Signal Ledger LabSignal Ledger valuation · APP
AppLovin Corp
What the shares are worth today on our research (management’s own targets for each business, plus our judgment calls): every line valued at the end of FY2030, net debt rolled forward, then discounted back to Jun 30, 2026.
- Business value at FY2030
- $302B
- FY2030 revenue
- $24B
- FY2030 EPS · P/E
- $46.21 · 22×
- Discount rate (WACC · equity)
- 9.64% · 9.87%
Latest quarter in this research: Q2 FY2026
Reported Aug 5, 2026 for the quarter to Jun 30, 2026 (company release ↗). This valuation already reflects these results (researched Oct 23, 2026).
| Segment | Revenue | vs a year ago | Operating income | Margin |
|---|---|---|---|---|
| Advertising Platform | $1.92B | +53% | $1.49B | 77.7% |
- Revenue increased 53% to $1.923686B; adjusted EBITDA was $1.614B and GAAP diluted EPS $3.76.
- GAAP operating income was $1.494277B; continuing operations exclude the sold Apps business.
- Q3 revenue guidance is $2.055–2.085B and adjusted EBITDA margin about 83%; compute/training costs are included.
What each business is worth
| Business | Model | FY2030 revenue | Value today | Per share | 2030 multiple | Value from beyond FY2030 |
|---|---|---|---|---|---|---|
| Advertising Platform (Axon, MAX and Ads Manager) | Margin | $24B | $234B | $697.91 | 16.7× EBIT | 67% |
| All businesses | $24B | $234B | $697.91 |
Our judgment calls
Where the evidence leaves room for judgment, we make the call ourselves and say why (Signal Ledger, Oct 22, 2026). This call is part of the valuation above; every other input follows the research file and the published rules.
| Assumption | Our call | Why |
|---|---|---|
| Advertising Platform (Axon, MAX and Ads Manager): FY2030 operating margin | 75.8% | Assume FY2030 GAAP EBIT margin stays at the existing FY2025 margin of 75.7526% on rounded model inputs, instead of the 79.7526% the rule alone would give. The FY2025 10-K reports operating income of $4.151914B on revenue of $5.480717B, or 75.7549%, including $0.207958B of stock-based compensation (https://www.sec.gov/Archives/edgar/data/1751008/000175100826000010/app-20251231.htm). In the official Q2 2026 transcript, management prioritizes EBITDA dollars and free cash flow, describes increased training and inference investment, and expects a low-80% long-term EBITDA margin, not GAAP EBIT guidance (https://s21.q4cdn.com/165405286/files/doc_financials/2026/q2/Q2-2026-AppLovin-Earnings-Presentation.pdf, pp. 2-3 and 9). The historical GAAP margin is our sustainable-margin proxy, not a management FY2030 target or a claimed ceiling; Q2 GAAP EBIT margin was already 77.68%. |
From 2030 back to today
- Enterprise value at end of FY2030$302B
- Plus net cash at FY2030$44B
- Equity value at FY2030$347B
- ÷ (1 + 9.87%)^4.5 years at the cost of equity$227B
- + dividends paid on the way, discounted$0B
This reconciliation checks the published Signal Ledger valuation against the net-debt path. The difference is 2.5%, inside our 5% tolerance.
From businesses to one share
- All businesses, valued today$234B
- − borrowings$3.5B
- − finance leases$0.1B
- + cash and short-term investments$3.1B
- ÷ diluted shares0.335B
- Signal Ledger valuation$696.16
Year by year to FY2030
| Fiscal year | Revenue | EBITDA | Capex | Free cash flow | Net debt at year end |
|---|---|---|---|---|---|
| FY2026 | $8.4B | $6.5B | $0.2B | $5B | $1.9B cash |
| FY2027 | $11B | $8.5B | $0.2B | $6.5B | $8.5B cash |
| FY2028 | $14B | $11B | $0.3B | $8.5B | $17B cash |
| FY2029 | $18B | $14B | $0.4B | $11B | $29B cash |
| FY2030 | $24B | $19B | $0.5B | $14B | $44B cash |
What must be true
- Advertising Platform (Axon, MAX and Ads Manager) grows revenue from $8.4B in FY2026 to $23.9B in FY2030 (2.9×).
- Advertising Platform (Axon, MAX and Ads Manager) holds its EBIT margin at 75.8%.
- The company spends $1.5B of capital expenditure through FY2030.
