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AppLovin Corp (APP)

CIK: 0001751008. SIC: 7370 Services-Computer Programming, Data Processing, Etc.. Latest 10-K as of: 2026-02-19.

SIC breadcrumb: Services > Business Services > SIC 7370 Services-Computer Programming, Data Processing, Etc.

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1751008. Latest filing source: 0001751008-26-000010.

Selected Fundamentals

MetricValueUnitFYFiled
Revenue5,480,717,000USD20252026-02-19
Net income3,333,751,000USD20252026-02-19
Assets7,259,610,000USD20252026-02-19

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-19. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001751008.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Metric20182019202020212022202320242025
Revenue994,104,0001,451,086,0002,793,104,0002,817,058,0001,841,762,0003,224,058,0005,480,717,000
Net income119,040,000-125,187,00035,446,000-192,746,000356,711,0001,579,776,0003,333,751,000
Operating income194,371,000-62,042,000150,016,000-47,791,000772,411,0001,910,956,0004,151,914,000
Diluted EPS0.36-0.580.09-0.520.984.539.75
Assets2,154,593,0006,163,579,0005,847,846,0005,359,187,0005,869,259,0007,259,610,000
Liabilities2,312,829,0004,025,288,0003,945,169,0004,102,858,0004,779,441,0005,124,939,000
Stockholders' equity-378,355,000-256,567,000-158,545,0002,138,090,0001,902,677,0001,256,329,0001,089,818,0002,134,671,000
Cash and cash equivalents317,235,0001,520,504,0001,080,484,000502,152,000697,030,0002,487,096,000
Net margin11.97%-8.63%1.27%-6.84%19.37%49.00%60.83%
Operating margin19.55%-4.28%5.37%-1.70%41.94%59.27%75.75%

Financial Charts

Macro Cross-References

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-19. Report date: 2025-12-31.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors” and other parts of this Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

Our mission is to create meaningful connections between companies and their ideal customers. We provide end-to-end AI-powered advertising solutions for businesses to reach, monetize and grow their global audience. Our scaled business model is intricately linked to the advertising ecosystem, providing a durable competitive advantage. We generate revenue when our advertisers achieve their return on advertising spend targets with our advertising solutions, ensuring that their success directly fuels our growth.

Since our founding in 2011, we have been focused on building advertising solutions for advertisers to improve the marketing and monetization of their content. Our founders, who were mobile app developers themselves, quickly realized the real impediment to success and growth in the advertising ecosystem was a discovery and monetization problem—breaking through the congested app stores to efficiently find users and successfully grow their business. Their first-hand experience with these challenges led to the development of our infrastructure and advertising solutions.

Recent Developments

On May 7, 2025, we, along with our subsidiaries Morocco, Inc. and AppLovin GmbH (collectively, the “Sellers”) entered into a Purchase Agreement (the “Agreement”) with Tripledot and its subsidiaries Eton Games Inc. ("Eton") and Tripledot Group Holdings Limited (collectively, with Tripledot, the “Purchasers”) relating to the sale of our Apps business. On June 30, 2025, we and Tripledot entered into an amendment to the Agreement to provide, among other things, that in lieu of the issuance of a secured promissory note by Eton to us or our designated affiliate to fund a portion of the full Cash Consideration (as defined in the Agreement), Tripledot may elect to pay such amount in cash.

On June 30, 2025, we consummated the sale of the Apps business to the Purchasers for $400 million in cash, subject to closing adjustments, and equity consideration representing approximately 20% of Tripledot’s fully-diluted equity at the time of closing. No promissory note was issued as part of the transaction. Following the sale of the Apps business, we operate as a single operating and reportable segment. Results related to our Apps business are presented as discontinued operations in our consolidated financial statements. See Note 2—Summary of Significant Accounting Policies and Note 3 – Discontinued Operations of the Notes to consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

Our Business Model

We primarily generate revenue from fees paid by advertisers who use our advertising solutions to grow and monetize their content. We are able to grow our revenue by improving our various technologies, including improvements to our Axon AI recommendation engine.

Advertising clients include a wide variety of advertisers, from indie developer studios to some of the largest global internet platforms, such as Meta and Google. We see multiple opportunities to gain new clients, and to increase spend from existing clients, as we help them grow their businesses and make them more successful.

