AppLovin Corp. (NASDAQ:APP)

The financial metrics demonstrate notable shifts over the five-year period. Generally, adjusted ratios present a more conservative view than reported figures, particularly concerning profitability and returns. Several key trends emerge when examining the provided values.

Asset Turnover

Both reported and adjusted total asset turnover ratios exhibit an increasing trend from 2021 to 2024, peaking at 0.80 and 0.87 respectively. A slight decrease is then observed in 2025, with values settling at 0.75 and 0.78. This suggests improving efficiency in asset utilization initially, followed by a modest pullback.

Liquidity

The reported and adjusted current ratios both show a significant decline from 2021 to 2023, indicating decreasing short-term liquidity. A recovery is then seen in 2024 and 2025, with both ratios increasing, though the adjusted values remain consistently higher than the reported values. This suggests that adjustments to current assets and liabilities improve the liquidity position when considered.

Leverage

Reported and adjusted debt to equity ratios consistently increase from 2021 to 2024, with the adjusted ratio experiencing a more substantial rise, reaching 5.13 in 2024. A considerable decrease is observed in 2025 for both, falling to 1.70 and 1.90 respectively. Similar trends are present in the debt to capital ratios. Financial leverage follows the same pattern, peaking in 2024 and decreasing in 2025, indicating a period of increased reliance on debt financing followed by a reduction.

Profitability

Reported net profit margin experiences substantial volatility, moving from a positive 1.27% in 2021 to a negative -6.84% in 2022, then a dramatic increase to 33.55% in 2024 and 60.83% in 2025. The adjusted net profit margin mirrors this volatility but remains consistently lower, starting at -3.03% and reaching 63.62% in 2025. The divergence between reported and adjusted margins suggests significant non-recurring items or accounting adjustments impacting reported profitability.

Returns

Reported return on equity (ROE) and return on assets (ROA) exhibit similar patterns to the net profit margin, with significant fluctuations and substantial increases in 2024 and 2025. Adjusted ROE and ROA also follow this trend, though at lower magnitudes. The substantial difference between reported and adjusted returns highlights the impact of adjustments on perceived performance. The adjusted figures provide a more tempered view of the company’s ability to generate returns.

In summary, the period under review demonstrates a dynamic financial profile. While reported metrics indicate strong performance in later years, the adjusted ratios suggest a more moderate and, in some cases, initially weaker financial position. The increasing leverage followed by a decrease in the final year warrants further investigation, as does the significant difference between reported and adjusted profitability and returns.

The adjusted total asset turnover ratio for the period demonstrates an overall increasing trend, albeit with some fluctuation. Initial values are consistent with reported figures, suggesting adjustments do not fundamentally alter the overall turnover picture. A more detailed examination reveals specific patterns over the five-year period.

Overall Trend

The adjusted total asset turnover ratio generally increased from 0.45 in 2021 to 0.78 in 2025. This indicates improving efficiency in utilizing assets to generate revenue over time. However, the increase was not linear, with a slight decrease observed between 2024 and 2025.

Year-over-Year Changes

From 2021 to 2022, the ratio experienced a modest increase from 0.45 to 0.49. A more substantial increase occurred between 2022 and 2023, rising to 0.64. The largest single-year increase was observed from 2023 to 2024, with the ratio reaching 0.87. The final period, from 2024 to 2025, saw a decrease to 0.78, representing a slight reduction in asset utilization efficiency.

Comparison to Revenue and Asset Trends

Revenue consistently increased throughout the period, growing from US$2,785,148 thousand in 2021 to US$5,491,346 thousand in 2025. Adjusted total assets also increased, but at a slower rate than revenue, which likely contributed to the initial increases in the turnover ratio. The leveling off and slight decrease in the ratio in 2025 coincide with a continued increase in adjusted total assets, suggesting asset growth may be outpacing revenue growth at that point.

Consistency with Reported Figures

The adjusted total asset turnover ratio closely mirrors the reported total asset turnover ratio across all periods. The differences between the two are minimal, indicating that the adjustments made to revenue and total assets do not significantly impact the overall assessment of asset utilization efficiency.

In conclusion, the adjusted total asset turnover ratio suggests improving asset utilization efficiency for the majority of the analyzed period. The slight decrease in 2025 warrants further investigation to determine if it represents a temporary fluctuation or the beginning of a more sustained trend.

The adjusted current ratio exhibited fluctuations over the five-year period. Initially strong, the ratio experienced a decline before demonstrating a recovery towards the end of the observed timeframe. A consistent pattern of adjusted current liabilities remaining below reported current liabilities is also apparent.

