Applovin Corp (NASDAQ:APP) stock plunges 18.85% (As on February 12, 11:24:14 AM UTC-4, Source: Google Finance) after the company’s first quarter guidance disappointed investors, despite beating fourth quarter sales estimates driven by strength in its artificial intelligence-enhanced marketing business. The mobile advertising technology company reported strong demand for its advertising services and AI-powered tools in the fourth quarter, but faces increasing competition for advertising dollars from Big Tech companies and newer advertising platforms. Free Cash Flow for the quarter was $1.31 billion, an 88% increase year-over-year, growing the cash balance to $2.5 billion

APP in the fourth quarter of FY25 has reported the adjusted earnings per share of $3.24, beating the analysts’ estimates for the adjusted earnings per share of $2.96. The company had reported the adjusted revenue growth of 66 percent to $1.66 billion in the fourth quarter of FY25, beating the analysts’ estimates for revenue of $1.61 billion. This is driven by continued technology advancements to the core mobile gaming business, seasonal strength, and the expanding impact of the e-commerce initiative. This growth reflects AppLovin’s strong position in the mobile advertising market and its strategic investments in AI and e-commerce. Adjusted EBITDA was $1.4 billion, up 82% year-over-year, representing an 84% margin. Margins expanded over 700 basis points from the same period last year, and quarter-over-quarter flow through to Adjusted EBITDA was approximately 95%.

Additionally, Net cash from operating activities was $1.31 billion and $3.97 billion, and Free Cash Flow was $1.31 billion and $3.95 billion for the fourth quarter and full year 2025, respectively. During the fourth quarter and full year 2025, APP repurchased and withheld 0.8 million and 6.4 million of the Class A common stock, for a total cost of $481.7 million and $2.58 billion, respectively. As of the end of the year, the company had a remaining share repurchase authorization of approximately $3.28 billion.

AppLovin forecasted first quarter sales between $1.75 billion and $1.78 billion, which exceeded analyst estimates of $1.70 billion. However, investors appeared concerned about intensifying competition, particularly from Meta Platforms. The company also forecasts an adjusted EBITDA of $1.465 billion to $1.495 billion, maintaining an 84% margin. AppLovin remains committed to expanding its AI capabilities and self-service e-commerce platform. In addition, the company operate a foundational piece of the ecosystem, the MAX auction. It’s critical for the ecosystem that the MAX auction improves through more competition, which in turn helps publishers make more money, leading to more user acquisition.