AppLovin Corp
For the period ended Mar 31, 2026. Filed May 6, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 6, 2026
APP$391.22+9.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-05.
0001751008-25-000081
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-06.
0001751008-26-000044
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 116 previous paragraphs and 93 current paragraphs.
45 unchanged; 40 reworded; 8 added; 29 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
2 Negative amount reflects a reversal of amounts expensed in prior periods.
Current report
Attract and retain clients
Current report
(1) Includes stock-based compensation as follows:
Current report
Sales and marketing expenses in the three months ended March 31, 2026 increased by $1.4 million, or 2%, compared to the same period in the prior year, due primarily to an increase of $16.7 million in advertising and marketing program costs, partially offset by a decrease of $15.3 million in personnel-related expenses related to a decrease in stock-based compensation-related payroll costs.
Current report
Other income, net
Current report
Net cash used in investing activities was $5.2 million for the three months ended March 31, 2026 and primarily related to payments for initial direct costs of certain new leases.
Current report
Share Repurchase Program
Current report
During the three months ended March 31, 2026, we repurchased and retired 2.2 million shares of Class A common stock for $1.0 billion. As of March 31, 2026, $2.3 billion remained available for repurchases under the program. The program has no expiration date, does not obligate us to repurchase any specific amount of stock, and may be modified, suspended, or terminated at any time at our discretion. For additional information, see Note 7 – Equity of the Notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Removed paragraphs (29)
Previous report
For the three months ended September 30, 2025, our revenue increased 68% year-over-year to $1.4 billion, from $835.2 million in the three months ended September 30, 2024. We generated net income from continuing operations of $835.5 million and $433.1 million for the three months ended September 30, 2025 and 2024, respectively, and net income of $835.5 million and $434.4 million for the three months ended September 30, 2025 and 2024, respectively. We generated Adjusted EBITDA of $1.2 billion and $647.0 million for the three months ended September 30, 2025 and 2024, respectively. Additionally, our net cash provided by operating activities was $2.7 billion and $1.4 billion in the nine months ended September 30, 2025 and 2024, respectively. We generated Free Cash Flow of $2.6 billion and $1.4 billion for the nine months ended September 30, 2025 and 2024, respectively. Cash flows and Free Cash Flow include the cash flows from continuing and discontinued operations. Given our strong financial position, we have been able to reinvest in our expansion and growth, and repurchase and withhold shares of our Class A common stock. See the section titled “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated in accordance with GAAP.
Previous report
Recent Developments
Previous report
On May 7, 2025, we, along with our subsidiaries Morocco, Inc. and AppLovin GmbH (collectively, the “Sellers”) entered into a Purchase Agreement (the “Agreement”) with Tripledot and its subsidiaries Eton Games Inc. ("Eton") and Tripledot Group Holdings Limited (collectively, with Tripledot, the “Purchasers”) relating to the sale of our Apps Business. On June 30, 2025, we and Tripledot entered into an amendment to the Agreement to provide, among other things, that in lieu of the issuance of a secured promissory note by Eton to us or our designated affiliate at the closing of the transactions contemplated by the Agreement (the “Closing”) to fund a portion of the full Cash Consideration (as defined in the Agreement), Tripledot may elect to pay such amount in cash.
Previous report
On June 30, 2025, we completed the Closing and sold our Apps Business to Tripledot for $400 million in cash, subject to closing adjustments, and equity consideration representing approximately 20% of Tripledot’s fully-diluted equity at the time of closing. No promissory note was issued as part of the transaction. Following the Closing, we operate as a single operating and reportable segment. Results related to our Apps Business are presented as discontinued operations in our condensed consolidated financial statements. See Note 1 – Description of Business and Summary of Significant Accounting Policies and Note 2 – Discontinued Operations of the Notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Previous report
Retain and grow existing clients
Previous report
In the past, our clients have generally increased their usage of our advertising solutions, and as a result, growth from existing clients has been a primary driver of our revenue growth. We must continue to retain our existing clients and expand their spend with us over time to continue to grow our revenue, increase profitability and drive greater cash flow.
Previous report
Add new clients globally
Previous report
Our future success depends in part on our ability to acquire new clients. During the three months ended September 30, 2025, 51% of our revenue was generated from outside of the United States. We believe that the global opportunity is significant and will continue to expand as developers and advertisers outside the United States adopt our advertising solutions. We also see opportunities to acquire new clients outside of mobile gaming, as the capabilities of our advertising solutions are relevant to the broader advertising ecosystem, including in areas such as e-commerce. For example, in October 2025 we opened a public referral program to onboard customers to Axon Ads Manager, which we expect to launch more broadly in the first half of 2026. We are investing in direct sales, product development, education, and other capabilities to drive increased awareness and adoption of our advertising solutions, which investments may impact our profitability in the near term as we seek further scale.
