Core Insights - Applovin reported strong Q2 2025 earnings, exceeding Wall Street expectations, driven by its AI advertising engine AXON [1][2] - The company's stock has risen 20% year-to-date, outperforming the S&P 500, reflecting investor confidence in AI applications [1] - Meta's strong performance in AI-driven digital advertising has set a positive precedent for Applovin, highlighting the growth potential in this sector [1][5] Financial Performance - Applovin's adjusted EPS for Q2 was $2.39, surpassing the expected $2.32, while GAAP EPS was $2.28, above the anticipated $1.98 [2] - Q2 revenue reached $1.26 billion, exceeding the expected $1.22 billion, with a year-over-year growth of 17% [2][3] - The company reported a net income of $820 million, a 164% increase compared to the previous year [2][3] Business Strategy - Applovin sold its mobile gaming business for $400 million to focus on its core "AI + digital advertising" platform [4] - The management aims to concentrate on global expansion driven by AI technologies [4] - The AXON 2.0 engine utilizes deep learning for real-time bidding, enhancing advertising efficiency and revenue growth [6] Market Outlook - Applovin expects Q3 revenue to be between $1.32 billion and $1.34 billion, slightly above Wall Street's average estimate of $1.31 billion [3] - UBS has identified Applovin as a strong candidate for investment, highlighting its performance-driven AI attributes [7] - The integration of AI in digital advertising is seen as a significant trend, with major players like Google and Meta rapidly adopting AI technologies [8] Industry Trends - The demand for AI applications in digital advertising is accelerating, with companies like Applovin and Palantir showing strong performance [9] - The market is witnessing a shift towards generative AI applications, which are expected to enhance operational efficiency across various sectors [10]

Core Insights - AppLovin (APP) reported quarterly earnings of $2.26 per share, exceeding the Zacks Consensus Estimate of $1.99 per share, and showing a significant increase from $0.89 per share a year ago, representing an earnings surprise of +13.57% [1] - The company achieved revenues of $1.26 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.74% and up from $1.08 billion year-over-year [2] - AppLovin's stock has increased approximately 16.7% since the beginning of the year, outperforming the S&P 500's gain of 7.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.18 on revenues of $1.31 billion, and for the current fiscal year, it is $8.39 on revenues of $5.51 billion [7] - The estimate revisions trend for AppLovin was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Technology Services industry, to which AppLovin belongs, is currently ranked in the top 41% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - In Q2 2025, revenue increased by 77% year-over-year to approximately $1.26 billion, while adjusted EBITDA nearly doubled to $1.02 billion, achieving an 81% adjusted EBITDA margin [13][14]. - Free cash flow reached $768 million, up 72% year-over-year, with a slight decrease from the previous quarter due to timing of bond interest payments and taxes [14][15]. - The company ended the quarter with $1.2 billion in cash and cash equivalents, including $425 million from the sale of its apps business [14]. Business Line Data and Key Metrics Changes - The majority of revenue growth was driven by the core gaming business, which continues to grow at a rate of 30% to 40% [14][36]. - E-commerce, while performing well, was constrained in onboarding new customers to prepare for the self-serve launch, maintaining around 10% of the business [36][37]. Market Data and Key Metrics Changes - The Max Marketplace has consistently shown double-digit growth, outpacing the in-app purchasing gaming market growth rates of 3% to 5% [6][24]. - The company plans to open its platform to most major international markets on October 1, 2025, expanding its reach beyond the United States [10][38]. Company Strategy and Development Direction - The company is focused on expanding its platform with the launch of the Axon Ads Manager, which aims to simplify the advertising process and enhance user experience [8][11]. - The strategy includes building world-class products and launching them when they meet high standards, with a goal of achieving 20% to 30% year-over-year growth driven by gaming and expanding into new markets [6][12]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining strong growth rates due to improvements in technology and demand, with expectations of significant opportunities outside the core gaming market [5][7]. - The company anticipates a substantial ramp-up in e-commerce as it opens its platform to new advertisers, particularly during the holiday shopping season [36][37]. Other Important Information - The company has been actively managing its share count, reducing the weighted average diluted common shares outstanding from 346 million to 342 million [15]. - The self-service platform is expected to significantly increase advertiser count and revenue, with a referral-based opening planned for Q4 2025 [32][33]. Q&A Session Summary Question: Plans for paid marketing to acquire advertisers - Management indicated that the decision to start paid marketing is driven by the strong performance of their platform and the potential to reach small businesses globally [18][20]. Question: Supply growth and mediation share - Management clarified that supply growth is driven by improvements in technology and demand rather than taking share from other platforms, with the Max mediation platform experiencing swift growth [23][24]. Question: Impact of self-serve platform on overall business - Management expects the self-serve platform to have a material impact, particularly as it allows for rapid onboarding of new advertisers and increased revenue [28][33]. Question: E-commerce contribution to growth - Management confirmed that e-commerce remains around 10% of the business, with growth limited by the onboarding process but expected to ramp up significantly in Q4 [36][37]. Question: International expansion and customer onboarding - Management anticipates a gradual increase in international customer onboarding, leveraging existing relationships and referrals from current advertisers [109][110]. Question: User acquisition spend changes post-Apple vs. Epic lawsuit - Management noted no immediate changes in user acquisition spend from gaming companies, expecting a gradual impact over the next few quarters [97][99]. Question: Capital allocation strategy - The company plans to continue investing in organic growth initiatives and return capital to shareholders through share buybacks [101]. Question: Differences in onboarding international customers - Management indicated that onboarding will be broad-reaching, with no constraints on the types of advertisers as the platform opens up [111][112].

