AppLovin Corporation (APP), Financial Analysis

1 Revenue & Business Model

• Storyline: revenue grew 55.5% in Q3 2026 with installation volume up 2%, so growth came from net revenue per install; the company now reports advertising only, and three chapters follow the parts of that business. Chapters 2 to 4 cover AppLovin Ads in mobile apps, ecommerce and web advertising, and the platform layer (MAX, Adjust, Wurl) with compute costs.
• Basis of all figures: continuing operations. AppLovin sold its Apps business (mobile games) to Tripledot Studios on 30 Jun 2025 for $400m in cash plus about 20% of Tripledot equity (non cash consideration $285m; equity method investment $298.3m at 30 Sep 2026). Apps is reported in discontinued operations, and the FY2025 10-K restates FY2023 and FY2024 as advertising only. FY2021 and FY2022 exist only as originally reported, incl. Apps; they are not comparable and appear only in Table 1.2.
• One reportable segment. Revenue is AppLovin Ads (named Axon Ads Manager in FY2025) fees net of payments to publishers, plus MAX in app bidding fees (a % of winning auction spend), Adjust measurement subscriptions and Wurl connected TV services (10-K, 10-Q). AppLovin Ads makes up the vast majority of revenue; the company files no split by product or by gaming and ecommerce advertisers.
• Revenue FY2023 $1.84bn, FY2024 $3.22bn (+75.1%), FY2025 $5.48bn (+70.0%); TTM Q3 2026 $7.61bn. In FY2024 installs rose 50% and revenue per install 22%; in FY2025 installs rose 3% and revenue per install 72% (10-K).
• Regions by user location: United States $2.83bn in FY2025 (51.6%), international $2.65bn (48.4%); in Q3 2026 United States $1.10bn (+59.6%) and international $1.09bn (+51.5%).
• Employees 898 at 31 Dec 2025, about 380 (42%) in research and development and 60% outside the US (10-K).

2 AppLovin Ads in Apps: Revenue per Install +55%, Installs +2%

• Revenue $2.18bn in Q3 2026, +55.5%; growth year on year 70.8% in Q1 2025, 77.0% in Q2 2025, 68.2% in Q3 2025, 65.9% in Q4 2025, 59.0% in Q1 2026 and 52.8% in Q2 2026.
• Price and volume (10-Q): net revenue per installation +93%, +58% and +55% in Q1 to Q3 2026, while installs moved (18%), (2%) and +2%. In FY2024 installs had risen 50%.
• Product names in filings: AppDiscovery in Q2 2025, Axon Advertising in Q3 2025, Axon Ads Manager in FY2025 and Q1 2026, AppLovin Ads from Q2 2026.

How in app advertising is changing

• Unity: Grow Solutions revenue $457m in Q3 2026, +44%; Unity Vector +126%; it closed the ironSource Ads network in Q2 2026 and sold Supersonic on 4 Aug 2026; company adjusted EBITDA margin 41% and a GAAP profit in Q3 2026 (8-K Ex 99.1).
• Digital Turbine: App Growth Platform revenue $56.6m in the Jun 2026 quarter, +56%; FY2027 revenue guidance $650m to $670m (8-K/A).
• Meta and Google: Meta advertising revenue +25.9% and Google Network +1.4% in Q3 2026; both are AppLovin competitors and clients (10-K).
• Policy: Google retired its Privacy Sandbox for Android and Chrome in Oct 2025 (AppLovin 10-K).

3 Ecommerce and Web Advertising: Advertisers Added Since 2024, No Revenue Split

• AppLovin files no ecommerce revenue figure. The FY2025 10-K states that the company began in 2024 to add web based ecommerce advertisers and names ecommerce and social as new verticals; it adds that large ecommerce advertisers may make seasonal swings larger. The figures in this chapter come from AppLovin's filed costs and from peer filings.
• Sales and marketing expense $68.8m in Q3 2026, +41.6%, after (21.3%) in Q4 2025; in 9M 2026 advertising and marketing program costs rose $58.7m while personnel costs fell $22.9m (10-Q).
• Creative tools: the 2026 Forms 10-Q, from Q1 2026, state that the company has begun to introduce tools that create AI generated interactive ads and video creatives for advertisers.