Previous report
Continued execution of strategic partnerships
Previous report
We continue to explore strategic partnership opportunities related to our advertising solutions and the expansion of the markets it serves and we may from time to time evaluate strategic acquisitions and partnerships opportunistically. We believe our future results of operations will be affected by our ability to continue to identify and execute such strategic transactions that are accretive to our growth and profitability. In April 2025, we provided an indication of interest to the President of the United States to explore a purchase of TikTok in all markets outside of China. This indication of interest is preliminary and there can be no assurance that a transaction involving us will proceed.
Previous report
New tools for developers, industry standards, and platforms may emerge in the future. We believe our focus on the advertising ecosystem has allowed us to understand the needs of our clients and our relentless innovation has enabled us to quickly adapt to changes in the industry and pioneer new solutions. We must continue to innovate and stay ahead of developments in the advertising and mobile app ecosystems in order for our business to succeed and our results of operations to continue to improve.
Previous report
We plan to continue to invest in sales and marketing to grow our advertising customer base and increase brand awareness. We expect sales and marketing expenses to fluctuate period-over-period in absolute dollars and as a percentage of revenue in the near term as we invest to grow our customer base and increase brand awareness, and to decrease as a percentage of revenue over the long term as we benefit from greater scale.
Previous report
We plan to continue to invest in research and development to continue to enhance our advertising solutions. We expect our research and development expenses as a percentage of revenue to fluctuate period-over-period in the near term as we invest to enhance our advertising solutions and to decrease over the long term as we benefit from greater scale.
Previous report
We plan to continue to invest in our general and administrative function to support the growth of our business. We expect our general and administrative expenses as a percentage of revenue to fluctuate period-over-period in the near term as we invest to support the growth of our business, and to decrease over the long term as we benefit from greater scale.
Previous report
(1) Includes stock-based compensation expense as follows:
Previous report
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
Previous report
For the nine months ended September 30, 2025, our revenue increased by $1.6 billion, or 72%, compared to the same period in the prior year due primarily to improved Axon Advertising performance, where net revenue per installation increased 64% and the volume of installations increased 9%.
Previous report
Sales and marketing expenses in the three months ended September 30, 2025 decreased by $14.4 million, or 23%, compared to the same period in the prior year, due primarily to a $17.8 million decrease in personnel-related expenses related to a decrease in stock-based compensation expense.
Previous report
Sales and marketing expenses in the nine months ended September 30, 2025 decreased by $36.0 million, or 19%, compared to the same period in the prior year, due primarily to a $43.4 million decrease in personnel-related expenses related to a decrease in stock-based compensation expense.
Previous report
Research and development expenses in the nine months ended September 30, 2025 decreased by $124.6 million, or 46%, compared to the same period in the prior year, due primarily to a decrease of $126.4 million in personnel-related expenses related to a decrease in stock-based compensation expense.
Previous report
General and administrative expenses in the nine months ended September 30, 2025 increased by $50.3 million, or 44%, compared to the same period in the prior year, due to an increase of $23.8 million in bad debt expense primarily related to new initiatives and an increase of $17.7 million in professional services costs.
Previous report
In the nine months ended September 30, 2025, interest expense decreased by $67.6 million, or 30%, compared to the same period in the prior year, due primarily to a $64.9 million decrease in interest expense as a result of lower interest rates under our senior unsecured notes and our unsecured credit agreement compared to our prior credit agreement.
Previous report
Other income (expense), net
Previous report
In the nine months ended September 30, 2025, other income (expense), net decreased by $39.3 million compared to the same period in the prior year, due primarily to a net fair value remeasurement loss of $42.7 million related to our investments in non-marketable equity securities in the current period and an increase in net foreign currency losses of $10.5 million. This is partially offset by an increase in interest income of $7.3 million driven by an increase in cash and cash equivalents and a decrease in certain third-party costs of $6.6 million incurred in connection with the refinancing of term loans in the prior year period.
Previous report
Net cash provided by investing activities was $359.3 million for the nine months ended September 30, 2025, primarily driven by $407.3 million in proceeds from the divestiture of our Apps Business, net of cash divested, which were partially offset by $22.4 million in earn-out payments related to prior acquisitions of intangible assets and $20.2 million in purchases of non-marketable equity securities.
Previous report
Credit Agreement
Previous report
In March 2025, we borrowed $200.0 million under our revolving credit facility pursuant to the credit agreement entered in 2024 to fund share repurchases under our repurchase program. We repaid $100.0 million of the outstanding principal amount of borrowings in April 2025 and the remaining $100.0 million of the outstanding principal amount of borrowings in May 2025. As of September 30, 2025, $1.0 billion remained available for borrowing under the facility.
