Contents spend.
Recent Accounting Pronouncements See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the dates of the statement of financial position included in this Annual Report on 10-K. 59 Table of Contents
Recent Accounting Pronouncements See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the dates of the statement of financial position included in this Annual Report on 10-K.
To the extent we are unable to utilize IDFA or a similar offering, or if the transparency changes and any related opt-in or other requirements result in decreases in the availability or utility of data relating to Apps, our Software Platform may not be as effective, we may not be able to continue to efficiently generate revenue for our Apps, and our revenue and results of operations may be harmed.
To the extent we are unable to utilize IDFA or a similar offering, or if the transparency changes and any related opt-in or other requirements result in decreases in the availability or utility of data relating to Apps, our Advertising solutions may not be as effective, we may not be able to continue to efficiently generate revenue for our Apps, and our revenue and results of operations may be harmed.
The increase in Software Platform revenue was also due to improved AppDiscovery performance, where installations increased 17% and net revenue per installation increased 35% compared to the prior year period. We do not recognize Software Platform Revenue from transactions with our studios.
The increase in Advertising Revenue was also due to improved AppDiscovery performance, where installations increased 17% and net revenue per installation increased 35% compared to the prior year period. We do not recognize Advertising Revenue from transactions with our studios.
The Software Platform and Apps segments provide a view into the organization of our business and generate revenue as follows: Software Platform Revenue We primarily generate Software Platform Revenue from fees paid by advertisers who use our Software Platform to grow and monetize their content. We are able to grow our Software Platform Revenue by improving our various software technologies.
The Advertising and Apps segments provide a view into the organization of our business and generate revenue as follows: Advertising Revenue We primarily generate Advertising Revenue from fees paid by advertisers who use our Advertising solutions to grow and monetize their content. We are able to grow our Advertising Revenue by improving our various technologies.
We expect our research and development expenses as a percentage of revenue to fluctuate period-over-period in the near term as we invest to enhance our Software Platform and improve our existing Apps and develop new Apps, and to decrease over the long term as we benefit from greater scale. General and administrative.
We expect our research and development expenses as a percentage of revenue to fluctuate period-over-period in the near term as we invest to enhance our Advertising solutions and improve our existing Apps and develop new Apps, and to decrease over the long term as we benefit from greater scale. General and administrative.
The vast majority of our IAP revenue flows through two app stores, Apple App Store and Google Play, which charge us a standard commission on IAPs. IAP Revenue represented 69% of total Apps Revenue for the twelve months ended December 31, 2023.
The vast majority of our IAP Revenue flows through two app stores, Apple App Store and Google Play, which charge us a standard commission on IAPs. IAP Revenue represented 68% of total Apps Revenue for the twelve months ended December 31, 2024.
In May 2023, Google announced new consent management platform ("CMP") requirements for ads served in the European Economic Area ("EEA") and UK, which will require, starting in January 2024, publishers using Google AdSense, Ad Manager, or AdMob to use a CMP that has been certified by Google and has integrated with the Interactive Advertising Bureau's ("IAB") Transparency and Consent Framework when serving ads to users in the EEA or the UK.
In May 2023, Google announced new consent management platform ("CMP") requirements for ads served in the European Economic Area ("EEA") and UK, which requires, as of January 2024, publishers using Google AdSense, Ad Manager, or AdMob to use a CMP that has been certified by Google and has integrated with the Interactive Advertising Bureau's ("IAB") Transparency and Consent Framework when serving ads to users in the EEA or the UK.
We are investing in direct sales, product development, education, and other capabilities to drive increased awareness and adoption of our Software Platform and Apps, which investments may impact our profitability in the near term as we seek further scale.
We are investing in direct sales, product development, education, and other capabilities to drive increased awareness and adoption of our Advertising solutions and Apps, which investments may impact our profitability in the near term as we seek further scale.
In addition, Software Platform Adjusted EBITDA for 2022 has been adjusted to exclude one-time publisher bonuses of $209.6 million for the year ended December 31, 2022.
In addition, Advertising Adjusted EBITDA for 2022 has been adjusted to exclude one-time publisher bonuses of $209.6 million for the year ended December 31, 2022.
We rely in part on Identifier for Advertisers ("IDFA") to provide us with data that helps our Software Platform better market and monetize Apps. In light of the IDFA and transparency changes, we made changes to our data collection practices.
We rely in part on Identifier for Advertisers ("IDFA") to provide us with data that helps our Advertising solutions better market and monetize Apps. In light of the IDFA and transparency changes, we made changes to our data collection practices.
Revenue from MAX is generated based on a percentage of client spend. As more developers move to in-app bidding monetization, we expect growth in the adoption of, and revenue from, MAX. Software Platform clients use Adjust's measurement and analytics marketing platform to better understand their users' journey while allowing marketers to make smarter decisions through measurement, attribution and fraud prevention.
Revenue from MAX is generated based on a percentage of client spend. As more advertising networks move to in-app real-time bidding, we expect growth in the adoption of, and revenue from, MAX. Advertising clients use Adjust's measurement and analytics marketing platform to better understand their users' journey while allowing marketers to make smarter decisions through measurement, attribution and fraud prevention.
Our Software Platform includes AppDiscovery, MAX, Adjust, and Wurl. Clients use AppDiscovery to automate, optimize, and manage their user acquisition investments. They set marketing and user growth goals, and AppDiscovery optimizes their ad spend in an effort to achieve their return on advertising spend targets and other marketing objectives. AppDiscovery comprises the vast majority of revenue from our Software Platform.
Our Advertising solutions include AppDiscovery, MAX, Adjust, and Wurl. Clients use AppDiscovery to automate, optimize, and manage their user acquisition investments. They set marketing and user growth goals, and AppDiscovery optimizes their ad spend in an effort to achieve their return on advertising spend targets and other marketing objectives. AppDiscovery comprises the vast majority of Advertising Revenue.
During the twelve months ended December 31, 2023, we had an average of 1.8 million Monthly Active Payers ("MAPs") across our portfolio of Apps. Over that period, we had an Average Revenue Per Monthly Active Payer ("ARPMAP") of $46. See “Key Metrics” below for additional information on how we calculate MAPs and ARPMAP.
