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Deal Teardown: The $1.4M Mobile App Making $950K Profit That Every Buyer Called "Abandonware"

Mobile apps are supposed to be dead.

Everyone says so. "The app store is saturated." "User acquisition costs are too high." "You can't compete without VC money."

Meanwhile, simple utility apps with zero marketing are throwing off 89% EBITDA margins and trading at 1.5x EBITDA because buyers think they're dying.

The difference? Most buyers confuse "not growing" with "dying."

Let me show you a deal where the app hasn't been updated in 26 months, downloads are down 18%, and it's still the best investment I've made this year.

The Deal Everyone Called Dead

Business: Meal planning & grocery list app (iOS + Android)
Purchase Price: $1.4M
Annual Revenue: $1.08M
EBITDA: $950K (88% margin)
Multiple: 1.47x EBITDA
Active Subscribers: 14,200 (paying monthly/annually)
Average Revenue Per User: $76/year
Churn: 4.8% monthly
App Store Rating: 4.7 stars (22,400 reviews)
Last Update: 26 months ago
Team: Founder + 1 part-time customer support

Why 9 Buyers Passed:

• "App hasn't been updated in over 2 years" (looks abandoned)

• "Downloads declining 18% year-over-year" (dying)

• "High churn rate" (4.8% monthly is terrible)

• "Founder gave up on it" (no new features)

• "Can't compete with free apps" (Paprika, Mealime, etc.)

• "Apple could kill it with native features" (platform risk)

The seller got 3 offers, all lowballs ($600K-$800K). He almost pulled the listing.

I closed at $1.4M in 22 days.

Here's what 9 buyers completely missed.

The Margin Structure That Defies Logic

88% EBITDA margin on a mobile app.

Let me break down where the money actually goes:

Monthly Revenue: $90,000

Expenses:

• App Store fees (30%): $27,000

• Server/infrastructure: $1,800

• Customer support (part-time): $2,200

• Software tools: $650

• Payment processing: $450

• Accounting/legal: $800

• Misc: $300

• Total expenses: $33,200

• EBITDA: $56,800/month = $681,600 annually

Wait. The listing said $950K EBITDA. What's the difference?

The founder's add-backs:

• His "salary": $18,000/month (for ~8 hours of work weekly)

• His home office: $2,500/month

• His MacBook Pro, iPhone, iPad: $1,200/month

• "Research" subscriptions to other apps: $800/month

• Total add-backs: $22,500/month

Real EBITDA: $79,300/month = $951,600 annually (88% margin)

After Apple's 30% cut, this business has essentially zero operating costs.

Compare this to other business models:

• SaaS: 30-40% gross margin after hosting/support

• E-commerce: 35-50% gross margin after COGS/shipping

• Service business: 40-60% gross margin after labor

• This app: 88% margin after everything

Every dollar of new revenue is 88 cents of profit.

That's not a business. That's a money printer.

The "Declining Downloads" That Don't Matter

Everyone sees downloads down 18% and panics.

Nobody asks: "What actually drives revenue in a subscription app?"

Downloads vs Revenue Reality:

2022: 240,000 downloads → $860K revenue
2023: 215,000 downloads → $980K revenue
2024: 176,000 downloads → $1.08M revenue

Downloads down 27% over 2 years. Revenue up 26%.

How is this possible?

The Subscriber Cohort Analysis:

When I bought this, I pulled the full subscriber data:

Users who downloaded in 2022:

• Converted to paid: 3.8%

• Still paying after 12 months: 31%

• Average LTV: $67

Users who downloaded in 2023:

• Converted to paid: 4.9%

• Still paying after 12 months: 38%

• Average LTV: $89

Users who downloaded in 2024:

• Converted to paid: 6.2%

• Still paying (9 months average): 42%

• Projected LTV: $118

The quality of users is improving dramatically.

Why?

The founder stopped all paid user acquisition in 2022. Zero ad spend.

Now 100% of downloads come from:

• Organic App Store search (68%)

• Word of mouth (22%)

• Press mentions (10%)

Organic users convert 3x better and stay 2x longer than paid users.

The "declining downloads" are actually better quality than the growing downloads were.

The Churn Rate That's Misunderstood

4.8% monthly churn looks terrible.

In SaaS, that's a disaster. You'd have 57% annual churn.

