LFTO Liftoff Mobile, Inc. 10-Q 2026-09-30 section summaries

Liftoff Mobile, Inc. — Q3 and nine months ended September 30, 2026

Liftoff Mobile facilitates digital advertising transactions between advertisers and publishers. It reports revenue net because it acts as an agent and does not control ad inventory. Revenue is primarily variable, based on impressions or other agreed actions; substantially all customer contracts are cancellable and have terms of one year or less. The company has one operating and reportable segment, managed on a consolidated basis.

Consolidated results

Revenue grew 32.3% in Q3 and 34.8% for 9M. The earnings comparison also reflects non-operating valuation changes: contingent-consideration revaluation was a $14.382M benefit in Q3 2026 versus a $13.200M expense in Q3 2025, and a $1.753M benefit for 9M versus an $18.300M expense. Post-conversion earnout revaluation was a $1.416M Q3 benefit versus a $1.096M expense; the 9M benefit was $4.091M versus a $1.096M expense. Net interest expense was $24.965M versus $31.508M in Q3, but $93.279M versus $91.150M for 9M. The 9M debt-extinguishment loss was $7.366M versus $5.264M; income tax expense was $39.699M versus $1.528M.

Revenue by geography

Growth patterns varied by region: U.S. revenue increased 61.8% in Q3 and 54.1% for 9M; APAC increased 17.3% and 32.7%, respectively; Other Americas was nearly flat in Q3 (down 0.1%) but rose 17.1% for 9M. EMEA grew 17.7% in Q3.

Cash flow and investment

Stock-based compensation expense was $48.366M for 9M 2026 versus $36.674M in 9M 2025. Q3 expense was $13.531M versus $10.989M. The 9M total included $27.895M in G&A, $12.630M in R&D, $7.256M in sales and marketing, and $0.585M in cost of revenue. A one-time $10.9M charge resulted from extending option terms.

Balance sheet, debt and capital

Intangible assets comprised $19.506M of developed technology, $24.885M of finite-lived trade name, and $96.240M of indefinite-lived trade name. Tangible common equity—equity less goodwill and intangible assets—was approximately negative $1.096808B, improved from negative $2.187345B.

The June IPO issued 21.85M shares at $23 per share, including the over-allotment, generating $472.397M net of underwriting discounts and commissions. Proceeds funded a $409.2M principal prepayment and IPO costs, with the remainder intended for general corporate purposes. The prepayment and write-off of issuance costs resulted in a $7.4M extinguishment loss; amendments reduced facility interest rates by 0.25%. The term loan bears interest at Term SOFR plus 4.00% and matures in 2032. The $195.5M revolver, maturing in 2030, was undrawn at both reporting dates; the company was covenant-compliant. Debt fair value was $1.4105B at September 30, 2026, versus $1.8243B at year-end.

At the IPO, all 24,011,299 preferred shares converted into common shares (56.4972 common shares per preferred share at a $17.70 conversion price); no preferred shares remained outstanding. The IPO also consolidated the former Class A and Class B common stock into one class. Q3 diluted weighted-average shares were 182.525M, including 13.181M dilutive securities, versus 122.867M in Q3 2025. For 9M, diluted weighted-average shares were 156.840M, including 13.501M dilutive securities, versus 137.824M. Additional potentially dilutive securities excluded as anti-dilutive or contingent totaled 22.453M for Q3 and 21.977M for 9M, down from 70.076M in both 2025 periods. Participating securities reduced the 9M 2026 basic EPS numerator by $11.380M.

Awards, customer exposure and risk management

At September 30, 2026, 41.980M nonqualified options were outstanding, down from 46.662M at year-end; 3.286M share-settled and 0.186M cash-settled RSUs were also outstanding. Executive Awards generated $19.5M of cumulative expense after IPO-related performance conditions became probable; $16.4M remained unrecognized, expected over 0.4 years. Up to 2.349M options could vest, with potential total expense of $35.9M. Separately, 18.0M MIP options remained eligible to vest, but no expense was recognized because the Sponsor-return condition was not considered probable. A contingent-consideration arrangement may require payments of up to $130.9M, subject to Sponsor return and share-value/disposition thresholds.

