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Earnings Results: Applovin stock falls after outlook cut amid big offer for Unity Software

Applovin Inc. shares fell in the extended session Wednesday after the app-monetization company said it was rolling back its outlook for the year, a day after it offered to buy Unity Software Inc. for $20 billion.

Applovin
APP,
+12.36%

reported a second-quarter loss of $21.7 million, or 6 cents a share, compared with net income of $13.3 million, or 4 cents a share, in the year-ago period. The company did not list adjusted earnings-per-share figures.

The company reported revenue of $776.2 million compared with revenue of $668.8 million in the year-ago quarter.

Analysts surveyed by FactSet had forecast adjusted earnings of 16 cents a share on revenue of $819.6 million. Using Applovin’s forecast, FactSet calculated that represented adjusted earnings of 15 cents a share.

The Palo Alto, Calif.-based company offers marketing, monetization and analytics software that helps app developers grow their businesses, similar to the software Unity 
U,
+10.37%

sells to videogame makers.

Read: AppLovin IPO: 5 things to know about the software company valued at nearly $30 billion

Applovin had already pre-warned about results Tuesday, when it eclipsed Unity’s own earnings with a $20 billion offer for the company, which was valued at $15 billion at Tuesday’s close. Applovin’s offer comes just three months after Unity revealed a flaw in its ad-targeting software, a flaw that was “behind us,” according to Unity’s Operate Solutions head Ingrid Lestiyo. Unity shares finished Wednesday up 10.4% at $55.57.

Applovin shares fell about 12% after hours, following a 12.4% gain in the regular session to close at $40.46, putting them 65% off their record closing high of $114.85 on Nov. 11. On Tuesday, shares had fallen 10.3% to finish at $36.01, and climbed 10% Monday to finish at $40.14. In the company’s April 15 initial public offering, shares priced at $80, but closed down nearly 20% in their debut.

Applovin is no stranger to M&A. In April, it added streaming-video company Wurl in a $430 million cash-and-stock acquisition, following its $1.05 billion acquisition of app-monetization company MoPub, which closed on Jan. 3, and its year-ago $1 billion acquisition of German mobile-app measurement and marketing company Adjust.

The company now sees full-year revenue of $2.84 billion to $3.14 billion, down from a previous $3.14 billion to $3.44 billion, while the Street had been looking for $3.23 billion.

On Tuesday, Applovin confirmed its 2022 software sales outlook of $1.14 billion to $1.29 billion, while lowering the Apps outlook to a revenue range of $1.7 billion to $1.85 billion, down from a previous $2 billion to $2.15 billion. Last quarter, Applovin said it would start treating its apps business as a standalone concern, raising the question on whether the company intended to sell it.

The quarter before that, the company provided a 2022 forecast that disappointed Wall Street, when it called for full-year revenue between $3.55 billion and $3.85 billion when, at the time, analysts were looking for $3.83 billion.

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