AppLovin Corp. (NASDAQ:APP)

The analysis of the financial data reveals notable trends in the composition and valuation of intangible assets over the observed period.

Goodwill

Goodwill experienced a significant increase between the end of 2021 and 2022, nearly doubling from approximately 966 million to 1.82 billion US dollars. This figure then stabilized in the following periods, with minor decreases observed by the end of 2024.

Apps

The value attributed to apps showed a slight decline from about 1.94 billion in 2021 to roughly 1.79 billion in 2022. However, it recovered gradually afterwards, reaching approximately 1.83 billion in 2024, indicating stability in this asset category after initial fluctuations.

Customer Relationships

This asset class saw a substantial increase from around 146 million at the end of 2021 to over 515 million in 2022, and it remained relatively consistent through the subsequent years. The value peaked in 2023 at over 519 million and slightly declined to about 511 million in 2024, suggesting sustained but stable customer portfolio value.

User Base

The user base value remained constant throughout all periods at approximately 68.8 million, indicating no recorded change or revaluation in this asset component over the analyzed timeframe.

License Asset

The license asset value more than doubled between 2021 and 2022, from around 25.6 million to nearly 59.2 million, with stability observed in 2023. A slight increase appeared by the end of 2024, reaching approximately 60.7 million, reflecting ongoing intangible asset additions or revaluations.

Developed Technology

Developed technology increased markedly in 2022, rising from about 87.9 million to 206.1 million, with minor fluctuations afterwards: a slight increase in 2023 to about 207.9 million followed by a small decrease to approximately 204.3 million in 2024.

Other Intangible Assets

This category exhibited steady growth over the period, nearly doubling from 34.9 million in 2021 to 53.9 million in 2022 and continuing to increase to 71.2 million in 2023, with a moderate decrease to 66.0 million in 2024.

Intangible Assets, Gross

The gross intangible assets rose from approximately 2.30 billion in 2021 to a peak of about 2.74 billion in 2023, indicating overall growth in the company's intangible resources. There was a small decline by the end of 2024 to just under 2.74 billion.

Accumulated Amortization

Amortization showed a consistent upward trend in absolute terms, increasing from negative 593 million in 2021 to nearly negative 1.84 billion by 2024. This reflects ongoing amortization expense as intangible assets are systematically written down over time.

Intangible Assets, Net

Net intangible assets, after amortization, declined significantly over the period: from about 1.71 billion in 2021 to 1.68 billion in 2022, dropping further to approximately 1.29 billion in 2023 and then sharply to 897 million by 2024. This trend highlights the accelerating amortization burden outweighing gross asset growth.

Goodwill and Intangible Assets, Net

Combining goodwill and net intangible assets, the value increased substantially from roughly 2.68 billion in 2021 to a peak near 3.50 billion in 2022. However, a downward trend ensued, with declines to approximately 3.14 billion in 2023 and 2.70 billion in 2024, signaling a contraction in overall intangible asset valuation net of amortization.

In summary, the data indicates initial growth and acquisition activity that increased goodwill and gross intangible assets sharply between 2021 and 2022. Subsequent periods show stabilization or slight decline in gross values but more pronounced decreases in net intangible assets due to increasing accumulated amortization. The consistent user base valuation and growth in certain developed technology and license assets reflect iterative investment in core intangible resources, while the declining net intangible asset figure suggests a maturing phase with higher amortization expense impacting asset book value.

Total Assets

The reported total assets demonstrate a declining trend from 6,163,579 thousand US dollars in 2021 to a low of 5,359,187 thousand in 2023, followed by a rebound to 5,869,259 thousand in 2024. The adjusted total assets, which exclude goodwill, show a more pronounced decrease from 5,197,152 thousand in 2021 to 3,516,337 thousand in 2023, then a recovery to 4,065,833 thousand in 2024. This indicates that a significant portion of the asset base reduction is related to adjustments excluding goodwill, with some level of asset recovery in the final year observed.

Stockholders’ Equity

Reported stockholders’ equity declines consistently across the period, starting at 2,138,090 thousand in 2021 and falling steadily to 1,089,818 thousand in 2024. The adjusted stockholders’ equity, however, reveals a far more concerning trajectory, dropping sharply from 1,171,663 thousand in 2021 to negative values starting in 2023 (-586,521 thousand) and further deteriorating to -713,608 thousand in 2024. This negative adjusted equity suggests the company’s net asset value, excluding goodwill, has become significantly impaired over the latter years.

Overall Analysis

The data indicates a weakening financial position over the time frame analyzed when considering both reported and goodwill-adjusted figures. While reported figures suggest a moderate decline in total assets and equity, the adjusted figures reveal a much sharper erosion of asset quality and equity base, highlighting the impact of goodwill adjustments. The negative adjusted equity in the most recent years raises concerns about potential impairments or write-downs affecting the company’s net assets. The partial recovery in total assets in 2024 shows some stabilization but does not extend to equity, particularly on an adjusted basis.

