Applovin Corporation

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Welcome to App Loving's earnings call for the second quarter into June 30th, 2026. I'm David Hsiao, head of investor relations. Joining me today to discuss our results are Adam Foroughi, our co-founder and CEO, and Matt Stumpf, our CFO. Please note, our SEC filings to date, as well as our financial update and press release discussing our second quarter performance are available at investors.applevin.com. During today's call, we will be making forward-looking statements, including, but not limited to, the future development and reach of our platform, our expected growth opportunities, the expected future financial performance of the company, and other future events. These statements are based on our current assumptions and beliefs, and we assume no obligation to update them except as required by law. Our actual results may differ materially from the results predicted. We encourage you to review the risk factors in our most recently filed Form 10-Q for the fiscal quarter and in March 31, 2026. Additional information may also be found in our quarterly report on Form 10-Q for the fiscal quarter and June 30, 2026, which will be filed today. We will also be discussing non-GAAP financial measures. These non-GAAP measures are not intended to be superior to or a substitute for our GAAP results. Please be sure to review the GAAP results and reconciliations of our GAAP and non-GAAP financial measures in our earnings release and financial update, available on our investor relations site. This conference call is being recorded and a replay and transcript will be available for a period of time on our IRL website. Now I'll turn it over to Adam and Matt for some opening remarks Then we'll have the moderator take us through Q&A.

Thanks everyone for joining us today. I'm going to get right to it. This quarter we delivered almost $2 billion in revenue, which was just below the midpoint of our guidance range, and our adjusted EBITDA was just below the range. We've always managed this business with the goal of outperforming our own expectations, and this quarter we fell short of that standard. What matters is that we know what happened, and it's already been addressed. Q3 is off to a strong start, and the business is back on the trajectory we expect. Let me explain. Gaming is still the majority of our revenue, and the single biggest driver of its growth is model performance. When our models improve, advertisers can profitably deploy more spend at their target return on ad spend goals, and budgets naturally step up. This quarter came down to timing. Our pace of meaningful model improvement was lighter than normal during the quarter, and the next step up in model performance landed just after quarter end. Importantly, nothing we saw suggested weakening advertiser demand or a change in the competitive environment. In fact, max publisher earnings grew double digits quarter over quarter, and our share of publisher waterfalls remained consistent. With those improvements now live and heading into what is a seasonally stronger part of the year, the business is re-accelerating. Now let me talk about consumer, which had an outstanding quarter. Advertiser spend set another record, finishing 28% above Q4 2025 levels. And remember, Q4 is the seasonal peak for these advertisers. Growing well past peak season levels in a seasonally slow quarter tells you how steep this curve is. Consumer isn't yet large enough to fully smooth a quarter like this, but that will change as we continue to ramp up our consumer business every quarter. Stepping back, I want to put our long-term growth in context, how we think about the next decade. We built gaming into a far larger business, far faster than we believe possible, and gaming keeps improving. What consumer adds is runway. We run one auction across multiple advertiser categories and every category we bring in extends the opportunity in front of us. Over the longer term, as we continue improving gaming and expanding consumer, we believe this business can compound at roughly 30% annually. Now on EBITDA. Adjusted EBITDA grew to a bit over $1.6 billion, up more than 50% year-over-year. While this result lands just below our guidance range, the incremental investments were exactly where we believed they should be, in our technology. We've been investing in architectural changes that let us build more complex models, models that benefit far more from additional training compute. That investment includes additional compute spend on the model improvements now live in Q3. And every dollar of it is dependent on return. When additional compute produces substantially more revenue through better model performance, that's the trade we'll make every day. These higher training and inference costs are built into our guidance for next quarter. During the quarter, we also opened up our platform to the public under its original name, Applovin Ads Manager. As we said last quarter, we never expected the public launch to change the business overnight. We're sequencing deliberately, mid-market advertisers first, where the platform performs best today, with the long tail unlocking as our data compounds, the same way gaming developed. We'll execute on this through partnerships, and you'll see us continue to invest there. Before I close, here's what we're focused on as a team. First, improving our core models, which is the primary driver of our near-term growth. Second, advancing the architectural work that lets us benefit more from scaling compute, which we believe unlocks meaningfully larger gains over time. Third, improving our creative tools and ad formats so advertisers can optimize their use of our platform to achieve even better outcomes. Fourth, bringing more high quality advertisers onto the platform through strategic partnerships. Let me close with this. We've spent years building an advertising platform whose economics improve as our models improve. Advertiser demand is healthy. Our models continue to improve. Consumer is scaling rapidly. Nothing we saw this quarter changed our conviction in the long-term opportunity ahead. With that, I'll turn it over to Matt to walk through the financials.