AppLovin Q2 2025 earnings: ad revenue up 77%, general self-serve in 2026

AppLovin reported its Q2 2025 earnings yesterday:

• Advertising (formerly, Software Platform) revenue grew by 77% to $1.26BN. AppLovin’s divestiture of its games portfolio was completed last quarter, so it no longer reports for an “Apps” segment;
• Net income grew by 156% to $772MM. Note that Net Income is presented as “Net Income from Continuing Operations,” given the divestiture of the Apps segment.

The company provided Q3 revenue guidance of between $1.32-$1.34BN, which would represent between 58% and 60% year-over-year growth in the quarter. AppLovin’s stock traded down by as much as 9% after-hours but rebounded this morning and is now up by roughly 12%.

In prepared remarks on the earnings call, Adam Foroughi, AppLovin’s CEO, credited growth in the quarter to “improved technology, increased demand as well as from supply side expansion.” Later in the call, when asked about supply-side expansion given the high market penetration of MAX, AppLovin’s SSP, Foroughi said (emphasis mine):

Yes. Look, we talk a lot about the market in mobile gaming and people fixate on the in-app purchasing market. And what we’re trying to do is just highlight the fact that our business grows from improvements in technology and demand, which drives CPM and expansion of supply. The MAX mediation platform is really high penetration into the market, so we’re not going to be able to grow it particularly quickly by taking more mediation from other platforms at this point. What we were highlighting was that the base platform, just the audience inside MAX, is growing swiftly, double-digit growth, so multiples greater than what you would expect when people try to size up the gaming market growth rates of 3% to 5% … The other thing that is super valuable to understand in that is that inside that marketplace, we historically have always talked about how there’s not a share gain concept. As the marketing platforms improve, that platform grows. The eyeballs playing games play more games every single day. Inventory goes up. That drives growth on our platform. It drives growth on the platforms that are the other bidders inside that ecosystem. And then we benefit the most because we’re taxing every transaction for the most part that happens outside of us at the MAX fee. And then obviously, our own DSP is a super lucrative business model when we win the inventory.

This explanation touches on a fundamental aspect of the mobile gaming advertising market that I outlined in Understanding AppLovin:

Whichever ROAS flavor is used, it guides the direct response advertising apparatus utterly. An advertiser will establish some ROAS standard within a timeline – and this is usually determined by the company’s CFO – and spend as much money as it can on every channel that can deliver that level of ROAS. This concept can be counterintuitive and confounding: direct response marketers often don’t face budget constraints but rather hard ROAS constraints, and they seek to maximize advertising spend on any channel that can support those ROAS constraints. In other words: a marketing budget isn’t a fixed pie that gets allocated to advertising channels based on their performance but rather the fluid outcome of being able to achieve ROAS goals wherever possible.

I highlight this idea here because it’s a critically important concept to understand when analyzing the mobile gaming market and digital advertising more generally. The fact that many mobile gaming advertisers are ROAS, not budget, constrained means that profits are reinvested into marketing and compound; as such, budgets grow when ROAS meets advertiser targets. I speak to this effect in The money multiplier of performance marketing.

Foroughi noted in prepared remarks that the company’s self-serve platform for eCommerce advertisers would expand beyond US advertisers in October and be made available to additional advertisers on a referral basis, with the platform opening to all advertisers in the first half of 2026:

With the rollout going smoothly, we were ready to widen access. On October 1, 2025, we plan to open the AXON ads manager on a referral basis, perfectly timed for the holiday season. Feedback from these partners will guide our global public launch in the first half of 2026. To date, web advertising campaigns have been limited to the United States. On October 1, we plan to open our platform to most major international markets.

Foroughi also revealed that the company would begin paid marketing activities at that time to actively recruit new advertisers to the platform. In response to a question about that initiative, he stated (emphasis mine):

So the value of us being able to go out in performance market, the platform, is that we’ve got one of the most lucrative financial models the world has ever seen. I mean, obviously, you can see the amount of cash that we print. And we’re very good performance marketers. So we’re very good performance marketers. It’s plausible that we will be using our own models to recruit advertisers off of our own inventory. There’s plenty of moms with small businesses and dads with small businesses sitting in games, playing games all day that could use our platform to market themselves … You can imagine us running ads on Facebook, on LinkedIn, on TikTok. But it really does come down to the fact that we’ve got such a lucrative financial model and we try to run lean and automate every step of that process. And we believe that if we can automate the onboarding of advertiser flow from when an advertiser can find out about us from an ad all the way through to going live and then scaling on our platform, the model will be very lucrative on an LTV to CAC basis, and we won’t have to staff up a large sales force.

