DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
Quarterly Data
Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.
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- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Analysis of Reportable Segments
- Capital Asset Pricing Model (CAPM)
- Price to Earnings (P/E) since 2021
- Price to Operating Profit (P/OP) since 2021
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Two-Component Disaggregation of ROE
AppLovin Corp., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31).
- Return on Assets (ROA)
- The return on assets displayed a fluctuating but overall improving pattern over the reported periods. Initially, it was negative, starting at -1.12% and declining further to -3.3% by the end of 2022. Starting from the first quarter of 2023, the ROA turned positive and exhibited a marked upward trend, reaching 44.63% by the third quarter of 2025. This substantial increase suggests enhanced efficiency in asset utilization and improved profitability over time.
- Financial Leverage
- The financial leverage ratio remained relatively stable around the low 3s in the early quarters but showed considerable volatility in later periods. Following a gradual increase to 4.57 in the third quarter of 2023, it peaked sharply at 9.92 in the first quarter of 2025. Subsequently, the ratio decreased to 4.3 by the third quarter of 2025. This pattern indicates periods of increased reliance on debt financing, followed by a reduction in leverage in the most recent quarters.
- Return on Equity (ROE)
- Return on equity exhibited a significant transformation from negative to highly positive values. The metric started at -3.44% and diminished further to -10.13% by the end of 2022. From early 2023, ROE turned positive and increased dramatically, reaching an exceptional 333.67% in the first quarter of 2025. Although it declined subsequently, it remained notably high at 192.05% in the third quarter of 2025. This suggests a substantial improvement in shareholder value generation, likely influenced by both increasing profitability and changes in financial leverage.
- Overall Analysis
- The company’s profitability indicators (ROA and ROE) improved markedly from negative figures in early periods to robust positive returns by 2025, reflecting successful operational and financial strategies. The rise in financial leverage, particularly the spike observed in early 2025, may have amplified the return on equity but also indicates a higher financial risk profile during that time. Subsequent reductions in leverage suggest a strategic effort to manage this risk. The interplay between increasing asset efficiency and financial leverage appears instrumental in driving the enhanced equity returns.
Three-Component Disaggregation of ROE
AppLovin Corp., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31).
- Net Profit Margin
- The net profit margin demonstrated a clear and consistent upward trajectory over the analyzed quarters. Initially negative, with values ranging from -2.46% to -6.84% during the early periods, it reversed to positive territory by mid-2023, achieving a substantial increase thereafter. The margin rose sharply to 10.87% by the end of 2023 and continued improving significantly, reaching 54.48% by the third quarter of 2025. This trend indicates a strengthening profitability and more efficient cost management over time.
- Asset Turnover
- Asset turnover showed a steady improvement throughout the periods, reflecting more effective utilization of assets to generate sales. Starting from 0.46 and gradually increasing to a peak of 0.84 in mid-2025, the ratio remained relatively stable around 0.8 thereafter. The moderate but consistent rise in asset turnover suggests enhanced operational efficiency and better asset management that contributes positively to overall financial performance.
- Financial Leverage
- Financial leverage exhibited notable fluctuations over the quarters. Initially stable around 3.06 to 3.12, it increased markedly to a high of 9.92 by the first quarter of 2025 before dropping back to 4.3 by the third quarter of 2025. The significant spike indicates a period of increased reliance on debt or other forms of leveraged funding, which could imply a strategic move to finance growth or restructure capital. The subsequent decline suggests a deleveraging phase or adjustment in capital structure.
- Return on Equity (ROE)
- ROE closely mirrored the pattern seen in profitability and leverage but with more pronounced volatility. It began with negative returns, reaching lows near -10.13% in late 2022, then improved substantially into positive figures by mid-2023. There was a remarkable surge to a peak of 333.67% in the first quarter of 2025, significantly influenced by both improved net margins and increased financial leverage. Although it decreased afterwards, it remained high at 192.05% by late 2025, indicating strong returns to shareholders despite prior fluctuations.
Five-Component Disaggregation of ROE
AppLovin Corp., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31).
- Tax Burden
- The Tax Burden ratio shows an increasing trend beginning from the period where data starts being available, around 0.72, rising gradually to a perfect 1.00 before slightly declining to 0.91. This indicates a reduction in the impact of taxes on earnings over time, improving net profitability after tax.
- Interest Burden
- The Interest Burden ratio reflects a steady improvement over the periods analyzed. Initially presenting highly negative values indicating losses before interest, the ratio turns positive and improves progressively, stabilizing in high positive territory close to 0.93, suggesting better management or reduction of interest expenses relative to earnings.
- EBIT Margin
- The EBIT Margin exhibits a strong upward trajectory, starting marginally at 0.08% and peaking at 64.77% in the latest period. The margin has shown consistent growth, signaling enhanced operational efficiency and profitability, with a particularly notable acceleration from early 2023 onward.
- Asset Turnover
- Asset Turnover has gradually increased from 0.46 to a peak near 0.84 before a slight dip to 0.82. This suggests an improving ability of the company to generate revenue relative to its asset base, highlighting increasing operational effectiveness in asset utilization over time.
