APP AppLovin 10-Q 2026-09-30 section summaries

AppLovin Corporation — Q3 and nine months ended September 30, 2026

Results

Revenue increased 55.5% in Q3 and 55.7% in 9M. Q3 net income grew 72.2%. 9M 2025 net income included a $99.4 million after-tax loss from discontinued operations; continuing-operations net income was $3,911.053 million in 2026 versus $2,330.939 million in 2025, up 67.8%. The company reports one segment, whose profit measure is net income from continuing operations.

Revenue by geography

U.S. revenue grew about 59.6% in Q3 and 52.7% in 9M; rest-of-world revenue grew about 51.5% and 58.9%, respectively.

Cash flow and liquidity

The cash-flow statement has no separate capital-expenditure line. Cash and cash equivalents were $3,173.7 million at September 30, 2026, versus $2,487.1 million at year-end 2025; long-term debt was $3,516.1 million. Accounts receivable increased to $2,388.8 million from $1,819.4 million. During 9M, cash interest paid was $100.8 million and cash taxes paid, net of refunds, were $926.2 million.

Balance sheet and shares

Intangibles comprised customer relationships of $267.291 million ($309.471 million at year-end), developed technology of $24.985 million ($51.434 million), and other intangibles of $43.909 million ($35.809 million). Goodwill declined by $23.563 million due to foreign-currency translation. Implied tangible common equity—equity less goodwill and other intangible assets—was approximately $1,446.1 million.

Shares outstanding fell from 338.313 million at December 31, 2025 to 331.322 million at September 30, 2026. AppLovin repurchased and retired 7.329450 million Class A shares for approximately $2.9 billion in 9M; $394.3 million remained under the authorization at quarter-end. In October, the board added approximately $3.2 billion to the authorization, bringing available capacity to $3.6 billion. Stock-based compensation was $253.417 million in 9M 2026 versus $127.434 million; $204.400 million of 2026 expense was in R&D, versus $60.593 million a year earlier.

Business, commitments and risks

Substantially all revenue is generated by AppLovin Ads, its AI-powered advertising solution; the company also provides MAX, Adjust and Wurl. It acts as an agent and reports revenue net of publisher inventory costs, with revenue tied to dynamically priced campaigns and recognized on impressions or actions. Contracts are generally cancelable at any time and payment is typically due 30 days after month-end, making results dependent on advertiser demand and campaign performance.

In June 2025, AppLovin sold its Apps business for $715.6 million—$430.6 million in cash and Tripledot shares valued at $285.0 million. Its Tripledot stake represented approximately 22% of outstanding shares and 20% of fully diluted equity at closing and is accounted for under the equity method. The sale followed a $188.9 million non-cash goodwill impairment of the Apps reporting unit. Tripledot-related revenue was $44.7 million in 9M 2026.

Cloud-services minimum purchase commitments total $1.3 billion over three years; $1.1 billion had been paid by September 30, 2026. NAV-measured private-equity fund interests were $222.3 million, up from $118.7 million at year-end, with 9M unrealized gains of $97.5 million versus $9.6 million in 2025. These generally nonredeemable, transfer-restricted investments had $2.6 million of remaining unfunded commitments. AppLovin early adopted the internal-use software accounting update on January 1, 2026, with no material financial-statement impact.

AppLovin (APP) — MD&A summary

For the three and nine months ended September 30, 2026, AppLovin’s revenue and earnings grew sharply, primarily because advertisers generated more revenue per installation on the AppLovin Ads platform. Management highlighted continued investment in its advertising technology and infrastructure, while noting that results remain dependent on platform effectiveness, client spending, and changes in the mobile-app and advertising ecosystems.

Consolidated results

Revenue increased 55% in Q3 and 56% for 9M. Substantially all revenue came from advertiser fees for AppLovin Ads; other services were immaterial. The former Apps Business is classified as discontinued operations. In Q3, net revenue per installation rose 55% while installations increased 2%; for 9M, net revenue per installation rose 68%, partly offset by a 7% decline in installations. 9M 2025 net income included a $99.4M after-tax loss from discontinued operations; 2026 had none.

Cost of revenue grew more slowly than revenue, with its share of revenue declining to 11% in Q3 from 12% and to 11% for 9M from 13%. Higher network-infrastructure costs contributed $53.6M to the Q3 increase and $145.5M to the 9M increase.

Expenses and other income

R&D expense rose sharply, mainly on higher stock-compensation-related payroll; stock compensation in R&D was $68.1M in Q3 and $204.4M for 9M. Sales and marketing increases reflected higher advertising and marketing program costs; 9M program costs rose $58.7M, partly offset by $22.9M lower personnel costs tied to stock-compensation payroll. G&A increased in Q3 on professional-services costs, but declined for 9M due mainly to lower bad-debt expense. Intangible-asset amortization was $26.7M versus $25.6M in Q3 and $78.1M versus $71.8M for 9M.