How ecommerce and web advertising are changing

• Large platforms: Meta advertising revenue $63.1bn in Q3 2026, +25.9%; Google advertising $82.0bn, +10.6%; Amazon advertising services $19.6bn, +10.9%.
• Smaller platforms: Reddit advertising $847m, +54%; Pinterest revenue $1.17bn, +11.9% (8-K Ex 99.1).

4 Platform Layer: MAX, Adjust, Wurl and Compute Costs

• MAX runs in app bidding for publishers and charges a % of winning auction spend; Adjust sells measurement mainly by annual subscription; Wurl serves connected TV, mainly on a usage or CPM basis (10-Q). None of the three is split out in filings.
• Compute cost: cost of revenue, mainly third party cloud datacenter cost, $240.8m in Q3 2026, +37.7%, incl. $53.6m more network infrastructure; 11.0% of revenue against 12.4% (10-Q).
• Margin: adjusted EBITDA margin (company non GAAP) 84.3% in Q3 2026 and 84.3% TTM; the increase in adjusted EBITDA on Q2 2026 equalled 87% of the increase in revenue (derived from 8-K Ex 99.1).
• Regions: international revenue 49.7% of Q3 2026 revenue against 51.0% a year earlier (10-Q, user location).

How the ad tech platform layer is changing

• Demand side: The Trade Desk revenue $715m in Q2 2026, +3%, adjusted EBITDA $241m (33.7%), with Q3 2026 guidance of at least $650m; its Q3 2026 release was not filed when this report was built.
• Supply side: Magnite contribution ex TAC $200.6m in Q3 2026, +20%, of which connected TV $105.4m, +39%; Digital Turbine App Growth Platform +56% in the Jun 2026 quarter.
• Unity: Grow Solutions +44% in Q3 2026 while its non strategic revenue fell 73% after the ironSource Ads sunset and the Supersonic sale (8-K Ex 99.1).
• Google ad tech: in Sep 2026 the US District Court for the Eastern District of Virginia issued its remedies decision in the DOJ ad tech case, denying structural divestitures of Google's advertising technology assets and ordering behavioral remedies on interoperability, data access and auction conduct; Google may appeal (Alphabet 10-Q of 28 Oct 2026). Google Network revenue +1.4% in Q3 2026.

5 Financial Analysis & Ratios

• GAAP operating margin 41.9% in FY2023, 59.3% in FY2024, 75.8% in FY2025 and 77.8% TTM; gross margin TTM 88.8%. Adjusted EBITDA margin, the company's non GAAP measure: 67.1%, 74.8%, 82.3% and 84.3% TTM.
• Net income TTM $5.01bn, 65.9% of revenue. Annual net income includes losses from discontinued operations of $101.1m (FY2023), $9.7m (FY2024) and $99.4m (FY2025, incl. a $188.9m goodwill impairment in Q1 2025 and a $106.2m gain on the sale); continuing net income FY2025 $3.43bn.
• Free cash flow TTM $4.88bn, 64.1% of revenue, under the company definition: operating cash flow less purchases of property and equipment and finance lease principal ($25.3m TTM). Cash taxes were $926m in 9M 2026 against $167m (10-Q).
• Balance sheet at 30 Sep 2026: cash $3.17bn; $3.6bn of senior unsecured notes at fixed rates of 5.125% to 5.950%, due 2029 to 2054 (carrying $3.52bn); $1.0bn revolver undrawn; net debt $342.4m; equity $3.30bn.
• Capital returns: no dividend. Repurchases $3.23bn TTM in the cash flow statement; 9M 2026 7.3m Class A shares retired for $2.9bn (10-Q); $394.3m of the authorization remained at 30 Sep 2026 before the Oct 2026 increase.

