AppLovin NASDAQ: APP executives used the company’s first-quarter 2026 earnings call to emphasize accelerating growth, expanding margins, and a major product milestone coming in June, when the company plans to open its Axon advertising platform to self-serve advertisers globally.
Adam Foroughi, co-founder and CEO, said the company “delivered another quarter where we beat our own guidance,” while continuing to grow rapidly “despite the numbers getting much bigger,” alongside expanding margins. Foroughi framed the upcoming June self-serve launch as a pivotal moment: “For 14 years, we have been a closed platform. Come June, advertisers across the world will be able to sign up for Axon and start running campaigns.”
Q1 results: revenue up 59% and adjusted EBITDA margin reaches 85%
Chief Financial Officer Matt Stumpf said the company exceeded the high end of its guidance on revenue and adjusted EBITDA and posted a new high in profitability. Revenue for the first quarter was $1.84 billion, up 59% year-over-year and 11% sequentially, which Stumpf attributed to “continued technology advancements across our core gaming business and our expanding consumer vertical.”
Adjusted EBITDA was $1.56 billion, up 66% year-over-year, representing an 85% margin. Stumpf said margins expanded roughly 400 basis points versus the prior year, and noted “quarter-over-quarter flow through to adjusted EBITDA was 86%,” reflecting operating leverage.
Free cash flow was $1.29 billion, which Stumpf said was “slightly elevated due to interest and tax payment timing.” He added that cash tax payments are weighted to the second and third quarters, and the company expects free cash flow conversion to “normalize over the course of the year to approximately 75% of EBITDA for 2026.”
AppLovin ended the quarter with $2.76 billion in cash and cash equivalents. During Q1, it repurchased and withheld 2.23 million shares for $1 billion, ending with 336 million shares outstanding and roughly $2.3 billion remaining under its repurchase authorization.
Q2 outlook calls for continued growth and mid-80s EBITDA margins
For the second quarter of 2026, Stumpf guided to revenue of $1.915 billion to $1.945 billion, representing 52% to 55% year-over-year growth and 4% to 6% sequential growth. Adjusted EBITDA is expected to be $1.615 billion to $1.645 billion, implying an adjusted EBITDA margin of roughly 84% to 85%.
Stumpf said capital allocation priorities remain unchanged: “Fund organic investment and return capital through buybacks.”
Gaming remains the foundation as studios adopt AI and hybrid monetization
Foroughi described mobile gaming as “the foundation of everything we do,” and said it is “performing really well.” He pointed to two industry shifts he said are energizing AppLovin’s partners: AI tooling that lowers the cost of experimenting and launching games, and a broader push toward hybrid monetization models that combine in-app purchases and advertising.
He said some historically in-app-purchase-only games are increasingly testing advertising, particularly when ads can come from non-gaming brands. “As we scale advertisers who are not gaming companies…those concerns go away,” he said, arguing that non-gaming advertisers will make it easier for IAP-focused developers to add advertising without promoting competing titles.
In response to questions about whether growth in consumer advertising could harm gaming, Foroughi said the company has “yet to see any cannibalization,” and argued that additional advertiser diversity and data can improve outcomes for both segments. He also said model complexity will likely require more GPU capacity over time, but emphasized that infrastructure scale alone is not what differentiates platforms: “What makes our business really compelling is that for this space, we’ve written the best models and products for the advertisers.”
Consumer vertical accelerates, with April setting a spend record
Foroughi said the consumer vertical—previously discussed more narrowly as e-commerce—is “growing even faster than gaming” and remains early in its lifecycle. He highlighted “another material model release” that improved scale and return on ad spend for consumer advertisers.
Operationally, he said momentum increased through the quarter: the consumer vertical “exited the quarter very strong, with March growing roughly 25% more than the numbers we did in January.” He added that April reached “a record month in advertiser spend, higher than any peak Q4 month,” which he called unusual for e-commerce-driven advertising patterns and a sign of model-driven performance gains.
When asked whether April strength came from new or existing customers, Foroughi said it was both but “almost certainly is coming from the current existing customer base as they see the product improving,” adding that the company is “always fixated on growth from current as the most important KPI.”
Product rollout: self-serve launch, creative tools, and lead-gen expansion
Executives repeatedly returned to the June general availability plan, describing it as a step-change for onboarding and scale. Foroughi said AppLovin is building Axon to be accessible to AI agents and paired that with creative automation: “an advertiser can onboard, generate high-performing ads, and scale campaigns profitably without ever needing to talk to a human.”
On generative creative tooling, Foroughi said the company rolled out an “interactive page generator” earlier in the quarter, which is now available to all customers and has “pretty widespread adoption.” He said video generation remains in testing but is expected to roll out broadly “shortly,” calling video a key hurdle for many smaller advertisers that do not have suitable creative for AppLovin’s placements.
On costs, Foroughi said the company uses third-party services for video generation compute, and he did not expect the tools to pressure margins. If usage scales significantly, he said AppLovin could introduce charging mechanisms such as caps or credits, describing it as a potential revenue stream.
Looking beyond transactional advertising, Foroughi said AppLovin is testing a cost-per-lead model and views lead generation categories—such as auto insurance, health insurance, fintech, and food delivery—as a major adjacent opportunity. “We’re never gonna get into branding,” he said, emphasizing performance outcomes, while describing leads as a large category the company does not currently serve at scale.
Stumpf also addressed sales and marketing spend, saying AppLovin evaluates its own marketing like its customers do and only invests where it sees profitable returns. He said costs “might” increase temporarily around the general audience launch and expanded brand awareness efforts, but suggested that higher spend should signal attractive returns. Foroughi added the company is running “under 30-day break even” on marketing dollars and projected “well over $70,000 a year from every new customer,” estimating that 100,000 new customers in a year would equate to roughly $7 billion in first-year advertising spend.
On longer-dated initiatives, Foroughi reiterated interest in Connected TV as a performance channel for small and mid-sized businesses, but said it is not expected to have a material financial impact in 2026. He also discussed the company’s experimentation with building products using “vibe coding” tools, including work that could help attract engineering talent for recommendation systems, while noting a “social media app” is an example of a project that could serve that recruiting and experimentation purpose.
About AppLovin NASDAQ: APP
AppLovin Corporation is a Palo Alto–based mobile technology company that provides software and services to help app developers grow and monetize their businesses. The company operates a data-driven advertising and marketing platform that connects app publishers and advertisers, delivering tools for user acquisition, monetization, analytics and creative optimization. AppLovin's technology is integrated into a broad set of mobile applications through software development kits (SDKs) and ad products designed to maximize revenue and engagement for developers.
Key components of AppLovin's offering include an ad mediation and exchange platform that enables publishers to manage and monetize inventory across multiple demand sources, and a user-acquisition platform that helps advertisers target and scale campaigns.
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