Previous report
Stock Repurchase Program
Previous report
During the nine months ended September 30, 2025, we repurchased 4.9 million shares of Class A common stock for an aggregate amount, including commissions and fees, of $1.8 billion. As of September 30, 2025, $492.2 million remained available for repurchases under the program. In February 2025, our Board modified our stock repurchase program such that $500.0 million was immediately available for repurchase of shares of our Class A common stock, notwithstanding the amount that otherwise would have remained available during the quarter under the prior program limitation, and such limit would be increased in future quarters by the amount of free cash flow generated in the preceding fiscal quarter, with such increases to be carried forward and remain available for future repurchases if not used (up to the total authorized amount available for repurchases). In October 2025, our board of directors authorized an increase to the repurchase program of $3.2 billion and removed the limitations and conditions related to free cash flow. Following the increase, an aggregate amount of approximately $3.3 billion remained available for repurchases as of October 31, 2025. Repurchases may be made from time to time through open market purchases or through privately negotiated transactions, subject to market conditions, applicable legal requirements, including surplus and solvency requirements, and other relevant factors. For additional information, see Note 8 – Equity of the Notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Reworded paragraphs (40)
Previous wording
Our mission is to create meaningful connections between companies and their ideal customers. We provide end-to-end software and AI-powered solutions for businesses to reach, monetize and grow their global audience. Our scaled business model is intricately linked to the advertising ecosystem, providing a durable competitive advantage. We generate revenue when our advertisers achieve their return on ad spend targets with our advertising solutions, ensuring that their success directly fuels our growth.
Current wording
Our mission is to create meaningful connections between companies and their ideal customers. We provide end-to-end AI-powered advertising solutions for businesses to reach, monetize, and grow their global audience. Our scaled business model is intricately linked to the advertising ecosystem, providing a durable competitive advantage. We generate revenue when our advertisers achieve their return on advertising spend targets with our advertising solutions, ensuring that their success directly fuels our growth.
Previous wording
We primarily generate revenue from fees paid by advertisers who use our advertising solutions to grow and monetize their content. We are able to grow our revenue by improving our various technologies.
Current wording
We primarily generate revenue from fees paid by advertisers who use our advertising solutions to grow and monetize their content. We are able to grow our revenue by improving our various technologies, including improvements to our Axon AI recommendation engine.
Previous wording
Advertising clients include a wide variety of advertisers, from indie developer studios to some of the largest global internet platforms, such as Facebook and Google. We see multiple opportunities to gain new clients, and to increase spend from existing clients, as we help them grow their businesses and make them more successful.
Current wording
Advertising clients include a wide variety of advertisers, from indie developer studios to some of the largest global internet platforms, such as Meta and Google. We see multiple opportunities to gain new clients, and to increase spend from existing clients, as we help them grow their businesses and make them more successful.
Previous wording
Our advertising solutions include Axon Advertising, MAX, Adjust, and Wurl. Clients use Axon Advertising to automate, optimize, and manage their user acquisition investments. They set marketing and user growth goals, and Axon Advertising optimizes their ad spend in an effort to achieve their return on advertising spend targets and other marketing objectives. Axon Advertising comprises the vast majority of revenue. Revenue is generated from our advertisers, typically on a performance basis, and shared with our advertising publishers, typically on a cost per impression model.
Current wording
Our advertising solutions include Axon Ads Manager, MAX, Adjust, and Wurl. Clients use Axon Ads Manager to automate, optimize, and manage customer acquisition. They set marketing and transaction goals, and Axon Ads Manager maximizes advertising spend at their return on advertising spend targets and other marketing objectives. Axon Ads Manager comprises the vast majority of revenue. Revenue represents the dynamically-priced amount charged to advertisers based on their campaign goals, less consideration paid or payable to publishers.
Previous wording
Advertising clients use MAX to optimize purchases of app advertising inventory. The MAX tool provides insights to manage against key performance indicators, understand the long-term value of users, and help manage profitability. Revenue from MAX is generated based on a percentage of client spend. As more advertising networks move to in-app real-time bidding, we expect growth in the adoption of, and revenue from, MAX.
Current wording
Publishers use MAX to optimize the sale of their app advertising inventory to demand-side platforms and ad networks. The MAX tool provides insights to manage against key performance indicators, understand the long-term value of users, and help manage profitability. Revenue from MAX is generated based on a percentage of winning auction spend. As demand-side platforms continue to improve their recommendation systems and more apps adopt in-app advertising, we expect growth in the adoption of, and revenue from, MAX.
Previous wording
Advertising clients use Wurl's connected TV ("CTV") platform to distribute streaming video, maximize revenue, and acquire and retain viewers or subscribers. Revenue from Wurl is primarily generated from content companies, streamers, and advertisers, typically on a usage-based and/or CPM model.
