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 日的第三季 AppLovin 收益電話會議。我是投資者關係主管 David Hsiao。今天與我一起討論我們的成果的有我們的共同創辦人、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，我們迄今向美國證券交易委員會提交的文件以及討論第三季業績的股東信函和新聞稿均可在 investor.applovin.com 上查閱。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、我們的財務長過渡、公司未來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它們的責任。我們的實際結果可能與預測的結果有重大差異。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 10-Q 表以及我們預計將於今天晚些時候提交的第三季度 10-Q 表中的風險因素。

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。這些非公認會計準則指標並非旨在取代或優於我們的公認會計準則結果。請務必查看我們投資者關係網站上的股東信中我們 GAAP 和非 GAAP 財務指標的對帳表。

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音，重播將在我們的 IR 網站上提供。現在我將把時間交給亞當和赫拉爾德來致一些開場白，然後主持人將帶領我們進行問答。

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。我們的團隊表現十分出色。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，該技術再次推動收入和調整後 EBITDA 超出我們的預期。

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.

我想花點時間讚揚我們傑出的團隊的奉獻和努力。一年前，我們面臨重大挑戰，但我們的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，也為長期持續擴張奠定了基礎。

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 計劃中取得了進展，我們計劃在接下來的幾個季度繼續擴大這些努力。

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領域，我們看到了透過卓越的績效解決方案填補電視空白的巨大機會。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大該業務的潛力。

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.

考慮到我們的軟體平台業務的規模，我們正在投資我們的 CTV 和 Array 業務，因為我們相信它們有潛力成為我們年收入的有意義的貢獻者。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、我們技術創新的潛力、我們產品的品質以及我們財務狀況的實力充滿信心。當我們踏上充滿成長和不斷創新的旅程的下一篇章時，我們感謝您的信任和支持。

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.

最後，我想對 Herald 在過去 4 年擔任財務長期間做出的諸多貢獻表示感謝。 Herald 致力於在支援和營運功能方面奠定堅實的基礎，這一目標已經實現，為我們走上了卓越營運的道路。隨著我們逐漸為他的團隊提供更多機會，Herald 將繼續以新的顧問角色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.

現在我將請《先驅報》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，謝謝你的好意。正如亞當所討論的，全面強有力的執行帶來了上個季度的出色財務表現。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，其中軟體平台年增 65%，達到 20 億美元的營運率。自從我們啟動投資組合優化計劃以來，應用程式業務首次實現季度環比收入成長。

In total, [we] 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，[我們]創造了 8.64 億美元的收入，年增 21%，調整後的 EBITDA 為 4.9 億美元，年成長 63%，均超過了我們預期的最高水準。鑑於利潤率更高以及軟體平台業務貢獻更大，總調整後 EBITDA 利潤率達到 5 年來的最高水平，為 48.5%，環比增長超過 400 個基點，而 2023 年第一季較第二季度增長 600 個基點。值得注意的是，過去一個季度確實受益於一次性非經常性成本效益帶來的約 100 個基點的成長。

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.

談到我們的分部報告。我們很高興看到我們的軟體平台和人工智慧驅動的技術幫助我們的廣告合作夥伴擴大覆蓋範圍，獲得更好的投資回報並增加他們在我們的支出。軟體平台營收達到創紀錄的5.04億美元，較上年同期成長65%，季增24%，這是連續第三個季度實現環比兩位數的營收成長。軟體平台調整後的 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.

隨著規模的擴大，我們的軟體平台持續展現出從營收到調整後 EBITDA 的高流通性。鑑於其現金流產生的非凡增長，軟體平台調整後的 EBITDA 現在占我們公司總調整後 EBITDA 的近 90%。正如亞當所提到的，我們為我們的軟體平台團隊迄今為止的辛勤工作和取得的成就感到非常自豪，但我們對這項業務的未來發展更為興奮，無論是在我們的核心市場還是在我們與 Wurl 和 Array 一起推行的新計劃中。

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.

談到應用程式部分，應用程式收入環比增長 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個季度增長。 Apps 調整後的 EBITDA 為 5,500 萬美元，利潤率為 15%。隨著我們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表現和企業價值。

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.

