Summary of AppLovin Corp 2Q25 Earnings Call Company Overview - **Company**: AppLovin Corp - **Industry**: Digital Advertising and Gaming Key Points Financial Performance - **2Q25 Advertising Revenue**: $1,259 million, representing a **77% YoY increase**, exceeding expectations of $1,231 million and $1,225 million [2][10] - **EBITDA Estimate for FY26**: Increased to **$6.18 billion** from $5.65 billion, driven by better-than-expected gaming trends and the rollout of a self-serve web-based ad platform [1][11] - **Projected Revenue Growth**: Expected to reach **$7.576 billion** in FY26, with a **41% YoY growth** [13] Strategic Initiatives - **Self-Serve Ad Platform**: The rollout is set to begin in October 2025, starting with referrals from existing advertisers, aiming for a broader public launch in 1H26 [1][2] - **International Expansion**: The company plans to expand inventory access to international markets, which may reduce advertiser churn risk [1] Upside and Downside Scenarios - **Upside Case**: A target price of **$660** reflects a **69% upside**, with anticipated revenue growth of **74%** in FY25 and **44%** in FY26 [2][13] - **Downside Case**: A target price of **$260** indicates a **33% downside**, with potential challenges in web-based ad contributions and international expansion logistics [3][13] Valuation Metrics - **Current Price**: $390.57 as of August 6, 2025 [5] - **Price Target**: Maintained at **$540**, based on a **30x multiple on FY26 EBITDA** [8][11] - **Market Capitalization**: Approximately **$143 billion** with **366 million shares outstanding** [5] Profitability and Margins - **EBITDA Margin**: Expected to be **81.6%** in FY26, indicating strong profitability [9][13] - **Free Cash Flow**: Projected to be **$4.838 billion** in FY26, with a free cash flow margin of **63.9%** [9] Risks and Considerations - **Execution Risks**: Uncertainties regarding the pace of the referral model and visibility into web-based ad contributions could impact quarterly performance [3] - **International Challenges**: Expansion may require significant investment to localize services for international markets [3] Additional Insights - **Gaming Revenue**: Expected to grow to **$5.876 billion** by FY26, with a **28.5% YoY growth** [9][13] - **Debt Position**: Net debt projected to decrease significantly, moving from **$2.619 billion** in FY23 to **$303 million** by FY26 [4] This summary encapsulates the key financial metrics, strategic initiatives, and potential risks associated with AppLovin Corp as discussed in the 2Q25 earnings call.