AppLovin Corporation (APP) Earnings Call Transcript & Summary

There we go, okay. I know some people are still finding their seats, but we're going to kick it off for our next fireside chat. It's my pleasure to introduce Adam Foroughi, CEO of AppLovin. Adam, thanks so much for being part of the conference this year.

Thanks for having me, Eric. Thanks for saying my name right. That's as good as I've heard.

I'm not going to say I did -- the first time I met you, which is not today. But I'm always going to try to get that right.

So I do want to start off maybe big picture and take a step back because I think this company has been on a bit about a journey and an evolution since before we went public, you went public and now you're a very different company a short period now after going public. And you've done some things to sort of align the business in a way that looks along multiple different avenues of growth and potential from a market dynamic. Maybe just level set for those folks who don't know the company as well, and just help people understand what have you built to date and sort of what are you trying to solve for over the medium to long term?

Yes. So we started the business in 2011-2012, launched an app marketing platform for mobile developers. Over the years, really gaming became our core constituent and the mobile gaming market needs marketing for app discovery, and it ended up really our core driver of growth. What we delivered in the ecosystem was one of the better solutions for marketing on a performance basis to that mobile game developer. And on the other hand, a platform for them to better monetize their audience as well when they're monetizing with advertising. That's what we call our mediation platform, a product named MAX, and the ad network is called AppDiscovery. Now our business went from, in 2012, tiny, to this year we're talking about over $1 billion of software revenue and over $1 billion of EBITDA for the first time in the company's history. We've delivered, I think, well over 10 billion app installs for advertising partners over the life of the company, and that number continues to accelerate. Now what generates our value, our core value proposition, is our ability to take an advertisement that we show, predominantly a video advertisement, and better match it up with an advertiser. And if we can do that well, we're charging the advertiser when they generate revenue. So they're able to buy on our platform as arbitrage marketers effectively and not pay us for an ad impression, not pay us for an install. Would actually pay us for transactions of value, whether it's ad revenue generated or in-app purchasing generated. And if we can attain their goals, the marketers on our platform are happy and they'll spend as much as they possibly can spend. In the middle there, we have our machine learning technology that's really been the catalyst for growth in the company in the last couple of years. When we went public, our software business was -- I think this was 6 quarters ago now and our software business was probably 1/4 or 1/5 what it is today in terms of scale. And that growth came from us just getting more efficient at taking the audience, the data that we have available to ourselves, showing an advertisement that's a more relevant one to the consumer, which, by definition, ends up the more relevant one for the advertiser, yields more revenue on the other side and generates growth in our business. And that's where we focus on going forward: improving our core technology, the matching algorithm, and expanding to adjacent areas with the core ad technology that we've built.

So -- and then maybe stick with what you mentioned there, the element of games and data and what drives some of the competitive advantages you have broadly and how those are built and scaled and how you think about just the software business going forward from here and what might be the key drivers of growth now that you're already at that sort of scaled level?

