Asset structure analysis
AppLovin’ s total assets were $5.36 billion and $5.85 billion in 2023 and 2022, respectively.
Intangible assets, net were $1.3 billion in 2023, accounting for 24% of total assets.
Goodwill was $1.84 billion in 2023, making up 34.3% of total assets.
AppLovin revealed that the company completed many acquisitions sine 2018, and then cost $4 billion for those acquisition.
AppLovin has expended business by acquiring other company, which would generate goodwill and intangible assets.
Cash and cash equivalents were $502 million as of December 31, 2023, consisting of 9.4% of total assets.
Accounts receivable, net were $954 million at December 31, 2023, comprising 17.8% of total assets.
Current assets were $1.6 billion, accounting for 30% of total assets.
Liquidity and solvency
Current liabilities were $944 million in 2023.
The current ratio was 1.7, which indicate that current assets covered current liabilities 1.7 times for 2023.
The debt ratio was 76.5%.
We need to look at cash flow.
Net cash provided by operating activities was $1.06 billion, $412.8 million and $362 million in 2023, 2022 and 2021, respectively.
AppLovin’ s debt was remained by net cash provided by operating activities .
Considering goodwill and intangible assets, the debt ratio was undervalued.
AppLovin’ s cash flow is important for servicing debt.
Profitability analysis
AppLovin’ s revenue was $3.28 billion, $2.8 billion and $2.8 billion in 2023, 2022 and 2021, respectively.
AppLovin’ s revenue in 2022 was flat year-on-year.
AppLovin’ s revenue in 2023 was up 17% year-on-year.
Operating income was $648 million, -$47.8 million and $150 million in 2023, 2022 and 2021, respectively.
Net income was $356.7 million, -$193 million and $35 million in 2023, 2022 and 2021, respectively.
We can notice that Applovin generate a lot of interest expenses.
Interest expenses and loss on settlement of debt were $275.7 million, $171.9 million and $103 million in 2023, 2022 and 2021, respectively.
Interest expense was a very big factor, which affect net income.
Another factor, stock-based compensation expenses, reduced net income .
Stock-based compensation was $363 million, $191.6 million and $133 million over the past three years.
AppLovin ‘s net profit margin was 10.9% in 2023.
Cash flow analysis
Net cash provided by operating activities was $1 billion, $412.8 million and $362 million in 2023, 2022 and 2021, respectively.
AppLovine ‘s cash flow is not sufficient for acquiring businesses and intangible assets and repurchasing common stock.
Acquisitions of businesses and intangible assets were $63.9 million, $1.35 billion and $1.2 billion in 2023, 2022 and 2021, respectively.
Repurchases of common stock were $1.15 billion and $339 million in 2023 and 2022, respectively.
Conclusion
AppLovin expanded business by acquiring other companies, with accumulating debt.
You need to pay attention to stock-based compensation, which reduce valuation for Applovin.
Net cash provided by operating activities was not sufficient.
Now, AppLovin’s stock price is $74.80 per share, which is equivalent to $25.58 billion in market cap.
We think AppLovin’ s investment value is minimal.
Disclaimer: The content is for reference only and does not constitute investment advice.
Introduction
We generate our revenue from our Software Platform and our Apps. As more advertisers use our Software Platform to market and monetize their content, we gain access to more data regarding users and user engagement1, further strengthening our scaled distribution. As our distribution grows, we gain better insights for our AXON recommendation engine, which then further enhances our Software Platform. Our Apps consist of a globally diversified portfolio of over 200 free-to-play mobile games across five genres, run by eleven studios, some of which we own and others that we partner with. Our studios generally focus on the development of easy to learn and play games, which appeal to a broad range of demographics, but our portfolio also includes several games for other genres.
We report our operating results through two reportable segments: Software Platform and Apps. These segments align with how our Chief Operating Decision Maker (“CODM”) allocates resources, makes operating decisions, and manages and assesses the performance of our business. For the amount of revenue derived from our two segments and other relevant data for the years ended December 31, 2023, 2022 and 2021, as well as other additional information, see Note 14 of our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
