TenQ

The AppLovin story

AppLovin provides AI software for placing and pricing mobile ads, with growth hinging on whether Axon can extend its advertising results beyond gaming while preserving high margins.

Written from AppLovin's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $308.24share price, last close
  • $103.4Bmarket value
  • 27/36TenQ Score checks passed
  • 10.3%growth a year the price assumes

The story in brief

  • Axon defines the business. After divesting its Apps business in June 2025, AppLovin generates substantially all its revenue through Axon Ads Manager.
  • Margins widened further. Adjusted EBITDA margin reached 84 percent in the quarter to June 2026, up from 81 percent in the prior year period.
  • Cash funds share repurchases. AppLovin generated $863.3 million in free cash flow in the quarter to June 2026 and spent $551.3 million on share repurchases and equity award tax withholdings.

What drives the business

  • AppLovin completed the divestiture of its Apps business on June 30, 2025, under its purchase agreement with Tripledot, concentrating the business on advertising solutions.
  • Axon Ads Manager generates substantially all revenue by matching advertisers with audiences through auctions, with charges set dynamically around advertisers’ campaign return goals rather than fixed prices per impression or action.
  • MAX runs competitive auctions for publishers’ advertising inventory, Adjust measures marketing performance, and Wurl distributes streaming video and supports connected TV advertising.
  • AppLovin is extending Axon into web commerce and connected TV, seeking to use broader advertiser participation and audience insights to improve advertising results.
  • Revenue reached $6.8 billion over the last twelve months, growing 76.3% against an annual growth pace of 24.8% over the last three years, with an operating margin of 77.4%.

What the price assumes

At $308.24, TenQ’s reverse DCF implies free cash flow after stock pay grows 10.3% a year for ten years, using a discount rate of 10.2%.

That compares with historical annual growth of 96.5% in free cash flow after stock pay and the TenQ check’s 50.3% bar, which slows that record halfway toward 4%.

The implied growth requirement is below both comparisons, but the historical pace is not a forecast.

Value APP on your own assumptions

What could change the story

  • Reliance on Axon Ads Manager concentrates revenue in its ability to deliver advertiser returns, while customers can spread spending across competitors including Meta, Google, Amazon, and Unity Software.
  • Privacy and information security rules could require changes to AppLovin’s advertising tools and increase compliance costs as its AI platform and international operations expand.
  • Total debt of $3.5 billion exceeds cash and short-term investments of $3.1 billion, and the debt-to-equity ratio of 1.11 fails TenQ’s financial health check.
  • The valuation checks remain mixed: the earnings yield of 4.2% trails the Treasury yield of 5.2%, while the free cash flow yield of 4.4% is below its historical 5.0%.

What to watch next

  • For the quarter to September 2026, AppLovin expects revenue between $2,055 million and $2,085 million.
  • Its adjusted EBITDA guidance is $1,710 million to $1,740 million, with an adjusted EBITDA margin of 83 percent, compared with 84 percent in the quarter to June 2026.
  • Operating cash flow and free cash flow will show how much of those margins becomes cash, following $869.0 million and $863.3 million, respectively, in the quarter to June 2026.
  • Further reporting on web advertisers and Wurl will help show whether expansion beyond mobile gaming is broadening Axon’s reach.

Sources

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