AppLovin's stock dropped 20% after the company fell short of guidance due to a timing-related deceleration in model performance, which limited advertiser spend growth and contributed to adjusted EBITDA missing expectations despite strong consumer segment growth.
- Revenue reached $1.92 billion, up 53% year-over-year but slightly below the midpoint of guided range.
- Adjusted EBITDA was $1.61 billion, up 58% year-over-year but just below guidance, pressured by increased compute costs for model training.
- Gaming revenue growth slowed due to lighter-than-usual model performance improvements during the quarter, delaying the expected uplift to early Q3.
- Consumer segment delivered strong performance with advertiser spend rising 28% above Q4 2025 levels, signaling steep growth but still too small to offset gaming deceleration fully.
- Free cash flow totaled $863 million, with below-normal conversion attributed to the timing of international tax and interest payments, expected to normalize in Q3.
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