Core Insights - The focus is on growth and momentum stocks that are reasonably priced and expected to outperform the market in the long term [1] - The S&P 500 and Nasdaq saw significant increases of 367% and 685% respectively from 2009 to 2019, following a recommendation to buy at the financial crisis bottom in March 2009 [1] Investment Strategy - The investment strategy emphasizes long-term investment in quality stocks, utilizing options as part of the approach [1] - The goal is to assist investors in making money through investments in high-quality growth stocks [1]

Core Insights - Digital Turbine, Inc. has secured a new four-year $430 million term loan credit facility, which supports the company's growth momentum and fiscal outlook [1][2][3] - The refinancing allows the company to fully repay its prior credit facility, extending its debt maturity and enabling the execution of strategic initiatives [2][3] - The company has raised its fiscal year 2026 revenue guidance to a range of $530 million to $535 million, and Non-GAAP adjusted EBITDA guidance to $92 million to $95 million, reflecting strong first-quarter performance [3][4] Financial Performance - The updated fiscal year 2026 guidance includes revenue expectations of $530 million to $535 million, an increase from the previous lower end of $525 million [4] - Non-GAAP adjusted EBITDA guidance has been raised to $92 million to $95 million, up from the previous range of $90 million to $95 million [4] Strategic Initiatives - The new credit facility provides a multi-year runway for Digital Turbine to focus on innovation, operational efficiencies, and delivering premium mobile experiences [2][3] - The company aims to continue executing its business strategy with discipline, leveraging improved execution and a return to growth performance [3]

Core Viewpoint - AI software stocks continued their downward trend this week, with significant declines observed across multiple companies in the sector [1] Company Performance - Palantir (PLTR.US) experienced a drop of over 7.4% [1] - SoundHound AI (SOUN.UD) fell by more than 8.9% [1] - Figma Inc (FIG.US) decreased by over 1.7% [1] - Adobe (ADBE.US) saw a decline of 0.76% [1] - Digital Turbine (APPS.US) dropped by more than 1.8% [1]

Core Viewpoint - The article emphasizes the importance of conducting personal in-depth research and due diligence before making investment decisions, highlighting the inherent risks involved in trading [3]. Group 1 - The analysis is intended solely for informational purposes and should not be interpreted as professional investment advice [3]. - There is a beneficial long position in the shares of Amazon (AMZN), indicating a positive outlook on the company's stock performance [2]. - The author expresses personal opinions and insights based on their background, aiming to provide a contrasting view of their portfolio [1].

Core Insights - Digital Turbine reported a return to growth with GAAP revenue of $130.9 million for the quarter ended June 30, 2025, marking an 11% increase year over year [1][2] - The company narrowed its GAAP net loss to $14.1 million from $25.2 million in the prior year, while non-GAAP adjusted EBITDA rose significantly to $25.1 million, a 73.1% increase [2][7] - Management raised its financial outlook for fiscal 2026, expecting revenue between $525 million and $535 million, reflecting increased confidence in the On Device Solutions (ODS) segment [9] Financial Performance - GAAP revenue increased to $130.9 million from $118.0 million, representing a 10.9% year-over-year growth [2] - Non-GAAP EPS decreased from $0.07 to $0.05, a decline of 28.6% [2] - Adjusted EBITDA rose to $25.1 million from $14.5 million, indicating strong operational performance [2] Business Segments - The ODS segment was the primary growth driver, with revenue increasing by 18% to $95.4 million, supported by the Ignite platform and improved device sales [5] - The App Growth Platform (AGP) experienced a revenue decline of 5% to $36.3 million, facing challenges from competition and market changes, but management sees potential in non-gaming brands and international expansion [6] Profitability and Cash Flow - Non-GAAP gross margin improved to 47% from 46% in the prior year, reflecting better operational leverage [7] - Free cash flow turned positive at $1.4 million compared to a negative $5.7 million in the prior year, indicating improved cash management [7] - Cash decreased to $34.1 million from $40.1 million, while debt remained high at $400.5 million [8] Future Outlook - Management's guidance for fiscal 2026 includes a non-GAAP adjusted EBITDA range of $90 million to $95 million, up from earlier forecasts, driven by confidence in the ODS segment [9] - Investors are advised to monitor revenue progress in ODS and any recovery in AGP metrics, as well as the competitive landscape and technology advancements [10]

