AppLovin Corporation (APP) FY2025 10-K and Q2 FY2026 10-Q Summary

Business

From the Annual Report on Form 10-K for the fiscal year ended December 31, 2025, accession 0001751008-26-000010.

AppLovin sells AI-powered advertising software. Advertisers pay it to acquire and re-engage users; publishers use it to sell their advertising inventory. Revenue comes from fees charged to advertisers, priced dynamically against the advertisers' own campaign goals rather than at a fixed price per impression, click or install, the company states it earns when advertisers hit their return-on-ad-spend targets. Substantially all revenue comes from one product: the self-serve user-acquisition platform, which the 10-K calls Axon Ads Manager and which the June 2026 quarterly report calls AppLovin Ads. Following the June 2025 sale of its Apps business, AppLovin operates as a single operating and reportable segment. In fiscal 2025 the company generated $5.48 billion of revenue and $3.33 billion of net income.

The product set is four pieces:

• Axon Ads Manager / AppLovin Ads, the user-acquisition engine, powered by the Axon AI

recommendation engine, matching advertiser demand with publisher supply through auctions run at microsecond speeds. Advertisers set reach, geography, retention and target-return parameters; the platform bids to hit them. This product "comprises the vast majority of revenue." Revenue is recorded net of consideration paid or payable to publishers, because AppLovin acts as an agent, it does not control the advertising inventory and is not primarily responsible for fulfillment.

• MAX, the in-app bidding and monetization tool. Publishers use it to run a single real-time

auction across bidding platforms for each impression. Revenue is a percentage of winning auction spend.

• Adjust, a SaaS measurement, attribution and fraud-prevention platform, billed as an annual

subscription. It is operated by a wholly-owned subsidiary, and the 10-K states that data generated by Adjust's services is not shared with AppLovin or used to optimize its recommendation engine unless a customer directs it.

• Wurl, a connected-TV platform distributing streaming video for content companies and

selling CTV advertising (AdPool for monetization, Global FAST Pass for channel distribution). Revenue is usage-based and/or CPM.

The business model is explicitly a data flywheel: more advertiser spend produces more data on users and engagement, which improves Axon AI, which improves campaign performance, which attracts more spend. Clients span indie developer studios to the largest global internet platforms, including Meta and Google, which are simultaneously partners, clients and competitors. Named competitors are Meta, Google, Amazon and Unity Software, plus various private companies.

The stated growth strategy has three legs: optimize within the existing mobile-app market; keep compounding Axon AI; and expand into new verticals the company has not historically served, web-based e-commerce and social, plus CTV through Wurl. The company began onboarding web-based e-commerce advertisers in 2024 and describes itself as early in that expansion. It also flags that seasonality (holidays, promotional events, school cycles, game launches) may become more pronounced as large e-commerce advertisers make up a larger share of the platform.

Founded in 2011 by mobile app developers, incorporated in Delaware, headquartered in Palo Alto, California, listed on Nasdaq. The company has three classes of common stock (Class A one vote, Class B twenty votes, Class C none) and is a "controlled company" under Nasdaq rules, though it does not currently take the governance exemptions that status allows.

Risk factors

From the FY2025 10-K, accession 0001751008-26-000010; substantively repeated in the Q2 2026 Form 10-Q, accession 0001751008-26-000059.

Concentration. Revenue is concentrated in a single product (Axon Ads Manager / AppLovin Ads) and in a single ecosystem, mobile apps, and specifically mobile gaming. A significant amount of total revenue runs through apps distributed by a small number of third-party platforms: the Apple App Store, the Google Play Store and Meta. Because Meta and Google are also significant partners of both AppLovin and Adjust, a deterioration in either relationship would hit harder than a normal customer loss. Clients have no long-term commitments and can stop spending at any time; substantially all customer contracts are cancelable.

Dependence on third-party platform policy. Platform owners set the rules on tracking, identifiers and data transparency, and can change them unilaterally. The 10-K names specific episodes: Apple's app tracking transparency framework (since 2021) and its reliance on IDFA data; Apple's iOS 17 SDK privacy controls; Google's Chrome Tracking Protection and EEA/UK consent management platform requirements from January 2024; and Google's October 2025 retirement of the Privacy Sandbox initiative for Android, with plans to discontinue most associated technologies across Chrome and Android. Management says the aggregate impact of these changes on results to date has been "relatively muted," but treats further changes as a live risk to the effectiveness of its advertising solutions.

Growth durability and the AI dependency. The company states plainly that prior growth should not be relied on as an indication of future performance and that the growth rate may decline as comparisons get harder and the market saturates. Its ability to keep improving Axon AI is described as critical to continued success. Expanding AI use also brings regulatory exposure (the EU AI Act, proposed and enacted U.S. state laws), unsettled intellectual-property law around AI-generated output, and heightened cybersecurity risk.

