Applovin Corp (APP) 2023 Q3 法說會逐字稿

Welcome, everyone, to the AppLovin Earning Call for the Third Quarter ended September 30, 2023. I'm David Hsiao, Head of Investor Relations. Joining me today to discuss our results are Adam Foroughi, our Co-Founder, CEO and Chairperson; and Herald Chen, our President and CFO.

歡迎大家參加截至 2023 年 9 月 30 日的 AppLovin 第三季財報電話會議。我是投資人關係主管 David Hsiao。今天與我一起討論我們的結果的是我們的共同創辦人、執行長兼董事長 Adam Foroughi；以及我們的總裁兼財務長 Herald Chen。

Please note, our SEC filings to date as well as our shareholder letter and press release discussing our third quarter performance are available at investors.applovin.com. During today's call, we will be making forward-looking statements regarding our products and services, market expectations, our CFO transition, the future financial performance of the company and other future events.

請注意，我們迄今向 SEC 提交的文件以及討論我們第三季業績的股東信函和新聞稿均可在 Investors.applovin.com 上取得。在今天的電話會議中，我們將就我們的產品和服務、市場預期、財務長的過渡、公司未來的財務表現和其他未來事件做出前瞻性陳述。

These statements are based on our current assumptions and beliefs, and we assume no obligation to update them except as required by law. Our actual results may differ materially from the results predicted. We encourage you to review the risk factors in our most recently filed Form 10-Q for the fiscal quarter ended June 30, 2023, and our Form 10-Q for the third quarter, which we expect to file later today.

這些聲明是基於我們目前的假設和信念，除非法律要求，否則我們不承擔更新這些聲明的義務。我們的實際結果可能與預測結果有重大差異。我們鼓勵您查看我們最近提交的截至 2023 年 6 月 30 日的財政季度的 10-Q 表格以及預計今天晚些時候提交的第三季度的 10-Q 表格中的風險因素。

We will also be discussing non-GAAP financial measures. These non-GAAP measures are not intended to be a substitute for or superior to our GAAP results. Please be sure to review the reconciliations of our GAAP and non-GAAP financial measures in our shareholder letter available on our Investor Relations site.

我們也將討論非公認會計準則財務指標。這些非公認會計原則衡量標準無意取代或優於我們的公認會計原則結果。請務必查看投資者關係網站上股東信中公認的會計準則和非公認會計準則財務指標的調節表。

This conference call is being recorded, and a replay will be available on our IR website. Now I'll turn it over to Adam and Herald for some opening remarks, then we'll have the moderator take us through Q&A.

本次電話會議正在錄製中，重播將在我們的 IR 網站上提供。現在我將把它交給 Adam 和 Herald 進行一些開場白，然後我們將讓主持人帶領我們進行問答。

Good afternoon. Thank you for joining us today. Our team has executed exceptionally well. This quarter's record-breaking performance is a testament to the success of our new AI-based advertising technology, AXON 2, which has once again driven revenue and adjusted EBITDA above our expectations.

午安.感謝您今天加入我們。我們的團隊執行得非常好。本季破紀錄的業績證明了我們基於人工智慧的新型廣告技術 AXON 2 的成功，該技術再次推動了營收成長，調整後的 EBITDA 超出了我們的預期。

I would like to take a moment to commend our outstanding team for their dedication and hard work. A year ago, we faced significant challenges, yet our teams resolve and enthusiasm never faltered. Our efforts this year have not only solidified our short-term growth trajectory but have also set the stage for sustained long-term expansion.

我想花一點時間讚揚我們優秀團隊的奉獻和辛勤工作。一年前，我們面臨重大挑戰，但我們團隊的決心和熱情從未動搖。我們今年的努力不僅鞏固了我們的短期成長軌跡，也為持續的長期擴張奠定了基礎。

The journey with AXON 2 is just beginning with numerous enhancements on the horizon. This quarter, we made strides by integrating AXON 2 into our CTV initiative during its testing phase, and we are planning to scale up these efforts in the subsequent quarters.

AXON 2 的旅程才剛開始，即將推出眾多增強功能。本季度，我們在測試階段將 AXON 2 整合到我們的 CTV 計劃中，取得了長足進步，並且我們計劃在接下來的幾個季度擴大這些工作。

We are excited about introducing our leading performance marketing technologies to television, where we see a substantial opportunity to fill a gap with the superior performance solution. Additionally, this quarter, we'll be extending AXON 2 to Array and expect it will materially accelerate the potential to scale that business.

我們很高興將我們領先的績效行銷技術引入電視，我們看到了利用卓越績效解決方案填補空白的巨大機會。此外，本季度，我們將把 AXON 2 擴展到 Array，並預計它將大大加速擴展該業務的潛力。

Considering the magnitude of our software platform business, we're investing in our CTV and Array businesses because we believe they have the potential to become meaningful contributors to our annual revenue. Our dedication to creating long-term value for our shareholders is steadfast.

考慮到我們軟體平台業務的規模，我們正在投資 CTV 和 Array 業務，因為我們相信它們有潛力成為我們年收入的重要貢獻者。我們堅定不移地致力於為股東創造長期價值。

We are confident in the capabilities of our team, the potential for the innovation of our technology, the quality of our products and the strength of our financial position. We are grateful for your trust and support as we embark on the next chapter of our journey, which promises growth and relentless innovation.

