APP Q2 2025: Apps Sale Boosts Q3 Guidance; Self-Service Ads Launch
- Self-Service & Referral Growth Catalyst: The company’s imminent rollout of its self-serve Ads Manager with a referral-based onboarding program is expected to drive rapid advertiser growth both domestically and internationally, leveraging organic peer referrals for a scalable customer base.
- Innovative AI and Automation Enhancements: The integration of generative AI-based ad creative tools and continuous model enhancements will improve campaign performance and ad targeting, providing a competitive advantage in both gaming and ecommerce segments.
- Expanding Beyond Core Gaming: With a strategic focus on ecommerce and web-based advertising alongside its core gaming business, the company is poised to tap a significantly larger total addressable market, fueling substantial future growth.
- Referral Program Limitations: The Q&A highlighted that the new self‐serve ads manager will launch on a referral basis, meaning that advertiser onboarding remains curated and potentially constrained. This limited access could slow broader advertiser adoption and delay accelerated revenue growth.
- Product Improvement Timing Risks: Management emphasized iterative enhancements—such as dynamic product ads, improved integrations, and forthcoming AI tools—but acknowledged these updates will roll out gradually. Delays in achieving full functionality may postpone the anticipated performance uplift and margin benefits.
- Uncertainty in International Expansion: While global expansion is a key growth pillar, executives noted uncertainties regarding the pace and effectiveness of onboarding international advertisers. If the anticipated demand from non‐US markets does not materialize quickly, the revenue mix and overall business growth could be negatively affected.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q3 2025 | no prior guidance | $1,320,000,000 – $1,340,000,000 | no prior guidance |
Adjusted EBITDA | Q3 2025 | no prior guidance | $1,070,000,000 – $1,090,000,000 | no prior guidance |
Adjusted EBITDA Margin | Q3 2025 | no prior guidance | 81% | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
E-commerce expansion and advertising opp. | In Q4 2024, e‑commerce was discussed as a material revenue contributor with early pilot success, incremental demand, and seasonal effects. In Q3 2024, it was portrayed as a pilot-phase, greenfield opportunity with promising ROAS and plans to scale. | In Q2 2025, e‑commerce is noted as contributing around 10% of the business, with limited onboarding to prepare for a self‑service launch, plus plans for international expansion and a diversified advertiser base. | There is a clear evolution from an early pilot phase to a more mature, scalable opportunity with defined self‑service and global expansion strategies. |
AI and automation enhancements | Q4 2024 emphasized iterative AI model improvements, the development of automated tools and AI agents for managing campaigns. Q3 2024 highlighted advancements in AXON technology, early generative AI features, and increased operational automation. | Q2 2025 introduced the Axon Ads Manager with built‑in agent capabilities and generative AI‑based ad creative tools to streamline workflows and enhance advertiser experience. | The focus has shifted from incremental model upgrades to a fully integrated self‑service platform with advanced generative AI and agent functionality. |
Self‑service tools and referral‑based onboarding | In Q4 2024, self‑service tools were discussed as key to scaling along with referral‑based onboarding during pilot phases for mid‑market clients. In Q3 2024, the emphasis was on achieving a self‑service state for the e‑commerce product by 2025, without specific mention of referral‐based onboarding. | Q2 2025 detailed the launch of Axon Ads Manager along with a scheduled referral‑based onboarding starting October 1, 2025, including plans for an international rollout. | The discussion has evolved from pilot‑phase concepts to the formal implementation of a self‑service platform with referral‑based onboarding and global ambitions. |
Product improvement timing and scaling challenges | Q4 2024 focused on continuous model enhancements and addressing scaling via automation with a non‑customized vertical approach. Q3 2024 stressed that the e‑commerce solution was still in pilot with a rollout planned for 2025 and noted minor bottlenecks. | Q2 2025 emphasized deliberate product improvement with constrained onboarding to ensure quality, while addressing scaling challenges through increased automation and targeting adjustments. | There is a heightened focus on ensuring product readiness before scaling, with increased attention on automation and careful timing to balance growth and quality. |
