AppLovin Corp. (NASDAQ:APP)

Goodwill and intangible assets exhibited significant fluctuations over the observed period. A substantial increase in goodwill was noted between 2021 and 2022, followed by a period of relative stability and then a decline towards the end of the period. Intangible assets, both gross and net, also demonstrated considerable changes, particularly a marked decrease in net intangible assets in later years.

Goodwill

Goodwill increased significantly from US$966.427 million in 2021 to US$1,823.755 million in 2022, representing a nearly 88% increase. It remained relatively stable between 2022 and 2023, with a slight decrease in 2024. A more pronounced decrease occurred between 2023 and 2025, falling to US$1,539.986 million, indicating potential impairment or strategic divestitures. This represents a roughly 20% decrease from 2023 to 2025.

Intangible Assets - Composition

Apps constituted the largest component of gross intangible assets throughout the period, ranging from approximately US$1.79 billion to US$1.94 billion. Customer relationships also represent a significant portion, increasing substantially from 2021 to 2023 and remaining relatively stable thereafter. Developed technology also showed consistent growth, albeit at a slower pace. Other intangible assets also increased over the period, but remained the smallest component.

Intangible Assets - Amortization

Accumulated amortization increased consistently throughout the period, from -US$592.906 million in 2021 to -US$1,842.314 million in 2024. This increase corresponds with the growth in gross intangible assets. The rate of increase slowed in 2025, with accumulated amortization at -US$407.991 million, potentially reflecting a reduction in the gross value of intangible assets.

Intangible Assets - Net

Net intangible assets peaked in 2022 at US$1,677.660 million, but then experienced a substantial decline, falling to US$396.714 million by 2025. This decline is attributable to the combination of increasing accumulated amortization and a decrease in gross intangible assets, particularly in 2025. The significant drop in 2025 suggests potential write-downs or disposals of intangible assets.

Total Goodwill and Intangible Assets, Net

The combined value of goodwill and net intangible assets increased from US$2,675.774 million in 2021 to US$3,501.415 million in 2022. Following 2022, a downward trend was observed, decreasing to US$1,936.700 million in 2025. This decline is driven by the decreases in both goodwill and net intangible assets, indicating a potential reduction in the overall value of these assets.

The observed trends suggest a period of significant investment and growth in goodwill and intangible assets, followed by a period of reassessment and potential impairment or divestiture. The substantial decline in net intangible assets, particularly in 2025, warrants further investigation.

A significant reduction in total assets is observed when comparing reported figures to adjusted figures, indicating a substantial removal of goodwill and intangible assets. This adjustment has a corresponding impact on stockholders’ equity, with the adjusted equity figures being considerably lower than the reported equity, particularly in 2022, 2023, and 2024.

Total Assets Trend

Reported total assets decreased from US$6,163,579 thousand in 2021 to US$5,847,846 thousand in 2022, then further to US$5,359,187 thousand in 2023. A slight increase to US$5,869,259 thousand is noted in 2024, followed by a more substantial increase to US$7,259,610 thousand in 2025. However, the adjusted total assets demonstrate a more pronounced decline, falling from US$5,197,152 thousand in 2021 to US$3,516,337 thousand in 2023, before recovering to US$4,065,833 thousand in 2024 and US$5,719,624 thousand in 2025. The difference between reported and adjusted assets widens considerably in 2022 and 2023, suggesting a larger write-down of assets during those periods.

Stockholders’ Equity Trend

Reported stockholders’ equity follows a similar pattern to total assets, decreasing from US$2,138,090 thousand in 2021 to US$1,256,329 thousand in 2023, then increasing to US$2,134,671 thousand in 2025. The adjusted stockholders’ equity exhibits a more dramatic fluctuation. It declines sharply from US$1,171,663 thousand in 2021 to US$78,922 thousand in 2022, and then becomes negative, reaching US$-586,521 thousand in 2023 and US$-713,608 thousand in 2024. A recovery is observed in 2025, with adjusted equity reaching US$594,685 thousand. The negative adjusted equity in 2023 and 2024 indicates that the cumulative adjustments to goodwill and intangibles have exceeded the initial equity value.

The substantial divergence between reported and adjusted figures suggests that a significant portion of the company’s previously reported assets and equity was attributable to goodwill and intangible assets that were subsequently written down. The recovery in both reported and adjusted figures in 2024 and 2025 may indicate subsequent acquisitions or a reversal of prior impairments, but the impact of the earlier write-downs remains evident in the adjusted equity position.

The financial metrics demonstrate a significant impact from adjusting for goodwill. Generally, the adjusted ratios reveal a different financial picture than the reported figures, particularly concerning profitability and leverage. A notable trend is the increasing divergence between reported and adjusted values over the observed period.

Total Asset Turnover

Reported total asset turnover exhibits an increasing trend from 0.45 in 2021 to 0.80 in 2023, followed by a slight decrease to 0.75 in 2025. The adjusted total asset turnover shows a more pronounced increase, moving from 0.54 in 2021 to 1.16 in 2024, and then decreasing to 0.96 in 2025. The adjusted ratio consistently exceeds the reported ratio, suggesting that excluding goodwill improves the efficiency with which assets are utilized to generate revenue.