Financial Data and Key Metrics Changes - The company reported total revenue of $131 million for the first quarter, reflecting an 11% year-over-year growth and $25 million in EBITDA, representing a 73% increase year-over-year [5][14][19] - Adjusted EBITDA for the quarter was $25.1 million, marking the highest quarterly EBITDA since 2023 [16] - Free cash flow remained positive at $1.4 million, an improvement of approximately $7 million year-over-year [16] - GAAP net loss was $14.1 million or $0.13 per share, while non-GAAP net income was $5.8 million or $0.05 per share [17] Business Line Data and Key Metrics Changes - The on-device solution (ODS) business generated $95.4 million in revenue, up 18% year-over-year, driven by strong growth in device volumes and revenue per device (RPD) [14][15] - The application growth platform (AGP) segment generated $36.3 million in revenue, representing a 5% decline year-over-year but a 9% sequential increase, indicating early signs of stabilization [15][19] Market Data and Key Metrics Changes - The company experienced over 30% year-over-year growth in RPD in both the U.S. and international markets for the on-device business [6][7] - Device volumes improved in North America and select international markets, contributing to the overall growth [7][8] Company Strategy and Development Direction - The company is focusing on first-party data investments and AI-driven decision-making to enhance targeting and return on ad spend for advertisers [10][11] - The branding of first-party data as "DT Ignite Graph" and the AI platform as "DTiQ" aims to showcase unique advantages to customers and partners [11] - The company is positioning itself for future growth by leveraging regulatory momentum for more open app distribution models [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver value to partners, advertisers, users, and shareholders, citing solid year-over-year growth driven by execution and favorable industry dynamics [13][19] - The company raised its full-year revenue guidance to a range of $525 million to $535 million and adjusted EBITDA guidance to $90 million to $95 million for fiscal year 2026 [19] Other Important Information - The company ended the quarter with a cash balance of $34.1 million and total debt of $400.5 million, a reduction of over $8 million quarter-over-quarter [18] Q&A Session Summary Question: International carrier strength and RPD improvement - Management indicated that the international business was up 70%, driven by better device volumes and RPDs, with improved execution and demand from various geographies [21][22][23] Question: Longevity of brand revenue - Management noted a nearly 50% increase in brand advertisers on the platform, indicating strong diversification and encouraging growth potential [24][25] Question: Potential breakup of Apple and Google monopoly - Management highlighted strong interest from publishers for alternative app stores and the encouraging legal developments supporting a more open mobile marketplace [26][27] Question: AGP business improvement - Management emphasized the importance of performance side improvements and investments in first-party data and AI to drive top-line growth in the AGP business [31][34] Question: Growth from device sales turnaround - Management acknowledged a macro trend of improving device sales as a potential tailwind for growth, alongside efforts to expand technology on more devices [38][41] Question: Geographic growth areas - Management reported growth in Asia and Europe for AGP, and double-digit growth in the U.S. for the ODS business, indicating a global growth story [42][43]

[Part I: Financial Information](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Consolidated Financial Statements](index=3&type=section&id=ITEM%201.%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements for the quarter ended June 30, 2025 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly increased to **$818.4 million**, liabilities to **$666.1 million** as of June 30, 2025 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | **Assets** | | | | Cash, cash equivalents, and restricted cash | $34,132 | $40,084 | | Accounts receivable, net | $203,869 | $181,770 | | Total current assets | $260,233 | $242,779 | | Goodwill | $223,936 | $221,741 | | Intangible assets, net | $246,344 | $257,697 | | **Total Assets** | **$818,356** | **$812,854** | | **Liabilities & Equity** | | | | Accounts payable | $113,346 | $139,944 | | Accrued revenue share | $79,892 | $35,264 | | Total current liabilities | $237,710 | $222,526 | | Long-term debt, net | $400,503 | $408,687 | | **Total Liabilities** | **$666,062** | **$658,896** | | **Total Stockholders' Equity** | **$152,294** | **$153,958** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20(Loss)%20Income) Net revenue increased **11%** to **$130.9 million**, and net loss significantly narrowed to **$14.1 million** for Q1 FY2026 Statement of Operations Highlights (in thousands, except per share amounts) | Metric | Q1 FY2026 (ended Jun 30, 2025) | Q1 FY2025 (ended Jun 30, 2024) | | :--- | :--- | :--- | | Net revenue | $130,926 | $117,989 | | Loss from operations | $(4,661) | $(16,088) | | Net loss | $(14,104) | $(25,156) | | Diluted net loss per share | $(0.13) | $(0.25) | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities provided **$8.8 million** in cash, a significant improvement from the prior year's cash usage Cash Flow Summary (in thousands) | Activity | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $8,788 | $(1,352) | | Net cash used in investing activities | $(7,616) | $(5,931) | | Net cash provided by (used in) financing activities | $(8,456) | $9,966 | | **Net change in cash** | **$(5,952)** | **$2,124** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover accounting policies, segment performance, debt obligations, and the company's transformation program - The company operates through two reportable