Financial Data and Key Metrics Changes - In Q2 2025, revenue increased by 77% year-over-year to approximately $1.26 billion, while adjusted EBITDA nearly doubled to $1.02 billion, achieving an 81% adjusted EBITDA margin [12][14]. - Free cash flow reached $768 million, up 72% year-over-year, with cash and cash equivalents totaling $1.2 billion, including $425 million from the sale of the apps business [13][14]. - The company anticipates Q3 2025 advertising revenue between $1.003 billion and $1.34 billion, with adjusted EBITDA between $1.007 billion and $1.09 billion, targeting an 81% adjusted EBITDA margin [14][15]. Business Line Data and Key Metrics Changes - The majority of revenue growth was driven by the core gaming business, while e-commerce performance was strong but limited due to constrained onboarding of new customers in preparation for the self-serve launch [12][13]. - Gaming continues to grow at a rate of 30% to 40%, exceeding the long-term goal of 20% to 30% [39]. Market Data and Key Metrics Changes - The Max Marketplace has consistently shown double-digit growth, significantly outpacing the in-app purchasing gaming market growth rates of 3% to 5% [5][24]. - The company plans to open its platform to most major international markets on October 1, 2025, expanding beyond the current U.S.-only web advertising campaigns [8][41]. Company Strategy and Development Direction - The company is focused on expanding its platform with the launch of the Axon Ads Manager, which aims to simplify the advertising process for businesses of all sizes [6][9]. - The strategy includes building world-class products and launching them when they meet high standards, with a focus on patient and disciplined execution for sustainable growth [11]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining 20% to 30% year-over-year growth driven by gaming, while also excited about opportunities to expand outside the core market [5][11]. - The company anticipates a substantial ramp-up in e-commerce as the holiday shopping season approaches, with expectations for increased advertiser onboarding [40]. Other Important Information - The company closed the sale of its apps business to Triple Dot Studios, with financial results for the apps business included in discontinued operations [12]. - The company repurchased approximately 900,000 shares for a total cost of $341 million, reducing the weighted average diluted common shares outstanding [14]. Q&A Session Summary Question: Plans for paid marketing to acquire advertisers - Management indicated that the decision to start paid marketing is driven by the strong performance of their platform and the potential to reach small businesses globally, utilizing their own advertising models for recruitment [17][20][22]. Question: Supply growth in the Max Marketplace - Management clarified that supply growth is driven by improvements in technology and demand, rather than taking share from other platforms, with the audience inside Max growing swiftly [24][25]. Question: Impact of self-serve platform launch - Management expects the self-serve platform to significantly increase advertiser count and drive growth, with a referral-based opening planned for Q4 2025 [31][36]. Question: E-commerce contribution to revenue - Management confirmed that e-commerce is expected to remain around 10% of the business for the year, with limited onboarding impacting growth rates [39][40]. Question: International expansion and onboarding pace - Management anticipates a gradual increase in international onboarding as the platform opens up, with a mix of referrals from existing customers [100][105].

