AppLovin APP Q4 2025 earnings

Investment Analysis Clubs Saul’s Investing Discussions
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Here is my take on the AppLovin APP Q4 2025 earnings,

This was a fairly straightforward earnings report with AppLovin beating the top end of their revenue guidance range and giving decent guidance for next quarter. Profitability metrics stood out achieving record margins and strong bottom line numbers.

The company had guided revenue for Q4 from 1570 - 1600M which landed at 1658M, +66% yoy and +18% qoq. Profitability measured in adj EBITDA was guided 1290 - 1320M and came in at 1400M. I was impressed that adj EBITDA saw a step up this quarter as the EBITDA margin was 83%. We can see how big the step up was because the prior three quarters of EBITDA were 1.01B, 1.02B, 1.16B, and now 1.4B. Additionally gross margin was a record 89% with a net income margin of 66%.

For Q1 of 2026 AppLovin guided revenue from 1745 - 1775M which would be up 7% qoq at the top end of the range. Adj EBITDA was guided for 1465 - 1495M which is also +7% qoq. This guidance is roughly in line with how AppLovin has guided over the past year where they guide to a single digit sequential revenue increase and then beat that guidance by a decent amount.

There are two important factors to consider for why I thought this guidance number was pretty strong. The first is that e-commerce has a seasonally strong Q4 and a weaker Q1, but they still expect sequential growth. However, the company does not break out gaming revenue versus e-commerce revenue, so we do not know the breakdowns by segment. Management has told us that they see the platform as one unified whole.

The second important factor to consider for Q1 guidance is that e-commerce is unlikely to reach general availability in Q1. This means the e-commerce portion of the business is still being held back by management as they use a referral system currently. The reason given to hold off on the general availability launch, was qualified leads see 57% of those clients go live but the others drop off in the conversion funnel. The CEO said that they believe they can get this number close to 100%. Additionally he made it clear everything with their system is on track with their original plan to hit general availability in the first half of 2026. This does give me confidence there is significant near term upside for AppLovin as they are likely to launch general availability for e-commerce in Q2 or at the start of Q3.

One aspect I like about AppLovin’s business is how the company talks like they are a startup business. They originally called their e-commerce segment a pilot even though this system is going head to head challenging Meta for dominance at a huge scale. The company has just 900 employees since they dropped the gaming portion of their business. Meanwhile the management seems laser focused on getting the right product to market. There are no side projects or moon-shoots projects at the company. Their focus is proven out by the extraordinary profitability metrics that AppLovin is posting.

Here are some more stand out points from the earnings call,

  • “We are delivering the strongest operating performance in our history”
  • “AI will dramatically lower the cost of creation, which means content will explode”
  • Adjusted EBITDA margin +700 bps yoy
  • Free cash flow 1.31B +88% yoy
  • Cash balance increased to 2.5B
  • Repurchased 482M of shares in the quarter, plans to continue actively repurchasing
  • Model improving, saw sizable uplift from a few weeks ago
  • “We’ve got arguably one of the best business models the world has ever seen”
  • 30-day break even on LTV for user acquisition costs
  • Best model, “biggest breakthrough in a model in this category period and we were able to end up becoming the number one by a lot”
  • “So there’s no world where Meta is going to end up becoming that dominant player in the face of this competition”
  • “Our model is so far into getting smart for this niche. The niche isn’t that small, and we’ve got such a strong position. It’s highly unlikely that someone else is going to come in and materially disrupt it”
  • Getting brand recognition, people know the platform is critical
  • MAX auction is fully transparent, get audited by bidding partners
  • “A lot of opportunity out there for us to expand supply”

Overall I am confident to have AppLovin as my top position currently. The business has become incredibly streamlined as they scale up. They are in start up mode for their e-commerce segment. I expect that part of the business to ramp up revenue and profits significantly as it hits general availability in the coming quarters.

Lastly there was a short report against AppLovin from a company called CapitalWatch. This organization attempted to link AppLovin to money laundering. Recently CapitalWatch retracted their report and issued a public apology. They said their descriptions were inaccurate and did not meet their publications standards.

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The only thing I thought was completely incongruent about AppLovin’s ER was the market reaction. Just bizarre IMO.

