APP 10-K & 10-Q changes, risk factors and insider trading

•our reliance on third-party platforms to distribute our AppLovin Apps and collect revenue;

•our ability to attract new clients, theretain loss ofexisting clients, and maintain or reduction inincrease spend by clients;

•risks related to our strategic acquisitionstransactions, including integration and partnerships, including integration, managing growth, and tax risksgrowth;

•our recent rapid growth, and our ability to manage growth;

•our ability to maintainprotect and enhance our brand awarenessand reputation;

•changes in U.S. and foreign laws,laws and regulations, many of which are unsettled and still developing;

•compliance with governmental anti-bribery, export controlsand import controls, economic sanctions, and economicother sanctionsinternational trade laws and regulations;

•liability for content that is distributed through or advertising that is served through our Advertisingadvertising solutions or Apps;

•our substantial indebtedness and obligations thereunder;

•our ability to maintain and grow our client and user basesbase;

•changes to our Advertisingadvertising solutions, Apps,solutions or other offerings,offerings;

•the timing and efficacy of improvementimprovements to our algorithms, models and AI-poweredAxon AXONAI, our advertising enginerecommendation engine, generally;

•the development and introduction of new solutions,solutions or entry into new markets, or the development of new mobile appsmarkets by our studiosus or our competitors;

•changes to the policies or practices of companies or governmental agencies that determine access to third-party platforms, such as the Apple App Store and the Google Play Store, or to our Advertisingadvertising solutions, Apps, website, or the internet generally;

•the diversification and growth of revenue sources beyond our current Advertisingadvertising solutions and Apps;

•costs and expenses related to the strategic acquisitions and partnerships, including costs related to integrating mobile gaming studios or other companies that we acquire,transactions, as well as costs and expenses related to the development of our Advertisingproducts solutionsand orsolutions, Appsincluding the timing of such expenses;

•changes in regional or global business or macroeconomic conditions, including as a result of uncertainty in the global banking and financial services markets, political uncertainty and international conflicts around the world, inflation, and high interest rates, which may impact the other factors described above.

In particular, it is difficult to predict if, when, or how newly-launched products, software or new markets may begin to generate revenue or when products or software may decline in popularity. Further, we cannot be certain if a new App or product will become popular amongst users and generate revenue. The success of our business depends in part on our ability to develop and enhance our Advertisingadvertising solutions, including expansion into new markets, and consistently and timely launch new Appsproducts and products.features. It is difficult for us to predict with certainty when we will expand our Advertisingadvertising solutions, launch a new Appproduct or product,feature, or enter a new market as we may require longer development schedules or soft launch periods to meet our quality standards and expectations. If our clients do not adopt our new Advertisingadvertising offerings,offerings or develop or further invest in their own competing alternatives, or if we are unable to successfully launch or acquire new Appsproducts or productsfeatures or maintain or improve existing Appsproducts or successfullyfeatures, or enter a new market, our business and results of operations could be adversely affected. Fluctuations in our results of operations may cause such results to fall below our financial guidance or the expectations of analysts or investors, which could cause the market price of our Class A common stock to decline.

Security breaches, improper access to or disclosure of our data or userclient data, other hacking and phishing attacks on our systems, or other cyber incidents could harm our reputation and adversely affect our business.

The advertising and mobile app ecosystems are prone to cyberattacks by third parties seeking unauthorized access to our data or the data of our clients or their end users or to disrupt our ability to provide service. Our Advertisingadvertising solutions, Apps, and other offerings involve the collection, storage, transmission, and other processing of a large amount of data, including personal information, and we and our third-party service providers otherwise store and process information, including our confidential and proprietary business information, and personal information and other information relating to our employees andemployees, clients or other third parties. We also store and implement measures designed to secure the source code for our Advertisingadvertising solutions and Apps as they are created. Any failure to prevent or mitigate security breaches or incidents impacting our Advertisingadvertising solutions, Apps, or our systems or other systems used in our business, or improper access to or disclosure of our data, including source code, or user data, including personal information, content, or payment information from users, or information from clients or other third parties, that is stored or otherwise processed in our business could result in the unauthorized loss, modification, disclosure, destruction, or other unauthorized processing of such data, or unavailability of data or of our Advertisingadvertising solutions, Apps, or other offerings. Any such event, or the perception it has occurred, could adversely affect our business and reputation, damage our operations, result in claims, litigation, or regulatory investigations or enforcement actions, fines, penalties, or other liability or obligations, and diminish our competitive position. In particular, a breach or incident, whether physical, electronic, or otherwise, impacting systems on which source code or other sensitive data are stored could lead to loss, disruption, unavailability, or piracy of, or damage to, our offerings, lost or reduced ability to protect our intellectual property, and diminished competitive position.

