IronSource On Telcos, Why It Chose The SPAC Route To IPO And The Hotness That Is Mobile Gaming

ironSource is 2021 in a nutshell.

It’s a mobile ad tech provider founded more than ten years ago, with a multibillion valuation that’s on the cusp of going public via a special purpose acquisition company by merging with a private equity firm.

The SPAC in question is led by Thoma Bravo, whose blank check company is combining with ironSource to bring the latter public in a deal worth $11.1 billion. The merger was announced in late March.

Thoma Bravo has a portfolio bursting with software companies. During the past week alone, it closed a $10.2 billion acquisition of property and real estate management company RealPage and dropped $12.3 billion to buy security software vendor Proofpoint.

Initially, ironSource was “fully locked in” on going the traditional IPO route, said Omer Kaplan, CRO and co-founder of ironSource and head of its Sonic division, which houses a suite of publishing, user acquisition and monetization tools for apps.

“We weren’t thinking SPAC at the beginning, but then we were introduced to Thoma Bravo by one of our investors and we started to realize how much stronger we could be together,” Kaplan said. “They can help us consolidate the market while we keep building a true software company.”

As ironSource prepares to IPO, AdExchanger spoke with Kaplan and Arnon Harish, president and co-founder of ironSource and head of its Aura division, which offers engagement tools specifically for telcos and OEMs.

On why now is the right time to go public.

OMER KAPLAN: We’ve been acting like a public company for several years now. What’s been happening in the market actually really started a few years ago and now everyone is seeing the massive growth in mobile gaming.

Investors understand that platforms are part of what’s enabling this growth. Almost simultaneously, we saw Silverlake Partners invest in Unity, KKR invest in AppLovin and CVC invest in us.

ARNON HARISH: We’re also seeing that consolidation in the market is one of the things that’s fueling overall growth, and it’s also a part of our own growth strategy. Being a public company helps us expedite that strategy.

On why COVID-19 isn’t the only reason mobile gaming is white hot right now.

KAPLAN: COVID expedited a trend that had already started. Even three years ago, gaming was considered more of a niche category. Then we started to see the emergence of casual and hypercasual games that weren’t just for “gamers.” COVID just took it to the next level.

HARISH: It’s also about the computing power of phones. Today, phones are like true gaming machines. They can run games that until 10 years ago were only possible on PCs and hardcore game gear, like PlayStation.

On the nature of investor exuberance.

KAPLAN: We raised $1.5 billion, and our PIPE [private investments in public equity] was oversubscribed. I believe that the demand was there because investors really do understand our business and the potential for even more growth. I hope more people start to understand it.

HARISH: Several of our investors have also invested in some of our game developer customers, so they’re also getting real feedback on our solutions.

On the long-term growth vision.

KAPLAN: I can’t make forward-looking statements, but I can say that although everyone likes to compare us to AppLovin and Unity, our vision is to build the most comprehensive business platform we can for games and a central distribution channel for app developers, including on-device inventory.

We have a robust analytics product for monetization management and growth through our acquisition of Soomla [in January], and we have a creative management solution through our acquisition of Luna Labs [in February]. We’ve productized publishing so that independent developers can use our platform and we’ve expanded our offering for telcos.

We’ll continue growing through M&A and creating additional products to support our two key app economy constituents: game developers and telcos.

On why telcos are a major focus.

HARISH: One of the reasons we came into that space is because every mobile user in the world is connected to the internet through a telco. There is no other way to connect when you’re roaming outside of your home without WiFi, which gives telcos a massive value proposition.

Telcos have tried many things, like preloading applications on devices, but they’ve been aware for a very long time that they need to do better. We built a platform to help telcos engage with users throughout their lifecycle and participate in the app economy while also promoting branded solutions and services, like device trade-ins and device protection insurance.

Basically, we want to be a one-stop-shop solution for telcos to help them do more outside of the app store and on-device while also helping with their overall digital transformation. And we do it on a rev share model, like we do with our app developers.

That removes the friction, so that when they win, we win.

This interview has been edited and condensed.

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