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What changed in AppLovin Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of AppLovin Corp's 2022 and 2023 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 2023 report.

+493 added−531 removedSource: 10-K (2024-02-26) vs 10-K (2023-02-28)

Top changes in AppLovin Corp's 2023 10-K

493 paragraphs added · 531 removed · 384 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

57 edited+24 added−43 removed20 unchanged
Biggest changeAppDiscovery is powered by AXON and provides the technology to match advertiser demand with publisher supply through auctions at vast scale and microsecond- level speeds. • Adjust is our SaaS mobile marketing platform which allows marketers to make smarter decisions through measurement, attribution, and fraud prevention. • MAX utilizes an advanced in-app bidding technology that optimizes the value of a developer’s advertising inventory by running a real-time competitive auction, driving more competition, and higher returns for publishers. • Wurl is a connected TV (CTV) platform which primarily distributes streaming video for content companies, as well as provides solutions to maximize advertising revenue and attract consumers.
Biggest changeAppDiscovery is powered by AXON, our AI-powered advertising engine, and matches advertiser demand with publisher supply through auctions at vast scale and at microsecond-level speeds. • MAX is our monetization solution, utilizing an advanced in-app bidding technology that optimizes the value of a publisher’s advertising inventory by running a real-time competitive auction, driving more competition, and higher returns for publishers. • Adjust is our measurement and analytics marketing platform which provides marketers with the visibility, insights, and data needed to scale their apps marketing and drive more informed results. • Wurl is our connected TV ("CTV") platform that both distributes streaming video for content companies and provides advanced advertising and publishing solutions to attract viewers and maximize revenue.
We believe that the principal competitive factors in our market are: • the ability to enhance and improve technologies and offerings; • knowledge, expertise, and experience in the mobile app ecosystem; • relationships with third parties in the mobile app ecosystem; • the ability to reach and target a large number of users; • the ability to identify and execute on strategic transactions; • the ability to successfully launch and monetize mobile apps; • the pricing and perceived value of offerings; • brand and reputation; and • ability to expand into new offerings and geographies.
We believe that the principal competitive factors in our market are: • the ability to enhance and improve technologies and offerings; • knowledge, expertise, and experience in the advertising ecosystem; • relationships with third parties in the advertising ecosystem; • the ability to reach and target a large number of users; • the ability to identify and execute on strategic transactions; • the ability to successfully launch and monetize mobile apps; • the pricing and perceived value of offerings; • brand and reputation; and • ability to expand into new offerings and geographies.
The underlying elastic architecture of our Core Technologies 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. 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.
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 Core Technologies, Software Platform, or Apps or obtain and use information that we regard as proprietary.
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.
As a result of our historical strategic acquisition and partnership activity, we also have access to approximately 2,500 additional team members, a majority of whom are research and development resources and all of whom are located outside of the United States.
As a result of our historical strategic acquisition and partnership activity, we also have access to approximately 2,000 additional team members, a majority of whom are research and development resources and all of whom are located outside of the United States.
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.
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.
New and evolving laws and regulations, and changes in their enforcement and interpretation, may require changes to our Core Technologies, 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 Software Platform, Apps, or business practices, and may significantly increase our compliance costs and otherwise adversely affect our business and results of operations.
Data Privacy and Security Laws The data we collect and otherwise process is integral to our Core Technologies, 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 Software Platform and Apps, providing us with insights to improve our developer tools, to optimize app discovery and monetization and to improve our Apps.
Our issued U.S. patents, and any patents that may issue from our pending applications, are scheduled to expire at dates ranging between 2023 and 2041, 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.
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.
Approximately 51% 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 33% of our U.S. employees are female. None of our employees are represented by a labor union.
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.
Developers are able to set their user acquisition and revenue goals to target the most relevant, highest value users. • Maximize monetization of engagement. Developers use our Software Platform to generate incremental revenue by maximizing the monetization of their mobile app 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 our Software Platform to generate incremental revenue by maximizing the monetization of their ad inventory.
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 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. • 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.
AppLovin Apps Today, our Apps consist of a globally diversified portfolio of over 350 free-to-play mobile games across five genres, run by eleven studios located worldwide with a deep bench of talented developers. Our Owned Studios and Partner Studios have developed and published games across a number of genres including: casual, hypercasual, match-three, midcore, and card/casino.
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.
We encourage investors, the media, and others to follow the channels listed above and to review the information disclosed through such channels. Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website. 10 Table of Content s
We encourage investors, the media, and others to follow the channels listed above and to review the information disclosed through such channels. Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website. 8 Table of Contents
Our research and development organization is based in Palo Alto, California with additional resources around the world. 8 Table of Content s Intellectual Property Our success depends in part upon our ability to protect our intellectual property rights with respect to our Core Technologies, Software Platform, and Apps, and to operate without infringing, misappropriating or otherwise violating valid and enforceable third-party intellectual property.
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.
Our Software Platform also enables real-time auctions that optimize the value for each impression, while simultaneously enabling developers to attain an attractive value for each of the impressions from their inventory.
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 geographic diversification enhances our ability to retain and attract highly skilled talent as well as manage our headcount costs. As of December 31, 2022, approximately 48% of our global employees were located outside of the U.S. and 52% 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, 2023, approximately 49% of our global employees were located outside of the U.S. and 51% 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, 2022, we had a total of 1,707 employees, comprised of 1,675 full-time and 32 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, 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.
The large companies in our ecosystem may play multiple different roles given the breadth of their businesses. • Advertisers typically engage with several advertising platforms and networks to purchase advertisements on mobile games and other mobile apps, looking to optimize their marketing investments.
The large companies in our advertising and mobile app ecosystems may play multiple different roles given the breadth of their businesses. • Advertisers typically engage with several advertising platforms and networks to purchase advertisements on mobile apps, devices, and on CTV, looking to optimize their marketing investments.
Inc. further recognized us as a Best Workplace 2022. 9 Table of Content s 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, and anti-corruption.
As our business expands to scale our Software Platform and include additional Apps, and 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 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.
Though we rely in part upon these legal and contractual protections, we believe that factors, such as our unique position in the mobile app ecosystem and as one of the largest mobile game publishers, our flywheel advantage, our expertise and determination of our employees, and the functionality and flexibility of our Core Technologies and Software Platform in an ever-evolving industry, are also key contributors to our success.
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.
We also have registered domain names for websites that we use in our business, such as www.applovin.com. Finally, as of December 31, 2022, we owned the following patents related to the business: 56 issued U.S. patents, 1 U.S. patent applications, 10 non-U.S. issued patents, and 15 non-U.S. pending patent applications.
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.
As of December 31, 2022 , we had approximately 810 employees, or 48% of our total headcount, involved in research and development and related activities.
As of December 31, 2023, we had approximately 950 employees, or 54% of our total headcount, involved in research and development and related activities.
Revenue from AppDiscovery comprises a vast majority of revenue from our Software Platform. With AppDiscovery, advertisers can define the framework of their campaigns in the following ways: • Reach: Advertisers identify what they are willing to pay to acquire their target users.
With AppDiscovery, advertisers can define the framework of their campaigns in the following ways: • Reach: Advertisers identify what they are willing to pay to acquire their target users.
As of December 31, 2022, we owned the following trademarks related to the business: 49 registered trademarks in the United States, 14 pending trademark applications in the United States, as well as 531 registered trademarks in non-U.S. jurisdictions, and 33 pending trademark applications in various non-U.S. jurisdictions.
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.
Our studios generally focus on the development of easy to learn and play games, which appeal to a broad range of demographics, but also develop several games for other genres. We generate our revenue from our 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: Software Platform and Apps.
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. • Life-Time-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.
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.
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. We work to comply with, and to help allow developers and ecosystem partners to comply with, applicable laws and regulations relating to privacy, data protection and information security.
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.
We were named one of the Hottest Adtech Companies of 2021 by Business Insider, as well as a Certified Great Place to Work in 2021 and 2022. 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.
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.
The larger gaming companies in our ecosystem include Activision Blizzard (Microsoft), Tencent, and Zynga (Take-Two Interactive), as well as other public and private companies. Many of these companies 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.
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.
It connects us with the players, developers, and global communities we serve. Research and Development Continued investment in research and development is important to advancing our Core Technologies, Software Platform, and Apps. These advancements are key to attaining our strategic objectives and meeting the evolving needs of our customers.
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.
First, we provide marketing technology that allows developers to reach more of the most suitable users with personalized content, in order to increase the number of users who download and engage with their apps. Second, we provide developers with monetization and analytics technology to maximize the value of their inventory by obtaining a high price for each impression.
First, we provide marketing technology that allows advertisers to reach more of the most suitable users with personalized content in order to increase the number of users who download and engage with their content.
MAX includes the following features: • Advanced in-app bidding technology: MAX’s competitive auctions happen in real time with most bidding platforms in the industry bidding simultaneously for developers’ inventory at high volume.
As a result, MAX has become the preferred in-app bidding solution for many publishers worldwide, helping drive meaningful growth and momentum for AppLovin. MAX includes the following features: • Advanced in-app bidding technology: MAX’s competitive auctions happen in real time with most bidding platforms in the industry bidding simultaneously for developers’ inventory at high volume.
