Stock Analysis on Net

AppLovin Corp. (NASDAQ:APP)

$24.99

Analysis of Profitability Ratios

Microsoft Excel

Profitability Ratios (Summary)

AppLovin Corp., profitability ratios

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Return on Sales
Gross profit margin
Operating profit margin
Net profit margin
Return on Investment
Return on equity (ROE)
Return on assets (ROA)

Based on: 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).


Gross Profit Margin
The gross profit margin demonstrates an overall upward trend from 64.62% in 2021 to 75.22% in 2024. A decline is observed in 2022 to 55.41%, followed by a significant recovery and continuous improvement over the subsequent years. This suggests enhanced efficiency in production or sales cost management over time.
Operating Profit Margin
The operating profit margin shows considerable volatility. It fell to a negative figure of -1.7% in 2022 from a positive 5.37% in 2021, indicating a possible increase in operating expenses or reduced operating income during that year. However, a strong turnaround is visible in 2023 and 2024, with margins increasing to 19.74% and further to 39.78%, reflecting improved operational control and profitability.
Net Profit Margin
The net profit margin mirrors the operating margin trend with a dip into negative territory in 2022 (-6.84%), signifying the company faced net losses during that period. The margin subsequently improves to 10.87% in 2023 and further to 33.55% in 2024, indicating strong recovery and significant growth in bottom-line profitability.
Return on Equity (ROE)
ROE experienced a drastic decline from 1.66% in 2021 to -10.13% in 2022, suggesting the company’s shareholders experienced a negative return that year. Starting from 2023, ROE sharply increases to 28.39% and dramatically surges to 144.96% in 2024. Such strong growth signals exceptional value creation for shareholders and significant improvements in the company’s financial leverage or profitability.
Return on Assets (ROA)
The return on assets also followed a similar pattern, declining from 0.58% in 2021 to -3.3% in 2022, indicating inefficiency in asset utilization during that period. Thereafter, the ROA recovers to 6.66% in 2023 and rises significantly to 26.92% in 2024, reflecting better asset management and increased profitability from asset investments.

Return on Sales


Return on Investment


Gross Profit Margin

AppLovin Corp., gross profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Selected Financial Data (US$ in thousands)
Gross profit
Revenue
Profitability Ratio
Gross profit margin1
Benchmarks
Gross Profit Margin, Competitors2
Accenture PLC
Adobe Inc.
Cadence Design Systems Inc.
CrowdStrike Holdings Inc.
Datadog Inc.
International Business Machines Corp.
Intuit Inc.
Microsoft Corp.
Oracle Corp.
Palantir Technologies Inc.
Palo Alto Networks Inc.
Salesforce Inc.
ServiceNow Inc.
Synopsys Inc.
Workday Inc.

Based on: 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).

1 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × ÷ =

2 Click competitor name to see calculations.


Revenue
The revenue exhibited a gradual increase from 2021 to 2022, with a marginal rise from approximately 2.79 billion USD to 2.82 billion USD. This was followed by a more significant growth of approximately 16.5% in 2023, reaching around 3.28 billion USD, and an even larger increase of about 43.5% in 2024, reaching approximately 4.71 billion USD. Overall, the revenue trend indicates accelerating growth over the four-year period.
Gross Profit
Gross profit showed a declining trend between 2021 and 2022, decreasing from approximately 1.81 billion USD to 1.56 billion USD. This downturn reversed in 2023, with gross profit increasing substantially to about 2.22 billion USD, representing a growth of roughly 42% from the previous year. The upward trend continued strongly in 2024, with gross profit rising to approximately 3.54 billion USD, a notable increase of nearly 60%. The data indicates a recovery and then strong improvement in gross profit after a dip in 2022.
Gross Profit Margin
The gross profit margin declined noticeably from 64.62% in 2021 to 55.41% in 2022. This reduction suggests either increased cost pressures or a shift in revenue mix in that year. However, the margin improved significantly in 2023 to 67.74%, surpassing the level seen in 2021. The upward momentum continued in 2024, with the margin reaching 75.22%, indicating enhanced efficiency or a more profitable revenue structure. This positive trend in gross profit margin highlights improving operating performance and cost management over time.

