AppLovin Corp. (NASDAQ:APP)

An examination of short-term operating activity ratios reveals notable shifts in the period under review. Generally, efficiency in managing receivables and payables appears to be declining, while working capital utilization has fluctuated significantly.

Receivables Turnover & Collection Period

Receivables turnover consistently decreased from 5.43 to 3.01, indicating a lengthening of the time it takes to collect on credit sales. This trend is mirrored in the average receivable collection period, which increased from 67 days in 2021 to 121 days in 2025. The increasing collection period suggests a potential weakening in credit control or a shift towards offering more lenient credit terms to customers.

Payables Turnover & Payment Period

Payables turnover exhibited a decline from 3.83 to 0.89, suggesting the company is taking longer to pay its suppliers. Correspondingly, the average payables payment period lengthened considerably, rising from 95 days to 410 days. This substantial increase could indicate a deliberate strategy to conserve cash, or potentially, increasing difficulty in meeting payment obligations. The extremely high value in 2025 warrants further investigation.

Working Capital Turnover

Working capital turnover demonstrated considerable volatility. It increased significantly from 1.08 in 2021 to 4.89 in 2023, suggesting improved efficiency in utilizing working capital to generate sales. However, it then decreased to 3.75 in 2024 and further to 1.77 in 2025. This fluctuation suggests inconsistent performance in managing the relationship between working capital and revenue generation. The decline in recent years may be linked to the slower turnover of both receivables and payables.

In summary, the observed trends suggest a deterioration in the efficiency of managing both accounts receivable and accounts payable. While working capital turnover initially improved, it has since declined, potentially reflecting the impact of the lengthening collection and payment cycles. Continued monitoring of these ratios is recommended to assess the underlying causes and potential implications for liquidity and operational performance.

An examination of the provided financial information reveals a consistent decline in receivables turnover over the five-year period from 2021 to 2025. Simultaneously, revenue demonstrates a generally increasing trend, while net accounts receivable also exhibit substantial growth.

Receivables Turnover

The receivables turnover ratio decreased from 5.43 in 2021 to 3.01 in 2025. This indicates a lengthening of the average collection period for accounts receivable. A ratio of 5.43 suggests that, in 2021, the company collected its average receivables approximately 5.43 times during the year. By 2025, this frequency had fallen to 3.01 times annually.

The decrease in receivables turnover, coupled with increasing revenue, suggests that the company is extending more credit to its customers or experiencing delays in collecting payments. This could be due to changes in credit policies, a shift in customer mix, or inefficiencies in the collection process. The substantial increase in net accounts receivable—rising from US$514,520 thousand in 2021 to US$1,819,366 thousand in 2025—corroborates this observation.

Revenue and Accounts Receivable Relationship

While revenue increased from US$2,793,104 thousand in 2021 to US$5,480,717 thousand in 2025, the growth in accounts receivable outpaced revenue growth. This disparity is a key driver of the declining receivables turnover. The increase in revenue does not appear to be translating into a proportional increase in cash collection from receivables.

The observed trend warrants further investigation to determine the underlying causes and potential implications for the company’s cash flow and working capital management. A sustained decline in receivables turnover could indicate increasing credit risk or operational inefficiencies.

The accounts payable turnover ratio demonstrates a consistent decline over the five-year period. Initially, the ratio exhibited an increase, followed by a substantial decrease, indicating evolving trends in the company’s payment practices and supplier relationships.

Payables Turnover Trend

The payables turnover ratio increased from 3.83 in 2021 to 4.60 in 2022, suggesting the company was paying its suppliers more quickly during this period. However, this trend reversed sharply in subsequent years. A decrease to 2.85 was observed in 2023, followed by further declines to 2.07 in 2024 and a significant drop to 0.89 in 2025.

Relationship to Cost of Revenue

While cost of revenue increased from 2021 to 2022, the accounts payable turnover increased at a faster rate. From 2022 to 2023, cost of revenue decreased, but payables turnover decreased at a faster rate. This pattern continued through 2024, and the substantial decrease in cost of revenue in 2025 was accompanied by a dramatic decline in the payables turnover ratio.

Accounts Payable Growth

Accounts payable consistently increased throughout the period, rising from US$258,220 thousand in 2021 to US$746,977 thousand in 2025. This growth in accounts payable, coupled with the declining payables turnover, suggests the company is taking longer to settle its obligations to suppliers.

