Welcome to AppLovin's earnings call for the second quarter ended June 30, 2025. I'm David Hsiao, Head of Investor Relations. Joining me today to discuss our results are Adam Foroughi, our Co-Founder, CEO and Chairperson; and Matt Stumpf, our CFO. Please note, our SEC filings to date as well as our financial update and press release discussing our second quarter performance are available at investors.applovin.com. During today's call, we will be making forward-looking statements, including, but not limited to, the future development and reach of our platform including the expected timing of product launches, our expected growth opportunities, the efficiency of our operations, the expected future financial performance of the company and other future events. These statements are based on our current assumptions and beliefs, and we assume no obligation to update them, except as required by law. Our actual results may differ materially from the results predicted. We encourage you to review the risk factors in our most recently filed form 10-Q for the first quarter ended March 31, 2025. Additional information may also be found on our quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2020, which will be filed today. We will also be discussing non-GAAP financial measures. These non-GAAP measures are not intended to be superior to or a substitute for our GAAP results. Please be sure to review the GAAP results and the reconciliation of our GAAP and non-GAAP financial measures in our earnings release and financial update available on our Investor Relations site. This conference call is being recorded, and a replay will be available for a period of time on our IR website. Now I'll turn it over to Adam and Matt for some opening remarks. Then we'll have the moderator take us through Q&A.

Thanks, everyone, for joining us today. We appreciate your time and interest. Q2 2025 was another great quarter, driven by continued strength in gaming advertising. Our growth comes from improved technology, increased demand as well as from supply side expansion. The MAX marketplace creates the supply that drives our growth as well as the growth in the market. As marketing technologies in the industry continue improving, we expect the supply will keep growing quickly. While we don't disclose exact MAX marketplace growth rates, it has consistently been double digits, far outpacing growth in the in-app purchasing gaming market. The ongoing improvement in our models drives sustainable growth rates beyond the market growth rates, while we continue to expand our dominant leadership position. Based on all the opportunity in front of us in our core market, we are confident we can sustain 20% to 30% year-over-year growth driven by just gaming. However, what excites us more than ever is the opportunity to really expand outside our core market. Recently, we took the first step towards opening up our platform broadly, quietly launching our new AXON ads manager, our self-service portal, which will serve as the foundation for our next decade of growth. Our ads manager has many benefits. It puts day-to-day controls directly in advertisers' hands, reducing friction. It enables credit card billing, eliminating the hassle of monthly invoicing. It provides the architecture for agents that can eventually automate every workflow. It establishes the framework for automatically generated ads. It simplifies onboarding through our recently launched Shopify app. It deepens integrations with attribution providers, giving customers more accurate reporting. With the rollout going smoothly, we are ready to widen access. On October 1, 2025, we plan to open the AXON ads manager on a referral basis, perfectly timed for the holiday season. Feedback from these partners will guide our global public launch in the first half of 2026. To date, web advertising campaigns have been limited to the United States. On October 1, we plan to open our platform to most major international markets. Now stepping back, we have spent the last decade assembling the pieces, reaching a user base of more than 1 billion users and building best-in-class optimization. Together, they position us to help any business of any size anywhere in the world grow profitably. That is good for our partners. It's good for economies around the world, and it's great for job creation. The opportunity is so large that we will be launching the platform under its own brand, AXON. Once AXON is fully open next year, we plan to begin paid marketing to recruit new advertisers, which will drive predictable compounding growth. We have been building performance-driven advertising products longer and better than most anyone. Operating at our current scale with an incredibly small number of advertiser relationships highlights the magnitude of the opportunity ahead. Our strategy is simple: build world-class products, launch them when they meet our high bar and compound from there. Patient, disciplined execution produces durable success, and we hope our track record gives you the same confidence we have in our future. We're incredibly excited about what's ahead. With that, I'll turn it over to Matt for a closer look at the numbers.

