Live: Can AppLovin’s Earnings Tonight Stop Its Stock Slide?

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AppLovin had fine earnings tonight but is selling off amongst a broader software sell-off. A Wall Street analyst asked about this broader situation tonight, and here’s what the company had to say:

Omar Dessouky BofA Securities, Research Division

I wanted to ask a more general question because the market seems to be having an AI moment here. So let’s just forward 3 to 5 years in the future to potentially a world where consumers interface with the Internet through natural language-based agents.

LOMs are different than performance advertising neural networks. But how would your business be affected by potentially a change in how consumers interface with the Internet. So that’s the first part of it. And then the second is, how do you expect, again, over the long term, 3 to 5 years, how would you expect mobile game developers to casual mobile game developers to adapt their content to a world where they compete for time with the sophisticated chatbots.

Adam Foroughi Chief Executive Officer

Yes. So great question. The way I see the LM is that it’s going to enable anyone to be able to type out ideas for a game and get a game created. That doesn’t mean you’re going to get users to play your game, but that means you can create content in a very low-cost way, not being an engineer, that will accelerate content production for studios that are developed, that are sophisticated.

It will also create a flood of content that’s more personalized across people who could just become game developers with no engineering background. That’s a good thing for us. And the talk track I mentioned, as you get more content, that content becomes commoditized the discovery platforms, of which there are very few become the true value because those customers are going to have to come to MAX to monetize, and they’re going to have to come to our discovery platform to run advertising to get users to their space.

Now if humans just want to talk to a chat bot, do nothing else. Of course, while there’s nothing else that they’re going to do, we would lose time spent in games. That seems far-fetched. — the games that people play today in our domain are not very immersive games. They’re quick to play relaxing games and people play things like a solitary people play things like Amazon. This audience skews older, it skews female. This is an audience that’s very unlikely to sell playing crosswords in 10 years because they’re talking to a chatbot.

So not only do we think that the base audience is going to keep playing games, you’re going to need relaxing outlets. If LMs increase productivity, people likely have more time to go to outlets like games. And if LM’s increased production quality, and production capability of games, you’re going to have more content, which leads right into a business model like ours.

AppLovin was trading for about $451 at the start of their earnings, the company’s stock dropped to $423 20 minutes after earnings started, and is now trading for about $430.

Here’s the first call during earnings that led to significant trading volatility.

Benjamin Black Deutsche Bank AG, Research Division

Great. My first question is on the e-commerce opportunity. So could you perhaps sort of reflect on the self-service launch or some of the key learnings? What worked? What didn’t word the room for improvement? And to the extent possible, it would be great if you could to share or quantify the e-commerce contribution to revenue or gross ad spend this quarter and in the guide? And then I have a quick follow-up.

Adam Foroughi Chief Executive Officer

Yes. So the e-commerce business obviously has been live with us for 1.5 years. It’s doing really well. In Q4, we opened up the self-service platform referral only. So we’re not at the point yet where we’re sort of a GA type launch. We’ll get there. We said first half of this year, that’s still on track. What gets us excited are a couple of things.

One is the current customers that had lapped Q4 2025, saw material increases in spend as our models just keep getting better. Now remember this business and the model around this business that drives the value for the advertisers is really in its infancy. It takes us a while to continuously iterate to improve the model. In fact, just a few weeks ago, we had a pretty sizable uplift.

So those same customers from the prior year cohorts saw big growth. then you ended up with new customers coming in from the referral program. I mentioned on the last earnings call, we were seeing substantial growth there. We’re not going to see anything that’s going to impact our overall numbers for a while, but we’re seeing great trends. And I’ll talk about advertising leading advertisers into our platform later on the call, but we’re just seeing numbers that get us excited. On the breaking out e-commerce, we’re not going to do that because we think of our platform as a unified platform. Let’s say, tomorrow, the engineering team improves the gaming model 50%. Well, e-commerce would go down, but the business would be ripping.