AppDiscovery is powered by machine-learning with predictive algorithms that enable developers to match their apps to users that are more likely to download them. 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.
Many developers that integrate MAX have experienced a measurable increase in their average revenue per daily active user over traditional monetization tools and save countless hours because they are able to automate manual monetization work through its advanced feature set. • Wurl is a connected TV (CTV) platform which primarily distributes streaming video for content companies, as well as provides solutions to maximize advertising revenue and attract consumers.
Many developers who integrate MAX have experienced a measurable increase in their average revenue per daily active user ("ARPDAU") over traditional monetization tools and save countless hours because they are able to automate manual monetization work through its advanced feature set.
Our tools operate at nearly instantaneous speeds and at vast scale to enhance monetization for developers while preserving the end user experience. • Leverage proprietary data and insights. Developers 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 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.
Developers 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 mobile app creation.
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.
MAX auctions are more effective than historical tools and approaches because MAX yields more targeted users for advertisers and enables publishers to achieve better prices for each impression. MAX has become the preferred in-app bidding solution for many developers worldwide, helping drive meaningful growth and momentum for MAX.
MAX auctions are more effective than historical tools and approaches because MAX yields more targeted users for advertisers and enables publishers to achieve better competitive prices for each impression.
AppDiscovery leverages our AXON machine-learning recommendation engine to target the right users with the right marketing campaign, at scale. Advertisers not only 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.
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.
This helps underpin our strategy of building trust and providing a strong experience to ecosystem partners and clients. See the section titled “Risk Factors—Risks Related to Our Business—We are subject to laws and regulations concerning privacy, information security, data protection, consumer protection, and protection of minors, and these laws and regulations are continually evolving.
See the section titled “Risk Factors—Risks Related to Legal and Regulatory Matters—We are subject to laws and regulations concerning privacy, information security, data protection, consumer protection, advertising, tracking, targeting, and protection of minors, and these laws and regulations are continually evolving.
Today, our Apps consist of a globally diversified portfolio of over 350 free-to-play mobile games across five genres, run by eleven studios including studios that we own (Owned Studios) and others that we partner with (Partner Studios).
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.
Third, we provide developers a set of capabilities to optimize their apps and help streamline their businesses. We also are now starting to address the CTV advertising market with the acquisition of Wurl. AppDiscovery AppDiscovery is a suite of marketing solutions that enables developers to automate, optimize, and manage their marketing efforts.
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.
As more developers use our Software Platform to market and monetize their mobile apps, we gain access to more users and more user engagement further strengthening our scaled distribution. As our distribution grows, we gain better insights for our App Graph and AXON recommendation engine, which then further enhances our Software Platform.
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.
Benefits to Mobile App Developers We enable mobile app developers to: • Reach and attract users at scale. Our Software Platform reaches millions of users per day, enabling developers to target and find the right users for their apps worldwide.
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.
Adjust powers thousands of apps with built-in intelligence and automation, backed by responsive global customer support. • MAX is our in-app bidding software that optimizes the value of an app’s advertising inventory by running a 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 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.
These segments align with how our chief operating decision maker allocates resources and assesses performance of our business. The amount of revenue derived from our two segments and other relevant data for the years ended December 31, 2022, 2021 and 2020.
These segments align with how our Chief Operating Decision Maker ("CODM") allocates resources, makes operating decisions, and manages and assesses the performance of our business.
Given our proven track record, long-standing relationships with key industry players, and reputation as a partner of choice, we will continue to explore and consider acquisition, partnership, and investment opportunities related to our business or industry.
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 also operate a portfolio of owned mobile apps and accelerated our market penetration through an active acquisition and partnership strategy. Our scaled business model sits at the nexus of the mobile app ecosystem, which creates a durable competitive advantage that has fueled our clients’ success and our strong growth.
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.
AppLovin is critical to the success of mobile app developers, in particular mobile game developers, solving key marketing and monetization challenges. Through our technologies and scaled distribution, developers are able to manage, optimize, and analyze their marketing investments, and improve the monetization of their 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.
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: We seek excellence, together. We know that our customers trust us to deliver immersive experiences and best-in-class tools.
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.
Casual games can be played a few minutes at a time and appeal to a wide range of users across many highly attractive demographics. Our Owned Studios and Partner 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.
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.
Wurl Wurl is a connected TV (CTV) platform which primarily distributes streaming video for content companies, as well as provides solutions to maximize advertising revenue and attract consumers.
Wurl Wurl is our connected TV ("CTV") platform which distributes streaming video for content companies and provides advertising and publishing solutions to maximize advertising revenue, grow their CTV viewership, and strengthen their brand value. Wurl focuses on driving the streaming industry forward with market-leading solutions that help connect the right viewers to the right content.
AppDiscovery is powered by our AXON machine-learning recommendation engine with predictive algorithms that enable developers to match their apps to users that are more likely to download them . • Adjust is an analytics platform that helps marketers grow their mobile apps with solutions for measuring and optimizing campaigns and protecting user data.
AppDiscovery AppDiscovery is a suite of marketing solutions that enables developers to automate, optimize, and manage their marketing efforts. AppDiscovery is powered by AXON's predictive algorithms to enable advertisers to match their apps to users that are more likely to download them.
We have a broad audience on our Apps and this allows our Software Platform to connect users to a wide range of content. A large segment of our portfolio is casual games which have a lower risk of development and generally have more predictable revenue streams and return on investments.
A large portion of our portfolio are casual, match-three and card/casino games that have a lower risk of development and generally have more predictable revenue streams and return. These games can be played a few minutes at a time and appeal to a wide range of users across many highly attractive demographics.
We also provide a set of services that help both our Apps and third-party developers optimize their games and leverage our expertise to better streamline their business operations. 7 Table of Content s Competition We operate in a fragmented mobile app ecosystem composed of divisions of large, well-established companies as well as privately-held companies.
Competition We operate in a fragmented advertising ecosystem composed of divisions of large, well-established companies as well as privately-held companies.
Adjust Adjust is our SaaS mobile marketing platform which allows clients to better understand their users’ journey while allowing marketers to make smarter decisions through measurement, attribution, and fraud prevention. 6 Table of Content s MAX MAX is a suite of monetization solutions that optimize the value of a developer’s traffic by running a single unbiased auction in which advertisers bid simultaneously, driving more competition and higher prices for publishers.
Adjust allows clients to better understand their users’ journey while allowing marketers to make smarter decisions through measurement, attribution, and fraud prevention.
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Item 1. Business Our mission is to help companies grow their apps and accelerate their business. Our full stack software solution provides advanced tools for mobile app developers to grow their businesses by automating and optimizing the marketing and monetization of their apps.
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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”).
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The key elements of our solutions are delivered through the AppLovin Core Technologies and AppLovin Software Platform: • AppLovin Core Technologies : Our Core Technologies consist of our AXON machine-learning recommendation engine, our App Graph, and our elastic cloud infrastructure.
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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.
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Our App Graph stores and manages anonymized data from hundreds of millions of mobile devices we reach every day, which our AXON engine then leverages to better predict and match users to relevant advertising content. • AppLovin Software Platform : Our Software Platform includes a comprehensive suite of tools for developers to get their mobile apps discovered and downloaded by the right users, optimize return on marketing spend, and maximize monetization of engagement. • AppDiscovery, our marketing software solution, is the cornerstone of our Software Platform, augmented by our rapidly growing MAX monetization solution.
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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.
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In 2018, given an opportunity to scale our own apps using our Software Platform, insights, and expertise in the mobile app ecosystem, we launched AppLovin Apps (Apps).
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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.
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We accelerate our capabilities and enhance our strategic position by actively pursuing acquisitions and partnerships for new technologies and apps.
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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.
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From the beginning of 2018 through 2022, we have invested nearly $4.0 billion across 29 strategic acquisitions and partnerships with app studios, games, and software platforms. 2 Table of Content s We report our operating results through two reportable segments: Software Platform and Apps.
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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.
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For additional information, see Note 14 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Our Core Technologies, Software Platform and Apps We have built and invested in our Core Technologies and Software Platform, which primarily focus on expanding the mobile app ecosystem by solving key developer growth challenges.
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Adjust Adjust is our measurement and analytics marketing platform which provides the visibility, insights, and tools marketers need to grow their apps from early stage to maturity. Our software-as-a-service ("SaaS") platform is an end-to-end solution for optimizing ad performance and maximizing returns, powered by accurate attribution data and in-depth reporting that are essential for meeting business goals.
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We deliver value to mobile app developers by helping scale their businesses and maximize their revenue through our marketing and monetization technologies and expertise. Our Core Technologies and Software Platform combine marketing, monetization, and analytics into a single unified technology stack. AppLovin Core Technologies Our Core Technologies are our foundational technology infrastructure, which powers our Software Platform.
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The Adjust product solutions allow customers to benefit from the following key features: • Impact through measurement: Drive results faster with accurate, timely measurement on marketing and ad spend across channels. • Insights through real-time data and reports: Easily share timely, actionable insights with stakeholders to drive their business forward. • Strategic growth with automated attribution solutions: Scale profits with automated solutions that attribute sources and help customers work smarter and accomplish more.