It’s an interesting proposition. Having divested its games portfolio, AppLovin no longer operates any consumer-facing products. Every large social media platform runs paid user acquisition campaigns, but to recruit consumers, not advertisers, to their apps (see TikTok’s billion-dollar secret that wasn’t to understand the scope of these user acquisition programs). What AppLovin is describing here is obviously radically different: it would advertise its enterprise product to potential advertising clients, not consumers, on these social platforms. The subtext here is that AppLovin believes that its advertising platform can support growth for not just SMBs but VSMBs (where v stands for Very).

Below I’ve highlighted excerpts from the conference call that I found especially noteworthy. All emphasis mine.

On the crossover value of data between gaming and eCommerce:

And then just remember, the data in our platform is not unique to one or the other part of the business. So we’ve always felt that games will benefit a lot from our ability to break into these other categories. You can imagine if someone buys a $4,000 handbag from a store, that person is probably a whale for a match-three game. Now I can tell you that, but I can tell you the technology is going to come up with a lot of cross-correlations and conclusions that are a lot more powerful than that … So in terms of opportunity for us, not only does opening up the platform get us more demand, which is going to be massively accretive and incremental to our business. It gets us more data. And so every single quarter, you’re going to have that flywheel effect that, that then paired with our engineers’ ability to take added data and improve the technology and its interpretation of that data creates a real strong foundation for growth for a long time to come.

On the feasibility of various types of targeting for eCommerce advertising in games:

So look, when we got into the space, it surprised us how much of the market Meta advertising was in the D2C space, and it was the majority. And when you have one platform that’s that big, everyone wants every other platform to give them the same exact tools. Now we don’t have an e-mail address or that persistent identifier that matches up with their audience data. So technically doing an exclude is not going to be as accurate as what Meta can deliver to these advertisers … There are other nuances and differences. We serve a full-screen advertisement, and then we can pair the video with a dynamic product ad. That creates more intent for the shoppers. So the vast majority of all the transactions we drive happen within an hour or 2, and the vast majority of the transactions Meta drive, they take attribution for a much longer time frame … What we believe, because we can see it, our ads drive a lot of intent and drive to conversions very, very quickly, and we’ve been able to extract a lot of value out of the space … Now the last thing I’ll leave you with is we do believe in automation entirely throughout the funnel. We don’t allow gaming companies to use any sort of manual targeting in our platform. The platform allows them to input a goal, put it in a budget and get that result. And that’s what they pay us for, the technology being extremely precise and removing that human mind out of the equation … We bring the same view to this category. All these technologies in advertising are going to move to AI, automating most of this funnel in the future.

On expanding supply outside of gaming:

There’s absolutely no reason why we wouldn’t want to plug into other properties even if they’re large social networks, music apps, news apps, sports apps, websites. The audience itself, again, this gamer audience is a human being that’s doing a whole bunch of other things, and games are probably somewhere in the neighborhood of 10% to 15% of their time spent on mobile. And if we can access them outside of the largest-walled gardens that won’t let us in everywhere else, if we know them and we have data on them, we want to show that ad to them every chance we get and we think that will be a very lucrative transaction moment for us and the advertiser, we’re going to go after that.

It’s interesting to note that this response didn’t mention CTV, given that AppLovin operates Wurl, a CTV SSP.

On whether AppLovin has observed any change in monetization behavior toward link-out following the recent activity in the Epic Games v. Apple lawsuit:

Not yet. I think I mentioned this on the last call, but we sort of expect this one to be — take longer than people expect. Certainly, some apps are bypassing the App Store now to cut that rate down. But the biggest gaming companies tend to move really slowly and tend to operate in fear of the big platforms. And so in order to really do it, I think it’s going to take a few quarters for them to optimize the user experiences and go bank it. And then from there, you’ll start seeing it compound pretty quickly in terms of benefit to us as an ad platform because once the very large leaders start doing it, you’ll start seeing the smaller to mid-sized ones really pick it up quickly … So no impact yet. And I would guess it will probably take 2 to 4 quarters from some impact. And by 4 to 8 quarters, you’re going to get pretty material impact in pricing on our platform.

On the distinctions between app and eCommerce advertising attribution:

I mean it is much more fragmented when it comes to attribution and integration than the mobile app ecosystem. The mobile app ecosystem has 2 major MMPs, mobile measurement partners. We own one of them. So integration is pretty easy across the advertiser base, and everyone has the same attribution model. Everyone looks at things on a last click basis, and so everything is standardized … When we got into web, not only did we have to contend with the fact that most of the media buying was happening on Meta, so everyone wanted things the way they looked at things on Meta. Secondarily, we had to contend with the fact that the space was completely fragmented. So this was one of the bigger lifts that we had to go accomplish over the last quarter or 2, was do all those integrations that I laid out on the last call to get us ready so that we can go out and really open up the platform. We wouldn’t be able to if every shop by shop came on to our platform and couldn’t integrate one click. That’s how they integrate everywhere else.