AppLovin Corp

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, including improvements to our Axon AI recommendation engine.

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 system.

Previous 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.

Current wording

Our advertising solutions include AppLovin Ads, MAX, Adjust, and Wurl. Clients use AppLovin Ads to automate, optimize, and manage customer acquisition. They set marketing and transaction goals, and AppLovin Ads maximizes advertising spend at their return on advertising spend targets and other marketing objectives. AppLovin Ads 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

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.

Current 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 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 months ended March 31, 2026 and 2025, 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 and six months ended June 30, 2026 and 2025, and a reconciliation of net income to Adjusted EBITDA:

Previous 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:

Current wording

The following table provides our Free Cash Flow for the six months ended June 30, 2026 and 2025, and a reconciliation of net cash provided by operating activities to Free Cash Flow:

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 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.

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 AI 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 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.

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 drive new client acquisition.

Previous 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.

Current wording

We generate substantially all of our revenue from fees collected from advertisers spending on AppLovin Ads, 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

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.

Current 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.

Previous wording

In this section, we discuss the results of our operations for the three months ended March 31, 2026 and 2025.

Current wording

In this section, we discuss the results of our operations for the three and six months ended June 30, 2026 and 2025.

Previous wording

Comparison of Our Results of Operations for the Three Months Ended March 31, 2026 and 2025

Current wording

Comparison of Our Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

Previous 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%.

Current wording

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%.

Previous 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.

Current wording

Cost of revenue in the three months ended June 30, 2026 increased by $70.7 million, or 46%, compared to the same period in the prior year, due primarily to an increase of $52.1 million in expenses associated with operating our network infrastructure driven by the growth in our operations.

Previous wording

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 wording

Sales and marketing expenses in the three months ended June 30, 2026 increased by $16.5 million, or 35%, compared to the same period in the prior year, due primarily to an increase of $17.2 million in advertising and marketing program costs, partially offset by a decrease of $3.5 million in personnel-related expenses related to a decrease in stock-based compensation-related payroll costs.

Previous 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.

Current wording

Research and development expenses in the three months ended June 30, 2026 increased by $55.9 million, or 127%, compared to the same period in the prior year, due primarily to an increase of $54.8 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 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.

Current wording

General and administrative expenses in the three months ended June 30, 2026 decreased by $14.7 million, or 27%, compared to the same period in the prior year, due to a decrease of $9.5 million in bad debt expense and a decrease of $5.2 million in professional services costs primarily associated with transaction-related expenses.

Previous 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.

Current wording

In the three months ended June 30, 2026, other income (expense), net increased by $84.7 million compared to the same period in the prior year, due primarily to a net fair value remeasurement gain of $31.3 million related to certain non-marketable equity securities in the current period compared to a net fair value remeasurement loss of $20.4 million in the prior period, an increase in interest income of $21.3 million driven by an increase in cash and cash equivalents, and an increase in net foreign currency gains of $12.0 million.

Previous 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.

Current wording

In the three months ended June 30, 2026, the provision for income taxes increased by $126.8 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 three months ended June 30, 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 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.

Current wording

As of June 30, 2026, we had cash and cash equivalents of $3.1 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

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.

Current wording

Net cash provided by operating activities was $2.2 billion for the six months ended June 30, 2026, primarily consisting of $2.5 billion of net income, adjusted for certain non-cash items, including $169.0 million of stock-based compensation, $66.2 million of amortization, depreciation and write-offs, and $50.5 million of net gain on fair value remeasurement of financial instruments, which were partially offset by a net decrease in operating assets and liabilities of $504.8 million.

Previous 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.

Current wording

Net cash provided by operating activities was $1.6 billion for the six months ended June 30, 2025, primarily consisting of $1.4 billion of net income, adjusted for certain non-cash items, including $188.9 million of goodwill impairment, $126.9 million of amortization, depreciation and write-offs, and $97.0 million of stock-based compensation, which were partially offset by a gain on divestiture, net of transaction costs, of $106.2 million and a net decrease in the operating assets and liabilities of $140.3 million.

Previous 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.

Current wording

The improvement in cash flows from operating activities during the six months ended June 30, 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 $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 wording

Net cash used in investing activities was $7.7 million for the six months ended June 30, 2026, primarily related to payments for initial direct costs of certain new leases and purchases of property and equipment.

Previous 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.

Current wording

Net cash used in financing activities was $1.6 billion for the six months ended June 30, 2026, primarily consisting of $1.5 billion in share repurchases under our share repurchase program and $46.5 million in payments for withholding taxes related to the net share settlement of equity awards.

Previous wording

Net cash used in financing activities was $1.0 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.

Current wording

Net cash used in financing activities was $1.5 billion for the six months ended June 30, 2025, primarily consisting of $1.3 billion in share repurchases under our share repurchase program, $256.7 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

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.

Current wording

During the six months ended June 30, 2026, we repurchased and retired 3.3 million shares of Class A common stock for $1.5 billion. As of June 30, 2026, $1.8 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 in the notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

Except for scheduled payments from the ongoing business, there were no other material changes to our commitments under contractual obligations since December 31, 2025. For additional information, see Note 5 – Commitments and Contingencies of the Notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

Except for scheduled payments from the ongoing business, there were no other material changes to our commitments under contractual obligations since December 31, 2025. For additional information, see Note 5 – Commitments and Contingencies in the notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous 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.

Current wording

There have been no material changes to our critical accounting estimates during the six months ended June 30, 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.

Previous wording

See Note 1 – Description of Business and Summary of Significant Accounting Policies of the Notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

See Note 1 – Description of Business and Summary of Significant Accounting Policies in the notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.