AppLovin Corp. (NASDAQ:APP)

The return on equity (ROE) exhibited significant fluctuations between 2021 and 2025. A substantial increase in ROE is observed over the analyzed period, though preceded by a period of negative equity returns.

ROE Trend

In 2021, the ROE stood at 1.66%. This decreased substantially in 2022, resulting in a negative ROE of -10.13%. A dramatic recovery occurred in 2023, with ROE rising to 28.39%. Further increases were seen in subsequent years, reaching 144.96% in 2024 and 156.17% in 2025. This represents a considerable improvement in profitability relative to equity.

Net Income Impact

The substantial increase in ROE from 2022 onwards correlates with a significant improvement in net income attributable to AppLovin. A loss was recorded in 2022, but net income increased to positive values in 2023 and continued to grow substantially through 2025. This positive trend in net income is a primary driver of the observed ROE improvement.

Stockholders’ Equity Impact

Stockholders’ equity decreased from 2021 to 2023, moving from US$2,138,090 thousand to US$1,256,329 thousand. However, equity increased significantly in 2025, reaching US$2,134,671 thousand. The decrease in equity between 2021 and 2023 initially exacerbated the negative ROE in 2022, while the subsequent increase in equity in 2025 contributed to the high ROE values observed in 2024 and 2025, though the primary driver remains the substantial growth in net income.

The combined effect of fluctuating net income and stockholders’ equity resulted in a volatile ROE. The substantial growth in net income, particularly in the later years of the period, appears to be the dominant factor driving the significant increase in ROE.