AppLovin (APP -1.77%) shareholders lost ground to the market on Thursday as the stock plunged by as much as 15% before settling down 7% by noon ET.
The mobile platform developer reported fiscal fourth-quarter results that received a mixed reception from investors.
The company said late on Wednesday that sales jumped 56% overall and grew 25% on an organic basis in the period that ended in late December. Those numbers represented a slowdown from the 90% and 58% gains the company reported, respectively, in the previous quarter. Most investors were expecting a more modest deceleration as several pandemic-related tailwinds lessened.
AppLovin notched several operating and financial wins in Q4, though, including by diversifying deeper into the business-to-business space. The company's core consumer-focused segment, which relies heavily on digital advertising, grew 31% in Q4 and roughly doubled for the full 2021 year. "More advertisers and developers than ever are leveraging our platform to help grow their businesses," CEO Adam Foroughi said in a press release.
Investors weren't thrilled with the details of AppLovin's 2022 outlook. Executives are bullish about their software platform, which should double in size this year to over $1.3 billion in sales. But the core app business will see much more modest gains, in part thanks to privacy changes that Apple and other tech giants are making to their mobile operating systems. AppLovin overall is targeting sales gains of between 27% and 38% this year compared to last year's 92% surge.
The midpoint of that outlook is below the growth rate that most investors were hoping to see in 2022, and that gap helps explain why shares fell following the announcement. Yet investors have to be happy to see AppLovin diversifying its business away from digital advertising while finding ways to keep the wider sales footprint growing at more than 20%.