AppLovin IPO: 5 things to know about the software company seeking a $30 billion valuation

MarketWatch2021-04-12

Software company that helps videogame and other developers monetize and manage their apps also owns its own portfolio of mobile games AppLovin Inc. is shooting for a valuation of more than $30 ...

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Comments

SHELBY
2021-04-15
SHELBY
Like and comment
Jekanath
2021-04-15
Jekanath
Yep
- Jekanath:
  Yep
Yoxin
2021-04-15
Yoxin
Yep
- Yoxin:
  Yep
cammietang90
2021-04-15
cammietang90
Great!!!
- EliasAng:
  Like and shared
imeesu
2021-04-15
imeesu
Hmmm see how cheap it is before buying
cammietang90
2021-04-15
cammietang90
Great!

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The company plans to sell at least 25 million shares and have about 360 million shares outstanding, which would trade on the Nasdaq under the ticker “APP.”\nThe Palo Alto, Calif., company, which will be a decade old in July, makes marketing, monetization and analytics software that helps app developers grow their businesses. It also owns a portfolio of more than 200 free-to-play mobile games with in-app purchases. The expected valuation of AppLovin dwarfs that of a recent comparable IPO, Unity Software Inc.,which was valued at nearly $14 billion at the time of its IPO in September.\nIn its Securities and Exchange Commission filing, AppLovin said it sees a total market opportunity of about $189 billion, with $101 billion of that in in-app advertising revenue and about $88 billion in worldwide direct-game spending, citing IDC 2020 figures. AppLovin expects that market opportunity to grow to $283 billion by 2024.\nHere are five things to know about AppLovin.\nThe cost of business more than doubled, and Apple and Google are a reason\nAppLovin said it took in $1.45 billion in revenue in 2020, resulting in a loss of $125.9 million, versus 2019 revenue of $994.1 million and net income of $119 million. In 2018, the company booked revenue of $483.4 million for a loss of $260 million.\nThe big cost hike in 2020 versus 2019 was a 130% jump in cost-of-business expenses to $555.6 million, with $112 million of it due to payment-processing fees. Those payment-processing fees are the same kind that Epic Games balked about paying to Apple Inc.’s App Store and Alphabet Inc.’s Google Play store, that ran as high as 30% of purchases.\n“The mobile-app ecosystem depends in part on a relatively small number of third-party distribution platforms, such as the Apple App Store, the Google Play store, and Facebook, some of which are direct competitors,” AppLovin said in its S-1. “We derive significant revenue from the distribution of our apps through these third-party platforms and almost all of our [in-app purchases] are made through the payment processing systems of these third-party platforms.”\nNearly a quarter of proceeds will go to pay down debt\nAppLovin estimates it stands to bring in net proceeds of about $1.74 billion if it prices at the mid-point of its range.\nOf that, the company said it plans to use about $400 million to pay off debt under its revolving credit facility. Currently, AppLovin lists $1.6 billion in debt.\n“Additionally, we expect to use a portion of the net proceeds to enter into strategic acquisitions and partnerships,” AppLovin said. “However, other than our pending acquisition of Adjust, we do not have definitive agreements or commitments for any material acquisitions or partnerships at this time.”\nAcquisitions are part of its growth strategy\nMost recently, AppLovin announced plans to acquire Germany-based mobile-app measurement and marketing company Adjust. While AppLovin did not disclose terms of the deal, Crunchbase estimated the price at $1 billion.\nThe company did state in its S-1 that it has “invested over $1 billion across 15 strategic acquisitions and partnerships” since the beginning of 2018.\nAppLovin acquired mobile-game developer Machine Zone Inc. last May for an undisclosed amount, although Crunchbase estimated the deal at $500 million.\nThat follows acquisitions of software development kit-management platform SafeDK in 2019, in-app header bidding company Max Inc. in 2018, and Germany-based mobile-ad network Moqoqo in 2014.\n“We will continue to explore and evaluate additional acquisitions, some of which may be the same size or even larger in scale and investment than the Machine Zone acquisition and our pending acquisition of Adjust,” the company said.\nKKR has the lion’s share of voting control\nThe company plans to offer Class A shares in the IPO, which carry one vote, while early investors’ Class B shares will carry 20 votes. AppLovin has raised $1.4 billion in funding from investors, according to Crunchbase.\nHolding the reins will be KKR Denali Holdings, which will hold 72.4% of Class B shares after the offering, for 67.4% of the voting power. Other Class B shareholders include Applovin Chief Executive and co-founder Adam Foroughi, who will own 19.4% of the Class B shares with 18.1% voting rights, and Chief Financial Officer Herald Chen, with 3.2% of the Class B shares and 3% of voting rights.