我們對團隊的能力、技術創新的潛力、產品的品質以及我們的財務狀況充滿信心。我們感謝您的信任和支持，讓我們踏上旅程的下一個篇章，這將帶來成長和不懈的創新。

Before concluding, I would like to express my gratitude to Herald for his many contributions during his tenure as CFO over the past 4 years. Herald's ambition to build a strong foundation in our support and operational functions has been realized, setting us on a course for operational excellence. As we transition to provide more opportunities for his team, Herald will continue to offer invaluable strategic guidance in his new advisory role to me.

在結束之前，我要對 Herald 在過去 4 年擔任 CFO 期間所做的許多貢獻表示感謝。 Herald 為我們的支援和營運職能奠定堅實基礎的雄心壯誌已經實現，使我們走上了卓越營運的道路。隨著我們的轉型，為他的團隊提供更多機會，先驅報將繼續在他的新顧問角色中為我提供寶貴的策略指導。

I will now turn it to Herald who will share the financial highlights of the quarter. Thank you again for your continued support.

現在我將把它交給先驅報，他將分享本季的財務亮點。再次感謝您一直以來的支持。

Thanks, Adam, and thanks for the kind words. As Adam discussed, strong execution across the board led to fantastic financial performance this past quarter. In Q3, we achieved incredible year-over-year and quarter-over-quarter revenue growth, with software platform up 65% year-over-year reaching a $2 billion run rate. Apps posted the first quarter of quarter-over-quarter revenue growth since we started our portfolio optimization program.

謝謝亞當，也謝謝你的客氣話。正如亞當所討論的，全面的強有力執行導致了上個季度出色的財務表現。第三季度，我們實現了令人難以置信的同比和環比收入成長，軟體平台年增 65%，運行率達到 20 億美元。自從我們啟動產品組合優化計劃以來，應用程式發布了第一季的收入環比增長。

In total, generated revenue of $864 million, up 21% year-over-year with adjusted EBITDA of $490 million, up 63% year-over-year, both exceeding the high end of our guidance. Given higher margins and higher contribution from our software platform business, total adjusted EBITDA reached the highest EBITDA margin in 5 years at 48.5% margin, an improvement quarter-over-quarter of over 400 basis points on top of a 600 basis points improvement from Q2 over Q1 2023. Of note, this past quarter did benefit from approximately 100 basis points of improvement coming from onetime nonrecurring cost benefits.

總體而言，營收為 8.64 億美元，年成長 21%，調整後 EBITDA 為 4.90 億美元，年成長 63%，均超過了我們指導的上限。鑑於軟體平台業務的利潤率和貢獻率較高，調整後 EBITDA 總額達到 5 年來最高的 EBITDA 利潤率，達到 48.5%，比第二季度提高 600 個基點，環比提高超過 400 個基點2023 年第一季。值得注意的是，上一季確實受益於一次性非經常性成本效益帶來的約100 個基點的改進。

Turning to our segment reporting. We are excited to see our software platform and AI-driven technologies to help our advertising partners expand the reach, achieve better returns on their investments and increase their spending with us. The software platform reached record revenue of $504 million, a 65% increase over the prior year and a 24% increase quarter-over-quarter, which is the third consecutive quarter with double-digit quarter-over-quarter revenue growth. Software Platform adjusted EBITDA grew 91% year-over-year and 33% quarter-over-quarter to $364 million, with a record 72% adjusted EBITDA margin.

轉向我們的分部報告。我們很高興看到我們的軟體平台和人工智慧驅動的技術能夠幫助我們的廣告合作夥伴擴大覆蓋範圍，實現更好的投資回報並增加他們在我們這裡的支出。該軟體平台營收達到創紀錄的5.04億美元，比上年增長65%，環比增長24%，這是連續第三個季度實現兩位數環比收入增長。軟體平台調整後 EBITDA 年成長 91%，季增 33%，達到 3.64 億美元，調整後 EBITDA 利潤率達到創紀錄的 72%。

Our software platform continues to demonstrate high flow-through from revenue to adjusted EBITDA as we scale. Given its extraordinary growth in cash flow generation, software platform adjusted EBITDA now represents nearly 90% of our company's total adjusted EBITDA. As Adam mentioned, we're very proud of our software platform team's hard work and accomplishments to date but we're even more excited about where this business can go in the future, both within our core markets and within the new initiatives we have been pursuing with Wurl and Array.

隨著我們的規模擴大，我們的軟體平台繼續展現出從收入到調整後 EBITDA 的高流量。鑑於其現金流量產生的顯著增長，軟體平台調整後 EBITDA 目前占我們公司調整後 EBITDA 總額的近 90%。正如Adam 所提到的，我們對我們的軟體平台團隊迄今為止的辛勤工作和成就感到非常自豪，但我們更興奮的是這項業務未來的發展方向，無論是在我們的核心市場還是在我們一直在採取的新措施中。用 Wurl 和 Array 進行追蹤。

Moving on to the App segment, apps revenue grew 5% sequentially to $360 million, the first quarter of growth since we started our portfolio optimization project. Apps adjusted EBITDA was $55 million, a margin of 15%. With the major parts of our portfolio review complete, we are continuing to focus on balancing growth and cash flow to optimize the financial performance and enterprise value of our apps portfolio.