Thanks, Adam, and thanks to everyone for joining us today. Q2 was another exceptional quarter for AppLovin. At the end of the quarter, we closed the sale of our Apps business to Tripledot Studios. This quarter, the financial results for the Apps business are included within discontinued operations, and we will keep our commentary limited to the advertising business only. During the quarter, revenue increased by a very healthy 77% from last year to approximately $1.260 billion, while adjusted EBITDA nearly doubled to an impressive $1.020 billion, achieving an 81% adjusted EBITDA margin. The majority of our revenue growth in the quarter was driven by our core gaming business. While e-commerce continues to perform well, we limited onboarding of new customers to focus on the preparation for the self-serve launch in Q4. Quarter-over-quarter flow-through from revenue to adjusted EBITDA was a very strong 81%, illustrating our continued dedication to operating lean. At the end of the second quarter, we had $1.2 billion in cash and cash equivalents, which includes $425 million in net cash received from the sale of the Apps business. In the second quarter, we generated $768 million in free cash flow, up a staggering 72% year-over-year. Our free cash flow was slightly lower than last quarter due to the timing of payments for interest on our bonds, which are semiannual and certain taxes associated with the prior year. This quarter, we repurchased and withheld approximately 900,000 shares for a total cost of $341 million funded through free cash flow. As a result of our ongoing strategic share management activities, we were able to reduce our weighted average diluted common shares outstanding this year from 346 million in the fourth quarter to 342 million this quarter. Finally, turning to our financial guidance for next quarter. In the third quarter of 2025, for the Advertising business, we anticipate delivering between $1.320 billion and $1.340 billion in revenue, with adjusted EBITDA between $1.070 billion and $1.090 billion, targeting an adjusted EBITDA margin of 81%. We're confident these targets position us to continue driving strong growth and value for our partners and shareholders. Now with that, let's move to Q&A.

Our first question will come from Matthew Cost from Morgan Stanley.

I guess on your plans to start doing paid marketing next year, talk to us a little bit about how you arrived at this decision to market to acquire advertisers because I think historically, it's mostly been growth by word of mouth and sort of virality within the gaming industry that people become aware of your products. So I guess why is now the right time to start marketing? What channels are you going to market through? And how are you going to evaluate the return there? And then I have one follow-up.

Matt, good to see you. So look, we've got big aspirations with our platform. The advertising solution right now to web commerce advertisers and more broadly, other categories we've talked about is looking really strong. Obviously, we have very small penetration in terms of advertiser base against what our global advertisers count. The way we look at our business is if the model works this well at this small amount of penetration, what happens when we can really open it up and go service all the small businesses in the world. Our aspirations are to help any business of any size be able to acquire customers profitably. If we can do that, we'll achieve the goals that we've set for ourselves. So the value of us being able to go out in performance market, the platform, is that we've got one of the most lucrative financial models the world has ever seen. I mean, obviously, you can see the amount of cash that we produce. And we're very good performance marketers. It's plausible that we will be using our own models to recruit advertisers off of our own inventory. There's plenty of moms and dads with small businesses sitting in games, playing games all day that could use our platform to market themselves. You can imagine us running ads on Facebook, on LinkedIn, on TikTok. But it really does come down to the fact that we've got such a lucrative financial model and we try to run lean and automate every step of that process. We believe that if we can automate the onboarding of advertiser flow from when an advertiser can find out about us from an ad all the way through to going live and then scaling on our platform, the model will be very lucrative on an LTV to CAC basis, and we won't have to staff up a large sales force.

Great. And then on the supply side, you made some comments in the prepared remarks about some strong supply growth that you're seeing. Given that MAX is kind of already starting from such a strong position already, is the further growth, is it a function of just taking even more share in mediation? Is it about ad load increasing to the customers you already have? I guess where is the supply growth coming from?

Yes. Look, we talk a lot about the market in mobile gaming and people fixate on the in-app purchasing market. What we're trying to do is highlight the fact that our business grows from improvements in technology and demand, which drives CPM and expansion of supply. The MAX mediation platform has a really high penetration into the market, so we're not going to be able to grow it particularly quickly by taking more mediation from other platforms at this point. What we highlighted was that the base platform, just the audience inside MAX, is growing swiftly, double-digit growth, so multiples greater than what you would expect when people try to size up the gaming market growth rates of 3% to 5%. The other thing that is super valuable to understand in that is that inside that marketplace, we historically have always talked about how there's not a share gain concept. As the marketing platforms improve, that platform grows. The eyeballs playing games play more games every single day. Inventory goes up. That drives growth on our platform. It drives growth on the platforms that are the other bidders inside that ecosystem. And then we benefit the most because we're taxing every transaction for the most part that happens outside of us at the MAX fee. And then obviously, our own DSP is a super lucrative business model when we win the inventory.

Next, we'll hear from Ralph Schackart with William Blair.