Malware (including ransomware), viruses, social engineering (predominantly spear phishing attacks or smishing), and general hacking have become more prevalent in the advertising and mobile app ecosystems. Some of these have occurred on our systems and otherwise in our business in the past, and we expect they will continue to occur in the future. We regularly encounter attempts to create false or undesirable userclient accounts or take other actions for purposes such as spamming or other objectionable ends. Any actual or attempted breaches, incidents, or attacks may cause disruptions or interruptions to our Advertisingadvertising solutions, Apps, or other offerings, degrade the user experience, impair, disrupt, or interrupt our systems and networks and other systems and networks used in our business, or adversely affect our reputation, business, financial condition, and results of operations. Our efforts to protect our Advertisingadvertising solutions, Apps, and other offerings, our systems and other systems used in our business, and our data, user data, and information from clients, partners, and other third parties, and to disable or otherwise respond to undesirable activities on our offerings, may also be unsuccessful due to software bugs or other technical defects, errors, or malfunctions; employee, contractor, vendor, or partner error or malfeasance, including defects or vulnerabilities in information technology systems or offerings; cyberattacks, including attacks designed to disrupt systems or facilities, orfacilities; breaches of physical security of our facilities or technical infrastructure; or other threats that evolve. Additionally, any such breach, incident, attack, malfunction, defect, or vulnerability, or the perception that any of these has occurred, may cause clients or their end users to lose confidence and trust in our Advertisingadvertising solutions, Apps, or other offerings and otherwise harm our reputation and market position.

In addition, some developers or other business partners, such as those that help us measure the effectiveness of advertisements,advertisements or participate in the bidding process, may receive or store information provided by us or by our clients or their end users through mobile orapps, web appswebsites, or other means. These third parties or others may misappropriate or misuse this information. If these third parties fail to adopt or adhere to adequate data security practices, or experience a breach of, or other security incident impacting, their networks or systems, our datadata, our clients' data, or ourtheir end users’ data may be lost, destroyed, or accessed, modified, disclosed, or otherwise processed in unauthorized manners. In such an event, or if such an event is perceived to have occurred, we may suffer damage to our reputation, may have increased costs arising from the restoration or implementation of additional security measures and other costs relating to the incident, and we may face claims, demands, investigations, and other proceedings by private parties or governmental actors, and fines, penalties, and other liability or obligations, any of which could adversely affect our business, financial condition, and results of operations. Any theft or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an event could also adversely affect our business, competitive position, and results of operations.

Cyberattacks continue to evolve in sophistication and volume, and may be difficult to detect for long periods. Although we have developed systems and processes that are designed to protect ourfirst- data,and userthird- data,party data and information from our partners; to prevent data loss, disable undesirable accounts and activities on our Advertisingadvertising solutionssolutions, or Appsother offerings; and to prevent and detect security breaches;breaches, we cannot assure you that such measures will provide comprehensive security, that we have been or will be able to identify breaches or other incidents or to react to them in a timely manner, or that our remediation efforts will be successful. We experience cyberattacks and other security incidents of varying degrees from time to time, and we may incur significant costs in investigating, protecting against, litigating, or remediating such incidents. We may face increased risks of cyberattacks and other security incidents as a result of increases in remote work. Our use of third-party systems for remote workforce operations introduces security risks and increased cyberattacks, such as phishing attacks by threat actors as a method for targeting personnel. Further, in connection with geopolitical events and conflicts, such as those in Ukraine and the Middle East, there may be a heightened risk of potential cyberattacks by state actors or others.

Additionally, our Advertisingadvertising solutions and other offerings operate in conjunction with, and we are in some cases dependent upon, third-party products, services, and components. Our ability to monitor our third-party service providers’ data security is limited, and in any event, attackers may be able to circumvent our third-party service providers’ data security measures. There have been and may continue to be significant attacks on certain third-party providers, and we cannot guarantee that our or our third-party providers’ systems and networks have not been breached or compromised or do not contain defects or bugs that could result in a disruption, breach, or other incident impacting our systems and networks or those of third parties that support us and our platformadvertising and service.solutions. Security vulnerabilities, malicious code, errors, or other bugs or defects in these third-party products, services, and components could cause us to face increased costs, claims, liability, and additional or new obligations, reduced revenue, and harm to our reputation or competitive position. We and our service providers may be unable to anticipate these techniques, react, remediate or otherwise address any security vulnerability, breach or other security incident in a timely manner, or implement adequate preventative measures.

Further, we utilize AI technologies in our Advertisingadvertising solutions and Appsin our business operations and may expand such use in the future. Our use of AI technologies, and the use of AI technologies in third-party products and services, may create additional cybersecurity risks or increase cybersecurity risks, including risks of security breaches and incidents, and related monetary liability and harm to our reputation.reputation Further,and business. AI technologies may also be used in connection with certain cybersecurity attacks, resulting in heightened risks of security breaches and incidents.

In addition to our efforts to mitigate cybersecurity risks, we are working to combat misuse of our services and end user data by third parties. We may not discover all such incidents or otherrelated activities, in connection with ourthese efforts to combat misuse or otherwise,efforts, and we may instead be notified of such incidents or activity by clients, end users, the media, or other third parties. Such incidents and activities have in the past, and may in the future, include the processing of user data or use of our systems in manners inconsistent with our terms, contracts or policies, the existence of false or undesirable user accounts, improper advertising practices, activities that threaten people’s safety or spamming, scraping, data harvesting, or unsecured datasets.datasets, and may also include other forms of misuse. We may also be unsuccessful in our efforts to enforce our policies or otherwise remediate or respond to any such incidents effectively or in a timely manner. Any of the foregoing developments, or any reports of them occurring or the perception that any of them has occurred, could adversely affect user trust and engagement, harm our brand and reputation, require us to change our business practices, result in claims, demands, investigations, and other proceedings by private parties or governmental actors, and fines, penalties, and other liability or obligations, and adversely affect our business, financial condition, and results of operations.

