APP/U 2Q25:Trends and Upside

AppLovin's earnings met our expectations

• 2Q25 revenue beat high-end guidance by 4%, with 3Q25 guidance coming in light, below buyside bogey

• Margin improvement evident after divesting 1P gaming business

Following a below-buyside-expectations print, AppLovin initially dropped 15% after hours but quickly recovered during the earnings call.

This AppLovin earnings call might be the most worthwhile tech earnings call of the year - candid and clearly outlining the company's objectives.

In our preview communications, we discussed how AppLovin could recover or even reverse the narrative despite middling results:

• In 2Q24, we saw a similar situation where AppLovin guided inline with high-end but clearly articulated the e-commerce opportunity during the call, marking the beginning of their e-commerce story pivot

• 2Q25 represented another sensitive juncture. As we noted in our preview: "2Q25 might be APP's only cautious quarter this year. By 3Q25 earnings, we'll be approaching the self-service launch, and if test data looks good, self-service could launch early"

• The company actually provided earlier timing for self-service launch and clearly discussed meaningful contribution starting in 4Q25