AppLovin Corp (APP)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered material upside: revenue $1.405B (+68% YoY) and adjusted EBITDA $1.158B (+79% YoY), both above prior guidance highs and consensus; diluted EPS was $2.45 versus $1.25 YoY .
• Wall Street estimates were beaten across the board: revenue $1.405B vs $1.342B*, EPS $2.45 vs $2.389*, and EBITDA $1.158B vs $1.091B*; Q4 guidance implies 12–14% QoQ revenue growth and 82–83% EBITDA margin [*S&P Global].
• Management launched self‑service Axon Ads on Oct 1 with no major issues and is seeing ~50% week‑over‑week spend growth from new advertisers, highlighting early traction toward broader demand density .
• Capital returns accelerated: $571M repurchases/withholdings in Q3 and authorization increased by $3.2B to $3.3B total; FCF was $1.049B in Q3, underpinning buybacks .

What Went Well and What Went Wrong

What Went Well

• Strong beats: Revenue, adjusted EBITDA, and EPS all exceeded guidance and consensus; adjusted EBITDA margin reached 82%, above 81% guided for Q3 .
• Self‑service launch executed cleanly: “We did so without any significant hiccups, no major bugs, and effective filtering out of low-quality ad accounts…” .
• Early self‑service traction: “We’re already seeing spend from these self‑service advertisers grow around roughly 50% week over week” .
• Demand density strategy: Management expects higher advertiser diversity to lift conversion rates and support gaming advertiser economics via better targeting .

What Went Wrong

• EU web/shop inventory not yet opened; GDPR build‑out remains a gating task: “We can work with EU advertisers today… we do not open up our inventory for website or shop advertisers in the EU… not a priority versus expanding out the business” .
• Guidance conservatism: Q4 guide excludes incremental referral onboarding ramp due to unpredictability, limiting upside embedded in outlook .
• Higher tax burden and other expense: Q3 provision for income taxes rose to $185M vs $35M YoY; other income (expense), net swung to $(6.6)M vs $8.4M YoY .

Financial Results

YoY and Sequential Performance

Estimate Comparison (S&P Global)

Values marked with * retrieved from S&P Global.

Cash Flow & Capital Returns KPIs

Non‑GAAP Reconciliation Highlights (Selected Items)

Note: Full reconciliation provided in the company’s exhibit .

Segment Breakdown

• Not disclosed in Q3 materials; AppLovin reports consolidated results without segment revenue detail .

Guidance Changes

Management noted Q4 guidance excludes unpredictable onboarding ramp from the referral program (conservative approach) .

Earnings Call Themes & Trends

Management Commentary

• Prepared remarks: “Q3 was another very good quarter… MAX… continues to grow at very healthy rates… we also opened up international traffic for advertisers… ahead of schedule.”
• Execution quality: “We did so without any significant hiccups, no major bugs, and effective filtering out of low-quality ad accounts.”
• Early momentum: “We’re already seeing spend from these self‑service advertisers grow around roughly 50% week over week.”
• Strategic rationale: More advertiser density and better recommendation/personalization should lift conversion rates and support gaming advertisers .
• Outlook framing: Q4 guidance reflects e‑com seasonality, model enhancements, and optimism on referrals but excludes unpredictable new-customer onboarding; guide to what we know .

Q&A Highlights

• Self‑service onboarding: Early cohort mix comparable to last year’s pilot; filtered via referrals; focus on funnel optimization and AI‑powered support tools .
• Guidance philosophy: Conservative—exclude incremental onboarding ramp due to unpredictability; reflects normal holiday seasonality and ongoing model improvements .
• Conversion vs supply: Growth driven more by conversion rate lifts (models, density, creatives) than impressions; generative AI creatives testing in coming weeks/months .
• International: Web/shop inventory opened globally except EU; Western markets leading; localization planned; model generalizes across users .
• Capital returns: Authorization scaled; repurchases funded by strong FCF; diluted share count trending down .

Estimates Context

• Q3 2025 beat: Revenue $1,405B vs $1,342B*, EPS $2.45 vs $2.389*, EBITDA $1,158B vs $1,091B* .
• Forward consensus: Q4 revenue ~$1.605B*, Q1 2026 ~$1.689B*; EPS Q4 ~$2.923*, Q1 2026 ~$3.167*; EBITDA Q4 ~$1.322B*, Q1 2026 ~$1.384B* [*S&P Global].
• Guidance vs consensus: Q4 company guide revenue $1,570–$1,600 and EBITDA $1,290–$1,320 sits close to consensus, with margin 82–83% .
  Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

• Broad‑based beat with strong operating leverage and 82% adjusted EBITDA margin; momentum supports near‑term upside relative to consensus .
• Self‑service Axon Ads shows early traction; if 50% WoW spend persists and onboarding scales in 2026, demand density could structurally lift conversion and revenue per impression .
• Q4 guide is prudent—excludes unpredictable referral ramp; upside likely if onboarding accelerates; watch for updates on GA timing and conversion improvements .
• Capital allocation aggressive and well‑funded: $1.049B FCF in Q3 and buyback authorization raised to $3.3B remaining, providing support to EPS and share count .
• Risks: EU GDPR gating web/shop inventory; elevated tax provision; “other expense” headwinds; regulatory scrutiny of ad tech/data practices .
• Medium‑term thesis: Expanding advertiser diversity and generative AI creatives should enhance conversion economics; potential for supply expansion beyond mobile gaming as demand scales .

References: Q3 2025 8‑K and Exhibit 99.1 ; Q3 press release ; Q3 earnings call transcript –; Q2 2025 8‑K ; Q1/Q2 transaction context .