segments: On Device Solutions (ODS) and App Growth Platform (AGP)[45](index=45&type=chunk)[47](index=47&type=chunk) - On June 13, 2025, the company amended its credit agreement, extending maturity to August 29, 2026, reducing the revolver to **$411 million**, and increasing interest rates[83](index=83&type=chunk) - No goodwill impairment was recognized during the quarter ended June 30, 2025[53](index=53&type=chunk) - The company is currently assessing the impact of the newly enacted "One Big Beautiful Bill Act" (OBBBA) tax law and does not expect it to have a material effect[101](index=101&type=chunk)[102](index=102&type=chunk) [Management's Discussion and Analysis (MD&A)](index=25&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Q1 FY2026 financial results, highlighting revenue growth, operational improvements, and liquidity challenges [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Net revenue increased **11.0%** to **$130.9 million**, driven by ODS growth, while operating loss significantly narrowed Net Revenue by Segment (in thousands) | Segment | Q1 FY2026 (ended Jun 30, 2025) | Q1 FY2025 (ended Jun 30, 2024) | % Change | | :--- | :--- | :--- | :--- | | On Device Solutions | $95,448 | $80,650 | 18.3% | | App Growth Platform | $36,292 | $38,392 | (5.5)% | | **Total net revenue** | **$130,926** | **$117,989** | **11.0%** | - The increase in ODS revenue was primarily due to a **$18.4 million** rise in application media revenue from higher new device volumes internationally and increased revenue-per-device[135](index=135&type=chunk) - The decrease in AGP revenue was mainly caused by a **$4.7 million** decline in brand and performance advertising, partially offset by a **$2.9 million** increase in advertising exchange[136](index=136&type=chunk) - Total costs and operating expenses increased by only **1.1% YoY**, with decreases in sales & marketing and product development expenses helping to improve operating margins[132](index=132&type=chunk)[138](index=138&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company needs to refinance its **$411.0 million** credit agreement by August 29, 2025, to avoid debt reclassification - Primary sources of liquidity are cash on hand, cash from operations, and borrowings under the credit agreement[156](index=156&type=chunk) - The company is currently seeking to refinance its Amended and Restated Credit Agreement before August 29, 2025, to avoid reclassification of outstanding debt as short-term[159](index=159&type=chunk)[166](index=166&type=chunk) - As of June 30, 2025, the outstanding balance on the secured credit agreement was **$411.0 million**, with a maturity date of August 29, 2026[160](index=160&type=chunk) - The company was in compliance with all debt covenants as of June 30, 2025[163](index=163&type=chunk) [Cash Flow Summary](index=35&type=section&id=Cash%20Flow%20Summary) Operating activities generated **$8.8 million** in cash, a significant improvement from the prior-year quarter's cash usage Cash Flow Summary (in thousands) | Cash Flow Activity | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $8,788 | $(1,352) | | Net cash used in investing activities | $(7,616) | $(5,931) | | Net cash provided by (used in) financing activities | $(8,456) | $9,966 | - The **$10.1 million** increase in operating cash flow was due to a smaller net loss and positive working capital changes, particularly related to accounts payable and receivable[169](index=169&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces market risks from interest rate fluctuations on variable-rate debt and foreign currency exchange movements - The company's primary market risks are interest rate risk on its variable-rate debt and foreign currency exchange risk[174](index=174&type=chunk) - As of June 30, 2025, the company had **$411.0 million** in borrowings under its credit agreement at a variable interest rate of **9.92%**[176](index=176&type=chunk) - The company has transactions denominated in foreign currencies, principally the euro, Turkish lira, and British pound, which exposes it to exchange rate risk[178](index=178&type=chunk) [Controls and Procedures](index=38&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[179](index=179&type=chunk) - No material changes were identified in the company's internal control over financial reporting during the quarter[180](index=180&type=chunk) [Part II: Other Information](index=39&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and exhibits [Legal Proceedings](index=39&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company accrues for legal liabilities when a loss is probable and the amount is reasonably estimable - The company accrues for legal liabilities when a loss is probable and the amount is reasonably estimable[182](index=182&type=chunk) [Risk Factors](index=39&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to risk factors were reported since the last Annual Report on Form 10-K - No material changes to risk factors were reported since the last Annual Report on Form 10-K[183](index=183&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU RITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities during the period - None[184](index=184&type=chunk) [Exhibits](index=40&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL data - Exhibits include CEO/CFO certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL data[187](index=187&type=chunk)[190](index=190&type=chunk)