轉向應用程式領域，應用程式營收季增 5%，達到 3.6 億美元，這是我們啟動投資組合優化專案以來的第一季成長。 Apps 調整後 EBITDA 為 5,500 萬美元，利潤率為 15%。隨著我們的投資組合審查的主要部分完成，我們將繼續專注於平衡成長和現金流，以優化我們的應用程式組合的財務績效和企業價值。

With regard to free cash flow, we generated $194 million in Q3. The flow-through from adjusted EBITDA to free cash flow in Q3 is slightly lower than normal, primarily due to a temporary delay in certain cash collections which we expect will reverse itself in Q4.

關於自由現金流，我們在第三季創造了 1.94 億美元。第三季調整後的 EBITDA 到自由現金流的流量略低於正常水平，主要是由於某些現金收款暫時延遲，我們預計這種情況將在第四季度逆轉。

As previously mentioned in our calls, adjusted EBITDA to free cash flow flow-through is typically 50% to 60% on a normalized run rate basis, noting that we typically have some deviations in any particular quarter driven by the timing of tax payments and working capital movements. This flow-through percentage should increase over time as our high cash flow converting software platform business continues to grow faster than the apps.

正如我們之前在電話會議中提到的，在標準化運行率的基礎上，調整後的EBITDA 與自由現金流的比率通常為50% 至60%，並指出，由於納稅時間和工作時間，我們通常在任何特定季度都會出現一些偏差。資本流動。隨著我們的高現金流轉換軟體平台業務的成長速度繼續快於應用程序，這一流通百分比應該會隨著時間的推移而增加。

With regard to guidance for Q4 2023, we are targeting another quarter of growth with revenue between $910 million and $930 million, adjusted EBITDA between $420 million and $440 million and margin between 46% and 47%. Margin outlook is slightly down from Q3's 48.5% given an approximately 100 basis point benefit from onetime items in Q3 and the potential for further investments in the business in Q4.

關於2023 年第四季的指導，我們的目標是再成長一個季度，營收在9.1 億美元至9.3 億美元之間，調整後EBITDA 在4.2 億美元至4.4 億美元之間，利潤率在46% 至47% 之間。鑑於第三季一次性項目帶來約 100 個基點的收益以及第四季度對該業務進一步投資的潛力，利潤率前景略低於第三季的 48.5%。

From a cash perspective, we ended Q3 with $332 million of cash in the balance sheet. In the quarter, we used $582 million of cash to buy back stock and $249 million to pay down our term loan. This was offset by $185 million drawn on the revolver.

從現金角度來看，第三季結束時，我們的資產負債表上有 3.32 億美元的現金。本季度，我們使用 5.82 億美元現金回購股票，並使用 2.49 億美元償還定期貸款。這被左輪手槍提取的 1.85 億美元所抵消。

Regarding stock buybacks. Year-to-date, through the end of the third quarter, we have repurchased $1.2 billion of our Class A common stock at a weighted average price of under $25 per share. This is consistent with our asset allocation plan and focus on driving long-term shareholder value.

關於股票回購。今年迄今為止，截至第三季末，我們已回購了價值 12 億美元的 A 類普通股，加權平均價格低於每股 25 美元。這與我們的資產配置計劃一致，並專注於推動長期股東價值。

On the debt side, in Q3, we amended a portion of our term loans, extending the maturity to 2030, reducing principal amount by $250 million -- $249 million and improving our credit spread.

在債務方面，第三季度，我們修改了部分定期貸款，將期限延長至 2030 年，本金金額減少了 2.5 億美元至 2.49 億美元，並改善了我們的信用利差。

With regard to our Board, we're pleased to add Todd Morgenfeld in the quarter, a seasoned executive who most recently was a CFO at Pinterest and prior to that, was VP Finance at Twitter. Concurrently, Asha Sharma, COO of Instacart, stepped down from the Board. Overall, our strong Q3 performance showcases the strength and powerful business model underlying our software platform business.

至於我們的董事會，我們很高興在本季度增加 Todd Morgenfeld，他是一位經驗豐富的高管，最近擔任 Pinterest 的首席財務官，此前曾擔任 Twitter 的財務副總裁。同時，Instacart 營運長 Asha Sharma 辭去董事會職務。總體而言，我們第三季的強勁表現展現了我們軟體平台業務的實力和強大的業務模式。

Lastly, on a personal note, as Adam mentioned earlier, I've decided to transition from a full-time role to an advisory one at the end of this year so I can take some time off and investigate new opportunities. In my new role as adviser to the CEO, I very much look forward to working with Adam and the team on key strategic and financial matters. Further, I will be continuing my service on the AppLovin Board.

最後，就我個人而言，正如亞當之前提到的，我決定在今年年底從全職角色轉變為顧問角色，這樣我就可以休息一段時間並調查新的機會。在擔任執行長顧問的新職位上，我非常期待與 Adam 和團隊就關鍵策略和財務問題進行合作。此外，我將繼續在 AppLovin Board 上提供服務。

It has been my privilege to serve as AppLovin President and CFO for the past 4 years, in particular, getting to help build and work with this truly extraordinary management team. Come January, I'm excited to have Matt and Dimitri step into their new and well-deserved leadership roles. Based on their track record and past contributions, I am confident in their success.