That wouldn’t mean that there’s anything wrong with our platform. Fundamentally, auction, but getting more diversity will give the model more ways to serve the end consumer and should drive up our overall conversion rate. But we think if we start talking about verticals in a marketplace like ours, you start getting really misleading information that we’ll throw investors off.

Benjamin Black Deutsche Bank AG, Research Division

Great. I guess. And then sort of my second question is sort of the past — you mentioned the conversion uplift your partners could see if they have the ability to not only optimize for the best performing creators, but also sort of really scale and automate the creation of these video assets. So I guess with that backdrop, how far along the automation curve are we now and where it would be in the next, call it, 12 to 18 months?

Adam Foroughi Chief Executive Officer

Yes, great question. We’re still pretty early. I pulled some numbers earlier just to compare where e-commerce companies are when they upload ads and how many they upload to our platform versus the gaming companies that have really had a decade plus to optimize for a platform. top gaming companies run tens of thousands of ads at any given time. the top e-commerce companies are in the hundreds. So you’ve got a huge discrepancy here. And if you throw more ads at our system, the model does much better. That’s just a fact.

It gets the chance to diversify what the end user sees and try to find something that’s going to eventually convert that user. Now how do we bridge the gap is twofold. One is the customers have to get more accustomed to our platform to know what types of creatives work so that they can build up production around the things that work and multiply out the count. More importantly, though, generative AI tools to build creatives in a really low-cost way in an automated way is on the way.

We already have in a pilot with over 100 customers, generative AI-based tools for 1 part of the ad unit. Our ads are video plus then an interactive page and then follow-up of a shop preview dynamic product page. But that middle one, the interactive page is not something that these advertisers are accustomed to building because they don’t need them on social or search. We’re now generating those automatically for over 100 customers.

We’ll roll that out soon as it’s showing good performance to the broader set of customers. And shortly, we’re going to have the video model go live as well. We’re going to run the same pilot process. We’re going to make sure the video output looks good.

But if we get to a place where the video model can help these customers create new video ads in bulk in cost of dollars versus cost of thousands of dollars, we expect the count of ads for these new customers on our platform is going to go up a lot and that will make them more competitive against the gaming customers that are on our platform.

QuantumScape shares are down 4%. As we noted earlier, there is no cause to panic for investors. Earnings results were very good.

What comes next is the company’s earnings call.

We will post our updates from their earnings call on this live blog. What I’d recommend doing is leaving this page open and you can update it for future updates as the call will begin in 15 minutes.

If there’s a major movement on the call, we will react to it and provide analysis. As one final call, we’re able to do these live blogs because of readers like you. 

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AppLovin’s stock slid 4.5% after hours despite crushing Q4 expectations with $3.23 EPS versus $2.95 consensus and $1.66 billion revenue against $1.62 billion estimates. The reaction appears disconnected from fundamentals—net income jumped 84% YoY to $1.10 billion, and Q1 guidance of $1.76 billion exceeded the $1.7 billion consensus.

The after-hours decline comes amid broader ad-tech sector weakness, with Unity down 12.6% this week and 50.7% year-to-date. AppLovin’s RSI of 39.94 signals oversold territory after the stock fell 30% over the past month from $658.65. The company’s strong results and guidance contrast with the after-hours price action.

As we’ve noted, there’s not a lot of weakness in AppLovin’s earnings, but shares dropped as much as 8% in earlier updates.

Shares are now bouncing back, down 4.5%. It will be interesting whether shares will continue the rebound during the company’s conference call.

Cisco shares are now down about 4.5%.

That’s a surprising reaction, but keep in mind that shares were up 12.5% year-to-date and Cisco is trading at all-time highs, so solid execution might have met unreasonable expectations.

