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Credit Agreement
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Credit Agreement Credit Agreement
On August 15, 2018, the Company entered into a credit agreement with the lenders party thereto and Bank of America, N.A., as administrative agent for the lenders, which has been amended multiple times (the “Credit Agreement”; as amended, the “Amended Credit Agreement”). The Amended Credit Agreement provides for senior secured credit facilities consisting of two term loans (the “Term Loans”), with each having an outstanding balance of $1.5 billion, and a Revolving Credit Facility, with a maximum commitment of $610.0 million, as of December 31, 2023. During the third quarter of 2023, the Company drew down $185.0 million from the Revolving Credit Facility, with a remaining unused commitment of $418.7 million as of December 31, 2023, which is net of outstanding letters of credit of $6.3 million.
The Term Loans mature on October 25, 2028 and August 19, 2030. The Company is required to make equal quarterly repayments of $3.8 million for each term loan with the remaining balance due on the respective maturity date. The Revolving Credit Facility matures on June 12, 2028.
The Term Loans and the borrowings under the Revolving Credit Facility bear interest at a rate equal to an applicable margin plus, at the Company’s option, either (a) a secured overnight financing rate (“SOFR”) for a specified term, subject to a 0.50% floor, or (b) a base rate equal to the highest of (i) the prime rate then in effect, (ii) the federal funds rate, plus 0.50% and (iii) the SOFR rate for a one-month interest period, plus 1.00%. The applicable margin with respect to the Term Loans is equal to 3.10% in the case of SOFR loans and 2.00% in the case of base rate loans. The applicable margin with respect to the amounts outstanding under the Revolving Credit Facility is between 2.10% to 2.35% in the case of SOFR loans and between 1.00% and 1.25% in the case of base rate loans, based on the Company maintaining certain leverage ratios. The fee for unused commitments under the Revolving Credit Facility ranges, based on the applicable leverage, from 0.25% to 0.50%. As of December 31, 2023, the interest rates for the Term Loans and the borrowings under the Revolving Credit Facility were 8.45% and 7.45%, respectively, and the fee for unused commitments under the Revolving Credit Facility was 0.25%.
The Company may be required to prepay certain outstanding amounts in the event of certain circumstances or transactions and is permitted to voluntarily prepay or repay outstanding loans under the Revolving Credit Facility or Term Loans at any time, in whole or in part, subject to prior written notice, minimum amount requirements, and customary “breakage” costs with respect to SOFR loans. Amounts prepaid under the Revolving Credit Facility may subsequently be reborrowed.
The Company’s obligations under the Credit Agreement are secured by substantially all of the assets of the Company and its domestic subsidiary guarantors (other than customarily excluded assets).
The Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of AppLovin and its restricted subsidiaries to, among other things, incur debt, grant liens, undergo certain fundamental business changes, make investments, pay-out dividends to third parties, dispose of assets, and enter into transactions with affiliates, in each case, subject to limitations and exceptions set forth in the Credit Agreement. The Credit Agreement also contains customary events of default that include, among other things, certain payment defaults, cross defaults to other indebtedness, covenant defaults, change of control defaults, judgment defaults, and bankruptcy and insolvency defaults. If an event of default exists, the lenders may require the immediate payment of all obligations under the Credit Agreement and may exercise certain other rights and remedies provided for under the Credit Agreement, the other loan documents and applicable law. As of December 31, 2023, the Company was in compliance with all covenants.
During the third quarter of 2023, the Company entered into a refinancing transaction under which the Company replaced a previous term loan with one of the Term Loans. The Company evaluated the transaction on a creditor-by-creditor basis to determine the appropriate application of modification or extinguishment accounting and recorded a loss on extinguishment of debt of $4.3 million in interest expense and loss on settlement of debt, and an expense for third-party costs related to modification of debt of $11.1 million, in other income (expense), net, in the Company’s consolidated statement of operations for the year ended December 31, 2023. The Company recorded the refinanced term loan at face value less unamortized debt discount and issuance cost of $19.4 million, which is amortized over the term of the refinanced term loan using the effective interest method.
The following table presents the amount of interest expense recognized relating to the contractual interest expense, the amortization of the debt discount and issuance costs, and loss on debt extinguishment with respect to the Company's term loans, for the years ended December 31, 2023, 2022, and 2021 (in thousands):
Year Ended December 31,
202320222021
Contractual interest expense
$262,607 $162,150 $70,882 
Amortization of debt discount and issuance costs8,256 9,887 7,442 
Loss on debt extinguishment 4,337 — 16,852 
Total interest expense from term loans
$275,200 $172,037 $95,176 
The aggregate future maturities of long-term debt as of December 31, 2023 are as follows (in thousands):
2024$30,000 
202530,000
202630,000
202730,000
20281,428,750
Thereafter1,417,500
Total outstanding term loan principal$2,966,250 
Revolver credit facility185,000 
Unaccreted discount and debt issuance costs(30,344)
Total debt$3,120,906 
Less: short-term debt215,000
Long-term debt$2,905,906