Total Asset Turnover

The reported total asset turnover ratio shows a steady upward trend from 0.45 in 2021 to 0.8 in 2024, indicating improving efficiency in using assets to generate sales over the period. The adjusted total asset turnover, which accounts for goodwill, exhibits a similar but more pronounced increase from 0.54 in 2021 to 1.16 in 2024, suggesting that asset utilization efficiency is even stronger when goodwill is excluded.

Financial Leverage

Reported financial leverage has increased significantly, climbing from 2.88 in 2021 to 5.39 in 2024. This upward trend points to a greater reliance on debt or other liabilities relative to equity over time. Adjusted financial leverage shows an unusual spike from 4.44 in 2021 to 50.99 in 2022, followed by missing data. The extreme increase in 2022 suggests a significant change in the capital structure or valuation adjustments relating to goodwill that impacted equity measurements.

Return on Equity (ROE)

Reported ROE illustrates marked volatility. It dropped from a positive 1.66% in 2021 to a negative -10.13% in 2022, then surged to 28.39% in 2023 and further to an extremely high 144.96% in 2024. This variability may reflect changes in profitability, leverage, or other financial factors influencing shareholder returns. Adjusted ROE exhibits even more dramatic instability, plunging from 3.03% in 2021 to a severe negative value of -244.22% in 2022, which may be linked to large impairments or write-downs of goodwill or other non-operating items.

Return on Assets (ROA)

Reported ROA follows a similar pattern of recovery and improvement, declining from 0.58% in 2021 to -3.3% in 2022, then increasing to 6.66% in 2023 and 26.92% in 2024. The adjusted ROA, excluding goodwill, presents consistent trends with slightly higher values, starting at 0.68% in 2021, dropping to -4.79% in 2022, before climbing to 10.14% in 2023 and achieving 38.85% in 2024. This reflects strengthening asset profitability over the period, with stronger returns when accounting for asset adjustments.

Overall Analysis

Across the observed time frame, the company’s operational efficiency as measured by asset turnover has improved steadily, particularly when goodwill is adjusted out. Financial leverage has substantially increased, which correlates with the notable fluctuations in ROE, especially the dramatic turnaround in 2023 and 2024. Returns on assets have trended positively after a difficult year in 2022, indicating improving profitability and asset utilization. The pronounced volatility in adjusted ratios suggests that goodwill and related accounting factors have had a significant impact on the financial statements during this period. The exceptionally high reported ROE in the most recent year warrants careful consideration of underlying drivers, including leverage effects and non-recurring items.

The analysis of the annual financial data, both reported and goodwill adjusted, reveals several notable trends over the four-year period.

Total Assets

The reported total assets show a decline from 6,163,579 thousand US dollars in 2021 to 5,359,187 thousand in 2023, followed by a rebound to 5,869,259 thousand in 2024. This represents an overall downward trend initially, then a partial recovery in the last year observed.

The adjusted total assets, which exclude goodwill, decline more sharply over the same period, decreasing from 5,197,152 thousand US dollars in 2021 to 3,516,337 thousand in 2023 before increasing slightly to 4,065,833 thousand in 2024. This sharper drop indicates a significant reduction in net tangible or operating assets when goodwill is excluded, with only modest recovery in the final year.

Total Asset Turnover

The reported total asset turnover ratio displays a continuous improvement across the four years, increasing from 0.45 in 2021 to 0.80 in 2024. This rise signifies enhanced efficiency in generating revenue from the reported asset base.

The adjusted total asset turnover ratio, which reflects operating asset efficiency excluding goodwill, shows a stronger upward trend, rising from 0.54 in 2021 to 1.16 in 2024. This implies that the company has improved substantially in utilizing its core assets to generate sales, with the adjusted measure consistently indicating higher turnover ratios than the reported figures.

Overall, the trends suggest that while the company’s asset base has contracted, especially when excluding goodwill, its efficiency in generating revenue from these assets has improved markedly. The growth in total asset turnover ratios points to better asset utilization and operational performance over the reported years. The slight recovery in total assets in 2024 may indicate strategic asset investments or acquisitions, but the more pronounced recovery in adjusted assets suggests focus was also placed on enhancing tangible asset productivity.

Total Assets

The reported total assets show a decline from approximately 6.16 billion US dollars at the end of 2021 to around 5.36 billion by the end of 2023, followed by a moderate increase to roughly 5.87 billion in 2024. In contrast, the adjusted total assets, which exclude goodwill, reveal a more pronounced decreasing trend from about 5.20 billion at the end of 2021 to approximately 3.52 billion in 2023. There is a slight recovery to around 4.07 billion in 2024, although the overall level remains significantly below the 2021 figure. This indicates a consistent reduction in asset base when goodwill is excluded, reflecting possible impairments or write-downs in intangible assets.

