Liftoff Mobile, Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead. Thank you, operator, and good afternoon, everyone.

We're delighted to welcome you to Liftoff's first earnings call as a public company. Joining me today are Jeremy Bondy, Liftoff's Chief Executive Officer, and Tarek Kutrieh, Liftoff's President and Chief Financial Officer. Earlier this afternoon, we reported our financial results for the second quarter of 2026. Jeremy and Tarek will begin with prepared remarks covering our performance and business highlights before we open the call for your questions. To give as many participants as possible an opportunity to ask questions, we kindly ask that you limit yourself to one question and one follow-up. Today's discussion, along with our earnings release and accompanying slide presentation, may include references to certain non-GAAP financial measures and key operating metrics, which are defined in the appendices to the earnings release and slide presentation.

Our earnings release and slide presentation are available on our investor relations website at investors.liftoff.ai. Reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures, as well as information regarding our key performance indicators, is included in those documents. Before we begin, I'd like to remind you that certain statements made during the call may include forward-looking statements related to our future financial and operating performance, business strategy, and growth plans. Any statements we make about the future are, by their nature, uncertain. These statements are based on currently available information and assumptions, and they are subject to a number of significant risks and uncertainties that could cause our actual results to differ from those projected in the forward-looking statements.

We describe some of these uncertainties in the Risk Factors section of the prospectus included in our most recent registration statement on Form S-1, our most recent earnings release and slide presentation, and other filings we make with the SEC from time to time. Liftoff expressly disclaims any obligation to update forward-looking statements except as required by law. Now, I'd like to turn the call over to Jeremy.

Thanks, Jen. Good afternoon, everyone, and thank you for joining Liftoff's first earnings call as a public company. For many of us, this call marks a milestone in a journey that began almost 15 years ago. That said, we believe we are still in the early innings of our long-term growth story. Q2 was a strong quarter. We achieved an 11th consecutive quarter of revenue growth, and we expanded our adjusted EBITDA margin. These results show our strategy in action. We use machine learning across an integrated platform to serve the entire app economy. The platform learns from advertiser outcomes and supply signals, helping us value each ad opportunity more effectively. This quarter, market growth, core tech self-learning, and model breakthroughs all contributed to performance. Several of the app categories we serve converge around major cultural moments and global sporting events.

For example, we saw increased demand during the FIFA World Cup in Q2, particularly across OSB, live scoring apps, and prediction markets. This activity contributed to our second quarter performance. The global sports calendar is one source of high-attention moments across the broader app economy. As focus shifts from the FIFA World Cup to the NFL season, for example, our platform helps customers scale efficiently. We bring the same capability to cultural moments of all kinds across every vertical we serve worldwide, enabling customers to drive profitable user acquisition over time. Tarek will walk through the results and our outlook in more detail shortly, but since this is our first call together, I will spend a few minutes on the market we operate in, what Liftoff does, and where we go from here. Starting with the marketplace, the mobile app economy is massive and growing.

More than 5 billion people around the world use smartphones, and they spend an average of about three hours a day inside apps. Liftoff operates in the third-party in-app advertising market, which is projected to grow at an 11% compound annual rate to $136 billion by 2030. Within that market, non-gaming verticals are expanding even faster, at 14%. This is a marketplace that is structurally under-monetized, with third-party in-app advertising spend estimated at roughly one-sixth of TV on a per user hour basis. Perhaps put more simply, attention has already moved into apps. Ad dollars are still catching up. In a large, growing, and fragmented app economy, our role is clear: help advertisers acquire customers and help app publishers monetize their audiences. The role is simple to describe but complex to execute at global scale.

We built a fully integrated advertising platform to serve both sides across every vertical, from gaming and shopping to finance and productivity tools. On the demand side, we help businesses find new users for their apps with our demand-side platform. Our DSP is designed to find the right users at the right time and the right price to provide high ROI at scale. On the supply side, our SSP, or supply-side platform, helps apps monetize their user base with ads via our software development kit, or SDK, which is integrated into close to 170,000 apps globally. A fully distributed SDK network takes years to build and is difficult to replicate, given that publishers integrate only a limited number of SDKs into their apps, which makes comparable reach difficult to achieve.

Our unified DSP and SSP provides direct user reach, data symmetry, and economics that are more effective than either would be alone. At the center of the platform is Cortex, our proprietary AI-powered prediction engine. For each ad auction, Cortex estimates the probability of converting the user or device associated with that opportunity and what the conversion would be worth in return on ad spend. Cortex runs automatically, with over 1 billion predictions every second. Cortex is self-learning. To give you a sense of the pace of improvement, since Cortex launched in late 2023, the learning phase, which is the time it takes a new campaign to reach optimized performance, has gone from about 2 weeks to under 1 day. Self-learning sits at the heart of our business. The process starts with the outcome an advertiser values, whether that's a purchase or another measurable action.

For each ad opportunity, Cortex evaluates the data signals available to Liftoff from both sides of the platform and estimates whether to bid and at what price. We compare those estimates with the outcomes we observe, retrain the models, and apply what we learn to future decisions. Faster learning can improve performance. When performance improves, advertisers often increase spend with us, giving Cortex more outcomes to learn from. This feedback cycle is self-learning in practice. We believe this same cycle is a resilient source of growth, even in a competitive marketplace. Growth comes primarily from existing customers increasing their business with us. We believe that Liftoff is mission-critical to how our customers scale, and as a result, as performance improves, our customers are more likely to reinvest and grow with us. On competition, our market is elastic rather than a fixed pie.

Better performance drives advertisers to reinvest their returns, which expands the addressable market itself rather than redistributing share among existing players. In fact, 87% of advertisers say they will scale spend with a partner that is hitting their KPIs. Liftoff competes for incremental ad budget in the broader third-party in-app ecosystem. This is not a zero-sum game. What differentiates us in the mobile app ecosystem? First, the machine learning at the core of the platform. Cortex's prediction models allow us to price and target effectively across billions of auctions. Our models are continually improving, which we believe enables us to deliver better performance for our customers, expanding our market opportunity and strengthening our role in the app economy. Second, a unified architecture. Our fully integrated DSP and SSP with ubiquitous SDK distribution to reach users at scale serves as a technology mode.

Each side of the platform makes the other smarter, and that unified view of supply and demand is very hard to replicate. Third, and where I think we're most distinct, vertical diversification. Liftoff was built from inception to serve the entire app economy, which increases our addressable market well beyond the gaming industry. On the demand side, over half of our demand comes from advertisers outside of gaming, and the supply side is over one-third non-gaming. The three capabilities reinforce one another. Together, they support durable growth over time. Which brings me to how we grow from here. Market growth, ongoing self-learning, and discrete model breakthroughs are the primary drivers behind our performance, and we're still early on all three. The overall mobile app market keeps growing, and we've grown with it. This includes the high-growth verticals outside of gaming.

When new app categories emerge, our vertical-agnostic platform is built to capture them. Cortex continues to self-learn. The model is still very early in its growth trajectory and is designed to keep improving. More tests, more data, more continuous improvement. Model breakthroughs are discrete improvements in how well the model predicts and optimizes ad performance, resulting in lasting performance gains. They sit on top of self-learning. We saw examples in the past two quarters. We cannot predict exactly when the next one lands or how large it will be, but we do expect breakthroughs to keep contributing to growth over time. Before Tarek takes you through the financial model results and outlook, I want to thank our customers, our team, and our investors. To our customers, thank you for trusting us with your businesses.