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Our Core Technologies consist of our AXON machine-learning recommendation engine, our App Graph data management layer, and our elastic cloud infrastructure. Our Core Technologies catalog and consolidate interactions every day into our proprietary App Graph. AXON receives information from our App Graph and uses its machine-learning algorithms to match each user to relevant advertising content, driving better engagement and monetization.
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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.
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Our flexible, robust cloud infrastructure is the backbone of our Core Technologies. This proprietary system allows us to operate at massive scale and process significant data while maintaining a high degree of flexibility, so that we may keep pace with the ever-evolving needs of our customers.
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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. • 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.
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Our globally distributed data infrastructure ensures we are able to connect with devices worldwide and process aggregate user activity across our Software Platform. AppLovin Software Platform Our Software Platform provides a comprehensive suite of tools for developers to grow their businesses by automating and optimizing the marketing and monetization of their apps.
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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.
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This suite is primarily made up of three key solutions plus the addition of Wurl, which we acquired in April 2022: • AppDiscovery is our marketing software solution, which matches advertiser demand with publisher supply through auctions at vast scale and microsecond-level speeds.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe 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 • our limited operating history and the unpredictability of our results of operations; • our ability to attract new clients, the loss of clients, or reduction in spend by clients; • security breaches, improper access to or disclosure of data, or other cyber incidents; • 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; • our reliance on certain key employees and our ability to attract, retain, and motivate key personnel; • risks related to our strategic acquisitions and partnerships, including integration, managing growth, and tax risks; • risks related to the expansion and diversification of our operations, possibly through future strategic acquisitions and partnerships; • our ability to realize the value of our ongoing strategic review of our Apps portfolio; • our ability to maintain relationships with our Partner Studios; • our reliance on third-party platforms to distribute our AppLovin Apps and collect revenue; • 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 expansion into new business opportunities and our ability to effectively manage our growing international operations; • the impact of the geopolitical climate on our operations, including, as a result of war, terrorism, or armed conflict; • our ability to increase in-app purchases, respond to changes with respect to in-app purchases, and manage the economies in our AppLovin Apps; • our ability to achieve or maintain profitability with increasing operating expenses; • our ability to maintain company culture and to establish and maintain awareness of the AppLovin brand; • 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; Legal and Regulatory Matters • changes in laws and regulations concerning privacy, information security, data protection, consumer protection, advertising, tracking, targeting, and protection of minors; • changes in U.S. and foreign laws, many of which are unsettled and still developing; • 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; 11 Table of Content s • assertions by taxing authorities that we should have collected or in the future should collect sales and use, value added, or similar taxes; • 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; 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; • changes to segment reporting as a result of our evolving business; • 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; • changes with the London Interbank Offered Rate; 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; • the effect our multi-class structure may have on the market price of our Class A common stock; • 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.
Biggest changeThe 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.
Recently, 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.
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.
Adam Foroughi, our co-founder, CEO, and Chairperson; Herald Chen, our President and Chief Financial Officer, and a member of our board of directors; and KKR Denali Holdings L.P. (collectively with certain affiliates, the "Voting Agreement Parties") together hold all of the issued and outstanding shares of our Class B common stock.
Adam Foroughi, our co-founder, CEO, and Chairperson; Herald Chen, our former President and Chief Financial Officer, and a member of our board of directors; and KKR Denali Holdings L.P. (collectively with certain affiliates, the "Voting Agreement Parties") together hold all of the issued and outstanding shares of our Class B common stock.
The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly laws outside the United States. There is a risk that existing or future laws may be interpreted in a manner that is not consistent with our current practices and which could adversely affect our business.
The scope and interpretation of the laws that are or may be applicable to us are often uncertain and evolving and may be conflicting, particularly laws outside the United States. There is a risk that existing or future laws may be interpreted in a manner that is not consistent with our current practices and which could adversely affect our business.
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, 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 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.
Privacy Shield as well as certain standard contractual clauses approved by the EU Commission (the "SCCs"); however, both the EU-U.S. Privacy Shield and the SCCs have been subject to legal challenge, and on July 16, 2020, the Court of Justice of the EU, Europe’s highest court, held in the Schrems II case that the E.U.-U.S.
Privacy Shield as well as certain standard contractual clauses approved by the EU Commission (the "SCCs"); however, both the EU-U.S. Privacy Shield and the SCCs have been subject to legal challenge, and on July 16, 2020, the Court of Justice of the EU, Europe’s highest court, held in the Schrems II case that the EU-U.S.
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.
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.
Software Platform Revenue is mostly from AppDiscovery, 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.
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.
This review has 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, 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.
Any of these risks could be difficult to eliminate or manage, and, if not addressed, could adversely affect our business, financial condition, and results of operations. Our ability to acquire and maintain licenses to intellectual property may affect our business, financial condition, and results of operations. Competition for these licenses may make them more expensive and increase our costs.
Any of these risks could be difficult to eliminate or manage, and, if not addressed, could adversely affect our business, reputation, financial condition, and results of operations. Our ability to acquire and maintain licenses to intellectual property may affect our business, financial condition, and results of operations. Competition for these licenses may make them more expensive and increase our costs.
In particular, it is difficult to predict if, when, or how quickly 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 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.
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; 42 Table of Content s • actual or perceived significant data breaches involving our Core Technologies, 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 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.
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 Core Technologies, 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 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.
In such an event, or if such an event is perceived to have occurred, we may suffer damage to our reputation, may have increased costs arising from the restoration or implementation of additional security measures, and we may face claims, demands, investigations, and other proceedings by private parties or governmental actors, and fines, penalties, and other liability or obligations, any of which could adversely affect our business, financial condition, and results of operations.
In such an event, or if such an event is perceived to have occurred, we may suffer damage to our reputation, may have increased costs arising from the restoration or implementation of additional security measures and other costs relating to the incident, and we may face claims, demands, investigations, and other proceedings by private parties or governmental actors, and fines, penalties, and other liability or obligations, any of which could adversely affect our business, financial condition, and results of operations.
Any failure to prevent or mitigate security breaches or incidents impacting our systems or other systems used in our business, or improper access to or disclosure of our data, including source code, or user data, including personal information, content, or payment information from users, or information from clients or other third parties, that is stored or otherwise processed in our business could result in the unauthorized loss, modification, disclosure, destruction, or other misuse of such data, or unavailability of data or of our Core Technologies, Software Platform, Apps, or other offerings.
Any failure to prevent or mitigate security breaches or incidents impacting our systems or other systems used in our business, or improper access to or disclosure of our data, including source code, or user data, including personal information, content, or payment information from users, or information from clients or other third parties, that is stored or otherwise processed in our business could result in the unauthorized loss, modification, disclosure, destruction, or other misuse of such data, or unavailability of data or of our Software Platform, Apps, or other offerings.
Further, in the European Economic Area, the Austrian, French, Italian, and Danish data protection authorities recently indicated that use of Google Analytics by European website operators involves the unlawful transfer of personal data to the United States. In March 2022, the EU and U.S. announced that they reached an agreement in principle on a new EU-U.S. Data Privacy Framework.
Further, in the European Economic Area, the Austrian, French, Italian, and Danish data protection authorities have indicated that use of Google Analytics by European website operators involves the unlawful transfer of personal data to the United States. In March 2022, the EU and U.S. announced that they reached an agreement in principle on a new EU-U.S. Data Privacy Framework ("EU-U.S.
The loss or failure to successfully monetize one of these Apps could have a significant impact on our results of operations. For example, in the twelve months ended December 31, 2022 , our IAP Revenue decreased, primarily due to decreases in revenue from Project Makeover and Matchington Mansion, and continued declines in these Apps may significantly impact of Apps segment.
The loss or failure to successfully monetize one of these Apps could have a significant impact on our results of operations. For example, in the twelve months ended December 31, 2023, our IAP Revenue decreased, primarily due to decreases in revenue from Project Makeover and Matchington Mansion, and continued declines in these Apps may significantly impact of Apps segment.
In such cases, we may not be able to find alternative service providers which could limit our ability to process personal data from the European Economic Area, Switzerland, the United Kingdom, or other impacted jurisdictions and increase our costs and/or impact our Core Technologies, Software Platform, Apps, or other offerings.
In such cases, we may not be able to find alternative service providers which could limit our ability to process personal data from the European Economic Area, Switzerland, the United Kingdom, or other impacted jurisdictions and increase our costs and/or impact our Software Platform Apps, or other offerings.
In that event, the market price of our Class A common stock could decline, and you could lose all or part of your investment. Risk Factor Summary Investing in our Class A common stock involves a high degree of risk because our business is subject to numerous risks and uncertainties, as fully described below.
In that event, the market price of our Class A common stock could decline, and you could lose all or part of your investment. Risk Factor Summary Investing in our Class A common stock involves a high degree of risk because our business is subject to numerous risks and uncertainties, as further described below.
Any actual or attempted breaches, incidents, or attacks may cause disruptions or interruptions to our Core Technologies, Software Platform, Apps, or other offerings, degrade the user experience, impair, disrupt, or interrupt our internal systems and other systems and networks used in our business, or adversely affect our reputation, business, financial condition, and results of operations.
Any actual or attempted breaches, incidents, or attacks may cause disruptions or interruptions to our Software Platform, Apps, or other offerings, degrade the user experience, impair, disrupt, or interrupt our internal systems and other systems and networks used in our business, or adversely affect our reputation, 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 Core Technologies, 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 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.
