Jim Callahan

Jim Callahan asked about the expectation for double-digit market growth (MAX) through 2026 and a comparison of e-commerce reinforcement learning to gaming (Axon 2.0) after 1.5 years.

Answer

Adam Foroughi confirmed that the MAX market is growing very quickly, driven by AppLovin's platform strength and other gaming ad networks, with no slowdowns expected. He explained that while the e-commerce model also improves based on its own results, it's much earlier stage with less data penetration compared to gaming, where AppLovin sees most market transactions. E-commerce model improvements are currently more driven by team changes and new customer data.

Jim Callahan inquired about the expectation for double-digit MAX market growth through 2026 and a comparison of e-commerce reinforcement learning to gaming.

Answer

Co-Founder, CEO, and Chairperson Adam Foroughi expects MAX market growth to continue quickly, fueled by AppLovin's platform strength and other growing ad platforms (Unity, Moloco, Liftoff). He noted that the e-commerce model, while also using reinforcement learning, is much earlier stage with less data penetration compared to gaming, where AppLovin sees the vast majority of transactions. E-commerce model improvements will come from team changes and increased customer ramp-up, which provides more data.

Jim Callahan asked if all referral codes have been given out or if partners will continue to receive them through early 2026. He also inquired about AppLovin's definition of 'low quality' or an advertiser that wouldn't work with the platform.

Answer

Adam Foroughi, Co-Founder, CEO, and Chairperson, AppLovin, stated that successful referral partners delivering quality leads receive more codes, as the gate is solely to slow down growth for tool development. He defined 'low quality' as products their team wouldn't buy, emphasizing the need to train the audience that ads are high quality, a standard that may broaden later.

Jim Callahan asked for a definition of 'low quality' or an advertiser that wouldn't work with the platform.

Answer

Adam Foroughi, Co-Founder, CEO, and Chairperson, AppLovin, stated that currently, 'low quality' means products the team wouldn't buy, as the platform lacks advertiser density. The goal is to train the audience that ads are high quality. This standard may broaden over time as density increases, even for businesses running ads on social/search.

Jim Callahan of Piper Sandler Companies asked what the company has learned from the diverse goals of e-commerce advertisers that is informing the self-serve toolset, and also inquired about any specific performance improvements in the core gaming business during the quarter.

Answer

CEO Adam Foroughi explained that the key learning from the web ecosystem was its fragmentation in attribution and integration, which required significant work on integrations with MMPs and platforms like Shopify. For core gaming, he noted there were no major step-function changes, but rather continued iterative lifts and strong advertiser ROI, which drives healthy growth even on a large base.

Jim Callahan asked what Applovin has learned from the fragmented e-commerce space that is informing its self-serve tools and inquired about any specific performance improvements in the core gaming business during the quarter.

Answer

Co-Founder, CEO & Chairperson Adam Foroughi explained that a key learning was the need to address the fragmented attribution and integration landscape in web advertising. This led to significant work on integrations with partners like Shopify and mobile measurement firms, which was critical before opening the platform. For gaming, he noted there were no major step-function changes, but strong growth continues through iterative model lifts and strong advertiser ROI, demonstrating the business's underlying health.

Jim Callahan asked if e-commerce demand is serviced with different inventory than gaming ads and inquired about early feedback on the 28-day attribution models for the gaming vertical.

Answer

CEO Adam Foroughi clarified that all advertisers compete for the same inventory in a unified auction, which consists of full-screen video ads in mobile games. He added that the longer-term models, including the 28-day window, have been available for a couple of quarters and are highly performant, enabling gaming clients to spend more profitably on the platform.

Jim Callahan asked for more detail on the tariff-related headwinds and whether they are temporary, and also inquired about the potential size of the opportunity for Opera GX's launch in South Korea and Japan.

Answer

CFO Frode Jacobsen stated that the tariff headwinds were significant but were successfully offset by global growth, and that a recovery in that area presents a potential upside. Co-CEO Song Lin described the GX expansion into South Korea and Japan as an early-stage but exciting opportunity, driven by the partnership with League of Legends and the strong e-commerce potential in those key gaming markets.

Jim Callahan, on behalf of Piper Sandler, asked about the drivers behind the significant sequential revenue increase from China and sought clarification on whether the Unity ad network is synonymous with the DSP.

Answer

CEO Matthew Bromberg attributed the China growth primarily to improvements in the core Create business and expanded customer relationships. CFO Jarrod Yahes added that the $20 million sequential increase was broad-based across both Create and Grow. He also confirmed that the Unity ad network is effectively the DSP side of the business.