AppLovin (NASDAQ:APP) executives used the company’s fourth-quarter earnings call to push back on investor concerns about competition and artificial intelligence, while highlighting a sharp year-over-year acceleration in revenue, profitability, and free cash flow. Co-founder and CEO Adam Foroughi said recent stock volatility has been driven by worries that AI and new entrants could pressure the business, but he argued internal performance data shows the “strongest operating performance” in the company’s history.
Management addresses competition and AI narratives
Foroughi said AppLovin has “never feared competition,” framing the company’s MAX auction as a foundational component of the mobile gaming ecosystem. He argued that rising bid density can expand the overall “pie,” even if AppLovin wins a smaller share of impressions, because the company can collect a fee when other bidders win inventory that AppLovin’s model values less. In his view, improving auction competition helps publishers earn more, which supports more user acquisition and overall ecosystem growth.
Q4 and full-year results: growth, margins, and cash flow
CFO Matt Stumpf reported fourth-quarter revenue of $1.66 billion, up 66% year-over-year, driven by technology improvements in mobile gaming, seasonal strength, and the growing impact of the company’s e-commerce initiative. Adjusted EBITDA was $1.4 billion, up 82% year-over-year, representing an 84% margin. Stumpf said margins expanded more than 700 basis points from the prior year and that quarter-over-quarter flow-through to adjusted EBITDA was approximately 95%.
Free cash flow for the quarter was $1.31 billion, up 88% year-over-year, and the company ended the period with a $2.5 billion cash balance.
For the full year 2025, Stumpf reported:
- Revenue: $5.48 billion, up 70% year-over-year
- Adjusted EBITDA: $4.51 billion, up 87% year-over-year, with an 82% margin
- Free cash flow: $3.95 billion, up 91% year-over-year
Capital returns and balance sheet priorities
AppLovin continued returning capital through share repurchases. During Q4, the company repurchased and withheld about 800,000 shares for $482 million. For the full year, it repurchased and withheld about 6.4 million shares for $2.58 billion, which Stumpf said was funded entirely by free cash flow. The company ended the year with about $3.28 billion remaining under its authorization and reduced weighted average diluted shares outstanding from 346 million to about 340 million over the last four quarters.
In Q&A, Stumpf said the company’s first priority for cash is organic investment—retaining and hiring talent and supporting growth initiatives—while remaining cash has supported the repurchase program. He also addressed margin durability, saying the primary near-term variable that could pressure margins would be scaling performance marketing, though he emphasized the company’s intent to remain disciplined and focused on return-based campaigns.
E-commerce initiative: self-service rollout, creative automation, and advertiser funnel
Foroughi said the e-commerce business has been live for about a year and a half and is “doing really well.” In Q4, AppLovin opened a self-service platform on a referral-only basis, with a general availability launch still targeted for the first half of 2026. He said some customers that had been on the platform long enough to lap the prior year increased spending materially as the models improved, including a “sizable uplift” implemented a few weeks before the call.
Management declined to break out e-commerce contribution to revenue or ad spend, describing the platform as a unified auction and warning that vertical-based disclosures could be misleading.
As AppLovin expands beyond managed service, Foroughi said self-service reduced gating on minimum GMV, bringing in smaller merchants. He provided an example of an Israeli cookware company that he said went from $4 million in revenue to $16 million and profitability after scaling on AppLovin, then projected to reach $80 million as it ramps again. He said the company’s strategy is to help smaller businesses scale—similar to its historical approach in mobile gaming—before moving upmarket over time.
On product development, Foroughi said e-commerce advertisers currently run far fewer creatives than top gaming advertisers (hundreds versus tens of thousands). He said increasing creative volume improves model performance and described ongoing work to make creative production easier through generative AI tools. AppLovin is piloting generative AI tools with more than 100 customers to automatically create interactive elements of ad units, and he said a video-generation model is planned to follow a similar pilot process.
He also discussed early efforts to market the self-serve platform, noting small-scale tests on social and search and referral programs. He said AppLovin is seeing roughly a 30-day break-even on LTV-to-CAC in these tests, but the company is not yet ready for broad rollout because it wants to optimize the conversion funnel. Foroughi said that among qualified leads, about 57% of advertisers currently go live, and he identified a key inhibitor as a lack of properly formatted video ads—an issue he expects generative AI creative tools to improve.
MAX, Meta questions, and the mediation moat
Several analysts focused on whether larger platforms—particularly Meta—could become more aggressive in in-game advertising and pressure AppLovin’s economics. Foroughi said Meta has been a bidder on MAX for a long time and currently bids on inventory with an ID, but not on “no ID” traffic. He said Meta has increased bidding activity in the areas where it is active and could begin bidding on no-ID traffic in coming quarters, but he argued that increased competition historically has not harmed AppLovin’s outcomes post-Axon 2.0. He cited prior instances of added bidders (including Unity’s Vector, Liftoff’s Cortex, Moloco, and Google’s switch to bidding) and reiterated that stronger competition can shift low-value impressions away from AppLovin while AppLovin earns a fee when others win.
Asked about the moat around MAX mediation, Foroughi said the core defensibility is not only the mediation layer, but the combination of monetization tools and “the best advertising solutions,” which he said many publishers depend on for a significant portion of user acquisition spend. He described the market as largely a two-player environment between AppLovin and Google LevelPlay, alongside newer startups, and said the strength of AppLovin’s integrated offering makes the platform sticky.
Management also noted that MAX’s growth has been strong and characterized it as a double-digit growing category, supported by the growth of multiple gaming ad networks and the broader ecosystem.
Looking ahead, executives said they remain focused on model improvement, expanding advertiser diversity, and a controlled ramp of self-service and marketing as supporting tooling—especially AI-driven creative generation—catches up to the opportunity.
About AppLovin (NASDAQ:APP)
AppLovin Corporation is a Palo Alto–based mobile technology company that provides software and services to help app developers grow and monetize their businesses. The company operates a data-driven advertising and marketing platform that connects app publishers and advertisers, delivering tools for user acquisition, monetization, analytics and creative optimization. AppLovin’s technology is integrated into a broad set of mobile applications through software development kits (SDKs) and ad products designed to maximize revenue and engagement for developers.
Key components of AppLovin’s offering include an ad mediation and exchange platform that enables publishers to manage and monetize inventory across multiple demand sources, and a user-acquisition platform that helps advertisers target and scale campaigns.