Changes in our Core Technologies, 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 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.
Our Core Technologies, Software Platform, Apps, and other offerings involve the collection, storage, processing, and transmission of a large amount of data, including personal information, and we and our third-party service providers otherwise store and process information, including our confidential and proprietary business information, and personal information and other information relating to our employees and clients or other third parties.
Our Software Platform, Apps, and other offerings involve the collection, storage, processing, and transmission of a large amount of data, including personal information, and we and our third-party service providers otherwise store and process information, including our confidential and proprietary business information, and personal information and other information relating to our employees and clients or other third parties.
We intend to continue to make significant investments to support our business growth and may require additional funds to respond to business challenges, including the need to continue to develop our Core Technology and Software Platform, enhance our existing Apps and develop new Apps and features, improve our operating infrastructure, or enter into strategic acquisitions and partnerships.
We intend to continue to make significant investments to support our business growth and may require additional funds to respond to business challenges, including the need to continue to develop our Software Platform, enhance our existing Apps and develop new Apps and features, improve our operating infrastructure, or enter into strategic acquisitions and partnerships.
In addition, our ability to successfully launch or acquire Apps and their ability to achieve commercial success will depend in part on our ability to: • effectively market our Apps to existing and new users; • achieve a positive return on investment from our marketing and user acquisition costs or achieve organic user growth; • adapt to changing trends, user preferences, new technologies, and new feature sets for mobile and other devices, including determining whether to invest in development for any new technologies, and achieve a positive return on the costs associated with such adaptation; • continue to adapt mobile app feature sets for an increasingly diverse set of mobile devices, including various operating systems and specifications, limited bandwidth, and varying processing power and screen sizes; • achieve and maintain successful user engagement and effectively monetize our Apps; • develop mobile games that can build upon or become franchise games and expand and enhance our mobile games after their initial releases; • develop Apps other than mobile games; • identify and execute strategic acquisitions and partnerships; • attract advertisers to advertise on our Apps; • partner with third-party platforms and obtain featuring opportunities; • compete successfully against a large and growing number of competitors; • accurately forecast the timing and expense of our operations, including mobile app and feature development, marketing, and user acquisition; • minimize and quickly resolve bugs or outages; 24 Table of Content s • acquire, or invest in, and successfully integrate high quality mobile app companies or technologies; • retain and motivate talented and experienced developers and other key personnel from such acquisitions and investments; and • manage our strategic review of our Apps portfolio, including actions we may take that reduce Apps revenue in order to seek higher margins and the effects of the review on morale and personnel.
In addition, our ability to successfully launch or acquire Apps and their ability to achieve commercial success will depend in part on our ability to: • effectively and efficiently market our Apps to existing and new users; • achieve a positive return on investment from our marketing and user acquisition costs or achieve organic user growth; • adapt to changing trends, user preferences, new technologies, and new feature sets for mobile and other devices, including determining whether to invest in development for any new technologies, and achieve a positive return on the costs associated with such adaptation; • continue to adapt mobile app feature sets for an increasingly diverse set of mobile devices, including various operating systems and specifications, limited bandwidth, and varying processing power and screen sizes; • achieve and maintain successful user engagement and effectively monetize our Apps; • develop mobile games that can build upon or become franchise games and expand and enhance our mobile games after their initial releases; • develop Apps other than mobile games; • identify and execute strategic acquisitions and partnerships; • attract advertisers to advertise on our Apps; • partner with third-party platforms and obtain featuring opportunities; • compete successfully against a large and growing number of competitors; • accurately forecast the timing and expense of our operations, including mobile app and feature development, marketing, and user acquisition; • minimize and quickly resolve bugs or outages; • acquire, or invest in, and successfully integrate high quality mobile app companies or technologies; • retain and motivate talented and experienced developers and other key personnel from such acquisitions and investments; and • optimize the value of our Apps portfolio, including actions we may take that reduce Apps revenue in order to seek higher margins and the effects of the review on morale and personnel.
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 Core Technologies, Software Platform or Apps; and to prevent and detect security breaches; we cannot assure you that such measures will provide comprehensive security, that we 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 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.
If, on the other hand, we do not continue to enhance our Core Technologies, Software Platform, or Apps, or do not appropriately allocate our resources amongst opportunities, or we otherwise elect not to pursue new business models that achieve significant commercial success, we may face adverse consequences.
If, on the other hand, we do not continue to enhance our Software Platform or Apps, or do not appropriately allocate our resources amongst opportunities, or we otherwise elect not to pursue new business models that achieve significant commercial success, we may face adverse consequences.
It is possible that we may fail to continue to effectively scale and grow our technical infrastructure to accommodate these increased demands, which may adversely affect our user engagement and revenue growth. Additionally, we rely in part on third-party data centers and cloud hosting infrastructure.
It is possible that we may fail to continue to effectively scale and grow our technical infrastructure to accommodate these increased demands, which may adversely affect our user engagement and revenue growth. Additionally, we rely in part on third-party data centers.
Our business depends in part on our ability to maintain and scale our technical infrastructure, and any significant disruption to our Core Technologies, Software Platform, or Apps could damage our reputation, result in a potential loss of engagement, and adversely affect our business, financial condition, and results of operations.
Our business depends in part on our ability to maintain and scale our technical infrastructure, and any significant disruption to our Software Platform or Apps could damage our reputation, result in a potential loss of engagement, and adversely affect our business, financial condition, and results of operations.
We regard our Core Technologies, Software Platform, and Apps and related source code as proprietary and rely on a variety of methods, including a combination of copyright, patent, trademark, and trade secret laws and employee and third-party non-disclosure agreements, to protect our proprietary rights.
We regard our Software Platform and Apps and related source code as proprietary and rely on a variety of methods, including a combination of copyright, patent, trademark, and trade secret laws and employee and third-party non-disclosure agreements, to protect our proprietary rights.
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.
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.
Our reputation and ability to attract and retain our clients and users depends in part on the reliable performance of our Core Technologies, Software Platform, and Apps. We have in the past experienced, and may in the future experience, interruptions in the availability or performance of our offerings from time to time.
Our reputation and ability to attract and retain our clients and users depends in part on the reliable performance of our Software Platform and Apps. We have in the past experienced, and may in the future experience, interruptions in the availability or performance of our offerings from time to time.
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.
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 plan to continue to consider opportunities to expand and diversify our operations through strategic acquisitions and partnerships. We face a number of risks related to strategic transactions we may pursue. We will continue to consider opportunities to expand and diversify our operations with additional strategic acquisitions or partnerships, strategic collaborations, joint ventures, or licensing arrangements.
We face a number of risks related to strategic transactions we may pursue. We will continue to consider opportunities to expand and diversify our operations with additional strategic acquisitions or partnerships, strategic collaborations, joint ventures, or licensing arrangements.
To the extent such errors, bugs, vulnerabilities, or defects impact our Core Technologies or Software Platform or the accuracy of data in any such Core Technology or 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 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.
Our future success depends in part on our ability to adapt to trends and to innovate. To attract new clients and users and increase revenue from our current clients and users, we will need to enhance and improve our Core Technologies, Software Platform, and Apps.
Our future success depends in part on our ability to adapt to trends and to innovate. To attract new clients and users and increase revenue from our current clients and users, we will need to enhance and improve our Software Platform and Apps.
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.
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.
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.
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.
We use open source software in our Core Technologies, 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 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.
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.
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.
Computer malware (including ransomware), viruses, social engineering (predominantly spear phishing attacks or smishing), and general hacking have become more prevalent in the mobile app ecosystem. 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.
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.
Many jurisdictions have enacted breach notification obligations, and our agreements with certain customers or partners may require us to notify them 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.
While most of the intellectual property we use in our Core Technologies, Software Platform, and Apps is created by us, from time to time, we also acquire rights to third-party intellectual property.
While most of the intellectual property we use in our Software Platform and Apps is created by us, from time to time, we also acquire rights to third-party intellectual property.
We collect revenue from clients for fees paid by mobile app advertisers, including developers, that use our Software Platform and from the sale of advertising inventory of our Apps. Advertisers often engage with several advertising platforms and networks to purchase advertisements on mobile apps and developers often engage with multiple tools to market and monetize their apps.
We collect revenue from clients for fees paid by advertisers, including developers, that use our Software Platform and from the sale of advertising inventory of our Apps. Advertisers often engage with several advertising platforms and networks to purchase advertisements and developers often engage with multiple tools to market and monetize their apps.
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.
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.
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.
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.
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 machine-learning ("ML") 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 Core Technologies and 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 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.
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.
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.
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.
We have experienced recent rapid growth, which may not be indicative of our future growth. We may be unable to effectively manage the growth of our business, which could adversely affect our business, financial condition, and results of operations. We have experienced rapid growth in the scale, scope, and complexity of our business.
We have experienced recent rapid growth, which may not be indicative of our future growth. We may be unable to effectively manage the growth of our business, which could adversely affect our business, financial condition, and results of operations. 23 Table of Contents We have experienced rapid growth in the scale, scope, and complexity of our business.
The success of our business depends in part on our ability to develop and enhance our Core Technologies, Software Platform, and consistently and timely launch new Apps.