Stockholders’ Equity

Reported stockholders’ equity has decreased steadily over the period, dropping from about 2.14 billion US dollars in 2021 to approximately 1.09 billion in 2024. The adjusted stockholders’ equity, which removes goodwill effects, exhibits a sharper decline, turning negative in 2023 and further deteriorating in 2024 to a negative value exceeding -700 million. The transition from positive to negative equity in adjusted terms suggests an erosion of net asset value excluding intangible assets, potentially indicating financial distress or accumulated losses impacting the company's net worth.

Financial Leverage

The reported financial leverage ratio, defined as total assets divided by stockholders’ equity, has increased consistently from 2.88 in 2021 to 5.39 in 2024. This rising leverage indicates growing relative debt or liabilities compared to equity. Adjusted financial leverage shows an extreme jump from 4.44 in 2021 to approximately 51.0 in 2022, with data absent for subsequent years. The extraordinary increase in adjusted leverage suggests a substantial contraction in adjusted equity, reinforcing the view of deteriorating net asset value and heightened financial risk when excluding goodwill.

Overall Insights

The data reveals a pattern of asset base reduction and declining equity both in reported and adjusted terms over the analyzed period. The discrepancy between reported and adjusted figures highlights significant goodwill or intangible asset effects influencing financial presentation. The sharp decline and eventual negative adjusted equity alongside escalating leverage ratios suggest growing financial vulnerability and possible challenges in sustaining capitalization without goodwill assets. These trends warrant careful monitoring and potential strategic responses to address asset quality and capital structure risks.

Stockholders’ Equity

The reported stockholders’ equity demonstrated a declining trend over the observed periods. It decreased steadily from approximately 2.14 billion US dollars in 2021 to about 1.90 billion in 2022, followed by a significant drop to roughly 1.26 billion in 2023 and further down to approximately 1.09 billion in 2024. The adjusted stockholders’ equity, which accounts for goodwill adjustments, showed a more pronounced negative trajectory. Starting at around 1.17 billion in 2021, it sharply declined to approximately 79 million in 2022, turning negative in 2023 with about -587 million and continuing to deteriorate to approximately -714 million in 2024. This indicates that the company's equity base, when excluding goodwill, has weakened considerably over the period.

Return on Equity (ROE)

The reported ROE exhibited volatility and an overall upward trend. Initially, it was modestly positive at 1.66% in 2021, shifted to a negative value of -10.13% in 2022, then surged significantly to 28.39% in 2023, and escalated remarkably to 144.96% in 2024. This sharp increase suggests improved profitability or reduced equity base amplifying returns in the later years. In contrast, the adjusted ROE, which excludes goodwill effects, followed a different pattern. It started at a higher positive rate of 3.03% in 2021 but plummeted dramatically to -244.22% in 2022. Data for subsequent years are not available, indicating either a lack of reporting or complexity in calculating adjusted returns due to negative equity values.

Overall Analysis

Examining the trends reveals a divergence between reported and adjusted equity figures, pointing to significant goodwill impairments or write-downs affecting the adjusted equity negatively. The reported figures suggest a company experiencing increasing profitability relative to its equity base after a temporary downturn in 2022, as reflected in the rising reported ROE. However, the adjusted figures highlight financial strain when excluding intangible assets, with adjusted equity turning negative and adjusted ROE indicating substantial losses in 2022. The absence of adjusted ROE data for later years may reflect complexities arising from the negative adjusted equity. This combination of trends suggests a need for careful consideration of asset quality and sustainability of reported returns.

The financial data reveals notable trends in both the reported and goodwill adjusted figures over the four-year period analyzed.

Total Assets

The reported total assets show a decline from 6,163,579 thousand US dollars at the end of 2021 to 5,359,187 thousand US dollars by the end of 2023, followed by a rebound to 5,869,259 thousand US dollars in 2024. Similarly, the adjusted total assets decline more sharply from 5,197,152 thousand to 3,516,337 thousand over the same time frame before partially recovering to 4,065,833 thousand. This suggests a substantial reduction in asset base after adjusting for goodwill, with some recovery in the last period observed.

Return on Assets (ROA)

The reported ROA initially stands at a minimal positive level of 0.58% in 2021, then deteriorates significantly to a negative 3.3% in 2022, indicating operational challenges or declines in profitability. However, it improves markedly thereafter, rising to 6.66% in 2023 and surging to 26.92% in 2024. The adjusted ROA, which accounts for goodwill impact, shows a similar pattern but with more pronounced fluctuations: starting slightly higher than the reported figure at 0.68% in 2021, dropping more steeply to -4.79% in 2022, then improving more strongly to 10.14% in 2023 and reaching a substantially higher level of 38.85% in 2024.

Overall Insights

The data indicates a period of significant asset contraction and profitability challenges around 2022, followed by a recovery phase. The amplified movements in the adjusted figures imply that goodwill adjustments have a meaningful impact on the assessment of asset base and profitability performance. The strong improvement in ROA in 2024, especially on an adjusted basis, suggests enhanced operational efficiency or earnings quality despite a smaller asset base compared to the initial year. This reflects a potentially more disciplined or focused asset utilization in recent periods.