[Executive Summary and Highlights](index=1&type=section&id=Executive%20Summary%20and%20Highlights) [Recent Financial Highlights](index=1&type=section&id=Recent%20Financial%20Highlights) Digital Turbine reported strong fiscal first quarter 2026 results, with double-digit revenue growth and a significant increase in Non-GAAP adjusted EBITDA, while GAAP net loss improved year-over-year Key Financial Metrics for Q1 2026 and Q1 2025 | Metric | Q1 2026 | Q1 2025 | YoY Change | | :-------------------------------- | :---------- | :---------- | :--------- | | Revenue | $130.9 million | $118.0 million | +11% | | GAAP Net Loss | $14.1 million | $25.2 million | -44% | | GAAP EPS | ($0.13) | ($0.25) | -48% | | Non-GAAP Adjusted Net Income | $5.8 million | $7.3 million | -21% | | Non-GAAP Adjusted EPS | $0.05 | $0.07 | -29% | | Non-GAAP Adjusted EBITDA | $25.1 million | $14.5 million | +73% | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) The CEO expressed satisfaction with accelerating business momentum, attributing strong performance to the Ignite platform, improved device sales, and solid execution. The company is optimistic about future growth driven by AI/ML platform leverage, alternative app distribution, and brand investment - Business momentum accelerated in Q1, with **double-digit revenue growth** and a **73% increase in EBITDA**[3](index=3&type=chunk) - Key drivers for improved results include strong demand for the Ignite platform, modestly improved device sales, and solid execution[3](index=3&type=chunk) - Future growth catalysts are expected to be leveraging unique first-party datasets for AI/ML platform performance, favorable macro conditions for alternative app distribution, and focused investment in helping brands utilize the platform's global device footprint[3](index=3&type=chunk) [First Quarter Financial Performance](index=2&type=section&id=First%20Quarter%20Financial%20Performance) [Revenue Breakdown](index=2&type=section&id=Revenue%20Breakdown) Total revenue for Q1 fiscal 2026 reached $130.9 million, an 11% year-over-year increase, with On Device Solutions contributing the majority of revenue and App Growth Platform also making a significant contribution Q1 2026 Revenue Breakdown by Solution (in millions) | Metric | Q1 2026 (in millions) | | :-------------------------------- | :-------------------- | | Total Revenue | $130.9 | | On Device Solutions Revenue (before eliminations) | $95.4 | | App Growth Platform Revenue (before eliminations) | $36.3 | [Profitability Metrics (GAAP & Non-GAAP)](index=2&type=section&id=Profitability%20Metrics%20(GAAP%20%26%20Non-GAAP)) The company significantly reduced its GAAP net loss in Q1 FY2026 compared to the prior year, while Non-GAAP adjusted EBITDA saw substantial growth. Non-GAAP adjusted net income, however, experienced a slight decrease Q1 2026 and Q1 2025 Profitability Metrics | Metric | Q1 2026 | Q1 2025 | YoY Change | | :-------------------------------- | :---------- | :---------- | :--------- | | GAAP Net Loss | $14.1 million | $25.2 million | -44% | | GAAP EPS | ($0.13) | ($0.25) | -48% | | Non-GAAP Adjusted Net Income | $5.8 million | $7.3 million | -21% | | Non-GAAP Adjusted EPS | $0.05 | $0.07 | -29% | | Non-GAAP Adjusted EBITDA | $25.1 million | $14.5 million | +73% | [Business Outlook](index=2&type=section&id=Business%20Outlook) [Fiscal Year 2026 Outlook](index=2&type=section&id=Fiscal%20Year%202026%20Outlook) Digital Turbine is raising its financial expectations for fiscal year 2026, providing updated guidance for both revenue and Non-GAAP adjusted EBITDA. The company notes that providing a GAAP net income outlook is not reasonably practicable due to estimation challenges Fiscal Year 2026 Financial Guidance (in millions) | Metric | Fiscal Year 2026 Outlook | | :-------------------------------- | :----------------------- | | Revenue | $525 million - $535 million | | Non-GAAP Adjusted EBITDA | $90 million - $95 million | - The company cannot reasonably estimate GAAP net income for the business outlook due to unpredictable changes in stock-based compensation expense and other items[7](index=7&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) [About Digital Turbine, Inc.](index=2&type=section&id=About%20Digital%20Turbine%2C%20Inc.) Digital Turbine is a global company headquartered in North America, empowering mobile consumer experiences and delivering results for telcos, advertisers, and publishers through its end-to-end platform that simplifies awareness, acquisition, and monetization - Digital Turbine empowers superior mobile consumer experiences and results for leading telcos, advertisers, and publishers[8](index=8&type=chunk) - Its end-to-end platform simplifies partners' abilities to supercharge awareness, acquisition, and monetization across more consumers and devices[8](index=8&type=chunk) - The company is headquartered in North America with global offices[8](index=8&type=chunk) [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) Management hosted a conference call and webcast on August 5, 2025, to discuss Q1 FY2026 financial results and operational updates, including forward guidance. Access details for the live event and subsequent replay/archived webcast were provided - A conference call and webcast were hosted on August 5, 2025, at 4:30 p.m. ET to discuss fiscal 2026 first quarter financial results and operational