AppLovin revenue grows 53% despite Q2 guidance concerns

AppLovin reported a 53% increase in second-quarter revenue, reaching $1.92 billion, though the figure fell slightly short of the $1.94 billion analyst consensus. Despite the revenue miss, adjusted earnings per share (EPS) rose 57% to $3.76, slightly exceeding expectations, and adjusted EBITDA jumped 58% year-over-year to $1.6 billion.

The company attributed the revenue miss to a slower-than-typical pace in model improvements for its Axon 2.0 AI advertising platform, noting that significant performance boosts occurred after the quarter ended. Management expressed confidence in the gaming advertising business, projecting long-term annual compounding growth of 30%.

Despite strong profitability and a gross margin of 88.3%, the stock experienced significant volatility, hitting a 52-week low following the report. Investors expressed concerns regarding a potential slowdown in growth and the impact of high costs associated with AI integration on future margins. For the third quarter, AppLovin projected revenue between $2.055 billion and $2.085 billion.