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AppLovin to Exclude Inconsistent Spenders in New Key Metric Calculation
The app development platform will only count customers meeting a minimum spend threshold in a new key metric calculation.
May 16, 2022
AppLovin (APP), a mobile application developer platform, wants to be judged largely on what it calls Revenue Per Software Platform Enterprise Client (SPEC). The metric is calculated as the total revenue derived from Software Platform Enterprise Clients in a three-month period divided by Software Platform Enterprise Clients as of the end of that same period. The company says Revenue per SPEC shows how efficiently it’s monetizing each SPEC.
AppLovin recently disclosed it will now exclude certain SPECs from its calculation that do not meet a certain spending threshold.
Beginning in the second quarter 2022, the revenue measurement period used to determine the number of SPECs in a period will be updated to include only clients from whom AppLovin has collected greater than $125,000 in Software Platform revenue over the trailing 12 months. Currently, AppLovin’s definition of SPEC includes third-party clients who had more than $31,250 in Software Platform revenue for the prior three months.
The company says the change will help investors better gauge the scale and growth of its more mature clients.
In its latest quarterly filing, AppLovin’s new calculation resulted in Revenue per SPEC growing 10.16% to approximately $1.7 million in the 12-months ended March 31, 2022.
Similarly, the change will also be used to calculate Net Dollar-Based Revenue Retention (NDBRR) when AppLovin provides it.
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