The $900M Deal That Changed Everything
AppLovin just sold its entire gaming division for $900 million — a decision that marks the end of an era and the beginning of something much bigger.
The company, which once built its reputation on mobile gaming, is walking away from it completely. And it’s not because they failed. It’s because they won — just in a different game.
For years, AppLovin balanced two businesses: gaming and advertising. They developed and published mobile games, while also building an ad tech empire that helped developers monetize their apps.
But over time, the numbers started to tell a different story. Gaming wasn’t growing fast enough, while advertising was exploding in revenue, margins, and profitability.
So, AppLovin made a bold choice. They’re getting rid of gaming entirely and doubling down on ad tech. The $900 million deal isn’t just about selling off some studios — it’s about completing a transformation that’s been years in the making.
But that raises a big question:
Why would a company that started in gaming walk away from it?
To understand that, we need to go back to how AppLovin got here, why the gaming business no longer made sense, and what the company is really betting on for the future.
Update Feb 26th: Fuzzy Panda, which holds a short position in AppLovin, believes the company’s practices make it vulnerable to legal and regulatory crackdowns, potentially causing a major downfall.
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The Big Shift from Gaming to Ad Tech
For anyone who has followed AppLovin over the years, this shift didn’t come out of nowhere. The company started in gaming, but as time went on, it became clear that advertising — not gaming — was the real goldmine.
This $900 million sale is the final step in a transition that’s been playing out for years. AppLovin isn’t just offloading a few underperforming studios. They’re officially exiting the gaming business and going all-in on ad tech.
It’s a move that makes perfect sense when you look at the numbers. Back in 2020, gaming made up 86% of AppLovin’s revenue. Fast forward to 2024, and that number has flipped. Now, 68% of their revenue comes from advertising. Even more importantly, advertising delivers 90% of their total profits.
Gaming just couldn’t keep up. While the gaming division was struggling to grow at just 3% per year, advertising revenue was skyrocketing by 75%. And profitability? There was no contest. Gaming had an EBITDA margin of 19%, while advertising was sitting comfortably at 76%.
When one part of your business is growing 25 times faster than the other and bringing in nearly five times the profit margins, the choice is obvious.
That’s why this deal isn’t about AppLovin giving up. It’s about focusing on what works.
So, how did AppLovin get here? How did a company that started in mobile gaming become a dominant force in advertising? To see the full picture, we need to go back to the beginning.
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AppLovin’s Origins: From Mobile Gaming to Ad Tech Powerhouse
AppLovin wasn’t always the ad tech giant it is today. In fact, when the company was founded in 2012, its main focus was helping mobile game developers grow. Back then, the mobile gaming market was booming, and AppLovin’s tools made it easier for developers to acquire users and monetize their games.
But rather than just staying in the background as a tech provider, AppLovin started making its own games. It was a logical move at the time — if you’re already helping developers with distribution and monetization, why not create your own content and keep all the revenue?
For the next few years, AppLovin operated as both a game developer and an ad tech company, balancing two very different businesses. But as the industry evolved, it became clear that one side was far more scalable and profitable than the other.
Key Milestones That Shaped AppLovin
- 2012 — Founded as a mobile game distribution and monetization platform.
- 2014 — Launched its first ad tech product, expanding beyond just games.
- 2016 — Private equity firm KKR invested $1.4 billion, fueling growth.
- 2018 — Acquired MAX, a major ad mediation platform, strengthening its control over mobile advertising.
- 2020 — Bought Machine Zone for $500 million, one of the biggest mobile game studios at the time.
- 2021 — Went public in a $28.6 billion IPO, raising $2 billion.
- 2022 — Acquired MoPub from Twitter for $1.05 billion, doubling down on ad tech.
- 2022 — Attempted a $17.5 billion acquisition of Unity, aiming to dominate mobile advertising. The deal failed, but it made AppLovin’s ambitions clear.
By 2023, it was becoming obvious that gaming was no longer the future for AppLovin. The company had built one of the most powerful ad mediation and monetization platforms in the mobile industry, and the numbers proved that advertising was where the real money was.
While gaming revenue had stalled, ad tech revenue was exploding. And this wasn’t just a one-time trend. Ad tech was proving to be more predictable, more profitable, and easier to scale than gaming.
So when AppLovin announced in early 2025 that it was selling off its gaming division for $900 million, it wasn’t a surprise. It was the final confirmation that gaming had become a distraction — and that AppLovin was now playing in a much bigger game.
But just how bad had the gaming division fallen behind? And why did the numbers make it impossible for AppLovin to justify keeping it? Let’s break it down.
Read also: From Survive to Thrive: The Mobile Games Industry’s Big Shift in 2025
The Numbers Don’t Lie: Why Gaming Had to Go
When a company makes a decision as big as selling off an entire division, it’s not based on gut feeling. It’s based on cold, hard numbers. And in AppLovin’s case, the numbers made the decision easy.