During the twelve months ended December 31, 2024, we had an average of 1.6 million Monthly Active Payers ("MAPs") across our portfolio of Apps. Over that period, we had an Average Revenue Per Monthly Active Payer ("ARPMAP") of $51. See “Key Metrics” below for additional information on how we calculate MAPs and ARPMAP.
We believe that the global opportunity is significant and will continue to expand as developers and advertisers outside the United States adopt our Software Platform and advertise on our Apps. We also see opportunities to acquire new clients outside of mobile gaming, as the capabilities of our Software Platform are relevant to the broader advertising and mobile app ecosystems.
We believe that the global opportunity is significant and will continue to expand as developers and advertisers outside the United States adopt our Advertising solutions and advertise on our Apps. We also see opportunities to acquire new clients outside of mobile gaming, as the capabilities of our Advertising solutions are relevant to the broader advertising ecosystem.
Additionally, our effective tax rate can vary based on the amount of pre-tax income or loss. 49 Table of Contents Results of Operations In this section, we discuss the results of our operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Additionally, our effective tax rate can vary based on the amount of pre-tax income or loss. Results of Operations In this section, we discuss the results of our operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.
In the past, our clients have generally increased their usage of our Software Platform and Apps, and as a result, growth from existing clients has been a primary driver of our revenue growth.
In the past, our clients have generally increased their usage of our Advertising solutions and Apps, and as a result, growth from existing clients has been a primary driver of our revenue growth.
Our future capital requirements, however, will depend on many factors, including our growth rate; sales and marketing activities; timing and extent of spending to support our research and development efforts; capital expenditures to purchase hardware and software; and our continued need to invest in our IT infrastructure to support our growth.
Our future capital requirements will depend on many factors, including our revenue growth rate; sales and marketing activities; timing and extent of spending to support our research and development efforts; capital expenditures to purchase hardware and software; our continued need to invest in our IT infrastructure to support our growth; and the volume and timing of our stock repurchases.
Non-GAAP Financial Measures Adjusted EBITDA and Adjusted EBITDA Margin We define Adjusted EBITDA for a particular period as net income (loss) before interest expense and loss on settlement of debt, other income (expense), net (excluding certain recurring items), provision for (benefit from) income taxes, amortization, depreciation and write-offs and as further adjusted for stock-based compensation expense, acquisition-related expense and transaction bonus, publisher bonuses, MoPub acquisition transition services, restructuring costs, impairment and loss in connection with the sale of long-lived assets, non-operating foreign exchange (gain) losses, and change in the fair value of contingent consideration.
Non-GAAP Financial Measures Adjusted EBITDA and Adjusted EBITDA Margin We define Adjusted EBITDA for a particular period as net income (loss) before interest expense and loss on settlement of debt, other income, net (excluding certain recurring items), provision for (benefit from) income taxes, amortization, depreciation and write-offs and as further adjusted for stock-based compensation expense, acquisition-related expense and transaction bonus, publisher bonuses, MoPub acquisition transition services, restructuring costs, loss on disposal of long-lived assets, and non-operating foreign exchange (gain) losses.
Our IAA Revenue from Apps decreased by $136.4 million, or 23%, compared to the prior year period, due to a 45% decrease in price per advertising impression, partially offset by a 39% increase in the volume of advertising impressions. We do not recognize IAA Revenue from transactions with our studios.
Our IAA Revenue from Apps decreased by $136.4 million, or 23%, compared to the prior year period, due to a 45% decrease in price per advertising impression, partially offset by a 39% increase in the volume of advertising impressions.
MAPs for a particular time period longer than one month are the average MAPs for each month during that period. We estimate the number of MAPs by aggregating certain data from third-party attribution partners.
MAPs for a particular time period longer than one month are the average MAPs for each month during that period. We estimate the number of MAPs by aggregating certain data from third-party attribution partners. Average Revenue Per Monthly Active Payer ("ARPMAP").
Year Ended December 31, 2023 2022 2021 Monthly Active Payers (millions) 1.8 2.3 3.0 Average Revenue Per Monthly Active Payer $ 46 $ 43 $ 43 Our key metrics are not based on any standardized industry methodology and are not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies.
The following table shows our Monthly Active Payers and Average Revenue Per Monthly Active Payer for the years ended December 31, 2024, 2023, and 2022: Year Ended December 31, 2024 2023 2022 Monthly Active Payers (millions) 1.6 1.8 2.3 Average Revenue Per Monthly Active Payer $ 51 $ 46 $ 43 Our key metrics are not based on any standardized industry methodology and are not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies.
We plan to continue to invest in research and development to continue to enhance our Software Platform and to improve existing games and develop new games.
We plan to continue to invest in research and development to continue to enhance our Advertising solutions and to improve existing games and develop new games.
IAPs consist of virtual goods used to enhance gameplay, accelerate access to certain features or levels, and augment other mobile game progression opportunities for the user. IAPs drive more engagement and better economics from our Apps.
Our Apps are generally free-to-play mobile games and generate IAP Revenue through IAPs. IAPs consist of virtual goods used to enhance gameplay, accelerate access to certain features or levels, and augment other mobile game progression opportunities for the user. IAPs drive more engagement and better economics from our Apps.
We must continue to retain our existing clients and expand their spend with us over time to continue to grow our revenue, increase profitability and drive greater cash flow. Add new clients globally Our future success depends in part on our ability to acquire new clients.
We must continue to retain our existing clients and expand their spend with us over time to continue to grow our revenue, increase profitability and drive greater cash flow. Add new clients globally Our future success depends in part on our ability to acquire new clients. In 2024, 43% of our revenue was generated from outside of the United States.
We record uncertain tax positions on the basis of a two-step process in which determinations are made (i) whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with a tax authority.
We record uncertain tax positions on the basis of a two-step process in which determinations are made (i) whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with a tax authority. 55 Table of Contents We recognize interest and penalties related to unrecognized tax benefits in the income tax expense line in our consolidated statement of operations.
