AppLovin Divesting Apps Business To Dig Into Ads, Ecommerce
- by Laurie Sullivan @lauriesullivan, February 14, 2025
Adam Foroughi, CEO, co-founder and chairman of AppLovin, announced this week the company would divest its gaming studio apps business for $900 million, comprising $500 million in cash and a minority equity stake in the combined private company. The goal is to move deeper into ecommerce.
“We've signed an exclusive term sheet to sell all of our apps business," Foroughi said during the company’s most recent earnings call.
Foroughi said the company’s teams would “soon be part of a company that specializes in and champions game development, adding that the "company is transitioning to a pure advertising platform, with a focus on productivity, automation, and building lean, high-impact teams.
Revenue for the company in Q4 2024 rose 44% from the year-ago period to $1.37 billion. During the quarter, the company generated $695 million in free cash flow, up 105% year-over-year.
advertisement
advertisement
AppLovin’s advertising business generated $999 million in revenue and $777 million in adjusted EBITDA, achieving a 78% margin.
Prescient AI has been following AppLovin's media-mix modeling trends and this week released its second report around visibility into spend, halo effects and a Black Friday and Cyber Monday recap, as well as new customers' cost of acquisitions.
The data shows that halo effects by weekly cohort have changed since the holidays, and more favorably for AppLovin. While AppLovin’s position in the overall range is still lower than Meta's — about 30%, now 22% — AppLovin's is now more in line with Google — about 23%, just behind TikTok at about 25%.
AppLovin's move toward automating an entire system and deeper entrance into ecommerce and AI will allow the company to go after the “very, very large set of advertisers that are in the 10 million-plus range in the world over the next coming quarters, years, and decade plus.," the company said.
Specific details about the performance of advertisers in the ecommerce pilot were scarce, but Foroughi said its Axon models are showing "positive outcomes for a range of advertisers,” pointing to but limited to direct-to-consumer (D2C) brands.
When an analyst asked during the earnings call for the number of people dedicated to an ecommerce, pilot, Foroughi said that would be about 1,000 for the entire advertising business, including at subsidiaries like Adjust and Wurl.
The ecommerce go-to-market team is comprised of roughly 20 people, as the company works through self-service tools and automation.
Consumers are spending on mobile devices. Since AppLovin went public in 2021, is found success with advertising to mobile-game users. More than 2 billion people play mobile games worldwide. The audience rivals TikTok and Meta Platforms, Bank of America analyst Omar Dessouky told The Wall Street Journal.
“None of those companies have ever tried to monetize this audience,” Dessouky told the WSJ. “Every four years or so a new customer acquisition model disrupts the advertising landscape. TikTok was the last one.”
Ads on mobile games primarily marketed other gaming ads to gamers because it had been difficult to figure out what products those users want. Working with advertisers could mean something similar to what Amazon now offers with its platform.
