Why Liftoff Mobile Stock Soared 30% on Friday
Key Points
Liftoff Mobile is growing quickly and gushing cash.
The in-app ad market is set to exceed $130 billion by the end of the decade.
- Motley Fool Issues Rare "Total Conviction" Buy Alert ›
Shares of Liftoff Mobile (Nasdaq: LFTO) popped more than 30% on Friday after the performance marketing platform for the mobile app industry reported earnings that were well above investors' expectations.
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Accelerating the growth of the app economy
Liftoff's core advertising revenue jumped 33% year over year to $237 million in the third quarter.
The digital monetization specialist's artificial intelligence (AI)-powered platform, Cortex, helps app makers attract users and generate more advertising revenue.
"We saw strength across key app categories, as better performance for our customers drove more investment in our platform," CEO Jeremy Bondy said.
All told, Liftoff's net income improved to $87 million, or $0.47 per share, from a loss of $6 million in the year-ago quarter. That crushed Wall Street's estimates, which had called for per-share profits of $0.18.
Liftoff's capital-light business model also continues to crank out cash. Trailing 12-month operating and free cash flow climbed 107% and 158%, respectively, to $303 million and $249 million.
A long runway for further expansion
During a conference call with analysts, Bondy noted that the third-party in-app advertising market is forecasted to grow by 11% annually to $136 billion by 2030.
"And this is a marketplace that is structurally undermonetized, with third-party in-app advertising spend estimated at roughly one-sixth of TV on a per-user-hour basis," Bondy said. "Perhaps put more simply: attention has already moved into apps. Ad dollars are still catching up."
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Most investors think they missed the AI boat because they didn't buy Nvidia in 2005.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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