As for the CaptialWatch short report - just about as unethical as you can get, maybe illegal, but they could probably claim plausable denial or whatever and get away with it. But of course the stock took a hit upon its release which gave them adequate time to cover their shorts and then issue the “oops, we didn’t really mean it” disclaimer. The money laundering accusation was so ludicrous I was amazed that so many people fell for it - I guess it’s indicative of how many people put money in the market without any idea of what they are actually investing in other than momentum.

I have only one misgiving about AppLovin, and it has no near term relevance, but I do wonder what their second act will be. Undoubtedly they will reach a point when the incredible growth will taper and the company will be a cash cow with little remaining growth opportunity - unless they develop a new service. Years down the road for sure, but it seems like an inevitability. Maybe at some point they’ll pay dividends because what else can they do with all the cash?

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Very concise write up, thanks. The CFO pointed out in his opening remarks that their ‘Rule of 40’ is something like 150, and has increased over last quarter. He noted that possibly no company in history, certainly no company of their size, has ever done something like that. Really extraordinary.

My sense from listening to the report was that they have a few glitches to work out with e-commerce, but that they feel fully up to the challenge. To the issue of Meta getting back in the battle, Adam was clear that it is 5 years since Meta has been active in the space, and the world has changed utterly in that time. In his view there is no way that Meta will ever have the same dominant position.

The link below is to a comment thread in a SeekingAlpha article on APP that I found very insightful. I realize it is most likely behind a paywall, so I also got permission from the commenter (JeffreyNV) to post his comment here. I found it useful because it links to third-party industry data, and it also specifically describes how APP is faring against each of its major competitors.

https://seekingalpha.com/article/4870462-applovin-explosive-adtech-growth-at-a-discount-upgrade-buy#comment-102140493

Specific to Google, which continued to experience steady, albeit slower, growth as a more established, diversified ad giant, APP has significantly outperformed Google in mobile app advertising growth, particularly with in-app gaming. Google remains the leader in total digital ad spend and Android monetization, while APP surpassed other competitors in key iOS metrics and narrowed the gap on Android on Google.

Importantly, APP’s success is built on providing better conversion data in a post-iOS14 world, where Google and Meta face, or are facing, much greater degrees of disruption. APP is focused at an incredibly granular level, on maximizing in-app ad performance and monetization.

Specific to In-App Advertising Share (Android), GOOGL AdMob’s 28% share remains the leader, while APP’s 24% share narrowed the gap significantly, with some analysts noting APP’s growth has surpassed Google on their own OS in specific segments. These are significant metrics in their own right.

ppc.land/…

Notably, App’s ability to navigate iOS privacy constraints (specifically using SKAdNetwork and AI, rather than direct tracking) has allowed them to outperform Google in user acquisition for app publishers. This is the data point that shorts appear to have erroneously focused upon in their reports.

growthcurve.co/…

Industry reports indicate that APP has now become the #1 e-com network for certain performance-driven marketers, challenging Google’s traditional dominance in this space. Google retains a superior total reach, but APP has shown superior performance in targeted mobile user acquisition, particularly in the 2025–2026 time frame.

From another camera angle, Google Ads continues to dominate the broader market with an 80.2% share of global PPC and generated $81 billion in revenue in 2025, yielding an average 200% ROI ($2 for every $1 spent) for its 1.2 million active advertisers.

www.emarketer.com/…

Specific to META, who remains the dominant player by overall volume and scale, Northbeam Data reports that APP has demonstrated a ~45% higher ROAS compared to Meta among DTC brands using the platform, delivering 74% to 115% higher ROAS than secondary platforms, including TikTok, Snap, and YouTube, with 85% of conversions coming from new customers.

While Meta holds a 63% share of wallet, APP has grown to capture over 5-10%+ of ad spend for many brands included in their invitational customer mix. CPMs have remained competitive, averaging roughly 3.95% lower than META’s, though they are expected to rise incrementally as adoption increases. APP is also particularly efficient at 1-day ROAS, while Meta continues to be a strong contender for broader brand awareness and long-term, multi-touch campaign

www.northbeam.io/…

In that that third party data is not yet available on APP e-commerce initiatives, the connected television (“CTV”) space that has long been dominated by TTD as the go to platform for extending brand awareness via open web inventories, and most particularly CTV, APP is now significantly outperforming them in revenue growth, profitability margins, and AI-driven performance metrics that includes superior ROAS with trailing top line growth of approximately 18% in this segment, and at higher operating margins. TTD is generally considered to have lower efficiency compared to APP, with operating margins in the 15–20% range.

