Applovin IPO: 5 Things to Know About the Software Company Seeking a $ 30 Billion Valuation

Applovin Inc. is targeting a valuation of more than $ 30 billion, as the app software company priced its initial public offering in its bid to capture a sizable chunk of the $ 200 billion mobile app market. On Wednesday, Applovin APP, + 10.91% named a price range for its shares of $ 75 to $ 85 each, a price that could value the company at more than $ 30 billion. The company plans to sell at least 25 million shares and have around 360 million shares outstanding, which would trade on the Nasdaq under the symbol “APP.”

The Palo Alto, California company, which turns a decade in July, makes marketing, monetization and analytics software that helps application developers grow their businesses. It also owns a portfolio of over 200 free mobile games with in-app purchases. Applovin’s expected valuation dwarfs that of a recent comparable initial public offering, Unity Software Inc. U, -4.25%, which was valued at nearly $ 14 billion at the time of its initial public offering in September. See Also: 5 Things To Know About Unity Software’s IPO In its Securities and Exchange Commission filing, Applovin said it sees a total market opportunity of around $ 189 billion, with $ 101 billion of that in in-app advertising revenue and about $ 88 billion worldwide. direct spending on games, citing 2020 IDC figures. Applovin expects the market opportunity to grow to $ 283 billion by 2024. Here are five things to know about Applovin. The cost of the business has doubled, and Apple and Google are one of the reasons Applovin said it made $ 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 posted revenue of $ 483.4 million with a loss of $ 260 million. The big cost increase in 2020 compared to 2019 was a 130% increase in cost of business expenses to $ 555.6 million, with $ 112 million due to payment processing fees. Those payment processing fees are the same type that Epic Games resisted paying to Apple Inc.’s AAPL, + 1.34% App Store and Alphabet Inc.’s GOOG, + 1.12% GOOGL, + 1.35% Google Play store, which ran up to 30% of purchases. “The mobile application ecosystem depends in part on a relatively small number of third-party distribution platforms, such as the Apple App Store, Google Play Store and Facebook, some of which are direct competitors,” said Applovin in his S-1. ” We earn significant revenue from the distribution of our applications through these third-party platforms and nearly all of our [in-app purchases] they are made through the payment processing systems of these third-party platforms ”. Almost a quarter of the proceeds will go to pay off the debt. Applovin estimates that it can generate net income of around $ 1.74 billion if it trades in the midpoint of its range. . Of that, the company said it plans to use about $ 400 million to pay off debt under its revolving line of credit. Currently, Applovin is $ 1.6 billion in debt. “Additionally, we expect to use a portion of the net proceeds for strategic acquisitions and partnerships,” said Applovin. “However, other than our pending acquisition of Adjust, we have no definitive agreements or commitments for major acquisitions or partnerships at this time.” Acquisitions are part of its growth strategy Most recently, Applovin announced plans to acquire mobile devices based in Germany. app marketing and measurement company Adjust. While Applovin did not disclose the terms of the deal, Crunchbase estimated the price at $ 1 billion. The company indicated in its S-1 that it has “invested more than $ 1 billion in 15 acquisitions and strategic partnerships” since early 2018. Applovin acquired mobile game developer Machine Zone Inc. last May for an undisclosed amount. though Crunchbase estimated the deal at $ 500 million. That follows the 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. “We will continue exploring and evaluating additional acquisitions, some of which may be the same size or even greater in scale and investment than the Machine Zone acquisition and our pending acquisition of Adjust, ”the company said. KKR has most of the voting control The company plans to offer Class A shares in the IPO, which have one vote, while the Class B shares of early investors will have 20 votes. Applovin has raised $ 1.4 billion in investor funding, according to Crunchbase. Taking the reins will be KKR Denali Holdings, which will own 72.4% of the Class B shares after the offering, for 67.4% of the voting power. Other Class B shareholders include Applovin CEO and Co-Founder Adam Foroughi, who will own 19.4% of the Class B shares with 18.1% voting rights, and CFO Herald Chen, with the 3.2% of the class B shares and 3% of the shares. right to vote. The company will also establish a class of non-voting shares, although those shares do not yet exist. The attempt to sell off a Chinese company failed and KKR intervened If it weren’t for US concerns about investments in China’s strategic assets, KKR might have never gotten involved and Applovin would not have gone public. In September 2016, Applovin agreed to be acquired by Chinese private equity firm Orient Hontai Capital for $ 1.4 billion. Just over a year later, that deal was scrapped, reportedly after the Foreign Investment Committee in the United States rejected the deal over concerns about customer data, and Applovin agreed to take a debt investment of $ 841. million Orient Hontai. Prior to that agreement, Orient Hontai had invested $ 140 million in the company; Orient Hontai currently owns 26.2 million Class A shares. In July 2018, KKR & Co. invested $ 400 million for a minority interest in Applovin of approximately 110 million shares. At the suggested IPO price, that $ 400 million investment would be worth more than $ 8 billion.