AppLovin’s second quarter results were met with a significant negative market reaction as revenue and adjusted EBITDA both came in just below Wall Street expectations. Management attributed the shortfall to a slower pace of model improvements within its core gaming advertising business, which CEO Adam Foroughi described as “lighter than normal during the quarter.” Foroughi emphasized that the timing of these improvements, which landed just after quarter end, was the primary factor behind the weaker performance, not a change in advertiser demand or competitive dynamics. He added, “We know what happened, and it’s already been addressed.”
Is now the time to buy APP? Find out in our full research report (it’s free for active Edge members).
AppLovin (APP) Q2 CY2026 Highlights:
- Revenue: $1.92 billion vs analyst estimates of $1.95 billion (52.8% year-on-year growth, 1.2% miss)
- Adjusted EPS: $3.97 vs analyst expectations of $4.21 (5.7% miss)
- Adjusted EBITDA: $1.61 billion vs analyst estimates of $1.64 billion (83.9% margin, 1.5% miss)
- Revenue Guidance for Q3 CY2026 is $2.07 billion at the midpoint, below analyst estimates of $2.08 billion
- EBITDA guidance for Q3 CY2026 is $1.73 billion at the midpoint, below analyst estimates of $1.75 billion
- Operating Margin: 77.7%, up from 76.1% in the same quarter last year
- Market Capitalization: $106.6 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is 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
- Jason Bazinet (Citi) asked about the strategy behind using partnerships to bring in new advertisers. CEO Adam Foroughi explained that targeted partnerships with analytics firms like Triple Whale are effective for attracting high-quality, mid-market advertisers.
- James Heaney (Jefferies) sought clarity on the model breakthroughs that were delayed. Foroughi acknowledged that model improvements were less impactful in Q2 but materialized early in Q3, which he expects to drive a rebound.
- Stephen Ju (UBS) questioned the ability of advertisers to scale spend and whether AppLovin is ready for larger brands. Foroughi responded that mid-market is the current focus due to data and model maturity, with expectations to address the long tail as the platform evolves.
- Ralph Schackart (William Blair) inquired about diagnosing the lack of model uplift and the long-term margin outlook. Foroughi described the unpredictable nature of R&D and Stumpf reiterated that higher compute costs are justified when they lead to revenue growth.
- Omar Dessouky (Bank of America) asked about the early results from the public launch of Ads Manager and the approach to onboarding advertisers. Foroughi said that current growth is concentrated among a few high-spending advertisers, with gradual expansion planned as data volume increases.
Catalysts in Upcoming Quarters
Looking forward, our analysis will focus on (1) the impact of recent model improvements on gaming advertiser spend and platform growth, (2) the pace at which mid-market consumer advertisers are onboarded and drive incremental results, and (3) the effectiveness of ongoing compute investments in boosting model sophistication and revenue. Additionally, we will monitor progress in creative tools, ad format innovation, and the expansion of strategic partnerships as indicators of sustainable growth.
AppLovin currently trades at $319.32, down from $417.80 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
Our Favorite Stocks Right Now
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.