Investment Thesis
AppLovin demonstrates exceptional financial performance with industry-leading profitability metrics (60.8% net margin, 75.8% operating margin) and robust cash generation (4.0B operating cash flow, 72.4% FCF margin). The company maintains a fortress balance sheet with substantial liquidity (3.32x current ratio, 2.5B cash) and manageable leverage despite 1.65x debt/equity, supported by exceptional interest coverage of 20.7x.
APP Strengths
- Exceptional profitability with 60.8% net margin and 75.8% operating margin, well above software/services industry averages
- Outstanding cash generation with 4.0B operating cash flow and 72.4% FCF margin, indicating high-quality earnings
- Fortress balance sheet with 2.5B cash, 3.32x current ratio, and 20.7x interest coverage despite 3.5B long-term debt
- Exceptional returns on capital with 156.2% ROE and 45.9% ROA, demonstrating highly efficient capital deployment
- Significant insider activity with 17 Form 4 filings in last 90 days, suggesting confidence in company fundamentals
APP Risks
- Flat revenue growth (0.0% YoY) despite strong profitability raises concerns about organic growth stagnation and market saturation
- High leverage at 1.65x debt/equity and 3.5B long-term debt creates refinancing risk and limits financial flexibility
- Extremely high profitability metrics (156.2% ROE) may not be sustainable and could indicate accounting adjustments or one-time gains
- Absence of gross margin data prevents deeper analysis of cost structure and unit economics
Key Metrics to Watch
- Revenue growth trajectory - must return to positive growth to validate business model sustainability
- Operating cash flow trends - ensure 4.0B OCF level is maintainable and not artificially inflated
- Debt reduction progress - monitor whether company prioritizes deleveraging given high leverage ratio
- Net margin sustainability - track if 60.8% margin persists or reverts to historical levels
APP Financial Metrics
APP Profitability Ratios
APP Balance Sheet & Liquidity
APP 5-Year Financial Trend
5-Year Trend Summary: AppLovin Corp's revenue has grown significantly by 96% over the 5-year period, indicating strong business expansion. The most recent EPS of $0.98 reflects profitable operations.
APP Growth Metrics (YoY)
APP Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2025 | $835.2M | $236.2M | $1.25 |
| Q2 2025 | $711.0M | $236.2M | $0.89 |
| Q1 2025 | $1.1B | $236.2M | $0.67 |
| Q3 2024 | $864.3M | -$4.5M | $0.30 |
| Q2 2024 | $750.2M | -$4.5M | $0.20 |
| Q1 2024 | $715.4M | -$4.5M | $-0.01 |
| Q3 2023 | $713.1M | -$4.5M | $0.06 |
| Q2 2023 | $750.2M | -$4.5M | $-0.06 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
APP Capital Allocation
APP SEC Filings
Access official SEC EDGAR filings for AppLovin Corp (CIK: 0001751008)