就自由現金流而言，我們在第三季產生了 1.94 億美元。第三季調整後的 EBITDA 流向自由現金流的幅度略低於正常水平，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那樣，調整後的 EBITDA 與自由現金流的比率通常為 50% 到 60%（以正常的運行率計算），但需要注意的是，由於納稅時間和營運資本變動的時間因素，我們通常會在任何特定季度出現一些偏差。隨著我們的高現金流轉換軟體平台業務繼續以比應用程式更快的速度成長，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 年第四季的指引，我們的目標是再實現一個季度的成長，營收在 9.1 億美元至 9.3 億美元之間，調整後的 EBITDA 在 4.2 億美元至 4.4 億美元之間，利潤率在 46% 至 47% 之間。由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的進一步投資潛力，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，我們第三季末的資產負債表中有 3.32 億美元現金。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。這筆款項被循環信貸提取的1.85億美元所抵銷。

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。年初至今，截至第三季末，我們已以每股低於 25 美元的加權平均價格回購了 12 億美元的 A 類普通股。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 to $249 million and improving our credit spread.

在債務方面，在第三季度，我們修改了部分定期貸款，將期限延長至 2030 年，將本金減少 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.

就我們的董事會而言，我們很高興在本季度增加了 Todd Morgenfeld，他是一位經驗豐富的高管，最近擔任 Pinterest 的首席財務官，之前擔任 Twitter 的財務副總裁。同時，Instacart 營運長阿莎夏爾馬 (Asha Sharma) 辭去董事會職務。整體而言，我們第三季的強勁業績彰顯了我們軟體平台業務的實力和強大的商業模式。

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，這樣我就可以抽出一些時間並尋找新的機會。作為執行長顧問的新角色，我非常期待與亞當和團隊在關鍵的策略和財務問題上合作。此外，我將繼續在 AppLovin 董事會任職。

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.

過去四年來，我很榮幸能夠擔任 AppLovin 總裁兼財務官，特別是能夠幫助建立並與這個真正傑出的管理團隊合作。到了一月份，我很高興 [Matt 和 Dimitri] 能夠走上他們當之無愧的新領導職位。根據他們的業績和過去的貢獻，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，在亞當的領導下，公司實現了巨大的成長，收入成長了 6 倍多，調整後的 EBITDA 從幾億美元的運作率增加到今天的 16 億美元以上。儘管道路並不總是一帆風順，也並非一帆風順，但團隊始終堅定不移，憑藉專業知識執行，取得了出色的業績。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，他們一路支持我們。

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.

我確實這麼說是因為 AppLovin 面前的機會非常棒，我非常期待在新的職位上成為其中的一員。現在主持人將帶領我們進行問答。

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

（操作員指示）我們的第一個問題來自 William Blair 的 Ralph Schackart。

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.

第一個問題是關於本季的超額表現。也許您可以談談 EXON 2 的坡道進展比您最初預期的要好。也許您可以談談歷史上您談到的超出遊戲範圍的領域，也許談談它在其他垂直領域的表現？然後我還有一個後續問題。

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.

我們談到上個季度，AXON 2 已於上一季部分推出。這是一項全新的技術，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，不斷自我提升。然後我們的團隊也能夠不斷改進它們。因此，我們正在談論一種我們已經看到的新技術，它已經改變了我們的業務，並且仍在第一局。這讓我們非常興奮。

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.

該技術的產出為廣告商帶來了更好的效果。我們已經看到，對於您關於遊戲或非遊戲的問題，我們發現它與類別無關。我們平台上的廣告商正在以實質的方式投入更多資金，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額的原因。無論是在非遊戲領域還是在遊戲領域，它都運作得更好。

And then during the prepared remarks, Adam 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，亞當談到了將 EXON 2 擴展到聯網電視業務和陣列，然後在某個時候為結果做出貢獻。您認為什麼時候它才能開始對整體企業績效產生貢獻？

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？已經過去大約 1.5 年了。 World 團隊進行了整合，他們在聯網電視上打造了非常好的產品，其中一部分是 [SSP]，因此，現在 World 平台上有大量庫存可供我們進入並使用我們的績效行銷模式進行購買。

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. 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.

在上次財報電話會議上，我們談到我們將開始將 AXON 2 遷移到連網電視產品。我們已經進入測試階段。當我們開始擴展它時，我們對該平台的潛力感到非常興奮。顯然，這是電視，而且我們都知道，電視上的效果行銷實際上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，能夠擴展到該平台代表著一個巨大的機會。

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.

Array 也是一樣，它讓我們能夠以更親密的方式在 Android 裝置上使用。它向消費者提供了多種新的廣告產品，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以及兩者的前景。

Our next question will come from Clark Lampen with BTIG.