Current wording
Advertising clients use Wurl's connected TV ("CTV") platform to distribute streaming video and maximize revenue. Revenue from Wurl is primarily generated from content companies and streamers typically on a usage-based and/or CPM model.
Previous wording
We define Adjusted EBITDA for a particular period as net income adjusted for loss (income) from discontinued operations, net of income taxes, interest expense, other (income) expense, net (excluding certain recurring items), provision for income taxes, amortization, depreciation and write-offs and as further adjusted for stock-based compensation, transaction-related expense, restructuring costs, and non-operating foreign exchange gain, as well as certain other items that we believe are not reflective of our core operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue for the same period.
Current wording
We define Adjusted EBITDA for a particular period as net income adjusted for loss from discontinued operations, net of income taxes, interest expense, other income, net (excluding certain recurring items), provision for income taxes, amortization, depreciation and write-offs and as further adjusted for stock-based compensation, transaction-related expense, restructuring costs (benefits), and non-operating foreign exchange gain, as we believe these items are not reflective of our core operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue for the same period.
Previous wording
The following table provides our Adjusted EBITDA and Adjusted EBITDA margin for the three and nine months ended September 30, 2025 and 2024, and a reconciliation of net income to Adjusted EBITDA:
Current wording
The following table provides our Adjusted EBITDA and Adjusted EBITDA margin for the three months ended March 31, 2026 and 2025, and a reconciliation of net income to Adjusted EBITDA:
Previous wording
The following table provides our Free Cash Flow for the nine months ended September 30, 2025 and 2024, and a reconciliation of net cash provided by operating activities to Free Cash Flow:
Current wording
The following table provides our Free Cash Flow for the three months ended March 31, 2026 and 2025, and a reconciliation of net cash provided by operating activities to Free Cash Flow:
Previous wording
We believe that the future success of our business depends on many factors, including the factors described below. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to continue to grow profitably while maintaining strong cash flow.
Current wording
We believe that the future success of our business depends on many factors, including the factors described below.
Previous wording
We have made, and intend to continue to make, significant investments in our advertising solutions to enhance their effectiveness and value proposition for our clients. We expect that these investments will require spending on research and development and acquisitions and partnerships related to technology components and products. We believe investments in our technology, including Axon AI, our advertising recommendation engine, Axon Advertising, Adjust, and MAX, will further improve effectiveness for advertisers. In addition, we plan to continue to invest in the AI-based, self-learning capabilities of our advertising recommendation engine, Axon AI. Our investments will also allow us to enter into and expand into new verticals outside of gaming, such as e-commerce and CTV. While our investments in research and development and acquisitions and partnerships may not result in revenue in the near term, we believe these investments position us to increase our revenue over time.
Current wording
We have made, and intend to continue to make, significant investments in our advertising solutions to enhance their effectiveness and value proposition for our clients. We expect to continue to invest in our technology and to incur related costs, including costs to attract and retain critical engineering talent, such as stock-based compensation, as well as datacenter costs as we continue to launch enhancements to our Axon recommendation system. We believe investments in our technology will further improve effectiveness for advertisers. Our investments will also allow us to continue to enter into and expand into new verticals outside of gaming, such as e-commerce and CTV. We also continue to opportunistically explore strategic transactions related to our advertising solutions and the expansion of the markets we serve.
Previous wording
We rely on existing clients for a significant portion of our revenue. As we improve our advertising solutions, we can attract additional spend from these clients. Our clients include indie studio developers and some of the largest advertising platforms in the world. We believe there is significant room for us to further expand our relationships with these clients and increase their usage of our advertising solutions.
Current wording
We rely on existing clients for a significant portion of our revenue. As we improve our advertising solutions, we can attract additional spend from these clients. Our clients include indie studio developers and some of the largest advertising platforms in the world. We believe there is significant room for us to further expand our relationships with existing clients and increase their usage of our advertising solutions, as well as to onboard new clients. We expect to continue to invest in sales and marketing to enhance awareness of the Axon brand and drive new client acquisition.