Yes. In our sector, we're pretty successful at this point. There's 3 public comps today, 2 are in the midst of a merger. So you've got us, Unity and ironSource, our ad tech business, the performance of that software business, if you could dissect the financials of the 3, bigger than the sum of the other 2. Really big in the category are, of course, Google and Facebook. And we have a very strong role to play. We're very successful at driving advertising dollars spent for mobile gaming advertisers. We're also the majority of the mediation market. And that's an auction system, a real-time auction. When a publisher that runs ads wants to monetize the inventory from that user, they don't want to use just one marketing company. If they just use Facebook, they just use Google, they only used AppLovin, they'd have a loss. So they want to have access to all the demand in the marketplace, and we put it all into a real-time auction and auction it off. That product itself is a nice product in a market as well. We're the majority player there. So we've got very strong ad monetization tools and growth tools. The growth of the company will come from 2 things, and this is what we focus on, on this business going forward. You've got the advertising platform that generates the bulk of our EBITDA, the ad network. And we have 500-plus software platform enterprise clients. They pay us every single quarter. They pay us for performance. But more importantly than the count is that over the last few quarters, we've got over 200% net dollar retention. And the advertisers in our platform will spend more if we improve the efficiency of the ad algorithm. That's what generates growth for us in, at least right now, a difficult market. The market backdrop, obviously, everyone knows mobile gaming struggling, IDFA changes plus macro changes have been fairly detrimental to the growth prospects of mobile gaming at the moment coming off COVID comps. So for us in our business, the growth that we can generate in the future is entirely in our control, and that comes from tech efficiency. And I think it's been, at least earlier today, it was interesting to investors to unpack this a little bit. If you think about our software platform as mostly ad revenue that we report, we're reporting the margin that we take between the dollar that the advertiser pays us to what we pay the publisher equals our revenue. So if you just round that off to $1 billion estimated for this year. And then you gross it up by what we've sized typical ad network margins at, somewhere in the neighborhood of 20% to 30%, so just pick a midpoint, 25%, you get to roughly $4 billion of ad spend on an annual year going through our platform. Now in a category that's tens of billions of dollars of ad spend, we're not the major player, but we're a successful player. And that's not a small marketplace, the media, certainly not a small marketplace, the performance media, in one sector. Now what's interesting about that and what gives us confidence in our business going forward is that if you take 4 spend, we pay 3, we net 1. Now what happens if we get a 25% lift to efficiency of that core engine? It's a black box that's unpredictable. It's not as easy as someone selling a contract and generating incremental revenue. It's improvements to algorithms on top of the data platform that we have. But to size it, 25% lift to the efficacy of our solution is taking $4 billion to $5 billion. That incremental $1 billion would take our software revenue that we report from the ad network at $1 billion estimated roughly to $2 billion. That's a huge growth driver, and that's technology gains that yield nearly 100% margin because, again, just starting point is just its margin. We don't have a sales force that we're giving commission to for those dollars. It all comes from efficiency of machine learning. And that type of a lift creates a lot of upside in our business. For investors that understand, it's not going to happen every single quarter. We can't predict tech enhancement. But when it happens, it's a step function. And because of the scale that we operate at, that step function can drive a huge ability to generate increased cash flow over time.

Okay. There's a lot to mine in there. Maybe just going back to the beginning of your answer and maybe we can just drill down a little bit on the trends that the industry you're serving from an advertising standpoint are currently dealing with. Want to know if we could parse out your thoughts about the structural growth of the mobile app economy over the next couple of years as opposed to some of the headwinds that mobile gaming and the broader app economy are facing as a result of some of the privacy changes Apple made a little over a year ago. And how you think about some of the post-pandemic hangover -- the Apple hangover abating and some of the more structural growth elements may be coming through on the story?

Yes. So let's sort of set aside COVID as a onetime event, the economy is something that we can't predict and it will reverse out, as we all know, at some point. So the main structural changes is privacy change. You've got IDFA taken away from somewhere in the neighborhood of 60% to 65% of non-consenting Apple users no longer share their IDFA to advertisers. So the ad platforms can't target as relevant as they used to be able to target, which creates inefficiency or loss in potential spend for advertisers. So -- this is -- it's very hard to decouple this from the economy and understand exactly what constrained the sector. But this is probably just a really big hurdle to overcome. And it's not that Apple is going to take back targeting and reverse it out and make it as efficient as it was. The systems used to be serve an ad and then drive an action and get a full feedback loop. You drive the transaction and 100% of the time you have IDFA and you can run attribution models against it and your machine learning engine on the front end knows exactly what to show the user next because you had that closed loop. They split it and said, targeting no longer allowed if the user is not sharing IDFA in a behavioral way the way it used to be allowed and attribution is dependent on their attribution platform, SKAdNetwork. We think the loss is pretty material there if you take the mobile gaming category and it's happened across e-commerce and fintech. If you size mobile gaming at $100 billion a year business and $70 billion roughly was spent in user acquisition, which we think based on just [indiscernible] P&L, that's roughly where people were spending on a net revenue basis to user acquisition. We think there were -- was somewhere between $10 billion to $30 billion of just lost potential spend that companies used to have that now got sucked out of the system. So that's not going to be recoverable if all else equal. What gives us confidence in the market as consumers are still playing games, they want to discover new games. And there's a lot of inventory that's going to come online over the next 3 to 5 years, they can offset this and more. Good example is Apple has talked about their own advertising platform. And people wonder is that good for us, is that bad for us? As an advertising company, we want to live in a growing pie. And in order for this sector to grow, there has to be more dollars spent. It's all a performance marketing-driven category. And so if Apple takes a business that they have today at $4 billion a year of ad spend and grows it in 3 years to $30 billion, that's great. If you think about the App Store economics, 60% of App Store revenue is mobile gaming. So presumably, you'd figure 60% of that $30 is going to be incremental mobile gaming spend, that's $18 billion that fills in the gap, possibly even more than the gap, that was lost from IDFA from just new inventory coming available. That will get people to go from Apple News to playing a game, that grows the audience that we can monetize with our mediation platform and our ad network product and that will grow the pie. And so we think with Netflix bringing ads online, Apple bringing ads online, every product from Uber to Lyft to Instacart to -- all these products are talking about bringing ads online, some percentage of all that media is going to be gaming. And when that grows the sector, that will feed right back into our business. So that gives us confidence that despite the structural changes, we're going to end up seeing an offset to that over time against this new low that will help grow the space.

