PALO ALTO, CA - AppLovin Corp (NASDAQ:APP), a $127.8 billion market cap company specializing in computer programming and data processing services, has entered into significant financial agreements as part of its capital management strategy.
The company, which has demonstrated impressive revenue growth of 41.5% over the last twelve months, completed a public offering of $3.55 billion in senior notes and secured a new $1 billion unsecured revolving credit facility.
According to InvestingPro analysis, AppLovin's stock is currently trading near its 52-week high, with multiple indicators suggesting the stock may be overvalued.
The senior notes, due between 2029 and 2054, were offered under AppLovin's automatically effective shelf registration statement filed with the SEC. These notes carry interest rates ranging from 5.125% to 5.950% and will mature in a staggered fashion over the next 30 years.
The proceeds from this offering, after underwriting discounts and before expenses, are approximately $3.519 billion. AppLovin intends to use these funds to repay its existing senior secured term loan facilities due in 2028 and 2030.
Concurrently, AppLovin has entered into an unsecured revolving credit agreement with JPMorgan Chase (NYSE:JPM) Bank, N.A., as the administrative agent, and other financial institutions as lenders. This new credit line of $1 billion, maturing in December 2029, includes a $100 million letter of credit sublimit and an option to request an increase in commitments by up to an additional $1 billion.
The new credit facility's interest rates will vary based on U.S. dollar borrowings and the company's public debt credit rating. It also encompasses customary covenants and conditions, including a debt to EBITDA ratio that must not exceed 3.50 to 1.00, with a temporary increase to 4.00 to 1.00 permitted under certain acquisition-related circumstances. InvestingPro data shows AppLovin maintains a healthy current ratio of 2.41, with liquid assets exceeding short-term obligations, suggesting strong financial flexibility for this new debt structure.
In connection with these financial maneuvers, AppLovin has terminated its existing credit agreement dated August 15, 2018. This move effectively repaid all outstanding obligations and terminated all commitments under the previous agreement.
InvestingPro analysis indicates AppLovin maintains a GREAT overall financial health score, operating with a moderate level of debt. For deeper insights into AppLovin's financial position and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, AppLovin Corp has been the focus of several financial firms' attention, with a common trend of increased price targets and maintained positive ratings. Stifel has raised its price target for AppLovin to $435, maintaining a "Buy" rating, while Piper Sandler has maintained an "Overweight" rating with a price target of $400. Loop Capital has kept its "Buy" rating and a price target of $385, and Oppenheimer has significantly increased its price target to $480, maintaining an "Outperform" rating.
These revisions follow AppLovin's impressive third-quarter results, which showed a 39% year-over-year increase in revenue, reaching $1.2 billion. In addition, the company has announced plans to offer senior notes to repay existing senior secured term loan facilities due in 2028 and 2030. The joint book-running managers for this transaction are J.P. Morgan Securities LLC, BofA Securities, Inc., and Morgan Stanley (NYSE:MS) & Co. LLC.
AppLovin is transitioning to an all unsecured debt capital structure after acquiring investment grade ratings from S&P Global Ratings and Fitch Ratings. The company's Q4 2024 revenue is projected to be between $1.24 billion and $1.26 billion, with adjusted EBITDA expectations of $740 million to $760 million.
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