Previous wording
Growth and structure of the mobile app and advertising ecosystems
Current wording
Changes to the mobile app and advertising ecosystems
Previous wording
Our business and results of operations are, and will continue to be, impacted by industry factors that drive the overall performance of the mobile app and advertising ecosystems. Mobile app developers rely on third-party platforms, such as the Apple App Store and Google Play Store, among others, to distribute games, collect payments made for IAPs, and target users with relevant advertising. We expect this to continue for the foreseeable future. These third-party platforms have significant market power and discretion to set platform fees, select which apps to promote, and decide how much consumer information to provide to advertising networks that enable our advertising solutions to target users with personalized and relevant advertising and allocate marketing campaigns in an efficient and cost-effective manner. Any changes made to the policies of third-party platforms could drive rapid change across the mobile app and advertising ecosystems. For example, in April 2021, Apple started implementing its application tracking transparency framework that, among other things, requires users' opt-in consent for certain types of tracking. While this transparency framework has not had a significant impact on our overall business, it may do so in the future, including with respect to the effectiveness of our advertising practices. We rely in part on Identifier for Advertisers ("IDFA") to provide us with data that helps our advertising solutions better market and monetize mobile apps. In light of the IDFA and transparency changes, we made changes to our data collection practices. Additionally, Apple implemented new requirements for consumer disclosures regarding privacy and data processing practices in December 2020, which has resulted in increased compliance requirements. Apple incorporated new SDK privacy controls into iOS 17, which was released in September 2023, including privacy manifests and signatures designed to allow app developers to outline the data practices for SDKs embedded in their apps, manage tracking domains within SDKs, and curb device fingerprinting by requiring app developers to select allowed reasons for using data received through certain APIs. In February 2022, Google announced its Privacy Sandbox initiative for Android, a multi-year effort aimed at reducing cross-app tracking and limiting reliance on user identifiers. However, in October 2025, Google announced its plans to retire several Privacy Sandbox technologies for both Chrome and Android. In January 2024, Google commenced rolling out a Chrome feature, called Tracking Protection, which limits cross-site tracking. In May 2023, Google announced new consent management platform ("CMP") requirements for ads served in the European Economic Area ("EEA") and UK, which requires, as of January 2024, publishers using Google AdSense, Ad Manager, or AdMob to use a CMP that has been certified by Google and has integrated with the Interactive Advertising Bureau’s (“IAB”) Transparency and Consen…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Our business and results of operations are and will continue to be, impacted by industry factors that drive the overall performance and growth of the mobile app and advertising ecosystems. Mobile app developers rely on third-party platforms, such as the Apple App Store and Google Play Store, among others, to distribute apps, collect payments made for in-app purchases, and target users with relevant advertising. These third-party platforms have significant market power and discretion to set platform fees, select which apps to promote, and decide how much consumer information to provide to advertising networks that enable our advertising solutions to target users with personalized and relevant advertising and allocate marketing campaigns in an efficient and cost-effective manner. Any changes made to the policies of these third-party platforms can drive rapid change across the mobile app and advertising ecosystems. Both the Apple App Store and Google Play Store have made various changes to their policies in recent years, as further discussed in the section titled “Risk Factors–Risks Related to Our Business, Operations and Industry–If third-party platforms change their policies in a way that harms our business, including the design and effectiveness of our advertising solutions, our business, financial condition, and results of operations could be adversely affected.” The mobile app and advertising ecosystems also continue to be subject to an evolving legal and regulatory landscape, including with respect to data protection, privacy, and AI. We must continue to innovate and stay ahead of developments in the advertising and mobile app ecosystems in order for our business to succeed and our results of operations to continue to improve.
Previous wording
We generate revenue primarily from fees collected from advertisers spending on Axon Advertising, typically on a performance basis, then shared with our advertising publishers, typically on a cost per impression basis. Revenue also includes fees generated based on a percentage of client spend through MAX and subscription fees for Adjust's measurement and analytics marketing platform. Revenue from other services was not material. Revenue does not include the results of our former Apps Business, which is classified as discontinued operations.
Current wording
We generate substantially all of our revenue from fees collected from advertisers spending on Axon Ads Manager, which are determined dynamically based on advertisers' campaign goals. Revenue from other services was not material. Revenue does not include the results of our former Apps Business, which is classified as discontinued operations.
Previous wording
Cost of revenue. Cost of revenue consists primarily of amortization of acquired technology-related intangible assets, amortization of finance lease right-of-use assets related to certain servers and networking equipment, and data center costs related primarily to third-party cloud computing services. We expect our cost of revenue to increase in absolute dollars over the long term as our business and revenue continue to grow. We also expect our cost of revenue as a percentage of revenue to fluctuate period-over-period.
Current wording
Cost of revenue. Cost of revenue consists primarily of datacenter costs related mainly to third-party cloud computing services, amortization of acquired technology-related intangible assets and finance lease right-of-use assets related to certain servers and networking equipment, and third-party payment processing fees related to customer transactions.
Previous wording
Sales and marketing. Sales and marketing expenses consist primarily of marketing programs and other advertising expenses, professional services costs, personnel-related expenses including salaries, employee benefits, and stock-based compensation for employees engaged in sales and marketing activities, amortization of acquired user-related intangible assets, travel and allocated facilities and information technology costs.
Current wording
Sales and marketing. Sales and marketing expenses consist primarily of personnel-related expenses including salaries, benefits, and stock-based compensation for employees engaged in sales and marketing activities, expenses related to marketing programs and other advertising activities, and amortization of acquired user-related intangible assets.