- Financial Leverage
- Financial Leverage has shown a volatile pattern with general upward movement, starting near 3.06 and peaking close to 9.92 before declining to 4.30 in the most recent period. The peak indicates a substantial increase in reliance on debt or liabilities relative to equity at certain points, followed by deleveraging steps.
- Return on Equity (ROE)
- ROE moved from negative values early in the timeline to consistently positive and rapidly escalating figures, reaching as high as 333.67% before settling around 192.05% in the last period. This dramatic increase reflects significantly higher profitability relative to shareholders' equity, driven by improving operational performance and financial efficiency.
Two-Component Disaggregation of ROA
AppLovin Corp., decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31).
- Net Profit Margin
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The net profit margin exhibits a significant upward trend over the observed periods. Initially, it was negative, indicating losses, with a margin of -2.46% at the beginning of the timeline and deepening to -6.84% by the fourth quarter. Starting from the fifth quarter, the margin transitions into positive territory, showing steady and accelerating improvement, reaching 54.48% by the last quarter. This consistent increase suggests enhanced profitability and operational efficiency over time.
- Asset Turnover
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The asset turnover ratio shows a moderate but steady increase across the periods, moving from 0.46 to a peak of approximately 0.84 before a slight decline to 0.82 in the final quarter. This growth signals improved efficiency in utilizing assets to generate revenue. The rise is gradual but consistent, indicating ongoing enhancements in asset management and business activity relative to asset base.
- Return on Assets (ROA)
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Return on assets follows a pattern similar to the net profit margin, beginning with negative values and gradually improving into positive figures. It starts at -1.12%, worsening to -3.3%, and then improves after the fifth quarter, reaching 44.63% by the end of the period. This increase reflects growing profitability relative to the asset base and demonstrates improved overall efficiency in converting investments into net income.
- Overall Analysis
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The data collectively illustrate a company moving from a position of financial challenge, indicated by losses and low efficiency, to robust profitability and operational effectiveness. The synchronized improvement in net profit margin, asset turnover, and ROA suggests that financial performance gains are supported by both enhanced profit generation and efficient asset use. The continuous positive momentum seen in these key financial ratios points to a strengthening financial health and potentially successful strategic initiatives.
Four-Component Disaggregation of ROA
AppLovin Corp., decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31).
- Tax Burden
- The tax burden ratio data begins from the third quarter of 2023, showing values consistently close to 1.0, fluctuating slightly between 0.72 and 1.0 in the given periods. This indicates a stable but relatively high tax expense relative to earnings before tax in the latter part of the examined timeline.
- Interest Burden
- The interest burden ratio improves significantly over the observed periods. Initially, negative values are reported from early 2022, indicating substantial interest expenses relative to earnings before interest and taxes. Over time, this trend reverses, moving towards positive ratios close to 0.9 by the third quarter of 2025, signifying decreasing interest expenses and an improving ability to cover interest obligations.
- EBIT Margin
- The EBIT margin shows a strong upward trajectory throughout the period. Starting from a very low margin at 0.08% in the first quarter of 2022, with some volatility including a dip to negative 1.18% at the end of 2022, the margin subsequently rises sharply. By the third quarter of 2025, it reaches a peak of 64.77%, reflecting substantial improvements in operational profitability and efficiency.
- Asset Turnover
- Asset turnover ratio exhibits a generally positive trend, increasing gradually from 0.46 in the first quarter of 2022 to peaks around 0.84 in 2025. This suggests enhanced efficiency in using assets to generate revenue over time, with relative stability and slight fluctuations near the end of the period.
- Return on Assets (ROA)
- The return on assets starts with negative values in early 2022, reaching as low as -3.3%, indicating losses relative to asset base at the outset. From mid-2023 onwards, ROA improves markedly, crossing into positive territory, and steadily climbs to 44.63% by the third quarter of 2025. This strong growth reflects improving profitability and efficient asset utilization over the analyzed timeframe.
Disaggregation of Net Profit Margin
AppLovin Corp., decomposition of net profit margin ratio (quarterly data)
Based on: 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31).
- Tax Burden
- The tax burden ratio shows a generally stable to slightly improving trend in recent periods, starting at 0.72 in mid-2023 and gradually increasing to near unity by early 2025. This suggests a consistent ability to retain a higher portion of pre-tax income after taxation over time.
- Interest Burden
- The interest burden ratio displays substantial improvement from significantly negative figures in early 2022, reaching positive values from the first half of 2023 onward. The ratio steadily increases from 0.11 in June 2023 to 0.93 by the end of 2025, indicating a marked reduction in interest-related expenses relative to operating income and an improvement in financial leverage or cost of debt management.
- EBIT Margin
- The EBIT margin has demonstrated a strong and consistent upward trend throughout the observed periods. Initial values near zero and negative in early 2022 gradually increased to nearly 6% by the start of 2023, with rapid growth thereafter. By the end of 2025, the EBIT margin reaches an impressive 64.77%, highlighting significant operational profitability improvements and potentially enhanced cost efficiency or revenue growth.
- Net Profit Margin
- Similar to the EBIT margin, the net profit margin improves markedly over time. Negative margins are observed in early periods, with a significant turnaround beginning in early 2023. There is a continuous growth trajectory thereafter, reaching 54.48% by the end of 2025. This improvement signifies enhanced bottom-line profitability, likely reflecting both operational gains and better management of interest and tax expenses.