Why do AppLovin (APP) investors face a guidance test?

Sonal Goyal

28 October 2026 05:00 PM AEDT

Why do AppLovin (APP) investors face a guidance test?

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Key Highlights

Second-quarter 2026 Revenue was $1.924 billion, up 53 per cent, with adjusted EBITDA of $1.614 billion and an 84 per cent margin.
Free Cash Flow was $863.3 million, and the company repurchased and withheld 1.1 million Class A shares for $551.3 million.
Third-quarter guidance is revenue of $2.055 billion to $2.085 billion and adjusted EBITDA of $1.710 billion to $1.740 billion.

The latest results

AppLovin (NASDAQ:APP), the Advertising technology company, last reported on 5 August 2026 for the second quarter ended 30 June 2026. No third-quarter figures were available at the time of writing, so the second-quarter release remains the most recent evidence of the company's position.

Revenue was $1.924 billion, up 53 per cent from $1.259 billion a year earlier. Net Income was $1.267 billion, up 55 per cent from $820 million, and net income from continuing operations rose 64 per cent. Diluted Earnings per Share were $3.76.

Adjusted EBITDA grew faster than revenue, at 58 per cent against 53 per cent, which is consistent with the higher Margin reported.

Margins and cash generation

Adjusted EBITDA, a non-GAAP measure, reached $1.614 billion, up 58 per cent from $1.018 billion. The adjusted EBITDA margin was 84 per cent, compared with 81 per cent in the second quarter of 2025.

Operating cash flow was $869.0 million and free cash flow was $863.3 million.

Capital allocation and balance sheet

During the quarter AppLovin repurchased and withheld 1.1 million Class A shares for $551.3 million. Shares outstanding were 335 million at the end of June.

Cash and equivalents were $3.053 billion at 30 June 2026, against long-term Debt of $3.515 billion.

Relative to free cash flow, the quarter's repurchases were roughly 64 per cent, leaving about $312 million of free cash flow after repurchases, before any other uses of cash, which the release extract does not detail.

Guidance

For the third quarter, management guided to revenue of $2.055 billion to $2.085 billion and adjusted EBITDA of $1.710 billion to $1.740 billion. These are forecasts rather than results, and the actual figures will be known only when the company reports.

At the midpoint, guided revenue is about 8 per cent above the second-quarter figure, a slower sequential pace than the 53 per cent year-on-year growth rate reported for the second quarter, although the two measures are not directly comparable.

What to watch

The first point is whether third-quarter revenue and adjusted EBITDA land within the guided ranges. The third is the pace of repurchases relative to free cash flow, and the movement in net debt, which depend on cash flow and management decisions. A fourth is the gap between continuing-operations net income growth (64 per cent) and total net income growth (55 per cent).

FAQs

Q: What was AppLovin's revenue in the second quarter of 2026?

A: Revenue was $1.924 billion, up 53 per cent from $1.259 billion a year earlier. Net income was $1.267 billion, up 55 per cent.

Q: What was AppLovin's adjusted EBITDA margin?

A: Adjusted EBITDA was $1.614 billion, up 58 per cent, for a margin of 84 per cent compared with 81 per cent a year earlier. Adjusted EBITDA is a non-GAAP measure.

Q: What is AppLovin's third-quarter guidance?

A: Management guided to revenue of $2.055 billion to $2.085 billion and adjusted EBITDA of $1.710 billion to $1.740 billion.

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