Three months ago, AppLovin told investors its advertising models had stalled. Its chief executive, Adam Foroughi, said the "pace of meaningful model improvement was lighter than normal during the quarter and the next step up in model performance landed just after quarter ended." The shares lost a fifth of their value the next day, and by October 30 they had closed at $228.50, against $733.60 last December.
On Wednesday, after the market closed, AppLovin reported the quarter that was supposed to show whether that explanation held. Revenue rose 55% to $2.18 billion, above the $2.07 billion analysts expected, according to Bloomberg estimates cited by Yahoo Finance. It beat the top of AppLovin's own forecast by about $100 million, finance chief Matt Stumpf said on the call, MarketBeat reported. The shares jumped sharply on Thursday, Yahoo Finance and Investing.com reported. Thursday's close wasn't in when this was written.
This story is about what changed between the two quarters, what the company says caused it, and what it still hasn't shown. Our preview on Wednesday named three things to watch. Two came in well above the bar; the third still rests on the company's word.
The quarter, against the bar it set
In August, AppLovin guided to third-quarter revenue of $2.055 billion to $2.085 billion. It reported $2.18 billion. Net income grew 72% to $1.44 billion. Investing.com put the revenue consensus at $2.08 billion, a little higher than Bloomberg's, but the result cleared both.
The cash came with it. "Net cash from operating activities and Free Cash Flow were $1.4 billion for the third quarter 2026," the release says. That was 77% of adjusted earnings before interest, taxes, depreciation and amortization, against 53% in the second quarter, and Stumpf put the earlier drop down to the timing of tax payments, MarketBeat reported. AppLovin spent another $1.4 billion buying back and withholding shares, and its board raised the buyback authorization to $3.6 billion.
Source: SEC EDGAR XBRL data
Where the growth came from
The 10-Q AppLovin filed an hour after the release explains the jump in one sentence. Revenue rose "due primarily to improved AppLovin Ads performance, where net revenue per installation increased 55% and the volume of installations increased 2%." In plain terms, AppLovin is paid when an ad it places leads someone to install an app, and almost all of the growth came from earning more for each install, not from more installs.
That is what better models are supposed to do: find the users most likely to spend, so advertisers can pay more per install and still hit their targets. Foroughi said AppLovin "partially rolled out a new generation of models during the quarter," MarketBeat reported. He compared the change to Axon 2.0, an earlier overhaul of its ad engine, but "did not commit to a full rollout date or predict the business impact."
Beyond games, still without figures
Mobile games are still most of the business, and gaming revenue grew nearly 50% from a year earlier, Foroughi said. Spending by consumer advertisers, the online shops AppLovin has been courting since it opened its platform to them, "rose by double digits sequentially and by triple digits from a year earlier," Stumpf said. But "The company did not disclose revenue for the individual verticals on the call," MarketBeat noted, so how big that business is remains a company estimate, not a figure anyone outside can check.
It also changes the shape of the year. Foroughi said online shops spend most in the fourth quarter, and "AppLovin should see bigger fourth quarters followed by tougher first quarters as its e-commerce business grows," MarketBeat reported.
A forecast above what analysts had
For the last three months of the year, AppLovin forecast revenue of $2.365 billion to $2.395 billion, growth of about 43% to 44%. Analysts had expected $2.25 billion, Yahoo Finance reported. In our preview, the bar to watch was a forecast below that figure, which would have pushed next year's estimates down. It came in well above it.
Analysts moved quickly. BTIG raised its price target to $450 from $396 and kept a Buy rating, Yahoo Finance reported. That is BTIG's view, not ours.
Source: SEC EDGAR XBRL data
What it adds up to
This is analysis, not advice. One quarter has answered the narrow question from August: the slowdown in AppLovin's models looks like a pause, not a ceiling. Revenue per install rose as fast as revenue itself, which is the clearest sign in the filing that the models, not more ad space, did the work. For scale, AppLovin earned $3.3 billion in all of 2025, its annual report shows.
It hasn't answered the larger one. The shares were down more than 50% this year before Wednesday, Yahoo Finance reported, partly on what The Motley Fool called "fears that artificial intelligence (AI) will disrupt its operations and impact its growth potential." Those fears are about the next few years, not one quarter. The signs to watch are the full rollout of the new models, which Foroughi wouldn't date, and the first quarter of 2027, which he has already warned will be weaker. If revenue per install keeps rising while the first quarter dips only for the season, the models are carrying the business again. If it stalls, August will look less like an exception.
These figures come from the earnings release, the 10-Q and news reports of the call. More are on AppLovin's company page. In August the company asked investors to wait one quarter. This time, the numbers came in before the excuses were needed.