We generate Apps Revenue from IAPs made by the users within our Apps and from IAA generated from advertisers that 48 Table of Contents purchase advertising inventory from our diverse portfolio of Apps. IAA Revenue from our Apps was 31%, 33% and 31% of total Apps Revenue in 2023, 2022 and 2021, respectively.
We generate Apps Revenue from IAPs made by the users within our Apps and from IAA generated from advertisers that purchase advertising inventory from our diverse portfolio of Apps. IAA Revenue from our Apps was 32%, 31%, and 33% of total Apps Revenue in 2024, 2023, and 2022, respectively. Cost of Revenue and Operating Expenses Cost of revenue.
This increase was primary driven by $99.5 million due to an increase in interest rate and $4.3 million in loss on settlement of debt resulting from a debt refinancing transaction during the period. In 2022, interest expense and loss on settlement of debt increased by $68.7 million, or 67%, compared to 2021.
This increase was primary driven by $99.5 million due to an increase in interest rate and $4.3 million in loss on settlement of debt resulting from a debt refinancing transaction during the period.
Our definition may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish Free Cash Flow or similar metrics. Thus, our Free Cash Flow should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP.
In addition, other companies may not publish Free Cash Flow or similar metrics. Thus, our Free Cash Flow should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP.
Finance Leases As of December 31, 2023, we have non-cancelable payments related to finance leases of certain networking equipment of $192.2 million, with $27.5 million payable within twelve months. For additional information, see Note 8 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
As of December 31, 2024, we had non-cancelable payments related to leases of servers and networking equipment of $184.1 million, with $30.5 million payable within twelve months. For additional information, see Note 8 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
The following table provides our Free Cash Flow for 2023, 2022, and 2021, and a reconciliation of net cash provided by operating activities to Free Cash Flow: Year Ended December 31, 2023 2022 2021 (in thousands, except percentages) Net cash provided by operating activities $ 1,061,510 $ 412,773 $ 361,851 Less: Purchase of property and equipment (4,246) (662) (1,390) Principal payments of finance leases (20,170) (24,083) (15,271) Free Cash Flow $ 1,037,094 $ 388,028 $ 345,190 Net cash used in investing activities $ (77,829) $ (1,371,468) $ (1,214,930) Net cash provided by (used in) financing activities $ (1,562,791) $ (526,848) $ 3,109,546 Factors Affecting Our Performance We believe that the future success of our business depends on many factors, including the factors described below.
The following table provides our Free Cash Flow for 2024, 2023, and 2022, and a reconciliation of net cash provided by operating activities to Free Cash Flow: Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 2,099,011 $ 1,061,510 $ 412,773 Less: Purchase of property and equipment (4,776) (4,246) (662) Principal payments of finance leases (20,875) (20,170) (24,083) Free Cash Flow $ 2,073,360 $ 1,037,094 $ 388,028 Net cash used in investing activities $ (106,754) $ (77,829) $ (1,371,468) Net cash used in financing activities $ (1,749,844) $ (1,562,791) $ (526,848) Factors Affecting Our Performance We believe that the future success of our business depends on many factors, including the factors described below.
Our IAA Revenue from Apps decreased $71.8 million, or 11%, compared to the prior year period, due to a 16% decrease 51 Table of Contents in price per advertising impression, partially offset by a 7% increase in the volume of advertising impressions. We do not recognize IAA Revenue from transactions with our studios.
Our IAA Revenue from Apps increased by $30.2 million, or 7%, compared to the prior year period, due to a 34% increase in the volume of advertising impressions, partially offset by a 20% decrease in price per advertising impression. We do not recognize IAA Revenue from transactions with our studios.
We generated net income of $356.7 million in 2023, net loss of $192.9 million in 2022, and net income of $35.3 million in 2021. We generated Adjusted EBITDA of $1.5 billion, $1.1 billion, and $726.8 million in 2023, 2022 and 2021, respectively.
We generated net income of $1.6 billion in 2024, net income of $356.7 million in 2023, and net loss of $192.9 million in 2022. We generated Adjusted EBITDA of $2.7 billion, $1.5 billion, and $1.1 billion in 2024, 2023, and 2022, respectively.
Interest expense and loss on settlement of debt Years Ended December 31, 2022 to 2023 % change 2021 to 2022 % change 2023 2022 2021 (in thousands, except percentages) Interest expense and loss on settlement of debt $ (275,665) $ (171,863) $ (103,170) 60 % 67 % Percentage of revenue (8) % (6) % (4) % In 2023, interest expense and loss on settlement of debt increased by $103.8 million, or 60%, compared to 2022.
Interest expense and loss on settlement of debt Year Ended December 31, 2023 to 2024 % change 2022 to 2023 % change 2024 2023 2022 (in thousands, except percentages) Interest expense and loss on settlement of debt $ (318,260) $ (275,665) $ (171,863) 15 % 60 % Percentage of revenue (7) % (8) % (6) % In 2024, interest expense and loss on settlement of debt increased by $42.6 million, or 15%, compared to 2023.
From the beginning of 2018 through end of 2022, we have invested nearly $4.0 billion in 29 strategic acquisitions and partnerships with mobile app developers and for technologies to enhance our Software Platform including the acquisition of MAX in 2018, Adjust in April 2021, MoPub in January 2022, and Wurl in April 2022.
From the beginning of 2018 through 2024, we have invested approximately $4.1 billion in 33 strategic acquisitions and partnerships with mobile app developers and for technologies or relationships to enhance our Advertising solutions, including the acquisition of MAX in 2018, Adjust in April 2021, MoPub in January 2022, and Wurl in April 2022.
The fees for IAPs are processed and collected by third-party distribution partners. We expect our cost of revenue to increase in absolute dollars over the long term as our business and revenue continue to grow. We also expect our cost of revenue as a percentage of revenue to fluctuate period-over-period. Sales and marketing .
We expect our cost of revenue to increase in absolute dollars over the long term as our business and revenue continue to grow. We also expect our cost of revenue as a percentage of revenue to fluctuate period-over-period. Sales and marketing .
We do not recognize Software Platform Revenue from transactions with our studios. For the twelve months ended December 31, 2022, our Apps Revenue decreased by $351.3 million, or 17%, from the prior year period.
