AppLovin Corp (APP) reported Q2 2026 revenue of $1.92 billion. This marks a substantial 53% increase compared to the same quarter in 2025. The surge in revenue is primarily due to a record performance in the consumer vertical advertising segment. This segment outperformed Q4 2025 results by 28%. It achieved this despite being a seasonally slow quarter. This growth indicates strong momentum within the company's core business segments.
The company’s adjusted EBITDA reached $1.61 billion in the second quarter. This reflects a 58% annual increase. It also shows a notable expansion of margins by about 300 basis points. Free cash flow amounted to $863 million during the quarter. AppLovin anticipates cash flow conversion will stabilize at approximately 75% of adjusted EBITDA for the full year. This showcases robust financial performance.
AppLovin's financial position showed $3.05 billion in cash at the end of the quarter. Total debt stood at $3.7 billion. This resulted in a net leverage ratio of 0.1 times trailing twelve-month adjusted EBITDA. The company demonstrated its commitment to returning value to shareholders. It invested $551 million to repurchase 1.14 million shares. Approximately $1.8 billion still remains under its repurchase authorization.
Outlook and Challenges
Looking ahead to Q3 2026, AppLovin anticipates revenue in the range of $2.055 billion to $2.085 billion, which would represent a 46% to 48% annual growth. The forecast for adjusted EBITDA is between $1.71 billion and $1.74 billion, a year-over-year increase of 48% to 50%. However, the company highlighted that Q2 results fell short of the guidance midpoint due to lower-than-anticipated model improvements.
Increased compute costs for training and developing new models impacted the company's margins. The timing of international cash tax and interest payments caused the Q2 free cash flow to fall below expected levels. AppLovin also noted the consumer vertical, although performing strongly, is still not large enough to completely eliminate quarterly fluctuations. The Q2 results demonstrated this by missing expectations.