Financial Performance - Revenue for the three months ended June 30, 2025, increased 77% year-over-year to $1.3 billion, up from $711 million in the same period of 2024[111] - Net income for the three months ended June 30, 2025, was $819.5 million, compared to $310 million for the same period in 2024, reflecting a significant increase[111] - Adjusted EBITDA for the three months ended June 30, 2025, was $1.0 billion, up from $511.2 million in the same period of 2024, indicating strong operational performance[111] - Revenue for Q2 2025 reached $1,258.8 million, a 77% increase from $711.0 million in Q2 2024, driven by improved AppDiscovery performance[150] - For the first half of 2025, revenue increased by $1.0 billion, or 74%, compared to the same period in 2024, primarily due to a 59% increase in net revenue per installation and a 15% increase in installation volume[151] - Net income from continuing operations for Q2 2025 was $771.9 million, compared to $301.0 million in Q2 2024, marking a significant improvement in profitability[147] Cash Flow and Investments - Free Cash Flow for the six months ended June 30, 2025, was $1.6 billion, compared to $833.1 million for the same period in 2024, demonstrating improved cash generation[124] - Net cash provided by operating activities for the six months ended June 30, 2025 was $1,603.9 million, significantly higher than $847.3 million in the same period in 2024, primarily due to increased cash collection from customers[172] - Net cash provided by investing activities for the six months ended June 30, 2025 was $378.9 million, primarily driven by proceeds from divestiture[175] - Net cash used in financing activities for the six months ended June 30, 2025 was $1,539.6 million, primarily due to $1.3 billion in stock repurchases[177] - During the six months ended June 30, 2025, the company repurchased 3,663,841 shares of Class A common stock for an aggregate amount of $1.3 billion[180] - As of June 30, 2025, $1.0 billion remained available for repurchases under the stock repurchase program[180] - In February 2025, the Board modified the stock repurchase program to make $500.0 million immediately available for share repurchase[180] Expenses and Cost Management - Cost of revenue for Q2 2025 was $155.1 million, up from $121.8 million in Q2 2024, reflecting ongoing growth in business operations[147] - Sales and marketing expenses for Q2 2025 were $46.9 million, down from $67.0 million in Q2 2024, indicating a strategic shift in spending[147] - Research and development expenses decreased to $44.0 million in Q2 2025 from $99.1 million in Q2 2024, suggesting improved efficiency in R&D investments[147] - General and administrative expenses increased to $55.0 million in Q2 2025 from $38.7 million in Q2 2024, reflecting investments to support business growth[147] - Cost of revenue for the three months ended June 30, 2025 increased by $33.3 million, or 27%, to $155.1 million compared to the same period in 2024, primarily due to increased network infrastructure expenses[152] - Sales and marketing expenses for the three months ended June 30, 2025 decreased by $20.0 million, or 30%, to $67.0 million compared to the same period in 2024, mainly due to a reduction in personnel-related expenses[156] - Research and development expenses for the three months ended June 30, 2025 decreased by $55.1 million, or 56%, to $44.0 million compared to the same period in 2024, primarily due to a decrease in personnel-related expenses[158] - General and administrative expenses for the three months ended June 30, 2025 increased by $16.3 million, or 42%, to $55.0 million compared to the same period in 2024, driven by higher bad debt expenses and professional services costs[160] Strategic Initiatives - The company completed the sale of its Apps Business to Tripledot for $400 million in cash on June 30, 2025, enhancing its focus on core operations[113] - The company plans to continue investing in AI-powered advertising solutions, including the AXON recommendation engine, to enhance client effectiveness[127] - The company aims to expand its client base beyond mobile gaming, targeting sectors like e-commerce and connected TV (CTV) for future growth[130] - Strategic partnerships and potential acquisitions, including an indication of interest to purchase TikTok outside of China, are being explored to drive growth[131] Tax and Accounting - The effective tax rate may vary based on the proportion of foreign to domestic income and changes in tax laws, impacting overall financial results[145] - Provision for income taxes for the three months ended June 30, 2025 increased by $95.3 million to $112.1 million compared to the same period in 2024, driven by higher pre-tax income[167] - The company has not experienced any material changes to its critical accounting estimates during the six months ended June 30, 2025[184] - The preparation of the condensed consolidated financial statements requires the company to make estimates and assumptions that affect reported amounts[182] - The company evaluates its accounting estimates based on reasonable assumptions and acknowledges that actual results could differ materially[182] - The company’s accounting estimates are considered critical if they involve significant subjectivity and judgment[183] - There have been no material changes in market risk from the information presented in the Annual Report for the year ended December 31, 2024[186]

Exhibit 99.1 PALO ALTO – August 6, 2025 – AppLovin Corporation (NASDAQ: APP) ("AppLovin"), a leading marketing platform, today announced financial results for the quarter ended June 30, 2025 and posted a financial update on its Investor Relations website located at https://investors.applovin.com. Second Quarter 2025 Financial Highlights: | (In millions, except percentages) | Quarter Ended June 30, | | | Six Months Ended June 30, | | | | --- | --- | --- | --- | --- | --- | --- | | | 2025 | 2024 | % Change | ...