Just 2 if I could. Just on the self-serve platform, Adam, maybe you could sort of frame this for us. The launch is coming up, public launch coming up, which is exciting. But could this be a pretty material impact to the overall business? Obviously, it's of good scale today and growing pretty fast, but maybe kind of frame that opportunity. And then I have a follow-up, please.

Yes, sure. I mean let's look back over the last year at our numbers, and then I'm going to give you qualitatively sort of what was going on with growth in the business. In Q4, we saw a huge ramp-up in the e-commerce category when we went into this pilot state, recruiting hundreds of advertisers that we disclosed. That was a big ramp-up in Q4, where, in Q1, we got the full benefit of that run rate. If you look back at the quarter-over-quarter growth, Q4 and Q1 were really high growth rates. The reason for that is that the new type of customer that comes into our platform is extremely incremental to our business as we've talked about in the past. Since then, we highlighted a whole bunch of things that we had to go build into the platform to service advertisers at the level that we like to do. We wanted to build the ads manager, which we released and we will continue to innovate and iterate through. We wanted to build dynamic product ads that came out in the last couple of quarters. We wanted to do better integrations with attribution companies, which happened inside the quarter. We wanted to launch a Shopify app and other tools that allow for seamless integration among the advertiser base. We ended up constraining the advertiser onboarding process for a couple of quarters while we made sure that the product was at the level that we wanted to get it to. Now we're looking at, in Q4, talking about a referral-based opening. That, in itself, I'm going to define that for you so you understand what we're talking about: accounts on the platform like our solutions because they're spending substantial amounts of money on our platform. We'll get the chance to refer their colleagues into our platform and have them go live in a self-service way. We expect that will increase the advertiser count quite quickly and allow us to go through live examples of advertisers coming in self-service all the way to scaling on our product. Assuming all that goes well, then we talked about opening up the platform entirely to the world in the first half of next year. We think as advertiser count grows on our business, especially in categories outside of gaming, you're going to see a lot of upside in the numbers that we're able to report.

Great. Maybe one more if I could. I think historically, you've talked about e-commerce being around 10% or so of the business for this year. Maybe just sort of an update if that's current thinking. And then I think in your prepared remarks, you talked about limited onboarding to e-com customers. Did that sort of limit the growth rate in the quarter had you not limited those customers being onboarded?

Yes, for sure. I mean, I'll take it in reverse. By constraining the advertiser count, we're limiting growth. Now we're focused on growing the cohort that's live, which we saw growth from the cohort that's live that Matt, in his prepared remarks, said majority of our growth came from gaming. If you assume a large amount of the growth in the quarter came from gaming and you're roughly at a 9% quarter-over-quarter increase, gaming is still a 30% to 40% grower for us, well above our 20% to 30% long-term goals that we've stated. Now e-commerce, we went from a state where we ramped it in Q1 and then controlled the advertiser onboarding while we got these tools ready to go. Where we were at was that sort of 10% range that we were targeting for the year. There's a reason I expect it to have grown above that because gaming is growing so quickly. For 2 quarters now, we've mentioned that gaming was a big contributor to growth. As we go into Q4, that's a huge holiday shopping season. Not only are you going to see the cohort that we have live spend a lot more, but you're also going to have new onboarding happening for the first time in our history at a rate that's much higher than we will have ever seen before. We fully expect that e-commerce will see a substantial ramp-up through that what you can call a soft launch period and then, as we go into a broader global release, the impact from that. And the last point to remember is one of my prepared remarks highlighted that we have constrained the advertisers we even have live today by not allowing them to buy our audience that's international. The vast majority of our user audience is outside the U.S. We will be releasing almost all markets once we go into this October 1 release.

Our next question will come from Omar Dessouky with Bank of America.

Can you hear me?

Yes, can hear you fine.

I just wanted to take the conversation in a slightly different direction if I could and ask about game engine data. One of your competitors, specifically Unity, which owns a game engine that 70% or so of mobile games are built on, plans to use game engine data for ad targeting purposes sometime in 2026. Do other companies besides them have access to game engine data? Do you know if your customers own their own game engine data and if you're able to access it and use it at some point in the future? And do you think it matters?

