APPLOVIN (SINGAPORE) PTE. LTD. (202315459Z) was incorporated in April 2023.
It had a paid capital of US$151,000.
Based on ig, Applovin officially opened its office in Singapore a few months ago, in December 2024!

Applovin Singapore 2023 financials can be found here.


a. Intercompany Billing: $1.47 Billion Between APPLOVIN and its SG Subsidiary

• Nature of the Transaction: Nasdaq-listed APP has billed its Singapore subsidiary US$1.47 billion (representing 45% of APP’s total revenues in 2023). These could be for services, product sales, intellectual property (IP) rights, or other intercompany arrangements.

o Disclosure: While this won’t affect Applovin’s consolidated revenues, Applovin should disclose this as part of its related-party transactions in the Notes to the 10-K or 10-Q filings. Key details should include the nature of the transactions, the terms, and any pricing arrangements. Yet, there were 0 disclosures to the SEC.

b. Accounts Receivable: $953M at Applovin US as of the end-2023, $267M of it Owed by the Singapore Subsidiary.

• Nature of the Transaction: APP has $953 million in accounts receivable (Dec-2023), including $267 million owed by its Singapore subsidiary. On Singapore subsidiary’s balance sheet, $267 million is in trade payables to APP.
• Normal and Ordinary: These amounts represent the cash flow between the parent and its subsidiary. At the consolidated level, these balances will be eliminated since they are intercompany receivables and payables.

o Disclosure: APPLOVIN will need to disclose these intercompany balances in the Notes to the financial statements under related-party transactions in the 10-K and 10-Q filings. The disclosure should outline the terms of these payables and receivables, including the nature of the transactions and any related terms. Yet, there were 0 disclosures to the SEC.

c. Dividend Payment from SG to APP: $378 Million

• Nature of the Transaction: SG declared $378 million in dividends to APP in 2023, which was Singapore’s entire net income and equity.
• Normal and Ordinary: This is a typical dividend payment from a subsidiary to the parent. The dividend will not impact APP’s consolidated net income because it will be eliminated in the consolidation process.

o Disclosure: Since the $378 million dividend is significant and may affect the liquidity, APPLOVIN must disclose this transaction in its 10-K. The Notes should explain the nature of the dividend and its impact on SG’s capital structure, especially the resulting shareholder equity deficit of $358 million. Yet, there were 0 disclosures to the SEC.

d. Assets (Cash and Receivables on SG’s Balance Sheet)

• Nature of the Assets: SG has $109 million in cash and $628 million in trade receivables, of which $622 million are third-party receivables.
• Normal and Ordinary: These are standard operating assets. Since the receivables are to third parties, they won’t be eliminated during consolidation (only intercompany receivables with Applovin would be eliminated).

o Disclosure: This information will appear in the balance sheet of Applovin after consolidation, but in the 10-K, APPLOVIN must disclose the nature of these receivables, particularly the third-party nature of the majority of the Singapore’s receivables. Yet, there were 0 disclosures to the SEC.

2. Transactions Requiring Public Disclosure
Certain transactions and risks should be disclosed in APP’s 10-K, 8-K, or 10-Q filings due to their material impact on the financial condition or risk profile of the company. These include:

a. International Restructuring and Intellectual Property (IP) Licensing

• Nature of the Transaction: APP’s 2023 10-K mentions that it completed a restructuring, transferring intellectual property (IP) and other assets to SG for tax optimization purposes.
• Problem: At the end of 2023, SG’s balance sheet shows no IP assets. This raises concerns about whether the IP transfer truly took place or if it was a paper restructuring (e.g., a license rather than an actual transfer).
• Disclosure Requirements:

o Materiality: The absence of IP on SG’s balance sheet despite the restructuring needs to be explained.

o Transfer Pricing: APPLOVIN should disclose whether the IP transfer was done at arm’s length prices, in line with transfer pricing regulations (for tax purposes). If the IP was licensed rather than transferred, the terms of that license should be clearly disclosed.

b. Dividend Payment and Shareholder Equity Deficit of SG

• Nature of the Transaction: Singapore subsidiary’s dividend payment of $378 million left it with a shareholder equity deficit of $358 million.
• Risk to Disclose: This creates a liquidity concern for SG, which may need financial support from APPLOVIN in the future.
• Disclosure Requirements:

o Material Impact: APPLOVIN must explain the financial health of Singapore subsidiary in the Risk Factors and Liquidity and Capital Resources sections of the 10-K.

o Going Concern: Since Singapore subsidiary has a shareholder equity deficit, it’s critical to disclose any potential risks to SG’s solvency and operations, and whether APPLOVIN will provide additional capital if necessary. If Singapore Subsidiary’s future ability to pay dividends is at risk, this should also be noted.

3. Issues and Suspicious Transactions Between Applovin and Singapore Subsidiary. IP Transfer and Missing IP Assets

• The most concerning issue is that while Applovin mentioned on the 2023 10K transferring IP to Singapore subsidiary, there is no IP reflected on Singapore’s balance sheet. This raises the question of whether the IP was actually transferred or just licensed. If it was licensed rather than transferred, APPLOVIN should disclose the terms of the license and the tax benefits of this structure.