Cost structure and profitability

• Costs (revenue less operating income) $475.8m in Q3 2026, +45.9%, against revenue +55.5%; operating margin up 1.4 pts year on year and 0.5 pts on Q2 2026.
• Cost of revenue 11.0% of revenue against 12.4% a year earlier; R&D 4.7%, sales and marketing 3.1%, G&A 3.0%.
• Stock based compensation $84.2m, 3.9% of revenue, against $33.8m (2.4%); FY2025 was $208.0m after $357.4m in FY2024 on lower stock based payroll costs (10-K).
• GAAP operating income $1.71bn and adjusted EBITDA $1.84bn in Q3 2026; the difference of $133.3m is mainly stock based compensation ($84.2m) and depreciation, amortization and write offs ($34.2m), plus $15.5m of transaction and other items.

Capital return and guidance

• Repurchases $1.28bn in Q3 2026 against $551.2m in Q2 2026 and $501.9m a year earlier; with tax withholding on net share settlement the total cost was $1.4bn for 4.1m shares (8-K). Weighted diluted shares fell for each of the last six quarters shown.
• Revenue against guidance: above the top of the range in Q4 2025 (+$58m), Q1 2026 (+$67m) and Q3 2026 (+$100m); within the range in Q2 2026, below the midpoint of $1.930bn.

6 MD&A & Management Commentary

Q3 2026 results release and 10-Q

• Q3 2026 (8-K Ex 99.1 and 10-Q of 4 Nov 2026): revenue $2.185bn, +55.5% and +13.6% on Q2 2026; diluted EPS $4.30 against $2.45; operating cash flow $1.43bn; free cash flow $1.42bn (77.0% of adjusted EBITDA against 53.5% in Q2 2026).
• Costs (10-Q): cost of revenue +37.7%, incl. $53.6m more network infrastructure cost; R&D +132% to $101.8m on $55.1m more personnel cost, mainly stock based (R&D stock based compensation $68.1m against $15.6m); sales and marketing +42% on marketing programs.
• Below operating income: other income $86.0m against ($6.6m), incl. a $46.9m fair value gain on non marketable equity securities and $15.9m more interest income; tax $305.0m, 17.5% of pretax income (10-Q).
• Q2 2026 (5 Aug 2026): revenue $1.924bn, +52.8%, below the midpoint of guidance ($1.915bn to $1.945bn); adjusted EBITDA $1.614bn against guidance of $1.615bn to $1.645bn (8-K Ex 99.1).
• Cash conversion (derived from 8-K Ex 99.1): free cash flow was 71.2% of adjusted EBITDA in 9M 2026; the company issues guidance one quarter ahead and gives no FY2026 range.

Management and CFO commentary

• Q3 2026 release (8-K Ex 99.1): revenue $2.18bn, net margin 66% and adjusted EBITDA margin 84%; the board raised the repurchase authorization by $3.2bn, citing continued confidence in the future; 4.1m shares repurchased or withheld for $1.4bn in Q3 2026.
• Q2 2026 release (8-K Ex 99.1): revenue $1.924bn, adjusted EBITDA $1.614bn; operating cash flow $869.0m and free cash flow $863.3m; 1.1m shares repurchased or withheld for $551.3m.
• Q4 2025 release (8-K Ex 99.1): FY2025 revenue $5.48bn and free cash flow $3.95bn; 6.4m shares repurchased or withheld in FY2025 for $2.58bn.
• Leadership release (8-K Ex 99.1 of 7 Apr 2026): Adam Foroughi recommended Craig Billings as independent Chair to focus on strategic execution; the CTO and Chief Legal Officer successors were promoted from within.

