AppLovin Cash Hits $863 Million While Yield Stays at Zero
AppLovin closed Tuesday at $305.66, about 57 percent under the price of a year ago and about $8 above a 52 week low near $298. Second quarter revenue rose 4.4 percent from the prior quarter to $1.92 billion, and free cash flow was about $863 million. The dividend stayed at zero.
Sequential growth cooled while the cash stayed large
Revenue of $1.92 billion was 53 percent above the $1.26 billion booked a year earlier. Net income from continuing operations was $1.27 billion, up 64 percent. Diluted earnings were $3.76 a share. First half revenue was $3.77 billion, up 56 percent.
Revenue moved from about $1.84 billion to $1.92 billion, a 4.4 percent gain that came in under the $1.94 billion analysts expected. On the August report day the shares fell about 16 percent. They are still down about 55 percent year to date and about 7 percent over the latest week.
Adjusted EBITDA was $1.61 billion, an 84 percent margin. Free cash flow of about $863 million in one quarter sits against a market value near $102 billion, with about $3.05 billion of cash on the balance sheet. Repeat that quarter four times and the run rate is near $3.5 billion, about a 3.4 percent free cash flow yield.
The company repurchased and withheld 1.1 million shares in the quarter for $551 million, roughly 64 percent of that free cash flow. First half repurchases were about $1.53 billion, against first half net income of about $2.47 billion. Share count at the end of June stood at 335 million.
Margins are giving ground to compute
Adjusted EBITDA margin stepped from 85 percent to 84 percent, and the third quarter guide is 83 percent on adjusted EBITDA of $1.71 billion to $1.74 billion. Management tied the extra cost to compute for training models and building new ones. About 70 percent of the sequential revenue gain still flowed through to adjusted EBITDA.
Management expects $2.055 billion to $2.085 billion, which is 7 to 8 percent above the second quarter and 46 to 48 percent above the year ago quarter. The next report date is November 4.
Online retail is the offset. On June 30 the ad platform opened without the old referral gate. Client tracking cited by a large bank counted about 13,105 ecommerce advertisers through September 18, up 5.1 percent in a single week. Consumer advertiser spend in the second quarter was $1.28 billion, 28 percent above the fourth quarter 2025 peak. Net revenue per installation rose 58 percent. Installation volume fell 2 percent.
Tuesday’s close sits near the floor of a 52 week range of roughly $298 to $738. The trailing price to earnings ratio is about 23.5 and the forward ratio is near 17. Beta is above 2. If rival ad systems bid the same inventory, margins above 80 percent are the cushion that gets used first.
Software payout names fell with the growth names
On September 28 Meta said it would offer enterprises its model stack, including the Muse agent, a business agent, and developer tools. Software shares treated that as a pricing threat.
IGV, the iShares expanded tech software ETF, fell 2 percent. Microsoft lost 2 percent, Oracle 3 percent, SAP 3 percent, and Accenture about 1.5 percent. Salesforce fell 4.5 percent, ServiceNow 5 percent, Adobe 4 percent, Figma 6 percent, and monday.com 7 percent. MongoDB dropped about 25 percent after its chief executive left to lead the Meta effort.
Microsoft, Oracle, SAP, and Accenture pay regular dividends, and they fell with the growth names. The announcement put a question mark on the price increases that fund later raises. ServiceNow, Figma, and monday.com took the steeper hits.
Burry treats the AI buildout as an economic prop
Michael Burry argued that the administration cannot afford to let the AI buildout fail. He sees the spending as a central support for US growth this year.
One large asset manager estimates that investment tied to AI added about 0.47 percentage point to a 2.1 percent real growth pace over the past year, after removing imported hardware. That is roughly a fifth of growth. Hyperscalers are still expected to spend close to $800 billion on capital projects this year.
Burry has puts on Nvidia, Micron, Oracle, Palantir, and smaller AI infrastructure names. Oracle is the overlap that matters for income. It pays a dividend, it lost 3 percent on the Meta news, and it sits on that put list.
Bank payment rails point to 2027
On September 24 The Clearing House, the bank owned operator of RTP and CHIPS, named a technology partner for a tokenized deposit system. Institutions would clear and settle tokenized deposits and connect them to existing dollar rails. The network is planned for the first half of 2027. Major member banks were already attached when the project was outlined in June.
The QNT token rose about 36 percent in a day. The jump leaves net interest income, fee income, and bank dividends unchanged. Any fee benefit has to appear in later reports.
What this means for income investors
AppLovin stays a growth holding while the payout is zero. The cash is real, and the buyback is where it goes. A spot near the 52 week low and a forward multiple near 17 matter if sequential growth can move from 4.4 percent toward the 7 to 8 percent guide without handing more margin to compute. November 4 is the next check.
Software coupons were unchanged on September 28. Microsoft, Oracle, SAP, and Accenture still finished lower, and IGV fell 2 percent. If later raises depend on enterprise price increases, Meta’s entry is the risk to underwrite.
Bank token projects and AI capital spending are schedules. Tokenized deposits point at 2027. Spending near $800 billion is happening now and competes with dividends at the firms writing the checks. A payout counts once it is declared and covered.