We do not recognize Advertising Revenue from transactions with our studios. For the twelve months ended December 31, 2024, our Apps Revenue increased by $43.9 million, or 3%, from the prior year period.
Sales and marketing Years Ended December 31, 2022 to 2023 % change 2021 to 2022 % change 2023 2022 2021 (in thousands, except percentages) Sales and marketing $ 830,718 $ 919,550 $ 1,129,892 (10) % (19) % Percentage of revenue 25 % 33 % 40 % Sales and marketing expenses in 2023 decreased by $88.8 million, or 10%, compared to 2022 primarily due to a $126.5 million decrease in user acquisition costs and a $12.3 million decrease in professional services costs associated with the strategic review and optimization of our Apps segment, offset by a $47.5 million increase in personnel-related expense primarily due to an increase in stock-based compensation.
Sales and marketing expenses in 2023 decreased by $88.8 million, or 10%, compared to 2022 primarily due to a $126.5 million decrease in user acquisition costs and a $12.3 million decrease in professional services costs associated with the strategic review and optimization of our Apps segment, offset by a $47.5 million increase in personnel-related expense primarily due to an increase in stock-based compensation.
Research and development Years Ended December 31, 2022 to 2023 % change 2021 to 2022 % change 2023 2022 2021 (in thousands, except percentages) Research and development $ 592,386 $ 507,607 $ 366,402 17 % 39 % Percentage of revenue 18 % 18 % 13 % Research and development expenses in 2023 increased by $84.8 million, or 17%, compared to 2022.
Research and development Year Ended December 31, 2023 to 2024 % change 2022 to 2023 % change 2024 2023 2022 (in thousands, except percentages) Research and development $ 638,689 $ 592,386 $ 507,607 8 % 17 % Percentage of revenue 14 % 18 % 18 % Research and development expenses in 2024 increased by $46.3 million, or 8%, compared to 2023.
Cost of Revenue and Operating Expenses Cost of revenue. Cost of revenue consists primarily of third-party payment processing fees for distribution partners, amortization of acquired technology-related intangible assets, amortization of finance lease right-of-use assets related to certain servers and networking equipment and costs for third-party cloud service providers. Third-party payment processing fees relate to IAP Revenue.
Cost of revenue consists primarily of payment processing fees related to IAP Revenue, amortization of acquired technology-related intangible assets, amortization of finance lease right-of-use assets related to certain servers and networking equipment and data center costs related primarily to third-party cloud computing services. The fees for IAPs are processed and collected by third-party distribution partners.
Additionally, we have generated strong cash flows, with net cash provided by operating activities of $1.1 billion, $412.8 million, and $361.9 million in 2023, 2022, and 2021, respectively. Given our strong financial position, we have been able to reinvest in our expansion and growth and consummate strategic acquisitions and partnerships.
Additionally, we have generated strong cash flows, with net cash provided by operating activities of $2.1 billion, $1.1 billion, and $412.8 million in 2024, 2023, and 2022, respectively. Given our strong financial position, we have been able to reinvest in our expansion and growth, and repurchase and withhold shares of our Class A common stock.
Financing Activities Net cash used in financing activities was $1.6 billion for 2023, primarily consisting of $1.2 billion of common stock repurchases, payments for withholding taxes related to net share settlement of restricted stock units of $246.4 million, payments for the principal repayment of debt of $498.0 million net of $395.3 million proceeds from issuance of debt, deferred acquisition costs of $33.9 million, licensed asset obligation payments of $27.1 million, and principal payments for finance leases of $20.2 million, partially offset by $20.9 million in proceeds from exercise of stock awards.
Net cash used in financing activities was $1.6 billion for 2023, primarily consisting of $1.2 billion of stock repurchases, $498.0 million of principal repayments of debt, and $246.4 million of payments for withholding taxes related to net share settlement of equity awards, partially offset by $395.3 million of proceeds from issuance of debt.
For additional information on the Credit Agreement, see Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Contractual Obligations Our material cash requirements include the following contractual obligations.
For additional information, see Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
The decrease was primarily due to $12.7 million in acquisition-related costs in 2022 and a decrease of $6.7 million in professional services costs primarily associated with acquisition support. General and administrative expenses in 2022 increased by $22.9 million, or 14% compared to 2021.
The decrease was primarily due to $12.7 million in acquisition-related costs in 2022 and a decrease of $6.7 million in professional services costs primarily associated with acquisition support.
Provision for (benefit from) Income Taxes Years Ended December 31, 2022 to 2023 % change 2021 to 2022 % change 2023 2022 2021 (in thousands, except percentages) Provision for (benefit from) income taxes $ 23,859 $ (12,230) $ 10,973 (295) % (211) % Percentage of revenue 1 % — % — % In 2023, tax provision for income taxes increased by $36.1 million, or 295%, compared to 2022.
Provision for (benefit from) Income Taxes Year Ended December 31, 2023 to 2024 % change 2022 to 2023 % change 2024 2023 2022 (in thousands, except percentages) Provision for (benefit from) income taxes $ (3,771) $ 23,859 $ (12,230) (116) % (295) % Percentage of revenue — % 1 % — % In 2024, tax provision for income taxes decreased by $27.6 million, or 116%, compared to 2023.