- Net debt peaks at $0.6B in FY2025 and stays financeable.
What the price implies
At our discount rate, the price assumes less than our research overall: one combination matching $264.28 is about $8.3B of FY2030 sales (a decline of about 0.3% a year from FY2026) with 75.8% GAAP EBIT margin — versus $23.9B and 75.8% GAAP EBIT margin in our research.
At the research price of $264.28 (2026-10-23), the price asks less than our assumptions overall. These are operating requirements at that price, not additional valuations or forecasts.
If sales and margins changed together
Each row matches the same research price at our unchanged discount rate, by scaling every operating line's margin by one common factor. Sales cover margin and capacity lines only; other valuation lines stay fixed. Margins are revenue-weighted within each metric, before separately modeled corporate costs and eliminations. The conclusion uses the row at our research margins when sales alone can match the price, otherwise the solved row needing the least sales growth; this is a trade-off between growth and profitability, not a forecast.
| FY2030 sales factor | FY2030 sales | FY2026–30 CAGR | Required FY2030 margin | Requirement |
|---|---|---|---|---|
| 0.35×At research margins | $8.3B | −0.3% | 75.8% GAAP EBIT | Within margin guardrails |
| 1.50× | $35.9B | 43.9% | 19.6% GAAP EBIT | Within margin guardrails |
| 2.00× | $47.8B | 54.6% | 14.8% GAAP EBIT | Within margin guardrails |
| 3.00× | $71.8B | 71.1% | 10.0% GAAP EBIT | Within margin guardrails |
CAGR uses $8.4B of same-scope FY2026 sales from the published model or its sourced research base, over four fiscal years. “Within margin guardrails” checks numeric limits only, not commercial plausibility. Each line and year must stay at or below 50.0% GAAP EBIT and 100% EBITDA, or our research margin where that is higher; capacity EBIT uses the engine's equipment depreciation. Unsolved margins are not extrapolated.
- Implied discount rate
- 18.4%
- All-business FY2030 sales factor
- 0.35×
The WACC that makes model value equal the price, shifting WACC and cost of equity by the same amount. Model: 9.6% WACC · 9.9% cost of equity.
FY2030 revenue would need to reach $8.3B (model: $23.9B) across the margin and capacity businesses. FY1 stays fixed; the sales change ramps to FY2030 and stays at that factor thereafter.
If only one business changed
Businesses with margin or capacity revenue paths, ordered by value today. Revenue and margin are separate alternatives; these requirements are not added together.
Advertising Platform (Axon, MAX and Ads Manager)
- Revenue alone
- FY2030 revenue would need to reach $9B (model: $23.9B).
- Margin alone
FY2030 EBIT margin would need to reach 28.9% (model: 75.8%).
Mechanical requirements, not forecasts. The separate sales-only and single-business factors are searched from 0.1× to 6×; an unsolved comparison means this business alone cannot get there within those bounds. Single-business revenue changes apply from FY2 onward; margin changes scale the full EBIT or EBITDA margin path. Mixed groups show revenue-weighted EBIT and EBITDA margins separately. Requirements above 100% are not feasible margins. Joint rows instead search non-negative uniform margin factors only up to the EBIT/EBITDA guardrails; the entire margin path scales, including post-FY2030 convergence. Sales and margins change together only in that table. The rate search runs from the largest terminal growth rate plus 0.5 percentage points to 30% WACC.
The discount rate
- Cost of equity
- 9.87%
- WACC
- 9.64%
- 10-year Treasury · model / spot
- 3.87% · 5.13%
r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 1.20 after Blume adjustment × 5%, rounded to 0.01% (1bp)
methodology §4.5: market-weighted WACC, not rounded
The model uses the recorded 5-year average Treasury yield. The spot yield is shown for context.
