Ryan Packard pitches AppLovin at Sohn 2026

Please welcome Ryan Packard, managing partner and CIO, Hidden Night Capital Partners.

Good afternoon, everyone. I'm Ryan Packard, the founder of Hidden Night Capital. I'm excited to be returning to the Sohn stage to share with you one of our favorite portfolio investments.

1. The Allocator Advantage

We at Hidden Night spend our time trying to find great businesses that will compound capital consistently over long periods of time. Last year, I spoke about one of our favorite places to hunt, both long and short: companies that we call asset-advantaged acquirers, or AAA for short. This year, you'll notice we've modified the acronym to allocators in place of acquirers. We believe that we're in a generational moment for extraordinary growth among the asset-advantaged allocators, whether it be in M&A or organic growth.

We also believe that the opportunity to harness AI growth and AI operating efficiencies plays no small part in this generational moment. When we look at possible AAA companies, we think the 2 most important metrics to focus on are consistent returns on invested capital and the ability to redeploy that capital. Over the last 10 years, 3 of our favorite companies that fit the AAA construct were Broadcom, Constellation Software, and TransDigm. Last year, we added Comfort Systems to that list on the stage here at Sohn.

As you can see from the numbers, these 4 companies have been able to redeploy most of their operating capital through M&A and equity. Importantly, when they deploy it, it is at a consistently above-market rate of return. I'm here today to tell you about a fifth company that we think belongs on this storied list. The name of that company is AppLovin Corporation.

2. AppLovin's Adtech Engine

AppLovin is a $150 billion market-cap company and the largest mobile advertising technology company in the world today. Founded by CEO Adam Foroughi in 2012, AppLovin went public in 2021. At its core, AppLovin is an AI-powered, performance-based advertising technology company. It helps businesses find and reach their ideal customers at scale across mobile apps and the web.

Think of it as the engine behind the ads that you see on your phone. AppLovin sits between advertisers who want to reach customers and app publishers who want to monetize their audiences. AppLovin provides performance-based advertising where return can be accurately measured, creating a virtuous loop where customer ad spend leads to a customer growing their own revenue, which leads to them spending more with AppLovin. It operates as both a demand-side platform for advertisers and a supply-side platform for publishers, effectively running the marketplace in between.

3. AXON Drives Efficiency

AppLovin's proprietary AI engine, called AXON, is the core technology. It determines which ad to show which user, when, and at what price, driving massive efficiency gains for advertisers. In 2025, AppLovin generated approximately $5.5 billion of revenue and nearly $4 billion in free cash flow, an extraordinary free-cash-flow margin for a company of its size. As you can see from the slide behind me, no company in the S&P has grown faster than AppLovin over the last 5 years.

4. E-Commerce Expands the Market

We have high conviction that AppLovin's growth prospects from here are maintained. AppLovin's growth over the last 5 years was primarily within its original mobile gaming vertical. Last year, AppLovin entered the e-commerce ad market, dramatically increasing its total available market. In the next 3 months, we will start to see the e-commerce vertical hit its stride as it becomes generally available for the first time.

5. Profitability Strengthens the Thesis

We believe tremendous growth is ahead for AppLovin, and in keeping with AppLovin's track record as an asset-advantaged allocator, we believe AppLovin will skillfully focus its resources on the opportunity ahead. While AppLovin's growth outlook alone makes for a compelling investment thesis, what really distinguishes AppLovin for us is the combination of AppLovin's growth profile and its consistently profitable operating model.

Amid a sector that often values growth over profitability, AppLovin stands apart as an extraordinary grower that's been profitable since inception. In the slide behind me, we've highlighted the most profitable operating companies in the S&P. Like in the slide before, AppLovin leads the pack, driven by exceptional operating efficiency, which is underpinned by AI efficiencies—something that AppLovin's founder and CEO, Adam Foroughi, speaks passionately about maintaining and increasing.

6. The Stock Could Double

Based on our projections, we believe AppLovin can grow its revenue in excess of 25% for the foreseeable future, which will lead to even greater EPS growth. If they do that, we think the stock will double over the next 3 years. 2030 GAAP EPS of $50 times 20 times earnings is $1,000, or a little bit more than a 100% upside from where it is currently trading.

7. The Trillion Dollar Path

In closing, AppLovin is a triple-A company with a leading track record in capital allocation and differentiated operating execution. AppLovin has been an excellent capital allocator since inception. Cumulatively, from inception to 2024, along the way they reinvested 100% of free cash flow in M&A, all the while maintaining a greater than 25% pre-tax ROIC—a rare feat for any company.

And yet, AppLovin's market share today represents a small fraction of its addressable market. We believe that AppLovin will continue to be a share gainer in one of the largest global TAMs, underpinning immense scalability, returns on incremental invested capital, and further expansion opportunities. We believe that AppLovin is on track to eventually grow to become a trillion-dollar company.

Let's put it into perspective with a historical analog. In 2009, Meta generated $500 million of revenue for the first time. It took Meta 5 years to grow from $500 million in revenue to $10 billion. After it hit $10 billion, within 7 years it was a trillion-dollar market cap.

Based on our forecast, AppLovin will grow from $500 million revenue in 2021 to $10 billion in run-rate revenue in the next 12 months. We believe that AppLovin is on a similar trajectory to be valued at a trillion dollars in market cap in the next 7 years or less.

Led by a prescient founder and CEO who is committed to maintaining profitable growth, AppLovin will both harness AI-fueled top-line growth and AI-fueled bottom-line efficiencies, making it, in our opinion, the most pure-play adtech company and AI-generative software play in the market today. Thank you.