By Karsten Weide, Chief Analyst
Executive Summary
AppLovin reported its third-quarter 2025 earnings on Wednesday, November 5, continuing a streak that has made the Palo Alto–based company one of the fastest-growing players in digital advertising. The results underscored AppLovin’s reinvention from mobile gaming developer to pure-play advertising technology powerhouse – one now fueled almost entirely by artificial intelligence.
AppLovin delivered another outstanding quarter, with revenue up 68% year over year to $1.41 billion and net income from continuing operations soaring 93% to $836 million at a 59% margin. Adjusted EBITDA reached a record $1.16 billion at an 82% margin, cementing AppLovin as the most profitable company in programmatic advertising. It is also the most efficient company, with a per-employee revenue of more than $9 million per year. This growth – driven by its Axon 2.0 AI platform and a booming market for in-app and e-commerce advertising – outpaced both The Trade Desk (TTD), its closest competitor, and the broader ad-tech sector. The company’s divestiture of its Apps business earlier in the year simplified operations and unlocked extraordinary leverage. Strong cash flow enabled another $571 million in share repurchases, while guidance for Q4 2025 suggests momentum is still building.
Revenue Numbers
AppLovin generated $1.41 billion in revenue for the third quarter, up 68% from $835 million a year ago. The company’s revenue trajectory has accelerated sharply since mid-2024: growth reaccelerated from 58% in Q4 2024 to an average of 72% year-to-date as Axon 2.0’s algorithmic ad-placement and bidding capabilities have matured. By contrast, The Trade Desk reported Q3 2025 revenue growth of around 18%, while overall programmatic advertising spending will probably grow by about 15% in 2025. AppLovin’s outperformance illustrates how its proprietary AI engine is capturing share from legacy demand-side and supply-side platforms alike.
By concentrating resources on advertising software and retiring the low-margin Apps division, AppLovin has effectively become an operating-margin machine. The company’s revenue growth curve now more closely resembles that of a software platform than a traditional ad-tech intermediary.
Following the sale of its Apps business in mid-2025, AppLovin now reports results under a single segment – Advertising – which represents substantially all company revenue. This consolidation reflects a strategic transformation completed over the past eighteen months. The former Software Platform segment, renamed Advertising, contributed roughly three-quarters of total revenue in 2024; today, it accounts for virtually 100%.
The transition from a dual-segment structure to a focused advertising platform signals AppLovin’s definitive break from its mobile-gaming origins. Over time, this segment concentration should yield higher predictability, efficiency, and R&D scale, allowing AppLovin to reinvest AI-driven optimization gains into new ad formats such as commerce and CTV – channels in which it is still weak.
Revenue by Geography
AppLovin divides revenue between the United States and the rest of the world. In Q3 2025, U.S. revenue was $688 million (49% of total), while international markets contributed $717 million (51%). The near-equal split marks a major evolution: in 2023, the U.S. accounted for more than 60% of revenue. The shift reflects rapid growth in Asia-Pacific and Europe, where mobile gaming and app-based commerce are rebounding.
While The Trade Desk still earns roughly three-quarters of its revenue from North America, AppLovin’s global footprint gives it insulation from U.S. ad-spend volatility. Its performance in emerging markets demonstrates the exportability of Axon’s algorithmic advantage – a key factor in sustaining above-market growth.
Operating Income Numbers
AppLovin’s income from continuing operations reached $836 million, translating to a net margin of 59%, up from 52% a year earlier. Adjusted EBITDA margins climbed to an eye-popping 82%, compared with 77% in Q3 2024. In plain English, that means out of every $100 in sales, $52 are profit, and $82 if one removes costs that are not part of core operations (taxes, depreciation, one-time charges). Few companies in advertising – or even software – approach this level of profitability.
These gains stem from two main factors: reduced headcount and AI automation. Machine-learning-driven optimization replaced human campaign management, while the divestiture of low-margin app publishing stripped away overhead. Compared to The Trade Desk’s operating income margin of 16% in Q3, and an Adjusted EBIDTA margin of 43%, AppLovin now operates on an entirely different efficiency plane.