Financial Leverage

Reported financial leverage increases substantially from 2.88 in 2021 to 5.39 in 2023, before decreasing to 3.40 in 2025. The adjusted financial leverage shows a dramatic increase in 2022 to 50.99, followed by missing values for 2023 and 2024, and then a decrease to 9.62 in 2025. The substantial difference between reported and adjusted leverage highlights the considerable contribution of goodwill to the company’s overall leverage position. The 2022 spike in adjusted leverage suggests a significant impact from the goodwill adjustment in that year.

Return on Equity (ROE)

Reported ROE fluctuates considerably, starting at 1.66% in 2021, declining to -10.13% in 2022, and then increasing sharply to 144.96% in 2024 and 156.17% in 2025. Adjusted ROE demonstrates even more extreme volatility, beginning at 3.03% in 2021, plummeting to -244.22% in 2022, and then showing a value of 560.59% in 2025. The large negative value for adjusted ROE in 2022 and the subsequent substantial increase indicate that goodwill significantly influences equity and profitability calculations. The divergence between reported and adjusted ROE widens over time.

Return on Assets (ROA)

Reported ROA shows an upward trend, increasing from 0.58% in 2021 to 45.92% in 2025. Adjusted ROA also demonstrates an increasing trend, moving from 0.68% in 2021 to 58.29% in 2025. While both metrics show improvement, the adjusted ROA consistently exceeds the reported ROA, indicating that excluding goodwill results in a higher return on assets. The difference between the two metrics is less pronounced than with ROE and leverage, but still notable.

In summary, the adjustments for goodwill have a material effect on the reported financial performance. The adjusted ratios suggest a more volatile, and potentially riskier, financial profile, particularly concerning leverage and equity returns. The increasing divergence between reported and adjusted figures over the period warrants further investigation into the nature and potential impairment of goodwill.

An examination of the financial information reveals trends in both reported and adjusted total assets, alongside their corresponding turnover ratios, over a five-year period. Reported total assets decreased from 2021 to 2022, continued to decline through 2023, then experienced an increase in 2024, followed by a further increase in 2025. Adjusted total assets exhibited a similar pattern, with a more pronounced decrease from 2021 to 2023, an increase in 2024, and a substantial increase in 2025.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio demonstrates a clear upward trend from 2021 to 2024. Starting at 0.54 in 2021, the ratio increased to 0.70 in 2022, then to 0.93 in 2023, peaking at 1.16 in 2024. A slight decrease was observed in 2025, with the ratio settling at 0.96. This suggests increasing efficiency in utilizing assets to generate revenue during this period, culminating in a high point in 2024 before a modest pullback.

The difference between reported and adjusted total assets is notable. The adjusted figures are consistently lower, indicating that adjustments are being made to remove certain asset components, likely related to goodwill and intangible assets. The increasing gap between reported and adjusted total assets from 2021 to 2023 suggests a growing impact from these adjustments. The narrowing of this gap in 2024 and 2025 could indicate a stabilization or reversal of these adjustments.

Reported Total Asset Turnover

The reported total asset turnover ratio also increased over the period, though at a slower pace than the adjusted ratio. It rose from 0.45 in 2021 to 0.48 in 2022, then to 0.61 in 2023, reaching 0.80 in 2024 before decreasing slightly to 0.75 in 2025. While showing improvement, the reported ratio consistently remains lower than the adjusted ratio, reflecting the impact of the asset adjustments.

The convergence of the reported and adjusted total asset turnover ratios in 2025, coupled with the increasing adjusted total assets, suggests a potential shift in the company’s asset composition or a change in the nature of the adjustments being made. Further investigation into the specific adjustments impacting the adjusted total assets would be beneficial to fully understand these trends.

The financial information reveals significant fluctuations in reported and adjusted asset and equity values between 2021 and 2025. These shifts have a pronounced impact on calculated financial leverage ratios. A notable divergence exists between reported and adjusted figures, particularly concerning stockholders’ equity and, consequently, adjusted financial leverage.

Total Assets

Reported total assets decreased from US$6,163,579 thousand in 2021 to US$5,359,187 thousand in 2023, before increasing to US$7,259,610 thousand in 2025. Adjusted total assets demonstrate a similar pattern, declining from US$5,197,152 thousand in 2021 to US$3,516,337 thousand in 2023, and then recovering to US$5,719,624 thousand in 2025. The difference between reported and adjusted total assets widens over the period, suggesting a substantial component of goodwill or intangible assets impacting the adjusted figures.

Stockholders’ Equity

Reported stockholders’ equity experienced a consistent decline from US$2,138,090 thousand in 2021 to US$1,089,818 thousand in 2024, before rebounding to US$2,134,671 thousand in 2025. However, adjusted stockholders’ equity exhibits a far more dramatic trajectory. It decreased sharply from US$1,171,663 thousand in 2021 to a negative value of US$-586,521 thousand in 2023, remaining negative in 2024 before becoming positive again at US$594,685 thousand in 2025. This indicates significant adjustments are being made to the valuation of equity, likely related to intangible assets and goodwill.