Key-person and lean-organization risk. Future success depends significantly on co-founder and CEO Adam Foroughi. There are no employment agreements beyond offer letters with Foroughi or other senior management, and no key-man insurance. The company deliberately runs a lean structure in which key employees hold multiple responsibilities, which it acknowledges makes it more vulnerable to turnover and harder to scale quickly.

Privacy and data regulation. GDPR, UK GDPR, CCPA/CPRA and a widening set of U.S. state laws, children's-privacy regimes (COPPA, the UK Age Appropriate Design Code), Brazil's LGPD and China's PIPL all bear on the business. Cross-border transfer mechanisms (the EU-U.S. Data Privacy Framework, standard contractual clauses) remain subject to challenge. The DOJ rule implementing Executive Order 14117, effective April 8, 2025, restricts bulk transfers of sensitive personal data to countries of concern including China, where AppLovin has operations.

Litigation. Securities class actions filed from March 2025 and consolidated shareholder derivative suits allege materially false and misleading statements about the advertising solutions and financial growth. Details are in the Current quarter section below. The company also retained responsibility for certain legal proceedings tied to its former studios after the Apps sale.

Leverage. $3.6 billion of senior unsecured notes outstanding at December 31, 2025, plus a $1.0 billion unsecured revolving commitment. The indentures and the credit agreement carry covenants, and the credit agreement requires compliance with a financial covenant whether or not anything is drawn. A change-of-control repurchase event would require the company to offer to repurchase the notes, and it may not have sufficient funds to do so. Pricing on the revolver varies with the company's public debt ratings, so a downgrade would raise borrowing costs.

Strategic-transaction risk. The company intends to keep pursuing acquisitions and states that transaction size has increased and may keep increasing, potentially requiring significant cash, additional debt, or dilutive equity issuance. It discloses that in April 2025 it confirmed an indication of interest to the President of the United States to explore a purchase of TikTok in all markets outside China, and did not enter into a transaction. It also flags divestiture risk directly: after selling the Apps business it no longer generates Apps revenue and may not achieve the intended strategic and financial benefits.

Goodwill. Goodwill must be tested at least annually; a decline in the share price and market capitalization, slower industry growth or asset underperformance could force a significant charge.

Control and governance. As of June 30, 2026, Adam Foroughi and director Herald Chen (with certain affiliates, the "Voting Agreement Parties") held approximately 67% of total voting power and vote their Class B shares as a bloc under a voting agreement. They can therefore determine or significantly influence any matter requiring stockholder approval, including a change of control. Combined with the multi-class structure, exclusive-forum bylaws, board-only vacancy filling and undesignated preferred stock, this may deter a takeover or deprive holders of a control premium. The company also warns that share repurchases may not deliver the anticipated long-term value and consume cash otherwise available for the business.

Management's discussion and analysis, fiscal year 2025

From the FY2025 10-K, accession 0001751008-26-000010.

Revenue. $5,480.7 million, up $2.3 billion or 70% on 2024's $3,224.1 million (itself up 75% on 2023's $1,841.8 million). The composition of the 2025 increase is the striking part: the volume of installations rose only 3%, while net revenue per installation rose 72%. The prior year was the reverse mix, 2024's 75% growth came from installation volume up 50% and revenue per installation up 22%. Growth in 2025 was therefore almost entirely price/monetization, not volume.

Costs. Total costs and expenses were $1,328.8 million, essentially flat against 2024's $1,313.1 million despite the 70% revenue increase, 24% of revenue versus 41%. Within that:

• Cost of revenue $665.1 million, up $144.5 million or 28%, driven by a $150.2 million increase in

network infrastructure expense. At 12% of revenue, down from 16%.

• Sales and marketing $203.7 million, down $49.2 million or 19%, primarily a $57.1 million drop

in personnel expense from lower stock-based-compensation-related payroll and reduced headcount.

• Research and development $226.5 million, down $148.2 million or 40%, primarily a $151.1

million drop in personnel expense from lower stock-based-compensation-related payroll.

• General and administrative $233.5 million, up $68.6 million or 42%, from $31.6 million more in

professional services tied to transaction support and $24.5 million more bad debt expense primarily related to new initiatives.

Total stock-based compensation fell to $208.0 million from $357.4 million.

Profit. Income from operations $4,151.9 million, 76% of revenue (2024: 59%). Interest expense and loss on settlement of debt fell 35% to $207.0 million, $78.7 million from lower rates on the senior notes versus the prior credit agreement, and the absence of a $28.4 million 2024 loss on debt extinguishment. Provision for income taxes rose $497.3 million to $519.7 million on higher pre-tax income, global minimum tax, lower stock-compensation benefits and lower R&D credits, partly offset by larger foreign-derived intangible income deductions. Net income from continuing operations $3,433.2 million; net income $3,333.8 million after a $99.4 million loss from discontinued operations. Adjusted EBITDA $4,512.5 million at an 82.3% margin (2024: $2,411.8 million, 74.8%).