We are subject to a variety of laws and regulations in the United States and abroad relating to cybersecurity and data protection, some of which provide a private right of action. Many jurisdictions have enacted breach notification obligations, and ourwe have agreements with certain customers or partners maythat require us to notify them or fulfill other obligations in the event of acertain security breachbreaches or incident.incidents. Affected users or government authorities could initiate legal or regulatory actions against us in connection with any actual or perceived security breaches or incidentsincidents, insufficient security practices, or improper access to, or disclosure of, or other processing of,of data, or other cybersecurity issues which hashave occurred in the past or may occur in the future, and which could cause us to incur significant expense and liability, distract management and technical personnel, and result in orders or consent decrees forcing us to modify our business practices and to pay fines or penalties. Such actual or perceived breaches or other incidents or our efforts to remediate suchthese incidentsevents may also result in a decline in our active user base or engagement levels. Any of these events could adversely affect our reputation, business, financial condition, or results of operations.

Our insurance coverage may not extend to all types of privacy or security breaches or other incidents, and it may be insufficient to cover all costs and expenses associated with such incidents.events. Further, such insurance may not continue to be available to us in the future on economically reasonable terms, or at all, and insurers may deny us coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material and adverse effect on our business, including our reputation, financial condition, or results of operations.

If issues arise with third-party platforms change their policies in a way that impact the visibility or availability ofharms our Apps,business, our users’ ability to access our Apps or our ability to monetize our Apps, or otherwise impactincluding the design orand effectiveness of our Advertisingadvertising solutions, our business, financial condition, and results of operations could be adversely affected.

We believe strongly in operating a lean organizational structure, leveraging technology wherever possible, as it allows us to adapt our business as needed and affords increased opportunity to our employees. While this approach enhances efficiency and cost control, it may also expose us to certain risks.risks, Whilesuch weas believe our lean culture allows us to move faster than other companies our size, a lean workforce could limitlimiting our ability to scale operations quickly in response to increased demand, develop new products or services in a timely manner, or effectively manage multiple initiatives simultaneously. Additionally, key employees often hold multiple responsibilities, making us more vulnerable to disruptions caused by turnover or unexpected absences. If we are unable to attract, retain, and efficiently allocate personnel, our operational capabilities, growth potential, and competitive position could be adversely affected. Furthermore, as we expand, we may need to hire additional employees and enhance our infrastructure to support growth. Failure to do so in a timely or effective manner could strain our existing workforce and negatively impact our financial performance and strategic objectives.

•our ability to improve the effectiveness and predictability of our advertising and maintain and improve Axon AI, our AI-powered advertising recommendation engine AXON;

Our mission is to create meaningful connections between companies and their ideal customers. We provide end-to-end softwareAI-powered and AI-poweredadvertising solutions for businesses to reach, monetize and grow their global audience. We also operate a portfolio of owned mobile apps and accelerated our market penetration through an active acquisition and partnership strategy. Our scaled business model is intricately linked to the advertising ecosystem, providing a durable competitive advantage. We generate revenue when our advertisers achieve their return on advertising spend targets with our Advertisingadvertising solutions, ensuring that their success directly fuels our growth.

Since our founding in 2011, we have been focused on building Advertisingadvertising solutions for advertisers to improve the marketing and monetization of their content. Our founders, who were mobile app developers themselves, quickly realized the real impediment to success and growth in the advertising ecosystem was a discovery and monetization problem—breaking through the congested app stores to efficiently find users and successfully grow their business. Their first-hand experience with these challenges led to the development of our infrastructure and Advertisingadvertising solutions. We capitalized on our success and understanding of the mobile app ecosystem by entering into the mobile game apps industry in 2018. Our global diversified portfolio of apps now consist of over 200 free-to-play mobile games across five genres, run by ten studios.

We primarily generate Advertising Revenuerevenue from fees paid by advertisers who use our Advertisingadvertising solutions to grow and monetize their content. We are able to grow our Advertising Revenuerevenue by improving our various technologies.technologies, including improvements to our Axon AI recommendation engine.

Advertising clients include a wide variety of advertisers, from indie developer studios to some of the largest global internet platforms, such as FacebookMeta and Google. We see multiple opportunities to gain new Advertising clients, and to increase spend from existing clients, as we help them grow their businesses and make them more successful.

Our Advertisingadvertising solutions include AppDiscovery,Axon Ads Manager, MAX, Adjust, and Wurl. Clients use AppDiscoveryAxon Ads Manager to automate, optimize, and manage their user acquisition investments. They set marketing and user growth goals, and AppDiscoveryAxon Ads Manager optimizes their ad spend in an effort to achieve their return on advertising spend targets and other marketing objectives. AppDiscoveryAxon Ads Manager comprises the vast majority of Advertisingrevenue. Revenue.The Revenuerevenue we generate from Axon Ads Manager is generateddetermined fromdynamically our advertisers, typicallybased on aadvertisers’ performance-basis,campaign and shared with our advertising publishers, typically on a cost per impression model.goals.