The success of our business depends in part on our ability to develop and enhance our Software Platform and consistently and timely launch new Apps.
We also store and implement measures designed to secure the source code for our Core Technologies, Software Platform and Apps as they are created.
We also store and implement measures designed to secure the source code for our Software Platform and Apps as they are created.
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. 37 Table of Content s 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 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.
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.
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.
RISK FACTORS You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and the related notes, included elsewhere in this Annual Report on Form 10-K before making a decision to invest in our Class A common stock.
RISK FACTORS You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes, before making a decision to invest in our Class A common stock.
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. 20 Table of Content s 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 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.
As of December 31, 2022, the Voting Agreement Parties collectively held approximately 82% 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, 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.
Expanding our international operations may subject us to risks associated with: • recruiting and retaining talented and capable management and employees in foreign countries; • the diversion of senior management attention; • 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 Russia’s invasion of Ukraine and its impacts on the region 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; • 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.
We have historically hired a number of key personnel and additional team members working on our Apps through strategic acquisitions and partnerships, and as competition within the mobile app ecosystem for attractive target companies with a skilled employee base persists and increases, we may incur significant expenses and difficulty in continuing this practice.
We have historically hired a number of key personnel and additional team members working on our Software Platform and Apps through strategic acquisitions and partnerships, and as competition within the advertising and mobile app ecosystems for attractive target companies with a skilled employee base persists and increases, we may incur significant expenses and difficulty in continuing this practice.
Additionally, we also compete with businesses that develop online and mobile games and other mobile apps, which vary in size and include companies such as Activision Blizzard (expected to be acquired by Microsoft), Tencent, and Zynga (Take-Two Interactive), as well as other public and private companies. Many of these companies are also our partners and clients.
Additionally, we also compete with businesses that develop online and mobile games and other mobile apps, which vary in size and include companies such as Activision Blizzard (which entered into an agreement to be acquired by Microsoft), Tencent, and Zynga (Take-Two Interactive), as well as other public and private companies. Many of these companies are also our partners and clients.
Numerous factors can influence our results of operations, including: • our ability to maintain and grow our client and user bases; • changes to our Core Technologies, 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 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; • our ongoing 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 Core Technologies, 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 and data protection, 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; 13 Table of Content s • 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 the COVID-19 pandemic, inflation, and rising 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 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.
We expect that the number of our App users may fluctuate or decline as a result of apps divestitures or other actions we take in connection with our review of our Apps portfolio, or in one or more markets from time to time, particularly in markets where we have achieved higher penetration rates or where the macro economic conditions have been negatively impacted.
We expect that the number of our App users may fluctuate or decline as a result of apps divestitures or other actions we have taken in connection with our review of our Apps portfolio, or in one or more markets from time to time, particularly in markets where we have achieved higher penetration rates or where the macroeconomic conditions have been negatively impacted.
Successfully monetizing our Apps is difficult and requires that we deliver user experiences that a sufficient number of users will pay for through IAPs or we are able to otherwise sufficiently monetize our Apps, including by serving in-app advertising.
Successfully monetizing our Apps is difficult and requires that we deliver user experiences that a sufficient number of users will pay for through IAPs or we are able to otherwise sufficiently monetize our Apps, including by serving IAA.
Any decreased use of our products or limitation on our ability to export or sell our products in major international markets could adversely affect our business, financial condition, and results of operations. 34 Table of Content s Changes in tax laws or tax rulings could adversely affect our effective tax rates, business, financial condition, and results of operations.
Any decreased use of our products or limitation on our ability to export or sell our products in major international markets could adversely affect our business, financial condition, and results of operations. Changes in tax laws or tax rulings could adversely affect our effective tax rates, business, financial condition, and results of operations.
For 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.
For 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.
For example, we have reduced our user acquisition spend for our portfolio of Apps as we increased our desired return goals, which has led to improved App segment Adjusted EBITDA margin, but also contributed to a decline in Apps revenue and 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 led to improved Apps Adjusted EBITDA margin compared to periods before such adjustments, but also contributed to a decline in Apps revenue and Monthly Active Payers ("MAPs") compared to periods before such adjustments.
If we need to obtain any necessary export license or other authorization for a particular sale, the process may be time-consuming and may result in the delay or loss of opportunities to sell our products.
If we need to obtain any necessary export licenses or other authorizations for a particular sale, the process may be time-consuming and may result in the delay or loss of opportunities to sell our products.
For example, our Software Platform revenue has expanded rapidly, in particular since the launch of our ML-engine AXON. Our growth in any prior period should not be relied upon as an indication of our future performance, as we may not be able to sustain our growth rate in the future.
For example, our Software Platform revenue has expanded rapidly, in particular since the launch of our AI-powered advertising recommendation engine, AXON. Our growth in any prior period should not be relied upon as an indication of our future performance, as we may not be able to sustain our growth rate in the future.
During the pendency of this review or any transaction that may occur as a result of this review, we may be subject to risks related to a decline in the business or employee morale and turnover, as well as distraction of management from our business and customers, and investors may not react favorably to our decisions, which could adversely affect our business, results of operations and the market price of our Class A common stock.
As a result of this review, we may be subject to risks related to a decline in the business or employee morale and turnover, as well as distraction of management from our business and customers, and investors may not react favorably to our decisions, which could adversely affect our business, results of operations and the market price of our Class A common stock.
The mobile app ecosystem is subject to rapid technological change, and if we do not adapt to, and appropriately allocate our resources among, emerging technologies and business models, our business, financial condition, and results of operations could be adversely affected. Technology changes rapidly in the mobile app ecosystem.
The advertising ecosystem and mobile gaming are subject to rapid technological change, and if we do not adapt to, and appropriately allocate our resources among, emerging technologies and business models, our business, financial condition, and results of operations could be adversely affected. Technology changes rapidly in the advertising ecosystem and in mobile gaming.
Changes in tax laws (including in response to the COVID-19 pandemic) or tax rulings, or changes in interpretations of existing laws, could cause us to be subject to additional income-based taxes and non-income taxes (such as payroll, sales, use, value-added, digital, net worth, property, and goods and services taxes), which in turn could adversely affect our financial condition and results of operations.
Changes in tax laws or tax rulings, or changes in interpretations of existing laws, could cause us to be subject to additional income-based taxes and non-income taxes (such as payroll, sales, use, value-added, digital services, net worth, property, and goods and services taxes), which in turn could adversely affect our financial condition and results of operations.
Changes in current laws or regulations or the imposition of new laws and regulations in the United States or elsewhere regarding these activities may lessen the growth of the mobile app ecosystem.
Changes in current laws or regulations or the imposition of new laws and regulations in the United States or elsewhere regarding these activities may lessen the growth of the advertising ecosystem.
Our Core Technologies, Software Platform, and Apps, as well as our internal systems, rely on software and hardware that is highly technical and complex. In addition, our Core Technologies, 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 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.
We are subject to governmental export controls and economic sanctions laws that could impair our ability to compete in global markets or subject us to liability if we violate the controls. Our Core Technologies, Software Platform, and Apps may be subject to U.S. export controls.
We are subject to governmental export controls and economic sanctions laws that could impair our ability to compete in global markets or subject us to liability if we violate the controls. Our Software Platform and Apps may be subject to U.S. export controls, including the Export Administration Regulations.
We are party to a credit agreement that provides for senior secured credit consisting of term loans and a revolving credit facility, with varying maturity dates through 2028. As of December 31, 2022, the aggregate principal amount of our outstanding indebtedness under our credit facilities was $3.25 billion.
We are party to a credit agreement that provides for senior secured credit consisting of term loans and a revolving credit facility, with varying maturity dates through 2030. As of December 31, 2023, the aggregate principal amount of our outstanding indebtedness under our credit facilities was $3.2 billion.
In addition, our ability to execute our strategy depends in part on our continued ability and the continued ability of our Partner Studios to identify, hire, develop, motivate, and retain highly skilled employees, particularly in the competitive fields of game development, product management, engineering, 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 game development, product management, engineering, AI, machine learning, and data science.
While we believe we compete favorably, competition for highly skilled employees is intense, particularly in the San Francisco Bay Area, where our headquarters is located. Interviewing, hiring, and integrating new employees has been and will continue to be particularly 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 remote working environment.
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.
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.
For example, our Owned Studios and Partner Studios are located throughout the world, including in areas with less certain legal and regulatory regimes or more potential risks, such as Belarus, China, and Vietnam and with partners in Russia and Ukraine.
For example, our resources are located throughout the world, including in areas with less certain legal and regulatory regimes or more potential risks, such as Belarus, China, Israel and Vietnam and with partners in Russia and Ukraine.
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 in-app purchases (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 21 Table of Contents revenue primarily through the sale of advertising, a substantial portion of which comes from other mobile gaming clients, and IAPs.
Similarly, our future success depends, in part, on the ability of our Owned Studios and Partner Studios to launch and monetize additional mobile games and other mobile apps, as well as, on our ability to successfully acquire and monetize additional mobile games and other mobile apps, and these Apps may not successfully diversify our revenue concentration.
