AppLovin’s latest earnings reveal has positioned the company as a formidable player in ad tech, with a year-on-year revenue surge of 39% for Q3, hitting $1.2 billion. This has sent its stock up an impressive 45% in recent days, pushing its market cap close to $100 billion and placing it ahead of The Trade Desk. With a Q4 forecast reaching as high as $1.26 billion, AppLovin’s trajectory is drawing significant attention across the industry.
At the centre of AppLovin’s success is its AI-powered AXON 2.0 technology, launched just a few months ago. CEO Adam Foroughi describes AXON as a game-changer in ad optimisation, pointing out that it can drive significant performance even with limited access to third-party data. In his words, it’s “the most innovative advertising technology” in the market, which he believes will allow the platform to serve “tens of thousands to hundreds of thousands to millions of advertisers” that had previously been out of reach.
Why we care
This focus on advanced algorithms over data volume is more than a trend; it’s becoming a strategic necessity. Conor McKenna, Partner at LUMA Partners, highlighted how AppLovin’s AI-driven model represents a pathway for independent ad tech firms, particularly as industry changes make data harder to come by. In fact, the mobile app advertising ecosystem has been under pressure since 2021, when privacy updates began curbing data access. But AppLovin, like other major players, has turned to machine learning as the key to sustaining growth in a more restrictive data environment.
While industry speculation swirled around potential acquisitions, CFO Matt Stumpf downplayed the idea, stating the company has “no plans” for M&A and will focus on organic growth. AppLovin’s focus on AI-driven ad optimisation highlights a broader trend in ad tech, as firms across the sector turn to advanced algorithms to maintain ad performance despite data limitations. In an evolving landscape where access to user data continues to tighten, AppLovin’s recent results may signal that AI-driven strategies could become essential for growth in the ad tech space.
