A man is playing a game on a smartphone.
Brent Levin | Bloomberg | Getty Images
Mobile games developer AppLovin is poised to become the newest online games provider in the public market, joining a group of companies to capitalize on increased usage during the pandemic.
In its IPO prospectus on Tuesday, AppLovin said sales were up 46% in 2020 to $ 1.45 billion. Kids games company Roblox will go public next week, following Israeli Playtika’s debut in January and game software developer Unity in September.
According to research group SensorTower, the mobile games market grew 26% last year to $ 79.6 billion. With offices and schools closed for most of 2020, kids and adults flocked to their phones, tablets, and consoles for entertainment.
AppLovin’s business is divided between games, which make much of their money from the sale of virtual items, and marketing tools that other game developers use to discover and promote apps. Last year, 49% of sales came from companies using the software and 51% from consumers making in-app purchases.
While AppLovin was profitable in 2019, it surged to a net loss of more than $ 125 million last year. The company quadrupled its research and development expenditures and recorded $ 74.8 million costs to settle an “acquisition agreement.” It also had an expense of $ 7.9 million related to lease terminations and write-offs.
Founded in 2011, AppLovin was initially focused on helping mobile apps discover and make money. In 2016, the company agreed to be acquired for $ 1.4 billion by Chinese private equity firm Orient Hontai Capital.
However, that deal fell apart the following year and turned into a debt investment. AppLovin then sold a minority stake to KKR in 2018, which the company valued at $ 2 billion. Since then, AppLovin has been buying, mainly to become a force in game development.
The company created a publishing house and bought up studios including Machine Zone, creator of Game of War: Fire Age and World War Rising. It also bought Magic Tavern, creator of puzzle game Project Makeover, and Peoplefun, developer 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-to-play mobile games from 12 studios and says its apps are used by nearly 32 million people every day.
Last month, AppLovin Adjust, a German app distribution and analysis company, bought $ 1 billion in cash and stock. Adjust has 500 employees, which adds to the 2,000 that AppLovin had at the end of last year, divided between the core activities and acquisitions.
AppLovin co-founder and CEO, Adam Foroughi, is the largest shareholder after KKR.
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