Similarly, our future success depends, in part, on our ability to launch and monetize additional mobile games and other mobile apps, as well as, on our ability to successfully acquire and monetize additional mobile games and other mobile apps, and these Apps may not successfully diversify our revenue concentration.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease and license additional facilities in the United States in Palo Alto, San Francisco, Santa Monica, California; Las Vegas, Nevada; Secaucus, New Jersey; and Richardson, Texas; and internationally in Toronto, Canada; Beijing, Hangzhou and Shanghai, China; Limassol, Cyprus; London, England; Paris, France; Berlin, Germany; Jakarta, Indonesia; Dublin, Ireland; Herzliya, Israel; Tokyo, Japan; Seoul, South Korea; Singapore; Madrid, Spain; Bangkok, Thailand; Istanbul, Turkey; Dubai, United Arab Emirates; and Ho Chi Minh City, Vietnam.
Biggest changeWe 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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
Biggest changeThe results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Item 4. Mine Safety Disclosures Not applicable. Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 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. 46 Table of Content s Recent Sale of Unregistered Securities and Use of Proceeds Recent Sale of Unregistered Securities During the three months ended December 31, 2022 , we issued RSUs covering 36,416 shares of our Class A common stock under our 2021 Partner Studio Incentive Plan.
Biggest changeThe 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.
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, 2022.
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.
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.
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]
During the three months ended December 31, 2022, we issue d 61,481 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.
During 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.
Holders of Record As of December 31, 2022, there were approximately 117 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, 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.

Item 7. Management's Discussion & Analysis

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

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Biggest changeComparison 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, 2021 to 2022 % change 2020 to 2021 % change 2022 2021 2020 (in thousands, except percentages) Software Platform Adjusted EBITDA $ 808,415 $ 457,302 $ 121,114 77 % 278 % Apps Adjusted EBITDA $ 254,795 $ 269,512 $ 224,381 (5) % 20 % 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.
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.
Investing Activities Net cash used in investing activities was $1.4 billion for 2022, primarily consisting of $1.3 billion related to acquisitions, $66.3 million in purchases of non-marketable investments and other, partially offset by $37.0 million in proceeds from sale of long-lived assets.
Net cash used in investing activities was $1.4 billion for 2022, primarily consisting of $1.3 billion related to acquisitions, $66.3 million in purchases of non-marketable investments and other, partially offset by $37.0 million in proceeds from sale of long-lived assets.
Financing Activities Net cash used in financing activities was $526.8 million for 2022, primarily consisting of $338.9 million of common stock repurchases, deferred acquisition costs of $124.2 million, payments for withholding taxes related to net share settlement of restricted stock units of $27.5 million, payments for the principal repayment of debt of $25.8 million, and payments for finance leases of $24.1 million, partially offset by $25.5 million in proceeds from exercise of stock awards.
Net cash used in financing activities was $526.8 million for 2022, primarily consisting of $338.9 million of common stock repurchases, deferred acquisition costs of $124.2 million, payments for withholding taxes related to net share settlement of restricted stock units of $27.5 million, payments for the principal repayment of debt of $25.8 million, and payments for finance leases of $24.1 million, partially offset by $25.5 million in proceeds from exercise of stock awards.
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 mobile 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 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.
We also expect our general and administrative expenses as a percentage of revenue to fluctuate period-over-period in the near term as we invest to support the growth of our business, and to decrease over the long term as we benefit from greater scale. Other Income and Expenses Interest expense and loss on settlement of debt.
We expect our general and administrative expenses as a percentage of revenue to fluctuate period-over-period in the near term as we invest to support the growth of our business, and to decrease over the long term as we benefit from greater scale. Other Income and Expenses Interest expense and loss on settlement of debt.
Users make IAPs through our distribution partners. The transaction price is equal to the gross amount charged to users because we are the principal in the transaction. IAPs fees are non-refundable. Such payments are initially recorded as deferred revenue. We categorize virtual goods as either consumable or durable.
Users make IAPs through our distribution partners. The transaction price is equal to the gross amount charged to users because we are the principal in the transaction. IAP fees are non-refundable. Such payments are initially recorded as deferred revenue. We categorize virtual goods as either consumable or durable.
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 model.
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.
The table below presents a summary of the significant contingent consideration arrangements: Relevant Transaction Contingent Consideration Summary Recoded asset acquisition (January 2019) Future one-time earn-out payments, based on a service agreement, of either $60.0 million or $30.0 million per game depending on the nature of the new game App developed, subject to the achievement of a certain monthly revenue milestone in the initial thirty-six months following the launch of a new game App.
The table below presents a summary of the outstanding contingent consideration arrangements: Relevant Transaction Contingent Consideration Summary Recoded asset acquisition (January 2019) Future one-time earn-out payments, based on a service agreement, of either $60.0 million or $30.0 million per game depending on the nature of the new game App developed, subject to the achievement of a certain monthly revenue milestone in the initial thirty-six months following the launch of a new game App.
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 Core Technologies and 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 Software Platform to target users with personalized and relevant advertising and allocate marketing campaigns in an efficient and cost-effective manner.
General and administrative expenses consist primarily of costs incurred to support our business, including personnel-related expenses for salaries, employee benefits, and stock-based compensation for employees engaged in finance, accounting, legal, human resources and administration, professional services fees for legal, accounting, recruiting, and administrative services (including acquisition-related expenses), insurance, travel, and allocated facilities and information technology costs.
General and administrative expenses consist primarily of costs incurred to support our business, including personnel-related expenses such as salaries, employee benefits, and stock-based compensation for employees engaged in finance, accounting, legal, human resources and administration, professional services fees for legal, accounting, recruiting, and administrative services (including acquisition-related expenses), insurance, travel, and allocated facilities and information technology costs.
For a discussion of the year ended December 31, 2021 compared to the year ended December 31, 2020, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021. The following tables summarize our consolidated statement of operations.
For a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022. The following tables summarize our consolidated statement of operations.
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.
While this transparency framework has not had a significant impact on our overall business, it may do so 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 generally include contingent consideration in the cost of the assets acquired only when the uncertainty is resolved. We recognize contingent consideration adjustments to the cost of the acquired assets prospectively using the straight-line method over the remaining useful life of the assets. No goodwill is recognized in asset acquisitions.
We generally include contingent consideration in the cost of the assets acquired only when the uncertainty is resolved. We amortize contingent consideration adjustments to the cost of the acquired assets prospectively using the straight-line method over the remaining useful life of the assets. No goodwill is recognized in asset acquisitions.
From the beginning of 2018 through December 31, 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 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.
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 a $88.4 million decrease in third-party payment processing fees paid associated with in-app purchases.
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.
We also 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 Core Technologies and 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 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.
IAA clients that purchase advertising inventory from our Apps are able to target highly relevant users from our diverse and global portfolio of over 350 mobile games.
IAA clients that purchase advertising inventory from our Apps are able to target highly relevant users from our diverse and global portfolio of over 200 mobile games.
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.
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.
The terms for all mobile advertising arrangements are governed by our terms and conditions and generally stipulate payment terms of up to 60 days subsequent to the end of the month. Substantially all of our contracts with customers are fully cancellable at any time or upon a short notice.
The terms for all mobile advertising arrangements are governed by our terms and conditions and generally stipulate payment terms of 30 days subsequent to the end of the month. Substantially all of our contracts with customers are fully cancellable at any time or upon a short notice.
In light of the IDFA and transparency changes, we made changes to our data collection practices., 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 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.
Similarly, our key metrics may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology. The numbers that we use to calculate TSTV, MAP, and ARPMAP are based on internal data.
Similarly, our key metrics may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology. The numbers that we use to calculate MAPs and ARPMAP are based on internal data.
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.
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
We do not recognize Software Platform Revenue from transactions with our Owned Studios and Partner 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 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.
The following table shows our Monthly Active Payers and Average Revenue Per Monthly Active Payer for the years ended December 31, 2022, 2021 and 2020.
The following table shows our Monthly Active Payers and Average Revenue Per Monthly Active Payer for the years ended December 31, 2023, 2022 and 2021.
Any changes made in the policies of third-party platforms could drive rapid change across the mobile app ecosystem. For example, in April 2021, Apple started implementing its application tracking transparency framework that, among other things, requires users' opt-in consent for certain types of tracking.
Any changes made in the policies of third-party platforms could drive rapid change across the mobile app and advertising ecosystems. For example, in April 2021, Apple started implementing its application tracking transparency framework that, among other things, requires users' opt-in consent for certain types of tracking.
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 in-app purchases, partially offset by a 2% increase in price per in-app purchase.
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.
Continue to invest in innovation We have made, and intend to continue to make, significant investments in our Core Technologies and Software Platform to enhance their effectiveness and value proposition for our clients. We expect that these investments will require spending on research and development, and acquisitions and partnerships related to technology components and products.
Continue to invest in innovation We have made, and intend to continue to make, significant investments in our Software Platform to enhance its effectiveness and value proposition for our clients. We expect that these investments will require spending on research and development, and acquisitions and partnerships related to technology components and products.
The EAUL represents our best estimate of the expected life of paying users for the applicable game. The EAUL begins when a user makes the first purchase of durable virtual goods and ends when a user is determined to be inactive. We determine 64 Table of Content s the EAUL on a game-by-game basis.
The EAUL represents our best estimate of the expected life of paying users for the applicable game. The EAUL begins when a user makes the first purchase of durable virtual goods and ends when a user is determined to be inactive. We determine the EAUL on a game-by-game basis.