The Apps divestiture. On May 7, 2025 AppLovin and subsidiaries Morocco, Inc. and AppLovin GmbH signed a purchase agreement with Tripledot and its subsidiaries Eton Games Inc. and Tripledot Group Holdings Limited to sell the Apps business; a June 30, 2025 amendment let Tripledot pay in cash rather than issue a secured promissory note. The sale closed June 30, 2025 for total consideration of $715.6 million, $430.6 million in cash ($400.0 million contractual plus $30.6 million of purchase price adjustments) and 596.9 million Tripledot ordinary shares valued at $285.0 million, representing roughly 22% of Tripledot's outstanding ordinary shares and 20% of its fully diluted equity at closing, accounted for as an equity method investment. AppLovin derecognized $591.2 million of net assets and booked a $106.2 million pre-tax gain after $18.3 million of transaction costs. For tax purposes the transfer of certain subsidiaries was an asset sale, producing a $125.6 million write-off of deferred tax assets and a $204.3 million capital loss fully offset by a valuation allowance. Earlier, at March 31, 2025, the February 12, 2025 non-binding term sheet plus negotiations had triggered an interim goodwill impairment test on the Apps reporting unit and a non-cash $188.9 million goodwill impairment. All Apps results are presented as discontinued operations.

Cash and capital. Operating cash flow $3,971.1 million (2024: $2,099.0 million); Free Cash Flow $3,952.0 million. Investing activities provided $358.4 million, driven by $407.3 million of Apps divestiture proceeds net of cash divested. Financing used $2,593.1 million, mainly $2.2 billion of buybacks and $392.4 million of withholding taxes on net share settlement. Cash and equivalents ended 2025 at $2.5 billion.

Debt at December 31, 2025 was $3.6 billion of senior unsecured notes in several series maturing 2029 to 2054 at fixed rates of 5.125% to 5.950%, interest payable semi-annually on June 1 and December 1. The 2024 Credit Agreement provides a $1.0 billion unsecured revolver maturing December 5, 2029 with two one-year extension options; $200.0 million was drawn in March 2025 to fund repurchases and fully repaid by May 2025, leaving the full $1.0 billion available at year end.

In 2025 the company repurchased and retired 5.5 million Class A shares for $2.2 billion and the board authorized an incremental $3.2 billion, leaving $3.3 billion available at year end. Non-cancelable purchase obligations were $702.8 million, mostly a third-party cloud computing agreement, $398.5 million of it payable within twelve months; non-cancelable lease obligations were $173.9 million ($140.3 million server and network equipment, $33.7 million offices).

Tax. The One Big Beautiful Bill Act, enacted July 4, 2025, was evaluated and its 2025-effective provisions were immaterial to the financial statements. Long-term income tax liabilities include $64.2 million for uncertain tax positions.

Current quarter, three and six months ended June 30, 2026

From the Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, accession 0001751008-26-000059, and the earnings release furnished August 5, 2026, accession 0001751008-26-000057.

Revenue was $1,923.7 million for the quarter, up $664.9 million or 53% year over year, and $3,766.1 million for the six months, up 56%. The mix continues the 2025 pattern in sharper form: quarterly net revenue per installation rose 58% while installation volume fell 2%; for the six months, revenue per installation rose 75% while volume fell 10%. Growth is now coming entirely from monetization per install, with unit volume declining.

By geography in the quarter, the United States contributed $989.6 million and the rest of the world $934.1 million.

Costs. Cost of revenue $225.8 million, up 46%, on $52.1 million more network infrastructure spend; 12% of revenue, unchanged year over year. Sales and marketing $63.4 million, up 35%, from $17.2 million more advertising and marketing program cost partly offset by $3.5 million lower personnel expense. Research and development $99.9 million, up 127%, almost entirely a $54.8 million increase in personnel expense from higher stock-based-compensation-related payroll, R&D stock compensation went from $17.2 million to $68.9 million in the quarter. General and administrative $40.3 million, down 27%, on $9.5 million less bad debt expense and $5.2 million less transaction- related professional services.

Profit. Income from operations $1,494.3 million, 78% of revenue. Interest expense $51.2 million, flat. Other income, net swung to $62.4 million from a $22.3 million expense, driven by a $31.3 million net fair value remeasurement gain related to certain non-marketable equity securities (versus a $20.4 million net remeasurement loss a year earlier), $21.3 million more interest income on a larger cash balance, and $12.0 million more net foreign currency gains. Tax provision $239.0 million, up 113%. Net income $1,266.5 million, a 65.8% net margin; diluted EPS $3.76. Adjusted EBITDA $1,613.8 million at an 83.9% margin, up from 80.9%.

