APPLOVIN SHARES FALL 17% AFTER Q2 REVENUE MISSES FORECAST

Applovin, an adtech company, reported second-quarter revenue of $1.92 billion, falling short of the $1.94 billion expected by analysts according to LSEG estimates. The company's share price fell 17% on Thursday following the announcement. Earnings per share met expectations at $3.76. Chief Executive Adam Foroughi attributed the shortfall to delays in rolling out improvements to the company's artificial intelligence-powered advertising models, particularly within its e-commerce expansion.

Foroughi stated during an earnings call that the pace of model improvement during the quarter was slower than usual, with a significant performance upgrade arriving after the quarter ended. Revenue nonetheless rose 53% year-on-year. Piper Sandler analyst James Callahan downgraded the stock from overweight to neutral on Thursday, reducing the bank's price target from $665 to $385. Callahan wrote that whilst the bank remained impressed by management and the company's market position, it had "more questions than answers" regarding future earnings performance and chose to step back from the stock.

The miss represents a notable setback for Applovin, which has been expanding its artificial intelligence capabilities in the competitive adtech sector. Foroughi acknowledged the company had "fell short of that standard" it typically maintains for outperforming expectations. The company did not announce revised guidance or confirmed timescales for when model improvements would materialise.