Yes. Omar, we can't speak to other people's data. I mean we don't know what game engine data even means. But when you're integrated inside an application, both as a publisher and as an advertiser, you have a lot of behavioral data points that you can extract on how the consumer is playing into a game. We're obviously very good. Our models are cutting edge. AXON 2 has shown phenomenal growth for, I don't know, 8, 9 quarters now since release. You have to assume we're pretty good at using the data we have available to us. What we don't know, as you didn't define game engine data, is, is there some magical data out there? But our market penetration inside gaming is really large at this point. It's materially higher than 70%. We've got strong visibility into what matters in the gaming category given how large we've become. What's really going to matter for our business as we go forward is whether we can expand our offering as expected across all businesses of all sizes in any category. If we're able to do that, we will have a much better sense of the consumer on the other side. And I do want to remind everyone, we have more than 1 billion users and they're not just gamers. These are human beings doing a variety of activities, but the share of wallet from gaming is going to be a minority of the dollars that these people are spending outside of gaming. That's what's compelling to us as we go to this next chapter in the company. If our models that are already this good with such a small amount of advertiser penetration gain visibility into consumer behavior across every category, we're going to be far more predictive about the advertisement we can show the consumer.

Our next question will come from Chris Kuntarich with UBS.

Maybe just on the referral program and how this is going to work functionally. Are advertisers that are currently on this platform going to be given referral bonuses? Is there going to be any restriction on advertisers that they could refer? You've talked about opening up international inventory. Will international advertisers be available to participate in the referral program? And just as we think about the line out the door of advertisers you've been talking about for a while, are they going to get any special consideration to come in here maybe if they don't get a referral?

Chris, I can't say we have all the answers to all those questions you asked. We're going to definitely go through an iterative period, too, on the release of the referral program. But fundamentally, we don't think a ticket to our system is really worth paying for. If someone is a client of ours, they have a lot of benefit from being on the platform. People love using social media. You've already seen a whole lot of organic posts about us from influencers. We think as we give them the capacity to invite their peers, they're going to do it on their own because the platform has been exclusive for so long. If we see that happen, it's much better organically. And beyond that, the line out the door will still need to likely get an invite into the platform from one of our customers to be able to get automatically cleared.

Right. Okay. Just as we're thinking about the 3Q guidance here maybe a little bit faster than what we've seen in the past couple of quarters, is there anything reflected here in the faster sequential growth associated with the App portfolio divestiture? And any sort of quantification around that would be helpful.

Yes, sure. So the one change we did make, Chris, this quarter, which is slightly different than kind of our typical cadence that we've been going through every quarter, was to include the benefit we’re going to see from the divestiture of the Apps business, where we have a slight pickup in revenue. We also incorporated that within the Q3 guide.

Your next question will come from Jason Bazinet with Citi.

So I think on the last call, you all said that you're definitely working towards building 2 AXON models, right, 1 that's specific to games and 1 that's more focused on the other e-commerce. You use a new term now. I can't remember what it is, but I'll call it e-commerce. But I know it's more holistic. When you think about all the data that you had to ingest and the models that you had to build to make the gaming model as good as it is, what's sort of the right runway that you have in your mind before those 2 could be at parity in terms of efficacy?

That's a really good question, Jason. It's hard to predict because we're looking at the future and will gather a lot of data as we expand the platform. The two models we're developing are quite different. One is for users visiting a website, while the other involves users going to an app store, which we can't measure directly. In gaming, when we launched AXON 2.0, we already had decent market penetration, estimated at around 50% to 60%. Now, as we connect with larger customers, we've seen improvement, making our presence almost essential in the gaming market due to our effectiveness. In e-commerce, we were thrilled with the initial pilot results, especially since the first beauty shop had no prior knowledge of shopper behavior in that category. The key concern was whether AppLovin's technology could successfully convert users to buy from a beauty store without any background data. We currently have hundreds of e-commerce businesses on the platform, which is a small fraction compared to the vast scale of these markets, like Shopify having millions of shops. This presents a huge opportunity for data growth. The data we collect isn't limited to one part of the business; we believe gaming will significantly benefit from insights gained in e-commerce. For example, someone buying an expensive handbag is likely a strong candidate for a match-three game. Our technology will reveal cross-correlations and insights that are even more significant than that. Opening up the platform not only increases demand for our services, benefiting the business, but also enhances our data collection. Each quarter, you'll notice how our engineers improve the technology's data interpretation, establishing a solid foundation for long-term growth.

Next, we'll go to Rob Sanderson with Loop Capital.