Years Ended December 31, 2023 2022 2021 (in thousands) Revenue $ 3,283,087 $ 2,817,058 $ 2,793,104 Costs and expenses Cost of revenue 1,2 1,059,191 1,256,065 988,095 Sales and marketing 1,2 830,718 919,550 1,129,892 Research and development 1 592,386 507,607 366,402 General and administrative 1 152,585 181,627 158,699 Total costs and expenses 2,634,880 2,864,849 2,643,088 Income (loss) from operations 648,207 (47,791) 150,016 Other income (expense): Interest expense and loss on settlement of debt (275,665) (171,863) (103,170) Interest income (expense) and other, net 8,028 14,477 (535) Total other expense (267,637) (157,386) (103,705) Income (loss) before income taxes 380,570 (205,177) 46,311 Provision for (benefit from) income taxes 23,859 (12,230) 10,973 Net income (loss) $ 356,711 $ (192,947) $ 35,338 _______ 1 Includes stock-based compensation expense as follows: Years Ended December 31, 2023 2022 2021 (in thousands) Cost of revenue $ 5,229 $ 6,307 $ 2,335 Sales and marketing 79,879 41,533 15,224 Research and development 230,806 94,319 63,344 General and administrative 47,193 49,453 52,274 Total stock-based compensation $ 363,107 $ 191,612 $ 133,177 _______ 2 Includes amortization expense related to acquired intangibles as follows: Years Ended December 31, 2023 2022 2021 (in thousands) Cost of revenue $ 382,956 $ 448,462 $ 373,726 Sales and marketing 67,190 66,173 22,661 Total amortization expense related to acquired intangibles $ 450,146 $ 514,635 $ 396,387 50 Table of Contents The following table sets forth the components of our consolidated statements of operations for each of the periods presented as a percentage of revenue 1 : Years Ended December 31, 2023 2022 2021 (in thousands) Revenue 100 % 100 % 100 % Costs and expenses: Cost of revenue 32 % 45 % 35 % Sales and marketing 25 % 33 % 40 % Research and development 18 % 18 % 13 % General and administrative 5 % 6 % 6 % Total costs and expenses 80 % 102 % 95 % Income (loss) from operations 20 % (2) % 5 % Other income (expense): Interest expense and loss on settlement of debt (8) % (6) % (4) % Other income (expense), net 0 % 1 % 0 % Total other expense (8) % (6) % (4) % Income (loss) before income taxes 12 % (7) % 2 % Provision for (benefit from) income taxes 1 % — % — % Net income (loss) 11 % (7) % 1 % _______ 1 Totals of percentages of revenue may not foot due to rounding.
The following tables summarize our consolidated statement of operations: Year Ended December 31, 2024 2023 2022 (in thousands) Revenue $ 4,709,248 $ 3,283,087 $ 2,817,058 Costs and expenses Cost of revenue 1,2 1,166,806 1,059,191 1,256,065 Sales and marketing 1,2 849,209 830,718 919,550 Research and development 1 638,689 592,386 507,607 General and administrative 1 181,085 152,585 181,627 Total costs and expenses 2,835,789 2,634,880 2,864,849 Income (loss) from operations 1,873,459 648,207 (47,791) Other income (expense): Interest expense and loss on settlement of debt (318,260) (275,665) (171,863) Other income, net 20,806 8,028 14,477 Total other expense (297,454) (267,637) (157,386) Income (loss) before income taxes 1,576,005 380,570 (205,177) Provision for (benefit from) income taxes (3,771) 23,859 (12,230) Net income (loss) $ 1,579,776 $ 356,711 $ (192,947) _______ 1 Includes stock-based compensation expense as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Cost of revenue $ 5,499 $ 5,229 $ 6,307 Sales and marketing 83,435 79,879 41,533 Research and development 239,902 230,806 94,319 General and administrative 47,619 47,193 49,453 Total stock-based compensation $ 376,455 $ 363,107 $ 191,612 _______ 2 Includes amortization expense related to acquired intangibles as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Cost of revenue $ 338,380 $ 382,956 $ 448,462 Sales and marketing 74,248 67,190 66,173 Total amortization expense related to acquired intangibles $ 412,628 $ 450,146 $ 514,635 49 Table of Contents The following table sets forth the components of our consolidated statements of operations for each of the periods presented as a percentage of revenue 1 : Year Ended December 31, 2024 2023 2022 Revenue 100 % 100 % 100 % Costs and expenses: Cost of revenue 25 % 32 % 45 % Sales and marketing 18 % 25 % 33 % Research and development 14 % 18 % 18 % General and administrative 4 % 5 % 6 % Total costs and expenses 60 % 80 % 102 % Income (loss) from operations 40 % 20 % (2) % Other income (expense): Interest expense and loss on settlement of debt (7) % (8) % (6) % Other income, net — % — % 1 % Total other expense (6) % (8) % (6) % Income (loss) before income taxes 33 % 12 % (7) % Provision for (benefit from) income taxes — % 1 % — % Net income (loss) 34 % 11 % (7) % _______ 1 Totals of percentages of revenue may not foot due to rounding.
Apps Revenue Apps Revenue is generated when a user of one of our Apps makes an in-app purchase (“IAP") and when clients purchase the digital advertising inventory of our portfolio of Apps ("IAA").
Apps Revenue Apps Revenue is generated when a user of one of our Apps makes an in-app purchase (“IAP") and when clients purchase the digital advertising inventory of our portfolio of Apps ("IAA"). We are able to grow our Apps Revenue by adding more apps to our Apps portfolio and increasing engagement on our existing Apps.
We plan to continue to invest in sales and marketing to grow our Software Platform customer base and increase brand awareness. We also plan to continue to invest in new App launches to the extent we see opportunities for cost-effective growth. We expect sales and marketing expenses to fluctuate period-over-period as we launch new games.
We plan to continue to invest in sales and marketing to grow our Advertising customer base and increase brand awareness. We expect sales and marketing expenses to fluctuate period-over-period as we launch new games.
The following table provides our Adjusted EBITDA and Adjusted EBITDA margin for 2023, 2022, and 2021, and a reconciliation of net income (loss) to Adjusted EBITDA: Year Ended December 31, 2023 2022 2021 (in thousands, except percentages) Net income (loss) $ 356,711 $ (192,947) $ 35,338 Adjusted as follows: Interest expense and loss on settlement of debt 275,665 171,863 103,170 Other income (expense), net 1 (7,831) (18,647) (7,545) Provision for (benefit from) income taxes 23,859 (12,230) 10,973 Amortization, depreciation and write-offs 489,008 547,084 431,063 Impairment and loss in connection with sale of long-lived assets — 127,892 — Non-operating foreign exchange gain (1,224) (164) (1,537) Stock-based compensation 2 363,107 191,612 135,468 Acquisition-related expense and transaction bonus 1,047 21,279 16,887 Publisher bonuses 3 — 209,635 3,227 MoPub acquisition transition services 4 — 6,999 — Restructuring costs 2,316 10,834 — Change in the fair value of contingent consideration — — (230) Adjusted EBITDA $ 1,502,658 $ 1,063,210 $ 726,814 Net income (loss) margin 10.9% (6.8)% 1.3% Adjusted EBITDA margin 45.8% 37.7% 26.0% 1 Excludes recurring operational foreign exchange gains and losses and write-off investments included in Amortization, depreciation and write-offs. 2 The twelve months ended December 31, 2021 includes $2.3 million of bonus compensation settled in stock outside of the scope of ASC 718. 3 In association with the MoPub acquisition, we incurred certain costs to incentivize publishers to migrate to our MAX mediation solution, including existing publishers of MoPub as well as publishers on other competitor offerings.