我很榮幸在過去 4 年中擔任 AppLovin 總裁兼財務官，特別是幫助建立了這支真正非凡的管理團隊並與他們合作。一月份到來，我很高興馬特和迪米特里擔任他們當之無愧的新領導角色。根據他們的業績記錄和過去的貢獻，我對他們的成功充滿信心。

Since joining the Board in 2018, under Adam's leadership, the company has achieved tremendous growth, increasing revenues by over 6x and adjusted EBITDA as multiplied from a couple of hundred million dollars of run rate to over $1.6 billion run rate today. While the path has not always been linear, nor easy, the team has remained steadfast and executed with expertise to drive this outstanding performance. Thank you to all the AppLovin stakeholders, including our team, customers, partners, shareholders, lenders and Board who have supported us along our journey thus far.

自 2018 年加入董事會以來，在 Adam 的領導下，該公司實現了巨大的增長，收入增長了 6 倍以上，調整後的 EBITDA 從幾億美元的運行率增至如今超過 16 億美元的運行率。雖然道路並不總是線性的，也不是一帆風順的，但團隊始終堅定不移，並以專業知識執行，以推動這一出色的業績。感謝所有 AppLovin 利害關係人，包括我們的團隊、客戶、合作夥伴、股東、貸方和董事會，他們迄今為止一直支持我們。

I do say thus far because the opportunity ahead of AppLovin is awesome and I very much look forward to being a part of it in my new role. Now the moderator will take us through Q&A.

我之所以這麼說，是因為 AppLovin 面前的機會非常棒，我非常期待在我的新角色中成為其中的一部分。下面主持人就帶我們進行問答。

(Operator Instructions) And our first question is going to come from Ralph Schackart with William Blair.

（操作員說明）我們的第一個問題將由拉爾夫·沙卡特和威廉·布萊爾提出。

First question, just on the overperformance in the quarter. Maybe you could kind of speak to maybe what's going better with the sort of ramp of EXON 2 than you originally anticipated. And perhaps maybe you could kind of touch on, I think, historically, you talked about it extended beyond gaming, maybe some perspective on how it's doing in some of the other verticals? And then I have a follow-up, please.

第一個問題，關於本季的超額表現。也許你可以談談 EXON 2 的斜坡比你最初預期的更好的地方。也許你可以談談，我想，從歷史上看，你談論的不僅僅是遊戲，也許是關於它在其他一些垂直領域的表現的一些觀點？然後我有一個後續行動，請。

So we talked about last quarter, AXON 2 was rolled out partial way in the prior quarter. This is a brand-new technology, and it's a self-learning type of technology. These AI models as they get scaled, continuously improve themselves. And then our team also is able to continuously improve them. So we're talking about a new technology that we've seen is one, been game changing for our business and is too in the first inning. And that's what gets us really excited.

所以我們談到上個季度，AXON 2 在上個季度部分推出。這是一項全新的技術，而且是一種自學習型的技術。這些人工智慧模型隨著規模的擴大，會不斷自我改進。然後我們的團隊也能夠不斷改進它們。因此，我們正在談論一項新技術，我們已經看到它正在改變我們業務的遊戲規則，而且也處於第一局。這就是讓我們真正興奮的原因。

The output of the technology delivers better results for advertisers. And we've seen it to your question on gaming or non-gaming, we've seen it agnostic of the category. Advertisers on our platform are spending more dollars in a material way at better returns. And that is a model that just compounds on itself. And so that's what led to the vast majority of the over performance this past quarter. It works much better for both non-gaming and gaming.

該技術的輸出為廣告商帶來了更好的效果。我們已經看到了你關於遊戲或非遊戲的問題，我們已經看到它與該類別無關。我們平台上的廣告商正在以物質方式花費更多的錢以獲得更好的回報。這是一個自我複合的模型。這就是導致上個季度絕大多數業績超預期的原因。它對於非遊戲和遊戲都效果更好。

And then during the prepared remarks, Adam, you talked about extending EXON 2 to the Connected-TV business and Array and then, will at some point, contribute to results. Just kind of carry some perspective in your opinion, when it can start adding to the overall, sort of, enterprise results?

然後，在準備好的演講中，Adam，您談到將 EXON 2 擴展到聯網電視業務和 Array，然後在某個時候為結果做出貢獻。您認為只是攜帶一些觀點，什麼時候它可以開始增加整體的企業績效？

Yes. I mean we did the World deal, I think it was last April, right? So it's been about 1.5 years. World teams integrated, they've built out really good product offerings on Connected-TV, part of that is an SSP. So there's a lot of inventory available on World's platform now for us to step into it and buy it with our performance marketing model.

是的。我的意思是我們達成了世界協議，我想那是去年四月，對吧？就這樣，已經過了大約1.5年。世界團隊整合在一起，他們在連網電視上開發了非常好的產品，其中一部分就是 SSP。所以現在World的平台上有很多庫存可供我們進入並透過我們的效果行銷模式購買。

And in the last earnings call, we talked about we're just going to start migrating AXON 2 over to the Connected-TV offering. We've gotten the testing phase on that. As we start scaling that, we're very excited about the potential of that platform.

