Common-Size Income Statement
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AppLovin Corp., common-size consolidated income statement
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The common-size income statement reveals a significant shift in the company’s profitability and cost structure over the five-year period. Initially, the company experienced challenges, but demonstrated substantial improvements in recent years, culminating in a highly profitable position by the end of the period.
- Revenue and Cost of Revenue
- Revenue remained consistently at 100% throughout the period, as expected in a common-size analysis. However, cost of revenue as a percentage of revenue decreased considerably, moving from -35.38% in 2021 to -12.14% in 2025. This indicates increasing efficiency in managing the direct costs associated with generating revenue.
- Gross Profit
- The decline in cost of revenue directly contributed to a substantial increase in gross profit as a percentage of revenue. Starting at 64.62% in 2021, gross profit decreased to a low of 55.41% in 2022, then rose dramatically to 87.86% in 2025. This suggests a strengthening core business and improved pricing power or cost controls.
- Operating Expenses
- Sales and marketing expenses decreased significantly from -40.45% of revenue in 2021 to -3.72% in 2025. Research and development expenses also decreased, though less dramatically, from -13.12% to -4.13%. General and administrative expenses showed a more moderate decline, moving from -5.68% to -4.26%. These reductions in operating expenses, particularly in sales and marketing, likely contributed to the improved profitability.
- Operating Income
- Income from operations experienced a dramatic turnaround. Beginning with 5.37% of revenue in 2021, it dipped to -1.70% in 2022 before increasing substantially to 75.75% in 2025. This reflects the combined effect of improved gross profit and reduced operating expenses.
- Non-Operating Items
- Interest expense and loss on settlement of debt decreased from -3.69% to -3.78% over the period, while other expense, net, also decreased from -3.71% to -3.63%. Other income (expense), net, fluctuated but remained relatively small as a percentage of revenue.
- Net Income
- The net income trend mirrored the improvement in operating income. Starting with 1.27% of revenue in 2021, net income decreased to -6.85% in 2022, then increased significantly to 60.83% in 2025. A loss from discontinued operations impacted 2025 results by -1.81% of revenue. The provision for income taxes also became a significant factor in 2025, representing -9.48% of revenue, likely due to the increased profitability.
Overall, the company demonstrated a substantial improvement in financial performance over the analyzed period. The initial years showed challenges, but strategic cost management and potentially increased operational efficiency led to significant gains in gross profit, operating income, and ultimately, net income. The increasing percentage of net income attributable to the company, coupled with the decreasing impact of non-operating expenses, further supports this positive trend.