Goldman Sachs AppLovin Corp. (APP.US) Q4'25 Earnings Review: Steady Operating Momentum Amidst Heightened Investor Debates
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Goldman Sachs maintains a Neutral rating on AppLovin (APP.US), lowering the 12-month target price from $710 to $585, implying 28.1% upside. Fourth-quarter revenue reached $1.658 billion, beating the firm's estimate by 3.5% and growing 20.8% year-over-year. Adjusted EBITDA totaled $1.309 billion, with an impressive incremental margin exceeding 94%, reflecting strong operating leverage.
Management emphasized that the AXON 2.0 platform continues to drive robust growth across both core gaming and non-gaming advertising. The e-commerce advertising business successfully launched a self-service platform in Q4 and remains on track for a full general availability launch in the first half of 2026.
However, heightened investor concerns regarding intensifying competition continue to pressure the stock. First-quarter 2026 guidance points to sequential revenue and adjusted EBITDA growth in the mid-to-high single digits, above typical seasonality. Yet, the midpoint of the Q1 adjusted EBITDA guide implies a slight sequential decline in incremental margins due to planned increases in performance marketing spend.
Goldman adjusted its valuation multiples—lowering EV/EBITDA from 32x to 23x—to reflect recent multiple compression across the technology sector. The firm awaits clearer signals regarding competitive dynamics and margin trajectories before turning more constructive.