Other income improved substantially, including fair-value gains on non-marketable equity securities of $46.9M in Q3 and $97.5M for 9M, versus losses of $20.4M and $42.7M in the comparable 2025 periods. Higher interest income from increased cash balances contributed $15.9M in Q3 and $51.3M for 9M; 9M also benefited from $13.5M higher net foreign-currency gains. The 9M tax provision increase reflected higher pretax income, more foreign income taxed at different rates, and fewer stock-compensation tax benefits, partly offset by a higher foreign-derived income deduction.

Adjusted EBITDA and cash flows

Adjusted EBITDA is a company-defined non-GAAP measure that excludes, among other items, stock compensation and transaction-related costs. Its reconciliation included other income of $84.5M in Q3 and $185.7M for 9M, compared with expenses of $9.1M and $13.2M, respectively, in 2025.

Higher customer collections from revenue growth drove the improvement in operating cash flow, partly offset by higher publisher payments, operating spending, and cash taxes. Company-defined free cash flow reflects continuing and discontinued operations; it followed property-and-equipment purchases of $9.3M versus $0.3M and finance-lease principal payments of $11.5M versus $14.3M. Investing cash flow included $407.3M of net Apps Business divestiture proceeds in 2025; 2026 investing uses primarily related to property and equipment, intangible-asset acquisitions, and initial direct lease costs.

Liquidity, capital allocation and outlook

Cash and cash equivalents were $3.2B at September 30, 2026. The company expects cash, operating cash flows, and, if needed, its $1.0B unsecured revolving credit facility to cover anticipated working-capital and capital-expenditure needs for at least 12 months. Future funding needs could rise with growth, infrastructure and other investment, repurchases, or strategic investments; additional debt or equity financing may be sought sooner than expected or opportunistically.

Financing outflows primarily reflected $2.8B of share repurchases and $55.8M of withholding taxes on net share settlement of equity awards in 9M 2026. The company repurchased and retired 7.3M Class A shares for $2.9B during the period. At September 30, $394.3M remained available under the authorization; in October, the board added approximately $3.2B, bringing available capacity to $3.6B. Repurchases remain discretionary.

The platform uses its Axon AI recommendation system to optimize advertising campaigns. Management plans continued investment in technology, engineering talent, and datacenter capacity, and sees opportunities in e-commerce and connected TV (CTV), as well as from growing existing-client spend, onboarding clients, and improving MAX demand-side recommendations. Key risks include Axon effectiveness, client retention and spending, reliance on app-distribution platforms such as Apple and Google, and evolving privacy, data-protection, and AI regulation.

No material changes in market risk have occurred since the disclosures in Part II, Item 7A of AppLovin’s Form 10-K for the year ended December 31, 2025. This section reports no additional market-risk metrics, business developments, or quantified changes.

Disclosure Controls and Internal Control over Financial Reporting

Management, including the CEO and CFO, concluded that the company’s disclosure controls and procedures were effective at a reasonable-assurance level as of quarter-end. During the quarter, no changes in internal control over financial reporting materially affected, or were reasonably likely to materially affect, those controls.

The company cautions that controls provide reasonable, not absolute, assurance and may not prevent or detect every error, fraud, misstatement, or control issue.

Principal business and operating risks

AppLovin’s results depend heavily on mobile advertising and gaming, a limited number of distribution platforms—including Apple’s App Store and Google Play—and a relatively small set of important technology and business partners. Apple, Google and Meta can change platform access, fees, privacy rules or advertising capabilities, and some are also competitors. Outages, policy disputes or a deterioration in these relationships could impair ad targeting, measurement, monetization or service delivery. Apple’s App Tracking Transparency and other privacy changes have affected app discoverability, although AppLovin says their aggregate effect on results has so far been relatively muted and ATT has not materially affected the overall business to date. Future effects remain uncertain.

Advertisers generally have no long-term commitments and may reduce or stop spending at any time. Revenue therefore depends on client retention and budgets, publisher supply, ad pricing and volume, measurement quality, and the effectiveness and predictability of Axon AI. Economic weakness, privacy-related opt-outs, ad blocking, regulation or client concerns could reduce demand or pricing. AppLovin also competes with large platforms and ad-tech providers, some of which have greater resources or data capabilities; clients may develop competing solutions themselves.