Adjusted Current Ratio - Overall Trend

The adjusted current ratio began at 5.76 in 2021, indicating a robust ability to cover short-term obligations with short-term assets. A decrease was observed in 2022 to 3.77, followed by a further decline to 1.87 in 2023, representing the lowest point in the period. Subsequently, the ratio increased to 2.34 in 2024 and further to 3.45 in 2025, suggesting an improving liquidity position.

Adjusted Current Liabilities

Adjusted current liabilities generally increased throughout the period, moving from US$561,167 thousand in 2021 to US$1,286,106 thousand in 2025. The rate of increase was not consistent, with a more pronounced rise between 2023 and 2025. This increase in liabilities, while occurring, did not outpace the growth in adjusted current assets in the later years, contributing to the ratio’s recovery.

Comparison with Reported Current Ratio

The adjusted current ratio consistently exceeded the reported current ratio across all years. The difference between the two ratios varied, but generally remained within a range of 0.7 to 1.0. This suggests that the adjustments made to current liabilities had a positive impact on the perceived liquidity position. The adjustments appear to be reducing the stated short-term obligations.

Year-over-Year Changes

The largest year-over-year decrease in the adjusted current ratio occurred between 2022 and 2023, falling by 1.90. The most significant increase occurred between 2024 and 2025, rising by 1.11. These fluctuations suggest potential shifts in the timing of asset and liability recognition or management strategies.

The adjusted debt to equity ratio exhibits a fluctuating trend over the five-year period. Initially, the ratio demonstrates an increase, peaking in 2024 before declining in the most recent year presented. This suggests a changing capital structure and potentially evolving risk profile for the company.

Overall Trend

From 2021 to 2024, the adjusted debt to equity ratio increased significantly, rising from 1.54 to 5.13. This indicates a growing reliance on debt financing relative to equity. However, in 2025, the ratio decreased to 1.90, suggesting a shift towards a more balanced capital structure or a reduction in debt.

Year-over-Year Changes

The largest year-over-year increase occurred between 2023 and 2024, with the adjusted debt to equity ratio climbing from 3.02 to 5.13. This substantial increase warrants further investigation to understand the underlying factors, such as increased borrowing or a decrease in equity. Conversely, the most significant decrease was observed between 2024 and 2025, falling from 5.13 to 1.90, potentially due to debt repayment or an increase in equity.

Comparison to Reported Debt to Equity

The adjusted debt to equity ratio consistently exceeds the reported debt to equity ratio across all observed years. This difference suggests that adjustments are being made to either total debt or stockholders’ equity, resulting in a higher leverage ratio when considering these adjustments. The magnitude of the difference varies year to year, but the adjusted ratio consistently presents a more leveraged financial position.

Stockholders’ Equity Impact

Adjusted stockholders’ equity demonstrates a decline from 2021 to 2024, reaching its lowest point at 723,344 in 2024. This decrease likely contributes to the increasing adjusted debt to equity ratio during this period. The subsequent increase in adjusted stockholders’ equity in 2025, to 1,930,006, partially explains the reduction in the adjusted debt to equity ratio in that year.

Total Debt Impact

Adjusted total debt shows a relatively stable trend, with a slight increase from 2021 to 2024, followed by a minor decrease in 2025. While not as dramatic as the changes in equity, the increase in debt between 2021 and 2024 contributes to the overall increase in the adjusted debt to equity ratio during that timeframe.

The observed fluctuations in the adjusted debt to equity ratio, coupled with the changes in adjusted stockholders’ equity, indicate a dynamic financial landscape. Continued monitoring of these trends is recommended to assess the company’s long-term financial health and sustainability.

The adjusted debt to capital ratio exhibits a generally increasing trend from 2021 to 2024, followed by a decrease in the most recent period presented. Total debt remains relatively stable across the observed timeframe, with a slight increase between 2021 and 2024, and a minor decrease in 2025. Total capital demonstrates more volatility, decreasing from 2021 to 2023 before increasing in 2025.

Adjusted Debt to Capital Ratio - Overall Trend

The adjusted debt to capital ratio increased from 0.61 in 2021 to 0.84 in 2024, representing a 23 percentage point rise over three years. This indicates a growing reliance on debt financing relative to capital. However, the ratio decreased to 0.66 in 2025, suggesting a potential shift in the capital structure or a reduction in debt leverage during that period.

