Mobile gaming company AppLovin started trading at $ 70 a share on Thursday.
The nine-year-old company, which has a portfolio of mobile games and also sells marketing services to gaming companies, now has a market capitalization of about $ 24 billion. It started trading on the Nasdaq under the ticker ‘APP’.
AppLovin is just the latest in a spate of IPOs for games, with development game developer Unity Software launching its own in September, Israel’s Playtika in January and children’s gaming company Roblox in March. IronSource, which provides advertising services for app-based game developers and makes its own games, also plans to go public via a SPAC merger.
AppLovin said it owns about 1% of the $ 189 billion global mobile apps market share that exploded during a stay-at-home year.
“We’ve been seeing it since we started our business; people use their phones four or five hours a day. Mobile apps are the most accessible and affordable form of entertainment, the best access point for commercial transactions,” said Adam Foroughi, founder and CEO . told CNBC.
Foroughi said when he started the business, it was focused on building a technology platform for mobile application developers to grow their applications by marketing their software.
“We’ve been building it for nine years. We’ve got the distribution to see more than 400 million customers on our platform every day now. Then, in 2018, we started building original content effectively ourselves,” he said. ‘We have more than 200 programs [and] more than 200 million people play games from us every month. And these games, our own content, build this valuable audience insight information that then enters our software platform, making it even more effective in providing value to the customers we have to get their apps discovered. ‘
AppLovin’s business is now divided between games and marketing tools used by other game developers to discover and promote applications. Last year, 49% of revenue came from businesses using its software and 51% from consumers making in-app purchases.
In 2016, AppLovin agreed to the $ 1.4 billion acquisition by Chinese private equity firm Orient Hontai Capital, but the deal expired the following year and turned into a debt investment. AppLovin then sold a minority stake in 2018 to KKR and valued the company at $ 2 billion. Since then, AppLovin has been strengthening its position in game development. AppLovin said in its prospectus that it has invested $ 1 billion in 15 acquisitions and partnerships since 2018.
“We had this technology platform for app developers to help them grow, by letting them discover, and then the public’s insights we needed to improve the software. We wanted first-party information about the audience. have what we saw, “Foroughi said. “Our own content gives us much better insights about the audience than we would otherwise get, because otherwise we only have data from third parties.”
Foroughi compares the strategy to that of Netflix.
“That first-party data introduces our software and then creates the ability to be much better at recommending future content to customers,” he said. “I think the best analogy to really compare it to is how Netflix took their own data on their platform and rolled out personalized recommendations. And we all love consuming content on Netflix, then they’ve laid out their own original content, which increased the amount of consumption on their platform and gave them more insight into their audience – repeating the same playbook in a new media format. ‘
Like other businesses in the mobile space, AppLovin will have to contend with the effects of Apple’s upcoming privacy change in the way it follows users. Foroughi said the company’s data party should help with the first party.
“We thought about it when we were eligible ourselves and did not know we were thinking about it, but we knew what the power of first-party data is,” he said. “The core of our technology depends on the insights we gain from our own relationship with consumers. The Apple privacy change is meant to govern that first-party data sharing with third parties. So we think we’re on a very good place is to continue to carry out our vision going forward. ‘
Earlier this year, AppLovin, a German app distribution and analytics company, raised $ 1 billion in cash and shares. Foroughi said his own business did not have many salespeople, and the acquisition of Adjust provided the company with several hundred experienced sales associates and marketing talent to try and sell it to a wider set of mobile application developers.
Although press reports in the past have said that the company is named after ‘McLovin’, a character from the 2007 film ‘Superbad’, Foroughi said that is not the case. Can be.
“I don’t know if I’m subconsciously a Superbad fan and that’s where it came from, but it was really just an $ 8 domain name,” he said. “And it was stupid and cute at the time. And that’s why we chose it and grew into a very big company with a stupid name. It led to a good stock market.”
– Ari Levy of CNBC reported.