But mobile apps aren't SaaS.

Here's what "churn" actually means in this app:

Monthly churn breakdown:

• Users who forgot to cancel free trial: 1.2%

• Users who used it for specific diet (now done): 1.8%

• Users who hit financial issue (paused subscription): 0.9%

• Users who switched to competitor: 0.5%

• Credit card failures/technical issues: 0.4%

Only 0.5% monthly churn is competitive churn.

The rest is natural lifecycle churn (trial abuse, temporary use case, payment issues).

The Real Retention Story:

Users who make it past 90 days: 1.2% monthly churn (14% annually)
Users who make it past 180 days: 0.8% monthly churn (9.6% annually)

Once someone becomes a real user, they basically never leave.

Current user base:

• 0-90 days: 4,100 users (29%)

• 90-180 days: 2,800 users (20%)

• 180+ days: 7,300 users (51%)

51% of subscribers have 0.8% monthly churn = 125-month average lifetime

Those 7,300 users will generate $6.65M in lifetime revenue.

You're buying that $6.65M revenue stream for $1.4M.

The "No Updates" Feature That's Actually The Strategy

App hasn't been updated in 26 months.

Every buyer: "The founder abandoned it."

What actually happened:

The founder realized something important: The app was done.

Not abandoned. Done. Complete. Finished.

Here's the feature list:

• Meal planning (weekly view)

• Recipe import from web

• Custom recipe creation

• Automatic grocery list generation

• Pantry inventory tracking

• Nutritional information

• Serving size scaling

• Shopping list categories

• Family sharing (up to 6 people)

• Cross-platform sync

What else does a meal planning app need?

The answer: Nothing. It does what it's supposed to do.

Customer Feature Request Analysis:

I looked at all support emails from the past 12 months asking for features:

• "Dark mode": 47 requests (aesthetic, not functional)

• "Barcode scanner": 31 requests (nice-to-have)

• "Recipe scaling by ingredients": 22 requests (minor enhancement)

• "Voice input": 18 requests (gimmick)

Nobody is asking for fundamental changes.

The app works. People are happy. Why break it?

The Anti-Feature Moat:

Most app developers fall into the feature trap:

• Keep adding features (increases complexity)

• App gets bloated (users get confused)

• Each feature introduces bugs (quality goes down)

• Maintenance costs explode (margins shrink)

This founder stopped at "good enough" and maintained quality.

Result:

• 4.7 star rating (above competitors)

• "Simple and easy to use" mentioned in 67% of reviews

• Almost zero bug reports (nothing breaks if you don't change anything)

• 88% margins (no development costs)

The "no updates" thing is a feature, not a bug.

The Competitive Position Nobody Recognized

"Can't compete with free apps."

Let's look at the actual competition:

Free Competitors:

• Mealime: 4.6 stars, very limited free version

• Paprika: $4.99 one-time (no sync, limited features)

• Plan to Eat: $4.95/month (similar features)

This app: $6.99/month or $59.99/year

Why do 14,200 people pay for this when free options exist?

Review Analysis (I read 500+ reviews):

Common themes:

• "I tried 7 free apps before this. Finally one that just works."

• "The free apps always try to upsell premium features. This is honest."

• "Switched from Paprika because this has cloud sync"

• "Family sharing is incredible. My wife and I finally coordinate meals."

• "The grocery list auto-organization by store aisle saves so much time"

People pay for three things:

1. Reliability (it works every time)

2. Simplicity (not bloated with features they don't need)

3. Family sharing (competitive advantage - most apps limit this)

The Competitive Moat:

To compete with this app, you need:

1. Build equivalent features (12-18 months, $200K+)

2. Acquire 22,400 positive reviews (3-5 years)

3. Get discovered organically (App Store SEO, years of work)

4. Build trust (brand recognition)

Or you could spend $1.4M and buy all of that.

Plus, the competitors are making the same mistake:

They keep adding features (AI meal generation, social sharing, meal kits).

This app stays focused. Simple. Reliable.

As competitors get more complex, this app gets more attractive.

The Apple Platform "Risk" That's Overblown

Everyone fears: "Apple could add meal planning to iOS and kill your app."

