Mobile app technology company AppLovin (NASDAQ: APP) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 17.3% year on year to $1.41 billion. Its GAAP profit of $2.45 per share was 2.6% above analysts’ consensus estimates.
Is now the time to buy AppLovin? Find out by accessing our full research report, it’s free for active Edge members.
AppLovin (APP) Q3 CY2025 Highlights:
- Revenue: $1.41 billion vs analyst estimates of $1.34 billion (17.3% year-on-year growth, 4.5% beat)
- EPS (GAAP): $2.45 vs analyst estimates of $2.39 (2.6% beat)
- Operating Margin: 76.8%, up from 44.6% in the same quarter last year
- Free Cash Flow Margin: 74.7%, up from 61.3% in the previous quarter
- Market Capitalization: $205.9 billion
Company Overview
Sitting at the crossroads of the mobile advertising ecosystem with over 200 free-to-play games in its portfolio, AppLovin (NASDAQ: APP) provides software solutions that help mobile app developers market, monetize, and grow their apps through AI-powered advertising and analytics tools.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, AppLovin grew its sales at an excellent 35.2% compounded annual growth rate. Its growth surpassed the average software company and shows its offerings resonate with customers, a great starting point for our analysis.
Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. AppLovin’s annualized revenue growth of 34.9% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong. 
This quarter, AppLovin reported year-on-year revenue growth of 17.3%, and its $1.41 billion of revenue exceeded Wall Street’s estimates by 4.5%.
Looking ahead, sell-side analysts expect revenue to grow 26.9% over the next 12 months, a deceleration versus the last two years. Still, this projection is admirable and indicates the market is baking in success for its products and services.
While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our free report one of our favorites growth stories.
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
AppLovin is extremely efficient at acquiring new customers, and its CAC payback period checked in at 2.8 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give AppLovin more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
Key Takeaways from AppLovin’s Q3 Results
Both revenue and EPS beat Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 6.6% to $658.07 immediately after reporting.
AppLovin put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
