What AppLovin (APP) Said on Its Q3 Earnings Call

Key Points

• AppLovin posted record Q3 results: Revenue rose 55% year over year to $2.18 billion, while net income increased 72% to $1.44 billion. Both revenue and adjusted EBITDA beat the high end of guidance, supported by advertising-model improvements.
• Q4 guidance points to continued growth: The company forecast revenue of $2.365 billion to $2.395 billion and adjusted EBITDA of $1.995 billion to $2.025 billion. The outlook includes seasonal strength in e-commerce advertising and ongoing investment in computing capacity.
• AppLovin is expanding its platform and returning capital: New models could improve performance for newer and smaller advertisers, though a full rollout and business impact remain uncertain. The board expanded share repurchase authorization by $3.2 billion to $3.6 billion after the company repurchased or withheld 4.1 million shares for $1.4 billion in Q3.

AppLovin NASDAQ: APP reported record third-quarter 2026 revenue of $2.18 billion, up 55% from a year earlier, as improvements to its advertising models helped drive growth in mobile gaming and consumer advertising.

Both revenue and adjusted EBITDA exceeded the high end of the company’s guidance. CEO and co-founder Adam Foroughi said AppLovin partially rolled out a new generation of models during the quarter, helping advertisers deploy more spending profitably against their target returns.

Gaming revenue grew nearly 50% year over year, Foroughi said, while CFO Matt Stumpf said spending by consumer advertisers rose by double digits sequentially and by triple digits from a year earlier. The company did not disclose revenue for the individual verticals on the call.

Profit and cash flow rise

Net income increased 72% year over year to $1.44 billion, representing a 66% net income margin. Adjusted EBITDA rose 59% to $1.84 billion, with an 84% margin, up approximately 190 basis points from a year earlier.

Revenue rose 14% sequentially and exceeded the high end of guidance by approximately $100 million, primarily because of the core mobile gaming business and model improvements, Stumpf said. Free cash flow was $1.4 billion, or 77% of adjusted EBITDA, compared with 53% in the second quarter. Stumpf attributed the prior quarter’s lower conversion to the timing of cash tax payments and reiterated an expectation for full-year conversion of roughly 70% to 75%.

Data center costs declined as a percentage of revenue, even as AppLovin invested in additional computing capacity to train and develop models, Stumpf said. The company ended the quarter with $3.17 billion in cash and $3.5 billion in long-term debt.

Fourth-quarter outlook includes seasonality

AppLovin forecast fourth-quarter revenue of $2.365 billion to $2.395 billion, representing approximately 43% to 44% year-over-year growth and 8% to 10% sequential growth. It projected adjusted EBITDA of $1.995 billion to $2.025 billion.

Stumpf said the outlook incorporates normal seasonality, further consumer growth and model improvements already in operation. It also reflects continued investment in training compute. The company did not break out its forecast between gaming and consumer advertising.

Foroughi said e-commerce advertisers typically spend heavily in the fourth quarter and less in the first. New customer acquisition could support growth through seasonally difficult periods, he said, but AppLovin should see bigger fourth quarters followed by tougher first quarters as its e-commerce business grows.

New models and customer expansion

Foroughi said the new model architecture allows AppLovin to train larger models and has more room for optimization than its predecessor. He compared the technical complexity of the transition to Axon 2.0, but did not commit to a full rollout date or predict the business impact.

The models perform better where data is sparse, including for newer and smaller advertisers, Foroughi said. He added that customers often take time to validate their results through incrementality studies before substantially increasing spending.

AppLovin is seeking to accelerate customer acquisition through partnerships and referrals. Foroughi said the company would also consider acquiring data or customer relationships if a transaction could bring customers onto its platform more quickly. He cautioned that very small businesses are not yet the platform’s primary opportunity: customers assisted by AppLovin’s team, or sophisticated advertisers using self-service, are more likely to succeed.

The company also has pilot advertising campaigns running on connected television. Foroughi said the product looks promising but is early and should not be expected to contribute meaningfully to results soon.

Buyback authorization expanded

AppLovin repurchased and withheld 4.1 million shares for $1.4 billion during the quarter. Its board increased the repurchase authorization by $3.2 billion, bringing the total current authorization to $3.6 billion as of the end of October.

Stumpf said the company stepped up repurchases during the quarter because it saw a dislocation between the share price and its view of intrinsic value. AppLovin can act opportunistically again, he said.

Foroughi reiterated management’s belief that AppLovin can grow at roughly 30% annually over the long term, while cautioning that model improvements and customer growth are difficult to predict from quarter to quarter.

About AppLovin (NASDAQ:APP)

AppLovin Corporation is a technology company that provides software and services designed to help mobile application developers grow, monetize and operate their businesses. Its platform supports user acquisition, advertising, mediation, analytics and other functions across the mobile app ecosystem.

The company's principal products include AppDiscovery, which helps developers market their applications and acquire users; MAX, an in-app bidding and monetization platform; and its AXON technology, an artificial intelligence-powered engine intended to improve advertising performance and match users with relevant applications and content.

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