My question is about enhancing performance for your web-based advertisers. When we talk to pilot customers, they indicate that you are very effective at driving conversions, but it appears that there are many basic targeting features missing, such as the ability to exclude existing customers. This seems like a straightforward issue to address, but it could be more complex due to the multi-app inventory. The real question revolves around the targeting and improvements that web-based customers are requesting. Are these mainly issues you've already addressed for gaming customers, or are you facing a completely new set of challenges?

Yes, it's a great question. So look, when we got into the space, it surprised us how much of the market Meta advertising was in the D2C space; it was the majority. When you have one platform that's that big, everyone wants every other platform to give them the same exact tools. Now we don’t have an e-mail address or that persistent identifier that matches up with their audience data. So technically, doing an exclude is not going to be as accurate as what Meta can deliver to these advertisers. There are other nuances and differences. We serve a full-screen advertisement, and then we can pair the video with a dynamic product ad. That creates more intent for shoppers. The vast majority of all transactions we drive happen within an hour or 2, while the majority of transactions Meta drives take attribution over a much longer time frame. These are differences between platforms, but advertisers like comfort. They like what they know. They want to stick with the same processes. We believe, because we can see it, our ads drive a lot of intent and conversions very quickly, and we've been able to extract a lot of value out of the space. If you take the disclosure I gave you in Q1, hundreds of advertisers that have a $1 billion run rate, the market penetration in terms of the market of advertisers to the total is probably 1% or less. To get to a $1 billion run rate, clearly, even if they're complaining about missing features, the money is showing up at a level that you wouldn't expect for that little market penetration. As we go to bring in new customers, we think the products we deliver work well. Their mindsets will change over time because they'll realize that platforms are different, and that's good for their business. Lastly, we believe in automation throughout the funnel. We don’t allow gaming companies to use any sort of manual targeting in our platform. The platform allows them to input a goal, set a budget, and get that result. We bring the same view to this category. All technologies in advertising are going to move to AI to automate most of this funnel in the future. We've already done this in our largest part of our business, and we are committed to doing that in this category.

If I could ask a follow-up, you've said in previous calls that you're going to be patient and wait for a great experience for all customers before you open up. You mentioned that 80% are having good outcomes, but maybe 20% aren't. The product has been performing in a certain way. But October 1, obviously, you're still referral-based, so you're not completely open, but it's definitely a big step forward. Can we infer that it's largely improving performance that's informing that decision to go bigger? And if so, how would you grade that? Or any commentary on performance?

Look, last call, I laid out a list that I thought would take quarters, and our team knocked out most of that list in a single quarter. We got the Shopify app integration live and we don't announce these things, but you can find the app in the Shopify App Store. It facilitates one-click integration. We got dynamic product ads live which made a material uplift to the ability for the advertiser to run a video plus inventory ad to then transact the user in a very short time frame. We conducted more in-depth integrations with attribution companies, which we discussed last time. It was really important so that we can report the same way that the advertiser looks at data and lets the model interpret data that way. We're continuously improving the core underlying model. The advertisers we have are seeing substantial growth and providing us with strong feedback, giving us no reason to hold back from opening our platform as soon as we can now.

Our next question will come from Clark Lampen with BTIG.

I have, obviously, I guess, some follow-ups on the self-serve launch. But I wanted to see, as you all are thinking about taking on more of the customers that are in backlog, onboarding new cohorts and verticals next year, in the near term, is there any significant difference if we think about customers coming on from a size or product vertical standpoint? And from the referral dynamic, does that have any impact on expenses or margins? Will those customers be given credits or any sort of compensation for bringing in peers?

Yes. Second one first, Clark. The incremental value of a dollar in our business is worth a ton. If we decide to pay a referral, you know that we like to make money, so I wouldn't expect you'll see it in the margin number. It's just that the business is way too big. But it's very likely that what we look at is what I mentioned earlier. The chance for our clients to tell their peers to come on our platform while we've been exclusive for this long is a perk in itself. If we see this happen, it's much better organically. And beyond that, we'll still need to most likely get an invite into the platform from one of our customers to be automatically cleared. Regarding customer profiles, it will vary because we're going to open up to a much larger count. So far, we've gone through a period where, at first, I think we constrained it to $25 million, $30 million of GMV, limited it for a bit, then raised it to $100 million plus this quarter to really manage what comes on the platform. As we open up, the goal is to see that any small business of any type can market on our platform. If we achieve that goal, we know we’ll become a product that is essential to economies and job creation globally. That’s our goal. If we don't see that, we’re going to work on it. But we believe the product is prepared for this. We’ve seen cases where regardless of size, customers just plug in and it works. They can find their customers, measure as they need, and get expected results to grow their business. If we see this in this referral state, we're on track to open up the business aggressively.