Advertising clientsnetworks use MAX to optimize purchases of app advertising inventory. The MAX tool provides insights to manage against key performance indicators, understand the long-term value of users, and help manage profitability. Revenue from MAX is generated based on a percentage of client spend. As more advertising networks move to in-app real-time bidding, we expect growth in the adoption of, and revenue from, MAX.

Advertising clients use Wurl's CTV platform to distribute streaming video, maximize Advertising Revenue,revenue, and acquire and retain viewers or subscribers. Revenue from Wurl is primarily generated from content companies, streamers, and advertisers, typically on a usage-based and/or CPM model.

We define Adjusted EBITDA for a particular period as net income (adjusted for loss) beforefrom discontinued operations, net of income taxes, interest expense and loss on settlement of debt, other income, net (excluding certain recurring items), provision for (benefit from) income taxes, amortization, depreciation and write-offs and as further adjusted for stock-based compensationcompensation, transaction-related expense, acquisition-related expense and transaction bonus, publisher bonuses, MoPub acquisition transition services, restructuring costs, loss on disposal of long-lived assets, and non-operating foreign exchange (gain) losses.loss, as well as certain other items that we believe are not reflective of our core operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue for the same period.

The following table provides our Adjusted EBITDA and Adjusted EBITDA margin for 2025, 2024, 2023, and 2022,2023, and a reconciliation of net income (loss) to Adjusted EBITDA:

We define Free Cash Flow as net cash provided by operating activities less purchases of property and equipment and principal payment of finance leases. We use Free Cash Flow to help manage the health of our business, prepare budgets and for capital allocation purposes. We believe Free Cash Flow provides useful supplemental information to help investors understand underlying trends in our business and our liquidity. Free Cash Flow also reflects cash flowflows hasfrom certainboth limitations,continuing includingand thatdiscontinued it does not reflect our future contractual commitments.operations. Our definition may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish Free Cash Flow or similar metrics. Thus, our Free Cash Flow should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP.

We believe that the future success of our business depends on many factors, including the factors described below. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to continue to grow profitably while maintaining strong cash flow.

We have made, and intend to continue to make, significant investments in our Advertisingadvertising solutions to enhance their effectiveness and value proposition for our clients. We expect thatto thesecontinue investmentsto willinvest requirein spendingour on researchtechnology and development,solutions and acquisitionsto incur related costs, including costs to attract and partnershipsretain relatedcritical engineering talent, such as stock-based compensation, as well as datacenter costs as we continue to technologylaunch componentsenhancements andto products.our Axon AI recommendation engine. We believe investments in our technology, including our AI-powered advertising engine AXON, AppDiscovery, Adjust, and MAX,technology will further improve effectiveness for advertisers. In addition, we plan to continue to invest in the AI-based, self-learning capabilities of our advertising recommendation engine, AXON. Our investments will also allow us to continue to enter into and expand into new verticals outside of gaming, such as e-commerce, CTV, original equipment manufacturer ("OEM"),e-commerce and carrier-relatedCTV. markets.We Whilealso continue to opportunistically explore strategic transactions related to our investmentsadvertising in researchsolutions and developmentthe andexpansion acquisitions and partnerships may not result in revenue inof the near term,markets we believe these investments position us to increase our revenue over time.serve.

We rely on existing clients for a significant portion of our revenue. As we improve our Advertisingadvertising solutions and Apps,solutions, we can attract additional spend from these clients. Our clients include indie studio developers and some of the largest advertising platforms in the world. We believe there is significant room for us to further expand our relationships with theseexisting clients and increase their usage of our Advertisingadvertising solutions.solutions, as well as to onboard new clients both inside and outside of mobile gaming. We expect to continue to invest in sales and marketing to enhance awareness of the Axon brand and drive new client acquisition.

GrowthChanges and structure ofto the mobile app and advertising ecosystems

Cost of revenue. Cost of revenue consists primarily of payment processing fees related to IAP Revenue, amortization of acquired technology-related intangible assets, amortization of finance lease right-of-use assets related to certain servers and networking equipment and data centerdatacenter costs related primarily to third-party cloud computing services. The fees for IAPs are processed and collected by third-party distribution partners. We expect our cost of revenue to increase in absolute dollars over the long term as our business and revenue continue to grow. We also expect our cost of revenue as a percentage of revenue to fluctuate period-over-period.

Sales and marketing. Sales and marketing expenses consist primarily of user acquisition costs, marketing programs and other advertising expenses, professional services costs related to the marketing of apps by third parties,costs, personnel-related expenses including salaries, employee benefits, and stock-based compensation for employees engaged in sales and marketing activities, amortization of acquired user-related intangible assets, travel and allocated facilities and information technology costs.

Research and development. Research and development expenses consist primarily of product development costs, including personnel-related expenses such as salaries, employee benefits, and stock-based compensation for employees engaged in research and development activities, professional services costs related to development of new apps by third parties,costs, consulting costs, regulatory compliance costs, and allocated facilities and information technology costs.

General and administrative. General and administrative expenses consist primarily of costs incurred to support our business, including personnel-related expenses such as salaries, employee benefits, and stock-based compensation for employees engaged in finance, accounting, legal, human resources and administration, professional services fees for legal, accounting, recruiting, and administrative services (including acquisition-relatedacquisition or other transaction-related expenses), insurance, travel, and allocated facilities and information technology costs.