Maybe just one follow-up on that because it's one we get from investors a fair bit. When you think about the lost signal and the lost dollar opportunity that played out over the last year, most advertising is still a relative game. You want to grow, maybe you liked your ROI more in the prior world order. But at the end of the day, you have goals of adding 500,000 users or 1 million paying subs. How do you think about when the industry normalizes around new expectations, around ROI expectations within mobile advertising more broadly or maybe their success around Apple and SKAdNetwork and some reclamation of data there. How do you think about just the normalization theme coming back in?

Yes, I mean, look, like the space was $100 billion year growing high single digits and somewhere in the neighborhood of $50 billion to $70 billion a year in user acquisition spend. For it to have grown 10% a year, $70 billion would have had to become $77 billion, would have had to become $85 billion. So then it was just taken down. There was a step function down with this loss of targeting ripping out spend that was possible on the sector. Every company was worth more when they were spending more and they were on a growth trajectory than they are today harvesting their revenue, their audience spending less. It's not that they're spending less because they're constraining their return on ad spend goals. Every company that we work with was content with their return on ad spend goals. They just can't spend as effectively today. So if you could reverse it or you could generate some massive pool of new inventory where they can generate that return on ad spend, they'll go spend it and that will lead to growth in the sector, that will lead to expanding multiples. And so we think over time, it will get back to where it was more, but not because the targeting improved. It's just because the amount of eyeballs that see ads are going to grow. Just based on everything we're hearing that has to happen.

Got it. Okay. In your first answer, you referenced the machine learning capabilities of the company. I want to mine that a little bit. This was a big topic on the last earnings call. Maybe for those who weren't on the call or are a little less familiar with the company, talk a little bit about what you've built on the machine learning side and how it gives you sort of a competitive advantage as you see it looking out across the market dynamic?

