AppLovin Bets Big on Casino Titles to Drive Future Apps Revenue

Key insights

4 slides

Key number

AppLovin's app revenue strongly correlates with in-app purchases.

There is a strong correlation between AppLovin’s portfolio-level in-app purchase (IAP) revenue and its reported apps segment revenue.

0.86

Correlation coefficient between portfolio-level IAP revenue and reported apps segment revenue.

Declining engagement

Legacy Lifestyle & Puzzle titles show significant declines in user engagement.

AppLovin’s legacy Lifestyle & Puzzle titles, including Project Makeover, Wordscapes, and Matchington Mansion, have seen engagement declines.

Engagement drop. Legacy Lifestyle & Puzzle titles experienced significant declines in average daily time spent and sessions.

14%

Decrease in average daily time spent on legacy Lifestyle & Puzzle titles in 2024 vs. 2021.

Decrease in sessions: 17%

1 / 4

Ask AI about this article

Summary

AppLovin is strategically shifting its focus towards casino titles to bolster its apps segment revenue, as in-app purchases (IAP) from these games have shown resilience and growth. While AppLovin's overall revenue is primarily driven by AI-powered ad delivery, IAP revenue remains a significant contributor, with Sensor Tower's portfolio-level IAP data correlating strongly with the company's reported apps segment revenue (correlation coefficient of 0.86 from Q1 2020 to Q3 2024).

The analysis, covering Q1 2020 through Q4 2024, indicates a deceleration in IAP revenue growth post-pandemic. AppLovin's portfolio-level IAP revenue declined by an average of 2% year-over-year per quarter in 2024, a stark contrast to the average 50% year-over-year growth observed in the same period in 2021. This decline is largely attributed to the underperformance of Lifestyle & Puzzle titles, which were highly popular during the pandemic but have since experienced significant drops in monthly active users (MAUs), engagement, and IAP revenue. For instance, "Project Makeover," AppLovin's top IAP title from 2020 onwards, saw its US MAUs and IAP revenue decrease by an average of 27% and 20% year-over-year, respectively, from 2022 to 2024.

Conversely, AppLovin's casino titles demonstrated robust performance, with total IAP revenue for these games increasing by 12% year-over-year in 2024. This growth contrasts with a 4% decline for Lifestyle & Puzzle titles and a 27% decline for Action & Strategy titles. AppLovin's strategic shift is further evidenced by its advertising spend allocation in the US; the company reduced its ad spend on "Project Makeover" by 12 percentage points year-over-year in 2024, while increasing its allocation to casino titles such as "Cash Tornado Slots," "Jackpot Master Slots," and "Jackpot Friends Slots" by 15 percentage points during the same period. This indicates a deliberate effort to drive mobile app adoption and revenue growth in the casino segment.