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- **S&P 500 Inclusion**: Milestone broadening investor base and accountability.
- **Revenue Surge**: 68% YoY growth to $1.405 billion, driven by gaming model updates and self-service platform launch.
- **AI-Driven Growth**: 50% week-over-week e-commerce spend growth and AI tools for ad creatives and onboarding.
- **Financial Strength**: $1.158 billion adjusted EBITDA (82% margin), $1.049 billion free cash flow, and $3.2 billion share buyback authorization.
- **Q4 Outlook**: 12%–14% revenue growth, targeting $1.570–$1.60 billion, with focus on scaling AI and global advertiser acquisition.

**【CEO Summary Section】**
- AppLovin was added to the S&P 500, marking a significant milestone and broadening investor expectations.
- Q3 revenue grew 68% YoY to $1.405 billion, driven by core gaming model updates and the successful launch of the self-service platform in October.
- The self-service platform saw early success with e-commerce advertisers, achieving a 50% week-over-week spend growth, though still in early stages.
- Strategic priorities include AI-driven ad creatives, generative AI tools for onboarding, and testing paid marketing to scale advertiser acquisition without relying on a large salesforce.
- Emphasis on improving conversion rates through model enhancements and diversifying advertiser types to enhance recommendation engine effectiveness.

**【CFO Financial Commentary】**
- Adjusted EBITDA reached $1.158 billion (82% margin), up 79% YoY, with free cash flow of $1.049 billion (92% YoY growth).
- Share buybacks totaled $571 million in Q3, reducing diluted shares outstanding to 341 million.
- Q4 2025 guidance: Revenue $1.570–$1.60 billion (12%–14% sequential growth), adjusted EBITDA $1.290–$1.320 billion (82%–83% margin).
- Free cash flow margin improved due to no semiannual debt interest payments in Q3.

**【Q&A Key Highlights】**
- **Advertiser Characteristics**: New e-commerce advertisers are comparable in size to the initial pilot cohort, with a broad range of categories but no low-quality accounts due to automated filtering.
- **AI and Automation**: Testing generative AI for ad creatives to improve user engagement and conversion rates; AI tools for onboarding and filtering advertisers are being refined.
- **International Expansion**: EU advertisers are technically supported but not prioritized due to regulatory complexities; focus remains on scaling the self-service platform globally.
- **Paid Marketing**: Testing budget for promoting Axon Ads platform, with potential to scale without significant cost impact given high advertiser LTV.
- **Supply Dynamics**: Conversion rate improvements and model enhancements are key growth drivers, with no immediate risk of supply constraints despite expanding advertiser base.

AppLovin Corporation (APP) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

APP

APP fundamentals

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