TLDR
- AppLovin reported Q4 EPS of $3.24, crushing the $2.95 consensus, while revenue of $1.66 billion topped $1.6 billion estimates and grew 66% year-over-year.
- Stock plunged 9% after-hours despite the beat as Q1 2026 guidance pointed to 52% revenue growth, marking a deceleration from recent quarters.
- CEO Adam Foroughi pushed back on AI competition fears from Meta and startups, insisting AppLovin is “delivering the strongest operating performance in our history.”
- The stock has tumbled 30% in 2026 amid short-seller reports, an SEC probe, Google’s Project Genie debut, and competitor Unity’s 26% crash Wednesday.
- Free cash flow rocketed 88% to $1.31 billion in Q4 while adjusted EBITDA margin held at 84%, with full-year 2025 revenue reaching $5.48 billion.
AppLovin crushed Wall Street’s Q4 expectations Wednesday. Investors weren’t buying it.
The mobile advertising company posted earnings per share of $3.24. That beat the consensus estimate of $2.95 by 10%. Revenue hit $1.66 billion versus the expected $1.6 billion, marking a 66% year-over-year increase.
Shares still fell as much as 9% in after-hours trading. The stock had already dropped 3.4% during the regular session.
The market fixated on slowing growth in the company’s forward guidance. AppLovin’s Q1 2026 revenue outlook of $1.745 billion to $1.775 billion implies 52% growth. That represents a clear deceleration from prior quarters.
The company expects adjusted EBITDA between $1.465 billion and $1.495 billion, maintaining its 84% margin. But the slower top-line growth grabbed investor attention.
CEO Defends Against AI Threats
CEO Adam Foroughi faced tough questions about competition from Meta Platforms on the earnings call. He came out swinging.
“For the past few weeks, there’s been a lot of discussion about how AI and competition will challenge our business,” Foroughi said. “But when I look at our internal dashboards, we’re delivering the strongest operating performance in our history.”
The CEO said AppLovin’s own AI models are driving the growth. He called out the gap between market panic and operational reality.
“There is a real disconnect between market sentiment and the reality of our business,” Foroughi stated. “If the market chooses to price our stock based on fear while we continue to compound revenue, cash flow and product capability, we’ll stay focused on execution.”
AppLovin operates an advertising platform focused on mobile apps and games. It’s built a leading position in this digital advertising segment.
But 2026 has been brutal. The stock is down more than 30% year-to-date.
Last year saw short-seller reports alleging Apple and Google app store policy violations. An SEC investigation into data collection practices continues. In January, CapitalWatch published allegations about ties to crime syndicates before retracting the claims after AppLovin denied them.
Market Fears Over AI Competition
The AI narrative has whipsawed shares in recent weeks. Google’s Project Genie launch in January spooked investors about AI-generated games. AppLovin dropped 17% that day.
Then startup CloudX unveiled an AI-powered mobile ad product in February. Shares fell 16%.
Not everyone sees AI as a threat. Jefferies analyst Brent Thill argued that more AI games would make AppLovin’s discovery platform more valuable.
CFO Matt Stumpf highlighted the rare combination of metrics. “The combination of growth, profitability, Free Cash Flow, and capital returns we’re delivering is extraordinarily rare,” he said.
The financial performance backs up management’s confidence. Q4 free cash flow surged 88% year-over-year to $1.31 billion. For full-year 2025, free cash flow reached $3.95 billion, up 91%.
Q4 adjusted EBITDA came in at $1.4 billion with an 84% margin. Full-year 2025 revenue totaled $5.48 billion, jumping 70% from 2024.
Unity Software added pressure Wednesday morning. The competitor reported disappointing guidance, sending its stock down 26%. Unity competes directly with AppLovin in mobile advertising, and the selloff weighed on AppLovin shares during regular trading hours.
AppLovin expects Q1 2026 revenue to grow 5-7% sequentially from Q4 levels.
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