Motley Fool Money: AppLoving, Airbnb, and More Earnings Surprises
Release Date: August 7, 2025

In this episode of Motley Fool Money, hosts Matt Frankel, Tyler Crowe, and John Quast delve into the latest earnings reports of prominent companies such as Applovin, Airbnb, Zillow, and several retail real estate investment trusts (REITs). The discussion offers in-depth analysis, contrasting viewpoints, and forward-looking insights into these businesses' performances and future prospects.

1. Applovin's Stellar Earnings Performance

Overview: Applovin reported a remarkable 77% revenue growth in Q2, doubling its adjusted EBITDA and generating a free cash flow of $768 million, with nearly half dedicated to stock buybacks.

Key Highlights:

• Revenue Growth & Profitability:
  Matt Frankel introduces Applovin's impressive financials, noting a 77% revenue increase and a 65% profit margin (00:05).

• John Quast's Analysis:
  "Nearly 1.3 billion in quarterly revenue growing at 77%, a profit margin of 65%. These are extraordinary numbers." (00:54)
  John emphasizes Applovin's ability to thrive in the slow-growing mobile gaming sector by leveraging its AI-powered advertising engine, positioning the company as a standout amidst an industry with only 3% growth.

• Future Prospects & Concerns:
  John expresses skepticism about Applovin's next growth phase, highlighting their shift towards performance marketing and expansion into direct-to-consumer e-commerce. He raises concerns about potential profitability impacts due to increased marketing expenditures (02:08).

• Matt's Perspective:
  Matt shares his reservations about Applovin's business fragility, especially after the sale of its gaming apps and the complexities surrounding its new e-commerce platform managed by a board member. Despite impressive growth metrics, Matt remains cautious, pondering his hesitancy to fully endorse the stock (03:42).

2. Airbnb's Mixed Earnings Results

Overview: Airbnb showcased robust revenue and booking growth, yet its stock declined due to management's cautious outlook for the upcoming quarter.

Key Highlights:

• Financial Performance:
  Matt Frankel highlights Airbnb's 13% revenue growth and double-digit booking volume increases, alongside strong cash flow margins (05:42).

• Market Concerns:
  Despite solid numbers, Airbnb's stock dipped following warnings about slowing demand and tepid consumer sentiment (05:42).

• Macro Factors:
  Matt discusses broader economic indicators, such as the University of Michigan consumer sentiment scores being at lows comparable to the 2022 recession, juxtaposed with declining gas prices—a correlation he finds unusual (05:42).

• John Quast's Insights:
  "Nights and experiences in Q2 are up 7%. Average daily rates... up another 3%." (08:05)
  John disputes the narrative that consumers are abandoning Airbnb due to high fees, pointing to sustained growth in key metrics. However, he questions why management opts for share buybacks over investing in growth opportunities, suggesting a potential lack of viable expansion avenues (08:05).

3. Retail REITs Defying Consumer Sentiment

Overview: Despite a challenging consumer spending environment, several top retail REITs like Simon Property Group, Tanger Factory Outlets, and Realty Income reported strong earnings, raising guidance and dividends.

Key Highlights:

• Strong Performance Metrics:
  Matt Frankel notes increased sales per square foot, higher occupancy rates, and 12% rise in blended average lease rates for Tanger Factory Outlets—a testament to resilience amid low consumer sentiment (11:20).

• Sector Outlook:
  Tyler Crowe observes that leading retail REITs continue to perform well, questioning the discrepancy between negative consumer surveys and robust retail figures (12:56).

• Long-Term Potential:
  Matt expresses confidence in established REITs like Simon Property Group and Realty Income, suggesting they are well-positioned to capitalize on competitors' struggles and potentially acquire underperforming malls to enhance profitability (13:08).

• John Quast's Stance:
  "Negative narratives are really seductive and they're also very contagious." (14:26)
  John emphasizes the importance of observing actual spending behavior over prevailing negative sentiments, affirming his decision to hold onto Tanger stock for its predictability and steady dividends (14:26).

4. Zillow's Mixed Quartely Results

Overview: Zillow reported strong revenue growth driven by its rentals and mortgage segments but remains mired in operating losses despite slight GAAP profitability.

Key Highlights:

• Growth Drivers:
  Matt Frankel appreciates Zillow's revenue growth from rentals and mortgages, which reduce the business's sensitivity to interest rate fluctuations (15:22).

• Profitability Concerns:
  Despite exceeding revenue expectations, Zillow continues to post operating losses, relying on interest income from its cash balance sheet to achieve net income gains (16:16).

• Investment Stance:
  Matt remains cautious, holding off on committing to Zillow until it consistently demonstrates operating profitability (16:35).
  John Quast rates Zillow as a hold, recognizing its market dominance and strategic initiatives but remains skeptical about sustained growth and profitability improvements (17:18).

5. Stocks to Watch in Ongoing Earnings Season

Overview: As earnings season peaks, the hosts highlight specific stocks to monitor based on their upcoming reports and growth potential.

Key Highlights:

• Cava Restaurants (CAVA):
  Tyler Crowe expresses enthusiasm for Cava (CAVA) due to its significant turnaround from 2022 and anticipates its August 12 report to shed light on whether current growth trends will sustain or decelerate (18:54).

• BBB Foods (TBBB):
  Matt Frankel recommends keeping an eye on BBB Foods (TBBB), a Mexican hard discount grocer, citing its double-digit same-store sales growth and 25-30% year-over-year expansion. He praises its operational metrics and resilience in Mexico's economic landscape, expecting continued strong performance unless faced with severe macroeconomic downturns (20:00).

Conclusion

The episode provides a comprehensive analysis of key earnings reports, highlighting both impressive performances and underlying concerns. Applovin's exceptional growth and strategic shifts, Airbnb's balanced earnings against cautious future outlook, the surprising strength of retail REITs amid negative sentiment, Zillow's mixed results, and selected stocks to watch, all paint a nuanced picture of the current investment landscape. The hosts encourage investors to delve deeper into these companies' fundamentals and market conditions to make informed decisions.

Notable Quotes:

• "Nearly 1.3 billion in quarterly revenue growing at 77%, a profit margin of 65%. These are extraordinary numbers." — John Quast (00:54)

• "Nights and experiences in Q2 are up 7%. Average daily rates... up another 3%." — John Quast (08:05)

• "Negative narratives are really seductive and they're also very contagious." — John Quast (14:26)

Note: All timestamps refer to the provided transcript and are indicative of the discussed content's position within the episode.