AppLovin is taking a bold step to transform into a dedicated advertising platform by selling its entire apps business, targeting a $900 million deal expected to close next quarter. The move drove a 28% surge in the company’s stock during after-hours trading, signaling investor support for its strategic pivot.
This shift has been in the making for years, with AppLovin steadily positioning its software platform as the core of its business. Now, the planned sale of its remaining 10 gaming studios solidifies its path to becoming what CEO Adam Foroughi describes as “a pure advertising platform.”
Foroughi highlighted the importance of the company’s journey, noting that acquiring gaming studios over the past seven years was crucial for training the machine learning models powering AppLovin’s Axon platform. Axon, the company’s proprietary AI-driven ad tech software, uses predictive algorithms to deliver ads to the most receptive audiences. With Axon performing as intended, the company is now turning its attention beyond gaming to broader advertising opportunities.
AppLovin built its reputation by helping mobile game publishers monetize their apps through cross-promotional ads. However, it recently expanded its focus by testing ecommerce ads, allowing advertisers to promote products and services within mobile apps. The results have been promising, and while the company has not disclosed specific performance metrics, Foroughi stated that Axon’s models are driving “positive outcomes” for a diverse range of advertisers. He believes this success indicates that businesses from any industry can benefit from AppLovin’s platform.
A key factor in achieving AppLovin’s ambitious goals is automation. The company aims to replicate Meta’s success by attracting millions of advertisers, but it recognizes that scalable growth requires a robust self-serve ad-buying platform. Currently, its systems are still under development and lack the full self-service capabilities necessary to manage large-scale growth.
Foroughi emphasized that expanding self-serve options is the company’s top priority for the year. The ultimate goal is to fully automate the ad-buying process, enabling growth without increasing headcount. As part of this strategy, AppLovin has been reducing its workforce, laying off 120 employees in 2024 and 89 more this year, including the CEO of Machine Zone, which it acquired in 2020. Machine Zone is among the studios to be sold in the upcoming divestment.
The company’s streamlining efforts are already reflected in its financial results. AppLovin posted $1.37 billion in revenue for Q4, marking a 44% year-over-year increase. Total revenue for 2024 reached $4.7 billion, up 43% from the previous year.
Foroughi, who recently took on oversight of HR, explained that the layoffs were part of a broader effort to align the company with its most promising opportunities. His approach has been to identify areas of the business that don’t directly support the company’s organic growth strategy and eliminate them to sharpen its focus.
With its apps business on the way out and Axon driving results across industries, AppLovin is poised to redefine itself as a major force in digital advertising, ready to challenge established players with its AI-powered platform.