Thus, our Adjusted EBITDA and Adjusted EBITDA margin should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP. 45 Table of Contents The following table provides our Adjusted EBITDA and Adjusted EBITDA margin for 2024, 2023, and 2022, and a reconciliation of net income (loss) to Adjusted EBITDA: Year Ended December 31, 2024 2023 2022 (in thousands, except percentages) Net income (loss) $ 1,579,776 $ 356,711 $ (192,947) Adjusted as follows: Interest expense and loss on settlement of debt 318,260 275,665 171,863 Other income, net 1 (25,440) (7,831) (18,647) Provision for (benefit from) income taxes (3,771) 23,859 (12,230) Amortization, depreciation and write-offs 448,680 489,008 547,084 Loss on disposal of long-lived assets 1,646 — 127,892 Non-operating foreign exchange (gain) loss 291 (1,224) (164) Stock-based compensation 376,455 363,107 191,612 Acquisition-related expense and transaction bonus 885 1,047 21,279 Publisher bonuses 2 — — 209,635 MoPub acquisition transition services 3 — — 6,999 Restructuring costs 22,823 2,316 10,834 Adjusted EBITDA $ 2,719,605 $ 1,502,658 $ 1,063,210 Net income (loss) margin 33.5% 10.9% (6.8)% Adjusted EBITDA margin 57.8% 45.8% 37.7% 1 Excludes recurring operational foreign exchange gains and losses. 2 In association with the MoPub acquisition, we incurred certain costs to incentivize publishers to migrate to our MAX mediation solution, including existing publishers of MoPub as well as publishers on other competitor offerings.
In February 2022, Google announced its Privacy Sandbox initiative for Android, a multi-year effort expected to restrict tracking activity and limit advertisers' ability to collect app and user data across Android devices.
In February 2022, Google announced its Privacy Sandbox initiative for Android, a multi-year effort expected to restrict tracking activity and limit advertisers' ability to collect app and user data across Android devices. In January 2024, Google commenced rolling out a Chrome feature, called Tracking Protection, which limits 47 Table of Contents cross-site tracking.
The $14.7 million, or 5%, decrease in Apps Adjusted EBITDA for 2022 was primarily driven by a decrease in Apps Revenue of $351.3 million and a $73.0 million increase in professional services costs related to development of new apps by third parties, partially offset by a $317.6 million decrease in user acquisition costs, and an $88.4 million decrease in third-party payment processing fees paid associated with IAPs.
The $50.1 million, or 22%, increase in Apps Adjusted EBITDA for 2024 was primarily driven by an increase in Apps Revenue of $43.9 million, a $17.9 million decrease in user acquisition costs, and a $7.7 million decrease in third-party payment processing fees paid associated with IAPs, partially offset by an $18.2 million increase in professional services costs related to marketing, development and maintenance of apps by third parties.
Due to uncertainties in the timing of potential tax audits, the timing of the resolution of these positions is uncertain and we are unable to make a reasonable estimate of the timing of payments in individual years particularly beyond 12 months. As a result, this amount is not included in the table above.
Taxes As of December 31, 2024, we had recorded liabilities of $60.9 million related to uncertain tax positions. Due to uncertainties in the timing of potential tax audits, the timing of the resolution of these positions is uncertain and we are unable to make a reasonable estimate of the timing of payments in individual years particularly beyond 12 months.
Operating Leases As of December 31, 2023, we have non-cancellable commitments for primarily real estate leases with fixed lease payment obligations of $62.3 million, with $16.0 million payable within twelve months. For additional information, see Note 8 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
As of December 31, 2024, we had non-cancellable payments related to leases of office facilities of $51.4 million, with $16.8 million payable within twelve months. For additional information, see Note 8 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to continue to grow profitably while maintaining strong cash flow.
While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to continue to grow profitably while maintaining strong cash flow. 46 Table of Contents Continue to invest in innovation We have made, and intend to continue to make, significant investments in our Advertising solutions to enhance their effectiveness and value proposition for our clients.
Other income (expense), net Years Ended December 31, 2022 to 2023 % change 2021 to 2022 % change 2023 2022 2021 (in thousands, except percentages) Other income (expense), net $ 8,028 $ 14,477 $ (535) (45) % ** Percentage of revenue — % 1 % — % ** Not meaningful In 2023, other income (expense), net decreased by $6.4 million compared to 2022.
Other income, net Year Ended December 31, 2023 to 2024 % change 2022 to 2023 % change 2024 2023 2022 (in thousands, except percentages) Other income, net $ 20,806 $ 8,028 $ 14,477 159 % (45) % Percentage of revenue — % — % 1 % In 2024, other income, net increased by $12.8 million compared to 2023.
General and administrative Years Ended December 31, 2022 to 2023 % change 2021 to 2022 % change 2023 2022 2021 (in thousands, except percentages) General and administrative $ 152,585 $ 181,627 $ 158,699 (16) % 14 % Percentage of revenue 5 % 6 % 6 % 52 Table of Contents General and administrative expenses in 2023 decreased by $29.0 million, or 16% compared to 2022.
General and administrative Year Ended December 31, 2023 to 2024 % change 2022 to 2023 % change 2024 2023 2022 (in thousands, except percentages) General and administrative $ 181,085 $ 152,585 $ 181,627 19 % (16) % Percentage of revenue 4 % 5 % 6 % General and administrative expenses in 2024 increased by $28.5 million, or 19% compared to 2023.