我們的下一個問題來自 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，我希望我們能夠稍微解釋一下我們在軟體收入中看到的連續成長。您在準備好的發言開頭就提到它是 AXON 2 的證明。這是推動我們實現 5 億美元增幅的關鍵因素嗎？或者有其他企業如 World 或 MAX 也做出了貢獻？

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，這是 AXON 2 的絕大部分。它為 App Discovery 平台或廣告業務提供支持，這已經是軟體平台的絕大部分，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。當我們查看前瞻性指引時，我猜如果你假設只是為了討論而假設應用程式業務運作平穩。我們看到第四季軟體收入成長了 9% 到 13%。這是否仍將主要由應用程式發現、AXON 等您過去談到的改進的複合效應所推動？

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，自從我們啟動投資組合優化計劃以來，我們的應用程式已經實現了第一個季度的成長，並且實現了季度環比增長。但顯然，如果我們能夠將翻譯業務成長至 EBITDA，那麼絕大多數成長仍將留在軟體方面以及翻譯方面。

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.

正如我們所提到的，EBITDA，第三季有一些一次性項目將在第四季度出現。在第四季度，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?

我馬上就走，但本季你們是否也從非遊戲客戶那裡看到了任何成長？或者說，我們看到的改進大部分主要是由你們這類核心遊戲開發者推動的？

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，我們看到的是成本上的成功，無論是遊戲還是非遊戲。顯然，遊戲是我們業務中更重要的一部分。非博彩業的成長速度較快，因為起步數量明顯較少。需要加強銷售力度來大幅發展非博彩業務，以便使其成為業務中更重要的一部分，但無論經銷商使用何種類型的應用程序，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?

只是非常簡短地問一個高級問題。 AXON 2相比競品優勢有多大？這種狀況會持續多久才會被競爭對手追上？那麼接下來，我們該如何考慮新作品發布的節奏呢？這對你們來說意味著什麼？那我們什麼時候可以期待 AXON 3 呢？廣告市場在隱私方面的新要求和變化在多大程度上推動了新發布的需求，而不是競爭對手改善與你的競爭地位？

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 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.

這其中存在著一系列的問題。你看，這些技術超複雜。我們認為，我們的解決方案是尖端的，並且是市場上所有人工智慧實施中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，並且獲得了大量的數據。

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，這些系統本身就具有自學習能力。我們會持續定期、持續改進現有的產品。因此，這並不是我們期待競爭對手趕上來的事情。我們看到—我們已經設定了一個新標準，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。導致AXON平台三年變革的隱私問題。

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.

你看，我們可能從 2014 年就開始處理隱私變化了。每次平台或監管機構發生變化，你的庫存就會發生改變，但我們是一家靈活的公司，多年來我們多次重寫了我們的核心技術，面對任何此類變化，我們總是能夠適應並表現出色。

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透露了 AXON 2。顯然，我們在整合這些方面做得非常出色。我們不是在談論 AXON 3。我們在談論的是我們在這裡匯總的多個季度的成長所帶來的興奮。

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

現在我們來聽聽 D.A. 的 Franco Granda 的發言。戴維森。

I had a question around the investments on CTV and OEM. Obviously, last year, you put those investments in [post] 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?

我對 CTV 和 OEM 的投資有疑問。顯然，去年你把這些投資投入到了 Essentials 上，而這些領域受到了影響。但是，既然您現在計劃將 AXON 實施到這些類別中，您能否評論一下這項投資的規模以及我們應該如何考慮未來的發展？

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，我認為我們從來沒有暫停過它們。自從我們收購 World 和 Array 以來，我們一直在談論 CTV。我想，我們幾年前就已經推出了，我們已經向大家表明，這些是我們真正興奮的幾個成長載體。

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，我們的軟體業務規模非常大。我們每年的營業額是 20 億美元。因此，要從一項新舉措中獲得數字和規模，並對這些數字進行真正的大規模評估，需要一段時間。但我們對 CTV 和 Array 感到非常興奮。這兩家公司的基礎都已經建立。透過採用這項市場領先的技術，並將其應用於實際，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，根據本季的應用業務成長情況，有多少成長來自於與 Axon 的整合以及利用該技術實現 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。顯然，我們是自己系統的大客戶。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，我們預計將在第四季度繼續這樣做。所以這是成長的一大動力。

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與遊戲份額的問題。您能先談談非遊戲應用的收入貢獻的整體趨勢嗎？那麼 AXON 2 對非遊戲收入份額轉移到軟體平台的關係是否有幫助呢？

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。我們沒有詳細計算百分比，但我們說過我們的大部分業務是遊戲。然後我提到，這項技術對於任何類型的廣告商、所有類別的行動應用程式都非常有效。因此，我們看到整體上出現了相當大的成長，但非遊戲產業的起步規模較小。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.

然後與麥格理一起前往羅斯康普頓。

Looking at the gross margin last year, and then for [Q2] '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.

