What was changed
AppLovin went public in April 2021 as a hybrid: a mobile ad software platform plus a sprawling portfolio of over 350 first-party game apps. Then Apple's App Tracking Transparency changes and a collapsing ad market gutted mobile adtech in 2022, and AppLovin's stock fell roughly 90% from its peak. An unsolicited merger approach to Unity — on terms that would have handed control to Unity's side — was rebuffed in August 2022, leaving AppLovin to save itself.
On the Q4 2022 earnings call in February 2023, CEO Adam Foroughi and CFO Herald Chen laid out the pivot: a strategic review of the apps portfolio was 'nearing completion' after six months of headcount reductions, sales and closures of underperforming studios, and a $128 million net loss charge on divested and closed assets. Resources and management attention would concentrate on the software platform — above all AXON 2, a ground-up AI rebuild of the core ad-recommendation engine, promised for release in 2023.
AXON 2 launched in Q2 2023 and the results were immediate. Advertising spend on the platform roughly quadrupled after launch, reaching a $10 billion annual run rate from gaming clients alone, as the AI model delivered efficient user acquisition despite the post-IDFA privacy constraints that had broken rivals' targeting. Revenue grew 43% in 2024 with adjusted EBITDA up 81%, and the stock rose over 700% that year — the best performer among US tech companies of its size — taking the market capitalization past $100 billion.
What it achieved
Ad spend on the platform quadrupled after AXON 2's Q2 2023 launch; 2024 revenue rose 43%; stock gained over 700% in 2024 as top tech performer.
Why it worked
The 2022 crash and failed Unity approach forced a stark choice, and Foroughi chose concentration over diversification.
Cutting the apps portfolio early — taking a $128 million charge — freed cash flow and engineering talent for the platform bet.
AXON 2 turned Apple's privacy disruption into an advantage, restoring targeting efficiency competitors had lost.
The bet was on a compounding asset: better AI recommendations attract more ad spend, which generates more training data.
Management committed publicly to the pivot on earnings calls before the results were visible, aligning investors with the plan.
What can be applied
When the market rejects your diversified story, cut the lower-return business hard and concentrate resources on the one technology with compounding returns.
Aftermath
AppLovin kept shedding the old identity: in 2025 it sold its remaining mobile gaming studios to Tripledot Studios for $400 million in cash plus an equity stake, becoming a pure advertising platform. It joined the S&P 500 in September 2025, expanded AXON beyond gaming into e-commerce ads, and its market cap climbed well past $100 billion — though it also drew short-seller reports and an SEC probe questioning AXON's practices.
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