Financial Leverage

Reported financial leverage steadily increased from 2.88 in 2021 to 5.39 in 2024, then decreased to 3.40 in 2025. Adjusted financial leverage shows a much more volatile pattern. It rose dramatically from 4.44 in 2021 to 50.99 in 2022, with values missing for 2023, and then decreased to 9.62 in 2025. The substantial increase in adjusted financial leverage in 2022, coupled with the negative adjusted stockholders’ equity in 2023 and 2024, suggests a considerable impact from the adjustments made to assets and equity. The high adjusted leverage in 2022 and 2025 warrants further investigation into the nature and sustainability of these adjustments.

The considerable difference between reported and adjusted financial leverage highlights the importance of understanding the composition of the company’s assets and the adjustments made to arrive at the adjusted figures. The volatility in adjusted financial leverage, particularly the spike in 2022 and the subsequent negative adjusted equity, suggests potential concerns regarding the valuation of goodwill and intangible assets and their impact on the company’s financial position.

Reported stockholders’ equity demonstrated a decline from 2021 to 2023, followed by increases in 2024 and 2025. Conversely, adjusted stockholders’ equity exhibited a significantly different pattern, decreasing substantially from 2021 to 2023 before recovering in 2025. The reported return on equity (ROE) fluctuated considerably, experiencing a negative value in 2022, a substantial increase in 2023, and further growth in 2024 and 2025. Adjusted ROE mirrored this volatility, with a large negative value in 2022 and a significant positive value in 2025, but lacked values for 2023 and 2024.

Stockholders’ Equity Trends

Reported stockholders’ equity began at US$2,138,090 thousand in 2021, decreased to US$1,902,677 thousand in 2022, and then experienced a more substantial decline to US$1,256,329 thousand in 2023. A recovery was observed in subsequent years, reaching US$1,089,818 thousand in 2024 and US$2,134,671 thousand in 2025, exceeding the initial 2021 value. Adjusted stockholders’ equity, however, showed a dramatic decrease from US$1,171,663 thousand in 2021 to US$78,922 thousand in 2022, followed by negative values of US$-586,521 thousand in 2023 and US$-713,608 thousand in 2024, before becoming positive again at US$594,685 thousand in 2025.

Return on Equity Analysis

Reported ROE was 1.66% in 2021, decreased to -10.13% in 2022, and then increased significantly to 28.39% in 2023. This upward trend continued with ROE reaching 144.96% in 2024 and 156.17% in 2025. Adjusted ROE followed a similar pattern of volatility, starting at 3.03% in 2021, plummeting to -244.22% in 2022, and then showing no values for 2023 and 2024 before rising to 560.59% in 2025. The substantial differences between reported and adjusted ROE suggest that adjustments to stockholders’ equity have a significant impact on profitability metrics.

The divergence between reported and adjusted ROE, particularly the negative adjusted values in 2022, 2023, and 2024, warrants further investigation into the nature of the adjustments made to stockholders’ equity. The substantial increase in both reported and adjusted ROE in 2025 suggests a potential turnaround or significant positive impact from the adjustments made in prior periods.

The analysis reveals significant fluctuations in both reported and adjusted return on assets (ROA) over the five-year period. A notable divergence exists between the reported and adjusted asset bases, impacting the calculated ROA figures. The adjusted ROA consistently differs from the reported ROA, suggesting the impact of goodwill and intangible assets on the overall financial picture.

Total Assets

Reported total assets decreased from 2021 to 2022, then continued to decline through 2023 before increasing in both 2024 and 2025. The adjusted total assets exhibit a similar pattern of decline from 2021 to 2023, followed by increases in 2024 and 2025, but the magnitude of change is more pronounced. The difference between reported and adjusted total assets widens from 2021 to 2023, then narrows somewhat in 2024 and 2025, indicating a changing relationship between tangible and intangible asset values.

Reported Return on Assets (ROA)

Reported ROA experienced a substantial decline from 0.58% in 2021 to -3.30% in 2022. A significant recovery occurred in 2023, with ROA reaching 6.66%, followed by substantial increases to 26.92% in 2024 and 45.92% in 2025. This demonstrates a dramatic improvement in profitability relative to the reported asset base over the latter part of the period.

Adjusted Return on Assets (ROA)

Adjusted ROA mirrored the trend of the reported ROA, declining from 0.68% in 2021 to -4.79% in 2022. The recovery in 2023 was more pronounced than the reported ROA, reaching 10.14%. Further increases were observed in 2024 (38.85%) and 2025 (58.29%). The adjusted ROA consistently exceeds the reported ROA, suggesting that the exclusion of certain assets positively impacts the profitability metric. The magnitude of the increase in adjusted ROA from 2023 to 2025 is particularly noteworthy.

The consistent difference between reported and adjusted ROA highlights the importance of considering the impact of goodwill and intangible assets when evaluating the company’s performance. The substantial increases in both reported and adjusted ROA in 2024 and 2025 suggest a significant improvement in operational efficiency or profitability, but the underlying drivers warrant further investigation. The trend in asset values, particularly the adjusted asset base, should be monitored closely to understand the sustainability of these improvements.