Mobile gaming company AppLovin began trading at $ 70 a share on Thursday.
The nine-year-old, which has a portfolio of mobile gaming and also sells marketing services to video game companies, now has a market capitalization of about $ 24 billion. He started trading on the Nasdaq with the “APP” ticker.
AppLovin is just the latest in a wave of gaming OPIs, with game software developer Unity Software launching its own 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 makes their own games, also plans to go public through a SPAC merger.
AppLovin said it has about 1% of the global mobile app market share of $ 189 billion, which has exploded over a year at home.
“We’ve seen it since we started the business; people use their phones four or five hours a day. Mobile apps are the most accessible and affordable forms of entertainment, the best access points to transactional commerce.” said founder and CEO Adam Foroughi told CNBC.
Foroughi said that when he started the business, he focused on building a technology platform for mobile app developers to grow their apps by marketing through their software.
“For nine years, we built it. We got to the distribution of seeing over 400 million customers on our platform every day. Then in 2018, we got into the content and started creating original content effectively,” he said. to say.
“We have more than 200 applications [and] more than 200 million people play our games every month, “he said.” And these games, our own content, build this valuable audience information data that then feeds our software platform and makes it even more efficient in achieving customer value that we have for which concerns the discovery of its 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 companies that used their software and 51% came from consumers who made purchases from the app.
In 2016, AppLovin agreed to be acquired for $ 1.4 billion by Chinese private equity firm Orient Hontai Capital, but that deal disintegrated 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 has been buying to bolster 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 to help them grow, making them discover, and then what we needed to improve the software was publicly owned information. We wanted our own data about the audience we saw,” he said. Foroughi. “Our own content provides us with much better audience statistics than we would get, because otherwise we only have third-party data.”
Foroughi compares the strategy to that of Netflix.
“This own data feeds our software and then provides us with the ability to be much better at recommending future content to customers,” he said. “I guess maybe the best analogy to really compare it is how Netflix took its own data to its platform and released custom recommendations … then they included their own original content, which exploded the amount of consumption on its platform and gave more information about its audience: replicating the same playbook in a new multimedia format. “
Like other mobile space companies, AppLovin will have to deal with the consequences of Apple’s upcoming privacy change to the way it tracks users. Foroughi said reproducing data from the first company should help.
“We thought about it when we got content, not knowing we were thinking about it, but we knew the power of third-party data,” he said. “The core of our technology depends on the ideas we gather from our own relationship with consumers. Apple’s change in privacy is aimed at governing third-party data sharing with third parties. So we actually think that we are in a very good place to continue to execute our vision in the future “.
Earlier this year, AppLovin acquired Adjust, a German app distribution and analytics company, for $ 1 billion in cash and shares. Foroughi said his own company did not have much commercial strength, so the acquisition of Adjust brought the company a couple of hundred experienced sales employees as well as marketing talent to help it sell. to a wider set of mobile app developers.
Although in press reports in the past it was said that the company was named “McLovin”, a character from the 2007 film “Superbad”, Foroughi said that is not the case. May be.
“I don’t know if I’m subconsciously a fan of‘ Superbad ’and that’s where it came from, but it really was just a $ 8 domain name,” he said. “And at the time it was fun and beautiful. And so we chose it and it became a really big business with a ridiculous name. It resulted in a great stock indicator.”
– CNBC’s Ari Levy contributed to this report.