AppLovin Corp. (NASDAQ:APP)

Receivables Turnover

The receivables turnover ratio exhibits a fluctuating pattern. Initially, it shows an increasing trend from 4.11 at the start to a peak of 4.56 around March 31, 2023. Subsequently, there is a general decline, reaching approximately 3.05 by June 30, 2025, with slight recoveries late in the period. This decline suggests a gradual reduction in the efficiency of collecting receivables over the later quarters.

Payables Turnover

The payables turnover ratio reveals a significant rise in the first year, climbing from 2.83 to a high of 4.6 by December 31, 2022, indicating quicker payments to suppliers during that period. However, from the beginning of 2023 onwards, it steadily declines, falling well below the initial value to 1.55 by September 30, 2025. This trend reflects a lengthening payment cycle to creditors over recent quarters.

Working Capital Turnover

The working capital turnover ratio demonstrates volatility throughout the observed periods. It initially increases significantly from 1.86 to 2.61, peaking sharply at 6.12 by September 30, 2023. Following this peak, the ratio declines again to 2.15 by September 30, 2025. The high peak suggests a temporary surge in the efficient use of working capital, but the subsequent decline indicates this efficiency was not sustained.

Average Receivable Collection Period

The average receivable collection period shows variability with an overall increase over time. Starting at 89 days, it decreases to 80 days by March 31, 2023, implying faster collections initially. However, it then trends upward, reaching a high point of 120 days by March 31, 2025, before slightly reducing to 113 days by the end of the period. This increase signals deteriorating efficiency in collecting receivables.

Average Payables Payment Period

The average payables payment period displays a U-shaped trajectory. Initially, it declines from 129 days to 79 days by December 31, 2022, reflecting quicker payments to suppliers. Afterward, it lengthens progressively to a high of 235 days by September 30, 2025. The extended payment period in recent quarters indicates a strategic delay in cash outflows to suppliers.

Revenue Trends

Revenue exhibits a generally upward trajectory over the analyzed periods. Starting from approximately 625 million USD in March 2022, it increased significantly, peaking above 1.37 billion USD in December 2024. After this peak, a minor dip occurs in March 2025 before revenue resumes growth in June and September 2025, reaching approximately 1.41 billion USD. This indicates strong sales growth with some seasonal or cyclical fluctuations.

Accounts Receivable Dynamics

The net accounts receivable balances also follow an increasing pattern throughout the periods. Beginning near 684 million USD in March 2022, the balances rose steadily with occasional sharper increases, notably a jump from approximately 849 million USD in September 2023 to over 1.58 billion USD by mid-2025. This growth parallels revenue increases but at a faster pace in later periods, suggesting extended credit sales or slower collections.

Receivables Turnover Ratio

The receivables turnover ratio fluctuates with evident decline over time. Initial values above 4.0 in early 2022 reflect relatively efficient collections. The ratio peaks briefly near 4.56 in March 2023 but declines steadily thereafter to values near 3.0-3.3 by 2025. This downward trend, concurrent with rising accounts receivable, signals a potential slowing in collection efficiency or extended credit terms.

Overall Analysis

The data reveals expanding business activity marked by increasing revenue and receivables. However, the decreasing receivables turnover ratio indicates that receivables are being collected more slowly relative to revenue growth. This could impact cash flows and financial stability if not managed appropriately. Monitoring credit policies and collection practices is advisable to ensure ongoing operational liquidity.

The financial data reveal distinct patterns in the cost of revenue, accounts payable, and payables turnover ratios over the observed periods. The analysis highlights noteworthy trends and fluctuations in the company's operational efficiency and short-term financial obligations.

Cost of Revenue

The cost of revenue displays a generally fluctuating pattern with initial growth followed by a decline and subsequent recovery phases. Starting from approximately $282 million in the first quarter of 2022, it peaks near $369 million by the end of 2022. The subsequent two quarters show a downward trend, reaching approximately $259 million in mid-2023. Afterward, it gradually rises again, reaching around $320 million by the end of 2024. Interestingly, there is a significant and abrupt decrease at the start of 2025, falling to roughly $152 million, though it then shows a mild increase through the subsequent quarters. This variability indicates potential shifts in production costs, sales volume, or pricing strategies affecting the direct costs associated with generating revenue.

Accounts Payable

The accounts payable trend demonstrates considerable volatility and an overall upward movement in recent periods. Initially, payables decrease from around $370 million in early 2022 to a low near $261 million in the third quarter of 2022. This is followed by oscillations and a marked increase starting in the fourth quarter of 2023, ultimately peaking at approximately $595 million by the middle of 2025 before a slight decline toward the end of the period. This upward trajectory may reflect extended credit terms, increased purchases on credit, or shifts in supplier payment policies, potentially indicating management’s strategic adjustments in working capital management or operational expansion.

Payables Turnover Ratio

The payables turnover ratio experiences a significant decline across the periods observed. From a range of about 2.8 to 4.6 during 2022 and early 2023, it steadily drops to as low as approximately 1.55 by late 2025. This continuous decrease signifies that the company is paying its suppliers at a slower rate over time, which may be linked to the growing accounts payable balances. Lower turnover ratios can indicate elongated payment cycles, which might improve short-term liquidity but could also pose risks relating to supplier relationships and creditworthiness.