\nThe company will also establish a nonvoting class of shares, though those shares do not yet exist.\nAttempt to sell to Chinese firm failed, and KKR stepped in\nIf it wasn’t for U.S. concerns about investments in strategic assets from China, KKR may have never got involved and AppLovin would not have gone public.\nIn September 2016, AppLovin agreed to be acquired outright by Chinese private-equity firm Orient Hontai Capital for $1.4 billion. A little over a year later, that deal was scrapped — reportedly after the Committee on Foreign Investment in the United States pushed back on the deal over customer data concerns — and AppLovin agreed to take an $841 million debt investment from Orient Hontai. Prior to that deal, Orient Hontai had invested $140 million in the company; currently, Orient Hontai owns 26.2 million Class A shares.\nIn July 2018, KKR & Co. invested $400 million for a minority stake in AppLovin of roughly 110 million shares. At the suggested IPO price, that $400 million investment would be worth more than $8 billion.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":347247842,"gmtCreate":1618498827986,"gmtModify":1704711879726,"author":{"id":"3574130506412388","authorId":"3574130506412388","name":"SHELBY","avatar":"https://static.tigerbbs.com/8ea388783a3408018293b98b9d8e4c4a","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Like and comment&nbsp;","listText":"Like and comment&nbsp;","text":"Like and comment","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/347247842","repostId":1176099988,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":347244670,"gmtCreate":1618498787490,"gmtModify":1704711878268,"author":{"id":"3573831225735802","authorId":"3573831225735802","name":"Jekanath","avatar":"https://static.tigerbbs.com/4a9b5ab382ec4c5241c28565fb086c28","vip":1,"crmLevel":5,"crmLevelSwitch":0},"htmlText":"Yep","listText":"Yep","text":"Yep","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/347244670","repostId":1176099988,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4045211,"gmtCreate":1618498807039,"gmtModify":1680784212248,"authorId":3573831225735802,"author":{"id":3573831225735802,"authorId":3573831225735802,"name":"Jekanath","avatar":"https://static.tigerbbs.com/4a9b5ab382ec4c5241c28565fb086c28","vip":1,"crmLevel":5,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":347244670,"type":1,"supId":0,"prevId":0,"content":"Yep","text":"Yep","html":"Yep"}],"langContent":"EN"},{"id":347243673,"gmtCreate":1618498444492,"gmtModify":1704711869704,"author":{"id":"3571470148893542","authorId":"3571470148893542","name":"Yoxin","avatar":"https://static.tigerbbs.com/3184024bf3d660bd49cc2158ebd27b3f","vip":1,"crmLevel":1,"crmLevelSwitch":0},"htmlText":"Yep","listText":"Yep","text":"Yep","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/347243673","repostId":1176099988,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4045160,"gmtCreate":1618498454587,"gmtModify":1680784216606,"authorId":3571470148893542,"author":{"id":3571470148893542,"authorId":3571470148893542,"name":"Yoxin","avatar":"https://static.tigerbbs.com/3184024bf3d660bd49cc2158ebd27b3f","vip":1,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":347243673,"type":1,"supId":0,"prevId":0,"content":"Yep","text":"Yep","html":"Yep"}],"langContent":"EN"},{"id":347258019,"gmtCreate":1618498023731,"gmtModify":1704711857691,"author":{"id":"3574341550753694","authorId":"3574341550753694","name":"cammietang90","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Great!!!&nbsp;","listText":"Great!!!&nbsp;","text":"Great!!!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/347258019","repostId":1176099988,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4045123,"gmtCreate":1618498252960,"gmtModify":1680784203100,"authorId":3575103893335229,"author":{"id":3575103893335229,"authorId":3575103893335229,"name":"EliasAng","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":347258019,"type":1,"supId":0,"prevId":0,"content":"Like and shared","text":"Like and shared","html":"Like and shared"}],"langContent":"EN"},{"id":347253761,"gmtCreate":1618497980353,"gmtModify":1704711855752,"author":{"id":"3573956654548922","authorId":"3573956654548922","name":"imeesu","avatar":"https://static.tigerbbs.com/abfad96984c0f15184381e9cf7aa0d68","vip":1,"crmLevel":4,"crmLevelSwitch":0},"htmlText":"Hmmm see how cheap it is before buying","listText":"Hmmm see how cheap it is before buying","text":"Hmmm see how cheap it is before buying","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/347253761","repostId":1176099988,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":347259220,"gmtCreate":1618497928860,"gmtModify":1704711854618,"author":{"id":"3574341550753694","authorId":"3574341550753694","name":"cammietang90","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Great!&nbsp;","listText":"Great!&nbsp;","text":"Great!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/347259220","repostId":1176099988,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":393,"commentSize":102,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 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