Provision for (benefit from) income taxes. We are subject to income taxes in the United States and foreign jurisdictions in which we do business. These foreign jurisdictions have different statutory tax rates than those in the United States. Additionally, certain of our foreign earnings may also be taxable in the United States. Accordingly, our effective tax rate will vary depending on the relative proportion of foreign to domestic income, impacts from acquisition restructuring, deduction benefits related to foreign-derived intangible income, future changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws. Additionally, our effective tax rate can vary based on the amount of pre-tax income or loss.

In this section, we discuss the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024, as well as a comparison for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The following tables summarize our historical consolidated statement of operations:

1 Includes stock-based compensation expense as follows:

•the timing and efficacy of improvements to our algorithms, models and Axon AI, our advertising recommendation engine,system, generally;

Further, we utilize AI technologies in our advertising solutions and in our business operations and may expand such use in the future. Our use of AI technologies, and the use of AI technologies in third-party products and services, may create additional cybersecurity risks or increase cybersecurity risks, including risks of security breaches and incidents, and related monetary liability and harm to our reputation and business. AI technologies may also be used to identify and exploit vulnerability and otherwise in connection with certain cybersecurity attacks, resulting in heightened risks of security breaches and incidents and of more impactful security breaches and incidents.

•our ability to improve the effectiveness and predictability of our advertising and maintain and improve Axon AI, our advertising recommendation enginesystem;

We face significant competition in the advertising ecosystem. Advertisers often engage with numerous advertising platforms and networks to purchase advertisements and developers often engage with numerous tools to market and monetize their apps. Accordingly, we face significant competition from traditional, online, and mobile businesses that provide ad networks and platforms and other services for advertisers to reach relevant audiences. We also face competition from providers of developer tools that enable developers to reach their audiences, manage or optimize their advertising campaigns, or monetize their content. These companies vary in size and include Meta, Google, Amazon, and Unity Software and Liftoff Mobile as well as various private companies, several of which are also our partners and clients. Clients who are also competitors may decide to invest in their own offerings rather than continue to use our advertising solutions.

Technology changes rapidly in the advertising ecosystem. Our future success depends in part on our ability to adapt to trends and to innovate. To attract new clients and increase revenue from our current clients, we may develop new products or enter into new markets and we will need to enhance and improve our advertising solutions. For example, since 2024 we have begun expanding our customer base to include web-based e-commerce advertisers. Our ability to improve the effectiveness and predictability of our advertising recommendations through improvements to Axon AI, our advertising recommendation engine,system, is critical to our continuing success and future growth. Enhancements of our existing technology and offerings, and new offerings, may not be introduced in a timely or cost-effective manner and may contain errors or defects, both of which could adversely affect our business, financial condition, and results of operations.

We have experienced rapid growth in the scale, scope, and complexity of our business. For example, our revenue has grown rapidly, in particular since the launch of Axon AI, our advertising recommendation engine.system. Our growth in any prior period should not be relied upon as an indication of our future performance, as we may not be able to sustain our growth rate in the future. Even if our revenue continues to increase, we expect that our revenue growth rate may decline in the future as a result of a variety of factors, including because of more difficult comparisons to prior periods and the saturation of the market. The overall growth of our revenue depends in part on our ability to execute on our growth strategies. As we implement additional strategies designed to increase revenue, such as investing in product development, new initiatives, or strategic transactions, we are likely to recognize costs associated with these investments earlier than some of the expected benefits, and the return on these investments may be lower, or may develop more slowly, than we expect. If we are unable to generate adequate revenue growth and manage our expenses, our margins and profitability may be harmed.

We believe that investing in and maintaining our brands and overall reputation is critical to maintaining and creating favorable relationships with, and our ability to attract, new clients and key personnel. In connection with the 2025 launch of our self-serve advertising platform (Axon Ads Manager), we publicly launched our Axon product branding. Increasing awareness of theour AppLovin corporate brand and of Axon specificallybrands will depend largely upon our marketing efforts and our ability to successfully differentiate our advertising solutions from the offerings of our competitors. In addition, successfully globalizing and extending our brands requires significant investment and extensive management time. If we fail to maintain and increase brand awareness and recognition of our advertising solutions, or fail to protect our reputation, our business, financial condition, and results of operations could be adversely affected.

We rely on third parties for various aspects of our business, including demand-side platforms, SDK bidders, agencies, advertisers, and publishers who use our advertising solutions. Their actions may violate our contracts, policies, and applicable laws and regulations, or may otherwise put our business and reputation at risk. Demand-side platforms and SDK bidders may be given access to personal information in order to bid on advertising inventory andand, in violation of our contracts, and they may misappropriate and engage in unauthorized use of our information, technology, or customers' data. In violation of our policies, advertisers may enable the serving of ads that contain prohibited, restricted, or inappropriate content, or content that otherwise fails to adhere to our policies or country-specific laws, rules, or regulations. We also work with advertisers that operate sports gambling apps, apps that involve real money gambling, and apps and advertisers in other regulated industries and markets (including alcohol, CBD/hemp, financial services, and health & wellness), each of which imposes additional legal and regulatory requirements on these advertisers, which they may not comply with. A vast amount of publishers attempt to use our advertising solutions, a number of which may attempt to monetize prohibited, restricted, or inappropriate content, or may engage or attempt to engage in fraudulent or other unlawful activity in violation of our policies. Any of the foregoing activities may from time to time cause us to incur losses, impose additional operational costs to protect our platform, trigger additional law enforcement or other inquiries, put our reputation at risk, and otherwise adversely affect our business, financial condition, and results of operations.