7 Peer Valuation & Sector Summary

• Sector: mobile and performance advertising technology (ad networks, mediation, demand side platforms), with expansion into web ecommerce and connected TV advertising. The FY2025 10-K names Meta, Google, Amazon and Unity Software as competitors; Meta and Google are also clients and partners. Peers in the table: Meta, Alphabet, Unity, The Trade Desk and Reddit.
• Growth (latest quarter): APP 55.5%, RDDT 53.0%, U 32.1%, META 26.1%, GOOGL 24.7%, TTD 3.0%.
• Operating margin TTM: APP 77.8%, GOOGL 33.3%, META 32.9%, RDDT 29.4%, TTD 19.6%, U (17.8%); FCF margin: APP 64.1%, RDDT 38.8%, TTD 28.4%, U 27.8%, META 10.4%, GOOGL 4.2%.
• Valuation: APP 14.6x EV/Sales against U 9.9x, GOOGL 7.0x, META 6.5x, RDDT 5.9x and TTD 1.6x; APP 22.5x TTM P/E against META 20.9x, RDDT 19.8x, TTD 15.5x and GOOGL 14.7x.

8 Material Events & Contracts

• Seven Forms 8-K from 5 Nov 2025 to 4 Nov 2026: five earnings releases, one leadership release and one annual meeting report; the Q3 2026 release also carries the Item 5.07 written consent for Nevada; no Form 8-K/A.
• Nevada reincorporation: on 29 Oct 2026 holders of about 67% of voting power, incl. Adam Foroughi, Herald Chen and related trusts and LLCs with 2.37m Class A and 30.06m Class B shares, approved a conversion from Delaware to Nevada by written consent; a Schedule 14C information statement follows, and the conversion takes effect no earlier than 20 days after mailing.
• Leadership (8-K of 7 Apr 2026): Craig Billings became independent Chair, succeeding Adam Foroughi as Chair; Giovanni Ge succeeded Basil Shikin as CTO on 1 Jul 2026; Corina Cacovean succeeded Victoria Valenzuela as Chief Legal Officer on 1 Aug 2026.
• Legal (10-Q Part II Item 1): two securities class actions are pending (2025 action, class period 7 Nov 2024 to 27 Mar 2025, motion to dismiss fully briefed in Feb 2026; Sep 2026 action, class period 12 Feb to 5 Aug 2026), plus derivative suits of 2025 and 7 Oct 2026; the company gives no loss estimate.

9 Ownership, Voting Power & Annual Meeting

• Three share classes; the founders control the vote. Class A carries 1 vote and Class B 20 votes; Adam Foroughi held 61.6% of voting power and directors and officers 64.0% at 31 Mar 2026 (2026 proxy). The voting agreement among Adam Foroughi, Herald Chen and affiliates covered about 67% of votes, which made the Nevada written consent possible without a meeting.
• 2026 annual meeting (3 Jun 2026): nine directors elected with support from 92.1% (Margaret Georgiadis) to 99.7% (Victoria Valenzuela); say on pay 92.3%; officer exculpation amendment 90.1%; Deloitte & Touche ratified with 99.8%; the stockholder proposal to disclose results by share class received 14.6% of votes cast. Results combine both classes.
• Insiders, 12 months to 29 Oct 2026: no open market purchases; open market sales of about $574.1m by nine insiders, of which about $300m on Forms 4 that cite pre arranged trading plans. Largest sellers: director Eduardo Vivas about $264.2m, CEO Adam Foroughi about $147.1m, Basil Shikin about $132.2m (CTO until 1 Jul 2026), Victoria Valenzuela $16.3m, CFO Matt Stumpf $8.0m.
• Other insider activity: Giovanni Ge, CTO from 1 Jul 2026, received 273,691 restricted stock units on 29 Oct 2026; Herald Chen gifted 425,000 shares and converted 293,791 Class B shares into Class A.
• Institutional holders (2026 proxy): The Vanguard Group 8.2% of Class A, BlackRock 7.0%, Angel Pride Holdings 5.6%; together 6.9% of voting power. A 13F holder trend was not collected for this report.

