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AppLovin Corp. Class A (APP)
NASDAQ:APP
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AppLovin
(NASDAQ:APP)
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Rating:71Outperform
Price Target:
$601.00
▲(10.57% Upside)
High score is driven primarily by exceptional profitability and cash flow, reinforced by a very strong earnings call with robust growth, guidance, and buybacks. The rating is tempered by current weaker technical momentum, elevated leverage on the balance sheet, and a high P/E valuation.
Positive Factors
High Profit Margins
Sustained very high gross and net margins reflect strong pricing power and an efficient ad platform. Durable margins support reinvestment in product, fund buybacks and acquisitions, and provide a buffer versus cyclical ad demand, underpinning long-term profitability.
Strong Cash Generation
Robust free cash flow growth and excellent cash conversion give the company flexibility to fund strategic initiatives, M&A, and shareholder returns without relying heavily on external financing. This strengthens balance sheet resilience and long-term investment capacity.
Scalable Self-Service Platform
A functioning self-service offering is a structural growth lever: it automates advertiser onboarding, reduces sales costs, and scales small-to-medium advertiser spend. Over time this broadens the advertiser base and increases revenue stickiness and margin leverage.
Negative Factors
High Leverage
Significant leverage raises financial risk and interest exposure, limiting strategic flexibility. If ad demand or growth slows, servicing debt could constrain investment in product and international expansion, amplifying downside in a prolonged downturn.
EU Regulatory Restrictions
Regulatory constraints in the EU materially reduce addressable market access for web advertisers. Compliance requirements and delayed market entry require sustained engineering and legal resources and can slow international monetization for months to years.
Demand Density & Monetization Competition
Long-term growth depends on building sufficient demand density and continuously improving monetization. Competitive pressure forces ongoing product and AI investment; failure to sustain demand or monetization gains could cap revenue per impression and margin expansion.
AppLovin (APP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$180.95B
Dividend YieldN/A
Average Volume (3M)3.95M
Price to Earnings (P/E)68.5
Beta (1Y)3.62
Revenue Growth28.69%
EPS Growth134.97%
CountryUS
Employees1,533
SectorCommunication Services
Sector Strength97
IndustrySoftware - Application
Share Statistics
EPS (TTM)2.45
Shares Outstanding307,597,000
10 Day Avg. Volume5,750,917
30 Day Avg. Volume3,954,794
Financial Highlights & Ratios
PEG Ratio0.19
Price to Book (P/B)100.11
Price to Sales (P/S)23.17
P/FCF Ratio52.10
Enterprise Value/Market Cap1.02
Enterprise Value/Revenue33.56
Enterprise Value/Gross Profit40.29
Enterprise Value/Ebitda51.78
Forecast
1Y Price Target
$764.56Price Target Upside40.66% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering20
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
AppLovin Business Overview & Revenue Model
Company DescriptionAppLovin Corporation engages in building a software-based platform for mobile app developers to enhance the marketing and monetization of their apps in the United States and internationally. The company's software solutions include AppDiscovery, a marketing software solution, which matches advertiser demand with publisher supply through auctions; Adjust, an analytics platform that helps marketers grow their mobile apps with solutions for measuring, optimizing campaigns, and protecting user data; and MAX, an in-app bidding software that optimizes the value of an app's advertising inventory by running a real-time competitive auction. Its business clients include various advertisers, publishers, internet platforms, and others. The company was incorporated in 2011 and is headquartered in Palo Alto, California.
How the Company Makes MoneyAppLovin generates revenue primarily through its mobile advertising platform, which allows developers to monetize their applications by displaying ads. The company operates on a cost-per-install (CPI) and cost-per-click (CPC) basis, earning revenue each time a user interacts with an ad. Additionally, AppLovin provides software development kits (SDKs) that enhance app performance and user engagement, further driving monetization opportunities for developers. Significant partnerships with major app developers and advertisers, along with a vast network of advertising inventory, bolster AppLovin's revenue streams. The company also engages in strategic acquisitions to enhance its service offerings and expand its market presence, contributing to its overall earnings.
AppLovin Key Performance Indicators (KPIs)
Any
Monthly Active Payers
Measures the number of users making payments each month, indicating the level of user engagement and monetization success within the platform.
Measures the number of users making payments each month, indicating the level of user engagement and monetization success within the platform.
Data provided by:
The Fly
The FlyAppLovin Earnings Call Summary
Earnings Call Date:Nov 05, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 11, 2026
Earnings Call Sentiment Positive
The earnings call highlights a very strong financial performance with significant revenue and EBITDA growth, successful product launches, and strategic milestones like S&P 500 inclusion. However, there are challenges in expanding the EU market and potential demand constraints that need to be addressed. Overall, the positive aspects significantly outweigh the challenges.Q3-2025 Updates
Positive Updates
Record-Breaking Revenue Growth
Q3 revenue was approximately $1.405 billion, up 68% year-over-year, driven by model updates in the core gaming business.
Strong EBITDA and Cash Flow
Adjusted EBITDA was $1.158 billion, up 79% with an 82% margin, and free cash flow was $1.049 billion, up 92% year-over-year.
S&P 500 Inclusion
AppLovin was included in the S&P 500, marking a significant milestone and recognition of the company's growth and platform reach.
Successful Launch of Self-Service Platform
The self-service platform launched without significant issues, with early growth in advertiser spend at approximately 50% week-over-week.
International Expansion
Opened up international traffic for advertisers promoting websites or shops, expanding the reach of the platform.
Negative Updates
Challenges with EU Market Expansion
The platform has not yet opened EU traffic for web shops and web advertisers due to GDPR and other regulatory requirements.
Potential Demand Constraints
While the company is not currently supply-constrained, there is an acknowledgment that demand density is needed for ongoing growth.