Our advertising solutions include Axon Ads Manager, MAX, Adjust, and Wurl. Clients use Axon Ads Manager to automate, optimize, and manage their user acquisition investments. They set marketing and user growth goals, and Axon Ads Manager optimizes their ad spend in an effort to achieve their return on advertising spend targets and other marketing objectives. Axon Ads Manager comprises the vast majority of revenue. The revenue we generate from Axon Ads Manager is determined dynamically based on advertisers’ campaign goals.

Advertising networks use MAX to optimize purchases of app advertising inventory. The MAX tool provides insights to manage against key performance indicators, understand the long-term value of users, and help manage profitability. Revenue from MAX is generated based on a percentage of client spend. As more advertising networks move to in-app real-time bidding, we expect growth in the adoption of, and revenue from, MAX.

Advertising clients use Adjust's measurement and analytics marketing platform to better understand their users' journey while allowing marketers to make smarter decisions through measurement, attribution and fraud prevention. Revenue from Adjust is primarily generated from an annual software subscription fee.

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Advertising clients use Wurl's CTV platform to distribute streaming video, maximize revenue, and acquire and retain viewers or subscribers. Revenue from Wurl is primarily generated from content companies, streamers, and advertisers, typically on a usage-based and/or CPM model.

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA Margin

We define Adjusted EBITDA for a particular period as net income adjusted for loss from discontinued operations, net of income taxes, interest expense and loss on settlement of debt, other income, net (excluding certain recurring items), provision for income taxes, amortization, depreciation and write-offs and as further adjusted for stock-based compensation, transaction-related expense, restructuring costs, and non-operating foreign exchange (gain) loss, as well as certain other items that we believe are not reflective of our core operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue for the same period.

Adjusted EBITDA and Adjusted EBITDA margin are key measures we use to assess our financial performance and are also used for internal planning and forecasting purposes. We believe Adjusted EBITDA and Adjusted EBITDA margin are helpful to investors, analysts, and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. In addition, these measures are frequently used by analysts, investors, and other interested parties to evaluate and assess performance. We use Adjusted EBITDA and Adjusted EBITDA margin in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance.

Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures and are presented for supplemental informational purposes only and should not be considered as alternatives or substitutes to financial information presented in accordance with GAAP. These measures have certain limitations in that they do not include the impact of certain expenses that are reflected in our consolidated statement of operations that are necessary to run our business. Our definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, our Adjusted EBITDA and Adjusted EBITDA margin should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP.

The following table provides our Adjusted EBITDA and Adjusted EBITDA margin for 2025, 2024, and 2023, and a reconciliation of net income to Adjusted EBITDA:

Year Ended December 31,

2025

2024

2023

(in thousands, except percentages)

Revenue

$

5,480,717

$

3,224,058

$

1,841,762

Net income

3,333,751

1,579,776

356,711

Net margin

60.8%

49.0%

19.4%

Loss from discontinued operations, net of income taxes

99,444

9,748

101,115

Net income from continuing operations

3,433,195

1,589,524

457,826

Net margin from continuing operations

62.6%

49.3%

24.9%

Adjusted as follows:

Interest expense and loss on settlement of debt

207,016

317,209

273,508

Other income, net1

(15,694)

(23,396)

(4,729)

Provision for income taxes

519,715

22,419

43,776

Amortization, depreciation and write-offs

130,724

128,791

119,152

Non-operating foreign exchange (gain) loss

(3,949)

1,642

837

Stock-based compensation

207,958

357,431

342,551

Transaction-related expense

27,579

885

1,047

Restructuring costs

5,908

17,259

2,316

Adjusted EBITDA

$

4,512,452

$

2,411,764

$

1,236,284

Adjusted EBITDA margin

82.3%

74.8%

67.1%

1 Excludes recurring operational foreign exchange gains and losses.

Free Cash Flow

We define Free Cash Flow as net cash provided by operating activities less purchases of property and equipment and principal payment of finance leases. We use Free Cash Flow to help manage the health of our business, prepare budgets and for capital allocation purposes. We believe Free Cash Flow provides useful supplemental information to help investors understand

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underlying trends in our business and our liquidity. Free Cash Flow also reflects cash flows from both continuing and discontinued operations. Our definition may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish Free Cash Flow or similar metrics. Thus, our Free Cash Flow should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP.

