Core Thesis - AppLovin Corporation is transitioning from a mobile gaming publisher to a pure-play AI-powered advertising technology platform, which has led to significant revenue growth and improved profitability metrics [2][6]. Financial Performance - In Q2 2025, AppLovin reported a revenue growth of 77% year-over-year, with Software Platform revenue reaching $1.26 billion and an adjusted EBITDA margin of 81% [2][4]. - Profitability metrics have strengthened, with gross, EBITDA, and net margins rising above 80%, supported by disciplined cost management [5]. Business Strategy - The divestiture of its Apps business to Tripledot Studios for $400 million has allowed AppLovin to focus on its high-growth Software Platform [2]. - The company operates globally, connecting over 1.4 billion daily active users through its AI-driven platforms, which provide a competitive advantage through economies of scale and proprietary technology [3]. Market Position - AppLovin is increasingly recognized as a top-tier adtech platform, consistently ranked just behind Google and Meta, with strong retention and share-of-wallet gains in gaming and e-commerce [4]. - The upcoming launch of Axon Ads Manager is expected to unlock additional revenue opportunities in international markets and small businesses [4]. Investment Outlook - Despite a forward EV/Sales of 35.9x, the premium is justified by high revenue growth, robust free cash flow, and potential for further international expansion, making AppLovin a compelling investment [5].

Core Insights - Unity Software Inc. reported a strong second-quarter performance for 2025, driven by the launch of its AI-powered ad platform, Unity Vector, which contributed to a 15% sequential growth in the Unity Ad Network [1][9] - The company anticipates continued double-digit sequential growth in the third quarter, alongside stabilization in other ad products, indicating a positive outlook for the broader Grow segment [1][3] Financial Performance - Unity's second-quarter revenue reached $440.9 million, reflecting a year-over-year decline of 1.9% but surpassing estimates, while adjusted EBITDA was $90 million, representing a 21% margin [3] - The company is leveraging efficiency gains to reinvest aggressively in Vector and AI content creation without compromising profitability [3] Product Development and Market Position - Unity Vector's early success is attributed to its scalability and ability to process diverse data types in real time, enhancing install quality and return on ad spend for clients [2] - The platform benefits from Unity's extensive reach, powering 70% of top mobile games, which provides unique behavioral data advantages [2] Competitive Landscape - Unity is positioned in direct competition with AppLovin Corporation and Digital Turbine, both established players in mobile ad tech [5][6] - While AppLovin utilizes advanced machine learning for ad targeting, Unity's deep integration into game development offers a unique data edge [5] - Digital Turbine focuses on mobile content discovery, but Unity's first-party game runtime data may provide a stronger long-term advantage [6] Stock Performance and Valuation - Unity's stock has increased by 57.8% over the past three months, outperforming the Zacks Internet - Software industry and the Zacks Computer and Technology sector [7] - The stock currently trades at a premium with a forward 12-month price-to-sales (P/S) ratio of 7.33 compared to industry peers [11] Earnings Estimates - Unity's loss estimates for 2025 and 2026 have narrowed to a loss per share of 79 cents and 64 cents, respectively, indicating a year-over-year improvement from a loss of $1.68 per share in 2024 [14]