Pattern Recognition: Entravision (EVC) & Applovin (APP)
Pattern recognition is a powerful investing tool.
In June 2024, I bought Applovin (APP). I wrote up it as my first “Who Am I?” write up here on substack (link: here). 12 months later, the gaming division sale had been announced, the eye watering adtech growth and margin expansion persisted, so earnings doubled, the multiple trebled and the stock was a 6 bagger.
Entravision today (EVC at $3) reminds me a lot of Applovin in June 2024.
This write up provides my perspective on the Entravision investment case, focusing on topics that I haven’t seen addressed already: namely the similarities vs Applovin 2 years ago; the potential forward revenue and earnings trajectory of adtech; and details about the competitors that are expected to IPO this year. If you are looking for the background on the company, you should first read one of the deep dives already published, such as: OracleofOlso (free) / Jakub (paywall) / David (paywall).
Similarities between EVC today and APP in June 2024
1) Adtech share of revenue and profits over TTM:
APP in June 2024: 70% and 90%
EVC today: 60% and 120%
2) Average Sequential adtech growth over the last 8 quarters and YoY growth.
APP: 12%
EVC: 16%
3) Accelerating YoY growth over last 8 quarters
APP: 18%, 25%, 27%, 25%, 28%, 65%, 90%, 91%.
EVC: 21%, 36%, 30%, 49%, 57%, 66%, 104%, 123%
4) Adtech margin expansion:
APP: EBITDA: 62% in Q1 2023 to 73% in Q1 2024
EVC: EBIT: 5.5% in Q4 2024 to 13.9% in Q4 2025.
5) Good-co / Bad-co with separation intent
APP: adtech division financials (growth & margins) were obscured at the group level by a declining and low margin gaming division. Management intended to sell the gaming division
EVC: adtech division financials (growth & margins) are obscured at the group level by a declining and cyclical broadcasting division. Management are receptive to a separation, but timing isn’t imminent.
6) Growth tailwinds:
APP: AI model improvements, and e-commerce
EVC: AI model improvements, and penetrating the US
7) Management compensation / alignment:
APP: 14 months back (March 2023), significant off-cycle PSU grants to the CEO & CTO just before adtech growth accelerated materially
EVC: 14 month back (January 2025), the CEO took a c.50% salary cut to be paid more in long term equity grants as adtech growth acceleration started. CEO also has 1m PSUs, expiring on 1st July 2028, with share price triggers at increments between $5.75 and $13.75, +100% to +400% from today’s $3 share price.
8) Shareholder returns:
APP: Commitment to share buybacks
EVC: Commitment to dividends (7% yield)
9) key investor concerns:
APP: Dependency on gaming clients, privacy rules changes, cautious/uncertain about the sustainable growth rate. Timing of gaming sale.
EVC: Dependency on gaming clients, privacy rules changes, cautious/uncertain about the sustainable growth rate. Timing of break up. Customer concentration.
10) Valuation:
APP: Growth stock on a value multiple. On sale for 11x my FCF per share forecast 1 year out (2025).
EVC: Growth stock on a value multiple. On sale for potentially a mid-single digit FCF multiple 1-2 year out (2027-2028).
Competitors
The lionshare of EVC’s adtech revenues are from Smadex. Smadex is an AI-powered mobile focused, Demand Side Platform (DSP) that helps advertisers acquire, retain and re-engage users through programmatic advertising. Its closest competitors are: Applovin, Moloco, Liftoff. While EVC is currently delivering the fastest growth and has more margin upside, the competitors are larger, with stronger margins.
After a 37% correction, APP trades on 22x 2027 FCF. Applovin is best in class, continuing to deliver c.70% growth with over 80% EBITDA margins.
Moloco is planning an IPO, selecting JPM & GS to lead the process. Its latest reported private valuation, from June 2023, was $2bn, when they were expected to deliver slightly over $300m of revenue. So last mark was 6.5x sales.
Liftoff has filed its S1. Its 2025 are revenues are to be c.$650-700m, core advertising is growing 43%, and EBITDA margins are 54%. It has averaged 9% sequential growth in the trailing 8 quarters. IPO plans are paused, given recent market volatility and de-rating in its closest comp (Applovin), but it was targeting a c.$5bn market cap and c.$6bn enterprise value. So 16x 2025 EV/EBITDA and 9x EV/sales.
When Moloco & Liftoff are listed, there will be more comps and a wider audience of public market investors looking at this competitive landscape. An adtech spin off would be a powerful catalyst for EVC, but even in its current structure EVC has morphed into an high growth adtech company, with some legacy broadcasting assets attached.