Group 1: AppLovin Corporation (APP) Overview - AppLovin Corporation is set to announce its second-quarter 2025 results on August 6, with expectations of strong year-over-year revenue growth primarily driven by its Advertising segment [1] - The consensus estimate for Advertising revenues is $1.23 billion, indicating a 72% year-over-year growth, fueled by the advanced Axon 2 technology [2] - Total revenues for AppLovin are expected to reach $1.21 billion, reflecting a robust 12.3% increase from the year-ago quarter [2][8] Group 2: Profitability and Earnings Projections - Profitability is anticipated to improve significantly, with the consensus estimate for Advertising's adjusted EBITDA at $1 billion, implying a 92.3% year-over-year growth [3] - Earnings per share (EPS) are projected to show a massive 123.6% increase, with the Zacks Consensus Estimate at $1.99 [3][8] - These projections highlight AppLovin's ability to capitalize on its technology-driven business model, reinforcing its position in the digital advertising and gaming industries [3]

Core Viewpoint - The individual investor adopts a contrarian investment style, focusing on deep value opportunities, particularly in stocks that have recently experienced sell-offs due to non-recurrent events, while also considering insider buying as a positive signal [1] Investment Strategy - The investment portfolio is split approximately 50%-50% between shares and call options, indicating a balanced approach to risk and potential returns [1] - The investor's timeframe for holding positions typically ranges from 3 to 24 months, suggesting a medium-term investment horizon [1] - Fundamental analysis is employed to assess the health of companies, including their leverage and financial ratios compared to sector and industry averages [1] - Technical analysis is utilized to optimize entry and exit points, with a focus on support and resistance levels on weekly charts [1] Stock Selection Criteria - Preference is given to stocks that have undergone a recent sell-off, particularly when there is insider buying at the new lower price, indicating potential recovery [1] - The investor conducts professional background checks on insiders who purchase shares post-sell-off, adding a layer of due diligence to the investment process [1] Market Focus - The primary focus is on stocks in the US market, although there is openness to owning shares in less stable economies, referred to as "banana republics" [1] - The investor's approach is characterized by a willingness to engage in high-risk, illiquid options, highlighting a unique investment profile [1]

Core Insights - AppLovin is set to announce its earnings on August 6, 2025, with significant interest in its Axon 2.0 machine learning algorithm for ad placement, which has shown a 71% revenue increase in Q1 2025, totaling $1.16 billion [2][3] - The company has a market capitalization of $129 billion and generated $5.1 billion in revenue over the past twelve months, achieving $2.4 billion in operating profits and a net income of $1.9 billion [4] - Historical data indicates a 71% probability of positive one-day post-earnings returns, which increases to 83% when considering the last three years [6] Financial Performance - For Q2 2025, profit is projected at approximately $2.32 per share, with revenues expected to reach around $1.22 billion, reflecting a 13% year-over-year increase [3] - The median of the 12 positive one-day returns over the last five years is 24%, while the median of the five negative returns is -4.6% [6] Investment Strategies - Two strategies are suggested: analyzing historical data to position before earnings or examining correlations between immediate and medium-term returns post-earnings [5] - A less risky approach involves considering the correlation between short-term and medium-term returns, allowing traders to take positions based on positive one-day returns [7]

Core Insights - AppLovin Corporation (APP) is set to report its second-quarter 2025 results on August 6, with earnings expected to reach $1.99, reflecting a 123.6% increase year-over-year, and revenues projected at $1.21 billion, indicating a 12.3% growth from the previous year [1][8]. Earnings Estimates - The Zacks Consensus Estimate for the upcoming quarter shows two upward revisions in the last 30 days, while the overall consensus has declined by 1.5% during the same period [2]. - The company has a strong history of earnings surprises, having exceeded the Zacks Consensus Estimate in all of the last four quarters, with an average surprise of 22.9% [4][5]. Revenue and Advertising Performance - Advertising revenue is anticipated to be a key driver for growth, with estimates at $1.23 billion, representing a 72% year-over-year increase, and adjusted EBITDA projected to rise by 92% [7][8]. - AppLovin's stock has surged 465% over the past year, significantly outperforming the broader industry growth of 71% and competitors like Alphabet and Meta Platforms [9]. Technological Advancements - The company has strengthened its position in mobile advertising through its AI engine, Axon 2, which has significantly improved ad performance and quadrupled advertising spend on its platform [11]. - Financial performance has been robust, with a 40% year-over-year revenue increase in Q1 2025 and a 144% rise in net income compared to the previous year [12]. Market Sentiment - There is cautious optimism ahead of the earnings report, driven by strong advertising performance and the success of Axon 2, although recent estimate revisions indicate mixed sentiment [13].