Enterprise Value to FCFF (EV/FCFF)
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Free Cash Flow to The Firm (FCFF)
AppLovin Corp., FCFF calculation
US$ in thousands
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 financial information reveals a significant shift in free cash flow to the firm (FCFF) over the observed period. Initially, the company experienced negative FCFF, but this trend reversed, culminating in substantial positive FCFF by the end of the period.
- Net Cash from Operations
- Net cash provided by operating activities demonstrated a consistent upward trend. Starting at US$361.851 thousand in 2021, it increased to US$412.773 thousand in 2022, then experienced a considerable jump to US$1,061.510 thousand in 2023. This growth continued, reaching US$2,099.011 thousand in 2024 and further increasing to US$3,971.094 thousand in 2025. This indicates improving operational efficiency and cash generation.
- Free Cash Flow to the Firm (FCFF)
- FCFF initially registered negative values in both 2021 and 2022, at -US$812.059 thousand and -US$823.705 thousand respectively. However, a dramatic turnaround occurred in 2023, with FCFF becoming positive at US$1,113.151 thousand. This positive trend accelerated in subsequent years, reaching US$2,261.594 thousand in 2024 and US$4,143.620 thousand in 2025. The magnitude of the increase in FCFF significantly outpaced the growth in operating cash flow, suggesting changes in investment or financing activities.
The divergence between the initial negative FCFF and the subsequent positive and growing FCFF suggests a potential shift in the company’s investment strategy, capital structure, or operational performance. The substantial increase in both operating cash flow and FCFF from 2022 to 2025 indicates a strengthening financial position and improved ability to fund future growth or return capital to stakeholders.
Interest Paid, Net of Tax
AppLovin Corp., interest paid, net of tax calculation
US$ in thousands
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).
2 2025 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= × =
The amount of cash paid for interest, net of tax, exhibited a significant increase from 2021 to 2023, followed by a decline in the subsequent two years. This trend occurred alongside considerable fluctuations in the effective income tax rate.
- Cash Paid for Interest, Net of Tax
- Cash paid for interest, net of tax, increased substantially from US$58.526 million in 2021 to US$156.068 million in 2022, representing a growth of approximately 166.8%. This increase continued into 2023, reaching US$233.226 million, a further increase of roughly 49.5%. However, in 2024, this figure decreased to US$213.786 million, a decline of approximately 8.3%. The downward trend continued into 2025, with cash paid for interest, net of tax, falling to US$172.747 million, a decrease of approximately 19.2% from the prior year.
- Effective Income Tax Rate
- The effective income tax rate demonstrated considerable volatility throughout the period. It stood at 23.69% in 2021, then decreased dramatically to 5.96% in 2022. A slight increase was observed in 2023, with the rate rising to 6.27%. In 2024, the effective income tax rate increased significantly to 21.00%, and then decreased to 13.10% in 2025.
The decrease in cash paid for interest, net of tax, in 2024 and 2025 may be attributable to several factors, including debt repayment, refinancing at lower interest rates, or changes in the company’s capital structure. The fluctuations in the effective income tax rate could influence the net amount of interest paid after considering tax benefits. The inverse relationship between the effective income tax rate and cash paid for interest, net of tax, is not immediately apparent, and further investigation would be required to determine if a correlation exists.
Enterprise Value to FCFF Ratio, Current
AppLovin Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| 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. | |
| EV/FCFF, Sector | |
| Software & Services | |
| EV/FCFF, Industry | |
| Information Technology | |
Based on: 10-K (reporting date: 2025-12-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
AppLovin Corp., historical EV/FCFF 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) | ||||||
| Enterprise value (EV)1 | ||||||
| Free cash flow to the firm (FCFF)2 | ||||||
| Valuation Ratio | ||||||
| EV/FCFF3 | ||||||
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| 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. | ||||||
| EV/FCFF, Sector | ||||||
| Software & Services | ||||||
| EV/FCFF, 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).
3 2025 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
The Enterprise Value to Free Cash Flow to the Firm (EV/FCFF) ratio exhibits significant fluctuations over the observed period. Initially, the ratio is unavailable for 2021 and 2022, coinciding with negative Free Cash Flow to the Firm (FCFF) values. A positive FCFF emerges in 2023, enabling the calculation of the EV/FCFF ratio, which is reported at 20.62. This ratio then increases substantially to 49.47 in 2024 before decreasing to 33.81 in 2025.
- Enterprise Value (EV)
- Enterprise Value demonstrates a considerable decrease from 2021 to 2022, falling from US$17,446,296 thousand to US$7,279,721 thousand. It then experiences a substantial increase in 2023 to US$22,957,013 thousand, followed by a dramatic surge to US$111,877,014 thousand in 2024. This upward trend continues into 2025, with EV reaching US$140,107,080 thousand.
- Free Cash Flow to the Firm (FCFF)
- Free Cash Flow to the Firm is negative in both 2021 and 2022, registering at -US$812,059 thousand and -US$823,705 thousand respectively. A positive turnaround is observed in 2023, with FCFF reaching US$1,113,151 thousand. This positive trend continues, with FCFF increasing to US$2,261,594 thousand in 2024 and further to US$4,143,620 thousand in 2025.
- EV/FCFF Ratio Trend
- The EV/FCFF ratio’s initial value in 2023 suggests a relatively high valuation compared to the generated free cash flow. The significant increase in the ratio in 2024, despite rising FCFF, indicates that Enterprise Value grew at a faster rate. The subsequent decrease in 2025, while still representing a substantial valuation, suggests a moderation in the rate of Enterprise Value growth relative to FCFF.
The observed patterns suggest a period of financial restructuring or significant investment activity, particularly evident in the changes to Enterprise Value and the transition from negative to positive FCFF. The increasing FCFF values are a positive indicator, but the EV/FCFF ratio’s fluctuations warrant further investigation to understand the underlying drivers of valuation changes.