AppLovin posts 68% revenue growth in third quarter as AI platform gains

AppLovin Corporation reported substantial financial gains for the third quarter ended September 30, 2025, with revenue reaching $1.405 billion, marking a 68% increase compared to the same period in 2024. The Palo Alto-based marketing platform announced the results on November 5, 2025, alongside guidance projecting continued momentum into the fourth quarter.

Net income from continuing operations grew 93% year-over-year to $836 million, producing a net margin of 59%, according to the company's financial statements. Adjusted EBITDA climbed 79% to $1.158 billion at an 82% margin, while free cash flow surged 92% to $1.049 billion compared to the third quarter of 2024.

The company's performance stems primarily from incremental improvements to its core AI-powered advertising models serving mobile gaming clients. Revenue per installation increased 75% while total installations decreased 1%, reflecting enhanced monetization efficiency rather than volume expansion. AppLovin's MAX supply-side platform, which connects publishers with advertisers through real-time bidding, continued growing at what CEO Adam Foroughi characterized as "very healthy rates."

Self-service platform launch expands advertiser access

AppLovin launched its self-service Axon Ads platform on October 1, 2025, opening access beyond the pilot group of approximately 600 e-commerce and web advertisers onboarded during 2024. The launch employed a referral system designed to control onboarding velocity while the company optimizes integration workflows and support infrastructure.

"We did so without any significant hiccups," Foroughi said during the earnings call. "This speaks volumes about our ability to automate and execute." He noted the platform experienced "no major bugs and effective filtering out of low-quality ad accounts" during the initial rollout period.

Early adoption metrics show advertiser spending from the self-service cohort growing approximately 50% week-over-week, though Foroughi cautioned the absolute scale remains limited. "It is too soon to be significant. But this type of early growth gives us even more confidence that our platform will excel at being an open platform to any type of advertiser," he explained.

The referral-based onboarding brings advertisers comparable in size and category mix to last year's pilot cohort, representing a "broad set of shopping categories" rather than small local businesses, according to Foroughi. Integration requires pixel implementation and technical setup that typically extends beyond one week, creating natural lag time between account creation and active spending.

International expansion accelerates ahead of schedule

AppLovin opened international traffic for web and e-commerce advertisers during the third quarter, ahead of its previously announced timeline. The expansion covers all global markets excluding the European Union, where GDPR compliance requirements necessitate additional development work.

"EU tends to be somewhere in the low teens percentage of our business," Foroughi noted, explaining the region's relative priority. "GDPR rules are more restrictive and require a build-out for us. So we will get to it in due time. It is not a priority against getting to general release of our platform."

English-speaking markets including Canada, Australia, and New Zealand have shown the strongest early adoption, reflecting the current advertiser base composition of predominantly western e-commerce merchants. Localization efforts for major non-English markets such as Japan and South Korea are planned once the platform scales beyond its current cohort.

The international rollout represents a strategic shift for AppLovin, which previously concentrated e-commerce advertising within United States traffic. Gaming advertisers have maintained global reach throughout the company's history, with Japan representing the company's second-largest market by user base.

AI automation drives platform efficiency

AppLovin is deploying multiple AI agents throughout its advertising workflow to reduce manual intervention requirements and improve advertiser onboarding. The company's Axon Ads interface currently features a chat prompt powered by large language models, with additional bot implementations monitoring creative quality, website compliance, and account security.

"We already have various points of bots into the tool, and we will have more," Foroughi explained. "It is just gonna get better as we get more data in. And we can tune it so that it is actually accurate across the board."

The company is actively developing generative AI capabilities for automated creative production, which Foroughi identified as a near-term priority. AppLovin's advertising inventory features an average ad viewership duration of approximately 35 seconds, substantially longer than the roughly seven-second average on social media platforms. This format mismatch often results in advertisers porting short-form creative unsuited to AppLovin's environment.

"I am hoping in a matter of weeks or months, be able to test generative AI-based creative," Foroughi said. "Today in our advertising system, the advertiser can do almost no targeting. They can pick their country. They can put in their economic goals. Can put it in a budget, and off they go. The one manual lever is creative."

Automated creative generation could substantially expand available advertising inventory without requiring manual production from advertisers, according to management's assessment. The technology would enable dynamic customization of ad content to match platform best practices and user engagement patterns.

Advertiser density expected to lift conversion performance

Management emphasized that increased advertiser diversity represents a primary growth mechanism for the platform, independent of impression volume expansion. AppLovin currently serves over one billion daily active users with advertising spend from the low thousands of advertisers, creating substantial opportunity for improved targeting through broader category representation.

"The model today if you go back a year, prior to us getting into e-commerce and shops, you ended up having a thousand impressions to show a user, you bombarded them with games. Well, that is not a great offering," Foroughi explained. "In our case, the customers are not churning. They are playing games. But they are not gonna convert, and our conversion rates are really low."

The company's recommendation engine operates by matching user behavior patterns with advertiser offerings across its inventory. Limited advertiser density constrains the model's ability to personalize content effectively, resulting in repetitive ad exposure and depressed conversion rates. Historical disclosure indicated the platform achieved approximately 1% average conversion rates, though current performance may differ.