Summary of Interrelations and Implications

The inverse relationship between the rising accounts payable and declining payables turnover ratio underscores a strategic shift in payment practices. While the cost of revenue does not display a directly proportional relationship to payables trends, its fluctuations could be influencing working capital requirements and the company's approach to creditor settlements. The notable drop in cost of revenue at the start of 2025, paired with the peak in accounts payable, suggests a potential operational adjustment or financial restructuring effort occurring during this time frame. Overall, these patterns suggest an increased emphasis on managing outflows to suppliers more conservatively, possibly to preserve cash amidst varying operational conditions.

Working Capital

The working capital exhibited significant fluctuations over the observed periods. Initially, it decreased from 1,512,984 thousand USD at March 31, 2022, to a low of 495,318 thousand USD at September 30, 2023. Following this trough, it rebounded substantially, reaching a peak of 2,414,433 thousand USD by September 30, 2025. This pattern indicates periods of both contraction and expansion in the available short-term liquidity resources.

Revenue

Revenue demonstrated an overall upward trend throughout the time frame. Starting at 625,421 thousand USD in March 2022, it showed steady growth with some variability, peaking at 1,372,779 thousand USD at December 31, 2024 before experiencing a modest decline and then recovering to 1,405,045 thousand USD by September 2025. This suggests consistent top-line growth amid some short-term volatility.

Working Capital Turnover

The working capital turnover ratio showed marked volatility, with an initial value of 1.86 in March 2022. It increased to a high of 6.12 at September 2023, reflecting improved efficiency in utilizing working capital relative to revenue during that quarter. Subsequently, it declined to a low of 2.15 by September 2025. The fluctuations suggest variability in operational efficiency and capital management practices over time, with periods of both enhanced and reduced turnover efficiency.

Summary Insights

The observed data reveals that while revenue maintained a general growth trajectory, working capital management experienced notable oscillations. The substantial dip and subsequent recovery in working capital could indicate shifts in inventory, receivables, payables, or cash holdings. The inverse relationship seen at certain points between working capital levels and turnover ratio implies that the company occasionally operated with tighter capital but managed to generate higher revenue per unit of working capital during those periods. Conversely, when working capital increased significantly, turnover efficiency decreased, suggesting the potential buildup of less productive assets. Overall, the trends point to dynamic management of current assets and liabilities, with an emphasis on balancing liquidity and revenue generation efficiency.

Receivables Turnover Ratio

The receivables turnover ratio exhibited a fluctuating trend over the analyzed periods. Starting at 4.11, the ratio climbed to a peak of 4.56 by the first quarter of 2023, indicating an improvement in the efficiency of collecting receivables during this time. However, following this peak, a noticeable decline occurred, with the ratio falling to 3.05 by mid-2025. This downward trend suggests a gradual reduction in the effectiveness of receivables collection in the most recent periods.

Average Receivable Collection Period

The average collection period generally moved inversely to the receivables turnover ratio, as expected. Initially, the collection period decreased from 89 days to a low of 80 days in the first quarter of 2023, corresponding with the peak turnover ratio and indicating quicker collections. Afterward, the collection period increased considerably, reaching 120 days by the third quarter of 2025. This increase signals that, over time, it took longer for the company to collect its receivables.

Overall Observations

The data reveals a shift in working capital management efficiency related to receivables over the period. The early phase reflects strengthening in credit management as collections became faster and turnover improved. Contrastingly, the latter phase indicates a deterioration in collection efficiency, as evidenced by the reduced receivables turnover and extended collection days. This could imply increasing credit risk, loosening credit policies, or challenges in collecting payments promptly in recent quarters.

Payables Turnover

The payables turnover ratio exhibited a rising trend from March 2022 through December 2022, increasing from 2.83 to 4.6. This indicates an acceleration in the rate at which payables were settled during this period. The ratio remained relatively stable near 4.1 to 4.57 in the first three quarters of 2023, but a sharp decline occurred starting in the last quarter of 2023, with the ratio dropping to 2.85 and continuing downward through March 2025, reaching 1.55. This decline suggests a marked slowdown in the frequency of payable settlements in the later periods.

Average Payables Payment Period

The average number of days taken to pay suppliers decreased substantially from 129 days in March 2022 to a low of 79 days in December 2022, reflecting faster payment practices. This shorter payment period was maintained roughly around 80 to 89 days through the first three quarters of 2023, consistent with the elevated payables turnover ratios. However, starting from the last quarter of 2023, the payment period lengthened significantly, rising sharply to 128 days and continuing an upward trend, reaching 235 days by September 2025. This extension indicates a gradual lengthening of the credit terms or delays in payment processing over the most recent periods.

Overall Analysis

The financial ratios reveal a clear shift in the company's payables management practices over the examined timeframe. The initial phase through 2022 was characterized by increasingly prompt payments to suppliers, as evidenced by rising payables turnover and decreasing payment periods. However, beginning in the final quarter of 2023, a reversal occurred, marked by a steady decline in payables turnover accompanied by a rising average payment period. Such a shift may suggest deliberate changes in working capital management, potentially reflecting strategic cash flow preservation or external factors affecting payment capabilities. The data points to a trend toward slower payments and extended credit usage in the most recent years, which may warrant further investigation regarding supplier relations and liquidity management.