在上次財報電話會議中，我們談到我們將開始將 AXON 2 遷移到連網電視產品。我們已經進入了測試階段。當我們開始擴展時，我們對該平台的潛力感到非常興奮。

Obviously, it's television, and we all also know that performance marketing on TV hasn't really been thing anywhere near as much as it has been on desktop or on mobile devices. And so our technology is truly cutting-edge and being able to extend into that platform presents a very big opportunity.

顯然，這是電視，我們也知道，電視上的效果行銷遠不如桌面或行動裝置上的效果行銷。因此，我們的技術確實是尖端的，能夠擴展到該平台提供了一個非常大的機會。

And then Array is the same deal, Array, gets us on Android devices today in a much more intimate way. It presents multiple new ad offerings to the consumer and being able to use the AXON 2 solution there. We think is also going to be game changing for that business and the prospects of both.

然後，Array 也是同樣的交易，Array，讓我們以更親密的方式使用今天的 Android 裝置。它向消費者提供多種新的廣告產品，並能夠在那裡使用 AXON 2 解決方案。我們認為這也將改變該業務及其前景的遊戲規則。

Our next question will come from Clark Lampen with BTIG.

我們的下一個問題將來自 BTIG 的 Clark Lampen。

Adam, I was hoping maybe we could unpack a little bit of the sort of sequential uplift that we saw in software revenue. You talked about it being a testament to AXON 2 at the top of your prepared remarks. Was that the key driver in the sort of lift we saw up to $500 million? Or were there other businesses like World or maybe MAX also contributing?

亞當，我希望我們能夠像軟體收入那樣實現一些連續性的成長。您在準備好的發言的開頭提到這是對 AXON 2 的證明。這是我們看到的 5 億美元升值的關鍵驅動力嗎？或者有其他企業（例如 World 或 MAX）也做出了貢獻嗎？

Yes, that's vast majority of AXON 2. That powers the App Discovery platform or advertising business, and that's already the vast majority of the software platform, but AXON 2 is the key catalyst.

是的，這就是 AXON 2 的絕大多數。它為應用程式發現平台或廣告業務提供動力，這已經是軟體平台的絕大多數，但 AXON 2 是關鍵的催化劑。

Got it. And as we look at, I guess, sort of the forward guidance, if you were to assume I guess just for discussions sake that the apps business is running flat. We're sort of seeing like a 9% to 13% uptick in software revenue into the fourth quarter. Is that still expected to be mostly driven by app discovery, AXON, sort of the compounding effect of the improvements that you've talked about historically?

知道了。當我們看到時，我猜，如果你假設我猜只是為了討論，應用程式業務正在平穩運行。我們預計第四季軟體營收將成長 9% 到 13%。這是否仍然預計主要由應用程式發現、AXON 以及您歷史上談到的改進的複合效應所驅動？

Yes, we see both sides of the business growing. As we mentioned, we've had the first quarter of growth, quarter-over-quarter growth in the app since we started our portfolio optimization program. But clearly, the vast majority of growth will remain in the software side as well as translation if we were able to grow that business translation to EBITDA.

是的，我們看到雙方的業務都在成長。正如我們所提到的，自從我們開始投資組合優化計劃以來，我們的應用程式實現了第一季的成長，季增。但顯然，如果我們能夠將業務轉化為 EBITDA，那麼絕大多數成長將保留在軟體和翻譯方面。

EBITDA as we mentioned, there's some onetime items in the third quarter that will come out in the fourth quarter. And then the fourth quarter, we are considering some additional investments on the growth side, both on the software and app side.

EBITDA 正如我們所提到的，第三季的一些一次性項目將在第四季出現。然後第四季度，我們正在考慮在成長方面進行一些額外投資，包括軟體和應用程式方面。

And I'll step away really quick in just a second, but any uplift that you guys were seeing from sort of non-gaming customers this quarter also? Or was this mostly your sort of core game developers base that was driving most of the improvement we're seeing?

我很快就會離開，但你們本季也從非遊戲客戶那裡看到了任何提升嗎？或者這主要是你們那種核心遊戲開發者基地推動了我們所看到的大部分改進？

No, what we're seeing success at cost, both gaming and non-gaming. Obviously, gaming is a much bigger part of our business. Non-gaming is growing faster because the number that is starting out is materially smaller. It will take a sales effort to substantially grow non-gaming so that it can become a much more material part of the business, but the technology works very effectively regardless of the type of app on dealers.

不，我們看到的是付出成本的成功，無論是遊戲或非遊戲。顯然，遊戲是我們業務的重要組成部分。非遊戲產業的成長速度更快，因為剛開始的數量要少得多。要大幅成長非遊戲業務，需要付出銷售努力，使其成為業務中更重要的一部分，但無論經銷商使用哪種類型的應用程序，該技術都非常有效。

(inaudible) with Wolf has the next question.

（聽不清楚）沃爾夫有下一個問題。

Just very briefly a high-level question. How far ahead is AXON 2's advantage versus competitors? How long does this persist before competitors maybe catch up? And following up on that, how should we think about the pace of new releases? What that kind of becomes for you guys? And when should we expect like an AXON 3? How much the new requirements and changes in privacy in the ad market drive that new release desire versus, say, competitors improving their competitive positioning against you?