Okay. And then not that this is something that's, I guess, a huge priority right now, but in terms of long-run supply expansion, I think you guys, as you have more model improvements, will unlock supply across the existing gaming footprint. But when you think, I guess, maybe years down the road, is there a way to sort of expand MAX sort of logically outside of the gaming ecosystem?

Yes. I don't think it's going to be years down the road if we're able to access the demand broadly and drive the client count substantially over the coming quarters. Pretty quickly, we'll be looking at new supply sources as well. There’s no reason we wouldn't want to plug into other properties, even if they're large social networks, music apps, news apps, or sports apps. The audience itself, again, this gamer audience is a human being doing a variety of activities, and games account for probably 10% to 15% of their mobile time. If we can access them outside of major walled gardens that won't let us in everywhere else, if we know them and we have data on them, we want to show ads to them every chance we get, and we believe that will be a very lucrative transaction moment for us and the advertiser. So I wouldn't expect that initiative to be years into the future.

Next, James Heaney with Jefferies.

Adam, have you seen any changes in overall user acquisition spend from gaming companies post the Apple versus Epic lawsuit? I mean, conceptually, it should be a great tailwind for your business, but interested if you're seeing any benefits playing out currently.

Not yet. I think I mentioned this on the last call, but we expect this to take longer than people expect. Some apps are bypassing the App Store now to cut that rate down. The biggest gaming companies tend to move really slowly and operate in fear of the big platforms. For them to fully do it, I think it will take a few quarters for them to optimize the user experiences. From there, you'll start seeing it compound quickly in terms of benefit to us as an ad platform. Once the very large leaders start doing it, the smaller to mid-sized ones will quickly follow. So no impact yet, and I would guess it will probably take 2 to 4 quarters before we see some impact, and by 4 to 8 quarters, you may see significant impact on pricing on our platform.

Great. And then maybe just another one on capital allocation. It looks like without the Apps business, you're generating a 60% plus free cash flow margin. So just interested to hear how you're thinking about use of cash.

Yes. The approach that we're going to take, James, going forward is very consistent with what we've done in the past. First, we'll continue to allocate capital towards organic initiatives, continuing to hire high-quality engineering and business development talent, to help grow the organic business and after that, continue to return capital to shareholders via share buybacks. This will be our approach going forward as well.

Our next question will come from Martin Yang with Opp Co.

One question on international expansion. Can you give us a sense of how you view the size of the U.S. market versus international when it comes to your ideal target customer in the near term? And then I have a follow-up.

Yes. Let's break it down into two parts. First, we have our international businesses, such as a local shop in Japan, compared to our domestic U.S. operations. Second, there's the aspect of traffic. Historically, because we've grown mainly through word of mouth, attracting customers from local markets has always been challenging. It's been easier for us to engage with companies that are international buyers. Our revenue is influenced by where our audience is located and how monetizable that audience is. As I recall, it's about evenly split between the domestic U.S. market and the rest of the world. Just to note, we do not generally operate in China. Now, regarding the e-commerce sector, our $1 billion run rate indicates that opening up additional countries won't double our revenue overnight. Many Western companies find it difficult to operate in markets like Japan or Korea due to language localization, but there are numerous markets that resemble the U.S. Once we expand, our initial market can significantly grow. We anticipate that local Japanese companies will join our platform, and if we do not see them coming in naturally, we will actively market to attract them. Similarly, companies in Korea will come onto the platform, and we expect to achieve a deeper presence in every market where our users are engaged. The addition of advertisers in these segments is valuable for us, as our financial model supports scaling on a global level.

Got it. My follow-up question is on the pace of onboarding international customers. Do you see a pent-up demand among those? So when it comes to pacing, should we see a sudden uptick similar to Q4 last year in the U.S., or will international onboarding be more gradual in line with your overall rollout?

Yes. I can't say I know. I mean, I haven't looked at the queue of domains. You'd have to infer the company’s base, and we don’t track countries of origin. The reality is, as we open up the platform, the customers we have inside gaming are global. As they invite their peers, their peers are in their headquarters. So there's coverage all over the world. The companies that are live inside e-commerce are predominantly U.S., so their peers will probably be in western markets. You'll have a mix of referrals going out. I don't anticipate everyone will focus on the U.S. user. It will be broad-reaching, and there are no constraints we're setting as we open the platform.