Yes. I mean these systems are fairly robust. And at its core, over the years, we had to build a big data system. We process an immense amount of data from all places, including we serve an advertisement right now, we show a video advertising. We know all the engagements that happen on it. Two, there's an action that happens in one of the apps that we own, that we know all the engagements that happen there. And so there's data coming into our system from all fronts. And then this data is not personally identifiable, it's more contextual engagement data. And when a user shares, IDFA has it; when it doesn't -- when the user device doesn't, doesn't. So then it comes down to, okay, you have this massive pool of data you have to process. A lot of it is done in real time. What do you do with that data? End of the day, what's our goal? Our goal as a business is to show an advertisement and to predict to that user device in that moment which advertisement is going to generate the most engagement later from that user, engagement being revenue-generating events because that's how we get paid. And stated simply like that sounds pretty easy, but we have thousands of applications to go market to the user, probably in the neighborhood of hundreds of thousands of advertisements that we could show the user. And the systems have to take all the data that we have and decide what to show that user in that instance to maximize the value for the advertiser and ourselves in the middle is the party that's facilitating the transaction. And so the better we can do that, the more revenue we'll report, the higher yield will get, more cash flow we generate. Now the other interesting point about this business is that even though based on public comps, we performed really well. We're not that good. Like none of these services are very accurate. We serve 1,000 ads where we go out and we pay for those 1,000 advertisements and maybe we drive one revenue event. Some users will never look at an ad. But this full screen, it's high definition video, it's very engaging, it's within a game to a game. And this is just conceptual, but if you think about it, 1,000 impressions we paid for, we generate one revenue event. If we were to generate 2 revenue events out of the same 1,000, it's a double in the software business as we operate it today. And so that's what we get excited about is despite us performing really well, we sit on top of this core technology that's super complex. Not many companies have been able to execute on it. Obviously, based on scale of your business and way you use the math to drive this prediction, these technologies will be different. We do it very well versus peers, but we're still just starting out on how effective we can make that technology long term. And because of our scale, that generates a lot of upside in this business.

Great. Okay. Super clear. You talked a little bit about the scale today, 500-plus of enterprise clients on the platform. Can you give us a little sense of how you build a client backlog and how we should be monitoring elements of client growth going forward as you bring more people into your software business?

Yes. Look, like our biggest growth driver won't necessarily be client ads that can help. But the mix of how we report is a little weird like one Trade Desk might be 1,000 advertisers on the other side. But to us, we're going to report it as one. So it's a little bit unclear how the P x Q will back into overall revenue. That stat that we care more about and it's been trailing, but -- it's the net revenue retention. We have 500 advertisers who would spend double. They have unlimited spend tolerance. They're constrained by the efficiency of our technology to drive value at their goals. And so they input their revenue goals. And today, we can generate whatever we generate that backs into revenue, we report. Now if we were able to double the efficiency of what we can drive, that's much more of a growth catalyst than going out and selling. If we sold an extra 20%, if you think about just overall marketplace being in the billions, as I sized earlier, extra 20% of new advertisers testing and scaling in order for them to equate to 20% more revenue, that's at the $4 billion I sized earlier, you would end up having $800 million a year of media spend. It's just very hard to map to for new advertisers. So we look at the growth catalyst not being sales-driven, it's all going to be technology-driven and then expanding to a new audience with adjacencies.

Let me ask you differently, when you go out to talk to clients and maybe you want to give the audience perspective on this, what is the friction you most have to solve for to sort of improve net revenue retention per client, revenue growth per client, so you can capitalize on those budgets?

Yes. Frankly, it's -- these are not budgetarily constrained advertisers, especially with this huge step down in spend. It's just can we hit their goals accurately and at scale. If an advertiser wants to generate 20% return on ad spend in 24 hours, they put that goal in our system. If they generate $1,000 of spend and $200 of revenue, they're happy. If we could spend $10,000 and get them back to $2,000 in the same 24 hours, they're happy. So they're not constrained by budgets. They're not constrained by sources. They're not only going to work with 2 or 3 networks. So it's not much of a sales process. It's more can the technology take the data we have available and the stated goals by the advertiser and drive more value when connecting those 2 points.

Got it. Okay. I want to turn to some of the inorganic growth and decisions you've made around the software business. Obviously, you acquired MoPub first. One of the more unique deals I'd seen where a company takes clients and revenue, but no expense. So I think it was sort of unique in the way the deal was constructed and executed against. Talk a little bit about what attracted you to that asset and what you think that does for your platform going forward?