只是一個非常簡短的高級問題。 AXON 2 相對於競爭對手的優勢有多大？在競爭對手趕上之前，這種情況會持續多久？接下來，我們應該如何考慮新版本的發布速度？這對你們來說會變成什麼樣子呢？我們什麼時候該期待 AXON 3 呢？廣告市場中隱私方面的新要求和變化在多大程度上推動了新發布的願望，而競爭對手則提高了他們對您的競爭地位？

So there's a bunch of questions in there. Look, these technologies are super complicated. We think ours is cutting edge and one of the leading AI solutions in the market across any of the AI implementations we've seen. We have very large deployment of software and hardware to power it, and we've got a material amount of data.

所以裡面有很多問題。你看，這些技術超複雜。我們認為，在我們所見過的所有人工智慧實施中，我們的解決方案都是最前沿的，並且是市場上領先的人工智慧解決方案之一。我們部署了大量軟體和硬體來為其提供支持，並且我們擁有大量數據。

These systems themselves, they said, are self-learning. And we're continuing to evolve what we have on an ongoing basis on a regular basis. So this isn't something where we look at competition catching up. We look at -- we've set a new standard, and we're going to go build on that and that hopefully will lead to many quarters of growth coming up. the privacy question that leading to AXON 3 year changes in the platform.

他們說，這些系統本身是自我學習的。我們將繼續定期改進現有的技術。因此，我們不希望競爭對手趕上來。我們著眼於——我們已經制定了一個新標準，我們將在此基礎上繼續發展，希望這將帶來未來多個季度的成長。隱私問題導致AXON 3年平台發生變化。

Look, we've dealt with privacy changes probably since 2014. Every time there's a change on platform or with regulators, you've changed something in your stock, but we're a nimble company, we've rewritten our core technology multiple times over the years, and we are always able to adapt and perform in the face of any of those kinds of changes.

聽著，我們可能從 2014 年就開始處理隱私變化。每次平台或監管機構發生變化時，你的股票都會發生一些變化，但我們是一家靈活的公司，我們多次重寫了我們的核心技術多年來，我們始終能夠適應並應對任何此類變化。

And as far as AXON 3 goes, we signaled AXON 2 to you all a year ago. We've obviously executed really well on putting it together. We're not talking about AXON 3. We're talking about a lot of excitement about multiple quarters of growth coming up from what we put together here.

就 AXON 3 而言，我們一年前就向大家發出了 AXON 2 的訊號。顯然，我們在將其組合在一起方面執行得非常好。我們不是在談論 AXON 3。我們談論的是我們在這裡匯總的多個季度的成長帶來的許多令人興奮的事情。

And we will now hear from Franco Granda with D.A. Davidson.

現在我們將聽取弗朗哥·格蘭達 (Franco Granda) 和 D.A. 的演講。戴維森。

I had a question around the investments on CTV and OEM. Obviously, last year, you put those investments in cost then on Essentials and these were some areas that suffered. But now that you're planning on implementing AXON into those categories, can you comment on perhaps the magnitude of this investment and how we should think about those moving forward?

我有一個關於 CTV 和 OEM 投資的問題。顯然，去年，你把這些投資放在了成本上，然後放在了必需品上，這些領域都受到了影響。但現在您正計劃在這些類別中實施 AXON，您能否評論一下這項投資的規模以及我們應該如何考慮這些投資的進展？

Yes. I mean I don't think we've ever put them on pause. We've been talking about CTV since we acquired World and Array. We launched, I think, a couple of years ago, and we've signaled to you all that these are a couple of the growth vectors that we're really excited about.

是的。我的意思是，我認為我們從未讓他們暫停過。自從我們收購了 World 和 Array 以來，我們就一直在談論 CTV。我想，我們是在幾年前推出的，並且我們已經向大家表明，這些是我們真正感到興奮的一些成長載體。

Our software business, obviously, is really big. We're in a $2 billion a year run rate. So to have the type of numbers and scale from a new initiative, to put a real big debt on those numbers, it takes a while. But we're very excited about CTV and Array. The foundation is there on both those businesses. And by taking this market-leading technology, applying it to it, we think we're going to be able to really accelerate the path of both.

顯然，我們的軟體業務確實很大。我們的年營運額為 20 億美元。因此，要從一項新舉措中獲得這樣的數字類型和規模，並在這些數字上投入真正的巨額債務，需要一段時間。但我們對 CTV 和 Array 感到非常興奮。這兩項業務都有基礎。透過採用這一市場領先的技術並將其應用到其中，我們認為我們將能夠真正加速兩者的發展。

And then just very quickly here on the apps business growth based on the quarter, how much of that growth came from perhaps your integration with Axon and leveraging that technology for the UA capabilities there?

然後，很快就基於本季度的應用程式業務成長而言，這種成長有多少可能來自於您與 Axon 的整合以及利用該技術實現那裡的 UA 功能？

Yes. We're obviously a big customer of our own systems. And we -- when we saw AXON 2 in it's performance, like a lot of our customers we invested more in UA, and we expect to continue to do that rolling into the fourth quarter. So that was a big driver of growth.

是的。我們顯然是我們自己系統的大客戶。當我們看到 AXON 2 的表現時，就像我們的許多客戶一樣，我們在 UA 上投入了更多資金，我們預計第四季度將繼續這樣做。所以這是成長的一個重要推動力。

And moving on to Martin Yang with OpCo.