A material part of the year-over-year swing in other income is mark-to-market, not operating performance: the $31.3 million quarterly remeasurement gain is the writeup of equity interests in private equity funds carried at net asset value, which rose to $173.0 million from $118.7 million. Unrealized gains on those interests were $31.3 million in the quarter and $50.6 million in the half, against a $52.0 million six-month remeasurement gain across all non-marketable equity securities.

Balance sheet and cash. Cash and equivalents $3,053.3 million at June 30, 2026, up from $2,487.1 million at December 31, 2025. Accounts receivable $2,171.0 million. Goodwill $1,518.6 million (down only on currency translation). Equity method investments, the Tripledot stake, $290.0 million. Total assets $8,269.1 million; long-term debt $3,515.1 million; total stockholders' equity $3,163.0 million.

Operating cash flow was $869.0 million in the quarter and $2,160.4 million for the half; Free Cash Flow $863.3 million and $2,150.1 million. Half-year operating cash flow was held back by a $504.8 million net decrease in operating assets and liabilities, including a $352.6 million build in accounts receivable and $639.8 million of cash income taxes paid (versus $100.6 million a year earlier). Investing used only $7.7 million. Financing used $1,582.7 million, almost all buybacks.

Capital returns. During the six months the company repurchased and retired 3,275,252 Class A shares for $1.5 billion including commissions, taxes and fees, leaving $1.8 billion available under the program at June 30, 2026 (down from $3.3 billion at December 31, 2025). Quarterly repurchases under the program totaled 1,105 thousand shares: 356 thousand in April, 260 thousand in May and 489 thousand in June. Shares outstanding at June 30, 2026 were 335,291 thousand (305,084 thousand Class A, 30,208 thousand Class B), down from 338,313 thousand at year end.

Commitments. Under an August 2024 amendment to its cloud computing agreement, the company committed to a minimum of $1.3 billion over three years; $953.5 million had been paid by June 30,

1. No other material changes to contractual obligations since December 31, 2025.

Related party. AppLovin recognized $18.0 million of revenue in the quarter and $42.9 million in the half from Tripledot and its subsidiaries' use of AppLovin Ads, net of amounts paid or payable to them as publishers. No other material related party transactions.

Litigation status. The securities class action (the Brownback Action, N.D. Cal.) alleges Exchange Act violations over statements about the advertising solutions and financial growth, with a putative class period of November 7, 2024 through March 27, 2025; an amended complaint filed September 12, 2025 added Basil Shikin as a defendant alongside the Company, Adam Foroughi, Matthew Stumpf and Herald Chen. The defendants' motion to dismiss was fully briefed as of February 2026. Consolidated shareholder derivative complaints are stayed pending that ruling. The company says the allegations lack merit and will be contested, and that it cannot estimate maximum exposure or a range of possible loss. As of June 30, 2026 it had no material loss contingencies requiring accrual or disclosure.

Guidance. For the third quarter of 2026 the company guided to revenue of $2,055 million to $2,085 million and Adjusted EBITDA of $1,710 million to $1,740 million, an 83% Adjusted EBITDA margin at both ends. No forward GAAP equivalent was provided.

Subsequent events

Neither the Form 10-Q for the quarter ended June 30, 2026 (accession 0001751008-26-000059) nor the FY2025 Form 10-K (accession 0001751008-26-000010) contains a subsequent-events note; no acquisition, divestiture, financing or litigation outcome was disclosed as occurring after the respective period ends. The material post-June-30, 2026 items disclosed elsewhere in the company's filings are:

• Executive transitions taking effect after quarter end, announced April 7, 2026 (accession

0001751008-26-000014). Chief Technology Officer Basil Shikin stepped down from that role effective July 1, 2026, continuing as a Distinguished Engineer in a non-executive-officer capacity; Giovanni Ge, previously Chief Product and Engineering Officer, was appointed Chief Technology Officer on that transition. Chief Administrative & Legal Officer Victoria Valenzuela retired effective August 1, 2026, and serves as a consultant through May 31, 2027 for $150,000 in cash compensation; Corina Cacovean, previously Deputy General Counsel, Privacy, Litigation & Regulatory, was appointed Chief Legal Officer on that retirement. Ms. Valenzuela was elected to the board at the June 3, 2026 annual meeting and receives no non-employee director compensation while she is a consultant. Separately, and taking effect during the quarter rather than after it, Craig Billings became independent Chairperson of the board effective April 2, 2026, succeeding Adam Foroughi, who remains CEO and a director.