In 2020, gaming was everything to AppLovin. It made up 86% of total revenue and was a core part of the company’s identity. But over time, the balance shifted. By 2024, gaming had dropped to just 32% of revenue, while advertising had surged to 68%.
That’s a massive shift, but revenue is only one part of the story. Profitability is what really sealed the deal.
Gaming vs. Advertising: A One-Sided Battle
In 2024, AppLovin’s gaming division brought in $1.5 billion in revenue, but it wasn’t growing. Year-over-year, gaming revenue barely increased by 3%, showing clear signs of stagnation.
Meanwhile, advertising revenue exploded to $3.2 billion, growing at 75% year-over-year.
And then there’s profitability. The gaming division’s EBITDA margin was just 19% — not terrible, but nowhere near as strong as AppLovin’s advertising business. The ad tech side was pulling in a massive 76% EBITDA margin. That means advertising was almost five times more profitable than gaming.
When one part of your business is growing at 3% and making slim margins while another is growing at 75% and delivering massive profits, the decision is simple.
The Post-IDFA Reality Check
Another major factor was Apple’s IDFA (Identifier for Advertisers) changes, which completely disrupted mobile gaming. Before Apple tightened its privacy rules, gaming companies could target players with precision, making user acquisition efficient. But after the IDFA crackdown, the cost of acquiring new players skyrocketed.
AppLovin’s gaming studios felt the impact. User acquisition became more expensive, marketing spend had to increase, and overall profitability suffered.
Read also: The PlayStation Paradox: Winning the Console War Without First-Party Hits
While competitors like Zynga, Playtika, and Scopely continued investing in game content and acquisitions, AppLovin did the opposite. They hadn’t made a major gaming acquisition since 2020, and by 2022, they had already started reducing their gaming footprint.
At one point, AppLovin had 20 gaming studios under its umbrella. By 2024, that number had shrunk to just 10. That was a clear sign that gaming was becoming less of a priority — and now, with this sale, it’s out of the picture completely.
The Bottom Line
When a business division is:
- Growing at just 3% while the other side is growing at 75%
- Bringing in lower margins (19%) while the other side is at 76%
- Struggling with rising costs and limited upside
…it’s time to cut it loose.
That’s exactly what AppLovin did. By selling its gaming division for $900 million, the company is now free to focus entirely on what actually works: ad tech.
But was $900 million the right price? And what does this deal actually look like? Let’s break it down.
Why $900M Was the Right Deal
Selling an entire business for $900 million isn’t a small move. It’s a carefully calculated decision. So, was this a good deal for AppLovin? When you break it down, the answer is yes — and here’s why.
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Breaking Down the $900M Deal
AppLovin’s gaming division was sold for $900 million to an undisclosed private company. The payment structure is split into two parts:
- $500 million in cash
- $400 million in common shares of the acquiring company
But there’s a financing twist. The buyer is planning to borrow up to $250 million to help fund the purchase. If they can’t secure that financing, AppLovin will step in and provide it through promissory notes. This means AppLovin isn’t just walking away from gaming — they’re keeping a financial interest in the acquirer’s future success.
Was $900M a Fair Price?
To understand if this was a good deal, we need to look at how the gaming business was valued.
- Gaming division revenue (2024): $1.5 billion
- Sale price: $900 million
- Valuation multiple: 0.6x revenue
That’s a relatively low multiple, but it makes sense. The gaming division wasn’t growing fast, and its margins weren’t impressive. Investors typically pay a premium for high-growth businesses, and AppLovin’s gaming unit didn’t fit that profile anymore.
Now, compare that to the ad tech business:
- Advertising revenue (2024): $3.2 billion
- Growing at 75% year-over-year
- EBITDA margin: 76%
If you were running AppLovin, where would you focus your efforts? The decision was obvious. The company can generate far more value by investing in its ad tech platform than by holding on to a struggling gaming business.
What AppLovin Gains from the Sale
Immediate Cash Infusion
- With $500 million in cash, AppLovin strengthens its balance sheet.
- This cash can be used for R&D, acquisitions, or ad tech expansion.
A Stake in the Acquirer
- The $400 million in common shares means AppLovin still benefits from the gaming industry, just without running it themselves.
- If the acquirer grows the business, AppLovin gains upside.
Full Focus on Ad Tech
- No more operational distractions from a low-growth segment.
- Resources and talent can now be fully dedicated to high-margin ad tech.
Why AppLovin Didn’t Hold Out for More
Some might ask: Why didn’t they sell for a higher price? The answer is simple — the gaming division wasn’t worth more.
- It wasn’t growing fast enough.
- Margins were low.
