You're lean. As the prop begins to unload, you're picking up some extra rpm. This is normal, but the engine is getting too hot and sagging.

Open up (turn counterclockwise) the needle valve about a quarter turn, then do the lift test:

With someone holding the plane in a normal horizontal attitude, run the throttle to max. Let the engine stabilize at max power, then point the nose straight up. If the engine stays running strong at max, the mixture is okay. If not, tweak the needle valve until it does.