AppLovin Corp. (NASDAQ:APP)

The financial data reveals notable dynamics in the company's operational efficiency and liquidity management over the observed periods, particularly from March 2021 through June 2025.

Receivables Turnover

The receivables turnover ratio started at 5.43 and demonstrated a generally declining trend, decreasing to 3.15 by June 2025. This decline suggests that the company is collecting its receivables more slowly over time, indicating a lengthening in the credit terms or slower cash inflows from customers.

Payables Turnover

The payables turnover ratio showed fluctuations but a clear downward trajectory in the longer term. From 3.83 initially, it decreased significantly to 1.62 by June 2025. Such a pattern indicates that the company is taking longer to pay its suppliers, which could be a sign of stretching payment terms to preserve cash or potential liquidity pressure.

Working Capital Turnover

This ratio exhibited variability with an initial rise from 1.08 to a peak of 6.12 around December 2022, then a decline to 2.63 by June 2025. The early increase reflects efficient use of working capital, potentially through rapid asset turnover or better management of current assets and liabilities. However, the subsequent drop suggests a reduction in operational efficiency or changes in working capital composition influencing turnover adversely.

Average Receivable Collection Period

The average number of days to collect receivables lengthened from 67 days to a peak of 120 days before slightly decreasing to 116 days by June 2025. This trend aligns with the decreasing receivables turnover ratio, reinforcing the observation that the collection process has become slower, potentially impacting cash flow.

Average Payables Payment Period

The company’s average payment period to suppliers increased considerably from 95 days to 225 days by June 2025. This increasing trend indicates extended creditor payment terms or delayed payments, which could be deliberate management of cash outflows or an indication of liquidity challenges.

Overall, the data suggests a shift towards longer cash conversion cycles, with receivables being collected more slowly and payables being paid more slowly as well. The initial improvement in working capital turnover was not sustained over the long term. These patterns highlight potential liquidity concerns and a possible strategic emphasis on managing cash flows by extending payment periods while facing challenges in accelerating receivables collection.

Revenue Trend

Over the analyzed period, revenue exhibited overall growth with some fluctuations. Initial quarters from March 2021 to December 2021 showed a steady increase from approximately $603.9 million to $793.5 million. This was followed by volatility through 2022, where revenue peaked in June 2022 at around $776.2 million but subsequently declined to roughly $702.3 million by December 2022.

Starting in 2023, revenue demonstrated strong recovery and continued growth. It rose from approximately $715.4 million in March 2023 to an estimated $1.37 billion by December 2024. However, by mid-2025, revenue showed signs of a slight decline from the peak, decreasing to approximately $1.16 billion in March 2025 before increasing again to $1.26 billion in June 2025.

Accounts Receivable, Net

The net accounts receivable increased substantially over the timeframe. Starting from about $340.9 million in March 2021, the balance more than quadrupled, reaching an estimated $1.58 billion by June 2025. The rapid growth was especially marked between December 2023 and June 2025, when accounts receivable surged from approximately $953.8 million to over $1.58 billion. This sizable increase indicates either extended collection periods or higher sales on credit.

Receivables Turnover Ratio

The receivables turnover ratio, which measures how efficiently receivables are collected, showed a declining trend over the periods reported. Initially, the ratio was 5.43 in March 2022 but steadily decreased quarter over quarter, hitting a low of 3.05 in March 2025 before marginally recovering to 3.15 in June 2025.

This decline in receivables turnover suggests a slowdown in the collection of receivables, indicating customers might be taking longer to pay or the company extended more liberal credit terms. The decrease in turnover correlates with the significant rise in accounts receivable balances.

Overall Analysis

The combined trends of rising revenue and growing accounts receivable, accompanied by a declining receivables turnover ratio, imply the company experienced expanding sales with somewhat delayed cash collections. The increasing receivables balance relative to revenue growth points to potential cash flow management challenges if collection efficiency does not improve.

While revenue growth is a positive indicator of business expansion and market demand, the accompanying deterioration in receivables turnover requires close monitoring to mitigate credit risk and maintain healthy liquidity. Going forward, improving collection practices could enhance cash flows and reduce the buildup of accounts receivable.

The analysis of the quarterly financial data reveals several notable trends in costs, payables, and turnover ratios over the observed periods.

Cost of Revenue

The cost of revenue demonstrates a generally fluctuating pattern across the quarters. Starting at approximately 223 million US dollars in the first quarter of 2021, the cost shows an increasing trend through 2021 and 2022, peaking near 369 million in the last quarter of 2022. This peak is followed by a decline in early 2023, settling around 261 million by the first quarter of 2023. Subsequently, costs oscillate moderately, rising again towards the end of 2024 and experiencing a sharp decline by the second quarter of 2025 to around 155 million. This volatile movement may reflect variability in operational scale or cost management strategies during this period.

Accounts Payable

Accounts payable display an overall upward trajectory over the quarters. Beginning near 158 million in early 2021, the payable amount expands significantly, reaching over 563 million by mid-2025 before slightly decreasing. This substantial growth in payables suggests an increase in procurement or extended payment terms within the company's operations. The increase notably accelerates from mid-2023 onward with payables consistently above the 300 million mark and peaking in the mid-2025 period.

Payables Turnover Ratio

The payables turnover ratio shows a declining trend from late 2021 into mid-2025. The ratio starts around 3.83 and moves downward, indicating a reduction in the frequency with which the company settles its payables. By the first half of 2025, the ratio falls to approximately 1.62. This decrease might indicate slower payments to suppliers or longer credit periods being utilized, which aligns with the observed increase in accounts payable balances.

