AppLovin Corporation stock research
FY2023 Q4
AppLovin (APP) Gross Margin — Quarter Ended Dec 31, 2023
Revenue and cost of revenue were both negative, producing a negative gross profit; however, gross margin was positive because the ratio of gross profit to revenue was favorable. Compared with the prior quarter and the same quarter a year ago, all three metrics shifted from positive to negative, and gross margin weakened substantially.
Gross margin takeaway
Quarter ended Dec 31, 2023 · FY2023 Q4
Revenue and cost of revenue were both negative, producing a negative gross profit; however, gross margin was positive because the ratio of gross profit to revenue was favorable. Compared with the prior quarter and the same quarter a year ago, all three metrics shifted from positive to negative, and gross margin weakened substantially.
- The most notable observable relationship is the reversal of cost of revenue from a positive to a negative amount, which together with negative revenue resulted in a positive gross margin. This shift is the strongest factor in the quarter's margin outcome.
- Gross margin was lower than both the immediately preceding quarter and the same quarter one year earlier, as revenue and gross profit changed from positive to negative while cost of revenue also turned negative. The prior periods had positive revenue, positive cost of revenue, and positive gross profit, resulting in higher gross margins.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
12.1%
Gross profit
-$59.1M
Revenue
-$488.1M
Cost of revenue
-$429.0M
Quarter-over-quarter change
-57.2 pts
Year-over-year change
-35.3 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Mar 31, 2023 | $715.4M | $453.4M | $262.0M | 63.4% |
| Jun 30, 2023 | $750.2M | $491.6M | $258.6M | 65.5% |
| Sep 30, 2023 | $864.3M | $599.2M | $265.0M | 69.3% |
| Dec 31, 2023 | -$488.1M | -$59.1M | -$429.0M | 12.1% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Sep 30, 2023
-57.2 pts
Year-over-year change
Dec 31, 2022
-35.3 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The most notable observable relationship is the reversal of cost of revenue from a positive to a negative amount, which together with negative revenue resulted in a positive gross margin. This shift is the strongest factor in the quarter's margin outcome.
Gross margin was lower than both the immediately preceding quarter and the same quarter one year earlier, as revenue and gross profit changed from positive to negative while cost of revenue also turned negative. The prior periods had positive revenue, positive cost of revenue, and positive gross profit, resulting in higher gross margins.
Monitor whether revenue and cost of revenue return to positive figures in subsequent quarters, as the current negative values represent a significant departure from historical patterns.