Look, that one maybe, as you stated, that was compelling to us because at least in our experience, integrating a business is really challenging. We have a unique culture. And so being able to bring in a large-scale business that throw away everything they had and put it on our platform allowed us to get past integration in 90 days. And with the experience that we've had with acquisitions, it's incredibly hard to get through the integration hurdle. So being able to just compress it, throw out what they had and Blitz pass it made MoPub really exciting to us. And frankly, it was economically a very advantageous deal to us the way it was constructed. Those aren't going to be that common. MAX, also we acquired. We built the core technology, [ not only ] acquired the contracts. If we can find assets that we think are strategically valuable and don't have integration risk, that's the best case scenario. And then outside of that, like when we look around the landscape, the acquisitions that we've done, at least the most recent one, Wurl, was to expand into an adjacency. There's a -- we have a belief that we should be able to serve performance marketing ads in video format on television. If we can extend our ad tech out there, that's a huge growth catalyst for us over the next 3, 5, 10 years. And so Wurl was a path into an adjacency. So the way we'll look at acquisitions are go after revenue synergy, try to expand the business, hopefully have low integration hurdle and then it might make sense.

So let's just stick, just one follow-up on Wurl because it was diversification via acquisition. And it seems like it's obviously a growing area of focus for a lot of advertisers and a lot of platforms. How should we be monitoring what that means in terms of bringing new budgets, new advertisers into the ecosystem as you integrate that asset in the years ahead?

No one has linked mobile and connected television yet. We want to adjust so that hopefully helps with attribution. And if we can take performance marketing from mobile to Connected TV or Connected TV back to mobile, that becomes really compelling. So for instance, we sit on top of 400 million daily actives on mobile and a lot of these users will watch television show and they'll cross over, they'll be playing a game while they do it. If we can show an HBO ad on Connected TV and then have a similar ad on mobile and tie it all together, that's a compelling offering for an advertiser. Now we don't know that we can go execute on that. But just we believe that there is a compelling offering there. And so if we were to execute on it, and we think we're set up well with the components we have to go execute on it, that can unlock both customer expansion to traditional media companies, which Wurl has with a lot of their customers. And then from our business, extension of our demand to a whole new audience because, frankly, when we talk about market and the pie not growing and being constrained by both macro and privacy issues, the 400 million daily actives are our audience, but they're not growing. So getting to new audience automatically becomes advantageous for us and our business for our core constituents as well.

Got it. Okay. Last piece, just on the software business. You've obviously talked about sustaining relatively high margin, 65%, 70% adjusted EBITDA margins. Those are very high margins compared to a lot of businesses. How do you think about maintaining those margins, but striking the right balance of also reinvesting back in the business? And maybe a second part of the question would be what's the debate like internally of should you sacrifice some margin to maybe go faster as opposed to have margins that are that high in the software business?

Yes, I mean, look, like there are different components where I sort of look at MAX and Adjust and Wurl, and Adjust and Wurl specifically as traditional SaaS businesses, they're contractual, they're not running at high margin. In fact, I think they're basically break-even businesses. So they're not contributing a lot of cash flow. The ad tech business, the ad network is the compelling piece that drives that kind of margin. But again, our revenue is reported margin. So it's a little bit different. If we reported the spend as a revenue, then you'd be talking about EBITDA margins that people are typically accustomed to. So it's only because we report the margin as a revenue that it makes the numbers look as they do. And the other reason is because we're not sales-driven growth, we're not compensating a sales force to go bring in contracts to accelerate revenue. It's revenue growth comes from technological enhancement. Our team, we'd hire as many engineers as we can get our hands on, in particular, big data and machine learning experts because people are just hard to come by. And we have our core engineering team, most of those folks have been with the team over 10 years. So there were a lot of our early individuals that are building this stack. If there's a lift, can't really reinvest it that quickly. If you're talking about 25% lift to this $4 billion marketplace, could add $1 billion of cash flow straight into the business, obviously, margins will expand. That's what 25% does. That would double the ad network reported revenue and really just put it out of the ballpark for us. You can't spend it fast enough. And so in our business, the spend won't accelerate revenue. And the core driver as it is today, we are investing in expansion to new adjacencies, which we think isn't going to be a hefty investment, and we'll aim to grow organically over time. But if we can grow those over the next 3 to 5 to 10 years, they become compelling incremental business units.

Got it. And then maybe one last one on the software business, just tied back to investment. When you think about something you wish you could just sort of snap your fingers, accelerate, could solve for overnight, what would be the thing that you think could unlock the largest pool of opportunity set within that software?

