cash flow from our apps business, resulted in year-over-year
adjusted EBITDA growth of 47% to $270 million. That equates to
a 35% margin, which is the highest normalized EBITDA margin we
posted since being public.
We also introduced segment reporting this quarter, which allows us
to provide you more information regarding the progress of our
businesses. Starting with the software platform segment, we had
$318 million of revenue, which was up 118% year-over-year. We
continue to deliver highly performing solutions to our most
important customers as evidenced by our record 503 enterprise
customers with an increase in net dollar-based revenue retention of
204% on an LTM basis.
On a quarter-over-quarter basis, all of our software solutions had
some growth, except for ALX, which in the aggregate led to a
quarterly decline of minus 3%. The ALX decline was due to a
migration of DSP demand from Twitter’s platform in Q1 to our ALX
platform in Q2, which takes some time to ramp. And as Adam
mentioned, we proactively reduced the take rate from DSPs so we
could pass more dollars along to our publishers.
Importantly, from a cash flow standpoint, our software platform
adjusted EBITDA grew 114% year-over-year to $197 million,
representing a margin of 62%. While certainly a strong margin
overall, in particular relative to our peers, during the quarter we
incurred step function increases in several costs.
First, we have technology infrastructure costs that we discussed
before, including additional data center capacity to support new
publishers and demand partners onboarded from MoPub acquisition.
And headcount costs, we’re now including the team from WURL, our
recently acquired connected TV platform. For the second half of
2002 [sic], importantly, we do not foresee meaningful
increases in the software platform cost. Therefore, we expect our
software platform adjusted EBITDA margin to be between 65% and 70%
for the year, consistent with our previous range.
Regarding software revenue performance for the year, we have
confidence we will deliver against our guidance. In the second and
third quarter summer months are slower — a slower part of the year
for mobile gaming. But importantly, for our business, the primary
driver of our software platform business growth is App Discovery,
which is, of course, powered by AXON. The ability for us to more
than double revenue over the past year and more than quintuple
revenue over the past two years is largely driven by the continuous
improvements in AXON.
As we find improvements to our technology, we will realize
meaningful increases in software revenue, which will flow through
at very high margins. We do expect more of these improvements to
occur over time, which supports our outlook for this year and
Turning to the app side, as Adam described, our new approach to
managing the portfolio is to focus on optimizing the business for
financial return. Our efforts and progress are already evident in
our second quarter numbers. Our apps adjusted EBITDA increased from
$41 million in Q1 to $73 million. Margins expanded from
8% to 16%.
Our bigger-than-expected reduction in spend, in particular in user
acquisition, impacts the top line in the near term, and therefore,
we meaningfully reduced our apps revenue guidance by
$300 million for the year. By 2023, our goal is to position
the apps portfolio to have a healthy business model where we can
grow the top line and earn a solid margin.
Closing out on guidance, we did not make any other changes to
guidance, including holding the midpoint of ‘22 EBITDA at
$1.2 billion. We can do so given our high-margin software
platform business and our ability to drive higher margins now in
our apps portfolio.
Overall, we remain highly confident in the stand-alone long-term
value creation potential for our business given our top line
prospects and cash generation potential. To that end, we were able
to buy back approximately $340 million of our stock under our
$750 million buyback program at an average price of $38 per
Before we open it up for Q&A, I want to turn it back to Adam to
address the unique partnership proposal we made this week to the
Adam Foroughi, Chief Executive Officer