A man is playing a game on a smartphone.
Brent Levin | Bloomberg | Getty Images
Mobile game developer AppLovin is poised to become the newest online game provider to break into the public markets.
In its IPO prospectus on Tuesday, AppLovin said sales rose 46% to $ 1.45 billion in 2020. Following the debut of Israel’s Playtika in January and game software developer Unity in September, children’s game company Roblox will go public next week.
According to the SensorTower research group, the mobile games market grew 26% last year to $ 79.6 billion. With offices and schools closed for much of 2020, kids and adults flocked to their phones, tablets, and consoles for entertainment.
AppLovin’s business is split into games, which make a lot of their money selling virtual items, and marketing tools, which other game developers use to discover and promote apps. Last year, 49% of sales came from companies who used their software and 51% from consumers who made in-app purchases.
While AppLovin was profitable in 2019, it posted a net loss of over $ 125 million last year. The company quadrupled its research and development expenditures and booked $ 74.8 million in costs to process an asset acquisition agreement. There was also $ 7.9 million in expenses related to tenancy cancellations and write-offs.
AppLovin was founded in 2011 and initially focused on helping mobile apps get discovered and make money. In 2016, the company agreed to be acquired by Chinese private equity firm Orient Hontai Capital for USD 1.4 billion.
However, that deal fell apart the next year and became a debt investment. AppLovin then sold a minority stake in KKR in 2018 that valued the company at $ 2 billion. Since then, AppLovin has been on a shopping spree, mostly to become a force in game development.
The company set up a publishing division and bought studios, including Machine Zone, maker of Game of War: Fire Age and World War Rising. It also bought Magic Tavern, the creator of the puzzle game Project Makeover, and Peoplefun, the creator of Wordscapes. AppLovin said in its prospectus that it has invested $ 1 billion in 15 acquisitions and partnerships since 2018.
The company now has more than 200 free mobile games from 12 studios and says its apps are used by nearly 32 million people every day.
Last month, AppLovin acquired Adjust, a German app distribution and analytics company, for $ 1 billion in cash and stock. Adjust employs 500 people, adding to the 2,000 that AppLovin had in its core business and acquisitions late last year.
AppLovin’s co-founder and CEO Adam Foroughi is the largest shareholder after KKR.
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