Previous wording
Research and development. Research and development expenses consist primarily of product development costs, including personnel-related expenses such as salaries, employee benefits, and stock-based compensation for employees engaged in research and development activities, professional services costs, consulting costs, regulatory compliance costs, and allocated facilities and information technology costs.
Current wording
Research and development. Research and development expenses consist primarily of personnel-related expenses including salaries, benefits, and stock-based compensation for employees engaged in research and development activities related to existing and new products.
Previous wording
General and administrative. General and administrative expenses consist primarily of costs incurred to support our business, including personnel-related expenses such as salaries, employee benefits, and stock-based compensation for employees engaged in finance, accounting, legal, human resources and administration, professional services fees for legal, accounting, recruiting, and administrative services (including acquisition or other transaction-related expenses), insurance, travel, and allocated facilities and information technology costs.
Current wording
General and administrative. General and administrative expenses consist primarily of personnel-related expenses including salaries, benefits, and stock-based compensation for employees engaged in finance, accounting, legal, human resources and other administrative support functions, professional services fees related to legal, accounting, recruiting, and other administrative services (including acquisition or other transaction-related expenses), facilities related costs and other corporate expenses.
Previous wording
Other income (expense), net. Other income (expense), net, primarily includes interest earned on our cash and cash equivalents, fair value adjustments relating to our non-marketable equity securities, and foreign currency gains and losses.
Current wording
Other income, net. Other income, net, primarily includes interest earned on our cash and cash equivalents, fair value adjustments relating to our non-marketable equity securities, and foreign currency gains and losses.
Previous wording
Provision for income taxes. We are subject to income taxes in the United States and foreign jurisdictions in which we do business. These foreign jurisdictions have different statutory tax rates than those in the United States. Additionally, certain of our foreign earnings may also be taxable in the United States. Accordingly, our effective tax rate will vary depending on the relative proportion of foreign to domestic income, impacts from acquisition restructuring, deduction benefits related to foreign-derived intangible income, future changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws. Additionally, our effective tax rate can vary based on the amount of pre-tax income or loss.
Current wording
Provision for income taxes. We are subject to income taxes in the United States and foreign jurisdictions in which we do business. These foreign jurisdictions have different statutory tax rates than those in the United States. Additionally, certain of our foreign earnings may also be taxable in the United States. Accordingly, our effective tax rate will vary depending on the relative proportion of foreign to domestic income, deduction related to foreign-derived income, future changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws. Additionally, our effective tax rate can vary based on the amount of pre-tax income or loss.
Previous wording
In this section, we discuss the results of our operations for the three and nine months ended September 30, 2025 and 2024.
Current wording
In this section, we discuss the results of our operations for the three months ended March 31, 2026 and 2025.
Previous wording
(2) Includes amortization expense related to acquired intangibles as follows:
Current wording
(2) Includes amortization expense related to intangible assets as follows:
Previous wording
Comparison of Our Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024
Current wording
Comparison of Our Results of Operations for the Three Months Ended March 31, 2026 and 2025
Previous wording
For the three months ended September 30, 2025, our revenue increased by $569.9 million, or 68%, compared to the same period in the prior year due primarily to improved Axon Advertising performance, where net revenue per installation increased 75%, partially offset by a decrease in the volume of installations of 1%.
Current wording
For the three months ended March 31, 2026, our revenue increased by $683.5 million, or 59%, compared to the same period in the prior year due primarily to improved Axon Ads Manager, where net revenue per installation increased 93%, partially offset by a decrease in the volume of installations of 18%.
Previous wording
Cost of revenue in the three months ended September 30, 2025 increased by $53.9 million, or 45%, compared to the same period in the prior year, due primarily to an increase of $53.1 million in expenses associated with operating our network infrastructure driven by the growth in our operations.
Current wording
Cost of revenue in the three months ended March 31, 2026 increased by $52.0 million, or 34%, compared to the same period in the prior year, due primarily to an increase of $39.9 million in expenses associated with operating our network infrastructure driven by the growth in our operations.
Previous wording
Research and development expenses in the three months ended September 30, 2025 decreased by $36.9 million, or 46%, compared to the same period in the prior year, due primarily to a decrease of $38.9 million in personnel-related expenses related to a decrease in stock-based compensation expense.
Current wording
Research and development expenses in the three months ended March 31, 2026 increased by $37.7 million, or 67%, compared to the same period in the prior year, due primarily to an increase of $36.5 million in personnel-related expenses related to an increase in stock-based compensation-related payroll costs.
Previous wording
General and administrative expenses in the three months ended September 30, 2025 increased by $22.5 million, or 62%, compared to the same period in the prior year, due to an increase of $11.1 million in bad debt expense primarily related to new initiatives and an increase of $6.8 million in professional services costs.
