- Revenue Growth: Q3 2025 revenue reached $1.405 billion, a 68% year-over-year increase, driven by strong gaming advertising and MAX platform expansion.
- Profitability: Adjusted EBITDA hit $1.158 billion (82% margin), up 79% YoY, with free cash flow of $1.049 billion (92% YoY growth).
- Self-Service Growth: Self-service advertiser spend surged 50% week-over-week post-platform launch, indicating strong adoption.
- AI Integration: Plans to scale AI agents, test generative AI ad creatives, and enhance onboarding workflows to boost efficiency and demand density.
- Share Repurchases: $571 million spent to repurchase/restrict 1.3 million shares, reflecting confidence in long-term value.
Revenue Growth and Margin Expansion
The company's revenue growth was driven by the strong performance of its gaming advertising business, with the MAX supply-side platform growing at healthy rates. The adjusted EBITDA margin expanded to 82%, driven by the company's focus on improving models for all advertisers and tuning onboarding flows. As Matt Stumpf, CFO, noted, "the guidance for Q4 reflects a combination of different factors, including optimism around the e-commerce referral program, continued model enhancements, and normal holiday seasonality."
Guidance and Outlook
AppLovin guided to revenue between $1.570 billion and $1.6 billion for Q4 2025, reflecting 12% to 14% sequential growth. The company also expects adjusted EBITDA between $1.290 billion and $1.320 billion, targeting an adjusted EBITDA margin of 82% to 83%. Analysts estimate next year's revenue growth at 35.9%, which is slightly aggressive considering the company's current growth rate.
Valuation Metrics
AppLovin's current valuation metrics are as follows: P/E Ratio: 86.0, P/B Ratio: 179.02, P/S Ratio: 39.28, EV/EBITDA: 67.78. These metrics suggest that the company's stock is trading at a premium, with a high P/E ratio indicating that investors are pricing in high growth expectations. The EV/EBITDA ratio is also high, indicating that the company's enterprise value is significantly higher than its EBITDA.
Growth Prospects
The company's growth prospects are driven by its expanding presence in e-commerce and its focus on improving its AI capabilities. AppLovin is well-positioned to benefit from the growing demand for mobile advertising, and its strong financial performance is expected to continue. However, investors should be cautious about the company's high valuation multiples and the potential risks associated with its growth prospects.