Operating Profit Margin

AppLovin Corp., operating profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Selected Financial Data (US$ in thousands)
Income (loss) from operations
Revenue
Profitability Ratio
Operating profit margin1
Benchmarks
Operating Profit Margin, Competitors2
Accenture PLC
Adobe Inc.
Cadence Design Systems Inc.
CrowdStrike Holdings Inc.
Datadog Inc.
International Business Machines Corp.
Intuit Inc.
Microsoft Corp.
Oracle Corp.
Palantir Technologies Inc.
Palo Alto Networks Inc.
Salesforce Inc.
ServiceNow Inc.
Synopsys Inc.
Workday Inc.
Operating Profit Margin, Sector
Software & Services
Operating Profit Margin, Industry
Information Technology

Based on: 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).

1 2024 Calculation
Operating profit margin = 100 × Income (loss) from operations ÷ Revenue
= 100 × ÷ =

2 Click competitor name to see calculations.


Revenue
The revenue has exhibited a clear upward trajectory from 2021 through 2024. Starting at approximately 2.79 billion US dollars in 2021, it showed a modest increase in 2022, followed by a more substantial rise in 2023, culminating in a significant surge to nearly 4.71 billion US dollars by 2024. This pattern suggests consistent top-line growth, particularly accelerating in the latter years.
Income (loss) from operations
The operating income experienced volatility over the analyzed period. In 2021, the company reported a positive operating income of about 150 million US dollars. However, in 2022, this figure shifted dramatically to a loss of nearly 48 million US dollars, indicating operational challenges during that year. Subsequently, there was a remarkable recovery and growth, with operating income rebounding strongly to over 648 million US dollars in 2023 and reaching approximately 1.87 billion US dollars in 2024, reflecting improved operational efficiency or cost management alongside revenue growth.
Operating profit margin
The operating profit margin mirrored the income trends closely, turning negative in 2022 to -1.7%, which highlights a year where operational expenses outweighed revenues. The margin then improved significantly in 2023 to nearly 19.74%, signifying a transition back to profitability with enhanced operational leverage. This positive trend continued into 2024, with the margin increasing sharply to nearly 39.78%, indicating a strong capacity to convert revenue into operating profit and reflecting highly efficient operations.

Net Profit Margin

AppLovin Corp., net profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Selected Financial Data (US$ in thousands)
Net income (loss) attributable to AppLovin
Revenue
Profitability Ratio
Net profit margin1
Benchmarks
Net Profit Margin, Competitors2
Accenture PLC
Adobe Inc.
Cadence Design Systems Inc.
CrowdStrike Holdings Inc.
Datadog Inc.
International Business Machines Corp.
Intuit Inc.
Microsoft Corp.
Oracle Corp.
Palantir Technologies Inc.
Palo Alto Networks Inc.
Salesforce Inc.
ServiceNow Inc.
Synopsys Inc.
Workday Inc.
Net Profit Margin, Sector
Software & Services
Net Profit Margin, Industry
Information Technology

Based on: 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).

1 2024 Calculation
Net profit margin = 100 × Net income (loss) attributable to AppLovin ÷ Revenue
= 100 × ÷ =

2 Click competitor name to see calculations.


Revenue
There is a consistent upward trend in revenue from 2021 to 2024. The revenue increased from 2,793,104 thousand US dollars in 2021 to 4,709,248 thousand US dollars in 2024, representing substantial growth over the period. This reflects an expanding business scale and possibly growing market demand or effective sales strategies.
Net Income (Loss) Attributable
The net income attributable to the company showed significant volatility. In 2021, the company reported a net income of 35,446 thousand US dollars. However, in 2022, it experienced a net loss amounting to 192,746 thousand US dollars. This negative performance reversed sharply in 2023 with net income rising to 356,711 thousand US dollars, and there was a dramatic increase in 2024 with net income reaching 1,579,776 thousand US dollars. This pattern indicates a recovery from a temporary setback and significantly improved profitability by 2024.
Net Profit Margin
The net profit margin reflects the net income trend with notable fluctuations. In 2021, the margin was positive but modest at 1.27%. It turned sharply negative in 2022, dropping to -6.84%, corresponding with the recorded net loss. Subsequently, the margin improved markedly in 2023 to a positive 10.87%, and further rose substantially to 33.55% in 2024. This margin progression indicates increasing operational efficiency and profitability relative to revenue in the last two years of the period.

Return on Equity (ROE)

AppLovin Corp., ROE calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Selected Financial Data (US$ in thousands)
Net income (loss) attributable to AppLovin
Stockholders’ equity
Profitability Ratio
ROE1
Benchmarks
ROE, Competitors2
Accenture PLC
Adobe Inc.
Cadence Design Systems Inc.
CrowdStrike Holdings Inc.
Datadog Inc.
International Business Machines Corp.
Intuit Inc.
Microsoft Corp.
Oracle Corp.
Palantir Technologies Inc.
Palo Alto Networks Inc.
Salesforce Inc.
ServiceNow Inc.
Synopsys Inc.
Workday Inc.
ROE, Sector
Software & Services
ROE, Industry
Information Technology

Based on: 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).

