AppLovin upgraded to ’BBB’ by S&P on strong growth and improved position

Published 10/10/2025, 19:48
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Investing.com -- S&P Global Ratings has upgraded AppLovin Corp. to ’BBB’ from ’BBB-’ with a stable outlook, citing improved business prospects and competitive positioning.

The mobile advertising company is expected to grow its revenues by approximately 65% in 2025 and an additional 25% in 2026, following 74% year-over-year growth during the first six months of 2025. This growth is driven by the ongoing shift from traditional to digital advertising and the company’s proprietary AI-powered advertising engine, AXON.

AXON utilizes machine learning to improve targeting of advertising solutions by learning and self-iterating, which has led to faster-than-industry revenue growth. S&P believes barriers are high for competitors to replicate AppLovin’s machine-learning engine due to the substantial time and capital required.

The company reaches approximately 1.6 billion daily active users via mobile apps with its software development kit embedded, representing a substantial majority of the mobile gaming industry. This reach is significantly larger compared to peers such as Liftoff Mobile and Unity.

S&P expects AppLovin’s adjusted EBITDA to increase to $4.3 billion in 2025 and $5.5 billion in 2026, with adjusted EBITDA margins of about 80%. The margin improvement follows the company’s sale of its lower-margin APPs business in June 2025.

The rating agency forecasts adjusted leverage to remain below 1x over the next 24 months, with adjusted net leverage of 0.6x in 2025 and 0.3x in 2026. This provides AppLovin with an ample cushion to the rating, even with expectations that the company will use on average 70% of its free cash flow for share repurchases.

S&P could lower the rating if leverage increases above 2x on a sustained basis, or if sales significantly decline and the company loses market share. A rating upgrade could occur if AppLovin demonstrates a long-term commitment to maintaining adjusted net leverage below 1.5x while showing sustainable growth and business diversification beyond mobile gaming.

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