Tapjoy Raises $30 Million from JPMorgan to Fuel Push on Android
Tapjoy, which helps developers on Facebook, Android and iOS earn revenue through offers and CPA ads, raised an additional $30 million from JPMorgan. The announcement comes just a few months after Apple clamped down on one major revenue stream for the company — incentivized installs — or where game developers cross-promote other apps and give their players virtual currency for downloading titles from other companies.
Tapjoy chief executive Mihir Shah said the company remains profitable despite the setback. “We’ve been profitable for a number of quarters and top-line revenue has been growing,” he said. “Our gross margins have grown quarter-over-quarter even after all of this.”
At the same time, the company has seen a tenfold increase on Android in the size of its network and the number of paid actions it pushes in the last three months. Revenue on the platform has also seen a commensurate increase. Tapjoy recently launched a $5 million fund to help developers port their apps to the platform.
Shah did concede that revenue on the iOS platform had flattened out though. “It took a dip and then it flattened out,” he said. “As we release additional ad units for users to engage with, I expect it to increase.”
In April, Apple began rejecting apps that contain offer walls where users can download apps in exchange for virtual currency in a game. Apple argued that these walls were having an undue amount of influence on rankings as many developers were paying for just enough downloads to break into the top of the free charts, where more consumers could see their work.
Shah said the company has since moved to different types of ad units, like ones where users can watch videos (often game trailers) in exchange for virtual currency. There are also cost-per-action ads where users can level up or take an action inside an app in exchange for virtual currency.
“It’s basically retargeting,” Shah said. “You already have an app downloaded like Microsoft’s Bing and we suggest you do something like a search query or find a hotel in Kayak’s app.”
Then there are classic offers like signing up for Netflix, which Tapjoy has done for years on the Facebook platform.
As for avoiding a “three-peat” on the Android platform after facing friction on both iOS and Facebook?
Shah said, “Ultimately this is a portfolio play. We have to build a direct relationship with users, support a variety of platforms and continue to articulate our message that we are a healthy part of the ecosystem.”
Shah said the company chose JPMorgan above other classic Silicon Valley venture firms because the company was in a later growth stage.
“We were looking for a strong global growth partner rather than an early-stage VC,” he said. “It’s a very different mindset we’re in. JPMorgan has just a phenomenal global footprint and was a very good partner throughout the process.”
The New York-based investment bank did not demand a board seat. This round likely prices the company out of acquisition consideration and may push it down the path toward an initial public offering.
Shah played down that down as an option, however.
“We’re pretty focused on building lots of core value. We have a strong balance sheet, very strong revenue and strong EBITDA growth,” said Shah, who declined to offer financial specifics.