接下來是 OpCo 的 Martin Yang。

A question on the share between non-gaming and gaming for software platform. Can you first talk about the general trend on the revenue contribution from non-gaming apps? And then did AXON 2 help either direction of the non-gaming share of revenues to software platforms?

關於軟體平台非遊戲和遊戲佔比的問題。您能否先談談非遊戲類應用收入貢獻的整體趨勢？那麼 AXON 2 是否有助於將非遊戲收入份額轉向軟體平台？

Yes. We don't break down the percentages, but we've talked about a majority of our business is gaming. And then I referenced that this technology is working really well for advertisers of any kind, across every category of mobile application. So we're seeing quite a bit of growth across all, but non-gaming starts from a smaller place. So we're actually seeing accelerated growth on non-gaming advertisers.

是的。我們沒有細分百分比，但我們已經討論過我們的大部分業務都是遊戲。然後我提到這項技術對於任何類型的廣告商來說都非常有效，涵蓋所有類別的行動應用程式。因此，我們看到所有領域都有相當大的成長，但非遊戲領域的起步較小。因此，我們實際上看到非遊戲廣告商的加速成長。

And moving on to Ross Compton with Macquarie.

並與麥格理一起轉向羅斯康普頓。

Looking at the gross margin last year, and then 4Q '22, this was 47%. And most recently in 3Q, you guys approached at 69%. I was wondering if you could expand on the processes that have kind of led us here and how we should think about this into 4Q and beyond? Is there a ceiling? Scale, of course, helps longly improve billing technology with AXON, but any kind of understanding on the operating leverage in the model would be great.

看看去年和 2022 年第四季的毛利率，為 47%。最近在第三季度，你們達到了 69%。我想知道您是否可以擴展一下引導我們走到這裡的流程，以及我們應該如何在第四季度及以後考慮這個問題？有上限嗎？當然，規模有助於長期改進 AXON 的計費技術，但對模型中營運槓桿的任何理解都會很棒。

Yes, some of the question was breaking up. But I think you're asking about the gross margin on software and just the improvement year-over-year. Is that correct?

是的，有些問題被打破了。但我認為您問的是軟體的毛利率以及同比的改善。那是對的嗎？

Yes.

是的。

Our business model on the software side, first of all, as you know, we report on a net revenue basis, so we start at that level in the P&L. And then in terms of the cost structure itself, that's directly related to software.

我們在軟體方面的商業模式，首先，如您所知，我們以淨收入為基礎進行報告，因此我們從損益表的這一水平開始。然後就成本結構本身而言，這與軟體直接相關。

A lot of it is the data center infrastructure that we talked about almost a year ago that we had a big new contract that we needed to get to initial amount of initial scale. And so we had to grow into that. I'd say now we're very much on pace if not growing through some of that contract and so fully utilizing the capacity that we've had on board. And that's why we've been able to really expand gross margin all the way through to EBITDA given a relatively fixed cost structure on the R&D front.

其中很大一部分是我們大約一年前談論的資料中心基礎設施，我們有一份大型新合同，我們需要它才能達到初始規模。所以我們必須成長為這樣的人。我想說，現在我們的步伐非常快，即使沒有透過部分合約成長，也充分利用了我們現有的能力。這就是為什麼我們能夠在研發方面相對固定的成本結構的情況下，真正將毛利率擴大到 EBITDA。

Morgan Stanley's Matt Cost has the next question.

摩根士丹利的馬特·科斯特提出了下一個問題。

I guess the first one would just be, there were some media reports in September and October of some advertisers boycotting one of your largest competitors are pulling back spend. Did you see any material impact on your business in the third quarter? Or do you expect any business -- any impact along the lines in the fourth quarter?

我想第一個就是，九月和十月有一些媒體報道稱，一些廣告商抵制你最大的競爭對手之一，正在削減支出。您認為第三季對您的業務有任何重大影響嗎？或者你預計第四季會有任何業務——任何影響嗎？

It was a little overblown in the media, pretty negligible impact. It was late September to maybe a week or 2 of noise in the market but negligible to ours.

媒體報道有點誇張，影響微乎其微。當時是九月底，市場上可能有一兩週的噪音，但對我們來說可以忽略不計。

Great. And then just on the software platform margins, 72%, a very, very strong result. I guess can you give us your latest thoughts on what the flow-through at scale potential is for that business because we're higher than we've been certainly in a while.

偉大的。然後就軟體平台的利潤率而言，為 72%，這是一個非常非常強勁的結果。我想您能否向我們提供您對該業務的大規模流通潛力的最新想法，因為我們的水平比一段時間以來的水平要高。

Yes. Good question, Matt. And again, there's -- every quarter, there's going to be some bigger reason as to if there's some fixed cost, incremental cost, step function costs, in particular, on the data center side. But we expect, as I said, R&D to be relatively stable and that software margin can grow and expand as we continue to grow app discovery in particular because that is a net revenue business.

是的。好問題，馬特。再說一次，每個季度都會有一些更大的原因，例如是否存在一些固定成本、增量成本、階梯功能成本，特別是在資料中心方面。但正如我所說，我們預計研發將相對穩定，隨著我們繼續發展應用程式發現，軟體利潤率可以成長和擴大，特別是因為這是一項淨收入業務。

Over time, looking at more of the longer run as we scale Worlds, we scale CTV -- sorry, is rescaled the OEM side on Array, we'll likely need to make some fixed investments in those businesses and hire some teams, but those are also strong margin businesses as they scale up as well, but unlikely to start as high as the contribution that we do get from app discovery.