Further, children’s privacy continues to be a focus of enforcement activities and subjects our business to potential liability that could adversely affect our business, financial condition, or operating results. For example, enforcement of COPPA, which requires companies to obtain parental consent before collecting personal information from children known to be under the age of thirteen or from child-directed websites or online services, has increased in recent years. In addition, the GDPR, the CCPA, as modified by the CPRA, and other laws contain their own prohibitions and requirements relating to processing the personal information of children. There also may be various laws, regulations, industry standards, codes of conduct, or other actual or asserted obligations relating to children’s privacy to which we may be, or be asserted to be, subject, or that may otherwise impact our business and operations. For example, the United Kingdom’s Age Appropriate Design Code ("AADC") is one such regulatory framework that has been adopted in the United Kingdom that focuses on online safety and protection of children’s privacy online, and similar frameworks are being considered or have been enacted in other jurisdictions. While our terms of use prohibit publishers and advertisers from using our services in connection with end users who qualify as a “child” under applicable laws or content exclusively designed for or exclusively directed to children under applicable laws and app store policies, and we take reasonable efforts to comply with applicable laws and regulations and certain other standards, we may in the future face claims under COPPA, the GDPR, the CCPA, as modified by the CPRA, or other laws, regulations, or other actual or asserted obligations relating to children’s privacy.

We use AI technologies in connection with the development of our advertising solutions, including Axon AI, our advertising recommendation engine,system, and other product offerings, as well as in other aspects of our business, and we will continue to invest in the expansion of our AI capabilities. For example, we have begun to introduce tools that create AI-generated interactive ads and video creatives for advertisers. These technologies are complex and rapidly evolving, and the development of AI technologies can require significant investment. Expanding our AI capabilities subjects us to many of the risks discussed elsewhere in this Risk Factors section, including risks relating to rapid technological change, the highly technical nature of software, and competition.

Any allegations or violations of the FCPA or other applicable anti-corruption laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, suspension or disbarment from U.S. government contracts, substantial diversion of management’s attention, significant legal fees and fines, severe criminal or civil sanctions against us, our officers, or our employees, disgorgement of profits, other sanctions and remedial measures, and prohibitions on the conduct of our business, any of which could adversely affect our reputation, business, financial condition, and results of operations. Responding to any investigation or action will likely result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees.

As of MarchJune 31,30, 2026, we had a total of $3.6 billion in aggregate principal amount of senior unsecured notes outstanding (the “Senior Notes”). We also had $1.0 billion of commitments (with a $100 million letter of credit sublimit) under our senior unsecured credit agreement that provides for an unsecured revolving credit facility (the “Credit Agreement”). As of MarchJune 31,30, 2026, we did not have outstanding borrowings under the Credit Agreement.

We have three classes of common stock. Our Class A common stock has one vote per share, our Class B common stock has 20 votes per share, and our Class C common stock has no voting rights, except as otherwise required by law. Adam Foroughi, our co-founder and CEO, and Herald Chen, a member of our board of directors (collectively with certain affiliates, the "Voting Agreement Parties") together hold all of the issued and outstanding shares of our Class B common stock. As of MarchJune 31,30, 2026, the Voting Agreement Parties collectively held approximately 67% of the voting power of our outstanding capital stock in the aggregate. This voting power includes shares of Class A common stock deemed beneficially owned in accordance with Rule 13d-3(d)(1) under the Exchange Act. The Voting Agreement Parties have entered into a voting agreement (the "Voting Agreement") whereby all Class B common stock held by the Voting Agreement Parties and their respective permitted entities and permitted transferees will be voted as determined by Mr. Foroughi and Mr. Chen. As a result, the Voting Agreement Parties will collectively be able to determine or significantly influence any action requiring the approval of our stockholders, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction. The Voting Agreement Parties may have interests that differ from yours and may vote in a way with which you disagree, and which may be adverse to your interests. This concentrated control may have the effect of delaying, preventing, or deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale of our company, and might ultimately affect the market price of our Class A common stock.

We primarily generate revenue from fees paid by advertisers who use our advertising solutions to grow and monetize their content. We are able to grow our revenue by improving our various technologies, including improvements to our Axon AI recommendation engine.system.

Our advertising solutions include AxonAppLovin Ads Manager,Ads, MAX, Adjust, and Wurl. Clients use AxonAppLovin Ads Manager to automate, optimize, and manage customer acquisition. They set marketing and transaction goals, and AxonAppLovin Ads Manager maximizes advertising spend at their return on advertising spend targets and other marketing objectives. AxonAppLovin Ads Manager comprises the vast majority of revenue. Revenue represents the dynamically-priced amount charged to advertisers based on their campaign goals, less consideration paid or payable to publishers.

