tapebrief
APP · Q1 2026

APP · Q2 2026 Earnings

Cautious

AppLovin

Reported August 5, 2026

30-second summary

Q2 revenue of $1.924B (+52.8% YoY) came in $6M below the guide midpoint and Adjusted EBITDA of $1,614M landed $1M below the guided low end — the first time in five quarters AppLovin hasn't beaten its own bar. More importantly, the Q3 setup contains two hidden downshifts: implied YoY growth decelerates to 45.7–47.6% (from 52.8%) and the Adjusted EBITDA margin guide moves to 83%, down from Q2's 84% actual and the prior 84–85% guide. Consensus revenue of $1.94B was also missed by 0.8%.

Headline numbers

EPS

Q2 FY2026

$3.76

+0.3% vs est.

Revenue

Q2 FY2026

$1.92B

+52.8% YoY

-0.8% vs est.

Gross margin

Q2 FY2026

88.3%

Free cash flow

Q2 FY2026

$0.86B

Operating margin

Q2 FY2026

77.7%

Key financials

Q2 FY2026
MetricQ2 FY2026Q2 FY2025YoYQ1 FY2026QoQ
Revenue$1.92B$1.26B+52.8%$1.84B+4.5%
EPS$3.76$2.39+57.3%$3.57+5.3%
Gross margin88.3%87.7%+60bps88.9%-60bps
Operating margin77.7%76.0%+170bps78.2%-50bps
Free cash flow$0.86B$0.77B+12.4%$1.29B-32.9%

Guidance

Q2 missed revenue midpoint and Adjusted EBITDA guidance; Q3 guidance shows sequential margin compression from 84% to 83%, implying operational deceleration despite continued strong YoY growth.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ2 FY2026$1.915 - $1.945 billion$1.924 billion-$0.021 billion below guidance midpointMissed
Revenue YoY GrowthQ2 FY202652% to 55%52.8%+52.8% vs 52-55% range, at low-end but firmly in-rangeBeat
Adjusted EBITDAQ2 FY2026$1.615 - $1.645 billion$1.614 billion-$0.001 billion below guidance low endMissed
Adjusted EBITDA MarginQ2 FY202684% to 85%84%at low end of 84-85% rangeMissed

New guidance

MetricPeriodGuideYoY
RevenueQ3 FY2026$2.055 - $2.085 billion+45.7% to +47.6% YoY
Adjusted EBITDAQ3 FY2026$1.710 - $1.740 million—
Adjusted EBITDA MarginQ3 FY202683%—

Platform metrics

Q2 FY2026
SegmentQ2 FY2026
Revenue Growth YoY52.8%

Profitability

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Adjusted EBITDA$1,614M$1,018 million—
Adjusted EBITDA Margin84%81%—
Free Cash Flow$863M$768 million—
Operating Cash Flow$869M$772 million—

Management tone

No transcript was available for this quarter; tone analysis relies on the press release, prior briefs, and what was NOT said.

Q2 FY2025 platform roadmap unveiled → Q3 FY2025 self-service demand-constrained → Q4 FY2025 dismissive of bears → Q1 FY2026 "conversation is about us and our future" → Q2 FY2026 the numbers underdeliver against the setup.

The most consequential tonal signal this quarter is what didn't appear in the release. Q1 opened with the CEO refusing to address the bear thesis and pivoting to platform expansion; Q2 arrived without a transcript in the initial filing window and with a press release that missed on Adjusted EBITDA and landed below revenue midpoint after the "record April" pre-announcement. Q1's April datapoint implied Q2 would beat comfortably; the actual print did not. Either April was not representative, or May/June ran materially slower — and management did not proactively explain which.

The second unspoken shift is on margin trajectory. Through FY2025 the margin story compounded from 81% to 84%; Q1 pushed to 85%; this quarter compressed to 84% and Q3 is guided to 83%. That is a two-quarter, 200bps step-down from peak, delivered in press release footnotes rather than as a discrete cost or investment call. The "paid marketing to acquire advertisers" spend management telegraphed on the Q2 FY2025 and Q3 FY2025 calls is the most likely culprit, but the press release does not size it or flag it. The Q1 watch list flagged that "any retracement below 84% confirms paid marketing is now hitting the P&L" — the Q3 guide of 83% resolves that watch item.