Future playing patterns may differ from historical playing patterns, and therefore the EAUL may change in the future. The EAULs are generally between six and nine months. IAA Revenue IAA Revenue is generated by selling ad inventory on our Apps to third-party advertisers. Advertisers purchase ad inventory either through the Software Platform or through third-party advertising networks (“Ad Networks”).
Future playing patterns may differ from historical playing patterns, and therefore the EAUL may change in the future. The EAULs are generally between 5 and 10 months. In-App Advertising Revenue IAA Revenue is generated by selling ad inventory on our Apps to third-party advertisers. Advertisers purchase ad inventory either through the Software Platform or through third-party advertising networks (“Ad Networks”).
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 67% of total Apps Revenue for the twelve months ended December 31, 2022.
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.
For our other transactions, we generally recognize contingent consideration only on the date when the related performance metrics are achieved. For additional information, see Notes 2 and 6 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. As of December 31, 2022, we had recorded liabilities of $19.1 million related to uncertain tax positions.
For our other transactions, we generally recognize contingent consideration only on the date when the related performance metrics are achieved. For additional information, see Notes 2 and 6 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. As of December 31, 2023, we had recorded liabilities of $35.9 million related to uncertain tax positions.
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 Core Technologies and Software Platform are relevant to the broader mobile app ecosystem.
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.
Year Ended December 31, 2022 2021 2020 Monthly Active Payers (millions) 2.3 3.0 1.5 Average Revenue Per Monthly Active Payer $ 43 $ 43 $ 41 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.
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.
Additionally, we have generated strong cash flows, with net cash provided by operating activities of $412.8 million, $361.9 million, and $222.9 million in 2022, 2021, and 2020, 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 $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.
Services and Development Agreements We enter into strategic agreements with Partner Studios. We have historically allowed these Partner Studios to continue their operations with a significant degree of autonomy. In some cases, we bought Apps from Partner Studios and entered into service and development agreements whereby Partner Studios provide support in improving existing Apps and developing new Apps.
Services and Development Agreements We enter into strategic agreements with third-party mobile game studios. We have historically allowed these studios to continue their operations with a significant degree of autonomy. In some cases, we bought Apps from these studios and entered into service and development agreements whereby these studios provide support in improving existing Apps and developing new Apps.
Asset acquisition (April 2021) As amended in 2022, future earn-out payments are contingent on the earnings before interest, taxes, depreciation and amortization ("EBITDA") generated by the acquired mobile Apps. For acquisitions of Owned Studios that are accounted for as business combinations, contingent consideration is initially recognized at fair value.
Asset acquisition (April 2021) As amended in 2022, future earn-out payments are based on a percentage of the earnings before interest, taxes, depreciation and amortization ("EBITDA") generated by the acquired mobile Apps. For acquisitions of studios we own that are accounted for as business combinations, contingent consideration is initially recognized at fair value.
Key Metrics We review the following key metrics on a regular basis in order to evaluate the health of our business, identify trends affecting our performance, prepare financial projections, and make strategic decisions.
Key Metrics We review the following key metrics on a regular basis in order to evaluate the health of our business, identify trends affecting our performance, prepare financial projections, and make strategic decisions. Monthly Active Payers ("MAPs").
Growth and structure of the mobile app ecosystem Our business and results of operations will be impacted by industry factors that drive overall performance of the mobile app ecosystem.
Growth and structure of the mobile app and advertising ecosystems Our business and results of operations will be impacted by industry factors that drive the overall performance of the mobile app and advertising ecosystems.
Our IAA Revenue from Apps decreased $71.8 million, or 11%, compared to the prior year period, due to a 16% decrease 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 Owned Studios and Partner Studios.
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.
We recently increased our focus on markets outside the United States to serve the needs of clients globally. In 2022, only 41% of our revenue from Software Platform and IAA Revenue clients was generated from outside of the United States.
We recently increased our focus on markets outside the United States to serve the needs of clients globally. In 2023, only 42% of our revenue from Software Platform and IAA Revenue clients was generated from outside of the United States.
We are able to grow our Apps Revenue by adding more apps to our Apps portfolio and increasing engagement on our existing Apps. Our Apps are generally free-to-play mobile games and generate IAP Revenue through IAPs.
We are able to grow our Apps Revenue by adding more apps to our Apps portfolio and increasing engagement on our existing Apps. 44 Table of Contents Our Apps are generally free-to-play mobile games and generate IAP Revenue through IAPs.
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. 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.
We estimate that our counted MAPs generated approximately 98% of our IAP Revenue during the year ended December 31, 2022, and as such, management believes that MAPs are still a useful metric to measure the engagement and monetization potential of our games. Average Revenue Per Monthly Active Payer ("ARPMAP").
We estimate that our counted MAPs generated approximately 99% of our IAP Revenue during the year ended December 31, 2023, and as such, management believes that MAPs is still a useful metric to measure the engagement and monetization potential of our games. Average Revenue Per Monthly Active Payer ("ARPMAP").
If the result of the second test suggests that the acquired assets and activities constitute a business, we account for the transaction as a business combination. For transactions accounted for as business combinations, we allocate the fair value of acquisition consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.
If the result of the second test suggests that the acquired assets and activities constitute a business, we account for the transaction as a business combination. 57 Table of Contents For transactions accounted for as business combinations, we allocate the fair value of acquisition consideration to the identifiable assets acquired and liabilities assumed based on their estimated fair values.
We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue for the same period. 50 Table of Content s Adjusted EBITDA and Adjusted EBITDA margin are key measures we use to assess our financial performance and are also used for internal planning and forecasting purposes.
We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue for the same period. Adjusted EBITDA and Adjusted EBITDA margin are key measures we use to assess our financial performance and are also used for internal planning and forecasting purposes.
The CODM evaluates performance of each segment based on several factors, of which the financial measures are segment revenue and segment adjusted EBITDA, as defined in Note 14 to the Company's consolidated financial statements.
Our CODM, the Chief Executive Officer, evaluates performance of each segment based on several factors, of which the financial measures are segment revenue and segment adjusted EBITDA, as defined in Note 14 to our consolidated financial statements.
During the twelve months ended December 31, 2022, we had an average of 2.3 million Monthly Active Payers ("MAPs") across our portfolio of Apps. Over that period, we had an Average Revenue Per Monthly Active Payer ("ARPMAP") of $43. See “Key Metrics” below for additional information on how we calculate MAPs and ARPMAP.
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.
Finance Leases As of December 31, 2022, we have non-cancelable payments related to finance leases of certain networking equipment of $72.8 million, with $25.0 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.
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.
Additionally, our effective tax rate can vary based on the amount of pre-tax income or loss. 55 Table of Content s Results of Operations In this section, we discuss the results of our operations for the year ended December 31, 2022 compared to the year ended December 31, 2021.
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.
We will continuously evaluate efficient alternatives to using cash on hand to fund the program, including accessing the capital markets, subject to market conditions. Our Business Model We collect revenue from our Software Platform and our Apps. In 2022, Software Platform Revenue represented 37% of total revenue and Apps Revenue represented 63% of total revenue.
We will continuously evaluate efficient alternatives to using cash on hand to fund the program, including accessing the capital markets, subject to market conditions. Our Business Model We collect revenue from our Software Platform and our Apps.
Non-GAAP Financial Metrics 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 on disposal, loss (gain) on extinguishments of acquisition related contingent consideration, non-operating foreign exchange (gain) losses, lease modification and abandonment of leasehold improvements, 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 (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.
We believe investments in our software, including our machine learning engine AXON, AppDiscovery, Adjust, and MAX, will further improve effectiveness for developers. Our investments will also allow us to enter new mobile app sectors outside of gaming.
We believe investments in our software, including our AI-powered advertising engine AXON, AppDiscovery, Adjust, and MAX, will further improve effectiveness for advertisers. Our investments will also allow us to enter new mobile app sectors outside of gaming.
As of December 31, 2022 these unfunded commitments were $50.1 million, which may be called from time to time by the funds. 62 Table of Content s Contingent Consideration Several of the definitive agreements governing our acquisitions of our Owned Studios and arrangements with Partner Studios provide for payment contingent upon future performance metrics.
As of December 31, 2023 these unfunded commitments were $41.2 million, which may be called from time to time by the funds. Contingent Consideration Several of the definitive agreements governing our acquisitions of our owned studios and arrangements with our partner studios provide for payment contingent upon future performance metrics.
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 mobile app advertisers who use our Software Platform to grow and monetize their apps.
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.
These contingent consideration arrangements include payouts based on a percentage of revenue or profitability metrics, payouts of fixed amounts based on the achievement of certain operating targets, and revenue share arrangements for specific apps, and some of these arrangements do not have a maximum limit of contingent consideration achievable.
These contingent consideration arrangements include payouts based on a percentage of profitability metrics or the achievement of certain revenue targets, and some of these arrangements do not have a maximum limit of contingent consideration achievable.
The net increase in the operating assets and liabilities was primarily driven by an increase in accounts receivable, prepaid expenses and other current assets and decrease in operating lease liabilities partially offset by higher accounts payable and accrued and other liabilities.
