APP Stock Earnings Review: AppLovin’s Adtech Pivot Pays Off

Notwithstanding its playful name, AppLovin [APP] is a serious player in the adtech space. 

Based in Palo Alto, California, AppLovin was founded in 2012, then went public in April 2021 in the midst of the Covid-19 pandemic. There was a lot of initial hype, but APP stock looked lackluster for some years, up until the start of 2024, when it began a seemingly inexorable rise.

What changed?

In a word, artificial intelligence (AI). In Q2 2023, AppLovin launched Axon, its AI-powered engine which offers advertising recommendation, analytics and optimization services to its customers — mostly, but not exclusively, gaming app developers. Since then it has developed Axon into what the company itself describes as “the most advanced AI-driven advertising platform in the industry”.

Since launch, advertising spend on AppLovin’s platform has quadrupled, with gaming clients alone driving an estimated $10bn annual run rate. This has propelled the company into the top tier of the world’s most highly valued adtech players.

In light of this success, the firm is doubling down on its software platform. Last month, it shed its legacy mobile gaming business to Tripledot Studios for $400m and roughly a 20% equity stake.

It would seem that investors are buying into the narrative. As of August 11, APP stock is up 565.11% since its IPO and 43.77% year-to-date. It has been climbing steadily since the Q2 earnings call on August 6, although it has yet to top its record high, set on February 19. 

Let’s unpack those results.

APP Smashes Q2

AppLovin posted a blowout Q2 2025, with revenue surging 77% year-over-year to $1.26bn from $711m a year earlier. 

Profitability also jumped sharply. Net income was up 164% to $820m and income from continuing operations rose 156% to $772m. Adjusted EBITDA almost doubled, climbing 99% to $1.02bn and delivering an 81% margin, underscoring the company’s operating leverage. 

Cash generation remained healthy, with $768m in free cash flow for the period. Capital allocation was active: AppLovin repurchased and withheld 0.9 million Class A shares at a total cost of $341m, leaving 339 million Class A and B shares outstanding at quarter-end. 

Strategically, the sale of its Apps business, reported as discontinued operations, reflected AppLovin’s continued pivot toward its scalable, high-margin software platform.

APP Stock Q3 Outlook

There may be reasons to feel optimistic about AppLovin’s immediate prospects. 

AppLovin forecasts Q3 revenue will be between $1.32bn and $1.34bn, and expects adjusted EBITDA to come in between $1.07bn and $1.09bn.

It also plans to expand its footprint in its global addressable market. On the earnings call, CEO Adam Foroughi announced that, on October 1, “we plan to open the Axon ads manager on a referral basis, perfectly timed for the holiday season. Feedback from these partners will guide our global public launch in the first half of 2026. To date, web advertising campaigns have been limited to the US. On October 1, we plan to open our platform to most major international markets.”

Adtech Plays: APP vs ROKU vs U

AppLovin sits at the nexus of mobile-gaming and ad tech, reaching a reported 42% share of the mobile gaming user acquisition market and achieving an estimated $100bn valuation after a stock surge of over 780% in its breakout year. Its strength lies in full-funnel ad offerings — from user acquisition to performance ad returns — and its rapid pivot toward e-commerce advertising further expands its addressable market.

By contrast, Roku [ROKU] dominates the connected-TV ad landscape. In Q2 2025, its platform segment (ads plus subscriptions) generated $975m in revenue, up 18% year-over-year, part of total net revenue of $1.11bn, which beat expectations and earned the company positive GAAP EPS of $0.07. Roku benefits from scale — reaching approximately 145 million people in US households — and boasts deep monetization via both hardware and advertising ecosystems.

Meanwhile, Unity [U] operates in a different sector of the ecosystem: it powers in-game creation and serves ads within those environments. In Q2 2025, Unity reported $441m in revenue, a slight 2% decline year-over-year, with its Unity Ad Network delivering a 15% sequential increase. Adjusted EBITDA stood at $90m, with a margin of 21%, and free cash flow reached $127m. Unity’s reach spans developers and creators rather than direct consumer ad budgets.

Source: Yahoo Finance

APP Stock: The Investment Case

The numbers look good. But that is not the whole story. 

The Bull Case for APP Stock

AppLovin delivered a standout Q2 performance while raising its Q3 sales forecast, igniting a stock surge and technical breakout. Analysts remain bullish: Jefferies lifted its target to $530, UBS to $475 and Wedbush to an even more optimistic $620, citing untapped opportunity as fewer than 1,000 web-based advertisers currently use AppLovin, or just 0.1% of its total addressable market. The company’s strategic pivot to a pure-play ad tech model shows focus. Coupled with a rare IBD Composite Rating of 98 (among the top 2% of stocks), accelerating earnings and sales growth, and a robust technical setup, AppLovin could be well-positioned for continued outsized gains. 

The Bear Case for APP Stock

AppLovin’s stellar Q2 performance masked a dip in free cash flow, which fell short of expectations and triggered a notable pullback in share buybacks, signaling potential limits to capital returns. Meanwhile, a flurry of short-seller reports earlier this year rocked investor trust. The company’s high valuation, trading well above peers, leaves little margin for error. Lastly, although its adtech pivot seems to be paying off, the space is very crowded: as Oakoff Investments recently noted in Seeking Alpha, while AppLovin’s Axon platform “is clearly top-tier, it’s actually fighting for every ad dollar against behemoths like Alphabet’s [GOOGL] Google, Meta Platforms [META] and The Trade Desk [TTD], who have immense resources (more than APP has).”

Conclusion

AppLovin’s breakout Q2, raised guidance and adtech pivot have analysts eyeing major upside in a vast untapped market. But a lofty valuation, slowing free cash flow and fierce competition from adtech giants leave little room for missteps.