Expanding advertiser categories beyond gaming enables the model to reserve high-value gaming inventory for moments when users demonstrate receptivity to game advertising, while monetizing other impression opportunities with diverse content. "There are moments when the model knows a user is gonna be in the game. When those moments happen, the CPM for a game advertiser is phenomenal. It is really, really high," Foroughi noted.

The strategy aims to maintain or increase gaming advertiser performance through improved targeting precision while simultaneously expanding revenue from complementary categories. "You go and bring in demand density. What happens? Now the model can better use all that access impression," Foroughi said. "Your gaming is not gonna diminish. It is just gonna be more targeted. So maybe impressions go down, CPM goes up for them."

Capital allocation intensifies with expanded buyback authorization

AppLovin's board of directors authorized an additional $3.2 billion in share repurchases during the third quarter, increasing total remaining authorization to $3.3 billion as of the end of October 2025. The company repurchased and withheld approximately 1.3 million shares during the quarter for $571 million, funded entirely through free cash flow generation.

Weighted average diluted shares outstanding declined from 346 million in the fourth quarter of 2024 to 341 million in the current quarter, reflecting consistent buyback activity throughout 2025. The company ended the period with $1.7 billion in cash and cash equivalents, compared to $697 million at December 31, 2024.

"Given our continued confidence in the Company's future, our board of directors has increased our share repurchase authorization by an incremental $3.2 billion," the company stated in its press release. The expanded authorization signals management's confidence in sustained cash generation capability alongside growth investment requirements.

CFO Matthew Stumpf noted that free cash flow margin improved quarter-over-quarter due to the absence of semiannual cash interest payments on debt, which occur during the second and fourth quarters of each year. The company generated $2.657 billion in operating cash flow during the nine months ended September 30, 2025, compared to $1.398 billion in the prior-year period.

Fourth quarter guidance projects sustained margins

AppLovin issued fourth quarter 2025 guidance projecting revenue between $1.57 billion and $1.6 billion, representing 12% to 14% sequential growth. Adjusted EBITDA is expected to range from $1.29 billion to $1.32 billion, producing targeted margins of 82% to 83%.

"Within the guidance, we took an approach where it reflects a combination of different factors that we have going on at the company," Stumpf explained. "Optimism around the e-commerce referral program, continued model enhancements, the updates that we talked about previously within the Q3 period, and then also kind of normal holiday seasonality."

The guidance excludes assumptions about incremental advertiser onboarding through the referral program, which management characterized as unpredictable given variable integration timelines and ramp characteristics. "We guide to what we know. We do not try to estimate for something that is unpredictable," Stumpf said. "We cannot predict the number or the volume of new advertisers coming onto the system through the referral program and how that potential ramp in spend could happen through the quarter."

Management maintained its philosophy of providing guidance ranges reflecting high confidence levels rather than incorporating optimistic scenarios for emerging initiatives. This approach has characterized the company's financial communication throughout its expansion into e-commerce advertising categories.

Platform economics position company for scaled acquisition

AppLovin is testing paid marketing channels to promote the Axon Ads platform to prospective advertisers, exploring customer acquisition economics ahead of broader platform availability. The tests remain limited in scale, with spending levels not yet material to consolidated results, though management expressed confidence in eventual scalability.

"We are so we are testing right now, actively. Testing budget is gonna be not large," Foroughi said. "Even if we ever scale this, scale of our business is quite large. So, like, some of the largest advertisers in the world only spend a couple $100 million a year. As you think about the scale of our business, it is never gonna be a very large line item against the revenue potential."

The company's expertise in performance marketing and conversion optimization provides structural advantages for efficient advertiser acquisition. "Because our LTV is so high, and we are optimizing our conversion rate, and we think we can get that to be really compelling, and the brand is not known, the setup is really good for promoting our product to potential end customers," Foroughi explained.

Successful paid acquisition would enable AppLovin to scale advertiser onboarding independent of referral networks and without proportional expansion of direct sales personnel. "We are not brand marketers. The dollars will be much greater than the dollars we spend on user acquisition, and it is the full-blown automation of a Salesforce," Foroughi noted.

The company maintains conservative sales and marketing expenditure relative to revenue scale, consistent with its operational culture emphasizing cost discipline. Third quarter sales and marketing expenses totaled $48.6 million, declining 23% year-over-year despite substantial revenue growth, producing leverage that contributed to margin expansion.

Publisher revenue growth accelerates on MAX platform

AppLovin's MAX supply-side platform demonstrated faster growth in advertising revenue compared to in-app purchase monetization during the third quarter, according to management commentary. The divergence reflects both improved monetization tools for ad-supported publishers and structural maturity differences between the two mobile gaming business models.

"We are seeing much faster growth rates on the Max platform," Foroughi said. "We have said multiples faster than the in-app purchasing market grows. Because those publishers both the older publishers in that category are getting better tools both for growth and monetization. And then newer publishers see these other publishers scaling they integrate more ads."