AppLovin’s Q4 guidance landed well above Wall Street’s expectations, but investors aren’t celebrating. The company called for Q1 2026 revenue of $1.745 billion to $1.775 billion, roughly 5-8% above the $1.7 billion consensus. The guidance maintains the profitability trajectory that distinguished AppLovin from struggling peers like Unity.

The guidance represents sequential growth of roughly 11-13% from Q4’s midpoint, driven by what management described as “model enhancements, continued e-commerce momentum, and the self-service platform’s early traction.” CFO Matt Stumpf emphasized the company guides “to what we know” without baking in unpredictable new advertiser ramps—suggesting tonight’s raise reflects measurable strength rather than speculation.

Yet shares reversed initial gains to trade down, mirroring sector-wide anxiety triggered by Unity’s catastrophic guidance miss. The market is demanding proof that AppLovin’s AI-driven ad platform can sustain exceptional growth amid broader digital advertising uncertainty.

APP | AppLovin Q4’25 Earnings Highlights:

• Adj. EPS: $3.24 (Est. $2.95) [✅]; UP +88% YoY
• Revenue: $1.66B UP +66% YoY
• Adj. Gross Margin: 84% [✅]; UP +700 bps YoY
• Net Income: $1.10B  [✅]; UP +84% YoY
• Free Cash Flow: $1.31B; UP +87% YoY

Outlook:

• Revenue: $1.76B Midpoint
  • AppLovin expects continued strong demand for its marketing platform, driven by increased digital advertising spending.
  • The company anticipates growth in its customer base and enhanced monetization strategies to support revenue growth.

Q4 Segment Performance:

• Marketing Solutions Revenue: $1.20B [✅]; UP +70% YoY
• Software Solutions Revenue: $458M [✅]; UP +60% YoY

Other Key Q4 Metrics:

• Adj. Operating Income: $1.40B [✅]; UP +82% YoY
• R&D Expenses: $82.2M  [✅]; DOWN -22% YoY
• Effective Tax Rate: 12.0% (vs. 10.0% YoY)
• Cash and Cash Equivalents: $2.49B; UP +257% YoY
• Debt: $3.51B; UP +0.1% YoY

CEO Commentary:

• Harris K.: “Our strong performance in Q4 reflects our commitment to innovation and delivering value to our clients. We are excited about the growth opportunities ahead as we continue to enhance our platform and expand our market reach.”

CFO Commentary:

• David Hsiao: “The significant increase in our revenue and net income demonstrates the effectiveness of our strategic initiatives. We remain focused on optimizing our operations and driving sustainable growth.”

AppLovin’s guidance calls for $1.745 billion to $1.775 billion.

Wall Street was expecting just under $1.7 billion.

Adjusted EBITDA is forecasted at 84%.

The reaction to AppLovin flipped fast, shares are now down 4.5%… We’re digging in and will provide updates.

Here’s what AppLovin reported:

• EPS: $3.23
• Revenue: $1.66B

Here’s what Wall Street expected:

• EPS: $2.95
• Revenue: $1.62B

Shares initially have popped 3%. More updates to come. 

AppLovin shares are still trading down around 3.2% in late trading today. Its shares dropped following Unity’s earnings last night. Their rival issued muted guidance and saw its stock absolutely punished today.

We expect AppLovin to report at around 4:05 p.m. ET today. As a reminder, updates will begin posting automatically with news and analysis once their earnings hit the newswires. 

While you wait, make sure to check out a couple of essential resources.

If you’re looking for a daily news source that not only tells you the biggest news but the profit plays on it, make sure to check out 24/7 Wall St.’s Daily Profit newsletter.

Another area you might be interested in is top AI stocks as the trend continues accelerating in 2026. Once again, we’ve got you covered with our new Top 10 AI Stocks report. It’s free and will introduce some companies seeing absolutely massive growth this earnings season.

Polymarket currently has AppLovin at an 86% chance of beating earnings, which are listed at $2.95 tonight.

That’s a high probability, but below Cisco, which has 91% odds.