The decreasing payables turnover ratio, in conjunction with increasing accounts payable, could indicate a lengthening of the cash conversion cycle, potentially due to negotiating extended payment terms with suppliers, or a possible shift in supplier base. Further investigation into the company’s payment terms and supplier relationships is warranted to fully understand the drivers behind these trends.

The working capital turnover ratio exhibits considerable fluctuation over the observed period. Initial values are relatively low, increasing significantly before declining again. This suggests evolving efficiency in utilizing working capital to generate revenue.

Working Capital Trend

Working capital decreased substantially from 2021 to 2023, falling from approximately US$2.6 billion to US$672 million. A recovery was then noted in 2024, rising to US$1.25 billion, followed by a further increase to US$3.1 billion in 2025. This volatility indicates potential shifts in the company’s operational strategies or external economic factors impacting short-term asset and liability management.

Revenue Trend

Revenue demonstrated a consistent upward trend throughout the period. Starting at approximately US$2.8 billion in 2021, it increased to US$5.48 billion by 2025. This growth suggests expanding market reach or increased sales effectiveness.

Working Capital Turnover Ratio Analysis

The working capital turnover ratio was 1.08 in 2021, indicating that for every dollar of working capital, approximately US$1.08 in revenue was generated. This ratio increased significantly to 2.07 in 2022, suggesting improved efficiency in utilizing working capital. A substantial increase followed in 2023, reaching 4.89, indicating a markedly more efficient use of working capital to generate revenue. The ratio then decreased to 3.75 in 2024, and further to 1.77 in 2025. The decline in the latter years, despite continued revenue growth, suggests that the rate of working capital efficiency is diminishing, potentially due to increased investment in working capital to support the higher revenue levels.

The observed pattern suggests a period of improving working capital efficiency followed by a stabilization and then a slight decrease in efficiency as revenue scaled. Further investigation into the components of working capital (current assets and current liabilities) would be necessary to understand the drivers behind these fluctuations.

An examination of the short-term activity ratios reveals a consistent lengthening in the average receivable collection period over the five-year period. This is mirrored by a declining receivables turnover ratio.

Receivables Turnover

The receivables turnover ratio decreased steadily from 5.43 in 2021 to 3.01 in 2025. This indicates a diminishing efficiency in converting receivables into cash. The rate of decline slowed somewhat between 2023 and 2024, but continued into 2025.

Average Receivable Collection Period

The average receivable collection period increased consistently throughout the observed timeframe. Starting at 67 days in 2021, it rose to 121 days by 2025. This represents an approximately 81% increase over the five years. The increase from 2021 to 2022 was 24 days, while the increase from 2024 to 2025 was 11 days, suggesting a potentially moderating, but still present, lengthening of the collection cycle.

The observed trends suggest a potential weakening in the company’s ability to efficiently manage its accounts receivable. Further investigation may be warranted to understand the underlying causes of these changes, such as shifts in credit policies, customer payment behavior, or the composition of the customer base.

The average payables payment period exhibited a notable lengthening trend over the observed period. Initially, the period decreased before increasing substantially in later years. This shift warrants further investigation to understand the underlying causes and potential implications for the company’s financial health.

Payables Turnover

Payables turnover decreased consistently from 3.83 in 2021 to 0.89 in 2025. This indicates a declining efficiency in managing and paying off supplier obligations. The rate of decline accelerated in the later years of the period.

Average Payables Payment Period

The average payables payment period initially decreased from 95 days in 2021 to 79 days in 2022, suggesting improved efficiency in paying suppliers. However, beginning in 2022, the period began to increase. By 2023, it reached 128 days, and continued to rise to 176 days in 2024. A significant increase was observed in 2025, reaching 410 days. This substantial lengthening suggests a potential shift in payment strategies, possible difficulties in maintaining cash flow, or increased negotiation power with suppliers resulting in extended payment terms.

The inverse relationship between payables turnover and the average payables payment period is evident. As payables turnover decreased, the average payment period increased, confirming the interconnectedness of these metrics. The dramatic increase in the payment period in 2025, coupled with the low payables turnover, suggests a significant change in the company’s approach to managing its accounts payable.