Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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Profitability Ratios (Summary)
AppLovin Corp., profitability ratios
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 profitability metrics demonstrate a significant improvement over the five-year period. Initially, the company experienced challenges, but subsequent years show a strong positive trajectory across all measured ratios.
- Gross Profit Margin
- The gross profit margin exhibited volatility, decreasing from 64.62% in 2021 to 55.41% in 2022, before increasing substantially to 67.74% in 2023. This upward trend continued, reaching 75.22% in 2024 and culminating in a high of 87.86% in 2025. This indicates increasing efficiency in managing production costs or improved pricing strategies.
- Operating Profit Margin
- The operating profit margin initially declined from 5.37% in 2021 to -1.70% in 2022, suggesting increased operating expenses or decreased revenue. However, a dramatic recovery began in 2023, with the margin rising to 19.74%. This positive momentum accelerated in subsequent years, reaching 39.78% in 2024 and a substantial 75.75% in 2025. This suggests effective cost control and operational improvements.
- Net Profit Margin
- Mirroring the operating profit margin trend, the net profit margin decreased from 1.27% in 2021 to -6.84% in 2022. A strong recovery commenced in 2023, with the margin increasing to 10.87%. Continued growth was observed in 2024 (33.55%) and 2025 (60.83%), indicating improved overall profitability after accounting for all expenses and income.
- Return on Equity (ROE)
- The return on equity experienced the most pronounced fluctuations. It decreased from 1.66% in 2021 to -10.13% in 2022. A significant turnaround occurred in 2023, with ROE rising to 28.39%. This growth accelerated dramatically in 2024 (144.96%) and 2025 (156.17%), indicating a highly efficient use of shareholder equity to generate profits.
- Return on Assets (ROA)
- The return on assets followed a similar pattern to ROE, declining from 0.58% in 2021 to -3.30% in 2022. A recovery began in 2023, reaching 6.66%. Subsequent increases were observed in 2024 (26.92%) and 2025 (45.92%), demonstrating improved efficiency in utilizing assets to generate earnings.
Collectively, these ratios suggest a period of initial difficulty followed by substantial and accelerating improvements in profitability and efficiency. The significant increases in ROE and ROA, particularly in the later years, are noteworthy and indicate a strong positive trend in financial performance.
Return on Sales
Return on Investment
Gross Profit Margin
AppLovin Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | 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: 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).
1 2025 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The gross profit margin demonstrates a significant and consistent upward trend over the five-year period. While initially experiencing a decline, the metric has shown substantial improvement, reaching a high point in the most recent year presented.
- Gross Profit Margin Trend
- In 2021, the gross profit margin stood at 64.62%. A decrease was observed in 2022, with the margin falling to 55.41%. However, 2023 marked a turning point, as the gross profit margin increased to 67.74%. This positive momentum continued into 2024, with the margin rising to 75.22%. The most substantial increase occurred between 2024 and 2025, with the gross profit margin reaching 87.86%.
The growth in gross profit margin is supported by increases in both gross profit and revenue. However, the rate of increase in gross profit has consistently exceeded that of revenue in recent years, driving the margin expansion. This suggests improving efficiency in cost of goods sold or increased pricing power.
- Relationship to Revenue and Gross Profit
- Revenue exhibited modest growth from 2021 to 2023, increasing from US$2,793,104 thousand to US$3,283,087 thousand. A more substantial increase in revenue was then observed between 2023 and 2025, reaching US$5,480,717 thousand. Gross profit followed a similar pattern, but with more pronounced growth, particularly in the later years. Gross profit increased from US$1,805,009 thousand in 2021 to US$4,815,577 thousand in 2025.
The substantial improvement in the gross profit margin in the final two years of the period warrants further investigation to understand the underlying drivers. Potential factors could include economies of scale, changes in the product mix, or improved cost management strategies.
Operating Profit Margin
AppLovin Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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: 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).
1 2025 Calculation
Operating profit margin = 100 × Income (loss) from operations ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin demonstrates a significant and positive trend over the observed period. Initially, the company experienced a period of operational loss, followed by substantial improvement and growth in profitability.
- Operating Profit Margin - Overall Trend
- The operating profit margin began at 5.37% in 2021. It experienced a substantial decline in 2022, resulting in a negative margin of -1.70%. However, a strong recovery commenced in 2023, with the margin increasing to 19.74%. This upward trajectory continued through 2024, reaching 39.78%, and culminated in a substantial margin of 75.75% in 2025.
The magnitude of the increase in operating profit margin from 2022 to 2025 is particularly noteworthy. The shift from a negative margin to a margin exceeding 75% indicates a considerable improvement in the company’s operational efficiency and/or pricing power.
- Relationship to Revenue
- While revenue increased steadily throughout the period, the operating profit margin’s growth outpaced revenue growth, especially in the later years. This suggests that the company not only increased sales but also effectively managed its operating expenses, leading to a disproportionately larger increase in operating income.
The substantial increase in operating profit margin in the final two observed years warrants further investigation to understand the underlying drivers, such as cost control measures, changes in revenue mix, or increased economies of scale.
- Year-over-Year Changes
- The largest year-over-year increase in operating profit margin occurred between 2024 and 2025, with a change of 35.97 percentage points. The recovery from 2022 to 2023 was also significant, representing a 21.44 percentage point improvement.
