AppLovin slips despite earnings beat

Published: 2026-05-07 10:41:00 ET APP

AppLovin posted quarterly results that topped expectations, although this failed to reverse the pressure on its stock, which fell about 2% in after-hours trading on Wednesday. The group generated Q1 revenue of $1.84bn, up 59% y-o-y and up 11% sequentially, beating the consensus of $1.77bn. Diluted EPS reached $3.56, ahead of the $3.444 anticipated, while adjusted EBITDA rose to $1.56bn, representing an 85% margin and confirming the high profitability of its advertising engine.

Kevin Smith

Published on 05/07/2026 at 10:41 am EDT

This release underscores the strength of AppLovin's model, which has transitioned into a pure-play online advertising firm following the divestment of its legacy mobile apps and games business in June 2025. Its AI-driven advertising engine, Axon, now accounts for the vast majority of its revenue and continues to drive robust cash flow generation, with free cash flow for the quarter reaching approximately $1.29bn, up 55% y-o-y.However, the market appears to be increasingly focusing on areas of uncertainty than on the solid headline figures. Revenue growth slowed slightly compared to the 66% recorded in Q4, while margins are already approaching peak levels, leaving less leeway for further expansion. The stock has already shed about 30% since the start of the year, weighed on by a broader sell-off in software publishers, as well as an SEC investigation into its AI-related data collection practices and repeated attacks from short sellers, including Fuzzy Panda and Culper Research.AppLovin now forecasts Q2 revenue of $1.93bn on average. Investors will also be monitoring its ambitions in social media, an embryonic project for which no launch date has yet been set.