The following table provides our Free Cash Flow for 2025, 2024, and 2023, and a reconciliation of net cash provided by operating activities to Free Cash Flow:

Year Ended December 31,

2025

2024

2023

(in thousands)

Net cash provided by operating activities

$

3,971,094 

$

2,099,011 

$

1,061,510 

Less:

Purchase of property and equipment

(473)

(4,776)

(4,246)

Principal payments of finance leases

(18,669)

(20,875)

(20,170)

Free Cash Flow

$

3,951,952 

$

2,073,360 

$

1,037,094 

Net cash provided by (used in) investing activities

$

358,428 

$

(106,754)

$

(77,829)

Net cash used in financing activities

$

(2,593,069)

$

(1,749,844)

$

(1,562,791)

Factors Affecting Our Performance

We believe that the future success of our business depends on many factors, including the factors described below.

Continue to invest in innovation

We have made, and intend to continue to make, significant investments in our advertising solutions to enhance their effectiveness and value proposition for our clients. We expect to continue to invest in our technology and solutions and to incur related costs, including costs to attract and retain critical engineering talent, such as stock-based compensation, as well as datacenter costs as we continue to launch enhancements to our Axon AI recommendation engine. We believe investments in our technology will further improve effectiveness for advertisers. Our investments will also allow us to continue to enter into and expand into new verticals outside of gaming, such as e-commerce and CTV. We also continue to opportunistically explore strategic transactions related to our advertising solutions and the expansion of the markets we serve.

Attract and retain clients

We rely on existing clients for a significant portion of our revenue. As we improve our advertising solutions, we can attract additional spend from these clients. Our clients include indie studio developers and some of the largest advertising platforms in the world. We believe there is significant room for us to further expand our relationships with existing clients and increase their usage of our advertising solutions, as well as to onboard new clients both inside and outside of mobile gaming. We expect to continue to invest in sales and marketing to enhance awareness of the Axon brand and drive new client acquisition.

Changes to the mobile app and advertising ecosystems

Our business and results of operations are and will continue to be impacted by industry factors that drive the overall performance and growth of the mobile app and advertising ecosystems. Mobile app developers rely on third-party platforms, such as the Apple App Store and Google Play Store, among others, to distribute apps, collect payments made for in-app purchases, and target users with relevant advertising. These third-party platforms have significant market power and discretion to set platform fees, select which apps to promote, and decide how much consumer information to provide to advertising networks that enable our advertising solutions to target users with personalized and relevant advertising and allocate marketing campaigns in an efficient and cost-effective manner. Any changes made to the policies of these third party platforms can drive rapid change across the mobile app and advertising ecosystems. Both the Apple App Store and Google Play Store have made various changes to their policies in recent years, as further discussed in the section titled “Risk Factors–Risks Related to Our Business, Operations and Industry–-If third-party platforms change their policies in a way that harms our business, including the design and effectiveness of our advertising solutions, our business, financial condition, and results of operations could be adversely affected.” The mobile app and advertising ecosystems also continue to be subject to an evolving legal and regulatory landscape, including with respect to data protection, privacy, and AI. We must continue to innovate and stay ahead of developments in the advertising and mobile app ecosystems in order for our business to succeed and our results of operations to continue to improve.

Components of Results of Operations

Revenue

We generate substantially all of our revenue from fees collected from advertisers spending on Axon Ads Manager, which are determined dynamically based on advertisers’ campaign goals. Revenue from other services was not material. Revenue does not include the results of our former Apps business, which is classified as discontinued operations.

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Cost of Revenue and Operating Expenses

Cost of revenue. Cost of revenue consists primarily of amortization of acquired technology-related intangible assets, amortization of finance lease right-of-use assets related to certain servers and networking equipment and datacenter costs related primarily to third-party cloud computing services.

Sales and marketing. Sales and marketing expenses consist primarily of marketing programs and other advertising expenses, professional services costs, personnel-related expenses including salaries, employee benefits, and stock-based compensation for employees engaged in sales and marketing activities, amortization of acquired user-related intangible assets, travel and allocated facilities and information technology costs.