隨著時間的推移，隨著我們擴展世界賽，我們擴展了 CTV——抱歉，在 Array 上重新擴展了 OEM 方面，我們可能需要對這些業務進行一些固定投資並僱用一些團隊，但那些隨著規模的擴大，利潤率也很高的業務，但起步時的貢獻不太可能像我們從應用程式發現中獲得的貢獻那麼高。

And our final question will come from Omar Dessouky with BofA.

我們的最後一個問題將由美國銀行的 Omar Dessouky 提出。

So you guys talked about header bidding and how Google is going to shift to header bidding demand. Shift demand 100% to header bidding. They put out a notice on their website recently that they won't be shifting entirely after October 31, but we'll do so partially and expect that transition to happen into the first quarter of next year.

你們討論了標題競價以及谷歌將如何轉向標題競價需求。將需求 100% 轉移到標頭競價。他們最近在網站上發布了通知，表示 10 月 31 日之後不會完全轉變，但我們將部分轉變，並預計轉變將在明年第一季進行。

So I think you mentioned that your mediation platform can tax the Google demand. And what I was wondering was actually, given that Google has been waterfall bidder for so long and app discovery has been a real-time bidder for so long. Does Google shift to real-time bidding actually post competition to your core business because we tended to focus on the idea that you could tax demand from Google doing real-time bidding, but what about the competitive sector of Google?

所以我想你提到你的中介平台可以對Google的需求徵稅。事實上，我想知道的是，考慮到谷歌長期以來一直是瀑布式競價者，而應用程式發現長期以來一直是即時競價者。谷歌轉向即時競價實際上是否會為您的核心業務帶來競爭，因為我們傾向於關注這樣的想法：您可以透過即時競價對Google的需求徵稅，但谷歌的競爭部門又如何呢？

Yes. So you're talking about cannibalization effect of a mediation network, one as big as Google, in particular, going to bidding. We've taken most of the market to bidding at this point, and we're already above, I think, 60% once Google goes to bidding is going to be very close to the full market tipping that way.

是的。所以你說的是中介網絡的蠶食效應，尤其是像Google這樣大的中介網絡，會參與競價。目前我們已經佔據了大部分市場的競價份額，而且我認為，一旦 Google 進行競價，我們已經超過了 60%，這將非常接近整個市場的情況。

On every network that's mediated going to bidding, share moves around only slightly and possibly the bidder gets more efficient, so it can gain share, but the overall pie grows. And so that's the whole point of the MAX platform is our objective with that platform was building an efficient marketplace where you bring these networks and put them into the most efficient way possible to serve price and serve an ad a header bidding state, and then the publisher yields more.

在每個以競價為中介的網路上，份額僅略有變動，並且競標者可能會變得更有效率，因此它可以獲得份額，但整體蛋糕會成長。因此，這就是 MAX 平台的全部要點，我們該平台的目標是建立一個高效的市場，您可以將這些網路引入其中，並以最有效的方式提供價格服務並以標頭競價狀態提供廣告，然後出版商產出更多。

The publisher yields more so they can spend more on user acquisition. We're obviously one of their main user acquisition channels, dollars go back into the ecosystem, the pie grows. And usually, all parties end up benefiting and that's the trend we've seen now for 5 to 6 years since we launched the MAX platform.

發行商的收益更高，因此他們可以在用戶獲取上投入更多資金。顯然，我們是他們主要的用戶獲取管道之一，資金回到生態系統，蛋糕就會越來越大。通常情況下，各方最終都會受益，這是我們自我們推出 MAX 平台以來 5 至 6 年來所看到的趨勢。

Okay. So if I understood correctly, then, it sounds like you're saying the benefit of Google moving to real-time bidding is to make the entire industry bigger, and that will outweigh any potential competition because you have a new technology in the market from someone other than yourself, which could potentially experience increases in ad spend.

好的。所以，如果我理解正確的話，那麼，聽起來你是在說谷歌轉向實時競價的好處是讓整個行業變得更大，這將超過任何潛在的競爭，因為你在市場上擁有一項新技術除了您自己之外的其他人，他們的廣告支出可能會增加。

Yes. Look, we never look at share. It's not a zero-sum game. You need all the marketing companies to do well. That helps the ecosystem grow, user acquisition, dollars come into the space more, eyeballs swell, consumption goes up. That's always been our formula to growth. So we look at dollars and the dollars become bigger, it benefits all parties. And that's what we see every time a network goes to bidding.

是的。看，我們從來不看份額。這不是一場零和遊戲。你需要所有的行銷公司都做得很好。這有助於生態系統的發展、用戶的獲取、更多的資金進入該領域、眼球膨脹、消費增加。這一直是我們的成長公式。所以我們關注美元，美元變得更大，這對各方都有好處。這就是我們每次網路進行競價時看到的情況。

And with that, that does conclude today's earnings. We thank you all for attending, and we look forward to seeing you next quarter. Take care until next time, you may now disconnect.

至此，今天的收益就到此結束了。我們感謝大家的出席，期待下季與您見面。下次請小心，您現在可以斷開連接。