Yes. It's funny you asked that. I mean we did make an unsolicited bid for a lot of data just recently. And so like in our business, there's 2 things that drive value: it's data and improvement of the algorithms. And that's at least the short term. Over the next 3, 5, 10 years, we could be talking about a lot of expansion across these adjacencies. But in the 1-, 2-, 3-year term, for us, it's going to be all about data and improvement of systems. And so what was compelling about that proposal we made was that it would have been an influx of data paired with our machine learning that we know already is quite effective, and that could have accelerated our growth.

Got it. Okay. Turning to the apps business because I think the announcement you made now quite a few months ago continues to come up with a fair bit of confusion among investors. You're undergoing a strategic review of your apps business. Maybe just start with what are you trying to solve for with that strategic review? Why did you announce it? What are you sort of examining within that business?

Yes. We bought the apps originally or grew the apps originally, some were homegrown, some were bought to get data so that we can build our machine learning technology. And prior to that, we didn't have data at this level. So engagement data and transactional data within the apps themselves. We didn't certainly have the advertising data and the publisher data. And so we needed that data. That's what helped us facilitate building out our machine learning technology. It also helped us build out the mediation platform. So the 2 core technologies that drive our value today, we executed on because we had the games. Then obviously, a year ago, Apple came out with IDFA and said, we're going to take ownership of the data, put it back in the hands of the consumer, and [ one-off ] based on the apps they engage with, the consumer can say use my data for advertising or not. And so to us, our apps are exactly the same as third-party advertiser apps. If someone logs into Wordscapes, we don't use that data in our ad engine. We don't use the e-mail address. We don't have any PII. All the personally identifiable information stays within the games. The only data that comes over is IDFA if the user can sense, or if not, there's some other information that we collect to allow us to do a contextual ad offering and then the engagement data within the app itself. So said another way, if we were to divest them, sell them to another company tomorrow, if -- so long as they're still an advertiser on our platform, the data relationship would be exactly the same as it is today. And that's why we got to the point we did today, which is we don't have data advantage. We've been overspending in these apps to get audience we thought that had value. It certainly had value while we were growing the business. We have a software business that's scaled much larger than our own games. So we can start running our games as a financial instrument, not as much as a strategic instrument. And that makes us want to run it at more traditional margin targets that gaming companies would operate at.

Got it. So if I could paraphrase because I think this is pretty critical. It's not a reversal of the strategy. It's just at the end of the day, that the offset between running them at a certain margin and not for growth for the sake of growth no longer adds as much value as maybe it did a couple of years ago, given the scale you're at in the software business.

Right. We used -- we started with very few advertisers sharing its data, so we said one new user in our games is a data point. So we can -- so long as we don't lose money lifetime, we can overinvest in the short term and get that user. We now don't need that incremental data point from our own games because we do have a lot of data coming into the system from advertisers when the user is consenting to share that data with us. And so given that and given the constraint on our own data usage by the platform, we ended up in a place where we said we might as well make money on these assets.

And I know there's no final decisions on this, but are there potential different outcomes that could play out that you could see? Is it sell the whole business or partner on the whole business for the long term? Or are there games you might want to keep and grow because the additional data you get might be worth some of the growth investments? How should we think about what goes into the strategic review and what might end up making decisions?

Look, it might be all of the above. The reality is if we could find a strong market for the games today and pull them to cash and reinvest in our own shares, we'd probably do that. But it's not a seller's market, obviously, right now. And so with the constraint of the market, we look at it like we've got a whole bunch of studios, optimize costs, which we did last quarter; get it to steady-state, which we believe we're sort of in that range. As we forecasted the business, we think we're confident in and run it forward as a gaming company would. And hopefully, one day -- it's not a long-term strategic asset. Therefore, hopefully, one day, we can convert it into value for our shareholders. And that may be as simple as sell it and reinvest back in our own software stock.