International expansion uncertainties | No explicit discussion of international expansion uncertainties appeared in Q3 or Q4 2024 [N/A]. | In Q2 2025, there is a clear plan to open the platform to most major international markets on October 1, 2025, with expectations of significant growth. | A new and positive international expansion plan has emerged, replacing earlier ambiguity with a defined timeline and growth expectations. |
Seasonality and revenue volatility risks | Q4 2024 discussed e‑commerce seasonality with holiday spikes and post‑holiday normalization, while Q3 2024 noted minimal seasonality during the pilot phase. | Q2 2025 noted that Q2 is not particularly strong seasonally but emphasized that the upcoming Q4 holiday season is expected to boost growth. | Recognition of seasonal effects remains consistent; as e‑commerce scales, revenue volatility is acknowledged but is expected to stabilize over time. |
Reliance on the gaming sector | Q3 2024 stressed heavy reliance on gaming with strong performance and growth driven by user acquisition. Q4 2024 recounted the historical focus on gaming while noting efforts to diversify into other sectors. | In Q2 2025, gaming remains a core growth driver, achieving 30–40% growth, even as the company works to expand into non‑gaming categories. | Gaming continues to be pivotal, though the company is diversifying its revenue streams, balancing solid gaming performance with expansion into e‑commerce and other verticals. |
E-commerce brand recognition challenges | In Q3 2024, building brand awareness in the new e‑commerce category was highlighted as a priority. | In Q2 2025, there is no specific mention of brand recognition challenges [N/A]. | Earlier concerns over brand recognition appear to have diminished, suggesting improved confidence or resolution in this area. |
Cloud infrastructure investment risks | Q3 2024 covered proactive investments to scale cloud capacity, while Q4 2024 mentioned a step‑up in data center costs managed with expected annual increases. | Q2 2025 does not mention any concerns regarding cloud infrastructure risks [N/A]. | Discussion on cloud investments has faded, implying stable management and confidence in infrastructure scaling as revenue grows. |
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Divestiture Impact
Q: Does Q3 guidance reflect apps divestiture benefits?
A: Management explained that the apps business sale has been factored in to deliver a slightly faster sequential growth in Q3 guidance, underscoring a healthy uplift in revenue projections. -
Paid Marketing
Q: Why start paid marketing now?
A: They highlighted that with a lucrative financial model and efficient automation, ramping up direct, performance-based marketing is the logical next step to significantly boost advertiser acquisition. -
Self-Serve Launch
Q: How will self-service drive growth?
A: Management anticipates that launching the referral-based self‐service platform on October 1 will catalyze a surge in advertiser onboarding—especially in Q4—as the curated approach and international expansion come into play. -
International Expansion
Q: How significant is the international opportunity?
A: They noted a roughly 50/50 split between U.S. and international markets, with gradual yet steady onboarding expected overseas to strengthen long‑term growth. -
Referral Program
Q: Are referral bonuses or restrictions planned?
A: Management conveyed that the platform’s exclusivity naturally drives organic invitations without the need for explicit referral bonuses or special terms, keeping costs in check. -
Gaming Spend Post-Lawsuit
Q: Has gaming UA spend shifted post-lawsuit?
A: They mentioned that no immediate changes are observed; major gaming companies are expected to adjust over the next two to four quarters, with benefits materializing gradually. -
Measurement & AI Enhancements
Q: How do advanced measurement and AI fit in?
A: While external measurement systems remain separate, the self‑service platform will evolve to integrate enhanced agent capabilities and generative AI tools to boost campaign performance over time. -
Advertiser Queue
Q: How large is the onboarding queue?
A: Management expects that the existing, carefully curated queue will trigger a significantly larger onboarding event in Q4, driven by successful advertisers inviting peers.
Research analysts covering AppLovin.