Research and development. Research and development expenses consist primarily of product development costs, including personnel-related expenses such as salaries, employee benefits, and stock-based compensation for employees engaged in research and development activities, professional services costs, consulting costs, and allocated facilities and information technology costs.

General and administrative. General and administrative expenses consist primarily of costs incurred to support our business, including personnel-related expenses such as salaries, employee benefits, and stock-based compensation for employees engaged in finance, accounting, legal, human resources and administration, professional services fees for legal, accounting, recruiting, and administrative services (including acquisition or other transaction-related expenses), insurance, travel, and allocated facilities and information technology costs.

Other Income and Expenses

Interest expense and loss on settlement of debt. Interest expense and loss on settlement of debt consists primarily of interest expense associated with our outstanding debt, including accretion of debt discount and issuance costs.

Other income, net. Other income, net, primarily includes interest earned on our cash and cash equivalents, fair value adjustments relating to our non-marketable equity securities, and foreign currency gains and losses.

Provision for income taxes. We are subject to income taxes in the United States and foreign jurisdictions in which we do business. These foreign jurisdictions have different statutory tax rates than those in the United States. Additionally, certain of our foreign earnings may also be taxable in the United States. Accordingly, our effective tax rate will vary depending on the relative proportion of foreign to domestic income, impacts from acquisition restructuring, deduction benefits related to foreign-derived intangible income, future changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws. Additionally, our effective tax rate can vary based on the amount of pre-tax income or loss.

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Results of Operations

In this section, we discuss the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024, as well as a comparison for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The following tables summarize our historical consolidated statement of operations:

Year Ended December 31,

2025

2024

2023

(in thousands)

Revenue

$

5,480,717 

$

3,224,058 

$

1,841,762 

Costs and expenses

Cost of revenue1,2

665,140 

520,613 

356,613 

Sales and marketing1,2

203,651 

252,863 

228,025 

Research and development1

226,510 

374,710 

333,781 

General and administrative1

233,502 

164,916 

150,932 

Total costs and expenses

1,328,803 

1,313,102 

1,069,351 

Income from operations

4,151,914 

1,910,956 

772,411 

Other income (expense):

Interest expense and loss on settlement of debt

(207,016)

(317,209)

(273,508)

Other income, net

8,012 

18,196 

2,699 

Total other expense, net

(199,004)

(299,013)

(270,809)

Income before income taxes

3,952,910 

1,611,943 

501,602 

Provision for income taxes

519,715 

22,419 

43,776 

Net income from continuing operations

3,433,195 

1,589,524 

457,826 

Loss from discontinued operations, net of income taxes

(99,444)

(9,748)

(101,115)

Net income

$

3,333,751 

$

1,579,776 

$

356,711 

_______

1 Includes stock-based compensation as follows:

Year Ended December 31,

2025

2024

2023

(in thousands)

Cost of revenue

$

1,425 

$

4,799 

$

3,834 

Sales and marketing

34,055 

76,824 

69,903 

Research and development

114,463 

229,577 

216,236 

General and administrative

58,015 

46,231 

52,578 

Total stock-based compensation

$

207,958 

$

357,431 

$

342,551 

_______

2 Includes amortization expense related to intangible assets as follows:

Year Ended December 31,

2025

2024

2023

(in thousands)

Cost of revenue

$

42,300 

$

38,220 

$

36,983 

Sales and marketing

55,104 

54,628 

54,556 

Total amortization expense related to intangible assets

$

97,404 

$

92,848 

$

91,539 

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The following table sets forth the components of our consolidated statements of operations for each of the periods presented as a percentage of revenue1:

Year Ended December 31,

2025

2024

2023

Revenue

100 

%

100 

%

100 

%

Costs and expenses

Cost of revenue

12 

%

16 

%

19 

%

Sales and marketing

4 

%

8 

%

12 

%

Research and development

4 

%

12 

%

18 

%

General and administrative

4 

%

5 

%

8 

%

Total costs and expenses

24 

%

41 

%

58 

%

Income from operations

76 

%

59 

%

42 

%

Other income (expense):

Interest expense and loss on settlement of debt

(4)

%

(10)

%

(15)

%

Other income, net

— 

%

1 

%

— 

%

Total other expense, net

(4)

%

(9)

%

(15)

