AppLovin Corporation

AppLovin reported second quarter revenue of $1.92 billion, up 53% year over year and 4% sequentially. Adjusted EBITDA was $1.61 billion, up 58% year over year, with margins expanding approximately 300 basis points from last year and quarter-over-quarter flow-through of 70%. Free cash flow was $863 million. For Q3 2026, management guided revenue to $2.055 billion to $2.085 billion, implying 46% to 48% year-over-year growth and 7% to 8% sequential growth, and adjusted EBITDA to $1.71 billion to $1.74 billion, implying 48% to 50% year-over-year growth and about an 83% margin. Management said the outlook includes live model improvements, continued consumer scaling, normal seasonality, and higher training/compute costs, and does not assume additional model releases not yet deployed. The company also said free cash flow conversion should improve in Q3 and normalize to roughly 75% of adjusted EBITDA for the full year.

Adam Foroughi framed Q2 as a miss relative to AppLovin's internal standard, but said the issue was timing, not demand: model improvement was lighter than normal during the quarter and the next step-up arrived just after quarter end. He emphasized that advertiser demand remains healthy, MAX publisher earnings grew double digits quarter over quarter, and consumer spend set a record, giving him confidence the business is back on its expected trajectory. Strategically, he said the company is focused on core model improvement, more compute-enabled model complexity, better creative tools and ad formats, and targeted partnerships to bring in higher-quality advertisers.

Matt Stumpf emphasized that the business remained very strong despite the Q2 timing issue, pointing to $1.92 billion of revenue, $1.61 billion of adjusted EBITDA, 58% year-over-year EBITDA growth, and $863 million of free cash flow. He said the sequential cost increase was driven primarily by higher compute for training existing models and new model development, and that those costs are reflected in the outlook. He also noted $3.05 billion of cash versus $3.7 billion of total debt, net leverage of about 0.1x trailing 12-month adjusted EBITDA, and approximately $1.8 billion remaining under the share repurchase authorization after buying and withholding about 1.14 million shares for $551 million. He added that the SEC inquiry was resolved with no recommended action.

Analysts focused on what caused the weaker-than-expected Q2 model uplift, whether consumer/e-commerce demand is broadening, and how partnerships, branding, and creative tooling will help accelerate advertiser acquisition. Management said the model miss was an R&D timing issue, not demand weakness, and that Q3 started strongly once the new model improvements went live. On the consumer side, Adam Foroughi said the company is intentionally targeting mid-market advertisers through partnerships such as Triple Whale-style arrangements because that is the best fit for the current product, while long-tail and very large advertisers remain later-stage opportunities. He also said creative is still the biggest bottleneck for self-serve conversion, especially for longer-form video, and that lead gen remains in testing.