Performance vs. Guidance and Analyst Expectations
AppLovin’s results surpassed both internal guidance and Wall Street forecasts. Revenue of $1.41 billion exceeded the company’s earlier outlook of about $1.34 billion, while Adjusted EBITDA of $1.16 billion came in well above consensus estimates around $1.05 billion.
The company also issued bullish guidance for Q4 2025: revenue between $1.57 billion and $1.60 billion, with Adjusted EBITDA margins holding steady at 82–83%. That confirms that demand for mobile app and commerce advertising remains robust. Analysts responded by raising full-year targets and reiterating buy ratings, noting AppLovin’s unmatched combination of growth and cash generation.
Stock Price
Running up to what promised to be another blow-out quarter, investors had already driven up AppLovin stock price by 4% the day before earnings. The day after, the stock first rose by another 4%, but then lost that gain again to settle back at where it had started before earnings. The reasons: most of the upside of AppLovin’s stock had perhaps already been priced in. Also, keep in mind that many companies had to endure stock price losses of 20-30% in recent days, a fate that AppLovin avoided. Since the start of 2025, AppLovin’s share price has nearly doubled.
By contrast, The Trade Desk’s shares rose by only 2% in after-hours trading following its own Q3 report, reflecting slower growth and concerns over competition from Amazon’s booming CTV advertising business, The Trade Desk’s core business. (The Trade Desk reported earnings one day after AppLovin, the day of this writing.)
Cash Reserve
As of September 30, 2025, AppLovin held $1.67 billion in cash and equivalents – up nearly $1 billion since the start of the year. The company generated $1.05 billion in free cash flow during the quarter, almost double the $545 million it produced a year earlier.
That liquidity supports aggressive share buybacks and ongoing investment in Axon AI and Adjust analytics. It also gives AppLovin firepower for selective acquisitions, though management has emphasized organic growth over M&A. While the cash pile may not fund a blockbuster purchase, it comfortably finances continued expansion, data-center commitments, and R&D acceleration.
Looking Ahead
AppLovin used its Q3 report to reinforce its long-term vision: to become the default infrastructure for app-based advertising. CEO Adam Foroughi pointed to three pillars – AI innovation, global scale, and disciplined capital allocation – as the basis for durable growth.
Strengths. The company’s biggest strength is its AI engine. Axon 2.0 processes trillions of bid requests daily, predicting outcomes with precision that boosts yield for publishers and performance for advertisers. Combined with MAX mediation and Adjust attribution, AppLovin delivers a fully integrated advertising stack few can rival.
Weaknesses. The heavy reliance on mobile app advertising leaves AppLovin exposed if app-store dynamics or privacy frameworks shift unfavorably. The company’s business mix, though more diversified than before, still lacks the omnichannel breadth of The Trade Desk, which benefits from stronger CTV and retail-media presence.
Opportunities. With the Apps business gone, AppLovin can redeploy capital into new verticals. The most promising are commerce advertising, CTV expansion via Wurl, and potential partnerships in AI search and recommendations. The company’s data scale positions it to train models that could power ad targeting beyond mobile.
Threats. Rising privacy regulation and potential AI oversight in the U.S. and the EU could limit data access. Competitive responses from The Trade Desk, Google, Meta and Amazon will intensify as all invest in AI optimization. Macroeconomic headwinds in consumer spending could also slow ad budgets, testing AppLovin’s resilience.
At the industry level, digital advertising’s rebound is gathering pace, but growth is increasingly captured by platforms that combine automation, first-party data, and measurable performance. That’s precisely where AppLovin sits today.
Conclusion
AppLovin’s third quarter 2025 confirms its transformation from gaming startup to AI-powered advertising juggernaut. Revenue and profit growth outstrip every major peer, margins are best in class, and the company’s global expansion shows no signs of fatigue. The challenge ahead lies not in continued precise execution, but also in sustaining differentiation as others race to replicate its AI-driven model. For now, though, AppLovin is the pace-setter – the company rewriting what profitability looks like in AdTech.
About AppLovin
AppLovin (www.applovin.com) is a leading marketing platform that provides businesses with end-to-end software and AI solutions to reach, monetize, and grow their global audiences.
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