Adjusted Total Debt

Adjusted total debt increased from US$3,354,618 thousand in 2021 to US$3,712,634 thousand in 2024, a rise of approximately 10.7%. The value then decreased slightly to US$3,667,394 thousand in 2025. This suggests a period of increased borrowing followed by stabilization.

Adjusted Total Capital

Adjusted total capital decreased from US$5,533,400 thousand in 2021 to US$4,449,188 thousand in 2023, a decline of approximately 19.6%. It then experienced a notable increase to US$5,597,400 thousand in 2025, exceeding the 2021 level. This fluctuation in capital may be attributable to changes in equity, retained earnings, or other components of capital.

Comparison to Reported Debt to Capital

The adjusted debt to capital ratio is consistently higher than the reported debt to capital ratio across all periods. This indicates that the adjustments made to total debt and/or total capital result in a higher leverage metric. The difference between the reported and adjusted ratios remains relatively consistent throughout the period, suggesting the adjustments are systematically applied.

The increase in the adjusted debt to capital ratio from 2021 to 2024, coupled with the subsequent decrease in 2025, warrants further investigation to understand the underlying drivers of these changes and their potential implications for the company’s financial health.

The financial leverage metrics demonstrate a fluctuating pattern over the five-year period. Reported financial leverage initially increased from 2.88 in 2021 to 3.07 in 2022, then rose more substantially to 4.27 in 2023 and peaked at 5.39 in 2024. A decrease to 3.40 was observed in 2025. The adjusted financial leverage mirrors this trend, though with differing magnitudes.

Total Assets & Stockholders’ Equity

Total assets decreased from 2021 to 2023, declining from US$6,163,579 thousand to US$5,359,187 thousand. A subsequent increase occurred in 2024 and 2025, reaching US$7,259,610 thousand. Stockholders’ equity followed a similar trajectory, decreasing from US$2,138,090 thousand in 2021 to US$1,256,329 thousand in 2023, before increasing to US$2,134,671 thousand in 2025. The adjusted values for both metrics exhibit the same general trends, though with slight differences in magnitude.

Adjusted Financial Leverage – Trend Analysis

Adjusted financial leverage began at 2.81 in 2021 and increased to 3.14 in 2022. The rate of increase accelerated in 2023, reaching 4.63, and continued to climb significantly to 7.51 in 2024. A notable decrease to 3.63 was then recorded in 2025. This suggests a period of increasing financial risk culminating in 2024, followed by a partial mitigation of that risk in the final year.

Comparison of Reported and Adjusted Leverage

The adjusted financial leverage consistently reports higher values than the reported financial leverage across all observed years. The difference between the two metrics appears to widen during periods of increasing leverage, such as 2023 and 2024. This indicates that the adjustments made to the calculation are increasing the calculated leverage ratio, potentially reflecting a more conservative or comprehensive assessment of the company’s financial obligations.

The substantial increase in adjusted financial leverage in 2024, followed by a decrease in 2025, warrants further investigation to understand the underlying drivers of these changes and their potential impact on the company’s financial stability.

The adjusted net profit margin demonstrates a significant trajectory over the five-year period. Initially negative, the metric progresses to substantial profitability, exhibiting increasing levels of efficiency in generating profit from adjusted revenue.

Adjusted Net Profit Margin - Overall Trend

The adjusted net profit margin began at -3.03% in 2021, indicating a loss when considering adjustments to net income and revenue. A substantial improvement is then observed, moving to 9.31% in 2023, 28.45% in 2024, and culminating in 63.62% in 2025. This represents a considerable increase in profitability over the period.

Adjusted Net Profit Margin - 2021-2022

From 2021 to 2022, the adjusted net profit margin declined from -3.03% to -12.42%. This suggests that, even with adjustments, the company experienced a widening loss in profitability relative to adjusted revenue during this period. The magnitude of the loss increased considerably.

Adjusted Net Profit Margin - 2022-2025

Following the loss in 2022, a strong positive trend emerges. The adjusted net profit margin increased from -12.42% in 2022 to 9.31% in 2023, representing a significant turnaround. This positive momentum continued, with further increases to 28.45% in 2024 and 63.62% in 2025. This indicates successful implementation of strategies to improve profitability.

Comparison to Reported Net Profit Margin

The adjusted net profit margin consistently differs from the reported net profit margin. The adjustments made to net income and revenue appear to have a substantial impact, particularly in the earlier years. The reported margin shows a loss in 2022, while the adjusted margin shows a larger loss. In later years, the adjusted margin is generally lower than the reported margin, suggesting that adjustments reduce the reported profitability.

