AppLovin Q2 2026 earnings: Revenue rose 53% as margins expanded

AppLovin (NASDAQ: APP) reported Q2 2026 revenue of $1.924 billion, up 53% from $1.259 billion a year earlier, while diluted EPS rose to $3.76 from $2.39. Adjusted EBITDA grew 58% and its margin expanded to 84%, although free cash flow increased much more slowly than net income. Q3 guidance indicates continued sequential growth with a modest decline in adjusted EBITDA margin.

Core earnings data

Revenue growth carried through to operating income and adjusted EBITDA because total costs and expenses rose more slowly than sales. The net income comparison requires some context: Q2 2025 included $47.7 million of income from discontinued operations, so continuing-operations net income grew faster than total net income.

Revenue leverage outweighed higher R&D and stock compensation

Total costs and expenses increased about 43% to $429.4 million, below the 53% increase in revenue. This operating leverage lifted operating margin by approximately 1.6 percentage points.

The expense mix was uneven. Cost of revenue rose about 46% and sales and marketing increased about 35%, while general and administrative expense declined about 27%. Research and development expense more than doubled to $99.9 million from $44.0 million.

Stock-based compensation also increased to $85.8 million from $34.6 million. Because adjusted EBITDA excludes stock-based compensation and certain other items, the 84% adjusted EBITDA margin should be considered alongside the GAAP operating results rather than in isolation.

Below the operating line, total other income was $11.2 million compared with a $73.7 million expense a year earlier. That approximately $84.9 million swing also supported pre-tax income growth, while interest expense was nearly unchanged.

Profit growth outpaced cash generation

Q2 net income increased 55%, but operating cash flow and free cash flow rose only about 13% and 12%, respectively. The release does not provide a quarterly cash flow bridge explaining the full difference. For the first six months, however, accounts receivable used $352.6 million of cash, and cash income taxes increased to $639.8 million from $100.6 million, providing context for the slower cash conversion.

Cash and cash equivalents still increased by $566.2 million from year-end to $3.053 billion at June 30. Long-term debt was largely unchanged at $3.515 billion.

During Q2, AppLovin spent $551.3 million to repurchase shares and cover withholding obligations related to vested equity awards, equivalent to roughly 64% of quarterly free cash flow. Shares outstanding declined to 335.3 million at June 30 from 338.3 million at the end of 2025.

Q3 2026 guidance

At the midpoint, AppLovin’s Q3 revenue guidance implies approximately 7.6% sequential growth, while adjusted EBITDA would increase about 6.9%. The guided 83% adjusted EBITDA margin is one percentage point below the Q2 result, indicating modest margin normalization even as the company expects further growth.

The company did not provide GAAP equivalents for the non-GAAP adjusted EBITDA guidance because of uncertainty surrounding reconciliation items such as stock-based compensation.

Recent insider transactions

The supplied six-month insider summary shows 311,787 shares classified as purchases across 17 transactions and 751,244 shares sold across 20 transactions. That produced net sales of 439,457 shares, equal to 0.90% of total insider holdings. Among the 10 most recent listed transactions, seven were sales with reported values totaling approximately $148.4 million; the other entries were two stock grants and one gift.

These disclosures describe the transactions but do not, by themselves, establish insiders’ views on AppLovin’s future performance.

Risks investors need to watch

• Slower cash conversion: Receivables growth and higher cash tax payments could continue to limit the conversion of reported profit into operating and free cash flow.
• Margin normalization: The Q3 adjusted EBITDA margin forecast is below the Q2 level, making execution against the 83% target an important measure of operating leverage.
• Rising excluded expenses: Stock-based compensation and R&D expense grew faster than revenue. Continued increases could widen the difference between GAAP earnings and adjusted EBITDA.
• Cash demands from capital allocation: Q2 share repurchases and equity-award withholdings consumed a substantial portion of free cash flow while long-term debt remained above $3.5 billion.

Summary

AppLovin’s Q2 2026 results combined 53% revenue growth with higher GAAP operating and non-GAAP adjusted EBITDA margins. Profit growth substantially exceeded cash flow growth, while R&D and stock-based compensation rose rapidly. Q3 guidance points to continued sequential expansion, with cash conversion and the expected one-point decline in adjusted EBITDA margin serving as the main operational follow-up items.