The net increase in the operating assets and liabilities was primarily driven by an increase in accounts receivable and other assets, and a decrease in operating lease liabilities, partially offset by higher accounts payable, deferred revenue, and accrued and other liabilities.
The following table provides our Adjusted EBITDA and Adjusted EBITDA margin for 2022, 2021, and 2020, and a reconciliation of net income (loss) to Adjusted EBITDA: Year Ended December 31, 2022 2021 2020 (in thousands, except percentages) Net income (loss) $ (192,947) $ 35,338 $ (125,934) Adjusted as follows: Interest expense and loss on settlement of debt 171,863 103,170 77,873 Other (income), net 1 (18,647) (7,545) (6,183) Provision for (benefit from) income taxes (12,230) 10,973 (9,772) Amortization, depreciation and write-offs 547,084 431,063 254,951 Impairment and loss in connection with sale of long-lived assets 127,892 — — Non-operating foreign exchange (gain) loss (164) (1,537) 1,210 Stock-based compensation 2 191,612 135,468 62,387 Acquisition-related expense and transaction bonus 21,279 16,887 7,850 Publisher bonuses 3 209,635 3,227 — MoPub acquisition transition services 4 6,999 — — Loss on extinguishments of acquisition related contingent consideration — — 74,820 Lease modification and abandonment of leasehold improvements — — 7,851 Restructuring costs 10,834 — — Change in the fair value of contingent consideration — (230) 442 Adjusted EBITDA $ 1,063,210 $ 726,814 $ 345,495 Net income (loss) margin (6.8)% 1.3% (8.7)% Adjusted EBITDA margin 37.7% 26.0% 23.8% 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.
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.
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 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.
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.
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.
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.
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.
As of December 31, 2022, we had cash and cash equivalents of $1.1 billion. We believe that our existing cash and cash equivalents would be sufficient to satisfy our anticipated working capital and capital expenditures needs for at least the next 12 months.
As of December 31, 2023, we had cash and cash equivalents of $502.2 million. We believe that our cash and cash equivalents would be sufficient to satisfy our anticipated working capital and capital expenditures needs for at least the next 12 months.
Operating Leases As of December 31, 2022, we have non-cancellable commitments for real estate leases and leases of certain networking equipment colocation space with fixed lease payment obligations of $77.0 million, with $17.3 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.
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.
We generated a net loss of $192.9 million in 2022, net income of $35.3 million in 2021, and a net loss of $125.9 million in 2020. We generated Adjusted EBITDA of $1.1 billion, $726.8 million, and $345.5 million in 2022, 2021 and 2020, respectively.
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.
The following table provides our Free Cash Flow for 2022, 2021, and 2020, and a reconciliation of net cash provided by operating activities to Free Cash Flow: Year Ended December 31, 2022 2021 2020 (in thousands, except percentages) Net cash provided by operating activities $ 412,773 $ 361,851 $ 222,883 Less: Purchase of property and equipment (662) (1,390) (3,241) Principal payments of finance leases (24,083) (15,271) (9,708) Free Cash Flow $ 388,028 $ 345,190 $ 209,934 Net cash used in investing activities $ (1,371,468) $ (1,214,930) $ (679,891) Net cash provided by (used in) financing activities $ (526,848) $ 3,109,546 $ 377,855 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 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.
For additional information, see Note 6 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Software Development Costs We incur development costs related to internal-use software and the development of Apps. We review software development costs on a quarterly basis to determine if the costs qualify for capitalization.
For additional information, see Note 6 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Software Development Costs We incur development costs related to internal-use software and Apps.
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 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.
We rely in part on Identifier for Advertisers ("IDFA") to provide us with data that helps our Software Platform better market and monetize Apps.
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.
Sales and marketing expenses consist primarily of user acquisition costs, other advertising expenses, personnel-related expenses for salaries, employee benefits, and stock-based compensation for employees engaged in sales and marketing, and amortization of acquired user-related intangible assets, marketing programs, travel, customer service costs, and allocated facilities and information technology costs.
Sales and marketing expenses consist primarily of user acquisition costs, marketing programs and other advertising expenses, professional services costs related to the marketing of apps by third parties, personnel-related expenses including salaries, employee benefits, and stock-based compensation for employees engaged in sales and marketing activities, amortization of acquired user-related intangible assets, travel and allocated facilities and information technology costs.
Interest expense and loss on settlement of debt Years Ended December 31, 2021 to 2022 % change 2020 to 2021 % change 2022 2021 2020 (in thousands, except percentages) Interest expense and loss on settlement of debt $ (171,863) $ (103,170) $ (77,873) 67 % 32 % Percentage of revenue (6) % (4) % (5) % In 2022, interest expense and loss on settlement of debt increased by $68.7 million, or 67%, compared to 2021.
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.
The increase was primarily due to an increase of $12.7 million in acquisition-related costs, an increase of $3.1 million in professional services costs primarily associated with audit, tax, and legal support, and an increase of $3.0 million in bad debt expense. General and administrative expenses in 2021 increased by $92.3 million, or 139% compared to 2020.
The increase was primarily due to an increase of $12.7 million in acquisition-related costs, an increase of $3.1 million in professional services costs primarily associated with audit, tax, and legal support, and an increase of $3.0 million in bad debt expense.
Interest expense and loss on settlement of debt consists primarily of loss related to debt extinguishment, interest expense associated with our outstanding debt, including accretion of debt discount, and changes in fair value of interest rate swap related to the stream of variable interest payments associated with a portion of 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 gains and losses of interest rate swap related to the variable interest payments associated with our outstanding debt. Other income (expense), net.
Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of goodwill or a significant decrease in expected cash flows. When conducting quantitative annual goodwill impairment assessments, we compare the fair value of its reporting units to their carrying value.
Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of goodwill or a significant decrease in expected cash flows.
We believe our focus on the mobile app ecosystem has allowed us to understand the needs of our clients and our relentless innovation has enabled us to quickly adapt to changes in the industry and pioneer new solutions.
New tools for developers, industry standards, and platforms may emerge in the future. We believe our focus on the advertising ecosystem has allowed us to understand the needs of our clients and our relentless innovation has enabled us to quickly adapt to changes in the industry and pioneer new solutions.
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 .
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 .
Other income (expense), net Years Ended December 31, 2021 to 2022 % change 2020 to 2021 % change 2022 2021 2020 (in thousands, except percentages) Other income (expense), net $ 14,477 $ (535) $ 4,209 ** (113) % Percentage of revenue 1 % — % — % ** Not meaningful In 2022, other income (expense), net increased by $15.0 million compared to 2021.
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.
Research and development Years Ended December 31, 2021 to 2022 % change 2020 to 2021 % change 2022 2021 2020 (in thousands, except percentages) Research and development $ 507,607 $ 366,402 $ 180,652 39 % 103 % Percentage of revenue 18 % 13 % 12 % Research and development expenses in 2022 increased by $141.2 million, or 39%, compared to 2021.
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.
Software Platform Revenue also includes revenue generated by our mobile application tracking and attribution solutions that is recognized ratably over the subscription period generally up to twelve months. Apps Revenue IAP Revenue IAP Revenue includes fees collected from users to purchase virtual goods to enhance their gameplay experience.
Software Platform Revenue also includes revenue generated from Adjust's measurement and analytics marketing platform that is recognized ratably over the subscription period of generally up to twelve months. Apps Revenue In-App Purchase Revenue IAP Revenue includes fees collected from users to purchase virtual goods to enhance their gameplay experience.
Our IAA Revenue from Apps increased $156.7 million, or 31%, due to a 44% increase in the volume of advertising impressions partially offset by a 9% decrease in price per advertising impression compared to the prior year period. We do not recognize IAA Revenue from transactions with our Owned Studios and Partner 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. We do not recognize IAA Revenue from transactions with our studios.
Software Platform Revenue is generated by placing ads on mobile applications owned by Publishers. Our performance obligation is to provide customers with access to the Software Platform, which facilitates the advertiser’s purchase of ad inventory from Publishers.
Our performance obligation is to provide customers with access to the Software Platform, which facilitates the advertiser’s purchase of ad inventory from Publishers.
Our founders, who are mobile app developers themselves, quickly realized the real impediment to success and growth in the mobile app ecosystem was a discovery and monetization problem—breaking through the congested app stores to efficiently find users and successfully grow their business.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe 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. Consequently, future results may differ materially from estimated results due to adverse changes in interest rates.
Biggest changeWe 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.
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). 67 Table of Content s
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
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, 2022, we had unrestricted cash and cash equivalents of $1.08 billion.
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.
A 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, 2022, we had a debt balance of $3.25 billion.
A 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.
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.
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.
Removed
We have entered, and in the future may enter, into interest rate swaps to manage interest rate risk on a whole, or a portion, of our outstanding debt.
Added
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.
Removed
In 2022, we entered into a receive-variable and pay-fixed interest rate swap that allows us to effectively mitigate the impact of an increase in interest rates on a notional amount of $1.8 billion of the outstanding debt balance as of December 31, 2022.
Removed
With respect to our outstanding borrowings subject to variable interest rates at December 31, 2022, a hypothetical 100 basis point increase in interest rate would have increased the Company’s annual interest expense by approximately $15.1 million.

Other APP 10-K year-over-year comparisons