AppLovin shares close 18.5% on first day of trading


Mobile gaming company AppLovin closed Thursday 18.5% after trading on the Nasdaq under the ticker “APP”. With shares of $ 65.20, the company has a market capitalization of approximately $ 23 billion.

The nine-year-old company is the latest in a wave of gaming IPOs. Game software developer Unity Software launches its own in September, Israel’s Playtika in January and children’s game company Roblox in March. IronSource, which provides advertising services for app-based game developers and makes its own games, is also planning to go public via a SPAC merger.

AppLovin claims it holds around 1% of the global mobile app market, valued at $ 189 billion, which exploded during a year of staying at home.

“We’ve seen it since we started the company. People use their phones four or five hours a day. Mobile apps are the most accessible and affordable forms of entertainment, the best entry points for transactional trading,” said founder and CEO Adam Foroughi said CNBC.

Foroughi said when he started the company it focused on building a technical platform for mobile app developers to extend their apps through marketing their software.

“We’ve been building this for nine years. We have more than 400 million customers on our platform every day. Then in 2018 we got into content ourselves and started effectively creating original content,” he said.

“We have over 200 apps [and] Over 200 million people play our games every month, “he said.” And these games, our own content, build those precious audience insights that then feed our software platform and make it even more efficient to add value to the customers we have to discover their apps. ”

AppLovin’s business is now split between games and marketing tools that other game developers use for app detection and promotion. Last year, 49% of sales came from companies who used their software and 51% from consumers who made in-app purchases.

In 2016, AppLovin agreed to be acquired by Chinese private equity firm Orient Hontai Capital for $ 1.4 billion. However, that deal fell apart the following year and became a debt investment. AppLovin then sold a minority stake in KKR in 2018 and valued the company at $ 2 billion. Since then, AppLovin has been on a shopping spree to strengthen its position in game development. AppLovin said in its prospectus that it has invested $ 1 billion in 15 acquisitions and partnerships since 2018.

“We have this technology platform for app developers that helps them grow by being discovered. Then what we needed to improve the software was audience insight. We wanted first-party data on the audience we saw “said Foroughi. “Our own content gives us much better insight into the audience than usual, otherwise we only have third-party data.”

Foroughi compares the strategy to Netflix’s.

“This first-party data feeds our software and then gives us the ability to much better recommend future content to customers,” he said. “I think perhaps the best analogy to really compare that is how Netflix took its own data on its platform and came up with personalized recommendations … then they put up their own original content, which exploded and gave rise to consumption on their platform They get more insight into their audience – by replicating the same playbook in a new media format. “

Like other companies in the mobile space, AppLovin is grappling with the ramifications of Apple’s upcoming privacy change on the way users are tracked. Foroughi said the company’s first-party data game should help.

“We thought about it when we were doing content ourselves without knowing that we thought about it, but we knew the power of first-party data,” he said. “The core of our technology depends on lessons learned from our own relationships with consumers. Apple’s privacy change is aimed at regulating how third parties share information with third parties. So we think we’re in a very good place are to continue. ” to implement our vision for the future. “

Earlier this year, AppLovin acquired Adjust, a German app distribution and analytics company, for $ 1 billion in cash and stock. Foroughi said his own company doesn’t have a lot of salespeople, so the acquisition of Adjust brought in a few hundred seasoned salespeople as well as marketing talent to try and sell to a wider group of mobile app developers.

Although press reports in the past said the company was named after “McLovin,” a character from the 2007 film “Superbad,” Foroughi said it was not. May 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 goofy and cute at the time. And so we picked it and grew into a really big company with a goofy name. It turned into a great stock ticker.”

– CNBC’s Ari Levy contributed to this report.


Katherine Clark