%

Income before income taxes

72 

%

50 

%

27 

%

Provision for income taxes

9 

%

1 

%

2 

%

Net income from continuing operations

63 

%

49 

%

25 

%

Loss from discontinued operations, net of income taxes

(2)

%

— 

%

(5)

%

Net income

61 

%

49 

%

19 

%

_______

1 Totals of percentages of revenue may not foot due to rounding.

Comparison of Our Results of Operations for the Twelve Months Ended December 31, 2025, 2024, and 2023

Revenue

Year Ended December 31,

2024 to 2025

% change

2023 to 2024

% change

2025

2024

2023

(in thousands, except percentages)

Revenue

$

5,480,717 

$

3,224,058 

$

1,841,762 

70 

%

75 

%

For the twelve months ended December 31, 2025, our revenue increased by $2.3 billion, or 70%, from the prior year period primarily due to improved Axon Ads Manager performance, where the volume of installations increased 3% and net revenue per installation increased 72% compared to the prior year period.

For the twelve months ended December 31, 2024, our revenue increased by $1.4 billion, or 75%, from the prior year period primarily due to improved Axon Ads Manager performance, where the volume of installations increased 50% and net revenue per installation increased 22% compared to the prior year period.

Cost of revenue

Year Ended December 31,

2024 to 2025

% change

2023 to 2024

% change

2025

2024

2023

(in thousands, except percentages)

Cost of revenue

$

665,140 

$

520,613 

$

356,613 

28 

%

46 

%

Percentage of revenue

12 

%

16 

%

19 

%

Cost of revenue in 2025 increased by $144.5 million, or 28%, compared to 2024, due primarily to an increase of $150.2 million in expenses associated with operating our network infrastructure driven by the growth in our operations.

Cost of revenue in 2024 increased by $164.0 million, or 46%, compared to 2023, due primarily to an increase of $141.3 million in expenses associated with operating our network infrastructure driven by the growth in our operations.

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Sales and marketing

Year Ended December 31,

2024 to 2025

% change

2023 to 2024

% change

2025

2024

2023

(in thousands, except percentages)

Sales and marketing

$

203,651 

$

252,863 

$

228,025 

(19)

%

11 

%

Percentage of revenue

4 

%

8 

%

12 

%

Sales and marketing expenses in 2025 decreased by $49.2 million, or 19%, compared to 2024 due primarily to a decrease of $57.1 million in personnel-related expenses related to a decrease in stock-based compensation related payroll costs and a reduction in headcount.

Sales and marketing expenses in 2024 increased by $24.8 million, or 11%, compared to 2023 due primarily to an increase of $12.8 million in personnel-related expenses related to an increase in stock-based compensation related payroll costs and an increase of $4.8 million in marketing costs.

Research and development

Year Ended December 31,

2024 to 2025

% change

2023 to 2024

% change

2025

2024

2023

(in thousands, except percentages)

Research and development

$

226,510 

$

374,710 

$

333,781 

(40)

%

12 

%

Percentage of revenue

4 

%

12 

%

18 

%

Research and development expenses in 2025 decreased by $148.2 million, or 40%, compared to 2024, due primarily to a decrease of $151.1 million in personnel-related expenses related to a decrease in stock-based compensation related payroll costs.

Research and development expenses in 2024 increased by $40.9 million, or 12%, compared to 2023, due primarily to an increase of $39.8 million in personnel-related expenses related to an increase in stock-based compensation related payroll costs.

General and administrative

Year Ended December 31,

2024 to 2025

% change

2023 to 2024

% change

2025

2024

2023

(in thousands, except percentages)

General and administrative

$

233,502 

$

164,916 

$

150,932 

42 

%

9 

%

Percentage of revenue

4 

%

5 

%

8 

%

General and administrative expenses in 2025 increased by $68.6 million, or 42% compared to 2024, due primarily to an increase of $31.6 million in professional services costs primarily associated with transaction support and an increase of $24.5 million in bad debt expense primarily related to new initiatives.

General and administrative expenses in 2024 increased by $14.0 million, or 9% compared to 2023, due primarily to an increase of $9.5 million in indirect tax costs and an increase of $5.5 million in personnel-related expenses related to an increase in stock-based compensation related payroll costs, partially offset by a decrease of $6.3 million in bad debt expense.

