NEW: This story pulls from our recently updated Live Earnings Report: Marketing & Advertising Tracker Q2 2025

The news: AppLovin’s Q2 earnings suggest its shift from gaming company to AI-powered ads platform may be hitting a snag. Despite nearly $2 billion in revenues, the company missed expectations, sending its stock tumbling more than 23% in after-hours trading Wednesday. AppLovin reported 53% YoY revenue growth, down from 73% a year earlier. Its Q3 guidance came in at $2.05 billion, just above its Q2 revenues.

The company faces an SEC probe into its ad practices, creating added uncertainty amid its rapid pivot toward ad tech.

By the numbers:

• Total revenues: $1.9 billion, +53% YoY
• Diluted EPS: $3.76

Zooming out: AppLovin caught the ad industry’s attention when it announced in 2025 that it would exit the gaming business entirely, selling its $900 million in gaming assets to pivot toward becoming an AI advertising company. Its stock had risen more than $100 since May 2025, suggesting that its restructuring was paying off—but Wednesday’s post-earnings selloff erased much of those gains.

AppLovin’s core sector is mobile advertising, where it wields vast first-party data and offers a marketplace to help app developers sell and market their products. We forecast worldwide mobile ad spending will total $671.38 billion this year, growing to more than $1 trillion by 2030, giving AppLovin significant room for growth. But Q2 results suggest share gains are becoming more difficult.

The company is staking its advertising bet on AI. The company launched Axon AI in October 2025, a platform that uses predictive algorithms informed by first- and third-party data to determine which ad placements will deliver the highest ROI. But the market is now flush with competitors promising similar, AI-powered, high-ROI tech stacks.

Implications for marketers: AppLovin’s slowdown reflects a highly competitive mobile advertising landscape, where even claiming $2 billion of a nearly $700 billion pie is a challenge. Other ad tech firms may encounter similar stalls and will have to differentiate themselves in a market where nearly every competitor wants to be “the” AI platform.