AppLovin Corporation

What they do

AppLovin provides end-to-end AI advertising solutions that help businesses reach, monetize and grow global audiences. Its Axon Ads Manager, powered by the Axon AI recommendation engine, matches advertiser demand with publisher supply through auctions at microsecond speeds. The company also offers MAX for in-app bidding monetization, Adjust for measurement and analytics, and Wurl for connected TV distribution and advertising. Revenue is generated when advertisers achieve their return on advertising spend targets.

Revenue drivers

• AppLovin Ads (Axon Ads Manager) — User acquisition solution that comprises the vast majority of revenue; charges advertisers dynamically based on campaign goals less consideration paid to publishers.
• MAX — Monetization solution using in-app bidding that runs real-time auctions; revenue is a percentage of winning auction spend.
• Adjust — Measurement and analytics platform for attribution, fraud prevention and user journey insights; revenue primarily from annual software subscription fees.
• Wurl — Connected TV platform that distributes streaming video and provides advertising; revenue from content companies and streamers on usage-based and/or CPM models.

Recent performance

Second quarter 2026 revenue was $1,924 million, up 53% from $1,259 million in the prior year quarter. Net income was $1,267 million, up 55%, and Adjusted EBITDA was $1,614 million, up 58%. Basic and diluted EPS were $3.77 and $3.76. Net cash from operating activities was $869.0 million and Free Cash Flow was $863.3 million. The company repurchased and withheld 1.1 million shares for $551.3 million, ending the quarter with 335 million shares outstanding.

Strategy

AppLovin is focused on improving its Axon AI recommendation system to grow revenue from existing and new advertising clients. It emphasizes expanding into new markets such as e-commerce and sees opportunities to increase spend from existing clients. The company continues to invest in its advertising solutions including AppLovin Ads, MAX, Adjust and Wurl. It also repurchases shares under its buyback program.

Risks

• Revenue concentration — AppLovin Ads comprises the vast majority of revenue, so any decline in that product or its advertiser base would disproportionately harm results.
• Reliance on third-party platforms — The business depends on third-party platforms for distribution and advertising inventory, and changes to those platforms could disrupt operations.
• Competition and technological change — The advertising technology industry is highly competitive and rapidly changing, requiring continuous adaptation of Axon AI and other solutions.
• Data privacy and regulation — Evolving data protection, privacy and AI laws could increase compliance costs or restrict the data used to optimize advertising recommendations.

Outlook

For third quarter 2026, AppLovin guided revenue of $2,055 million to $2,085 million and Adjusted EBITDA of $1,710 million to $1,740 million, implying an 83% Adjusted EBITDA margin. Management has not provided a GAAP reconciliation for these forward-looking non-GAAP metrics due to uncertainty around reconciling items such as stock-based compensation. The company expects growth from continued improvements to Axon AI and expansion into new markets.