Our next question will come from Jim Callahan with Piper Sandler.

On e-commerce, you're working with various advertisers with different bidding goals and purchase windows. What have you learned through that process so far if that's informing the self-serve toolset?

It is much more fragmented when it comes to attribution and integration than the mobile app ecosystem. The mobile app ecosystem has 2 major MMPs, mobile measurement partners, and we own one of them. Integration is pretty easy across the advertiser base and everyone has the same attribution model. When we got into web, not only had we to contend with the fact that the majority of media buying was on Meta, so everyone wanted things the way they look at those on Meta, but we also faced fragmentation. This was one of the bigger lifts we had to accomplish over the last couple of quarters: all the integrations that I laid out previously. We wouldn't be able to open the platform if every shop that comes on can't integrate in one click. Therefore, we needed to have that deal integrated in their store and approved as functional. We also needed integrations with major attribution companies, so numbers align and advertisers can see things as they need for the model to optimize on their behalf. We've gotten through it, and there's been positive reception, which gives us confidence to continue opening up the platform.

Great. That's helpful. And just on core gaming in the quarter, anything to call out in terms of model enhancements, tweaks, performance improvements?

Yes. I mean nothing that's a double-digit step function. But look, the numbers are getting bigger now. We continue to put up significant numbers every single quarter. Q2 isn't particularly strong seasonally in the category, but we still grew at a very healthy rate. We continue to deliver a lot of value to advertisers, leading them to come back to reinvest more as they continue to see strong return on ad spending on our platform. Our confidence is being driven by the fact that our numbers are still growing healthily without substantial model enhancements. Everything else we’re discussing creates upside opportunities in the business, in addition to the data flywheel from new demand that will also benefit gaming.

Our next question comes from Bernie McTernan with Needham & Company.

Incremental margins of the business are obviously pretty incredible. Should there be any changes that we expect as e-commerce expands; whether from marketing to acquire advertisers or the economics as you're looking to plug into other supply sources, like this 80%, 90%, 100% incremental margins? Is that still the right way to think about the business?

Well, the latter when we plug in will be net revenue reported, right? Because we're going to report revenue the same way. The former will be a cost line item, but as you've seen, we're responsible for the dollars we spend. One, you'll see the sales and marketing line, so we'll talk about it as we go and test it. Two, we'll test it. And three, we're only spending dollars on performance marketing if we print cash on the other side, creating the growth upside that we expect. It will be a cost line item that wouldn’t have existed before, and it will be one that we believe every shareholder will love to see grow because it implies we're going to have a large spread on the LTV to user acquisition costs on the other side.

Our next question comes from Arsenije Matovic with Wolfe.

Adam, with Meta reintroducing the advanced mobile measurement and just supporting it, do you see that as an opportunity to showcase like app engines and incremental performance for e-commerce campaigns versus Meta? Could your advertisers that are opting in drive stronger traction with e-commerce advertisers, especially with the referral-based rollout in October? Is that timing of that rollout keeping that 10% of revenue being e-commerce intact for the year? And then, Matt, just a quick follow-up after.

You blitzed those questions. They sort of ran together for me. Let's start with advanced mobile measurement. We don't comment on other companies' measurement or integrations, but they've always been integrated as a self-attributing network with Adjust. Adjust is no different than AppsFlyer. We run that business completely separately. They do support attribution models across all these companies. I don't think there's any overlap with our business on these integrations. Your second question about e-comm revenue in the future, we’re starting at 10%. I think we said 0.5% market penetration. We are probably sub-1% of the market reported over 10 million advertisers, and we’re going after all businesses of all sizes. It’s a small number still in revenue. If we succeed in accessing these advertisers to perform well, then it will quickly make the e-comm marketing grow a lot larger as we go forward. Whether our business becomes 90% web-based advertising and 10% mobile gaming, it varies. But, given the data flywheel, both sides will mutually benefit.

Yes, sure. So the one change we did make, Chris, this quarter, which is slightly different than our typical cadence that we've been going was to include the benefit as well that we're going to see from the divestiture of the Apps business, where we have a slight revenue pickup. We also incorporated that within the Q3 guide.

And that concludes the question-and-answer session for this quarter. We thank you all for joining us today. Have a good afternoon.

Thanks, everyone.

Thank you.