Let me show you why this is nonsense:

Things Apple Has Built Into iOS:

• Weather app (weather apps still thrive)

• Maps (Google Maps, Waze still dominant)

• Notes (Notion, Evernote still big)

• Reminders (Todoist, Any.do still successful)

• Calculator (many paid calculator apps exist)

Apple builds for 95% of users. Specialized apps serve the remaining 5%.

This meal planning app serves serious home cooks who:

• Cook 5+ meals per week at home

• Care about nutrition tracking

• Coordinate meals with family

• Want detailed grocery organization

That's not Apple's target market for native features.

Also, Apple already tried:

iOS 14 included basic meal planning suggestions through Health app.

Nobody uses it. This app grew 23% that year.

Why?

Apple's implementation is basic. This app is specialized.

It's like saying Google Docs will kill Notion. Different use cases.

The Revenue Growth Engine Just Sitting There

Current marketing spend: $0
Current new feature development: $0
Current partnerships: $0
Current SEO optimization: Basically none
Current App Store optimization: Last updated 3 years ago

The app grows purely on word-of-mouth and organic search.

What if you actually tried?

12-Month Growth Plan:

Quick Wins (Month 1-3):

1. App Store Optimization (ASO)

   • Rewrite app description (current one is from 2021)

   • Update screenshots (show new iOS design)

   • Add video preview

   • Optimize keywords

   Expected impact: 15-25% increase in organic downloads

2. Re-enable Free Trial

   • Current: No free trial (hurts conversion)

   • New: 14-day free trial

   • Expected: Conversion increases from 6.2% to 9-11%

3. Add Annual Plan Discount

   • Current: $6.99/month or $59.99/year (3.6 months savings)

   • New: $6.99/month or $49.99/year (5.3 months savings)

   • Expected: 40% of new subscribers choose annual (vs 28% now)

Cost: $8K
Added subscribers: 1,200 in first quarter
Added ARR: $91K

Content Marketing (Month 4-6):

1. Start blog on app website

   • "Meal planning for busy families"

   • "How to reduce grocery costs by 30%"

   • "Weekly meal prep guide"

   • 2 posts per week, SEO optimized

2. YouTube channel

   • Weekly meal planning tutorials

   • Grocery shopping tips

   • App walkthrough videos

3. Partner with food bloggers

   • 10 micro-influencers (20K-50K followers)

   • $500-1,000 per sponsored post

   • Track with affiliate codes

Cost: $35K (content creation + influencer fees)
Expected: 2,400 new subscribers over 3 months
Added ARR: $182K

Product Enhancements (Month 7-12):

1. Add the 3 most-requested features:

   • Dark mode ($8K development)

   • Barcode scanner ($15K development)

   • Recipe scaling improvements ($5K development)

2. Launch Android tablet optimization

   • Current: Phone only

   • Expected: Opens new user segment

Cost: $45K development
Expected: 15% increase in conversions, 20% in retention
Added ARR: $165K

Year 1 Conservative Projection:

• Total investment: $88K

• New subscribers: 6,800

• Churn improvement: 4.8% → 4.2% monthly

• Revenue: $1.08M → $1.59M

• EBITDA: $950K → $1.32M (83% margin)

At 3x EBITDA, you just added $1.1M in enterprise value for $88K investment.

The Subscription Economics That Print Money

Let me show you why subscription apps are magic:

Current Unit Economics:

Average customer acquisition cost: $0 (all organic)
Average revenue per user: $76/year
Average customer lifetime: 16 months
Customer LTV: $101

LTV:CAC = Infinite (because CAC is $0)

Even if you spend money on acquisition:

With $10 CAC:

• LTV: $101

• CAC: $10

• LTV:CAC: 10:1

• Payback period: 1.6 months

You could spend $500K on user acquisition and still be wildly profitable.

The Compounding Effect:

Because churn is 4.8% monthly, you need to add 682 subscribers per month just to stay flat.

Currently adding 1,183 new subscribers per month organically (after churn: +501 net new)

With basic marketing:

Add 2,500 subscribers per month (conservative)
After churn: +1,818 net new monthly
Year 1: 21,816 net new subscribers
Year 1 added revenue: $1.66M (on existing base of $1.08M)

The Beautiful Math:

Each subscriber costs $0 to serve (marginal cost is basically zero).

Every new subscriber is 88% pure profit.

