APP · 10-Q · 2026Q2 · Full report

Gross Margin Drivers

AppLovin Corp · 2026-08-05 · Importance 64 · Surprise 56 · Matches filing data

Second-quarter 2026 cost of revenue increased 46% to $225.8 million from $155.1 million. Six-month cost of revenue increased 40% to $429.4 million from $306.8 million. The increases were driven primarily by $52.1 million of additional network-infrastructure expenses in the quarter and $92.0 million for six months. Despite higher infrastructure spending, revenue growth exceeded cost-of-revenue growth, improving the implied gross margin.

Key facts

• Three months ended June 30, 2026 Cost of revenue increased by $70.7 million, or 46%, compared to the same period in the prior year due primarily to an increase of $52.1 million in expenses associated with operating our network infrastructure. source
• Three months ended June 30, 2026 Cost of revenue: $225,801 (in thousands). source
• Six months ended June 30, 2026 Cost of revenue: $429,433 (in thousands). source
• Cost of revenue consists primarily of datacenter costs related mainly to third-party cloud computing services, amortization of acquired technology-related intangible assets and finance lease right-of-use assets related to certain servers and networking equipment, and third-party payment processing fees related to customer transactions. source

Impact estimates