- AppLovin plans to sell its games unit to Tripledot Studios in a $900 million deal, sources say.
- Tripledot Studios, valued at $1.4 billion, specializes in popular mobile games.
- AppLovin declined to comment, while Tripledot did not respond to BI requests for comment.
The adtech company AppLovin is nearing a $900 million deal to sell its games unit to Tripledot Studios, a London-based mobile games developer, four people with knowledge of the matter told Business Insider.
The people asked for anonymity to preserve their business relationships; their identities are known to Business Insider. They said the deal isn’t yet finalized, and the plans could still change.
AppLovin declined to comment. Tripledot Studios did not respond to requests for comment.
AppLovin, which helps app developers make money through advertising and find new users through ads, has been the buzziest company in adtech in recent months. AppLovin’s shares have been on a tear and are up more than 400% over the last year, with its market value topping $100 billion.
While AppLovin was traditionally known for working with the gaming community, its recent stock run was propelled by a new move to court e-commerce advertisers.
It now wants to focus purely on advertising and exit the game development business. AppLovin’s game studios include Lion Studios, Machine Zone, and Magic Tavern, which create more than 200 free-to-play mobile games like “Popsicle Stack,” “Project Makeover,” “Game of War: Fire Age,” and “Mobile Strike.”
While AppLovin’s overall fourth-quarter revenue was up 44% year-over-year to almost $1.4 billion, its app revenue lagged — down 1% to just over $376 million.
AppLovin said it’s ‘never been a game developer at heart’
In a filing for AppLovin’s latest quarterly earnings update in February, it said that it had reached an “exclusive term sheet agreement” with an undisclosed private company to offload its games studio in a deal that was expected to close by the second quarter.
AppLovin said at the time that the deal consisted of $500 million in cash and $400 million in equity, though it was still “subject to customary purchase price adjustments.”
The buyer was looking to borrow up to $250 million to fund the deal, AppLovin said in a filing. The company also said that if the buyer couldn’t find the funding, AppLovin would instead loan it the required cash to ensure the deal went ahead.
AppLovin CEO Adam Foroughi said during the February earnings call that while the company had acquired several game studios over the years to help train its machine learning model, “we’ve never been a game developer at heart.”
“I want to emphasize to our teams you’ll soon be part of a company that specializes in and champions game development,” Foroughi said.
Tripledot Studios fits that description. Founded in the UK in 2017, the company specializes in simple, popular mobile games such as “Solitaire,” “Woodoku,” and “Blackjack.”
TechCrunch reported that a $116 million Series B funding round in 2022 valued Tripledot at $1.4 billion. Its investors include 20VC, The Raine Group, Eldridge Industries, and Lightspeed Ventures.
AppLovin is fending off short-sellers
AppLovin’s stock market status has also meant that the company has attracted some negative attention in recent weeks.
Two separate short-seller reports published late last month sent its stock tumbling after they accused the company of exaggerating the performance of its AI models.
In a blog post, Foroughi said the reports were “littered with inaccuracies and false assertions” and were aimed at driving down its shares for the short sellers’ own financial gain.
Big-name hedge funds like Viking Global, D1 Capital, and Castlehook have been piling into AppLovin of late. One prime broker told BI earlier this year it AppLovin had become the latest hedge fund hotel, a term describing stocks with a disproportionate amount of hedge fund ownership relative to the overall market.