The substantial growth in the adjusted net profit margin from 2023 to 2025 suggests improved operational efficiency, effective cost management, or increased revenue generation following adjustments. The initial negative values indicate challenges in profitability, but the subsequent positive trend demonstrates a successful shift in financial performance.

The adjusted return on equity (ROE) exhibited significant fluctuations over the five-year period. Initial observations reveal a substantial shift from negative values to increasingly positive figures, though with some moderation in the most recent year presented.

Adjusted ROE Trend

In 2021, the adjusted ROE was negative at -3.88%. This figure deteriorated further in 2022, reaching -19.16%. A marked improvement occurred in 2023, with the adjusted ROE rising to 27.71%. The most substantial increase was observed in 2024, where the adjusted ROE reached 184.86%. While remaining high, the adjusted ROE experienced a slight decrease in 2025, settling at 181.02%.

Relationship to Adjusted Net Income

The trend in adjusted ROE closely mirrors the trend in adjusted net income. The negative adjusted ROE values in 2021 and 2022 correspond with adjusted net losses during those years. The substantial increases in adjusted ROE in 2023, 2024, and 2025 are directly linked to the corresponding increases in adjusted net income.

Relationship to Adjusted Stockholders’ Equity

Adjusted stockholders’ equity generally decreased from 2021 to 2024, moving from US$2,178,782 thousand to US$723,344 thousand. This decrease, coupled with increasing adjusted net income, contributed significantly to the dramatic rise in adjusted ROE between 2022 and 2024. A notable increase in adjusted stockholders’ equity occurred in 2025, reaching US$1,930,006 thousand, which partially offset the continued growth in adjusted net income and resulted in a slight decrease in adjusted ROE compared to 2024.

The considerable volatility in adjusted ROE suggests sensitivity to changes in both adjusted net income and adjusted stockholders’ equity. The substantial growth in adjusted ROE in recent years warrants further investigation into the drivers of adjusted net income and the factors influencing the fluctuations in adjusted stockholders’ equity.

The adjusted return on assets (ROA) exhibited a significant trajectory over the five-year period. Initially negative, it demonstrated substantial improvement, culminating in a high percentage by the final year. A comparison between reported and adjusted ROA reveals the impact of certain adjustments on the overall profitability assessment.

Adjusted ROA Trend

The adjusted ROA began at -1.38% in 2021, indicating a loss relative to the adjusted asset base. This figure deteriorated to -6.11% in 2022, representing a further decline in profitability. A positive shift occurred in 2023, with the adjusted ROA rising to 5.98%. This upward momentum continued, accelerating to 24.61% in 2024 and reaching 49.86% in 2025. This represents a substantial increase in profitability relative to adjusted assets over the period.

Comparison with Reported ROA

The reported ROA generally followed the same directional trend as the adjusted ROA, but with differing magnitudes. In 2021, reported ROA was 0.58%, significantly higher than the adjusted ROA of -1.38%. The difference widened in 2022, with reported ROA at -3.30% and adjusted ROA at -6.11%. In 2023, the gap narrowed as both metrics became positive, with reported ROA at 6.66% and adjusted ROA at 5.98%. The divergence increased again in 2024 and 2025, with reported ROA exceeding adjusted ROA by approximately 2 percentage points each year. This suggests that adjustments consistently reduced the reported profitability figures.

Asset Base Evolution

Adjusted total assets decreased from US$6,125,140 thousand in 2021 to US$5,132,214 thousand in 2023, before increasing to US$5,432,946 thousand in 2024 and US$7,007,263 thousand in 2025. The increase in assets in the later years, coupled with the rising adjusted ROA, indicates that the company was able to generate increasingly higher profits from a growing asset base.

Net Income Impact

Adjusted net income (loss) mirrored the ROA trend, starting with a loss of US$84,436 thousand in 2021, increasing to a loss of US$347,956 thousand in 2022, and then becoming positive in 2023 at US$306,988 thousand. Net income grew substantially in 2024 to US$1,337,159 thousand and further to US$3,493,617 thousand in 2025. The substantial growth in adjusted net income is a primary driver of the improved adjusted ROA.

In summary, the adjusted ROA demonstrates a strong recovery and growth pattern. While initially negative, it experienced significant improvement, driven by increasing adjusted net income and, to a lesser extent, changes in the adjusted asset base. The consistent difference between reported and adjusted ROA highlights the impact of adjustments in evaluating the company’s profitability.