Mobile gaming company AppLovin began 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 cap of about $ 24 billion. It started trading on the Nasdaq under the “APP” checkbox.
AppLovin is just the latest in a wave of gaming IPOs, with game software 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 application-based game developers and creates their own games, also intends to go public through a SPAC merger.
AppLovin said it holds about 1% of the global mobile app market share of $ 189 billion, which exploded over a year at home.
“I’ve seen it since I started the business; people use their phones four or five hours a day. Mobile apps are the most accessible and accessible forms of entertainment, the best transactional access points for commerce,” the founder and CEO Adam Foroughi told CNBC.
Foroughi said that when he started the business, he focused on building a technology platform for mobile application developers to develop their applications through marketing using its software.
“For nine years, we built this. We got the distribution to now see over 400 million customers on our platform every day. Then in 2018, we went into content on our own and started building content efficiently. original, “he said. “We have over 200 applications [and] over 200 million people play our games every month. And those games, our own content, build this valuable audience data on the public, which then fuels our software platform and makes it even more efficient to bring value to the customers we have in terms of discovering their applications. ”
The AppLovin business is now split between games and marketing tools that other game developers use to discover and promote applications. Last year, 49% of revenue came from businesses that use its software and 51% came from consumers who make in-app purchases.
In 2016, AppLovin agreed to be acquired for $ 1.4 billion by Chinese private equity firm Orient Hontai Capital, but the transaction fell apart the following year and turned into a debt investment. AppLovin then sold a minority stake in 2018 to KKR, valuing the company at $ 2 billion. Since then, AppLovin began to buy to strengthen a position in the development of the game. AppLovin said in its prospectus that it has invested $ 1 billion in 15 acquisitions and partnerships since 2018.
“We have this technology platform for application developers to help them grow, to make them discoverable, and then what we needed to improve the software was information about the audience we wanted. We wanted primary data about the audience we had. I saw it, “Foroughi said. “Our own content gives us much better audience information than we would otherwise get, because otherwise, we only have data from third parties.”
Foroughi compares the strategy to Netflix.
“This primary data feeds us with the software and then creates the ability to be much better at recommending future content to customers,” he said. “I think maybe the best analogy to really compare this is how Netflix took its own data on their platform and released personalized recommendations. And we all like to consume content on Netflix now, then put on their own original content, which exploded the amount of consumption on their platform and gave them more information about their audience – replicating the same game manual in a new media format. “
Like other companies in the mobile space, AppLovin will have to face the consequences of the next change in Apple’s privacy in the way it tracks users. Foroughi said the company’s data games should help.
“We thought about it when we were satisfied, not knowing that we were thinking about it, but we know the power of the data of the first parts,” he said. “The core of our technology depends on the knowledge we gather from our own relationship with consumers. Apple’s privacy change is intended to govern the sharing of data with third parties. Therefore, we believe that we are in a very good place to continue to carry out our vision in the future. “
Earlier this year, AppLovin acquired Adjust, a German application distribution and analysis company, for $ 1 billion in cash and stock. Foroughi said his own company doesn’t have much sales force, so the Adapt acquisition brought the company several hundred experienced sales employees as well as marketing talent to help it try to sell to a wider set of app developers. mobile.
Although past press reports said the company was named after “McLovin”, a character in the 2007 film “Superbad”, Foroughi said that was not the case. May be.
“I don’t know if I’m subconsciously a Superbad fan and that’s where it came from, but it really was just a $ 8 domain name,” he said. “And he was stupid and nice at the time. And so I chose it and it became a really big business, with a stupid name. It led to a big stock market.”
– CNBC’s Ari Levy contributed to the reporting.