The third silence: FY2026 revenue and EPS guidance remain undisclosed for a third consecutive quarter. Q3 FY2025, Q4 FY2025, and now Q2 FY2026 have all skipped full-year framing despite management's guidance cadence formally including it. The 20–30% gaming-only floor from Q2 FY2025 has not been reaffirmed on any print since.

Answers to last quarter's watch list

June public platform opening — actual launch date and any first-week disclosure — The Q1 press release dated the public launch for June; the Q2 press release provides no acknowledgment of the launch date, no first-week metric, no advertiser count, no retention indicator. The "no disclosure" outcome was flagged as "the most material negative signal of the year" in the Q1 watch list.
Resolved negatively
Q2 FY2026 revenue vs. $1.915–1.945B guide — Landed at $1.924B, $6M below the midpoint and 0.8% below the $1.94B consensus. A midpoint print implies May/June ran materially slower than the "record April" datapoint, invalidating April as a leading indicator.
Resolved negatively
Sequential growth cadence post-June launch — Q3 guide of $2.055–2.085B implies +6.8–8.4% QoQ, a modest step-up from Q2's ~4.5% QoQ and from the 4–6% guide bar. The YoY trajectory, however, decelerates from 52.8% to 45.7–47.6%. The public launch has produced some incremental sequential contribution but is not visible at the YoY level.
Resolved negatively
Adjusted EBITDA margin trajectory at 84–85% — Q2 actual 84% at the low end; Q3 guided to 83%, below the prior guided range. Paid marketing spend or platform-related investment is now hitting the P&L.
Resolved negatively
First quantitative platform disclosure tied to the June launch — None. No advertiser count, no % of revenue from self-service, no retention figure.
Resolved negatively
Consumer vertical specificity beyond e-commerce — Not addressed in the press release; without a transcript, the lead generation / insurance / fintech / food delivery vertical names from Q1 remain uncommented.
Not resolved
FCF conversion tracking to the ~75% FY2026 guide — Q2 FCF/EBITDA ran at 53.5%, well below the FY 75% target and a sharp step-down from Q1's 82.7% and Q4's 94%. First-half FCF/EBITDA blended to ~66%, requiring stronger H2 conversion to hit the FY guide.
Continue monitoring

What to watch into next quarter

Q3 FY2026 revenue vs. $2.055–2.085B guide — a midpoint print confirms YoY growth continues to decelerate into the mid-40s%; a beat similar to Q4 FY2025's +3.6% above high end (~$2.16B) would signal the public platform is contributing more than telegraphed.

Adjusted EBITDA margin — hold at 83% or fall further — the guide is now 83%. Any further compression (below 83% actual or a Q4 guide below that) confirms structural margin reset rather than one-quarter investment step-up; holding 83% cleanly means the investment cycle is defined.

Any quantitative Axon self-service disclosure at all — advertiser count, % of revenue, retention. A third consecutive quarter of silence after a public launch would be structurally negative for the platform-narrative multiple.

FCF conversion recovery — Q2's 53.5% FCF/EBITDA must reverse in H2 to hit the ~75% FY guide. Q3 FCF materially below EBITDA growth would put the FY conversion guide at risk.

FY2026 framing on the Q3 call — a fourth consecutive quarter without full-year guidance, or without reaffirming the 20–30% gaming-only floor, would be a tacit acknowledgment that near-term visibility is lower than management previously implied.

Transcript-driven explanation of the Q2 shortfall and Q3 margin step-down — when Q2 call commentary becomes available, look for whether management proactively sizes paid marketing spend, platform investment, or attributes the "record April" reversal to a specific factor. Silence on all three would compound the negative resolution of the Q1 watch list.

Sources

  1. AppLovin Q2 FY2026 Earnings Press Release (SEC Exhibit 99.1) — https://www.sec.gov/Archives/edgar/data/1751008/000175100826000057/exhibit991-2q26earningspre.htm

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