Investment Rating - The report assigns a Neutral rating to AppLovin (APP) with a price target of $355.00 for December 2025, raised from a previous target of $270.00 [1][11][21] Core Insights - AppLovin reported a strong first quarter, with revenue growth of 40% year-over-year and adjusted EBITDA growth of 83% year-over-year, significantly exceeding management's guidance [4][7][15] - The advertising segment was the primary driver of growth, with a 71% year-over-year increase in advertising revenue [7][10] - The company is expected to expand its total addressable market (TAM) beyond gaming into e-commerce and connected TV, although its ability to scale meaningfully outside gaming remains uncertain [10][20] Financial Estimates - Revenue estimates for FY2025 have been raised from $4,957 million to $5,410 million, and for FY2026 from $5,783 million to $6,610 million [1][18] - Adjusted EBITDA estimates for FY2025 have been increased from $3,736 million to $4,222 million, and for FY2026 from $4,713 million to $5,515 million [1][18] - The quarterly forecasts for FY2025 show a significant increase in adjusted EBITDA across all quarters, with Q1 at $1,005 million and Q4 projected at $1,172 million [2][18] Performance Drivers - The report highlights that improvements in technology and a data advantage over peers have led to increased advertising revenue and EBITDA [10][20] - The upcoming launch of a self-serve platform is anticipated to drive demand from advertisers, further enhancing revenue potential [4][10] Valuation - The valuation is based on applying a 22.5x multiple to the 2026E adjusted EBITDA of $5.5 billion, which is a premium compared to competitors [11][21]