AppLovin Corp Maintains Strong Growth Trajectory Despite Market Challenges February 25, 2026
Company Overview
AppLovin Corp operates as a leading mobile technology platform, primarily focused on mobile gaming advertising and monetisation solutions. The company’s core business revolves around its AXON advertising platform, which serves both mobile gaming developers and increasingly, e-commerce advertisers, through advanced machine learning algorithms and targeted advertising capabilities.
Strong Financial Performance Drives Upgrade
Phillip Securities Research has upgraded AppLovin Corp to BUY from ACCUMULATE, setting a target price of US$600. This upgrade comes despite lowering the previous target price, reflecting both the company’s strong operational performance and a more cautious market environment. The research house increased its weighted average cost of capital to 6.5% from 6.0% to account for current market volatility.
The fourth quarter of 2025 demonstrated AppLovin’s resilience, with revenue climbing 66% year-on-year to US$1.66 billion, though this fell slightly below expectations. More impressively, profit after tax and minority interests surged 84% year-on-year to US$1.1 billion, surpassing forecasts and highlighting the company’s improving operational efficiency.
Robust Gaming Advertising Foundation
The company’s advertising business continues to demonstrate exceptional strength, driven by technological improvements in its core mobile gaming segment and the expansion into e-commerce verticals. AXON’s, their self-service AI-powered advertising platform, unique approach of delivering full-screen video advertisements during natural game breaks sets it apart from competitors. This format ensures complete viewability and captures users’ full attention, resulting in an average watch time exceeding 35 seconds—significantly longer than the 30 seconds typical for television and 7 seconds for social media platforms.
The platform’s superior monetisation efficiency enables advertisers to achieve break-even on acquisition costs within 30 days, considerably faster than the approximately three months required on other major advertising platforms. This efficiency has driven annual advertiser spending on the platform to exceed US$11 billion.
Strong Profitability Growth
AppLovin’s profitability metrics showed remarkable improvement in the fourth quarter, with net income rising 84% year-on-year to US$1.1 billion. The company achieved a 16% margin improvement, with margins expanding from 61% to 77%, supported by enhanced operating leverage and a 55% year-on-year reduction in expenses. Free cash flow increased 88% year-on-year to US$1.31 billion, whilst the company maintains a healthy cash balance of US$3.95 billion, representing 91% year-on-year growth. The company retains approximately US$3.28 billion in remaining share repurchase authorisation.
Frequently Asked Questions
Q: What is Phillip Securities Research’s current recommendation and target price for AppLovin Corp?
A: Phillip Securities Research has upgraded AppLovin Corp to BUY from ACCUMULATE with a target price of US$600.
Q: How did AppLovin’s fourth quarter 2025 financial performance compare to expectations?
A: Revenue of US$1.66 billion was below expectations but grew 66% year-on-year, whilst profit after tax and minority interests of US$1.1 billion surpassed forecasts, rising 84% year-on-year.
Q: What makes AppLovin’s advertising platform unique compared to competitors?
A: AXON delivers full-screen video advertisements during natural game breaks, ensuring complete viewability with average watch times exceeding 35 seconds, compared to 30 seconds for TV and 7 seconds for social media platforms.
Q: How quickly can advertisers achieve break-even on AppLovin’s platform?
A: The platform’s monetisation efficiency enables advertisers to break even on acquisition costs within 30 days, significantly faster than the roughly three months required on other major advertising platforms.
Q: What drove the strong profitability growth in the fourth quarter?
A: Net income growth of 84% year-on-year was driven by robust revenue growth, improved operating leverage, a 55% reduction in expenses, and margin expansion from 61% to 77%.
Q: What is the company’s current financial position?
A: AppLovin maintains a healthy cash balance of US$3.95 billion, up 91% year-on-year, with free cash flow of US$1.31 billion and remaining share repurchase authorisation of approximately US$3.28 billion.
Q: Why did Phillip Securities Research lower its revenue forecast despite the upgrade?
A: The research house lowered revenue forecasts by 15% as e-commerce revenue is expected to take time to materialise, given the segment remains in early stages and is focusing on scaling.
Q: What factors are expected to support future growth?
A: Growth is expected to be supported by expansion into the e-commerce vertical, AXON, and continued strong performance in the gaming segment.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
Disclaimer
These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products.
Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance.
Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries.
The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.
Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
About the author
Serena Lim Yi Qi
Serena is a Research Analyst covering the U.S. Technology sector at PSR. Prior to joining the firm, she worked as an Equity Dealer and held various roles across the insurance and banking industries. Serena holds a Bachelor's degree in Economics and a Postgraduate Diploma in Applied Finance from the University of Adelaide.
Thomson Medical Group Ltd: Mixed Performance Amid Strategic Transformation 
Airbnb Inc Upgraded to Accumulate as New US Initiatives Drive Booking Growth 
BRC Asia Ltd Delivers Strong Growth with Record Order Book Surge 
CapitaLand Investment Faces China Valuation Challenges Despite Resilient Fee Growth 
