AppLovin
APP · NasdaqGrowth came from worth per install, not more installs
Revenue rose 52.8% while AppLovin Ads installs fell 2%, because net revenue per installation rose 58%: each install became more valuable.
Q2 FY2026, the quarter to Jun 30, 2026 · 10-Q filed Aug 5, 2026
- Operating margin
- 77.7%
- Net income
- $1.3B
- Free cash flow, quarter
- —
Where AppLovin's money goes
- 01
Growth came from worth per install, not more installs
Revenue rose 52.8% while AppLovin Ads installs fell 2%, because net revenue per installation rose 58%: each install became more valuable.
Why it matters
Revenue was $1.92B against $1.26B a year earlier, up 52.8%. The filing attributes the rise primarily to AppLovin Ads, where net revenue per installation increased 58%, partially offset by a 2% decrease in the volume of installations.1
The pattern is stronger over six months: net revenue per installation up 75%, installation volume down 10%. Volume has been shrinking, not growing, through the year.1
AnalysisAnalysis: AppLovin is paid when advertisers hit their return targets, so the price of an install reflects how well Axon predicts a valuable user. Rising value on falling volume reads as better prediction being paid for, not as a bigger audience. It also means growth now rests on that prediction keeping its edge.
- 02
Costs grew slower than revenue, except engineering pay
Total costs rose 42.6% against revenue up 52.8%, lifting operating margin to 77.7%, even as research and development more than doubled.
Why it matters
Total costs and expenses were $429.4M, 22.3% of revenue against 23.9% a year earlier. Operating income rose 56.0% to $1.49B from $957.7M, for an operating margin of 77.7%, up 1.6 points.1
Line by line: cost of revenue, mainly datacenter costs, rose 45.6% to $225.8M, 11.7% of revenue. Sales and marketing was $63.4M, 3.3% of revenue. General and administrative fell 26.8% to $40.3M, which the filing attributes to lower bad debt expense and lower professional services costs tied to transactions.1
The exception is research and development, up 126.9% to $99.9M from $44.0M, moving from 3.5% to 5.2% of revenue. The filing attributes the increase primarily to higher stock-based compensation-related payroll costs.1
AnalysisAnalysis: the margin widened because revenue outran every cost line at once. Engineering pay is the line growing fastest, and it is the one most tied to the models behind revenue per install. The widening holds only while revenue keeps outgrowing it.
- 03
Non-operating gains lifted net profit faster than operations
Net income from continuing operations rose 64.1% against 56.0% for operating income, as other income swung to $62.4M from a $22.3M expense.
Why it matters
Other income (expense), net was $62.4M against a $22.3M expense a year earlier. The filing ties the swing to a fair value gain on certain private equity securities against a loss a year earlier, more interest earned on a larger cash balance, and currency gains. Pre-tax income rose 70.3% to $1.51B.1
Tax took back part of it. The provision rose 113.1% to $239.0M, 15.9% of pre-tax income against 12.7% a year earlier. The filing names higher pre-tax income, foreign income taxed at different rates and smaller stock-compensation benefits, partly offset by a larger foreign-derived income deduction.1
Total net income rose less, 54.5% to $1.27B from $819.5M, because the year-ago quarter included $47.7M of income from the Apps business, sold at the end of that quarter. Diluted earnings per share were $3.76 against $2.39.1
AnalysisAnalysis: fair value gains on private holdings and currency moves are not the advertising business and need not repeat. Operating income growth of 56.0% is the cleaner read of how the core business moved.
- 04
Cash collected trailed reported profit this quarter
Operating cash flow of $869.0M was 68.6% of net income, against 94.2% a year earlier, so less of the profit arrived as cash.
Why it matters
Operating cash flow was $869.0M against net income of $1.27B, 68.6%. A year earlier it was $772.2M against $819.5M, 94.2%. The filing ties the half-year cash pattern to higher collections from revenue growth, offset by larger publisher payments, operating spending and cash paid for income taxes.1
The quarter before ran the other way: operating cash flow of $1.29B against net income of $1.21B, 107.1%. Quarterly cash is uneven, so one quarter does not establish a trend.1
AnalysisAnalysis: a business booking net revenue on payment terms carries receivables that grow with revenue, and tax payments arrive in lumps. For this to be timing rather than a change in the business, cash would need to move back toward reported profit in the quarters that follow.
