PALO ALTO, Calif. - AppLovin (NASDAQ:APP) Corporation (NASDAQ: APP), a technology company specializing in software solutions for businesses, announced today its plans to offer senior notes. The company aims to utilize the proceeds from this offering to repay existing senior secured term loan facilities due in 2028 and 2030. Any remaining funds will be allocated for general corporate purposes.
The offering of these senior unsecured obligations does not require subsidiary guarantees and is contingent upon market conditions. The specific terms, including maturity, interest rate, and principal amount, will be determined at the time of pricing.
J.P. Morgan Securities LLC, BofA Securities, Inc., and Morgan Stanley (NYSE:MS) & Co. LLC have been appointed as the joint book-running managers for the transaction. The offering is being conducted in accordance with an effective shelf registration on Form S-3 filed with the Securities and Exchange Commission (SEC) and became automatically effective on June 1, 2023.
Interested parties may obtain copies of the preliminary prospectus supplement and the related base prospectus through the SEC's website or directly from the joint book-running managers.
This press release does not constitute an offer to sell the notes nor a solicitation for an offer to buy in any state or jurisdiction where such an offer or sale would be prohibited without proper registration or qualification under the securities laws of that state or jurisdiction.
AppLovin has included forward-looking statements in its announcement, which involve certain risks and uncertainties. These statements include the completion of the notes offering and the intended use of the proceeds. The risks associated with these forward-looking statements have been detailed in the preliminary prospectus supplement, the accompanying prospectus, and various financial reports.
The information is based on a press release statement from AppLovin Corporation.
In other recent news, AppLovin Corp has announced plans to transition to an all unsecured debt capital structure after acquiring investment grade ratings from S&P Global Ratings and Fitch Ratings. This move follows the company's securing of syndication commitments for a new unsecured revolving credit facility, allowing AppLovin to borrow up to $1 billion. The finalization of this facility is dependent on the termination of the company's current senior secured credit facility and the repayment of existing secured term loans.
In the realm of financial performance, AppLovin reported a 39% year-over-year increase in revenue for its third quarter, reaching $1.2 billion. This growth was primarily driven by the company's advertising network's performance within the gaming sector, and revenues from AppLovin's Software (ETR:SOWGn) Platform surged by 66% compared to the same period last year.
Analysts have responded positively to these recent developments. Citi maintained a Buy rating on AppLovin and significantly increased the price target to $335, citing stronger ad revenue growth. Similarly, Loop Capital upgraded its stock price target for AppLovin to $385.00, maintaining its Buy rating, while Daiwa Securities upgraded AppLovin's stock from a Neutral rating to Outperform, with a new price target of $280.
In its recent earnings call, AppLovin projected Q4 2024 revenue to be between $1.24 billion and $1.26 billion, with adjusted EBITDA expectations of $740 million to $760 million. These projections, along with the company's plans for financial restructuring and recent performance, highlight the ongoing developments at AppLovin.
InvestingPro Insights
AppLovin's decision to offer senior notes aligns with its strong financial position and growth trajectory. According to InvestingPro data, the company boasts a market capitalization of $107.79 billion and has demonstrated impressive revenue growth of 41.48% over the last twelve months as of Q3 2024. This robust growth underscores the company's ability to potentially service new debt obligations.
InvestingPro Tips highlight that AppLovin's net income is expected to grow this year, and analysts anticipate sales growth in the current year. These positive indicators suggest that the company's strategy to refinance its debt through senior notes could be well-timed, potentially allowing it to capitalize on favorable market conditions and its strong financial performance.
The company's solid financial health is further evidenced by its operating income margin of 35.81% and a gross profit margin of 73.89% over the last twelve months. These metrics indicate AppLovin's efficiency in converting revenue into profit, which could be attractive to potential note investors.
It's worth noting that AppLovin's stock has shown significant momentum, with a 713.14% price return over the past year. While this impressive performance might raise concerns about valuation, it also reflects investor confidence in the company's business model and growth prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers 22 additional tips for AppLovin, providing a deeper understanding of the company's financial position and market performance.
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