Got it. Okay. Sticking with the apps business, but bringing it back to the overall mobile advertising trends, anything you can share with us on what you're seeing in terms of broader mobile gaming habits? Obviously, we're coming out of a post-pandemic period where mobile gaming went up the media consumption stack from a utility standpoint, there's some normalization around that, and obviously, the headwinds to overall user growth and monetization created by IDFA. How do you think about the back part of this year or into next year both in your own apps business and also how it's an indicator of what might happen in the broader mobile advertising phase for gaming?

Yes. We went through a couple of years of overconsumption where typically you had seasonality in mobile gaming, not traditional ad network seasonality, but where summer, spring break and winter were higher consumption periods because people just had more time. And then COVID, everything became a higher consumption period, all forms of games people just played. . And then now you went to, okay, this period in the summer -- in warmer months, we saw under consumption to what we would have expected for the summer. And we think that's just because people were traveling more. But again, it's really hard to decouple that from structural IDFA changes and like how that's flowing through the sector itself. But overall, the belief we have, at least, is it will recover to normal patterns at some point. And we hope, as it cools down and people are not traveling as much, that happens as early as Q4. But that's something consumer patterns, as we've all learned over COVID and now, incredibly hard to predict. And that's something that's effectively outside of our control.

Got it. Okay. One more big picture question with respect to you and you touched upon it in a couple of different your answers so far. But when you think about capital allocation or lining up your priorities for investment in the business against eventuality you've already announced a buyback and elements of possibly returning capital to shareholders and looking at balance sheet, maybe just put a finer point on how investors should be thinking about the prism of your own capital allocation strategy going forward?

Yes. I mean we look at our business today as having a fair bit of downside protection, we do generate a lot of cash. We have a strong position in the market. Even if the market is not growing and even if we don't get technological enhancements, we've got to get baseline, which today's prices end up looking pretty good on a cash yield basis. If we were able to generate technological gains, the amount of cash flow we could generate could be immense to what we're valued at. And so that's where you'd go, okay, well, we should be investing in repurchasing our shares if we're believers in our own ability to improve our technology, which obviously we've been executing on. If there's something strategic in the market as other prices are coming down, we certainly -- if we're buying our shares, we don't want to dilute our shares, but maybe we're a cash buyer for strategic tuck-ins. We're entirely focused at this point on maintain the core, which is a very strong cash flow asset, give a strong baseline of protection to the stock price as it is and then execute on upside, improve the technology as we sort of unpacked in this session, but hopefully then investors will see the numbers. And at this level of scale, what impact on technology could have, and it's not going to be every single quarter, but they're going to be several quarters into the future, years that we operate with where we see lifts, it will be step function, and that will generate a lot more capacity in this business. What do we do with that, it just gives us opportunity.

Okay. Understood. And before I let you go in the last few minutes we have, I've been asking sort of every CEO so far at this conference over 2 days. With respect to either your own business or the broader industries that you operate in, which are a couple of different end markets, what's your most outside-the-box thoughts about where the industry might go and how developments might play out, including with your own company over the next couple of years?

Look, I mean, I think it's -- I'm not very good at predicting the future, what we're over years. I think what we've been very good at is executing what's in front of us. And what we're focused on is improve our core technology and expand into adjacencies. And also frankly, if we see opportunities for short-term acceleration through a difficult time, go after revenue synergies, obviously, we did that in a public way. But if we don't see that in front of us, be patient. I think maybe the hardest thing that people don't talk about is psychologically a lot of us who have had success who took our companies public over the last couple of years, built the business over the last 10, 15 years since mobile came into existence, that was up into the right every single quarter. So resetting the psychological expectation to it's going to be more difficult, we're going to have to be patient, we're going to have to develop longer term, we're going to have to rally investors and shareholders to look at this business long term, but we're still believers in where this business is going is key, both externally and internally. And we've done this business a long time, and that's something that we're very confident in that so long as there's a lot of components of growth in this business that we can control, we'll be able to execute given time.

Okay. Well, Adam, thank you so much for being part of the conference. Really enjoyed your perspective. And please join me in thanking AppLovin for being part of the conference this year.

Thank you.