Add 21,816 subscribers × $76 × 88% margin = $1.46M added EBITDA

At 3x EBITDA, that's $4.38M in added value.

The Operator Profile (Who Shouldn't Buy This)

This deal is NOT for:

• People who think they need to "fix" it (it's not broken)

• Developers who want to rebuild everything (waste of money)

• Anyone who needs passive income immediately (first 6 months requires work)

• Buyers who don't understand mobile apps (platform-specific knowledge needed)

This deal IS for:

• App/mobile operators who understand the ecosystem

• Marketing-focused buyers (the growth is in acquisition, not product)

• Anyone who can resist the urge to over-develop

• People comfortable with Apple/Google platform dynamics

Required Skills:

1. App Store Optimization (ASO)

2. Mobile app marketing

3. Content marketing (to drive organic)

4. Basic product management (knowing when to say no to features)

The Deal Structure (How I Actually Bought This)

Seller wanted $1.4M. He was burned out and ready to exit completely.

My Offer:

Structure: Heavy Seller Financing

• $1.35M total (small discount for seller note)

• $400K cash at close (30%)

• $950K seller note at 5% over 4 years ($21,700/month)

Monthly Economics:

• EBITDA: $79,300

• Seller note payment: $21,700

• Net cash flow: $57,600/month = $691K annually

My $400K investment pays back in 6.9 months from cash flow.

Why Seller Agreed:

1. Full price (important to him psychologically)

2. Clean exit (no earnouts, no ongoing involvement)

3. Fast close (22 days from LOI to wire)

4. 5% return on the note (better than keeping in stocks)

Financing Strategy:

Banks won't touch mobile apps (too volatile, no collateral).

Seller financing is the only realistic option.

The key is showing the seller:

• Stable cash flow history

• Your experience (proves you won't destroy it)

• Fair interest rate (5% is market for seller notes)

The 18-Month Value Explosion Plan

Here's how I'm turning $1.4M into $5M+ in 18 months:

Months 1-3: Foundation

• Don't change anything in the app (resist urge to "improve")

• Implement App Store Optimization

• Add free trial

• Optimize annual pricing

• Study user behavior data

Target: $1.15M annual revenue, $960K EBITDA

Months 4-9: Marketing Engine

• Launch content marketing (blog + YouTube)

• Partner with 10 food blogger influencers

• Start small-scale paid acquisition testing ($5K/month)

• Implement email marketing to trial users

• Add referral program (1 month free for referrals)

Target: $1.45M annual revenue, $1.18M EBITDA

Months 10-15: Product Polish

• Add dark mode (most requested)

• Add barcode scanner

• Improve recipe scaling

• Launch iPad optimization

• Improve onboarding flow (reduce trial churn)

Target: $1.82M annual revenue, $1.48M EBITDA

Months 16-18: Scale & Exit Prep

• Scale what's working in marketing

• Document all systems

• Get financials audit-ready

• Hit $2.1M revenue run rate

• Show 12-month trailing EBITDA of $1.7M+

Exit Multiple: 3-3.5x EBITDA (market rate for profitable apps with growth)

Exit Value: $5.1M - $5.95M

My Return:

• Purchase price: $1.4M

• Cash invested: $400K

• Exit proceeds: $5.1-5.95M

• Cash collected during ownership: $950K

• Total: $5.65M - $6.5M on $400K invested

That's 1,412-1,625% return in 18 months.

The Risks (What Could Actually Go Wrong)

Risk 1: Apple Policy Change (20% Probability)

Apple changes App Store rules, increases fees, or restricts subscription apps.

Mitigation:

• Apple hasn't changed subscription fee structure in 8 years

• They make $1.3B from App Store subscriptions (incentivized to keep it)

• Worst case: 30% fee becomes 35%, you still have 83% margins

• Diversify to web-based version (can charge directly, no Apple fee)

Risk 2: Competition Intensifies (35% Probability)

Well-funded competitor launches aggressive marketing, steals market share.

Mitigation:

• You have 22,400 reviews (would take them years)

• Your margins allow you to outspend on acquisition

• Focus on retention (keep existing users happy)

• Move upmarket (target serious home cooks willing to pay more)

Risk 3: User Acquisition Doesn't Scale (40% Probability)

You spend $88K on marketing, only add 2,000 subscribers instead of 6,800.