Annual meeting remarks

• Stockholder proposal (2026 proxy, 8-K Item 5.07): Connecticut Retirement Plans and Trust Funds asked for vote results by share class; the proposal received 119.1m votes for and 696.9m against. The Form 8-K Item 5.07 reports vote counts only.

10 Risk Factors

• Item 1A of the FY2025 Form 10-K holds 47 risk factors against 57 in FY2024 (22,882 words against 29,359); 10 removed, mostly on the Apps business, none added and 17 materially reworded. Each 2026 Form 10-Q restates the full section; the Q3 2026 10-Q adds the Sep 2026 securities complaint.

How risk factors changed

• Comparison: 10-K FY2025 filed 19 Feb 2026 acc 0001751008-26-000010 against 10-K FY2024 filed 27 Feb 2025 acc 0001751008-25-000018.
• Risk factors fell from 57 to 47 and words from 29,359 to 22,882 (down 22%) after the June 2025 sale of the Apps business; 10 factors were removed and none were added.
• Mentions of Apps fell from 162 in 28 factors to 7 in 5 factors; mentions of tariffs rose from 1 to 7, across 5 factors.
• AI is named 37 times in 12 factors in both years; the 2026 Forms 10-Q add AI generated ad creatives and AI enabled cyber attacks.
• New legal exposure appears in the body text of existing factors: securities complaints from Mar 2025 in the FY2025 10-K and a further complaint in Sep 2026 in the Q3 2026 10-Q.
• New rules named in FY2025: DOJ bulk data transfer rule (8 Apr 2025), One Big Beautiful Bill Act (Jul 2025) and OECD minimum tax safe harbor (5 Jan 2026).

11 Stock Price, Scenarios & Sensitivity

• APP traded at $333.48 pre market on 5 Nov 2026 after the release, +22.7% on the close of $271.75 on 4 Nov 2026; 54.8% below the 52 week high of $738.01 (Dec 2025) and 48.1% above the low of $225.19 (Oct 2026). The monthly series in Figure 8.1 ends with the 4 Nov 2026 close.
• Valuation: market value $110.5bn on 331.3m Class A and B shares; 22.5x TTM EPS of $14.85; EV/Sales 14.6x; EV to TTM adjusted EBITDA 17.3x (Table 5.4 uses GAAP EBITDA, operating income plus depreciation and amortization: 18.3x); free cash flow yield 4.41%.
• Scenario model uses GAAP operating margins (TTM Q3 2026: 77.8%); revenue grows from TTM Q3 2026 $7.61bn for three years; 17% tax rate (Q3 2026: 17.5%); diluted shares 334.8m less 6% from buybacks; price equals TTM Q3 2029 EPS times exit P/E.

Critical factors and core assumptions

• Revenue base TTM Q3 2026 $7.61bn; GAAP operating income $5.92bn (77.8%); net income $5.01bn; implied FY2026 revenue midpoint $8.33bn.
• Best case: 35% revenue CAGR as revenue per install keeps rising and ecommerce advertisers scale; GAAP operating margin 80%; 28x P/E.
• Base case: 25% revenue CAGR as growth slows from 55.5% in Q3 2026; operating margin 76% as compute and stock based compensation rise; 22x P/E.
• Worst case: 10% revenue CAGR as model gains stall, gaming ad spend matures and ecommerce stays small; operating margin 68%; 14x P/E.
• Tax rate 17%; net interest and other income set at zero (TTM pretax income was within $16m of operating income); diluted shares down 6% over three years; no dividends.

Scenarios, three years forward

Sensitivity analysis

Disclaimer

This analysis is for information only and is not financial advice. It is derived from public SEC filings retrieved via sec-api.io and is not a publication of the U.S. Securities and Exchange Commission. Scenario values are model outputs under stated assumptions and are not forecasts. Data as of 5 November 2026.

Sources

All company and peer figures are read from SEC filings retrieved through the sec-api.io MCP server. Share prices are market data as of the dates stated; derived figures (growth rates, margins, the implied FY2026 range and scenario values) are computed from the filed figures.