One customer represented 14% of accounts receivable at September 30, down from 26% at year-end; no customer exceeded 10% of Q3 or 9M revenue. The company had $850M notional of cash-flow swaps and entered into $720M of interest-rate collars in October, effective December 31, 2026 through 2028, to limit Term SOFR exposure as swaps expire. The collars carry a weighted-average annual running premium of 0.232%.

Liftoff (LFTO) — Q3 and nine months ended September 30, 2026

Results

Revenue grew 32% in Q3 and 35% in 9M, driven by stronger performance from the Cortex-enhanced Core Advertising platform and higher customer spending as the market expanded. Existing customers generated 55% of Q3 Core Advertising growth and 71% of 9M growth; customers acquired in the prior 12 months contributed the remainder. Core Advertising accounted for approximately 100% of revenue in both 2026 periods, up from about 99% a year earlier. Operating margin increased to 44% from 27% in Q3 and to 40% from 19% in 9M. Adjusted EBITDA margins were 61% versus 56% in Q3 and 60% versus 54% in 9M.

Operating costs were nearly flat in Q3 despite revenue growth. Cost of revenue rose with platform volume, mainly from higher infrastructure and bidding fees, but declined as a share of revenue to 12% from 14% in Q3 and to 13% from 15% in 9M. Q3 G&A included higher personnel and public-company setup costs, largely offset by nonrecurring 2025 debt-refinancing fees. For 9M, lower G&A reflected the nonrecurrence of 2025 General Atlantic investment and refinancing costs, partially offset by higher personnel expenses, primarily stock compensation. R&D spending reflected continued Cortex investment; sales and marketing costs increased with personnel spending.

Net interest expense was $24.965M in Q3 versus $31.508M, mainly reflecting lower interest expense after the June debt repayment and more deposit interest, partly offset by less hedge interest income. For 9M, net interest expense was $93.279M versus $91.150M. Net income also reflected liability remeasurement gains: Q3 contingent-consideration gain of $14.382M versus a $13.200M loss, and earnout gain of $1.416M versus a $1.096M loss. These remeasurements are noncash and can make earnings volatile. The 9M contingent-consideration gain was $1.753M versus an $18.300M loss; the earnout gain was $4.091M versus a $1.096M loss. 9M debt-extinguishment loss was $7.366M versus $5.264M, mainly from writing off issuance costs after term-loan repayment.

Business and operating indicators

Liftoff operates a transaction-based mobile advertising platform, reporting advertising revenue net because it acts as agent and does not control inventory or primarily fulfill the advertising service. Its Cortex AI platform optimizes targeting, pricing and bidding. Management views campaign performance and user-acquisition data as a flywheel supporting advertiser returns and continued model improvement; migration from legacy models was substantially completed between Q4 2023 and early 2025.

These large customers generate the vast majority of Core Advertising revenue. Nearly 60% of revenue came from outside the Americas in both Q3 and 9M 2026. Management cites customer expansion, new large accounts, non-gaming verticals and international markets as opportunities. Customer retention and campaign performance remain important risks, alongside advertiser budget changes, customer concentration, privacy and attribution rules, app-store and operating-system changes, competition, and the cost of continued AI and infrastructure investment.

Cash flow and liquidity

Higher net income and improved customer collections supported 9M operating cash flow; 9M 2025 cash flow had benefited from a $104.7M increase in accounts payable and accrued liabilities. 9M 2026 financing included IPO proceeds, partly offset by debt principal payments. TTM free cash flow increased 158%, primarily due to higher net income. 9M stock-based compensation was $48.366M versus $36.674M.

Cash and cash equivalents were $385.7M at September 30, 2026, versus $133.3M at December 31, 2025. Management believes cash, operating cash generation and revolver availability will cover at least 12 months, subject to business and economic risks.