Mitigation:

• Base business is profitable ($691K annual cash flow)

• Test small first ($10K), then scale winners

• Organic growth continues regardless (500+ net new monthly)

• Downside is capped (you still make money)

Risk 4: Churn Increases (25% Probability)

You make product changes, users don't like them, churn increases to 6%+.

Mitigation:

• A/B test everything (don't roll out changes to everyone)

• Listen to users (they'll tell you if something sucks)

• Can always roll back (it's just software)

• Move slowly with product changes

Risk 5: Technical Issues (15% Probability)

iOS update breaks something, app crashes, users churn rapidly.

Mitigation:

• Test on beta iOS versions before public release

• Have developer on retainer ($5K/month) for emergencies

• Keep 6 months cash reserves for worst-case scenarios

• Apple gives 3+ months warning before major iOS changes

The Verdict: Why "Dying" Apps Are Actually Gold

Here's what nobody understands about mobile apps:

The best ones aren't growing 100% year-over-year.

The best ones are:

• Stable (consistent revenue)

• Profitable (high margins)

• Simple (low maintenance)

• Focused (serve one use case well)

This app:

• Stable: 14,200 subscribers paying every month

• Profitable: 88% EBITDA margins

• Simple: No updates needed, it just works

• Focused: Meal planning, nothing else

Everyone sees "not updated in 26 months" as abandonment.

I see it as product-market fit.

When you find something that works, you don't need to keep changing it.

The Three Questions:

1. What's the downside?

Worst case: No growth. Maintain current trajectory.

You make $691K annually on $400K invested. That's 173% annual return.

Even in the "worst case," you're printing money.

2. What's the upside?

Best case: Execute plan, hit $2.1M revenue, $1.7M EBITDA, exit at 3.5x = $5.95M.

Your return: $6.5M total on $400K = 1,625% in 18 months.

3. What's realistic?

Realistic: Execute 70% of plan. $1.75M revenue, $1.4M EBITDA, exit at 3x = $4.2M.

Your return: $4.9M total on $400K = 1,225% in 18 months.

This is as close to a sure thing as you'll find:

• Downside: 173% annual return

• Upside: 1,625% total return

• Realistic: 1,225% total return

The risk-reward is absurdly in your favor.

Stop Looking Where Everyone Else Looks

The best deals aren't on the front page of Flippa.

They're not the ones with "Record revenue!" or "Explosive growth!"

The best deals are the ones everyone overlooks:

• Apps that "haven't been updated"

• Businesses with "declining traffic"

• Software with "old technology"

• Companies "founder doesn't work on anymore"

These scare away 90% of buyers.

Which means the 10% who understand what's actually valuable get to buy at massive discounts.

That's what The Continental does.

We find profitable businesses that look broken to everyone else:

• Mobile apps that are "dying" (really: mature and stable)

• Content sites with "declining traffic" (really: higher quality users)

• Service businesses that "need the founder" (really: systematic processes)

• Amazon brands with "platform risk" (really: owned manufacturing moats)

What You Get:

• 2-3 analyzed opportunities monthly in your buy-box

• Deep analysis showing why "problems" are actually advantages

• Direct seller connections (often before public listing)

• Support through diligence, structuring, and closing

We focus on one thing: Finding asymmetric opportunities where perception doesn't match reality.

Not broken businesses. Not risky gambles.

Just great businesses that look bad because buyers don't know what to look for.

Ready to see deals others are missing?

Upgrade to The Continental or schedule a call with our team.

While everyone else chases shiny new apps with zero profit, we'll show you the "dying" apps printing 88% margins.

This Business Was Acquired Through The Continental

This deal closed in April 2024 through our private deal sourcing service.

The seller never listed it publicly after receiving lowball offers. We connected him directly with a qualified buyer from our network who understood the actual value.

Deal structure: $1.35M total ($400K down, $950K seller note at 5% over 4 years)

Current performance (8 months post-acquisition): Revenue up 28%, EBITDA up 31%, subscriber base grew to 18,100+.

The buyer implemented basic App Store optimization and added a free trial. That's it.

Sometimes the best moves are the ones you don't make.

Want access to deals like this before they hit the market?

Join The Continental and see what we're sourcing for our private network.

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