AppLovin is selling off its portfolio of ten game studios for $900m as it shifts to become a pure adtech firm.
That means Machine Zone, PeopleFun, Magic Tavern, Lion Studios, Belka, Athena, Clipwire, Leyi, Zenlife and Zero Gravity are all about to have a new owner. But AppLovin did not provide any further details on who the buyer is.
CEO and cofounder Adam Foroughi announced the move during its Q4 earnings call, following another monster set of financial results. CFO Matt Stumpf said AppLovin has signed a $900m deal to divest its entire games business, which includes $500m in cash and the rest in equity. He expects the deal to close in the coming quarter.
Foroughi said of the sale: “I want to emphasize to our teams, you’ll soon be part of a company that specializes in and champions game development, while it’s bittersweet to part ways, we’re excited for your future and immensely grateful for your role in getting us to where we are today.”
One can see why AppLovin is divesting its games arm – all of AppLovin’s year-on-year growth in revenue and profitability came from its advertising business. Revenue for its apps business was fractionally down in Q4 and narrowly up for the full year.
Q4 highlights (% changes all YoY):
- $1.4bn revenue, up 44%
- $848m adjusted EBITDA, up 78%
- $999m in advertising revenue, up 73%
- $373m in apps revenue, down 1%
Full year highlights (% changes all YoY):
- $4.7bn revenue, up 43%
- $2.7bn adjusted EBITDA, up 81%
- $3.2bn in advertising revenue, up 75%
- $1.5bn in apps revenue, up 3%
AppLovin CEO and cofounder Adam Foroughi also did a victory lap with what he called his “favourite metric”, profit per employee:
“In Q4 we had approximately $3m in run-rate adjusted EBITDA per employee in our advertising business, and we expect that number to rise as we refine processes and scale our business.”
As we’ve reported previously, AppLovin cut 120 staff at portfolio studio Machine Zone in October 2024. Estimated revenue for its two biggest titles, Game of War and Mobile Strike, has been in decline for years, and it also recently shutdown Final Fantasy XV: War for Eos.
