AppLovin upgraded to ’BBB’ by Fitch on strong performance

Investing.com -- Fitch Ratings has upgraded AppLovin Corporation’s Long-Term Issuer Default Rating to ’BBB’ from ’BBB-’ with a Stable outlook, the rating agency announced Thursday.

The upgrade reflects AppLovin’s leading position in mobile gaming, increased scale with over $11 billion in gross spend across its platforms, and stronger-than-expected operating performance. The company has achieved double-digit revenue and EBITDA growth, resulting in free cash flow margins expected to exceed 50%.

Fitch also upgraded the ratings on AppLovin’s revolving credit facility and unsecured notes to ’BBB’ from ’BBB-’.

The rating agency cited AppLovin’s enhancements to its AXON AI-based recommendation engine as a key factor driving improved ad performance for customers. These improvements have led to increased spending on the company’s user acquisition and monetization platforms, strengthening customer retention and expanding market share.

AppLovin has expanded beyond gaming into e-commerce, with annualized customer spend in this vertical already exceeding $1 billion as of Q3 2025. While still representing a small portion of total revenue, this diversification reduces the company’s reliance on gaming.

The company’s profitability and cash generation are expected to remain strong, with EBITDA margins projected in the low 80% range and free cash flow generation expected to exceed $3 billion in fiscal 2025. Fitch expects AppLovin to maintain a conservative financial policy with EBITDA leverage remaining below 2x.

Despite these strengths, the ratings remain constrained by AppLovin’s concentration in mobile gaming and exposure to a fragmented ad-tech market. The company also faces potential risks from evolving app-tracking regulations that enhance user privacy and limit third-party data collection.

Compared to peers, AppLovin operates at more than double the revenue scale of Unity Software, with revenue expected to exceed $5 billion in 2025. The company also delivers materially higher profitability, with run-rate margins in the low 80s versus Unity’s year-to-date 2025 margins of roughly 20%.

Fitch projects 2025 revenue growth for AppLovin in the low-20% range, driven by greater than 65% growth in advertising software revenues, partially offset by the negative revenue impact from the divested Apps business.

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