updates[9](index=9&type=chunk) - Access to the live call was available via webcast link or by dialing specific phone numbers with an access code[9](index=9&type=chunk)[10](index=10&type=chunk) - A replay was available through August 12, 2025, and an online webcast will be archived for one year via the Investor Relations section of Digital Turbine's website[10](index=10&type=chunk)[11](index=11&type=chunk) [Use of Non-GAAP Financial Measures](index=3&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) [Definition and Rationale](index=3&type=section&id=Definition%20and%20Rationale) Digital Turbine uses non-GAAP financial measures to supplement GAAP statements, providing investors with a clearer understanding of current and future financial performance by excluding expenses and benefits not indicative of recurring core business operations, thereby enhancing comparability and transparency - Non-GAAP measures are used to supplement GAAP consolidated financial statements to enhance investors' understanding of current financial performance and future prospects[12](index=12&type=chunk)[13](index=13&type=chunk) - These measures exclude certain expenses and benefits that may not be indicative of recurring core business operating results, facilitating period-to-period comparisons and management's internal analysis[13](index=13&type=chunk) - Non-GAAP measures are not intended to be considered in isolation or as a substitute for GAAP financial information[13](index=13&type=chunk) [Specific Non-GAAP Measure Definitions](index=4&type=section&id=Specific%20Non-GAAP%20Measure%20Definitions) The company provides specific definitions for its key non-GAAP measures, including adjusted net income and EPS, adjusted EBITDA, free cash flow, and gross profit, detailing the various GAAP adjustments made for each to reflect underlying business performance - Non-GAAP adjusted net income and EPS exclude stock-based compensation, amortization of intangibles, business transformation costs, transaction-related expenses, severance costs, changes in fair value of contingent considerations, contract settlement fees, impairment of goodwill, and tax adjustments[14](index=14&type=chunk) - Non-GAAP adjusted EBITDA excludes stock-based compensation, depreciation and amortization, net interest income (expense), net other income (expense), business transformation costs, foreign exchange transaction gains (losses), income tax (benefit) provision, transaction-related expenses, contract settlement fees, changes in fair value of contingent considerations, impairment of goodwill, and severance costs[14](index=14&type=chunk)[15](index=15&type=chunk) - Non-GAAP free cash flow is defined as net cash provided by operating activities, excluding transaction-related expenses, severance costs, and business transformation costs, reduced by capital expenditures[16](index=16&type=chunk) - Non-GAAP gross profit is defined as GAAP income from operations adjusted to exclude product development costs, sales and marketing costs, general and administrative costs, contract settlement fees, impairment of goodwill, and depreciation of software included in other direct costs of revenue[16](index=16&type=chunk) [Forward-Looking Statements and Risk Factors](index=4&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) [Forward-Looking Statements Disclaimer](index=4&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section serves as a disclaimer, indicating that the news release contains forward-looking statements about future results, financial position, and economic conditions. It warns that actual results may differ materially due to various known and unknown risks and uncertainties - The news release includes forward-looking statements concerning future results, financial position, economic conditions, and product releases[17](index=17&type=chunk) - These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied[17](index=17&type=chunk) - Readers should not place undue reliance on these statements, and the Company does not undertake to update them, except as required by law[17](index=17&type=chunk)[23](index=23&type=chunk) [Risks Specific to Our Business](index=4&type=section&id=Risks%20Specific%20to%20Our%20Business) This section outlines risks inherent to Digital Turbine's operations, including the potential ineffectiveness of transformation activities, a history of net losses, limited operating history for current assets, global operational complexities, and the unpredictability of quarterly financial results. It also covers reliance on a limited number of customers, goodwill impairment, economic downturns, and vulnerabilities related to software, data security, and IT systems - Transformation activities and workforce reductions may not adequately reduce costs, improve margins, or cash flows, and could lead to operational disruptions or additional workforce attrition[18](index=18&type=chunk) - The company has a history of net losses and a limited operating history for its current portfolio of assets[18](index=18&type=chunk) - Global operations expose the company to added business, political, regulatory, legal, operational, financial, and economic risks[18](index=18&type=chunk) - Financial results can vary significantly quarter-to-quarter and are difficult to predict, with a significant portion of revenue derived from a limited number of wireless carriers and customers[18](index=18&type=chunk) - Risks include impairment