Interest expense and loss on settlement of debt

Year Ended December 31,

2024 to 2025

% change

2023 to 2024

% change

2025

2024

2023

(in thousands, except percentages)

Interest expense and loss on settlement of debt

$

(207,016)

$

(317,209)

$

(273,508)

(35)

%

16 

%

Percentage of revenue

(4)

%

(10)

%

(15)

%

In 2025, interest expense and loss on settlement of debt decreased by $110.2 million, or 35%, compared to 2024. Interest expense decreased $78.7 million as a result of lower interest rates under our senior unsecured notes compared to the interest rates under our prior credit agreement. The decrease was also due to a loss on extinguishment of debt of $28.4 million in the prior year period.

In 2024, interest expense and loss on settlement of debt increased by $43.7 million, or 16%, compared to 2023. This increase was due to loss on extinguishment of debt of $28.4 million in 2024. In addition, the prior year period included a net gain of $15.8 million related to interest rate swaps.

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Other income, net

Year Ended December 31,

2024 to 2025

% change

2023 to 2024

% change

2025

2024

2023

(in thousands, except percentages)

Other income, net

$

8,012 

$

18,196 

$

2,699 

(56)

%

**

Percentage of revenue

— 

%

1 

%

— 

%

** Not meaningful

In 2025, other income, net decreased by $10.2 million compared to 2024, due primarily to a net fair value remeasurement loss of $34.8 million related to our investments in non-marketable equity securities in the current period and an increase in net foreign currency losses of $2.5 million. This is partially offset by an increase in interest income of $18.2 million driven by an increase in cash and a decrease in certain third-party costs of $6.6 million incurred in connection with the refinancing of term loans in the prior year period.

In 2024, other income, net increased by $15.5 million compared to 2023. The increase was primarily due to the loss on fair value remeasurement of $24.2 million from the impairment of non-marketable equity securities in the prior year period, partially offset by a decrease in interest income of $9.1 million due to a reduction in average cash balances held during the period.

Provision for Income Taxes

Year Ended December 31,

2024 to 2025

% change

2023 to 2024

% change

2025

2024

2023

(in thousands, except percentages)

Provision for income taxes

$

519,715 

$

22,419 

$

43,776 

**

**

Percentage of revenue

9 

%

1 

%

2 

%

** Not meaningful

In 2025, provision for income taxes increased by $497.3 million compared to 2024. The increase in tax provision was primarily driven by higher pre-tax book income, global minimum tax, a decrease in stock-based compensation benefits, and a decrease in research and development credits, partially offset by an increase in deduction benefits related to foreign-derived intangible income.

In 2024, provision for income taxes decreased by $21.4 million compared to 2023. The decrease in tax provision was primarily driven by an increase in stock-based compensation benefits, an increase in research and development credits, and a favorable shift in jurisdictional mix partially offset by higher pre-tax book income.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. We evaluated the provisions of OBBBA effective in 2025 and its impact on the consolidated financial statements was immaterial.

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Liquidity and Capital Resources

As of December 31, 2025, we had cash and cash equivalents of $2.5 billion, consisting primarily of cash held in checking and interest-bearing deposit accounts, as well as investments in money market funds. We believe that our existing cash and cash equivalents, cash flows expected to be generated by our operations, and, if necessary, our borrowing capacity under our 2024 Credit Agreement that provides for a $1.0 billion unsecured revolving credit facility, would be sufficient to satisfy our anticipated working capital and capital expenditures needs for at least the next 12 months. Our future capital requirements will depend on many factors, including our revenue growth rate; sales and marketing activities; timing and extent of spending to support our research and development efforts; capital expenditures to purchase hardware and software; our continued need to invest in our IT infrastructure to support our growth; and the volume and timing of our stock repurchases. In addition, we may enter into additional strategic investments in teams and technologies, including intellectual property rights, which could increase our cash requirements. As a result of these and other factors, we may be required to seek additional equity or debt financing sooner than we currently anticipate, or we may opportunistically seek additional financing. See the section titled “Risk Factors—Risks Related to Financial and Accounting Matters” for more information regarding risks related to liquidity and capital resources.