1 2024 Calculation
ROE = 100 × Net income (loss) attributable to AppLovin ÷ Stockholders’ equity
= 100 × ÷ =

2 Click competitor name to see calculations.


The financial data reflects significant variability in the company's profitability and equity position over the four reported years.

Net Income (Loss)
The net income attributable to the company presents notable fluctuations. In the year ending 2021, the company recorded a positive net income of approximately $35.4 million. However, this was followed by a substantial loss of roughly $192.7 million in 2022. The subsequent years show a robust recovery with net income rising sharply to about $356.7 million in 2023 and further escalating impressively to approximately $1.58 billion in 2024. This pattern indicates a volatile but ultimately strong performance in profitability.
Stockholders’ Equity
Stockholders' equity has declined consistently over the observed period. Starting from roughly $2.14 billion in 2021, it decreased to approximately $1.90 billion in 2022, then continued to drop to nearly $1.26 billion in 2023, and further down to about $1.09 billion in 2024. This downward trend in equity may suggest increased liabilities, share repurchases, or distributions that are not clearly indicated, warranting closer examination of the company’s financial management policies.
Return on Equity (ROE)
The return on equity shows a dramatic shift. Initially, in 2021, ROE was low at 1.66%, turned negative to -10.13% in 2022, reflecting the loss incurred that year. Subsequently, ROE rebounded strongly to 28.39% in 2023 and surged exceptionally to 144.96% in 2024. The sharp increase in ROE is consistent with the strong net income growth despite the declining equity base, indicating highly efficient use of shareholders' equity to generate profits, although such elevated returns might also indicate higher financial leverage or risk.

Overall, the data reveal a company that experienced a significant downturn followed by a pronounced recovery in profitability, accompanied by a steady decrease in equity and a remarkable improvement in return on equity performance. These trends suggest a period of restructuring or strategic changes leading to enhanced earnings efficiency, although the reduction in equity and the extent of ROE growth suggest potential underlying risks or capital structure shifts that should be analyzed further.


Return on Assets (ROA)

AppLovin Corp., ROA calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Selected Financial Data (US$ in thousands)
Net income (loss) attributable to AppLovin
Total assets
Profitability Ratio
ROA1
Benchmarks
ROA, Competitors2
Accenture PLC
Adobe Inc.
Cadence Design Systems Inc.
CrowdStrike Holdings Inc.
Datadog Inc.
International Business Machines Corp.
Intuit Inc.
Microsoft Corp.
Oracle Corp.
Palantir Technologies Inc.
Palo Alto Networks Inc.
Salesforce Inc.
ServiceNow Inc.
Synopsys Inc.
Workday Inc.
ROA, Sector
Software & Services
ROA, Industry
Information Technology

Based on: 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).

1 2024 Calculation
ROA = 100 × Net income (loss) attributable to AppLovin ÷ Total assets
= 100 × ÷ =

2 Click competitor name to see calculations.


The analysis of the annual financial data reveals significant fluctuations and a notable improvement in the company's profitability over the observed periods.

Net Income (Loss) Attributable to AppLovin
The net income initially recorded a positive figure of $35.4 million in 2021, followed by a substantial loss of approximately $192.7 million in 2022. However, the company experienced a strong recovery in 2023, with net income rising to $356.7 million and further accelerating dramatically to $1.58 billion in 2024. This indicates a volatile but ultimately highly positive turn in profitability.
Total Assets
Total assets showed a decreasing trend from $6.16 billion in 2021 to $5.36 billion in 2023, reflecting a reduction in asset base over these years. In 2024, there was a moderate increase to nearly $5.87 billion, suggesting some expansion or acquisition of assets after prior contractions.
Return on Assets (ROA)
The ROA corresponded clearly to the changes in net income. It was positive but low at 0.58% in 2021, turned negative with a significant decline to -3.3% in 2022, and then improved sharply to 6.66% in 2023. In 2024, ROA surged substantially to 26.92%, demonstrating much more efficient use of assets to generate profits.

In summary, while the company faced a challenging period in 2022 marked by losses and shrinking assets, it managed a robust turnaround in subsequent years. The considerable increase in net income and ROA in 2023 and 2024 highlights improved operational effectiveness and profitability, despite the relatively stable asset base. This trend suggests enhanced financial performance and strategic success during the later period, positioning the company favorably for future growth.