of goodwill, effects of general economic downturns, software errors or viruses, failure to safeguard confidential information, IT system failures, cyber-attacks, inability to hire and retain key talent, and potential harm to corporate culture[18](index=18&type=chunk) - Future acquisitions could require significant management attention and disrupt business, and adverse effects from negative developments in the financial services industry or entry into new lines of business pose additional risks[18](index=18&type=chunk) [Risks Related to the Mobile Advertising Industry](index=5&type=section&id=Risks%20Related%20to%20the%20Mobile%20Advertising%20Industry) This section addresses the highly competitive and rapidly evolving nature of the mobile advertising industry, highlighting risks such as market decline, dependence on smartphone usage, rapid technological changes, and complexities of mobile devices. It also covers potential liabilities from security vulnerabilities, legal issues, public health crises, and geopolitical conditions - The mobile advertising business is intensely competitive, and the company may not be able to compete successfully[18](index=18&type=chunk) - Markets for products and services are rapidly evolving and may decline or experience limited growth[18](index=18&type=chunk) - Business is dependent on the continued growth in usage of smartphones and other mobile connected devices[18](index=18&type=chunk) - Wireless technologies are changing rapidly, and the company may not be successful in working with new technologies, while complexity and incompatibilities among mobile devices may require additional development resources[18](index=18&type=chunk)[22](index=22&type=chunk) - Actual or perceived security vulnerabilities in devices or wireless networks could adversely affect revenue, and the company may be subject to legal liability associated with providing mobile and online services[22](index=22&type=chunk) - Risks include public health issues (epidemics/pandemics) and geopolitical conditions (conflicts, financial markets, inflation, global supply chain, tariffs, US-China relations)[22](index=22&type=chunk) [Industry Regulatory Risks](index=6&type=section&id=Industry%20Regulatory%20Risks) This section details regulatory challenges, including rapidly changing and stringent laws concerning privacy, data security, and child protection. It also highlights compliance requirements for anti-corruption, import/export, and government sanction laws, particularly for international operations, and potential restrictions on marketing methods - The company is subject to rapidly changing and increasingly stringent laws, regulations, and contractual requirements related to privacy, data security, and protection of children[22](index=22&type=chunk) - Compliance with anti-corruption, import/export, government sanction, and similar laws is required, especially for international operations[22](index=22&type=chunk) - Government regulation of marketing methods could restrict or prevent the ability to adequately advertise and promote content, products, and services[22](index=22&type=chunk) - Limitations may negatively affect the ability to use net operating losses, credits, and certain other tax attributes to offset future taxable income[22](index=22&type=chunk) [Risks Related to Our Intellectual Property and Potential Liability](index=6&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property%20and%20Potential%20Liability) This section addresses risks concerning intellectual property, including the potential for third parties to improperly use the company's IP, the necessity of adequate protection, and the risk of infringement lawsuits. It also notes the use of open-source software and indemnity provisions that could lead to substantial liability - Third parties may obtain and improperly use intellectual property, adversely affecting the competitive position if IP rights are not adequately protected[22](index=22&type=chunk) - Third parties may sue for intellectual property infringement, which could prevent or limit the use of IP, disrupt business, and require significant damage awards[22](index=22&type=chunk) - The company's platform contains open-source software[22](index=22&type=chunk) - Indemnity provisions in various agreements potentially expose the company to substantial liability for intellectual property infringement, damages caused by malicious software, and other losses[22](index=22&type=chunk) [Risks Relating to Our Common Stock and Capital Structure](index=6&type=section&id=Risks%20Relating%20to%20Our%20Common%20Stock%20and%20Capital%20Structure) This section discusses risks related to the company's financial structure and common stock, including the impact of secured and unsecured indebtedness on financial flexibility, significant cash requirements for obligations, and the potential for high volatility in the common stock market price. It also covers challenges in raising capital, the risk of limited analyst coverage, potential material weaknesses in internal controls, and anti-takeover provisions - Secured and unsecured indebtedness could limit financial flexibility[21](index=21&type=chunk) - A significant amount of cash will be required to service debt and fund other obligations and capital requirements, with generation depending on factors beyond control[25](index=25&type=chunk) - The market price of common stock is likely