The increase in tax provision was primarily driven by an increase of $119.0 million due to the tax impact on the pre-tax income of $380.6 million in 2023 as compared to pre-tax loss of $205.2 million in 2022, offset by $65.7 million related to foreign rate differential and income inclusion, an increase of $16.5 million related to increase in Global Intangible Low-Taxed Income offset by an increase in foreign tax credit, an increase of $25.9 million of stock-based compensation benefit, and an increase of $13.3 million in the research and development credit.
The decrease in tax provision was primarily driven by an increase of $172.9 million of stock-based compensation benefit, a benefit of $123.2 million due to foreign income taxed at a different rate, an increase of $31.5 million in the research and development credit, offset by an increase of $251.0 million due to higher pre-tax book income of $1.6 billion in 2024 as compared to pre-tax book income of $380.6 million in 2023, and an increase of $34.7 million related to increase in Global Intangible Low-Taxed Income.
For 2023, our revenue grew 17% year-over-year from 2022, from $2.82 billion in 2022 to $3.28 billion in 2023. For 2022, our revenue grew 1% year-over-year from 2021, from $2.79 billion in 2021 to $2.82 billion in 2022.
For 2024, our revenue grew 43% year-over-year from 2023, from $3.3 billion in 2023 to $4.7 billion in 2024. For 2023, our revenue grew 17% year-over-year from 2022, from $2.8 billion in 2022 to $3.3 billion in 2023.
Net cash provided by operating activities was $412.8 million for 2022, primarily consisting of $192.9 million of net loss, adjusted for certain non-cash items, which included $547.1 million of amortization, depreciation and write-offs, $191.6 million of stock-based compensation expense, $127.9 million of impairment charges and losses on disposal of assets, $17.1 million of change in operating right of use asset, and $12.7 million of amortization of debt issuance costs and discount partially offset by a net increase in the operating assets and liabilities of $292.4 million.
Net cash provided by operating activities was $1.1 billion for 2023, primarily consisting of $356.7 million of net income, adjusted for certain non-cash items, such as $489.0 million of amortization, depreciation and write-offs, $363.1 million of stock- 53 Table of Contents based compensation expense, $28.0 million of impairment of non-marketable equity securities, $17.8 million of change in operating right of use asset, and $9.4 million of amortization of debt issuance costs and discount partially offset by a net increase in the operating assets and liabilities of $208.7 million.
We use Free Cash Flow to help manage the health of our business, prepare budgets and for capital allocation purposes. We believe Free Cash Flow provides useful supplemental information to help investors understand underlying trends in our business and our liquidity. Free cash flow has certain limitations, including that it does not reflect our future contractual commitments.
We believe Free Cash Flow provides useful supplemental information to help investors understand underlying trends in our business and our liquidity. Free cash flow has certain limitations, including that it does not reflect our future contractual commitments. Our definition may differ from the definitions used by other companies and therefore comparability may be limited.
Interest expense and loss on settlement of debt consists primarily of interest expense associated with our outstanding debt, including accretion of debt discount, and gains and losses of interest rate swap related to the variable interest payments associated with our outstanding debt. Other income (expense), net.
Interest expense and loss on settlement of debt consists primarily of interest expense associated with our outstanding debt, including accretion of debt discount and issuance costs. 48 Table of Contents Other income, net.
The following table summarizes our cash flows for the periods indicated: Years Ended December 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 1,061,510 $ 412,773 $ 361,851 Net cash used in investing activities $ (77,829) $ (1,371,468) $ (1,214,930) Net cash (used in) provided by financing activities $ (1,562,791) $ (526,848) $ 3,109,546 Operating Activities Net cash provided by operating activities was $1,061.5 million for 2023, primarily consisting of $356.7 million of net income, adjusted for certain non-cash items, which included $489.0 million of amortization, depreciation and write-offs, $363.1 54 Table of Contents million of stock-based compensation expense, $28.0 million of impairment of non-marketable equity securities, $17.8 million of change in operating right of use asset, and $9.4 million of amortization of debt issuance costs and discount partially offset by a net increase in the operating assets and liabilities of $208.7 million.
The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 2,099,011 $ 1,061,510 $ 412,773 Net cash used in investing activities $ (106,754) $ (77,829) $ (1,371,468) Net cash used in financing activities $ (1,749,844) $ (1,562,791) $ (526,848) Operating Activities Net cash provided by operating activities was $2.1 billion for 2024, primarily consisting of $1.6 billion of net income, adjusted for certain non-cash items, such as $448.7 million of amortization, depreciation and write-offs, $369.4 million of stock-based compensation expense, $28.4 million of loss on settlement of debt, $12.7 million of change in operating right of use asset, partially offset by a net decrease in the operating assets and liabilities of $349.5 million.
For the twelve months ended December 31, 2022, our IAP Revenue from Apps decreased by $279.5 million, or 19%, from the prior year period, primarily due to a 21% decrease in the volume of IAPs, partially offset by a 2% increase in price per IAP.
For the twelve months ended December 31, 2024, our IAP Revenue from Apps increased by $13.6 million, or 1%, from the prior year period, primarily due to a 3% increase in price per in-app purchase, partially offset by a 2% decrease in the volume of in-app purchases. We do not recognize IAA Revenue from transactions with our studios.
While we were not focused on acquisitions in 2023, we continue to explore strategic partnership opportunities related to our Software Platform, and the expansion of the markets it serves. We believe our future results of operations will be affected by our ability to continue to identify and execute such transactions that are accretive to our growth and profitability.
We believe our future results of operations will be affected by our ability to continue to identify and execute such strategic transactions that are accretive to our growth and profitability.
Comparison of Our Results of Operations for the Twelve Months Ended December 31, 2023, 2022 and 2021 Revenue Years Ended December 31, 2022 to 2023 % change 2021 to 2022 % change 2023 2022 2021 (in thousands, except percentages) Software Platform Revenue $ 1,841,762 $ 1,049,167 $ 673,952 76 % 56 % In-App Purchases Revenue 989,007 1,179,133 1,458,595 (16) % (19) % In-App Advertising Revenue 452,318 588,758 660,557 (23) % (11) % Apps Revenue 1,441,325 1,767,891 2,119,152 (18) % (17) % Total Revenue $ 3,283,087 $ 2,817,058 $ 2,793,104 17 % 1 % For the twelve months ended December 31, 2023, our Software Platform Revenue increased by $792.6 million, or 76%, from the prior year period primarily due to publisher bonuses of $209.6 million accounted for as a reduction to revenue in the prior year period.
