Mobile ad tech business AppLovin has agreed the sale of its video games business, according to a filing on Wednesday. The deal sees London-based Tripledot Studios acquire the games unit for $400 million in cash, while AppLovin will take a 20 percent stake in Tripledot. The deal is expected to close in Q2 2025.
The firm announced plans to offload its mobile apps business in February, with a $900 million price tag attached to the portfolio of 10 games studios. The plans arose following three consecutive years of declining sales at the apps division, as AppLovin shifted its attention to its advertising business, whose revenues grew almost 400 percent over the three-year period.
And yesterday the company reported its earnings for Q1 2025, showing another 71 percent YoY uptick in advertising revenues, versus a 14 percent fall for its owned-and-operated apps. This balanced out to a 40 percent YoY increase in overall sales, bringing total revenues close to $1.5 billion for the quarter.
Not playing games
Investors have welcomed the change in focus for the ad tech firm, whose market cap has climbed almost 300 percent over the last year. The company’s market valuation overtook that of ad tech giant The Trade Desk in October 2024, and its share price saw another 19 percent rise in extended trading following yesterday’s announcement.
In February, AppLovin CEO Adam Foroughi told investors that the company had “never been a game developer at heart”, despite investing heavily in game studios over the years, including Lion Studios and Machine Zone. But the company transitioned its investments towards AI capabilities for its ad tech platform, driving the huge growth in advertising revenues.
The change in strategy came as mobile games increasingly struggled to break through in a crowded app market, with global downloads down by 6 percent last year, according to Sensor Tower. But the acquisition is expected to strengthen Tripledot’s market position, effectively doubling its user base and bringing its market value to around $2 billion.
Ticked off
AppLovin meanwhile has had its own struggles, losing $20 billion in market value in February after the company was accused by short sellers of exaggerating its AI capabilities, ad fraud and tax evasion. Foroughi denied the allegations, claiming the reports were “littered with inaccuracies and false assertions.” He added that the company’s “low tax burden” was acheived through “intelligent tax structuring, similar to many tech companies.”
Foroughi also said that AppLovin’s subsidiary structure would be simplified by the divestment of the games unit. And by serving relevant ads to games users across its network, the company was generating incremental demand for global advertisers. “Where we once focused on gaming, we’re now positioning ourselves to serve the entire global advertising economy,” he said in the company’s Q4 2024 earnings call.
Yet alongside exiting the apps business, AppLovin confirmed last month that it had submitted a bid to buy TikTok, which is facing a ban in the US if Chinese parent company ByteDance fails to divest its US operations. AppLovin said it has filed a statement of interest in acquiring all of TikTok’s operations outside of China, but stated that there was no guarantee a transaction would proceed.
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