The June 5, 2026 IPO issued 21.9M shares, including 2.9M from the fully exercised over-allotment, at $23.00 per share, producing approximately $472.4M of net proceeds before offering expenses. Liftoff used proceeds to repay $409.2M of term-loan principal and pay IPO expenses. The September 2025 refinancing established a $1.855B term loan due September 2032 and a $195.5M revolver due September 2030; the company was covenant-compliant at September 30, 2026.

Total commitments include $1.431925B of long-term debt, $662.803M of interest payments and $11.4M of operating leases. Additional financing could add fixed payments, covenants or shareholder dilution.

Taxes, equity and other matters

Income tax expense was $7.283M in Q3 versus $2.302M, and $39.699M for 9M versus $1.528M. The 9M effective tax rate was 23.1% versus (6.3)%, reflecting higher pretax income, fewer nonrecurring costs, public-company stock-compensation deduction limits and other tax items. The company reported no material Q3 or expected full-year effective-tax-rate impact from the OBBBA. Uncertain-tax-position liabilities, including interest and penalties, were approximately $51.4M; settlement timing cannot be reasonably estimated.

The IPO triggered the probability of vesting for certain performance awards and related stock-based compensation. General Atlantic’s preferred stock automatically converted at the IPO into 24,011,299 common shares. The company reported no material changes to critical accounting estimates for Q3 and no off-balance-sheet financing arrangements.

Market risk

LFTO is exposed in the ordinary course of business to foreign-exchange, interest-rate, and inflation risks, but does not engage in speculative trading. Most revenue and cash flows are denominated in U.S. dollars; international operations and expenses also involve primarily the Singapore dollar, British pound, Brazilian real, and euro. Foreign-exchange movements have not historically had a material effect on results, so LFTO has not hedged its currency exposure. As international operations expand, however, exchange-rate changes could become more consequential.

Floating-rate debt under the 2021 Credit Agreement exposes net income to higher borrowing costs, while interest rates may also affect the cost of refinancing indebtedness. As of September 30, 2026, interest-rate contracts designated as cash-flow hedges had an aggregate notional value of $850.0 million. A hypothetical 1.0-percentage-point annual increase in applicable average interest rates implied an estimated $5.8 million increase in annualized interest expense, based on instruments outstanding at that date.

In October 2026, LFTO entered into interest-rate collar agreements with two counterparties covering $720.0 million of aggregate notional to manage one-month Term SOFR exposure on its Term Loan Facility. These collars were not included in the September 30 sensitivity analysis; LFTO stated that they did not change the sensitivity relative to September 30.

Controls and Procedures

Management concluded that the company’s disclosure controls and procedures were ineffective as of quarter-end because a previously identified material weakness in internal control over financial reporting remains unremediated. The weakness concerns inadequately designed, implemented, and maintained IT general controls over applications supporting financial reporting. Specifically, controls were not sufficiently formalized, segregation-of-duties gaps remained, and IT resources and personnel were insufficient.

Management has improved its control environment and IT processes, but expects remediation to continue through 2026. Planned actions include implementing an enhanced IT general-control framework, strengthening logical-access and program-change controls, improving segregation-of-duties monitoring and technology, and adding internal expertise and third-party controls advisors. The weakness will not be considered remediated until controls have operated for a sufficient period and management has verified their effectiveness through testing; remediation is not assured.

If the weakness is not effectively remediated, or additional weaknesses arise, it could impair timely and accurate financial reporting and compliance with laws and regulations. Other than the described remediation measures, the company identified no changes during the quarter that materially affected, or were reasonably likely to materially affect, internal control over financial reporting.

Item 1A — Risk Factors

The company reports no material changes to the risk factors disclosed in its IPO Prospectus.

Rule 10b5-1 Trading Plans

During Q3 2026, four executives adopted Rule 10b5-1 trading plans intended to satisfy the rule’s affirmative-defense conditions. The plans cover up to 1,360,269 common shares in aggregate.

Each plan may terminate earlier once all covered transactions are completed. These are planned transactions; the filing does not report completed sales or realized proceeds.