AppLovin Corporation is experiencing a remarkable rally following the release of its exceptional third-quarter financial results. The mobile marketing technology company posted $1.405 billion in revenue, significantly surpassing analyst projections of $1.34 billion and demonstrating year-over-year growth of 68%.
The company’s strategic expansion beyond mobile gaming into e-commerce advertising through its AI-powered Axon platform is yielding substantial benefits, positioning AppLovin to capture market share in a sector that dwarfs mobile game advertising in size.
Unprecedented Profitability Metrics
The quarter’s financial performance revealed extraordinary strength across key profitability indicators:
• Net income surged 92% to $836 million, representing $2.45 per share
• Adjusted EBITDA jumped 79% to $1.158 billion, achieving a record margin of 82%
• Free cash flow reached $1.05 billion for the quarter
• Revenue exceeded consensus estimates by 4.7%
These operational metrics underscore AppLovin’s commanding industry position, with the company maintaining 80% market share on the supply side and over 55% on the demand side for mobile game user acquisition.
Wall Street Responds with Enthusiasm
Financial institutions have expressed overwhelming optimism following the earnings report. Benchmark increased its price target from $640 to $700 while maintaining its buy recommendation, citing the platform’s efficiency and scalability demonstrated in the quarterly results.
Deutsche Bank initiated coverage with a buy rating and $705 price target, praising AppLovin’s “best-in-class” advertising technology. Additional target revisions followed in rapid succession:
Should investors sell immediately? Or is it worth buying Applovin?
• Piper Sandler: Target raised to $800 from $740
• UBS: Target increased to $840 from $810
• Wedbush: Target lifted to $800 from $745
The Axon AI system has drawn particular acclaim, with early results from the October rollout in self-service and e-commerce showing approximately 50% week-over-week growth in advertising spending.
Strategic Expansion Creates New Opportunities
AppLovin’s deliberate push beyond mobile gaming is proving strategically sound. The rebranded Axon AI advertising platform now targets e-commerce businesses – a market opportunity several times larger than mobile game in-app advertising.
The company’s machine learning capabilities continue to improve with scale. Increased throughput generates superior signals for the model, leading to enhanced performance that attracts additional advertising investment. This creates a powerful flywheel effect that strengthens the company’s competitive advantages.
AppLovin’s board has expanded its share repurchase authorization by $3.2 billion, bringing the total program to $3.3 billion. During the third quarter, the company bought back 1.3 million shares for $571 million.
The company’s fourth-quarter guidance again surpasses market expectations. Management projects revenue between $1.57 billion and $1.60 billion, compared to the consensus estimate of $1.55 billion. Adjusted EBITDA is expected to range from $1.29 billion to $1.32 billion – representing sequential growth of 12.8%.
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