看看去年的毛利率，然後查看 22 年第二季的毛利率，數字為 47%。最近在第三季度，你們的比例達到了 69%。我想知道您是否可以詳細說明我們走到這一步的流程，以及我們應該如何看待第四季及以後的情況？有上限嗎？當然，規模有助於 AXON 的（長期改進計費）技術，但對模型中的營運槓桿的任何理解都是有益的。

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，部分問題已經破裂。但我認為您詢問的是軟體的毛利率以及同比增長情況。那正確嗎？

Yes.

是的。

Our business [won] 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.

我們的業務在軟體方面取得了勝利，首先，如您所知，我們以淨收入為基礎進行報告，因此我們從損益表中的這個水平開始。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.

其中很多是我們大約一年前談論的數據中心基礎設施，我們有一個很大的新合同，需要達到初始規模。所以我們必須成長為那樣的人。我想說，現在我們的進度非常順利，即使沒有透過部分合約成長，也充分利用了我們現有的產能。這就是為什麼在研發方面成本結構相對固定的情況下，我們能夠真正將毛利率擴大至 EBITDA。

Morgan Stanley's Matt Cost has the next question.

摩根士丹利的馬特·科斯特 (Matt Cost) 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?

我想第一個問題就是，9 月和 10 月有媒體報道稱，一些廣告商抵制你們最大的競爭對手之一，並減少了廣告支出。您認為第三季的業務受到什麼重大影響嗎？或者您預計第四季會產生任何業務影響嗎？

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.

媒體對此有點誇大其詞，影響相當小。那是九月下旬，市場大概出現了一兩週的噪音，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。然後僅就軟體平台利潤率而言，就達到 72%，這是一個非常非常強勁的成績。我想您能否向我們提供您對該業務的規模流通潛力的最新想法，因為我們的規模流通潛力肯定比一段時間內更高。

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。問得好，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、階梯式成本，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，並且隨著我們繼續發展應用程式發現，軟體利潤率也將成長和擴大，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，從長遠來看，隨著我們擴大 Worlds，我們擴大 CTV——抱歉，是重新調整 Array 上的 OEM 方面的規模，我們可能需要對這些業務進行一些固定投資並聘請一些團隊，但隨著它們的擴大，這些也是利潤豐厚的業務，但不太可能像我們從應用程式發現中獲得的貢獻那樣高。

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

我們的最後一個問題來自美國銀行的 Omar Dessouky。

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.

所以你們談到了標頭競價以及谷歌將如何轉向標頭競價需求。將需求 100% 轉移到標頭競價。他們最近在網站上發布通知稱，他們不會在 10 月 31 日之後全面轉移，但我們將部分轉移，預計轉移將在明年第一季發生。

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?

所以我認為你提到你的調解平台可以對谷歌的需求徵稅。我實際上想知道的是，鑑於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。谷歌轉向即時競價是否實際上會為你的核心業務帶來競爭，因為我們傾向於關注你可以從谷歌的即時競價中徵稅的想法，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。所以你談論的是中介網絡的蠶食效應，特別是像谷歌這樣大的網絡，進行競標。目前，我們已經將大部分市場納入競標範圍，我認為，我們的份額已經超過了 60%，一旦谷歌開始競標，這將非常接近整個市場的傾向。

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.

在每個透過中介進行競價的網路上，份額僅會發生輕微變動，並且競標者可能會變得更有效率，因此可以獲得份額，但整體份額會成長。這就是 MAX 平台的全部意義所在，我們的目標是透過該平台建立一個高效的市場，在這個市場中，您可以將這些網路以最高效的方式整合在一起，以提供價格和標頭競價狀態下的廣告，然後發布商可以獲得更多收益。

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.

出版商的收益更高，因此他們可以投入更多資金來獲取用戶。我們顯然是他們的主要用戶獲取管道之一，資金重新回到了生態系統，蛋糕也越來越大。通常情況下，各方最終都會受益，這也是我們推出 MAX 平台五、六年來所看到的趨勢。

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，聽起來你的意思是，Google轉向即時競價的好處是讓整個行業變得更大，而這將超過任何潛在的競爭，因為你在市場上擁有來自其他人的新技術，這可能會增加廣告支出。

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。你看，我們從不看份額。這不是一場零和遊戲。你需要所有行銷公司一起努力才能做好。這有助於生態系統的發展、用戶獲取、更多資金進入該領域、吸引更多眼球、促進消費。這一直是我們成長的秘訣。因此，我們看美元，美元變得更大，這對各方都有好處。每當網路進行競標時，我們都會見到這種情況。

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.

今天的收益報告到此結束。我們感謝大家的參加，並期待下個季度再見你們。請小心，直到下次，您現在可以斷開連接。