Broadcasting
I don’t love the broadcasting as a business, it’s structurally in decline, and profitability oscilates depending on the election cycle (e.g. Midterms in 2026 / Presidential election in 2028). Additionally the distribution agreement with Univision, expires at the end of this year so extending it on satisfactory commercial terms is a lingering left tail risk. Nonetheless these assets generate FCF over a 4 year election cycle, and with massive embedded that can be unlocked. There are significant regulatory tailwinds for broadcasters today, which is spurring a wave of synergy rich consolidation. While timing is uncertain, spectrum repurposing and auctions seem like a matter of when not if, given commentary and actions to date from Brendan Carr at the FCC, since he took office. Echostar (SATS) stock was +400% in 2025 because they monetised a portion of their spectrum at prices significantly higher pricing levels than historically. Critically this was an outcome that Carr agitated for. EVC Management have indicated that monetising their spectrum at 2017 auction prices would yield over $1bn.
Forecasting Adtech
Adtech ís notoriously difficult to model with confidence. It’s why the market is hesitant to extrapolate and pay up for growth. But that hesitancy presents opportunities. EVC added $42m (+42%) and $128m (+90%) of incremental adtech revenue in 2024 and 2025 respectively. Of the $128m of incremental adtech revenue added in 2025, $40m came from one large new client, accounting for 15% of FY 2025 adtech revenue. Excluding the large new client , 2025 incremental revenues were $88m, +62% YoY. Incremental margins were 20% in 2025, which was a heavy year for adtech opex investment. Gross margins have been consistently just under 40% and management have signalled they should expand from here. Combined with opex leverage I’d expect adtech’s incremental operating margins improve.
My “conservative case”: adtech grows by $42m per year (same as 2024 / a third of 2025 / half of 2025 excluding the large new client), with 20% incremental operating margins (same as 2025).
My “base case”: adtech grows by $88m per year (2025 incremental revenues excluding the large new client or the average of 2024 and 2025 incremental revenues), with 25% incremental operating margins. 2025 revenues would double in 2028, translating to a c25% 3 year revenue CAGR, implying growing in line with the market and a marked deceleration from 42% growth in 2024, 90% in 2025 (or 62% excluding the impact of the large new client).
My “bull case”: that adtech grows by $128m per year (same as 2025), with 30% incremental operating margins.
Historics:
2024: $143m, 42% growth, $8m EBIT, 5.6% margin
2025: $271m, 90% growth, $34m EBIT, 12.5% margin
Conservative case: $42m revenue growth per year, 20% incremental margins
2026: $313m, 15% growth, $42m EBIT, 13.5% margin
2027: $355m, 13% growth, $51m EBIT, 14.4% margin
2028: $397m, 11% growth, $59m EBIT, 15% margin
Base case: $88m revenue growth per year, 25% incremental margins
2026: 359m, 33% growth, $56m EBIT, 16% margin
2027: 447m, 25% growth, $78m EBIT, 17% margin
2028: $535m, 20% growth, $100m EBIT, 19% margin
Bullish case: 128m revenue growth per year, 30% incremental margins
2026: $399m, 47% growth, $72m EBIT, 18% margin
2027: $527m, 32% growth, $110m EBIT, 21% margin
So c.$500m revenues, should translate to c.$100m EBIT (pre corporate overheads). Maybe that comes in 2027 (bull case) or 2028 (base case) or never at all, but broadly speaking doubling revenue from the 2025 base, should translate to trebling of operating profit. Net debt should be eliminated by the end of 2027, removing interest expense. Adtech capex is minimal. NOLs reduce cash taxes materially. If adtech was a standalone listed entity at c.$500m revenue, fully burden with EVC $25m of corporate overheads, it could generate c.$70m of FCF. EVC’s market cap today is $270m.
You are potentially paying just 4x adtech FCF a couple of years out and getting broadcasting and spectrum for free, just as the regulatory landscape is looking increasingly supportive to unlock value in those assets.
Applying 15x FCF for adtech yields a valuation over $1bn, 4x today’s market cap.
Monetising the spectrum, at 2017 auction prices yield a valuation of over $1bn, 4x today’s market cap.
There are multiple routes to multi-bagger returns at EVC. The CEO is appropriately incentivised. His PSU package pays out in full ($14m) if the stock is a 5 bagger by July 2028. I suspect by then adtech will be spun off and broadcasting/spectrum will be monetised if the regulatory landscape permits.
Note: the author owns securities in Entravision (EVC) and Applovin (APP). Do your own due diligence, nothing written is investment advice.
Uzo
PS Credit: to my friend Dylan Marrelo aka Raging Bull Investments, who flagged Entravision to me a year ago (at $2!).