to be highly volatile and subject to wide fluctuations, potentially preventing resale at or above purchase price[25](index=25&type=chunk) - Risks include not being able to raise capital to grow the business, lack of securities or industry analyst research coverage affecting trading volume, and potential material weaknesses in internal control over financial reporting[25](index=25&type=chunk) - Maintaining and improving financial controls as a public company may strain resources, and anti-takeover provisions in charter documents could make an acquisition more difficult[25](index=25&type=chunk) [Consolidated Financial Statements](index=8&type=section&id=Consolidated%20Financial%20Statements) [Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20(Loss)%20Income) This statement presents the unaudited condensed consolidated results of operations, showing a significant reduction in net loss and loss from operations for the three months ended June 30, 2025, compared to the prior year, driven by increased net revenue Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited, in thousands) | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Net revenue | $130,926 | $117,989 | | Total costs of revenue and operating expenses | $135,587 | $134,077 | | Loss from operations | $(4,661) | $(16,088) | | Net loss | $(14,104) | $(25,156) | | Basic Net loss per common share | $(0.13) | $(0.25) | | Diluted Net loss per common share | $(0.13) | $(0.25) | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The unaudited condensed consolidated balance sheets show a slight increase in total assets and liabilities as of June 30, 2025, compared to March 31, 2025, with a minor decrease in total stockholders' equity Condensed Consolidated Balance Sheets (Unaudited, in thousands) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | | :-------------------------------- | :--------------------------- | :---------------------------- | | Total current assets | $260,233 | $242,779 | | TOTAL ASSETS | $818,356 | $812,854 | | Total current liabilities | $237,710 | $222,526 | | Total liabilities | $666,062 | $658,896 | | Total stockholders' equity | $152,294 | $153,958 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The unaudited condensed consolidated statements of cash flows indicate a positive shift in operating activities, moving from a net cash outflow in Q1 2024 to a net cash inflow in Q1 2025. However, investing activities continued to be a net cash outflow, and financing activities shifted from inflow to outflow Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Net cash provided by (used in) operating activities | $8,788 | $(1,352) | | Net cash used in investing activities | $(7,616) | $(5,931) | | Net cash provided by (used in) financing activities | $(8,456) | $9,966 | | Net change in cash and cash equivalents and restricted cash | $(5,952) | $2,124 | | Cash and cash equivalents and restricted cash, end of period | $34,132 | $35,729 | [Supplemental Financial Data and Reconciliations](index=11&type=section&id=Supplemental%20Financial%20Data%20and%20Reconciliations) [Revenue by Segment](index=11&type=section&id=Revenue%20by%20Segment) This table provides a breakdown of consolidated revenue by segment, showing that On Device Solutions experienced significant year-over-year growth, while App Growth Platform saw a slight decrease for the three months ended June 30, 2025 Consolidated Revenue by Segment for Q1 2025 and Q1 2024 (in thousands) | Segment | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | % Change | | :------------------ | :---------------------------------------------- | :---------------------------------------------- | :------- | | On Device Solutions | $95,448 | $80,650 | 18 % | | App Growth Platform | $36,292 | $38,392 | (5)% | | Elimination | $(814) | $(1,053) | (23)% | | Consolidated | $130,926 | $117,989 | 11 % | [GAAP (Loss) Income from Operations to Non-GAAP Gross Profit](index=11&type=section&id=GAAP%20(Loss)%20Income%20from%20Operations%20to%20Non-GAAP%20Gross%20Profit) This reconciliation details the adjustments from GAAP (Loss) Income from Operations to Non-GAAP Gross Profit, highlighting the add-back of various operating expenses to arrive at a higher non-GAAP gross profit and percentage for Q1 2025 compared to Q1 2024 Reconciliation of GAAP (Loss) Income from Operations to Non-GAAP Gross Profit (in thousands) | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | | :------------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Net revenue | $130,926 | $117,989 | | (Loss) income from operations | $(4,661) | $(16,088) | | Add-back items: | | | | Product development | $10,147 | $10,714 | | Sales and marketing | $13,589 | $16,247 | | General and administrative | $42,909 | $43,517 | | Depreciation of software included in other direct costs of revenue | $0 | $134 | | Non-GAAP gross profit | $61,984 | $54,524 | | Non-GAAP gross profit percentage | 47 % | 46 % | [GAAP Net (Loss) Income to Non-GAAP Adjusted Net Income](index=11&type=section&id=GAAP%20Net%20(Loss)%20Income%20to%20Non-GAAP%20Adjusted%20Net%20Income) This reconciliation shows the adjustments made to GAAP Net (Loss) Income to derive Non-GAAP Adjusted Net Income, primarily by adding back non-cash expenses and other specific costs, resulting in a positive adjusted net income despite a GAAP net loss Reconciliation of GAAP Net (Loss) Income to Non-GAAP Adjusted Net Income (in thousands) | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Net (loss) income | $(14,104) | $(25,156) | | Add-back items: | | | | Stock-based compensation expense | $6,267 | $8,168 | | Amortization of intangibles | $13,451 | $15,204 | | Tax adjustment (1) | $0 | $7,501 | | Business transformation costs | $31 | $1,072 | | Severance costs | $164 | $557 | | Non-GAAP adjusted net income | $5,809 | $7,346 | | Non-GAAP adjusted net income per common share | $0.05 | $0.07 | [GAAP Net (Loss) Income to Non-GAAP Adjusted EBITDA](index=12&type=section&id=GAAP%20Net%20(Loss)%20Income%20to%20Non-GAAP%20Adjusted%20EBITDA) This reconciliation details the adjustments from GAAP Net (Loss) Income to Non-GAAP Adjusted EBITDA, including various non-cash and non-recurring expenses, demonstrating a significant increase in adjusted EBITDA for Q1 2025 compared to Q1 2024 Reconciliation of GAAP Net (Loss) Income to Non-GAAP Adjusted EBITDA (in thousands) | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Net (loss) income | $(14,104) | $(25,156) | | Add-back items: | | | | Stock-based compensation expense | $6,267 | $8,168 | | Depreciation and amortization | $23,337 | $20,819 | | Interest expense, net | $9,954 | $8,250 | | Other income (expense), net | $668 | $(114) | | Business transformation costs | $31 | $1,072 | | Foreign exchange transaction (gain) loss | $914 | $(818) | | Income tax provision (benefit) | $(2,093) | $1,750 | | Severance costs | $164 | $557 | | Non-GAAP adjusted EBITDA | $25,138 | $14,528 | [GAAP Cash Flow from Operating Activities to Non-GAAP Free Cash Flow](index=12&type=section&id=GAAP%20Cash%20Flow%20from%20Operating%20Activities%20to%20Non-GAAP%20Free%20Cash%20Flow) This reconciliation shows the calculation of Non-GAAP Free Cash Flow from GAAP Net Cash Provided by (Used in) Operating Activities, adjusting for capital expenditures and certain business costs. The company generated positive free cash flow in Q1 2025, a notable improvement from a negative free cash flow in Q1 2024 Reconciliation of GAAP Cash Flow from Operating Activities to Non-GAAP Free Cash Flow (in thousands) | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Net cash provided by (used in) operating activities | $8,788 | $(1,352) | | Capital expenditures | $(7,616) | $(5,931) | | Severance costs | $164 | $557 | | Business transformation costs | $31 | $1,072 | | Non-GAAP free cash flow provided (used) by operations | $1,367 | $(5,654) | [Investor Relations](index=7&type=section&id=Investor%20Relations) [Investor Relations Contact](index=7&type=section&id=Investor%20Relations%20Contact) This section provides the contact information for investor relations inquiries at Digital Turbine, Inc - Investor Relations Contact: Brian Bartholomew, Digital Turbine, Inc[24](index=24&type=chunk) - Email: brian.bartholomew@digitalturbine.com[24](index=24&type=chunk)

Financial Performance - Total revenue for the first quarter of fiscal 2026 was $130.9 million, representing year-over-year growth of 11% compared to $118.0 million for the first quarter of fiscal 2025 [4][8] - GAAP net loss for the first quarter of fiscal 2026 was $14.1 million, or ($0.13) per share, an improvement from a GAAP net loss of $25.2 million, or ($0.25) per share in the first quarter of fiscal 2025 [5][8] - Non-GAAP adjusted net income for the first quarter of fiscal 2026 was $5.8 million, or $0.05 per share, compared to $7.3 million, or $0.07 per share in the first quarter of fiscal 2025 [5][8] - Non-GAAP adjusted EBITDA for the first quarter of fiscal 2026 was $25.1 million, representing year-over-year growth of 73% compared to $14.5 million in the first quarter of fiscal 2025 [6][8] Business Outlook - The company is raising its expectations for fiscal year 2026, projecting revenue between $525 million and $535 million and Non-GAAP adjusted EBITDA between $90 million and $95 million [9][7] - CEO Bill Stone highlighted strong demand for the Ignite platform and improved device sales as key drivers for the improved results, indicating confidence in future growth [3][8] Revenue Segmentation - Total On Device Solutions revenue before intercompany eliminations was $95.4 million, while total App Growth Platform revenue before intercompany eliminations was $36.3 million [4][8] - On Device Solutions revenue increased by 18% year-over-year, while App Growth Platform revenue decreased by 5% [34][8]

Core Insights - Digital Turbine has joined The Coalition for a Competitive Mobile Experience (CCME) to promote a more open and competitive mobile app marketplace [1][2] - The Coalition includes founding members such as Garmin, Match Group, Meta, and Spotify, aiming to address issues like limited distribution options and high platform fees [2][5] Company Contributions - Digital Turbine brings over a decade of technical expertise in app distribution and has established deep partnerships across the mobile ecosystem [3] - The company's Ignite platform is integrated on more than 1 billion Android devices globally, facilitating millions of app installs and representing over 82,000 apps [4] Industry Context - The CCME is focused on reforming app store practices amid increasing global regulatory scrutiny, with Digital Turbine contributing its technical perspective on app monetization and user acquisition [6] - The coalition aims to empower consumers and protect them from monopolistic practices in the digital economy [6][7]