AppLovin is well-positioned in mobile gaming ecosystem: CEO

Adam Foroughi, AppLovin CEO, joins Yahoo Finance’s Melody Hahm and Kristin Myers to discuss AppLovin’s growth and post-pandemic outlook.

Video Transcript

KRISTIN MYERS: Welcome back. Applovin is a mobile gaming app that also helps app developers grow, monetize, and publish their apps. And they've gone public today. We're joined now by Applovin CEO Adam Foroughi and Yahoo Finance's Melody Hahm.

Adam, thanks so much for joining us today. So I'm seeing right now that the stock is a bit under pressure, down over 17% right now. At least when it comes to the mobile gaming piece of your business, how do you see demand going forward, especially as we come out of the pandemic?

I know a lot of folk's returning to their phones, playing games throughout the pandemic when we were stuck at home. How do you see that growth going forward when we are able to go outside?

ADAM FOROUGHI: So our business reaches 400 million plus daily active users playing mobile casual games. Many of these games are just played on the go, on the bus to work, on the bus to home. So we didn't see an explosion in traffic going into COVID. And we're not seeing alterations in traffic coming off. Our growth is accelerating because the technologies that we have continued to improve.

MELODY HAHM: Adam, looking at your business in 2020, it seems like you were equal parts your own portfolio, and then the other half, as Kristin alluded to, helping developers market their own apps. As we look ahead, how do you think that dynamic and balance will shift? Do you anticipate investing more in creating your own games, or helping others market their own?

ADAM FOROUGHI: It's actually all intertwined together. A great analogy for our business is the way Netflix operates their platform. They've got third-party content. And they deliver that content to consumers through dynamic recommendations, and then they layered on original content.

And that created an explosion of consumption on their platform. We do the same thing. We invest in content to pair that with the third party content on our platform, to improve the recommendations that we could deliver to our customers.

MELODY HAHM: To that point, as I understand it, you have over 3 million, 3 trillion, machine learning predictions created every day for everyone using the apps in your entire ecosystem. What areas are you actually seeing the most interest and stickiness? What kinds of industries, perhaps, if you could kind of hone in on some of those areas?

ADAM FOROUGHI: Well, we do 3 trillion machine learning predictions per day. And the goal is to match up the app developer's app with the best customer for them. We've seen an explosion in mobile gaming over the last nine years.

It's the most accessible and affordable form of entertainment today. We're also seeing growth of any other categories of applications as well as we see transactional commerce continue to shift to mobile and other types of utilities continue to grow.

MELODY HAHM: You know, Adam, one of the games that I know you guys make is Project Makeover. Every YouTube video I watched, that game has served me. And I'm not going to lie. I have been tempted just based on the very catchy kind of grabbing quality of the game.

But I do want to understand more about the casual gamer that you seem to be touting. You talk about the 30-year-old and over subset, right? We're not talking about Fortnite addicts, or perhaps, the kids who are still living at home.

How much are you seeing new adoption of brand new games, versus let's say, the boomeranging back to Diablo, to StarCraft. And I can tell you, anecdotally, that's what's happening with my husband and his friends.

ADAM FOROUGHI: So those are the traditional gaming ecosystems where you get the male-centric usually skewing younger gamer. Our audience is actually skewing toward female. And it's a casual gamer audience.

One of the biggest apps in our portfolio is a game called Wordscapes by our developer PeopleFun. It's the largest word game in the world today. Audiences, adult, people are playing on the bus to work, on the bus home. And these types of games really have turned all of us into gamers.

MELODY HAHM: Yeah. That's such a funny kind of demographic that you're able to depict. Because to your point, that's not really what we think of when we think of the traditional gamer.

And then I do have to ask you about Applovin, of course, having to deal with the fallout from Apple's privacy changes, right, in the way they're able to track users. Tell me about how you're first party data will be able to [? buoy ?] this a bit and make sure that you're not really screwed on the other side of this.

ADAM FOROUGHI: You just said it yourself. But what we think is we're very well-positioned. Because when we executed on content, we brought a lot of original content into our portfolio. We now reach over 200 million monthly active consumers who play our content.

And that data, our own audience insights, are what feed our recommendation engine, the machine learning-powered Axon software to match up our clients and our own apps with the customers. And because our own audience and our own data is what's driving our engine, we think we're very well-positioned in this ecosystem.

KRISTIN MYERS: So Adam, Melody was hinting at it a little bit earlier, I'm curious to know if there's any trends, at least when it comes to applications, that you think are here to stay, especially after this pandemic where folks were staying at home and getting very creative and innovative?

ADAM FOROUGHI: People are accessing more and more content through digital connectivity, whether it's games, ordering groceries, ordering food, having a mental break with the mindfulness app. We don't think any of these types of trends are ever going to slow down. We've been seeing them expand since 2011 when we launched the company.

MELODY HAHM: You know, Adam, I can't help but think about dropshipping, right, and how a website is live for a couple of weeks, for a month, people get really excited about the products, and then it goes away. I'm curious if you think about app building in that way. I know you have a portfolio of over 200 apps.

Do you care if they're sticky? Do you care if people become addicted? Or is the idea that they use it, perhaps for a couple of weeks, maybe pay for a premium feature, and then they move on to the next one?

ADAM FOROUGHI: These types of apps are pretty good engagement apps. They're not addictive apps. So it's 30 to 45 minutes a day of gameplay. And they give us a mental break. It's a form of relaxation. We've seen, when we started in the mobile app ecosystem, 7 billion app installs a year happening in 2012. Now there's well over 200 billion app installs a year happening globally amongst consumers.

This market's huge. It's $190 billion app economy. And we're seeing that grow 10%. As human beings, we continue to engage with more content on our mobile devices. And I don't think that's slowing down any time soon.

KRISTIN MYERS: All right. Applovin CEO Adam Foroughi, Yahoo Finance's Melody Hahm, thank you both so much for joining us.