In conclusion, the operating profit margin exhibits a compelling narrative of recovery and substantial growth, indicating improving operational performance and profitability.
Net Profit Margin
AppLovin Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | 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: 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).
1 2025 Calculation
Net profit margin = 100 × Net income (loss) attributable to AppLovin ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin demonstrates a significant and volatile trend over the five-year period. Initial profitability declined sharply, followed by substantial improvement and continued growth.
- Net Profit Margin Trend
- In 2021, the net profit margin stood at 1.27%. This decreased considerably in 2022, resulting in a negative margin of -6.84%. A substantial recovery occurred in 2023, with the net profit margin increasing to 10.87%. This positive trend accelerated in 2024, reaching 33.55%, and continued its upward trajectory in 2025, culminating in a net profit margin of 60.83%.
The fluctuation in net profit margin closely mirrors the changes in net income. The negative margin in 2022 corresponds with a significant net loss, while the subsequent increases in net profit margin align with the growing net income figures in 2023, 2024, and 2025. Revenue also increased over the period, but the rate of revenue growth does not fully explain the dramatic changes in profitability, suggesting shifts in cost structure or other operational efficiencies contributed to the margin expansion.
- Magnitude of Change
- The largest single-year change occurred between 2022 and 2023, with a 17.71 percentage point increase in net profit margin. The increase from 2024 to 2025 was also substantial, adding another 27.28 percentage points. These increases indicate a significant improvement in the company’s ability to convert revenue into profit.
The substantial increase in net profit margin from 2021 to 2025 suggests improved operational performance, cost management, or a change in revenue mix. Further investigation into the underlying drivers of these changes would be necessary to fully understand the sustainability of this trend.
Return on Equity (ROE)
AppLovin Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2025 | 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: 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).
1 2025 Calculation
ROE = 100 × Net income (loss) attributable to AppLovin ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The return on equity (ROE) exhibited significant fluctuations over the observed period. Initially, the ROE was relatively low, followed by a substantial decline, and then a dramatic increase, culminating in a consistently high level by the end of the period.
- ROE Trend
- In 2021, the ROE stood at 1.66%. A marked decrease was observed in 2022, with the ROE falling to -10.13%, indicating a loss relative to shareholder equity. A substantial recovery occurred in 2023, with the ROE rising to 28.39%. This positive trend continued, with the ROE reaching 144.96% in 2024 and further increasing to 156.17% in 2025. This represents a considerable improvement in profitability relative to equity.
- Net Income and ROE Relationship
- The fluctuations in ROE closely mirror the changes in net income attributable to AppLovin. The negative ROE in 2022 corresponds with the reported net loss for that year. Conversely, the substantial increases in ROE in 2023, 2024, and 2025 align with the significant growth in net income during those periods.
- Stockholders’ Equity and ROE Relationship
- Stockholders’ equity decreased from 2021 to 2023, from US$2,138,090 thousand to US$1,256,329 thousand. This decrease, coupled with the net loss in 2022, contributed to the negative ROE that year. However, equity began to recover in 2024 and 2025, reaching US$2,134,671 thousand, while net income increased substantially, resulting in the high ROE values observed in those years. The increasing ROE despite the initial equity decline suggests a significant improvement in the efficiency with which equity was utilized to generate profits.
Overall, the ROE demonstrates a volatile but ultimately positive trajectory. The company experienced a period of unprofitability in 2022, but subsequently achieved substantial gains in profitability relative to equity in the following years.
Return on Assets (ROA)
AppLovin Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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: 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).
1 2025 Calculation
ROA = 100 × Net income (loss) attributable to AppLovin ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibits a significant and positive trend over the observed period. Initially, the ROA was positive at 0.58% in 2021, then experienced a substantial decline into negative territory in 2022, before recovering and demonstrating considerable growth through 2025.
- ROA Trend (2021-2025)
- In 2021, the ROA stood at 0.58%, indicating a modest return generated from the company’s assets. A marked deterioration occurred in 2022, with the ROA falling to -3.30%, signifying a loss in relation to the asset base. A substantial recovery began in 2023, as the ROA rose to 6.66%, suggesting improved profitability. This positive momentum continued, with the ROA increasing significantly to 26.92% in 2024 and further escalating to 45.92% in 2025. This represents a dramatic improvement in the efficiency with which assets are being utilized to generate profits.
The fluctuations in ROA correlate with the changes in net income. The negative ROA in 2022 aligns with the reported net loss for that year. Conversely, the substantial increases in ROA in 2023, 2024, and 2025 correspond with the progressively larger net income figures. Total assets decreased from 2021 to 2023, then increased in 2024 and 2025, but the growth in net income outpaced the asset growth in the latter years, driving the ROA higher.
- Net Income and ROA Relationship
- The strong positive correlation between net income and ROA suggests that profitability is the primary driver of changes in asset utilization efficiency. The company’s ability to generate increasing profits from a relatively stable, and eventually growing, asset base has resulted in a substantial improvement in its ROA.
The ROA’s trajectory indicates a significant turnaround in the company’s performance. The substantial increase from a negative value to 45.92% over the five-year period suggests a considerable enhancement in the effectiveness of asset management and overall profitability.