AppLovin Corporation (APP) Earnings & Analysis

Latest quarter

AppLovin reported Q2 FY2026 revenue of $1.9 billion, up 52.8% from $1.3 billion a year earlier. Revenue missed consensus, with a −0.75% surprise, although both reported revenue and the estimate rounded to $1.9 billion. Adjusted earnings per share of $3.76 beat the $3.72 consensus estimate by 1.08%.

CFO Matt Stumpf attributed revenue growth to the core gaming business and continued scaling in consumer advertising. CEO Adam Foroughi said gaming remained the majority of revenue, but model performance improved more slowly than usual during the quarter; the next improvement arrived after quarter-end.

AppLovin reported a gross margin of 88.3%, compared with 87.7% a year earlier, and an operating margin of 77.7%, compared with 76.1%. Free cash flow rose to $869.0 million from $772.2 million. Stumpf said the timing of international cash tax and interest payments reduced free-cash-flow conversion during the quarter.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Adam Foroughi said the timing of model improvements explained the quarter’s performance. As the models improve, he said, gaming advertisers can spend more while meeting their return-on-advertising-spend targets. He added that the quarter showed no weakening in advertiser demand or change in the competitive environment.

Foroughi said consumer advertiser spending finished 28% above Q4 2025 levels. He said AppLovin had opened its advertising platform to the public and was initially targeting mid-market advertisers through partnerships. In response to questions, he said existing customers were contributing more spending and that broader adoption would take time as advertisers became familiar with the platform and its results.

On competition, Foroughi said AppLovin saw opportunities to grow on both mobile platforms as its models improved, although he described Android as more competitive. Asked about expansion beyond gaming inventory, he said consumer advertising budgets remained constrained and that AppLovin would need more advertiser spending before moving into new supply. He identified non-gaming apps, the open web and connected TV as potential steps.

CFO Matt Stumpf said higher compute spending for existing-model training and new-model development was the primary reason costs rose sequentially. He said AppLovin manages the business to adjusted EBITDA dollars and free cash flow rather than a particular margin percentage. Asked about margins, he said they could fluctuate in the short term but that he retained confidence in a long-term adjusted EBITDA margin in the low 80 percent range.

Foroughi said the consumer platform could broaden as more mid-market customers contributed data, but added: “We can’t tell you when.” Stumpf said the Q3 outlook included deployed model improvements and higher compute costs; it “does not assume additional model releases that have not yet been deployed.”

Guidance

AppLovin expects Q4 2026 revenue of $2.37 billion to $2.4 billion. For the preceding quarter, CFO Matt Stumpf had projected revenue of $2.055 billion to $2.085 billion and adjusted EBITDA of $1.71 billion to $1.74 billion. He said that Q3 outlook incorporated deployed model improvements, consumer scaling, seasonality and higher training and compute costs.