Sources
- 1.AppLovin 10-Q for the period to 2026-06-30 (the filing), Aug 5, 2026, read Nov 2, 2026
Have a question about AppLovin? Ask CXProWealth on ChatGPT.Free membership required.
Growth, profit and margin
Revenue went from $994.1M in FY2019 to $5.5B in FY2025, the operating margin from 19.6% to 75.8%, over 6 years.
- Revenue$5.5B
- Operating income$4.2B
- Operating margin75.8%
- Period
- Q2 FY2026
- Revenue
- $1.9B
- Operating income
- $1.5B
- Operating margin
- 77.7%
- Net income
- $1.3B
- Free cash flow
- —
Does the profit turn into cash?
- Operating cash flow$4.0B
- Capital expenditure—
- Free cash flow—
- Net income$3.3B
Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.
Financial data and sources
The figures
Margins, cash and growth for the period, each with what it was computed from.
Not reported, or not derivable
- free cash flow: the quarter's cash flow is year to date in the filing and could not be differenced from the history
- fcf margin: the quarter's cash flow is year to date in the filing and could not be differenced from the history
- capex to revenue: the quarter's cash flow is year to date in the filing and could not be differenced from the history
Where revenue comes from
Every breakdown the filing reports for the period, with each item's share.
This filing reports no breakdown of revenue by product, segment or region for the period.
What it costs
The cost lines beneath operating income, each as a share of revenue, then the operating result.
Costs are reported by function: what it cost to make what was sold, then the expenses of selling, developing and administering.
| Cost line | Q2 FY2026 | Of revenue | Source |
|---|---|---|---|
| Total costs and expenses | $429.4M | 22.3% | Source10-Q, us-gaap:CostsAndExpenses, as reported in the 10-Q filed 2026-08-05 |
| Income from operations | $1.5B | 77.7% | Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-08-05 |
Operating figures the company states
From the text of the filing rather than its statements, each with the sentence that states it.
View source
For the six months ended June 30, 2026, our revenue increased by $1.3 billion, or 56%, compared to the same period in the prior year due primarily to improved AppLovin Ads performance, where net revenue per installation increased 75%, partially offset by a decrease in the volume of installations of 10%.
View source
For the three months ended June 30, 2026, our revenue increased by $664.9 million, or 53%, compared to the same period in the prior year due primarily to improved AppLovin Ads performance, where net revenue per installation increased 58%, partially offset by a decrease in the volume of installations of 2%.
View source
For the six months ended June 30, 2026, our revenue increased by $1.3 billion, or 56%, compared to the same period in the prior year due primarily to improved AppLovin Ads performance, where net revenue per installation increased 75%, partially offset by a decrease in the volume of installations of 10%.
View source
For the three months ended June 30, 2026, our revenue increased by $664.9 million, or 53%, compared to the same period in the prior year due primarily to improved AppLovin Ads performance, where net revenue per installation increased 58%, partially offset by a decrease in the volume of installations of 2%.
The statements, as filed
The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.
Income statement23 lines, as presented in the 10-Q
Cash flow statement2 lines, as presented in the 10-Q
Year to date, as a quarterly filing reports it.
| Line | Q2 FY2026 | A year earlier | Change | Source |
|---|---|---|---|---|
| Operating Activities | ||||
| Net income | $1.27B | $819.5M | +55% | Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-08-05 |
| Statement of Cash Flows | ||||
| Cash and cash equivalents at end of the period | $3.05B | $1.19B | +156% | Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-08-05 |
Balance sheet23 lines, as presented in the 10-Q
About this data
- Source
- AppLovin 10-Q, accession 0001751008-26-000059, filed Aug 5, 2026, read on Nov 2, 2026.
- History
- From the SEC's XBRL company facts, the value from the latest filing that stated each period.
