Q3 Revenue Soars 68% with 82% EBITDA Margin as Evercore Sets $835 Target
Q3 revenue +68% YoY, EBITDA margin 82%; Axon and new self-service platform drive advertiser spend into e-commerce beyond gaming. Evercore ISI launched Outperform with $835 target (25% upside), forecasting >30% CAGR to 2028 and $3.4B e-commerce revenue by fiscal 2028.
1. Strong Q3 Performance Fuels Buy Thesis
AppLovin reported third-quarter revenue growth of 68% year-over-year, driven by expansions in both mobile gaming and e-commerce advertising. The company achieved EBITDA margins of 82%, reflecting operational leverage within its core ad-tech business. Management reiterated expectations for sustained high double-digit revenue growth and stable low-80% EBITDA margins over the next several quarters, underpinned by continued adoption of its advertising solutions across a growing base of game developers and consumer brands.
2. Platform Innovations Accelerate Advertiser Spend
The recently enhanced Axon bidding engine and the launch of a self-service advertising platform have significantly reduced time-to-market for advertisers, enabling real-time campaign optimization. Since the platform rollout, non-gaming advertisers have increased spend share by over 15% sequentially, signaling traction beyond AppLovin’s traditional mobile gaming vertical. Internal data indicate a 30% uplift in average revenue per advertiser in e-commerce use cases, as brands leverage performance-oriented tools to capture direct-to-consumer sales.
3. Evercore Initiates at Outperform with Material Upside
Evercore ISI initiated coverage of AppLovin with an Outperform rating and projects roughly 25% upside to its valuation target, based on a multiple of forward EBITDA. The firm expects combined mobile gaming and e-commerce ad spend to drive revenue and EBITDA compound annual growth rates exceeding 30% from fiscal 2025 through 2028. Evercore’s analysis highlights AppLovin’s position as a dominant ad-tech platform in gaming, with a credible pathway to becoming a scaled player in performance advertising alongside established competitors.
4. Long-Term TAM Expansion and Financial Projections
Analyst models forecast that AppLovin could capture high-single to low-double-digit penetration of direct-to-consumer e-commerce ad spend by fiscal 2028, translating to approximately $3.4 billion in annual revenue from a $7.5 billion addressable segment. Within a broader digital ad market estimated between $75 billion and $150 billion, the company’s diversified platform and robust data assets support the potential for sustained market share gains. Even under conservative regulatory scenarios, management believes mobile gaming revenues will remain resilient while e-commerce performance marketing could accelerate share gains.