Adam Foroughi, AppLovin

**David Senra** (0:02)
Tell me about these billions of dollars of stock buybacks you did.

**Adam Foroughi** (0:05)
So let me give you a little bit of context on when we went public and why this became a pretty big opportunity. We went public in COVID in April 2021
Company was worth about $28 billion, went up to $40 billion for six months. We're all excited. Stock goes down from there literally every day for all of 22 We got to a floor of I think like $3.8 billion.
We went from $115 a share to $9 a share. So you're running a business and the whole world is telling you your business is trash. Like what do you do? At the same time, interestingly, we went out with $700 million of EBITDA in 21 We did a billion dollars plus of EBITDA in 22 So like fast growth, executing on the business, yet public market investors were telling us business is terrible and it was what it was.

**David Senra** (0:51)
Why did they think the business was terrible?

**Adam Foroughi** (0:53)
It is a tough space to understand. First of all, like we're in advertising and we're in gaming those are two tough places to be in the public markets. The other challenge was that we went out in COVID and there were just way too many IPOs. And once you learn the public markets, which I've learned a lot more as we've been public for now four years, you need really big investors to start buying shares in companies early on because you have your private company investors trying to sell shares. So on the one hand, you have this imbalance, you've got a flood of shares that are going to come to the market. And with all the COVID IPOs, the big funds, the companies like Fidelity, BlackRock, et cetera, they weren't doing as much research on any new IPO because they couldn't tell the difference. There was just too much hitting the market. So we ended up with a cap table that didn't have support. And then shares started selling in the market, stock crumbles.
You start going down every day, people look at the company and go, this company is something wrong with this company. Like what's happening? And it's really hard to look past the stock pricing, let me look at the fundamentals and try to assess what's going on. And you're out there, it's like catching a falling knife. Like what do you do as an investor? So we were thrown out.
It's easy to go, like we're down 92%, hang it up, like what are we going to do? Start getting reactive, defensive.
Instead of that, what we ended up doing was going two things. One is the whole world doesn't like our shares. So if no one's going to buy our shares, why don't we just start buying our own shares? And so we kicked off a really successful buyback. The company at the bottom was worth $3.8 billion market cap, and we were generating over a billion dollars of EBITDA. So you think about the cash flow to market cap, it was about one fifth that we were generating every single year. Well, in theory, we could buy back 20% of the shares of the company just in the next year, if we really believed in the path we were on. So we kicked that off, but we did it a little bit differently than what most companies do. Most companies go out and say, I'm going to buy shares from the public markets and just take shares back. But you don't know who's on the other side of that trade. On the other hand, we knew that we had a cap table where about 50% of the shares were going to sell at some point over the coming years. We had private equity investors that owned roughly 50% of the shares of the company alongside some other founders that were no longer there. So instead of going to the public, we went to the shareholders that we knew were going to sell and got them to agree to sell back to us over time. And so for the following 18 months, we ended up deploying somewhere around $6 billion of buybacks of our own capital. And we levered some to buy back shares in the company. And over time that ended up creating somewhere in the neighborhood of $50, $60 billion of actual proceeds from the buyback, one of the more successful buybacks in the history of companies.

**David Senra** (3:29)
You bought back around $6 billion. You made about $60 billion on that $6 billion. Where did you get that? You said some of it came from earnings of the company, and then you went and...