TLDR
- AppLovin delivered Q4 EPS of $3.24 versus $2.95 expected and revenue of $1.66 billion against $1.6 billion consensus, representing 66% year-over-year growth.
- Shares dropped 9% after-hours as Q1 2026 revenue guidance implied 52% growth, slower than recent quarters, sparking investor concerns about deceleration.
- CEO Adam Foroughi countered AI competition worries, stating AppLovin’s internal metrics show “the strongest operating performance in our history” driven by proprietary AI.
- The stock has cratered 30% in 2026 following short-seller accusations, SEC investigation, Google’s Project Genie announcement, and Unity’s 26% plunge Wednesday.
- Q4 free cash flow jumped 88% to $1.31 billion with 84% adjusted EBITDA margin, while full-year 2025 revenue climbed 70% to $5.48 billion.
AppLovin demolished Q4 earnings estimates Wednesday afternoon. The market still punished the stock.
The mobile ad platform reported earnings per share of $3.24, crushing the $2.95 Wall Street consensus by 10%. Revenue reached $1.66 billion, topping the $1.6 billion estimate and surging 66% from the prior year.
Despite the beat, shares tumbled as much as 9% in extended trading. The stock had already slipped 3.4% during the regular session.
Investors zeroed in on decelerating growth in the company’s Q1 outlook. AppLovin forecasts revenue between $1.745 billion and $1.775 billion, indicating 52% year-over-year growth. That’s a notable step down from recent quarters.
The company projects adjusted EBITDA of $1.465 billion to $1.495 billion, keeping its 84% margin intact. But the revenue growth slowdown dominated investor thinking.
Management Confronts Competition Narrative
CEO Adam Foroughi addressed competition concerns directly during the earnings call. Analysts pressed him about threats from Meta Platforms and AI startups.
“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.”
He emphasized that AppLovin’s proprietary AI models fuel the company’s growth. Foroughi pointed to a major gap between investor fear and business fundamentals.
“There is a real disconnect between market sentiment and the reality of our business,” the CEO 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 runs an advertising platform targeting mobile apps and games. The company has established dominance in this digital advertising niche.
Yet 2026 has brought relentless pressure. Shares have plummeted over 30% this year.
Short-seller reports in 2025 claimed violations of Apple and Google app store policies. An SEC investigation into the company’s data collection practices remains active. January saw CapitalWatch make allegations about organized crime ties, which AppLovin denied and CapitalWatch later retracted.
AI Developments Rattle Investors
Recent AI announcements have battered the stock. Google’s January launch of Project Genie, an AI tool that creates 3D virtual worlds, triggered fears about gaming’s future. AppLovin fell 17% that day.
Startup CloudX introduced an AI-powered mobile advertising product in February. Shares dropped 16% on the news.
Some analysts see opportunity in AI trends. Jefferies analyst Brent Thill suggested AI-generated games would increase demand for AppLovin’s discovery and distribution platform.
CFO Matt Stumpf defended the company’s financial profile. “The combination of growth, profitability, Free Cash Flow, and capital returns we’re delivering is extraordinarily rare,” he said.
The numbers support management’s case. Q4 free cash flow soared 88% year-over-year to $1.31 billion. Full-year 2025 free cash flow hit $3.95 billion, up 91% from 2024.
Q4 adjusted EBITDA totaled $1.4 billion at an 84% margin. Full-year 2025 revenue came in at $5.48 billion, representing 70% growth over the prior year.
Unity Software compounded AppLovin’s problems Wednesday. The direct competitor reported weak guidance, causing its stock to crash 26%. Unity operates in the same mobile advertising space, and its collapse weighed on AppLovin during regular trading.
AppLovin’s Q1 2026 guidance suggests 5-7% sequential revenue growth from Q4 levels.
