AppLovin Q3 revenue growth guidance slows to 46-48 percent

AppLovin guided for third-quarter revenue growth of 46 percent to 48 percent from a year earlier, a deceleration from the 52.8 percent growth recorded in the second quarter. The company stated that this forecast includes only model improvements already live and assumes no new releases. Third-quarter results remain pending.

Shares of AppLovin (APP) fell 57 percent between January 9 and October 6, 2026, while the S&P 500 returned 13.2 percent over the same period. The decline occurred despite a fourth-quarter report in February that beat estimates and raised the company's 2026 outlook. On February 12, 2026, shares dropped 16 percent in early trading following that strong performance.

Sales growth has slowed steadily across recent quarters. Revenue rose 65.9 percent year over year in the fourth quarter of 2025, then decelerated to 59.0 percent in the first quarter of 2026 and 52.8 percent in the second quarter. The August 5 report showed second-quarter revenue of $1.92 billion, landing just below the midpoint of guidance. Adjusted EBITDA also came in slightly below the company's target range.

Executives attributed the second-quarter shortfall to timing issues with model updates. They described improvements to company models as the single biggest driver of gaming growth, noting that these updates rolled out more slowly than usual. A subsequent improvement arrived just after the quarter ended.

Looking ahead, executives on the August 5 call projected that the business can compound at roughly 30 percent annually. This forecast relies on two factors: continued improvements in gaming, which remains the majority of revenue, and expansion of a consumer advertising business described as early stage.

The stock now trades at a multiple similar to the broader market, at 21.2 times earnings compared to 21.5 for the S&P 500. However, on a sales basis, AppLovin trades at a premium of 13.7 times, compared to 3.0 for the index. This valuation assumes the company maintains its margins, which have expanded significantly over the last twelve months, reaching 77 percent from 70 percent a year earlier.

AppLovin carries little net debt, according to executives on the August 5 call. The company guided for an adjusted EBITDA margin of approximately 83 percent for the third quarter. Executives noted that computing costs for training models are rising; if the upcoming third-quarter report shows margins clearly below the guided level, it would indicate costs are increasing faster than planned.