Key Takeaways
- AppLovin stock jumped nearly 30% after third-quarter revenue rose 55% to $2.18 billion, beating the $2.07 billion analysts expected.
- Gaming grew nearly 50% as AppLovin partly rolled out new ad models, and fourth-quarter guidance topped estimates.
- Unity’s Vector engine grew 126% while it bids inside AppLovin’s MAX auctions, and the two companies are fighting in arbitration over auction data.
- The fourth-quarter report, expected in February, will show whether gaming growth holds up as Unity speeds up.
AppLovin (APP) stock jumped nearly 30% on November 5 after a record third quarter. Revenue rose 55% to $2.18 billion, and analysts had expected $2.07 billion.
That bounce came after a brutal year. Before the report, shares had fallen more than 50% in 2026.
Still, the quarter landed next to a louder signal from a smaller rival. Unity Software (U) said its Vector ad engine grew 126% from a year earlier, and Unity Ads competes with AppLovin inside AppLovin’s own auctions.
So the rebound answers one question and raises another. Can AppLovin keep outgrowing the challenger now chasing it?
A beat above its own ceiling
AppLovin beat the top of its own revenue guidance by about $100 million. The rest of the report was just as clean:
- Net income rose 72% to $1.44 billion, a 66% margin.
- Diluted EPS reached $4.30, above the $4.04 consensus and up from $2.45.
- Fourth-quarter revenue guidance of $2.365 billion to $2.395 billion topped the $2.25 billion analysts expected.
Growth also turned higher again. It ran at 59% in the first quarter and 53% in the second before rising to 55%.
Revenue climbed about $261 million from the second quarter, the biggest sequential dollar gain in at least three years.
Gaming carried the quarter
Gaming did most of the work. That business grew nearly 50% as AppLovin partly rolled out a new generation of ad models. Meanwhile, consumer advertisers grew triple digits from a year earlier.
“We have every mobile gaming company live, probably,” CEO Adam Foroughi said on the earnings call.
That reach matters because Unity attacks from inside it. Unity Ads bids into MAX, AppLovin’s mediation platform. Unity’s Strategic Grow revenue rose 90% to $431.5 million last quarter, and it guided that business up 105% to 107% for the fourth quarter.
So how do the two compare on profitability?
AppLovin kept an 84% adjusted EBITDA margin, while Unity reached 41%. Scale still favors AppLovin by a wide gap.
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Buybacks meet a rising rival
The fight has turned legal as well. In September, AppLovin opened a JAMS arbitration accusing Unity of collecting MAX auction data through its Ad Quality tool. A San Francisco court then declined its request for a restraining order. Unity hit back, with a spokesperson calling the filings “a classic case of a dominant incumbent resorting to litigation and intimidation.”
AppLovin spent $1.4 billion on 4.1 million shares last quarter, roughly matching its free cash flow. The board then added $3.2 billion, which lifted the total authorization to $3.6 billion.
Valuation helps explain why management is buying so hard…
Even after the rally, the forward multiple sits below its five-year average.
The risks are real, though. Management gave no timeline for the full model rollout. Foroughi also warned that consumer spending tends to peak in the fourth quarter before a weak first quarter. If the arbitration drags on, Unity keeps bidding inside MAX with its fast-improving engine.
My take: AppLovin is still the stronger business, and an 84% margin gives it plenty of room to fight back. Yet Unity is growing fast enough that I’d stop treating AppLovin’s gaming lead as untouchable. At this valuation I like the stock, but I’d buy on pullbacks and let the rally cool first.
The next checkpoint is the fourth-quarter report, expected in February. It will show whether revenue lands near the $2.38 billion midpoint and whether gaming growth holds up against Vector.
So what is AppLovin stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
