Benchmark has maintained a Buy rating on AppLovin Corp and held its $775.00 price target after the software and advertising platform disclosed fourth-quarter 2025 results that beat consensus on several key metrics. The company reported a market capitalization of $126.23 billion and is currently regarded as undervalued by analysis covering the company.
AppLovin posted revenue of $1,658 million in Q4 2025, an increase of 66% year over year and 18% sequentially, coming in roughly 3% above consensus estimates. Over the trailing twelve months the company recorded 98.48% revenue growth.
Adjusted EBITDA for the quarter was $1,399 million, up 82% from the year-ago period and about 5% ahead of consensus. Adjusted EBITDA margin expanded to 84%, a record for the company, while gross profit margin stood at 79.69% for the period. AppLovin reported total EBITDA of $3.91 billion for the last twelve months.
Management highlighted strong earnings quality during the quarter, with incremental flow-through to the bottom line approaching 95% and adjusted EBITDA-to-free cash flow conversion near 94%. Valuation metrics cited with the results included a PEG ratio of 0.31, indicating the company is trading at a modest P/E relative to projected near-term earnings growth.
For the first quarter of 2026, AppLovin issued guidance implying revenue of approximately $1,760 million at the midpoint, which represents about 6% sequential growth from the fourth quarter, and adjusted EBITDA around $1,480 million with an 84% margin. The company also framed first-quarter revenue growth at roughly 51% at the midpoint on a basis that excludes divested business operations.
Despite the beat in Q4 and strong margin performance, the first-quarter outlook disappointed some investors and was followed by a decline in the stock price. Analyst reactions were mixed, with several notable adjustments to price targets and stance:
- Scotiabank raised its price target to $775 and maintained a Sector Outperform rating.
- Piper Sandler lowered its target to $650, citing market volatility as a rationale.
- Evercore ISI reduced its price target to $750 but kept an Outperform rating, noting the company’s solid Q4 performance.
- Needham reiterated a Buy rating with a $700 price target, while flagging projected improvements in e-commerce revenue growth for 2026.
Analysts’ targets for the company now range from $458 to $860. Market commentary alongside the updates emphasized that, while AppLovin’s recent quarter delivered sizable margin expansion and excellent cash conversion, the company operates in an increasingly competitive arena for advertising dollars as larger technology firms and new advertising platforms vie for spend.
Context for markets and sectors
The results and guidance have implications for sectors tied to digital advertising, mobile apps and software platforms that monetize through ad sales. High margins and strong free cash flow conversion can support valuation metrics, but revenue-growth assumptions and advertising-market dynamics remain central to investor assessments.
Going forward, market participants will be watching whether AppLovin can sustain the record-adjusted EBITDA margin and high cash conversion rates while navigating competitive pressure for ad spending.