We define Adjusted EBITDA for a particular period as net income adjusted for loss (income) from discontinued operations, net of income taxes, interest expense, other income,(income) expense, net (excluding certain recurring items), provision for income taxes, amortization, depreciation and write-offs and as further adjusted for stock-based compensation, transaction-related expense, restructuring costs (benefits),costs, and non-operating foreign exchange gain, as we believe these items are not reflective of our core operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue for the same period.

The following table provides our Adjusted EBITDA and Adjusted EBITDA margin for the three and six months ended MarchJune 31,30, 2026 and 2025, and a reconciliation of net income to Adjusted EBITDA:

The following table provides our Free Cash Flow for the threesix months ended MarchJune 31,30, 2026 and 2025, and a reconciliation of net cash provided by operating activities to Free Cash Flow:

We have made, and intend to continue to make, significant investments in our advertising solutions to enhance their effectiveness and value proposition for our clients. We expect to continue to invest in our technology and to incur related costs, including costs to attract and retain critical engineering talent, such as stock-based compensation, as well as datacenter costs as we continue to launch enhancements to our Axon AI recommendation system. We believe investments in our technology will further improve effectiveness for advertisers. Our investments will also allow us to continue to enter into and expand into new verticals outside of gaming, such as e-commerce and CTV. We also continue to opportunistically explore strategic transactions related to our advertising solutions and the expansion of the markets we serve.

We rely on existing clients for a significant portion of our revenue. As we improve our advertising solutions, we can attract additional spend from these clients. Our clients include indie studio developers and some of the largest advertising platforms in the world. We believe there is significant room for us to further expand our relationships with existing clients and increase their usage of our advertising solutions, as well as to onboard new clients. We expect to continue to invest in sales and marketing to enhance awareness of the Axon brand and drive new client acquisition.

Our business and results of operations are and will continue to be,be impacted by industry factors that drive the overall performance and growth of the mobile app and advertising ecosystems. Mobile app developers rely on third-party platforms, such as the Apple App Store and Google Play Store, among others, to distribute apps, collect payments made for in-app purchases, and target users with relevant advertising. These third-party platforms have significant market power and discretion to set platform fees, select which apps to promote, and decide how much consumer information to provide to advertising networks that enable our advertising solutions to target users with personalized and relevant advertising and allocate marketing campaigns in an efficient and cost-effective manner. Any changes made to the policies of these third-party platforms can drive rapid change across the mobile app and advertising ecosystems. Both the Apple App Store and Google Play Store have made various changes to their policies in recent years, as further discussed in the section titled “Risk Factors–Risks Related to Our Business, Operations and Industry–If third-party platforms change their policies in a way that harms our business, including the design and effectiveness of our advertising solutions, our business, financial condition, and results of operations could be adversely affected.” The mobile app and advertising ecosystems also continue to be subject to an evolving legal and regulatory landscape, including with respect to data protection, privacy, and AI. We must continue to innovate and stay ahead of developments in the advertising and mobile app ecosystems in order for our business to succeed and our results of operations to continue to improve.

We generate substantially all of our revenue from fees collected from advertisers spending on AxonAppLovin Ads Manager,Ads, which are determined dynamically based on advertisers' campaign goals. Revenue from other services was not material. Revenue does not include the results of our former Apps Business, which is classified as discontinued operations.

Other income,income (expense), net. Other income,income (expense), net, primarily includes interest earned on our cash and cash equivalents, fair value adjustments relating to our non-marketable equity securities, and foreign currency gains and losses.

In this section, we discuss the results of our operations for the three and six months ended MarchJune 31,30, 2026 and 2025.

Comparison of Our Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

For the three months ended MarchJune 31,30, 2026, our revenue increased by $683.5$664.9 million, or 59%,53%, compared to the same period in the prior year due primarily to improved AxonAppLovin Ads Manager,performance, where net revenue per installation increased 93%,58%, partially offset by a decrease in the volume of installations of 18%.2%.

Cost of revenue in the three months ended MarchJune 31,30, 2026 increased by $52.0$70.7 million, or 34%,46%, compared to the same period in the prior year, due primarily to an increase of $39.9$52.1 million in expenses associated with operating our network infrastructure driven by the growth in our operations.

Sales and marketing expenses in the three months ended MarchJune 31,30, 2026 increased by $1.4$16.5 million, or 2%,35%, compared to the same period in the prior year, due primarily to an increase of $16.7$17.2 million in advertising and marketing program costs, partially offset by a decrease of $15.3$3.5 million in personnel-related expenses related to a decrease in stock-based compensation-related payroll costs.

Research and development expenses in the three months ended MarchJune 31,30, 2026 increased by $37.7$55.9 million, or 67%,127%, compared to the same period in the prior year, due primarily to an increase of $36.5$54.8 million in personnel-related expenses related to an increase in stock-based compensation-related payroll costs.

General and administrative expenses in the three months ended MarchJune 31,30, 2026 decreased by $7.5$14.7 million, or 15%,27%, compared to the same period in the prior year, due to a decrease of $6.2$9.5 million in bad debt expense and a decrease of $2.1$5.2 million in professional services costs primarily associated with transaction-related expenses.

In the three months ended MarchJune 31,30, 2026, other income,income (expense), net increased by $35.1$84.7 million compared to the same period in the prior year, due primarily to a net fair value remeasurement gain of $20.7$31.3 million related to our investments incertain non-marketable equity securities in the current period andcompared to a net fair value remeasurement loss of $20.4 million in the prior period, an increase in interest income of $14.1$21.3 million driven by an increase in cash and cash equivalents.equivalents, and an increase in net foreign currency gains of $12.0 million.