Higher advertiser density contributes directly to publisher revenue expansion by improving fill rates and competition for available inventory. As AppLovin brings diverse advertiser categories onto the platform, publishers gain access to demand sources beyond gaming advertisers, reducing content fatigue and enabling higher ad load without negative user experience impacts.

"As the ads become higher quality, and we look at e-commerce shopping and just demand density, it is higher quality because the user stops seeing game, game, game, game, game," Foroughi explained. "If you bring more diversity of content, you would expect retention to go up, and ad supply to expand."

The company identified significant untapped supply potential within in-app purchase-focused games that traditionally minimize advertising to avoid promoting competitor titles. As non-gaming demand increases, these publishers gain monetization options that don't cannibalize their core revenue streams. "If you are monetizing a high LTV game, and most of the gaming customers are residing in these deep games, you do not want to run ads for your competition," Foroughi noted.

Direct payment systems create potential LTV expansion

AppLovin is monitoring developments in direct payment infrastructure that could reduce or eliminate app store commission rates currently averaging 30% on in-app purchases. Such changes would increase lifetime value calculations for gaming advertisers by approximately 20% if commissions decline to mid-single-digit rates, according to Foroughi's analysis.

"I do not think it is realistic that 30% tax goes to low single digits. So let us just take the midpoint 15%. That is a material lift in LTV for a lot of these in-app purchasing games, roughly 20%," Foroughi said during the earnings call. "Portion of that is gonna go into development of more content, which is great. They are gonna make better games. Some portion of that, they will bank into the bottom line. Some portion of that will go to marketing companies."

The direct payment capability has not yet contributed materially to AppLovin's results, with adoption remaining in early stages across the mobile gaming ecosystem. Regulatory pressure and platform policy changes from Apple and Google could accelerate adoption timelines, though management characterized the development as outside the company's direct control.

Gaming publishers would likely allocate commission savings across multiple priorities including content development, profit margin expansion, and increased marketing spend. The marketing allocation would benefit advertising platforms like AppLovin through higher advertiser budgets and willingness to pay elevated costs per installation.

S&P 500 inclusion marks institutional milestone

The company's formal addition to the S&P 500 index during the quarter represents enhanced market visibility and institutional investor focus, according to management. The inclusion reflects AppLovin's market capitalization growth and establishes the company within portfolios of index-tracking funds.

"First, I would like to recognize our inclusion in the S&P 500. A huge milestone for our company and a strong acknowledgment of what we built," Foroughi said. "It is a privilege we do not take lightly. It also means we now carry the expectations of a much broader set of investors, and we must push even harder to continue delivering."

AppLovin's market capitalization has expanded substantially throughout 2025 alongside operational performance improvements and investor recognition of its AI-powered advertising platform's competitive positioning. The S&P 500 inclusion typically generates automatic buying from passive funds tracking the index, though the specific impact varies by market conditions and constituent changes.

The milestone arrives as AppLovin transitions from predominantly serving mobile gaming advertisers to pursuing broader advertiser categories through its self-service platform. Management emphasized continued execution focus despite heightened market attention. "We continue to operate in an environment of heightened scrutiny around data, privacy, and ad tech practices," Foroughi noted. "We remain committed to strict compliance, transparency, and execution excellence."

Timeline

• Q3 2023: AppLovin operating with gaming advertisers exclusively, facing impression monetization challenges from limited advertiser diversity
• Q4 2024: Company pilots e-commerce advertising with curated cohort of approximately 600 web and shopping advertisers
• Q1 2025: E-commerce pilot demonstrates viability, company discloses advertising spend base and expansion plans
• Q3 2025: International traffic opens for web advertisers ahead of schedule, excluding European Union
• October 1, 2025: Self-service Axon Ads platform launches with referral-based onboarding system
• October 2025: Board authorizes additional $3.2 billion share repurchase, bringing total authorization to $3.3 billion
• November 5, 2025: Company reports third quarter results showing 68% revenue growth and 79% adjusted EBITDA growth

Summary

Who: AppLovin Corporation, a marketing platform company serving mobile gaming publishers and advertisers, reported by CEO Adam Foroughi and CFO Matthew Stumpf

What: Third quarter 2025 financial results showing $1.405 billion revenue (68% year-over-year growth), $836 million net income from continuing operations (93% growth), and $1.158 billion adjusted EBITDA (79% growth) alongside the October 1 launch of its self-service Axon Ads platform

When: Quarter ended September 30, 2025, with results announced November 5, 2025

Where: AppLovin's advertising platform serving over one billion daily active users globally, with recent international expansion to all markets except the European Union for e-commerce advertisers

Why: Performance driven by incremental AI model improvements for core gaming advertisers, early growth from self-service e-commerce platform expansion, and operational leverage producing sustained 82% adjusted EBITDA margins. The results matter for marketing professionals as they demonstrate AI-powered advertising platforms' ability to substantially improve conversion efficiency while expanding addressable advertiser categories beyond traditional performance marketing verticals, potentially reshaping competitive dynamics in digital advertising channels.