Current wording
General and administrative expenses in the three months ended March 31, 2026 decreased by $7.5 million, or 15%, compared to the same period in the prior year, due to a decrease of $6.2 million in bad debt expense and a decrease of $2.1 million in professional services costs primarily associated with transaction-related expenses.
Previous wording
In the three months ended September 30, 2025, interest expense decreased by $23.5 million, or 31%, compared to the same period in the prior year, due primarily to a $22.5 million decrease in interest expense as a result of lower interest rates under our senior unsecured notes compared to our prior credit agreement.
Current wording
In the three months ended March 31, 2026, interest expense decreased by $1.7 million, or 3%, compared to the same period in the prior year, due primarily to a decrease of $0.9 million in interest expense as a result of outstanding borrowings in the prior year period under our revolving credit facility.
Previous wording
In the three months ended September 30, 2025, other income (expense), net decreased by $15.0 million compared to the same period in the prior year, due primarily to a net fair value remeasurement loss of $20.4 million related to our investments in non-marketable equity securities in the current period, partially offset by an increase in interest income of $7.4 million driven by an increase in cash and cash equivalents.
Current wording
In the three months ended March 31, 2026, other income, net increased by $35.1 million compared to the same period in the prior year, due primarily to a net fair value remeasurement gain of $20.7 million related to our investments in non-marketable equity securities in the current period and an increase in interest income of $14.1 million driven by an increase in cash and cash equivalents.
Previous wording
In the three months ended September 30, 2025, the provision for income taxes increased by $150.7 million compared to the same period in the prior year. The increase was primarily driven by higher pre-tax income from business operations during the three months ended September 30, 2025 and global minimum tax, offset by foreign income taxed at different rates.
Current wording
In the three months ended March 31, 2026, the provision for income taxes increased by $154.7 million compared to the same period in the prior year. The increase was primarily driven by higher pre-tax income from business operations during the three months ended March 31, 2026, foreign income taxed at different rates, and a decrease in stock-based compensation benefits, partially offset by an increase in foreign-derived income deduction.
Previous wording
As of September 30, 2025, we had cash and cash equivalents of $1.7 billion, consisting primarily of cash on deposit with banks and short-term liquid investments in money market deposit accounts. We believe that our existing cash and cash equivalents, cash flows expected to be generated by our operations, and, if necessary, our borrowing capacity under our credit agreement, which provided $1.0 billion of remaining availability as of September 30, 2025, would be sufficient to satisfy our anticipated working capital and capital expenditures needs for at least the next 12 months. Our future capital requirements will depend on many factors, including our revenue growth rate; sales and marketing activities; timing and extent of spending to support our research and development efforts; capital expenditures to purchase hardware and software; our continued need to invest in our IT infrastructure to support our growth; and the volume and timing of our stock repurchases. In addition, we may enter into additional strategic partnerships as well as agreements to acquire or invest in teams and technologies, including intellectual property rights, which could increase our cash requirements. As a result of these and other factors, we may be required to seek additional equity or debt financing sooner than we currently anticipate, or we may opportunistically seek additional financing. See the section titled “Risk Factors—Risks Related to Financial and Accounting Matters” for more information regarding risks related to liquidity and capital resources.
Current wording
As of March 31, 2026, we had cash and cash equivalents of $2.8 billion, consisting primarily of cash in checking and interest-bearing deposit accounts, as well as investments in money market funds. We believe that our existing cash and cash equivalents, cash flows expected to be generated by our operations, and, if necessary, our borrowing capacity under our 2024 Credit Agreement that provides for a $1.0 billion unsecured revolving credit facility, would be sufficient to satisfy our anticipated working capital and capital expenditures needs for at least the next 12 months. Our future capital requirements will depend on many factors, including our revenue growth rate; sales and marketing activities; timing and extent of spending to support our research and development efforts; capital expenditures to purchase hardware and software; our continued need to invest in our IT infrastructure to support our growth; and the volume and timing of our share repurchases. In addition, we may enter into additional strategic investments in teams and technologies, including intellectual property rights, which could increase our cash requirements. As a result of these and other factors, we may be required to seek additional equity or debt financing sooner than we currently anticipate, or we may opportunistically seek additional financing. See the section titled “Risk Factors—Risks Related to Financial and Accounting Matters” for more information regarding risks related to liquidity and capital resources.
Previous wording
The following table summarizes our cash flows for the periods indicated (all periods include cash flows from continuing and discontinued operations):
Current wording
The following table summarizes our cash flows for the periods indicated (all periods include cash flows from continuing and discontinued operations, to the extent applicable):
Previous wording
Net cash provided by operating activities was $1.4 billion for the nine months ended September 30, 2024, primarily driven by net income of $980.6 million, adjusted for non-cash items, including $320.8 million of amortization, depreciation, and write-offs, and $275.5 million of stock-based compensation expense, which were partially offset by a net decrease in operating assets and liabilities of $196.2 million.
