AppLovin Stock Before Q2 Earnings: To Buy or Not to Buy?

AppLovin Corporation APP will report its second-quarter 2025 results on Aug 6, after the bell.

The Zacks Consensus Estimate for earnings in the to-be-reported quarter stands at $1.99, indicating 123.6% growth from the year-ago reported quarter. The consensus estimate for revenues stands at $1.21 billion, implying 12.3% year-over-year growth.

Two estimates for the second quarter were revised upward in the past 30 days, against no upward revision. The Zacks Consensus Estimate has declined 1.5% during this time frame.

The company has a strong history of earnings surprises. Earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, with an earnings surprise of 22.9%, on average.

Q2 Earnings Beat likely for APP

Our proven model predicts a likely earnings beat for APP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

APP has an Earnings ESP of +2.59% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Advertising Should Drive Performance Growth

We expect year-over-year improvement in the company’s top line in the to-be-reported quarter to be driven mainly by Advertising. The consensus estimate for the Advertising revenues is pegged at $1.23 billion, indicating 72% year-over-year growth. The consensus mark for the Advertising’s adjusted EBITDA is pegged at $1 billion, suggesting 92% year-over-year growth.

APP Stock is in a Great Mood

APP has rallied a staggering 465% over the past year, easily outpacing the broader industry's 71% growth. Competitors like Alphabet GOOGL and Meta Platforms META have also delivered strong results. Alphabet shares gained 19% during the same time frame, while Meta Platforms climbed 58%. Both Alphabet and Meta Platforms remain major players, but AppLovin’s specialized platform is delivering superior returns in this niche.

Investment Risk and Rewards for APP

AppLovin has solidified its leadership in mobile advertising, powered by its next-gen AI engine, Axon 2, which launched in the second quarter of 2023. Since its debut, Axon 2 has radically enhanced AppLovin’s ad performance, helping to quadruple advertising spend on its platform.

AppLovin’s financial performance has matched its technological breakthroughs. In the first quarter of 2025, revenues surged 40% year over year, reflecting strong market demand. Adjusted EBITDA jumped 83% year over year, showcasing improved operational efficiency. Net income skyrocketed 144% from the prior year, demonstrating APP’s ability to translate revenue growth into significant profitability. For the full year 2024, revenues climbed 43% year over year, while adjusted EBITDA surged 81%, underscoring AppLovin’s ability to seize market opportunities while maintaining efficiency.

Cautious Optimism Ahead of Earnings

AppLovin has shown exceptional momentum, driven by strong advertising performance and the continued success of its AI engine, Axon 2. The company’s track record of surpassing earnings expectations adds confidence ahead of its upcoming report. However, recent estimate revisions suggest mixed sentiment, and the stock's sharp rally may already reflect much of the optimism. With expectations running high and peers performing well, it’s wise to stay cautious. A hold strategy is recommended for now. Let the earnings results validate the stock’s next move before considering any fresh positions. Patience could be rewarding at this stage.

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This article originally published on Zacks Investment Research (zacks.com).

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