Similar patterns are present with ROKU, notwithstanding its superior access to television viewers and high-intent, first-party data for television audiences. Again, APP is the clear winner, frequently cited for superior ROI, particularly for app-based and e-commerce advertisers. What’s interesting with ROKU is the recent development of a new partnership between the two, where Roku utilized APP’s ad tech to boost its own performance-based ad inventory.

APP has been volatile for the past year, with trough to peak of about 3X. I personally feel we are at a trough, and are very likely to see a similar trough to peak in 2026. If I didn’t already have an oversized position, I would be backing up the truck.

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That’s pretty amazing - for comparison, ServiceNow’s “rockstar” CEO just recently bragged about his company being a “Rule of 57.”

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Earlier in this thread I expressed concern that longer term the adtech business will top out and there didn’t seem to be any indication of what AppLovin might have in the works as an act two. Where will their next S-curve come from?

I think I found the answer. You might recall that AppLovin was a contender for acquisition of TikTok. They didn’t win the bid, but it was an indication that they were interested in the social media space. AppLovin has posted a job listing seeking an engineer to help build the foundation of a new interactive social media platform - Maybe they aren’t just competing with Meta in the ad space, but they’re going to confront Meta head-to-head in the social media space.

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This is a 1.5 hour interview with APPs chief product and engineering officer Giovanni Ge posted 4 days ago. It’s in Chinese, but the subtitles are adequate. Fascinating!

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我会说一点普通话，但这超出了我的能力范围。

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Yeah, no quarter given there!

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Forgot to mention that the new social network thing that app is building is mentioned in the video (in passing)

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I felt the job posting was pretty nebulous, but the Chinese podcast with the CPO is definite confirmation of AppLovin’s desire to push into its own social network – which didn’t wane after the moonshot bid for TikTok.

From the CPO:

We aim to build a completely new next-generation social media platform. This platform will bring valuable organic traffic to AppLovin. Will we follow Meta’s old path? I think our path is definitely the opposite of Meta’s. Meta started with organic traffic; after acquiring it, it built its own advertising and algorithm teams and then introduced their technology to third-party platforms.

We started with third-party platforms, and after achieving some success there, we began building our own organic traffic. I think our path is not easy, but its difficulty has its advantages, especially in terms of organic traffic … I have a very optimistic vision for building our own traffic platform. But social media is still quite difficult, because its traffic is dominated by a few giants.

Bloomberg amplified his message from podcast:

https://www.bloomberg.com/news/articles/2026-02-19/applovin-plans-its-own-social-platform-after-failed-tiktok-bid?embedded-checkout=true

-muji

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Worth noting, that AppLovin is still expanding their market. They are in the initial stages of working with e-commerce ads, and early indications are that it has been very successful for their clients. Growth topping out doesn’t seem a concern if they are actively expanding their TAM through handling new types of advertising.

Plenty of detail discussed in the most recent earnings call (do a search for “e-commerce”):
Earnings Call Transcript FY2025Q4

(edit: didn’t finish my thoughts, oops)
Long-term (years), I don’t think growth topping out is any more of a problem than for any other type of company. But AppLovin has a long ways to go before that point is reached. Unless I am missing something (which is likely?) I don’t see how growth topping out is in any way an issue for investing in APP at this time.

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I fully agree with you. That’s one of the reasons that APP is by far my largest position. In fact, while AppLovin is just beginning to penetrate the ecommerce/DTC vertical, they also have CTV as a future target market which is why they bought WURL some several quarters ago. So when I said “long term,” I menat very long term meaning several years. Yet, it is inevitable - adtech growth will taper in time. It’s good to know that they have already seen this day to come and were already putting a 2nd act in place that will provide an entirely new market while also expanding their reach in the adtech space. Once again reaffirming my belief that Foroughi and team are one of the brightest management teams I’m ever studied.

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