Competitive Pressure in Monetization
The company faces pressure to continually improve monetization tools and compete in a mature in-app purchasing market.
Company Guidance
During the AppLovin earnings call for Q3 2025, the company provided robust guidance for the upcoming quarter and beyond. Revenue for Q3 was reported at approximately $1.405 billion, marking a year-over-year increase of 68%, driven by model updates in the core gaming business. The adjusted EBITDA reached $1.158 billion, reflecting a 79% increase at an 82% margin. Free cash flow was reported at $1.049 billion, up 92% from the previous year. The company ended the quarter with $1.7 billion in cash and cash equivalents and repurchased approximately 1.3 million shares for $571 million using free cash flow. The Board of Directors also increased the share repurchase authorization by an additional $3.2 billion. Looking ahead, AppLovin anticipates Q4 revenue between $1.570 billion and $1.6 billion, with an adjusted EBITDA between $1.290 billion and $1.320 billion, targeting a margin of 82% to 83%. The company is optimistic about its self-service platform, noting early growth in spend from self-service advertisers at roughly 50% week-over-week, and plans to continue refining its onboarding processes and testing AI-based ad creatives to further enhance user response rates.AppLovin Financial Statement Overview
Summary
Strong profitability and cash generation (TTM gross margin 83.31%, net margin 51.28%, free cash flow growth 17.77% and strong cash conversion) support a high score. The main offset is balance-sheet risk from elevated leverage (debt-to-equity 2.38), despite very strong ROE.Income Statement
AppLovin's income statement shows strong profitability with a TTM gross profit margin of 83.31% and a net profit margin of 51.28%, indicating efficient cost management and high profitability. The revenue growth rate of 3.89% TTM suggests steady growth, although it has slowed compared to previous years. The EBIT and EBITDA margins are robust at 59.57% and 64.18% respectively, reflecting strong operational performance.85
Very Positive
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio of 2.38 TTM, indicating significant leverage, which could pose a risk if not managed carefully. However, the return on equity is impressive at 262.94% TTM, suggesting effective use of equity to generate profits. The equity ratio stands at 23.23% TTM, indicating a moderate level of equity financing.70
Positive
Cash Flow
AppLovin's cash flow statement is strong, with a free cash flow growth rate of 17.77% TTM, indicating healthy cash generation. The operating cash flow to net income ratio of 3.13 TTM and free cash flow to net income ratio of 0.99 TTM suggest efficient conversion of income into cash, supporting liquidity and operational flexibility.88
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.52B | 4.71B | 3.28B | 2.82B | 2.79B | 1.45B |
| Gross Profit | 4.60B | 3.54B | 2.22B | 1.56B | 1.81B | 895.51M |
| EBITDA | 3.58B | 2.34B | 1.15B | 513.77M | 580.54M | 197.12M |
| Net Income | 2.83B | 1.58B | 356.71M | -192.75M | 35.45M | -125.19M |
Balance Sheet | ||||||
| Total Assets | 6.34B | 5.87B | 5.36B | 5.85B | 6.16B | 2.15B |
| Cash, Cash Equivalents and Short-Term Investments | 1.67B | 741.41M | 502.15M | 1.08B | 1.52B | 317.24M |
| Total Debt | 3.51B | 3.56B | 3.18B | 3.28B | 3.33B | 1.70B |
| Total Liabilities | 4.87B | 4.78B | 4.10B | 3.95B | 4.03B | 2.31B |
| Stockholders Equity | 1.47B | 1.09B | 1.26B | 1.90B | 2.14B | -158.54M |
Cash Flow | ||||||
| Free Cash Flow | 3.35B | 2.09B | 1.06B | 412.11M | 360.46M | 219.64M |
| Operating Cash Flow | 3.36B | 2.10B | 1.06B | 412.77M | 361.85M | 222.88M |
| Investing Cash Flow | 358.89M | -106.75M | -77.83M | -1.37B | -1.21B | -679.89M |
| Financing Cash Flow | -2.62B | -1.75B | -1.56B | -526.85M | 3.11B | 377.86M |
AppLovin Technical Analysis
Neutral
543.56
Price Trends
627.54
Negative
620.04
Negative
491.27
Positive
Market Momentum
-33.91
Positive
35.93
Neutral
15.09
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For APP, the sentiment is Neutral. The current price of 543.56 is below the 20-day moving average (MA) of 608.81, below the 50-day MA of 627.54, and above the 200-day MA of 491.27, indicating a neutral trend. The MACD of -33.91 indicates Positive momentum. The RSI at 35.93 is Neutral, neither overbought nor oversold. The STOCH value of 15.09 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for APP.
AppLovin Risk Analysis
AppLovin disclosed 49 risk factors in its most recent earnings report. AppLovin reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
AppLovin Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $180.95B | 68.51 | 230.71% | ― | 28.69% | 134.97% | |
70 Outperform | $16.35B | 36.73 | 16.78% | ― | 20.82% | 41.82% | |
67 Neutral | $5.64B | 52.32 | 9.79% | ― | 18.99% | 66.43% | |
65 Neutral | $18.40B | -39.29 | -13.64% | ― | -8.23% | 48.57% | |
61 Neutral | $586.17M | ― | -26.69% | ― | 13.09% | 32.34% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
60 Neutral | $371.94M | -34.77 | -1.56% | ― | -28.29% | -126.12% |
* Communication Services Sector Average
APP
AppLovin
543.56
178.05
48.71%
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9.05
0.32
3.67%
TTD
Trade Desk
32.19
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SPT
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9.46
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-71.42%
U
Unity Software
41.25
18.24
79.27%
SRAD
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18.52
-2.81
-13.17%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.