- Scaling was getting harder post-IDFA.
In fact, if AppLovin had waited, the business could have lost even more value over time. Selling now ensures they exit at a reasonable price while there’s still demand for gaming assets.
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What This Means for the Future
This isn’t just about cutting off a weak business. It’s about doubling down on the most profitable, scalable part of the company: advertising.
AppLovin is making it clear — they’re done with gaming, and they’re going all-in on ad tech.
Now, let’s look at what this means for the company’s future.
The Bigger Picture: AppLovin’s Future is Ad Tech
With gaming out of the picture, AppLovin is now fully an ad tech company. This wasn’t an overnight decision — it’s been happening for years. The sale of its gaming division is just the final step.
So what does this mean for AppLovin’s future?
From Mobile Gaming to Mobile Advertising Giant
A few years ago, AppLovin was best known for being a mobile game publisher. Today, that identity is gone. Instead, the company has positioned itself as one of the biggest players in mobile advertising, competing with Google, Meta, and Unity in the ad mediation and monetization space.
And the shift is paying off in real numbers.
- 2024 total revenue: $4.7 billion (up 43% from 2023)
- Net income: $1.58 billion (up 4.4x from 2023)
- Advertising revenue: $3.2 billion (68% of total revenue)
- Advertising EBITDA margin: 76%
That’s a massive jump in both revenue and profitability, and it proves that AppLovin made the right call.
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Competing with the Big Players
Now that AppLovin is all-in on ad tech, it’s competing at the highest level. Its main rivals aren’t gaming companies anymore. Instead, it’s going up against Google Ads, Meta Audience Network, and Unity’s ad business.
The real advantage? AppLovin owns one of the most powerful ad mediation platforms in mobile advertising.
- MAX (acquired in 2018) — A major ad mediation tool that helps developers monetize their apps.
- MoPub (acquired in 2022) — A $1 billion acquisition that gave AppLovin even more control over mobile ad inventory.
- AI-powered ad optimization — AppLovin has been investing heavily in AI-driven advertising, helping developers get the best return on their ad spend.
With these tools, AppLovin is one of the biggest mobile ad monetization platforms in the world.
Where Does AppLovin Go From Here?
Now that the company has fully transitioned into ad tech, what’s next?
More Acquisitions in Ad Tech
- Just like it bought MoPub and MAX, AppLovin could continue acquiring platforms that expand its ad network.
- It wouldn’t be surprising if the company targets AI-driven ad tech startups next.
Competing Directly with Google & Meta
- AppLovin is already a huge player in mobile ads, but the next step is going beyond apps.
- Could they expand into web-based or connected TV (CTV) advertising?
Strengthening Developer Relationships
- Now that gaming is gone, AppLovin must ensure that developers keep using its ad tools.
- The company will likely invest in new tools to make monetization even more effective.
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Bet on the future of mobile advertising
The sale of AppLovin’s gaming division isn’t a retreat — it’s an evolution. The company is moving away from low-margin content and fully embracing the high-margin, scalable business of ad tech.
This is a bet on the future of mobile advertising, and with the numbers they’re putting up, it looks like a smart one.
So what happens next? Will AppLovin continue its rise as a dominant ad tech company, or will new challenges emerge? One thing is certain: they’re no longer a gaming company, and they’re not looking back.
A Smart, Strategic Exit
AppLovin didn’t just sell its gaming division for $900 million because it wasn’t working. They sold it because they found something much bigger and more profitable.
Gaming was once the backbone of the company. In 2020, it made up 86% of revenue. But the numbers shifted, and by 2024, advertising accounted for 68% of total revenue and nearly all of the company’s profit.
The decision to sell gaming wasn’t about cutting losses — it was about focusing on what works.
- Gaming was growing at just 3% per year, while advertising was surging at 75%.
- Gaming had a 19% EBITDA margin, while advertising was running at 76%.
- User acquisition in gaming became expensive post-IDFA, while ad tech kept scaling.
When you step back and look at the full picture, the logic is crystal clear:
- Gaming wasn’t the future — ad tech was.
- Gaming had lower margins — advertising was far more profitable.
- Selling gaming frees up capital to expand their ad tech business.
- AppLovin is now positioned as one of the biggest players in mobile advertising, competing with Google and Meta.
This wasn’t a failure — this was a masterclass in corporate strategy. AppLovin is no longer a mobile gaming company. It’s an ad tech giant with a clear path forward.
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What Happens Next?
Now that AppLovin has fully committed to ad tech, the big question is: where do they go from here?
- Will they acquire more ad tech companies?
- Can they take on Google and Meta in mobile advertising?
- What’s the next big innovation in mobile ad monetization?
One thing is clear: AppLovin has made its bet, and it’s all-in on ad tech.
The gaming era is over. The ad tech empire begins.
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