AppLovin (APP) Q1 FY26 earnings call: guidance and Q&A

What was the recent product breakthrough, and what milestones signal continued consumer-vertical expansion?

Adam framed growth as driven by new products plus continuous underlying-model improvement (like LLMs iterating). Consumer is roughly 10 quarters behind where gaming (AXON 2.0) was; a substantial model release ~2 weeks ago drove the exit-quarter acceleration and record April. On creative, the interactive page generator is out to all customers with widespread adoption, and the video generator is still in testing, to be released before the June general launch.

“The one we just had a couple of weeks ago was quite substantial.”

asked by Matthew Cost · answered by Adam Foroughi

Are quarterly gaming run-rate step-ups still increasing, and does GPU-funding capacity differentiate you from competitors?

Adam said there has been no slowdown since AXON 2.0; Q1 QoQ growth was substantial despite two fewer days and post-holiday seasonality, and the majority of the 59% YoY still comes from gaming, with hybrid IAP+ads explosive. He reiterated 20-30% long-term gaming growth, consistently exceeded. On GPUs, AppLovin buys via Google Cloud and has what it needs but will buy more; GPU count is not the success driver — model/product quality and data are. He did not directly quantify the run-rate step-up, which the analyst noted.

“We have yet since we launched AXON 2.0, seen a slowdown.”

asked by Omar Dessouky · answered by Adam Foroughi

What is the current IAP-only vs hybrid mix, and what would a shift to hybrid mean for the top line?

Adam declined precise math but gave color: IAP is a mature ~$100B market of mostly older games; nearly all new and many old games are exploring hybrid. Because under 10% of a game's users pay (28-day window), layering ads can ~10x the market opportunity per customer. He cited a ~dozen-person Turkey studio that sold for nearly $1B about six months after launch, reaching a nine-figure annual business, mostly acquiring users on AppLovin. He expects ad-supported to converge toward IAP scale over five years.

“10x the market opportunity for that same customer.”

asked by Jason Bazinet · answered by Adam Foroughi

Progress on new-customer onboarding breakage, and will marketing spend rise in H2 with the June launch?

Adam said the main fix — delivering AI video out of the box — is nearly ready (weeks away), enabling the June general release. Matt said S&M is spent like a customer (return-driven), with some temporary increase expected around the general-audience launch and brand building, which should signal profitable returns. Adam added they run under a 30-day breakeven, project well over $70,000/year per new customer (~$7B first-year spend if 100k are signed), and customers almost never churn after 30 days.

“Right now, we're projecting well over $70,000 a year from every new customer.”

asked by James Heaney · answered by Adam Foroughi / Matt Stumpf

Do consumer advertisers' higher bids shift auction dynamics against gaming, and is the pace of model improvement (1.3% conversion) accelerating?

Adam said no cannibalization has been observed — wasted game-on-game impressions get repurposed to better-targeted product ads, and more consumer data improves both models; gaming still drove most of the record quarter. On the ~1.3% intra-quarter conversion, improvements come from onboarding plus model enhancements; the team has gotten faster and smarter at testing (aided by broad AI research), driving same-store growth with no expected slowdown.

“So we have yet to see any cannibalization.”

asked by William Lampen · answered by Adam Foroughi

Is video-tool testing just tech readiness, does OpenAI dropping Sora 2 hurt you, and what are the compute-cost/margin implications at scale?

Adam said video creation is new with low volume; the goal is a satisfactory one-shot output, and rollout is days away. More platform-catered creative reliably lifts spend, mainly benefiting the long tail and consumer brands, not big gaming customers with 50,000+ live ads. Compute is third-party, not AppLovin's own, so no margin compression is expected; if creative volume surges, they could cap credits or charge. The company is model-agnostic (uses Sora 2, SeeDance and others), so Sora 2's deprecation had no impact.

“Therefore, Sora 2 being deprecated didn't impact us at all.”

asked by Robert Sanderson · answered by Adam Foroughi

Does mediation distribution need to change for the long tail of vibe-coded apps, and is there interest in building or acquiring a social network?

Adam dismissed the App Store flood as mostly 'slop'; the value is that vibe-coding lets the best developers create more, higher-quality content, raising the need for discovery/mediation (trivial to integrate). He is not interested in monetizing $0.10/day long-tail apps. On social, he confirmed interest — AppLovin previously bid on TikTok — seeing it as a way to better monetize social, attract top recommendation-systems talent (under CTO Giovanni), and cheaply test and iterate via vibe-coding.

“There is once upon a time we bid on TikTok.”

asked by Alec Brondolo · answered by Adam Foroughi

What is the Connected TV vision and how do current efforts (Wurl) evolve into it?

Adam said CTV was deprioritized to go all-in on the scaling consumer product and platform opening, but TV remains massively undermonetized and the 'holy grail' of performance advertising. The vision is to let SMBs buy the big screen with one click, reuse generated creative, and prove incremental revenue versus cost. It is still early and in development; management will discuss it more once it is tangible and extrapolatable to big numbers.

“It's overused for brand marketing historically. It's underused for a lot of these small- to medium-sized businesses, and those are the ones that we really are building tools for.”

asked by Vasily Karasyov · answered by Adam Foroughi

Any macro impact on e-commerce advertisers (oil prices), and are you seeing higher self-serve retention?

Adam said there is little macro sensitivity — AppLovin sells revenue and profit to advertisers, who will not cut their best-ROI dollar; most customers are Western, so visibility is limited but the business is structurally insulated. He confirmed strong self-serve retention: once customers reach 30 days of spend they almost never churn (selling profit, quick ROI, under 30-day breakeven), implying strong long-term net dollar retention.

“if they get to 30 days of spend, customers almost never churn on our platform.”

asked by Ralph Schackart · answered by Adam Foroughi