Twitter on Wednesday announced the sale of its MoPub mobile advertising network to AppLovin, a game developer and ad-tech company,for $1.05 billion in cash.
Twitter said it's selling MoPub to accelerate the development and growth of its owned and operated revenue products. The sale is aligned with Twitter's goal of reaching $7.5 billion in revenue by the end of 2023, the company said.
AppLovin shares jumped more than 8% in extended trading on Wednesday. Twitter shares rose more than 2%.
"This transaction increases our focus and demonstrates confidence in our revenue product roadmap, accelerating our ability to invest in the core products that position Twitter for long-term growth and best serve the public conversation," Twitter CEO Jack Dorsey said in a statement.
MoPub generated $188 million in revenue for Twitter in 2020, the company said on Wednesday. That represents nearly 5.9% of the company's 2020 advertising revenue and a little more than 5% of its total sales for the year.
Twitter said it will provide additional details on the estimated financial impact of the deal when it reports its third-quarter earnings on Oct. 26.
The sale of MoPub comes after Apple in April launched iOS 14.5, a version of its mobile operating system that makes it more difficult for advertisers to track user activity on their iPhones and iPads.
The MoPub network is used by 45,000 mobile apps and reaches 1.5 billion addressable users, according to AppLovin's press release on Wednesday. The deal is expected to close next year.
"We are excited by the opportunity to grow the AppLovin platform and further enhance our publisher monetization tools through this strategic transaction," said AppLovin CEO Adam Foroughi in a statement. "We welcome the MoPub team and together we will work diligently to combine the best of MoPub into the AppLovin software platform."
AppLovin's business is split between games, which make much of their money from the sale of virtual items, and marketing tools that other game developers use for app promotion.
Founded in 2011, AppLovin was initially focused on helping mobile apps get discovered and generate revenue. In 2018, the company raised $2 billion from KKR to expand its business into game development, largely through acquisitions. AppLovin has a market cap of close to $29 billion as of Wednesday's close.
Twitter purchased MoPub for about $350 million in stock in September 2013 just before the company was set to make its public market debut. The purchase was intended to bolster Twitter's ability to generate revenue from mobile ads.
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