Current wording
Net cash provided by operating activities was $1.3 billion for the three months ended March 31, 2026, primarily consisting of $1.2 billion of net income, adjusted for certain non-cash items, including $83.4 million of stock-based compensation and $33.7 million of amortization, depreciation and write-offs, which were partially offset by a net decrease in operating assets and liabilities of $14.8 million.
Previous wording
Net cash provided by operating activities was $2.7 billion for the nine months ended September 30, 2025, primarily driven by net income of $2.2 billion, adjusted for non-cash items, including $188.9 million of goodwill impairment, $162.0 million of amortization, depreciation, and write-offs, $130.2 million of stock-based compensation expense and $50.0 million of impairment of non-marketable equity securities, which were partially offset by a gain from the divestiture of our Apps Business, net of transaction costs, of $106.2 million and a net decrease in operating assets and liabilities of $29.9 million.
Current wording
Net cash provided by operating activities was $831.7 million for the three months ended March 31, 2025, primarily consisting of $576.4 million of net income, adjusted for certain non-cash items, including $188.9 million of goodwill impairment, $79.9 million of amortization, depreciation and write-offs, and $61.3 million of stock-based compensation, which were partially offset by a net decrease in the operating assets and liabilities of $82.9 million.
Previous wording
The improvement in cash flows from operating activities during the nine months ended September 30, 2025 compared to the same period in the prior year was primarily due to an increase in cash collection from our customers driven by revenue growth and a decrease of interest payments on debt as a result of lower interest rates, partially offset by higher cash operating expenses primarily associated with operating our network infrastructure, as well as higher income tax payments due to revenue growth.
Current wording
The improvement in cash flows from operating activities during the three months ended March 31, 2026 compared to the same period in the prior year was primarily driven by increased cash collections from customers due to revenue growth, partially offset by increased publisher payments, operational spending, and cash paid for income taxes.
Previous wording
Net cash used in investing activities was $106.4 million for the nine months ended September 30, 2024, primarily driven by $77.0 million in purchases of non-marketable equity securities and $18.3 million in earn-out payments related to prior acquisitions of intangible assets.
Current wording
Net cash used in investing activities was $22.7 million for the three months ended March 31, 2025, primarily consisting of $18.7 million in purchases of non-marketable equity securities and $2.3 million in capitalized software development costs.
Previous wording
Net cash used in financing activities was $2.1 billion for the nine months ended September 30, 2025, primarily driven by $1.8 billion in stock repurchases under our share repurchase program and $316.9 million in payments for withholding taxes related to the net share settlement of equity awards.
Current wording
Net cash used in financing activities was $1.0 billion for the three months ended March 31, 2026, primarily driven by $981.7 million in share repurchases under our share repurchase program and $26.9 million in payments for withholding taxes related to the net share settlement of equity awards.
Previous wording
Net cash used in financing activities was $1.2 billion for the nine months ended September 30, 2024, primarily driven by $980.7 million in stock repurchases under our share repurchase program and $644.4 million in payments for withholding taxes related to the net share settlement of equity awards, which were partially offset by $1.1 billion in proceeds from debt issuances, net of $686.8 million in principal repayments of debt, and $28.8 million in proceeds from exercise of stock options and purchases under our Employee Stock Purchase Plan.
Current wording
Net cash used in financing activities was $1.0 billion for the three months ended March 31, 2025, primarily driven by $1.0 billion in share repurchases under our share repurchase program, $185.7 million in payments for withholding taxes related to the net share settlement of equity awards, and payments of licensed asset obligation of $13.5 million, partially offset by proceeds of $200.0 million from borrowings under the revolving credit facility pursuant to the 2024 Credit Agreement.
Previous wording
There have been no material changes to our critical accounting estimates during the nine months ended September 30, 2025, as compared to those disclosed in our Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in our Annual Report on Form 10-K for the year ended December 31, 2024. For additional information on all of our significant accounting policies, see Note 2 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024.
Current wording
There have been no material changes to our critical accounting estimates during the three months ended March 31, 2026, as compared to those disclosed in our Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in our Annual Report on Form 10-K for the year ended December 31, 2025. For additional information on all of our significant accounting policies, see Note 2 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Cost of revenue in the nine months ended September 30, 2025 increased by $114.4 million, or 31%, compared to the same period in the prior year, due primarily to an increase of $120.4 million in expenses associated with operating our network infrastructure driven by the growth in our operations.
Previous report — wording carried elsewhere
In the nine months ended September 30, 2025, the provision for income taxes increased by $284.8 million compared to the same period in the prior year. The increase was primarily driven by higher pre-tax income from business operations during the nine months ended September 30, 2025 and global minimum tax, offset by higher stock-based compensation benefit and foreign income taxed at different rates.