Every input, with its source
Show 13 inputs · reported, guidance and rule-based
| Input | Value | Basis | Why |
|---|---|---|---|
| Revenue FY2026Advertising Platform (Axon, MAX and Ads Manager) | $8.4B | Reported | target (methodology §4.2), growth 52.8% s21.q4cdn.com ↗ |
| Revenue FY2030Advertising Platform (Axon, MAX and Ads Manager) | $23.9B | Guidance | target (methodology §4.2), growth 30.0% s21.q4cdn.com ↗ |
| EBIT margin FY2030Advertising Platform (Axon, MAX and Ads Manager) | 75.8% | Rule | Signal Ledger judgment: Assume FY2030 GAAP EBIT margin stays at the existing FY2025 margin of 75.7526% on rounded model inputs, instead of the 79.7526% the rule alone would give. The FY2025 10-K reports operating income of $4.151914B on revenue of $5.480717B, or 75.7549%, including $0.207958B of stock-based compensation (https://www.sec.gov/Archives/edgar/data/1751008/000175100826000010/app-20251231.htm). In the official Q2 2026 transcript, management prioritizes EBITDA dollars and free cash flow, describes increased training and inference investment, and expects a low-80% long-term EBITDA margin, not GAAP EBIT guidance (https://s21.q4cdn.com/165405286/files/doc_financials/2026/q2/Q2-2026-AppLovin-Earnings-Presentation.pdf, pp. 2-3 and 9). The historical GAAP margin is our sustainable-margin proxy, not a management FY2030 target or a claimed ceiling; Q2 GAAP EBIT margin was already 77.68%. Our judgment calls · Read methodology ↗ |
| Maintenance capexAdvertising Platform (Axon, MAX and Ads Manager) | 2.0% | Rule | No verified maintenance/growth split; explicit rule default 2% of revenue. sec.gov ↗ |
| Terminal growthAdvertising Platform (Axon, MAX and Ads Manager) | 3.0% | Rule | methodology §4.2 terminal growth for a growth line Valuation methodology §4.2 · Read methodology ↗ |
| WACCDiscount rates | 9.64% | Rule | methodology §4.5: market-weighted WACC, not rounded FRED DGS10 2021-10-20..2026-10-21 |
| Cost of equityDiscount rates | 9.87% | Rule | r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 1.20 after Blume adjustment × 5%, rounded to 0.01% (1bp) 60 monthly returns vs SPY, 2021-09..2026-09 (adjusted closes) |
| Tax rateDiscount rates | 21.0% | Rule | No verified normalized tax guidance or three-year cash-tax series; use the US statutory 21% fallback, not a transient GAAP benefit. sec.gov ↗ |
| Cash and short-term investmentsBalance sheet | $3.1B | Reported | cash, cash equivalents and short-term investments us-gaap:CashAndCashEquivalentsAtCarryingValue · 0001751008-26-000059 (filed 2026-08-05) |
| BorrowingsBalance sheet | $3.5B | Reported | borrowings due within a year plus long-term borrowings; current liabilities fully tagged and reconciled; no current borrowing line; As of June 30, 2026, we did not have outstanding borrowings under the Credit Agreement. sec.gov ↗ |
| Finance leasesBalance sheet | $0.1B | Rule | Finance leases: carry forward the 2025-12-31 annual report amount of $0.122653B; not separately disclosed in the current period (2026-06-30). Separate from ordinary borrowings; 0.1387% of equity market cap ($88.441566B = price $264.28 × 0.334651B economic shares), within the 2% limit. Latest reported amount held unchanged; no estimate from subsequent principal payments or additions. sec.gov ↗ |
| SharesBalance sheet | 0.335B | Reported | shares outstanding as of 2026-07-31 cover page of 10-Q 0001751008-26-000059 (2 share classes summed) |
| Dividends per yearShareholders | $0.0B | Reported | Most recent annual ordinary cash dividends; verify continuation against the latest release; no future repurchases. × 0.335B shares sec.gov ↗ |
Research notes
- Finance leases: carry forward the 2025-12-31 annual report amount of $0.122653B; not separately disclosed in the current period (2026-06-30). Separate from ordinary borrowings; 0.1387% of equity market cap ($88.441566B = price $264.28 × 0.334651B economic shares), within the 2% limit. Latest reported amount held unchanged; no estimate from subsequent principal payments or additions. Original SEC source: https://www.sec.gov/Archives/edgar/data/1751008/000175100826000010/app-20251231.htm
- share-count comparison: 0.337031B quarter 2026-04-01..2026-06-30 · 0001751008-26-000059; point-in-time denominator retained
- cost of equity 9.87% (β 1.20 after Blume adjustment), WACC 9.6%
Signal Ledger research under one stated scenario — management's targets are delivered, with our stated judgment calls — not a forecast that they will be and not investment advice. The research desk (GPT-6.1 (Codex)) gathers filings, guidance and targets; deterministic code applies the samepublished rules to every company and checks the result. Inputs may contain errors; follow the source links before relying on them. Read our valuation methodology →