AppLovin’s second quarter was marked by a positive market response, despite revenue slightly missing Wall Street expectations. Management credited robust growth in its gaming advertising segment and ongoing improvements in advertising technology as key drivers. CEO Adam Foroughi emphasized the importance of the company’s MAX marketplace, noting that “our growth comes from improved technology, increased demand as well as from supply side expansion.” The majority of the quarter’s revenue growth came from gaming, and the company maintained a disciplined approach to operational efficiency, which supported strong profitability.
Is now the time to buy APP? Find out in our full research report (it’s free).
AppLovin (APP) Q2 CY2025 Highlights:
- Revenue: $1.26 billion vs analyst estimates of $1.27 billion (16.5% year-on-year growth, 1.2% miss)
- Adjusted EPS: $2.49 vs analyst estimates of $2.32 (7.8% beat)
- Adjusted Operating Income: $957.7 million vs analyst estimates of $841.7 million (76.1% margin, 13.8% beat)
- Revenue Guidance for Q3 CY2025 is $1.33 billion at the midpoint, above analyst estimates of $1.31 billion
- EBITDA guidance for Q3 CY2025 is $1.08 billion at the midpoint, above analyst estimates of $1.06 billion
- Operating Margin: 76.1%, up from 36.2% in the same quarter last year
- Market Capitalization: $158 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From AppLovin’s Q2 Earnings Call
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Matthew Cost (Morgan Stanley) asked about the decision to launch paid marketing for advertiser acquisition. CEO Adam Foroughi explained that the company sees a large opportunity to scale efficiently using its own performance marketing expertise and expects high returns without needing to expand the salesforce.
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Ralph Schackart (William Blair) requested clarification on the impact of the self-service platform launch. Foroughi indicated that a rapid increase in advertiser count is expected, especially as referrals and international access broaden the platform’s reach beyond gaming.
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Omar Dessouky (Bank of America) inquired about the use of game engine data for advertising optimization. Foroughi responded that AppLovin relies on behavioral data from in-app integrations and has significant market penetration, which provides a strong foundation for model improvements.
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Robert Sanderson (Loop Capital) questioned targeting limitations for web-based advertisers. Foroughi acknowledged some differences from social platforms like Meta, emphasizing that AppLovin focuses on automation and quick conversion, and that product improvements are ongoing.
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Alec Brondolo (Wells Fargo) asked about the magnitude of latent demand for self-service onboarding. Foroughi noted that referral-based onboarding is expected to drive a significant jump in advertiser participation, though onboarding will remain curated during the initial phase.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely follow (1) the initial impact of the AXON ads manager’s referral-based launch and subsequent international expansion, (2) adoption rates and user feedback on new AI-powered automation tools for advertisers, and (3) the pace at which e-commerce and non-gaming verticals contribute to overall revenue growth. Continued progress in operating efficiency and product enhancements will also be central to assessing execution.
AppLovin currently trades at $466, up from $391.10 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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