- Reading
- Paragraphs marked Analysis are CXProWealth's reading; everything else is the filing's own numbers and words, or a cited source.
- Version
- methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02
What holds AppLovin's model up, and what could bend it
Competitive edge
Paid on the advertiser's outcome, priced per install
AppLovin earns when advertisers reach their return targets, so better prediction raises price per install without a sales push.
The detail
The filing says the company generates revenue when advertisers achieve their return on advertising spend targets, with prices set dynamically by campaign goals. Net revenue per installation rose 58% in the quarter while sales and marketing stayed at 3.3% of revenue.1
AnalysisAnalysis: the advantage holds as long as Axon predicts valuable users better than rival networks. A model improvement reaches every campaign at once, and outcome pricing turns it straight into revenue rather than a discount to negotiate.
A lean company whose main cost is compute
Cost of revenue, mainly datacenters, is 11.7% of revenue, against 3.3% for sales and marketing and 2.1% for administration, leaving an 88.3% gross margin.
The detail
Because AppLovin acts as an agent, revenue is reported net of what publishers receive. Cost of revenue was $225.8M, 11.7% of revenue, chiefly third-party cloud computing. Sales and marketing was 3.3% of revenue and general and administrative 2.1%. The filing says it believes strongly in operating a lean organizational structure.1
AnalysisAnalysis: costs that scale with computing rather than headcount let revenue grow far faster than spending, which is how the operating margin reached 77.7%.
What to watch
Apple, Google and Meta control the data and distribution
Growth rests on value per install, which depends on data that a few platforms, some of them competitors, can restrict at will.
The detail
The filing says the app ecosystem depends on a small number of platforms, the Apple App Store, Google Play Store and Meta, some of them direct competitors, each with broad discretion to change fees and rules. It relies in part on Apple's advertising identifier; if available data shrinks, its solutions may not be as effective.1
AnalysisAnalysis: with installs down 2% and revenue per install up 58%, the business is growing on prediction quality. A cut in the signal those predictions use would hit the very lever that is producing growth.
Cancelable contracts, concentrated in mobile gaming
Substantially all contracts are cancelable at any time and revenue sits mainly in mobile gaming, so spending follows results month to month.
The detail
The filing says clients have no long-term commitments and substantially all contracts are cancelable at any time. Revenue is concentrated in the mobile app ecosystem and specifically mobile gaming. It names Meta, Google, Amazon, Unity Software and Liftoff Mobile among competitors, and says expansion into e-commerce and connected TV is not assured of broad adoption.1
Engineering pay and compute are the rising costs
Research and development rose 126.9% and cost of revenue 45.6%, the two lines the filing ties to talent and computing capacity.
The detail
The filing attributes the rise in research and development to $99.9M primarily to stock-based compensation-related payroll costs, and the rise in cost of revenue to $225.8M primarily to network infrastructure costs. It says growth needs more computing power, much of it from third-party providers, at a reasonable cost, and that it depends heavily on its co-founder and chief executive.1
Sources
- 1.AppLovin 10-Q for the period to 2026-06-30 (the filing), Aug 5, 2026, read Nov 2, 2026
AppLovin, further in
Member research, then your own questions on ChatGPT.
What could change the outlook
What AppLovin's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.
- What has to hold for revenue per install to keep rising
Installs are falling while each one earns more. The conditions under which that pattern continues, and the figures in each filing that would show it changing first.
- Reading the gap between profit and cash
Why operating cash flow swung from above net income to well below it in one quarter, and which balance sheet lines separate timing from a change in the business.
Loading…
Have a question about AppLovin?
Explore its profit drivers, competitive edge, risks, or your own investment and business questions with CXProWealth on ChatGPT.
- If AppLovin's installs keep falling, what would it take for a 58% rise in revenue per install to keep carrying revenue growth?
- Why did AppLovin's operating cash flow cover only 68.6% of net income this quarter, against 94.2% a year earlier?
- How much of AppLovin's 64.1% rise in continuing net income came from other income rather than from its advertising business?
Business Lens describes AppLovin from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.