The following table summarizes our cash flows for the periods indicated (all periods include cash flows from continuing and discontinued operations):

Year Ended December 31,

2025

2024

2023

(in thousands)

Net cash provided by operating activities

$

3,971,094 

$

2,099,011 

$

1,061,510 

Net cash provided by (used in) investing activities

$

358,428 

$

(106,754)

$

(77,829)

Net cash used in financing activities

$

(2,593,069)

$

(1,749,844)

$

(1,562,791)

Operating Activities

Net cash provided by operating activities was $4.0 billion for 2025, primarily consisting of $3.3 billion of net income, adjusted for certain non-cash items, such as $210.4 million of stock-based compensation, $194.8 million of amortization, depreciation and write-offs, $188.9 million of goodwill impairment, $50.0 million of impairment of non-marketable equity securities, and a net increase in the operating assets and liabilities of $77.9 million, partially offset by a gain from the divestiture of our Apps business, net of transaction costs, of $106.2 million.

Net cash provided by operating activities was $2.1 billion for 2024, primarily consisting of $1.6 billion of net income, adjusted for certain non-cash items, such as $448.7 million of amortization, depreciation and write-offs, and $369.4 million of stock-based compensation, partially offset by a net decrease in the operating assets and liabilities of $349.5 million.

The improvement in cash flows from operating activities during 2025 compared to 2024 was primarily due to an increase in cash collection from our customers driven by revenue growth and a decrease of interest payments on debt as a result of lower interest rates, partially offset by higher cash operating expenses primarily associated with operating our network infrastructure, as well as higher income tax payments due to revenue growth.

Investing Activities

Net cash provided by investing activities was $358.4 million for 2025, primarily driven by $407.3 million in proceeds from the divestiture of our Apps business, net of cash divested, which were partially offset by $28.3 million related to purchase of intangible assets and $20.2 million in purchases of non-marketable equity securities.

Net cash used in investing activities was $106.8 million for 2024, primarily consisting of $77.0 million in purchases of non-marketable equity securities and $25.6 million related to purchase of intangible assets.

Financing Activities

Net cash used in financing activities was $2.6 billion for 2025, primarily driven by $2.2 billion in stock repurchases under our share repurchase program and $392.4 million in payments for withholding taxes related to the net share settlement of equity awards.

Net cash used in financing activities was $1.7 billion for 2024, primarily consisting of $4.2 billion in principal repayments of debt, $1.1 billion in payments for withholding taxes related to net share settlement of equity awards, and $981.3 million of stock repurchases, partially offset by $4.6 billion of proceeds from issuance of debt.

Credit Agreement

Our unsecured revolving credit facility under the 2024 Credit Agreement provides for up to $1.0 billion of borrowing capacity and matures on December 5, 2029, with the option for two one-year extensions, subject to the terms of the agreement. In March 2025, we borrowed $200.0 million under the facility to fund share repurchases and we repaid $100.0 million in April 2025 and the remaining $100.0 million in May 2025. As of December 31, 2025, $1.0 billion remained available for borrowing under the facility. For additional information, see Note 9—Debt to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

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Long-term Debt

As of December 31, 2025, we had $3.6 billion of senior unsecured notes outstanding, issued in multiple series that mature between 2029 and 2054 and bear fixed annual interest rates ranging from 5.125% to 5.950%. Interest is payable semi-annually in arrears on June 1 and December 1 of each year, beginning June 1, 2025. For additional information, see Note 9—Debt to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Stock Repurchase Program

In 2025, we repurchased and retired 5.5 million shares of Class A common stock for $2.2 billion and our board of directors authorized an incremental increase to our stock repurchase program totaling $3.2 billion. As of December 31, 2025, $3.3 billion remained available for repurchases under the program. The program has no expiration date, does not obligate us to repurchase any specific amount of stock, and may be modified, suspended, or terminated at any time at our discretion. For additional information, see Note 10—Equity to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Contractual Obligations

As of December 31, 2025, we had non-cancelable purchase obligations of $702.8 million, primarily related to an agreement for third-party cloud computing services, of which $398.5 million is payable within twelve months. For additional information, see Note 6—Commitments and Contingencies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

As of December 31, 2025, we had non-cancelable lease payment obligations of $173.9 million, consisting of $140.3 million for server and network equipment leases and $33.7 million for office leases, of which $37.7 million is payable within twelve months. For additional information, see Note 8—Leases to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Taxes

As of December 31, 2025, our long-term income tax liabilities include $64.2 million related to the uncertain tax positions. Due to uncertainties in the timing of potential tax audits, the timing of the resolution of these positions is uncertain and we are unable to make a reasonable estimate of the timing of payments in individual years particularly beyond 12 months.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. On an ongoing basis, we evaluate our estimates based on assumptions that are believed to be reasonable under the circumstances. These estimates are inherently subject to judgment and actual results could differ materially from those estimates.

