AppLovin Inc., which plans to capture a significant portion of the $ 200 billion mobile app market, is valued at about $ 29 billion, as the software company’s initial public offering was $ 80 per share.

Pricing was in the range of expected prices early on Thursday morning – from $ 75 to $ 85 per share. Applovin APP,
-0.88%
IPO offered 22.5 million shares to raise $ 1.8 billion, while KKR Denali Holdings LP offered 2.5 million shares to raise $ 200 million.

With a balance of about 360 million shares, the company is valued at about $ 28.6 billion.

Shares are expected to start trading on the Nasdaq on Thursday under the “APP” tick.

California-based Palo Alto, which turns a decade in July, is developing marketing, monetization and analytics software to help app developers grow their business. It also has a portfolio of over 200 free mobile games with in-app purchases. The expected rating of AppLovin weakens the latest comparable IPO, Unity Software Inc. The value of U,
+ 1.72%,
which at the time of its IPO in September was estimated at almost $ 14 billion.

See him! 5 Things to Know About Unity Software IPO

In a document submitted to the Securities and Exchange Commission, AppLovin states that the total market capitalization is about $ 189 billion, of which $ 101 billion, from in-house advertising revenue, is about $ 88 billion in direct spending worldwide, citing IDC 2020 figures. AppLovin expects its market share to grow to $ 283 billion by 2024.

Here are five things you need to know about AppLovin.

The value of the business has more than doubled, և the reason is Apple and Google

AppLovin reported revenue of $ 1.45 billion in 2020, with a loss of $ 125.9 million, revenue of $ 994.1 million in 2019, and net income of $ 119 million. In 2018, the company recorded revenue of $ 483.4 million against a loss of $ 260 million.

The big increase in spending 2019 և 2019 was a 130% jump in business spending to $ 555.6 million, of which $ 112 million was due to payment processing fees. The processing fees for these payments are the same as Epic Games did not want to pay Apple Inc. AAPL.
+ 0.14%
App Store և Alphabet Inc. GOOG,
+ 0.01%

GOOGL,
+ 0.39%
Google Play Store, which accounted for more than 30% of purchases.

“The mobile app ecosystem depends in part on the 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,” says AppLovin, its S-1. “We get a lot of revenue from the distribution of almost all of these third-party platforms, almost all of our software [in-app purchases] are done through the payment processing systems of these third party platforms. ”

Almost a quarter of the proceeds will be used to repay the debt

AppLovin estimates it could generate $ 1.74 billion in net revenue if it buys in the middle of its range.

The company said it plans to use about $ 400 million to repay the debt under its working capital. AppLovin currently owes $ 1.6 billion.

“In addition, we expect to use some of the net proceeds in the Strategic Achievement Partnership,” said AppLovin. “However, other than the acquisition of Adjust, we do not have final agreements or commitments regarding any significant achievements or partnerships at this time.”

Achievements are part of his growth strategy

Most recently, AppLovin announced the acquisition of Adjust, a marketing and marketing company based in Germany. While AppLovin did not announce the terms of the deal, Crunchbase estimated the price at $ 1 billion.

The company said in its S-1 that since the beginning of 2018, it has “invested more than $ 1 billion in 15 strategic achievements և in partnership.”

AppLovin was acquired by mobile game developer Machine Zone Inc. last May for an undisclosed fee, although Crunchbase estimated the deal at $ 500 million.

This follows the acquisition of the SafeDK software development portfolio management platform in 2019 and Max App Inc. in 2018. in the title of the application և In Germany, on the Moqoqo mobile advertising network in 2014.

“We will continue to explore and evaluate additional acquisitions, some of which may be of the same or even larger scale, with investments than the acquisition of Machine Zone and the suspension of Adjust,” the company said.

KKH has the lion’s share of voting control

The company intends to offer Class A shares with one vote at the IPO, while Early Investors will hold Class B shares with 20 votes. AppLovin has raised $ 1.4 billion in funding from investors, Crunchbase reports.

KKR Denali Holdings, which will have 72.4% of Class B shares after the offer, will get 67.4% of the vote. Other Class B shareholders include Applovin CEO և Co-founder Adam Foroug, who owns 19.4% of Class B shares with 18.1% voting rights, and Chief Financial Officer Herald Chen – Class B 3.2% և 3%. voting rights.

The company will also create a non-voting class of shares, or those shares do not exist yet.

An attempt to sell to a Chinese company failed, LKH intervened

Were it not for US concerns about investing in strategic assets from China, KKR would probably never have been involved, and AppLovin would not have been made public.

In September 2016, AppLovin fully agreed to acquire the Chinese private company Orient Hontai Capital for $ 1.4 billion. More than a year after the deal was canceled, after the US Foreign Investment Commission withdrew the deal due to customer data, L AppLovin agreed to invest $ 841 million in debt from Orient Hontai. Prior to the deal, 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 in a minority stake in AppLovin with approximately 110 million shares. The $ 400 million investment at the proposed IPO will cost more than $ 8 billion.

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