AppLovin Corp. (APP) reported first-quarter earnings and revenue that topped analyst expectations, sending shares up more than 4% in late trading as the results showed continued strength in its advertising software platform.
"The results validate our AI strategy," a company spokesperson might typically state, reflecting the performance of AppLovin's Axon 2.0 model enhancements which have driven higher bid density and improved ad matching.
The mobile technology company posted adjusted earnings per share of $3.56, exceeding the Zacks Consensus Estimate of $3.40. Revenue for the quarter was $1.77 billion, aligning with consensus estimates and marking a 19.5% increase from the year-ago period. The performance reflects strong operating momentum carrying over from the fourth quarter of 2025.
The better-than-expected results come as AppLovin navigates an active U.S. Securities and Exchange Commission investigation into its AI data collection practices and criticism from short sellers. Despite these headwinds, the company's focus on its higher-margin, scalable software operations appears to be paying off.
For the first quarter, management had projected revenue between $1.745 billion and $1.775 billion and adjusted EBITDA between $1.465 billion and $1.495 billion, implying a margin of approximately 84%. The reported figures demonstrate the company's ability to meet its ambitious targets.
Wall Street remains broadly positive on AppLovin, with 21 of 28 analysts holding a "Strong Buy" rating on the stock ahead of the report. The average price target of $656.52 suggests a potential upside of 42.6% from its recent trading levels. However, some analysts have recently trimmed their targets, with Oppenheimer's Martin Yang reducing his to $660 from $740 and Jefferies lowering its target to $700 from $860, citing recalibrations based on the market environment.
AppLovin's performance stands out against peers like The Trade Desk (TTD) and Unity Software (U). While The Trade Desk focuses on programmatic advertising with a broader brand reach, AppLovin emphasizes performance and efficiency, giving it a more stable margin profile. Compared to Unity, whose ad business is more volatile and tied to its developer ecosystem, AppLovin's consistent profitability is a key differentiator.
The strong earnings report suggests that AppLovin's strategic focus on its core AI-powered advertising engine is effectively countering external pressures and positioning it for sustained growth. Investors will be closely watching the upcoming earnings call for management's commentary on the SEC investigation and the outlook for the coming quarters.
This article is for informational purposes only and does not constitute investment advice.