An accounting estimate is considered critical if it involves significant subjectivity and judgment, and if changes in the estimate have had or are reasonably likely to have a material effect on our consolidated financial statements. We believe the following estimates are subject to a greater degree of judgment and complexity and have the greatest potential impact on our consolidated financial statements. For additional information on all of our significant accounting policies, see Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Goodwill and Intangible Assets

We assess goodwill for impairment at the reporting unit level annually during the fourth quarter, or more frequently if events or changes in circumstances indicate potential impairment. Similarly, we evaluate intangible assets for impairment at the asset group level whenever indications suggest that their carrying amounts may not be recoverable. These impairment assessments involve both qualitative and quantitative evaluations.

The qualitative evaluation considers factors such as financial performance, macroeconomic conditions, industry trends, and other relevant events that may impact a reporting unit or asset group. If qualitative assessments suggest a potential impairment, we proceed with a quantitative assessment, which involves significant estimates and assumptions including projected future cash flows, risk-adjusted discount rates, economic and market conditions, and appropriate market comparables, among others. Additionally, we apply judgment and assumptions in allocating shared assets and liabilities to determine the carrying values of each reporting unit or asset group. Furthermore, we review and reassess the estimated remaining useful lives of intangible assets if significant events or changes in circumstances indicate a need to revise the remaining amortization periods.

Equity Method Investments

We account for investments under the equity method when we have the ability to exercise significant influence, but not control, over the financial and operating policies of an investee, unless the fair value option is elected. Equity method investments are initially recorded at cost and subsequently adjusted for our proportionate share of the investee’s net income or loss and the amortization of basis differences arising from the excess of investment cost over our share of the investee’s

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underlying net assets. We record our share of the investee’s results and related basis difference amortization one quarter in arrears in other income (expense), net in our consolidated statements of operations.

We evaluate equity method investments for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable and record an impairment loss when a decline in fair value below carrying value is determined to be other than temporary. Indicators of potential impairment include, among other factors, the investee’s financial results and operating trends, implied values from transactions involving the investee’s securities, the severity and duration of any decline in value, and our intent and ability to hold the investment. If an impairment is determined to be other than temporary, we determine the investment’s fair value and record an impairment charge for the difference between fair value and carrying value. Determining fair value, particularly for investments in privately held companies, requires significant judgment and the use of estimates and assumptions. Changes in these estimates and assumptions could affect the fair value determination and the amount of any impairment charges.

Stock-Based Compensation

We measure and recognize stock-based compensation for share-based awards, primarily including restricted stock units ("RSUs"), performance-based RSUs with both service and market-based conditions, stock options and stock purchase rights granted under the Employee Stock Purchase Plan, based on the grant-date fair value of the awards. To estimate the grant-date fair value, we may use different valuation models such as the Black-Scholes option valuation model or the Monte Carlo valuation model that require various assumptions including, among others, the expected stock price volatility, the risk-free interest rate, the expected dividend yield, the discount for awards subject to post-vesting restrictions.

Income Taxes

Significant management judgment is required in determining our provision for income taxes, including the determination of deferred tax assets and liabilities. We consider both positive and negative evidence regarding the realizability of deferred tax assets in assessing the need for valuation allowances, and if necessary, adjust the valuation allowance so that the net deferred tax assets are recorded only to the extent we conclude it is more likely than not that these deferred tax assets will be realized.

In evaluating the exposure associated with various tax filing positions, we accrue an income tax liability when such positions do not meet the more-likely-than-not threshold for recognition. We consider changes in facts and circumstances, such as new regulations or recent judicial opinions, as well as the status of audit activities by taxing authorities.

While we believe we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes and the effective tax rate in the period in which such determination is made.

Recent Accounting Pronouncements

See Note 2—Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the dates of the statement of financial position included in this Annual Report on 10-K.