The company is seeking to expand beyond mobile gaming, including into web-based e-commerce (an effort begun in 2024), social and connected TV, and other markets. These opportunities—including Wurl’s streaming-related markets—are nascent, may require substantial investment, and could fail to achieve adoption or adequate returns. Growth after Axon AI’s launch may slow as comparisons become more difficult or markets saturate. AppLovin warns that investment costs may precede benefits and that weak expense management or difficulties scaling systems, infrastructure, internal controls, operations and culture could pressure margins and execution. Its lean organization and reliance on CEO and co-founder Adam Foroughi and other senior leaders add execution and retention risks.

AppLovin depends on complex AI, software, data-processing and infrastructure systems. Bugs, inaccurate data, capacity constraints, outages or third-party disruptions could impair targeting, measurement, billing or service, and damage client trust. The company reports past interruptions and cybersecurity attacks in its systems or business; it expects attacks to continue. Malware, ransomware, phishing or breaches at AppLovin or its partners could expose personal information, source code or other intellectual property, disrupt operations, and lead to remediation costs, litigation, investigations, fines or reputational harm. Insurance may be inadequate or unavailable.

Regulation, legal exposure and strategic transactions

AppLovin faces changing requirements concerning privacy, data protection, cybersecurity, advertising, tracking, children, AI, consumer protection, competition, international trade and taxation. Compliance across jurisdictions requires resources and may restrict products or business practices. Cross-border data-transfer mechanisms may be challenged or limited. A U.S. Department of Justice rule effective April 2025 restricts certain sensitive-data transfers and related arrangements involving designated countries of concern, including China, where AppLovin operates. AI products—including Axon AI and tools for generating interactive ads and video creatives—also raise evolving privacy, security, copyright, licensing and content-liability questions.

International operations add exposure to sanctions, export controls and anti-corruption rules, including potential liability for third-party misconduct. Tax authorities may challenge transfer pricing, intellectual-property valuations, tax nexus or AppLovin’s Singapore-based structure and expected tax savings. Tax rules include the 15% minimum-tax frameworks and changes under the July 2025 OBBBA; unsuccessful positions could increase taxes, interest and penalties.

As a distributor of advertising and content, AppLovin may face intellectual-property, royalty and other claims. It relies on DMCA and Communications Decency Act Section 230 protections, whose scope may change and may not apply outside the U.S. The company also identifies ordinary-course litigation and government inquiries across several areas. Securities complaints began in March 2025 concerning statements about its advertising solutions and growth; another complaint filed in September 2026 concerns advertising-model improvements and the development timeline for an ad-generation tool. Following the June 2025 sale of its Apps Business, AppLovin retained responsibility for certain proceedings involving former studios; it does not expect those matters to be material but anticipates resolution costs.

AppLovin may pursue acquisitions, partnerships, joint ventures or licensing, bringing integration, regulatory, financing, dilution, inherited-liability and impairment risks. In April 2025 it expressed interest in exploring a purchase of TikTok operations outside China, but no transaction occurred. The June 2025 Apps Business sale may not deliver its intended benefits and could entail transition obligations.

Debt, financing and shareholder risks

At September 30, 2026, AppLovin had $3.6 billion aggregate principal amount of senior unsecured notes outstanding and a $1.0 billion unsecured revolving credit facility, including a $100 million letter-of-credit sublimit; there were no revolver borrowings outstanding. The notes are rated investment-grade by various agencies. Debt service may constrain investment and other uses of cash. Insufficient cash flow, covenant breaches, downgrades or difficulty refinancing could increase costs, restrict operations or impair liquidity. Additional financing may be unavailable or costly; debt could bring tighter covenants, while equity or equity-linked financing could dilute shareholders. The revolving credit agreement includes a financial covenant.

Voting power is concentrated: as of September 30, 2026, the Voting Agreement Parties held approximately 67% of aggregate voting power. Class B shares carry 20 votes each, compared with one vote for Class A shares; Class C shares generally have no voting rights. This concentration, together with charter and bylaw provisions, may limit other shareholders’ influence and make a takeover or proxy contest more difficult. AppLovin qualifies as a Nasdaq controlled company but says it does not currently use the available governance exemptions.

The board-authorized repurchase program has no minimum or fixed duration and may be suspended at any time. Repurchases could use funds otherwise available for investment or acquisitions and may not support the share price. Future share issuances, including under the charter’s authorization of up to 1.5 billion Class A, 150 million Class C and 100 million preferred shares, could dilute existing holders. AppLovin also highlights stock-price volatility, shareholder litigation, and exclusive-forum provisions that may limit where certain claims can be brought.

Rule 10b5-1 Trading Plans

During the last fiscal quarter, two directors terminated Rule 10b5-1 trading plans. The potential sale amounts below were authorized under the plans; they are not reported completed sales.

No other officers or directors adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter.