AppLovin Corporation (NASDAQ:APP) shares plunged more than 14% in premarket trading on Thursday after the software company delivered quarterly earnings that exceeded expectations but failed to satisfy investors on revenue growth and forward guidance.
For the second quarter ended 30 June, AppLovin reported adjusted earnings per share of $3.76, narrowly ahead of the consensus estimate of $3.75. Revenue reached $1.92 billion, rising 53% from $1.26 billion a year earlier, but falling short of analysts’ expectations of $1.94 billion.
Looking ahead, the company forecast third-quarter revenue of between $2.06 billion and $2.09 billion. The midpoint of $2.07 billion came in just below Wall Street’s consensus estimate of $2.08 billion, contributing to the sharp negative reaction in the stock.
Profit growth remains strong despite softer sales outlook
Net income climbed 55% year over year to $1.27 billion from $820 million in the second quarter of last year. Adjusted EBITDA increased 58% to $1.61 billion, compared with $1.02 billion in the corresponding period of 2025.
Macquarie analysts said, “APP reported a rare miss in 2Q driven by timing of model improvements, not by slowing demand or competitive pressure.”
The brokerage added, “We think management’s track record of execution and their confidence that the overall business can grow 30% annually speaks for itself and view a pullback in shares as a buying opportunity.”
Cash generation remains robust
AppLovin continued to generate strong cash flows during the quarter, producing $869.0 million in net cash from operating activities and $863.3 million in free cash flow.
For the third quarter, management expects adjusted EBITDA of between $1.71 billion and $1.74 billion, implying an adjusted EBITDA margin of approximately 83%, highlighting the company’s continued focus on profitability despite more measured revenue expectations.
AppLovin stock price