Suspicion: If the IP is being licensed to SG, this could be a tax-driven strategy rather than an actual asset transfer, which may have implications for transfer pricing and future tax audits.

b. Dividend Payment to Applovin and Singapore Subsidiary’s Liquidity Concerns
• SG paying out all its shareholder equity in the form of a dividend ($378 million) while running a shareholder equity deficit of $358 million raises significant liquidity risks.
Given that SG has a low cash balance ($109 million) relative to its operations and debts, this could indicate that SG is financially fragile, with a reliance on future support from APP.

Suspicion: If the dividend is being paid to maximize tax benefits at APP’s level, but SG is left with a large deficit and low liquidity, there’s a potential risk of financial instability at the subsidiary.

c. Unexplained Intercompany Transactions
• APPLOVIN billing $1.47 billion to its Singapore subsidiary (45% of APP’s total revenue in 2023) is substantial. If these intercompany transactions are not at arm’s length, there could be transfer pricing issues that may draw the attention of tax authorities in both the U.S. and Singapore. Additionally, the terms of these transactions (such as interest rates, payment terms, etc.) should be clarified.

Key Takeaways

1. Round-tripping and fake revenues could explain the large revenues ($834 million) and lack of credit impairment ($1,000) by inflating sales through internal transactions or pre-arranged deals with related parties (like Applovin).
2. The high receivables balance might primarily consist of related-party or round-trip transactions, leading to the appearance of healthy sales without creating real financial risk.
3. Impairment losses are so low because the company doesn’t face actual credit risk from these transactions, but this is misleading from a financial reporting standpoint.
4. If round-tripping is involved, Singapore’s revenues are artificially inflated, and the financials may not reflect the true economic performance of the company.

Suspicious Red Flags:

Possible round-tripping or related-party transactions inflating revenue without real economic impact.

Unusually low impairment losses on large receivables.

High receivables relative to annual revenue.


Questions for APPLOVIN Management about Its Singapore Subsidiary (Company No. 202315459Z)

Days Payable Outstanding (DPO) is reported as 30 days according to the company’s policy. The actual DPO at the end of 2023 was 279 days. Most of the payables are owed to the US parent.
Why is there no disclosure about this to the SEC?
How is this even possible when the normal credit term is about 30 days?

The 8-month-old Singapore subsidiary was billed USD 1.47 billion by the US parent in 2023, which accounts for 45% of the US parent’s total 2023 revenues. What kind of services were provided?
Were these arm’s-length transactions? Why is there no disclosure about this to the SEC?

The 8-month-old Singapore subsidiary reported generating USD 834 million in revenues from April to December 2023 (25% of Applovin’s total revenues for 2023), and it had USD 628 million in receivables at the end of 2023. This results in 275 DSO days (approximately 9 months to collect its invoices).
How is that even possible? Does this indicate fake or fictitious revenues and/or revenue round-tripping?
Considering its reported payment term is only 30 days and it had only USD 1,000 in receivables impairment, how can this be explained?
APPLOVIN Singapore reports: “As of 31 December 2023, substantially all trade receivables are not past due or are within 30 days past due, and 1% are more than 61 days past due.”

The 8-month-old Singapore subsidiary had USD 267 million in payables to Applovin as of the end of 2023, which represents 28% of Applovin’s total receivables (out of a total of USD 953 million) as of the end of 2023.
From this, we can infer that APPLOVIN is the top supplier to its Singapore subsidiary.
What kind of services were provided?
Why is there no disclosure about this material transaction with related parties?

In the 2023 10-K annual report, APPLOVIN stated: “We recently completed an international restructuring that included the inter-entity licensing of certain intellectual property and other assets used in the business to our Singapore subsidiary.”
However, the end-2023 Singapore subsidiary balance sheet shows only cash and trade receivables.
What kind of intellectual property and other assets did APPLOVIN transfer to its 8-month-old Singapore subsidiary, which generated USD 834 million in revenues in 2023, all from the Software Platform (i.e., Ads) segment?

99% of the Singapore subsidiary’s receivables are from third parties (with approximately 0% receivables impairment), and 91% of total payables are owed to the US parent and related companies. Applovin US is the top and most important supplier to its Singapore subsidiary.

For 8 months in 2023, the Singapore subsidiary generated an operating cash flow of USD 108 million, and had USD 109 million in cash/cash equivalents at the end of 2023. It paid USD 378.68 million in dividends to the US parent for 2023, which is its entire net income for the year!
Why is every single dollar of net income paid out as a dividend to Applovin US?
There is no cash on the balance sheet, yet the dividend “cash” still flows to Applovin US?

Days Payable Outstanding (DPO) is reported as 30 days according to the company’s policy. The actual DPO at the end of 2023 was 279 days. Absolute majority of the Singapore payables are owed to the US parent, Applovin.
Why is there no disclosure about this to the SEC?
How is this even possible, when Applovin’s normal credit term is about 30-59 days?

The full report of Sakura Research on $APP Applovin can be found here.