In the three months ended MarchJune 31,30, 2026, the provision for income taxes increased by $154.7$126.8 million compared to the same period in the prior year. The increase was primarily driven by higher pre-tax income from business operations during the three months ended MarchJune 31,30, 2026, foreign income taxed at different rates, and a decrease in stock-based compensation benefits, partially offset by an increase in foreign-derived income deduction.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $2.8$3.1 billion, consisting primarily of cash in checking and interest-bearing deposit accounts, as well as investments in money market funds. We believe that our existing cash and cash equivalents, cash flows expected to be generated by our operations, and, if necessary, our borrowing capacity under our 2024 Credit Agreement that provides for a $1.0 billion unsecured revolving credit facility, would be sufficient to satisfy our anticipated working capital and capital expenditures needs for at least the next 12 months. Our future capital requirements will depend on many factors, including our revenue growth rate; sales and marketing activities; timing and extent of spending to support our research and development efforts; capital expenditures to purchase hardware and software; our continued need to invest in our IT infrastructure to support our growth; and the volume and timing of our share repurchases. In addition, we may enter into additional strategic investments in teams and technologies, including intellectual property rights, which could increase our cash requirements. As a result of these and other factors, we may be required to seek additional equity or debt financing sooner than we currently anticipate, or we may opportunistically seek additional financing. See the section titled “Risk Factors—Risks Related to Financial and Accounting Matters” for more information regarding risks related to liquidity and capital resources.

Net cash provided by operating activities was $1.3$2.2 billion for the threesix months ended MarchJune 31,30, 2026, primarily consisting of $1.2$2.5 billion of net income, adjusted for certain non-cash items, including $83.4$169.0 million of stock-based compensationcompensation, and $33.7$66.2 million of amortization, depreciation and write-offs, and $50.5 million of net gain on fair value remeasurement of financial instruments, which were partially offset by a net decrease in operating assets and liabilities of $14.8$504.8 million.

Net cash provided by operating activities was $831.7$1.6 millionbillion for the threesix months ended MarchJune 31,30, 2025, primarily consisting of $576.4$1.4 millionbillion of net income, adjusted for certain non-cash items, including $188.9 million of goodwill impairment, $79.9$126.9 million of amortization, depreciation and write-offs, and $61.3$97.0 million of stock-based compensation, which were partially offset by a gain on divestiture, net of transaction costs, of $106.2 million and a net decrease in the operating assets and liabilities of $82.9$140.3 million.

The improvement in cash flows from operating activities during the threesix months ended MarchJune 31,30, 2026 compared to the same period in the prior year was primarily driven by increased cash collections from customers due to revenue growth, partially offset by increased publisher payments, operational spending, and cash paid for income taxes.

Net cash used in investing activities was $5.2$7.7 million for the threesix months ended MarchJune 31,30, 2026 and2026, primarily related to payments for initial direct costs of certain new leases.leases and purchases of property and equipment.

Net cash usedprovided inby investing activities was $22.7$378.9 million for the threesix months ended MarchJune 31,30, 2025, primarily consisting of $424.7 million in proceeds from divestiture net of cash divested, which were partially offset by $22.4 million in earn-out payments related to prior acquisitions of intangible assets and $18.7 million in purchases of non-marketable equity securities and $2.3 million in capitalized software development costs.securities.

Net cash used in financing activities was $1.0$1.6 billion for the threesix months ended MarchJune 31,30, 2026, primarily drivenconsisting byof $981.7$1.5 millionbillion in share repurchases under our share repurchase program and $26.9$46.5 million in payments for withholding taxes related to the net share settlement of equity awards.

Net cash used in financing activities was $1.0$1.5 billion for the threesix months ended MarchJune 31,30, 2025, primarily drivenconsisting byof $1.0$1.3 billion in share repurchases under our share repurchase program, $185.7$256.7 million in payments for withholding taxes related to the net share settlement of equity awards, and payments of licensed asset obligation of $13.5 million, partially offset by proceeds of $200.0 million from borrowings under the revolving credit facility pursuant to the 2024 Credit Agreement.

During the threesix months ended MarchJune 31,30, 2026, we repurchased and retired 2.23.3 million shares of Class A common stock for $1.0$1.5 billion. As of MarchJune 31,30, 2026, $2.3$1.8 billion remained available for repurchases under the program. The program has no expiration date, does not obligate us to repurchase any specific amount of stock, and may be modified, suspended, or terminated at any time at our discretion. For additional information, see Note 7 – Equity ofin the Notesnotes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Except for scheduled payments from the ongoing business, there were no other material changes to our commitments under contractual obligations since December 31, 2025. For additional information, see Note 5 – Commitments and Contingencies ofin the Notesnotes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

There have been no material changes to our critical accounting estimates during the threesix months ended MarchJune 31,30, 2026, as compared to those disclosed in our Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in our Annual Report on Form 10-K for the year ended December 31, 2025. For additional information on all of our significant accounting policies, see Note 2 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025.

See Note 1 – Description of Business and Summary of Significant Accounting Policies ofin the Notesnotes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.