How did AppLovin's core profitability change in Q1 2026?

Income from operations rose to $1.44 billion from $840 million, roughly 71% growth, on revenue growth of 59%. Operating expenses grew more slowly, mainly in R&D (up to $94 million from $56 million), while cost of revenue rose to $204 million from $152 million. Operating leverage was a key driver of the margin expansion.

Is the 109% net income growth a fair measure of underlying performance?

Not entirely. The prior-year net income was reduced by a $147 million loss from discontinued operations. Growth in net income from continuing operations, which was 67%, is a better gauge of the core business trend.

What drove the large increase in Q1 free cash flow?

Operating cash flow of $1.29 billion was supported by higher net income and a $183 million increase in accrued liabilities, partly offset by higher receivables of $138 million. Capital expenditures were negligible, so nearly all operating cash flow converted to Free Cash Flow. Investors should note the working capital benefit from accruals may not recur at the same level.

What does the buyback activity mean for shareholders?

AppLovin spent about $1.0 billion to repurchase and withhold 2.2 million shares, reducing the share count to 336 million from 338 million at year-end 2025. The buybacks were funded from operating cash flow, and cash still rose to $2.76 billion, indicating the company retained meaningful liquidity.

What are the key points to watch in the Q2 2026 outlook?

Guidance implies sequential revenue growth of roughly 4%–6% and an Adjusted EBITDA margin of 84%–85%, similar to Q1. Management did not provide GAAP reconciliations for forward Adjusted EBITDA, citing variability in stock-based compensation, so investors should compare guidance with the company's historical non-GAAP reconciliations and monitor stock-based compensation trends.

APP 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed May 6, 2026. Cited figures are marked; the original filing is the authoritative source.

AppLovin reported first quarter 2026 results that showed strong top-line and profitability growth.

Revenue rose 59% year over year to $1.842 billion^a from $1.159 billion, and net income more than doubled to $1.206 billion from $576 million (up 109%). Income from continuing operations rose 67% to $1.206 billion from $724 million, and Adjusted EBITDA increased 66% to $1.557 billion, with Adjusted EBITDA margin of roughly 85% versus 81% a year earlier. Note that the prior-year net income figure includes a $147 million loss from discontinued operations, so the 109% net income growth is flattered by the absence of that drag; the continuing-operations comparison is the cleaner view of underlying momentum.

Cash generation was particularly strong. Operating cash flow was $1.29 billion^b and Free Cash Flow was $1.29 billion, compared with $826 million of Free Cash Flow a year earlier. Diluted EPS was $3.56 versus $1.67 in the prior year's diluted EPS (which included discontinued operations), or $2.10 from continuing operations.

Management spent about $1.0 billion^c repurchasing and withholding 2.2 million Class A shares during the quarter, and shares outstanding declined to 336 million from 338 million at year-end 2025. Cash rose to $2.76 billion, while long-term debt was essentially flat at $3.51 billion. Looking ahead, management guided second quarter 2026 revenue to $1.915–$1.945 billion and Adjusted EBITDA to $1.615–$1.645 billion, implying an Adjusted EBITDA margin of 84%–85%.

Investors should weigh the strong margins and cash flow against the company's reliance on non-GAAP metrics, the company's decision not to provide GAAP reconciliations for forward guidance, and the rise in accrued liabilities and accounts receivable, which grew faster than revenue on a sequential basis. Accrued and other current liabilities jumped to $797 million^d from $587 million at year-end.

02—Key points

Key Highlights

Revenue grew 59% year over year to $1.842 billion, up from $1.159 billion in Q1 2025.
Net income from continuing operations rose 67% to $1.206 billion; total net income rose 109% to $1.206 billion, aided by lapping a $147 million loss from discontinued operations in the prior year.
Adjusted EBITDA increased 66% to $1.557 billion, with Adjusted EBITDA margin of about 85% versus 81% a year earlier.
Free Cash Flow was $1.287 billion, up from $826 million, on operating cash flow of $1.291 billion.
Diluted EPS was $3.56 (basic $3.57); continuing-operations diluted EPS was $3.56 versus $2.10 a year earlier.
The company repurchased and withheld 2.2 million shares for about $1.0 billion, reducing shares outstanding to 336 million.
Q2 2026 guidance calls for revenue of $1.915–$1.945 billion and Adjusted EBITDA of $1.615–$1.645 billion, with Adjusted EBITDA margin of 84%–85%.

03—Questions

Frequently Asked Questions

How did AppLovin's core profitability change in Q1 2026?
Income from operations rose to $1.44 billion from $840 million, roughly 71% growth, on revenue growth of 59%. Operating expenses grew more slowly, mainly in R&D (up to $94 million from $56 million), while cost of revenue rose to $204 million from $152 million. Operating leverage was a key driver of the margin expansion.
Is the 109% net income growth a fair measure of underlying performance?
Not entirely. The prior-year net income was reduced by a $147 million loss from discontinued operations. Growth in net income from continuing operations, which was 67%, is a better gauge of the core business trend.
What drove the large increase in Q1 free cash flow?
Operating cash flow of $1.29 billion was supported by higher net income and a $183 million increase in accrued liabilities, partly offset by higher receivables of $138 million. Capital expenditures were negligible, so nearly all operating cash flow converted to Free Cash Flow. Investors should note the working capital benefit from accruals may not recur at the same level.
What does the buyback activity mean for shareholders?
AppLovin spent about $1.0 billion to repurchase and withhold 2.2 million shares, reducing the share count to 336 million from 338 million at year-end 2025. The buybacks were funded from operating cash flow, and cash still rose to $2.76 billion, indicating the company retained meaningful liquidity.
What are the key points to watch in the Q2 2026 outlook?
Guidance implies sequential revenue growth of roughly 4%–6% and an Adjusted EBITDA margin of 84%–85%, similar to Q1. Management did not provide GAAP reconciliations for forward Adjusted EBITDA, citing variability in stock-based compensation, so investors should compare guidance with the company's historical non-GAAP reconciliations and monitor stock-based compensation trends.

04—Continue

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