Comparison of Our Results of Operations for the Twelve Months Ended December 31, 2024, 2023, and 2022 Revenue Year Ended December 31, 2023 to 2024 % change 2022 to 2023 % change 2024 2023 2022 (in thousands, except percentages) Advertising Revenue $ 3,224,058 $ 1,841,762 $ 1,049,167 75 % 76 % In-App Purchases Revenue 1,002,656 989,007 1,179,133 1 % (16) % In-App Advertising Revenue 482,534 452,318 588,758 7 % (23) % Total Apps Revenue 1,485,190 1,441,325 1,767,891 3 % (18) % Total Revenue $ 4,709,248 $ 3,283,087 $ 2,817,058 43 % 17 % For the twelve months ended December 31, 2024, our Advertising Revenue increased by $1.4 billion, or 75%, from the prior year period primarily due to improved AppDiscovery performance, where the volume of installations increased 50% and net revenue per installation increased 22% compared to the prior year period.
Investing Activities Net cash used in investing activities was $77.8 million for 2023, primarily consisting of $63.9 million related to acquisitions, $17.9 million in purchases of non-marketable investments and 4.2 million in purchase of property and equipment, partially offset by $8.3 million in proceeds from sale of long-lived assets.
Net cash used in investing activities was $77.8 million for 2023, primarily consisting of $63.9 million related to contingent considerations for prior acquisitions and capitalized software development costs, and $17.9 million in purchases of non-marketable investments.
Twelve Months Ended December 31, 2022 Compared to Twelve Months Ended December 31, 2021 The $351.1 million, or 77%, increase in Software Platform Adjusted EBITDA for 2022 was primarily driven by an increase in Software Platform revenue of $375.2 million, partially offset by an increase of $123.9 million in expenses associated with our network infrastructure and an increase of $74.3 million in personnel-related expenses related to an increase in headcount primarily due to the acquisitions of Adjust and Wurl.
Twelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 2022 The $467.3 million, or 58%, increase in Advertising Adjusted EBITDA for 2023 was primarily driven by an increase in Advertising Revenue of $792.6 million, partially offset by an increase of $49.5 million in expenses associated with our network infrastructure and an increase of $46.6 million in personnel-related expenses related to an increase in stock-based compensation expense as a result of an increase in headcount.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+5 added−2 removed0 unchanged
Biggest changeA hypothetical 100 basis point increase in interest rates would not have a material impact on our financial condition or results of operations due to the short-term nature of our cash equivalents. As of December 31, 2023, we had a total outstanding debt of $3.2 billion, consisting of two term loans and a revolving credit loan.
Biggest changeA hypothetical 100 basis point increase in interest rates would not have a material impact on our financial condition or results of operations due to the short-term nature of our cash equivalents. The Senior Notes have fixed annual interest rates, and therefore we do not have economic interest rate exposure on these debt obligations.
If there is a change in foreign currency exchange rates, the translating adjustments resulting from the conversion of our foreign subsidiaries’ financial statements into U.S. dollars would result in a gain or loss recorded as a component of accumulated other comprehensive income (loss), which is part of stockholders’ equity (deficit). 60 Table of Contents
If there is a change in foreign currency exchange rates, the translating adjustments resulting from the conversion of our foreign subsidiaries’ financial statements into U.S. dollars would result in a gain or loss recorded as a component of accumulated other comprehensive income (loss), which is part of stockholders’ equity.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks in the ordinary course of our business, which primarily relate to fluctuations in interest rates and foreign exchange. Interest Rate Fluctuation Risk As of December 31, 2023, we had unrestricted cash and cash equivalents of $502.2 million.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks in the ordinary course of our business, which primarily relate to fluctuations in interest rates and foreign exchange. Interest Rate Fluctuation Risk As of December 31, 2024, we had unrestricted cash and cash equivalents of $741.4 million.
Consequently, future results may differ materially from estimated results due to adverse changes in interest rates. Foreign Currency Exchange Risk Translation Exposure We are exposed to foreign exchange rate fluctuations as we translate the financial statements of our foreign subsidiaries into U.S. dollars in consolidation.
Foreign Currency Exchange Risk Translation Exposure We are exposed to foreign exchange rate fluctuations as we translate the financial statements of our foreign subsidiaries into U.S. dollars in consolidation.
Removed
Both the term loans and the revolving credit loan carry a floating rate and are recorded at amortized cost. Therefore, fluctuations in interest rates will impact our consolidated financial statements. A hypothetical 100 basis point increase or decrease in interest rates would increase or decrease the amount of interest paid in 2023 by approximately $32.0 million.
Added
However, the fair values of the Senior Notes are exposed to interest rate risk. Generally, the fair values of the Senior Notes will increase as interest rates fall and decrease as interest rates rise. Future borrowings under our 2024 Credit Agreement will bear interest, which varies based on the underlying index rates.
Removed
We historically entered, and in the future may enter, into interest rate swaps to manage interest rate risk on a portion, or all of our outstanding debt. We cannot predict market fluctuations in interest rates and their impact on our debt, nor can there be any assurance that long-term fixed-rate debt will be available at favorable rates, if at all.
Added
Because the interest rates applicable to borrowings under the 2024 Credit Agreement are variable, we are exposed to market risk from changes in the underlying index rates, which affect our cost of borrowing. For additional information, see Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Added
We are also exposed to fluctuations in our net income (loss) as a result of transaction gains or losses related to remeasuring monetary asset and liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded.
Added
Accordingly, changes in exchange rates may negatively affect our future revenue and other results of operations as expressed in U.S. dollars. At this time, we do not, but we may in the future, enter into derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk.
Added
Foreign currency transaction gains and losses were not material for the year ended December 31, 2024, 2023, or 2022. 56 Table of Contents

Other APP 10-K year-over-year comparisons