In summary, the cost of revenue experiences cyclic fluctuations with peaks and troughs, whereas accounts payable steadily increase over time. Concurrently, the declining payables turnover ratio points to a lengthening of payment cycles. These trends suggest evolving operational dynamics, possibly involving increased credit usage from suppliers and alterations in cost structures. Continuous monitoring of these metrics is essential to assess the company’s liquidity management and operational efficiency.

Working Capital

The working capital demonstrates considerable fluctuations over the reported periods. Initially, there is a notable increase from 698,225 thousand US dollars at the end of March 2021 to a peak of 2,594,967 thousand US dollars by December 2021. Subsequently, working capital declines sharply in early 2022 and stabilizes around the range of 1.1 to 1.4 million US dollars through most of 2022 and early 2023, followed by a marked drop to approximately 495,318 thousand US dollars in September 2023. Thereafter, a recovery trend is observed, with a steady increase up to 1,254,718 thousand US dollars in June 2024. The final two reported quarters show volatility again, with working capital falling to 958,110 thousand US dollars in March 2025 before rising sharply to 1,898,804 thousand US dollars by June 2025.

Revenue

Revenue exhibits a generally upward trend with notable seasonality and volatility. It rises consistently in 2021 from 603,877 thousand US dollars in March to 793,470 thousand US dollars in December. The first half of 2022 records a rebound after a decline in early 2022, experiencing some fluctuations but trending upward to 776,231 thousand US dollars in June 2022. Throughout 2023, revenue continues to grow, peaking at 953,261 thousand US dollars in December and further advancing in 2024, reaching 1,372,779 thousand US dollars by December 2024. The revenue dips slightly in the first quarter of 2025 but remains robust above 1.1 million thousand US dollars, ending at 1,258,754 thousand US dollars in June 2025.

Working Capital Turnover

Working capital turnover ratios indicate increasing efficiency in the use of working capital after March 2021, with figures starting at 1.08 and rising sharply to a peak of 6.12 by September 2023. This suggests that revenue generated per unit of working capital improved significantly during this period. After reaching the peak, the turnover ratio declines gradually to 2.63 by June 2025, indicating some reduction in efficiency or potentially more conservative working capital management in recent quarters.

Insights and Trends

The company exhibits a pattern of cyclical working capital levels coinciding with fluctuations in revenue. Despite working capital volatility, revenue shows a clear growth trend, which suggests successful scaling or market expansion. The peaks and troughs in working capital turnover further reflect adjustments in operational efficiency—periods of high turnover correlate with optimized capital usage, while declines may point to strategic shifts or external factors impacting capital management. Overall, the company demonstrates an ability to increase revenue consistently while navigating the challenges of working capital management.

Receivables Turnover Ratio

The receivables turnover ratio started at 5.43 in March 2022 and showed a general downward trend over the subsequent periods. After fluctuating moderately around the range of 4.0 to 4.5 through 2022 and early 2023, the ratio declined more noticeably in late 2023 and 2024. By mid-2025, the ratio reached a low of approximately 3.05 before a slight increase to 3.15. This declining turnover ratio suggests that the company has been collecting receivables more slowly over time.

Average Receivable Collection Period

The average number of days to collect receivables increased from 67 days in March 2022 to a peak of 120 days by June 2025, indicating a lengthening collection cycle. After some fluctuations in 2022 and 2023, the trend clearly moved upward starting in late 2023, with collection periods consistently exceeding 100 days through to 2025. The increase in collection days corresponds inversely to the decrease in receivables turnover, reinforcing the observation of slower receivable collections.

Overall Analysis

The data reveals a trend of declining efficiency in receivables management over the analyzed period. The lower turnover ratio combined with a longer collection period may point to challenges in credit control or changes in customer payment behavior. This could have implications for cash flow and working capital management, suggesting a need for closer monitoring and potentially improved collection strategies.

The financial data reveals trends in the company's payables turnover ratio and the average payables payment period over several quarters, beginning in the first quarter of 2021 and extending through the second quarter of 2025.

Payables Turnover Ratio

The payables turnover ratio is first reported in the first quarter of 2022, starting at 3.83. It then decreases to 2.83 in the second quarter of 2022, before increasing and peaking at 4.6 in the first quarter of 2023. Subsequently, the ratio shows a general decline with minor fluctuations, falling to 4.11 by the fourth quarter of 2023. From 2024 onward, a steady downward trend is evident, with the ratio dropping to 2.62 by the fourth quarter of 2024 and continuing to decrease through 2025, ultimately reaching 1.62 in the second quarter of 2025.

Average Payables Payment Period (Days)

The average payables payment period, which inversely correlates to the payables turnover ratio, starts at 95 days in the first quarter of 2022. It then increases sharply to 129 days in the second quarter of 2022, declining back to 83 days by the fourth quarter of 2022. The period remains relatively stable and low throughout 2023, ranging approximately between 79 and 89 days. However, starting in 2024, the payment period begins to rise significantly, reaching 139 days in the fourth quarter of 2024 and continuing this upward trajectory into 2025, peaking at 225 days by the second quarter of 2025.

Overall, the data indicates a shift in the company's payables management starting in 2024, characterized by longer payment durations and a corresponding decline in payables turnover ratio. This trend suggests a strategic extension of payment terms or potential liquidity considerations that could be impacting the efficiency with which the company settles its payables. Prior to 2024, the payables turnover was relatively stable with moderate fluctuations, while payment periods remained mostly within a tighter range, reflecting a more consistent supplier payment rhythm.