Financial Performance - Total revenue for the fiscal second quarter of 2025 was $118.7 million, reflecting a 1% increase quarter-over-quarter but a 17% decline year-over-year [2][4] - GAAP net loss for the fiscal second quarter of 2025 was $25.0 million, or ($0.24) per share, compared to a net loss of $161.5 million, or ($1.61) per share in the same quarter of the previous year [2][4] - Non-GAAP adjusted net income for the fiscal second quarter of 2025 was $5.0 million, or $0.05 per share, down from $13.9 million, or $0.13 per share in the fiscal second quarter of 2024 [2][5] - Non-GAAP adjusted EBITDA for the fiscal second quarter of 2025 was $15.3 million, a 6% increase quarter-over-quarter but a 45% decline year-over-year [2][5] Strategic Initiatives - The company has initiated a transformation program aimed at enhancing efficiency and cash flow generation, targeting over $25 million in annual cash expense savings [2][3] - The acquisition of ONE Store International was announced to create a competitive alternative app ecosystem, providing greater value to app developers, consumers, and mobile operators [2] Business Outlook - For fiscal year 2025, the company expects revenue to be between $475 million and $485 million and non-GAAP adjusted EBITDA to be between $65 million and $70 million [6]

Fiscal 2025 Second Quarter Financial Results Overview Digital Turbine reported mixed Q2 FY25 results with sequential revenue growth but year-over-year declines, improved GAAP net loss, and reduced non-GAAP profitability, alongside a new transformation program and acquisition [Recent Financial Highlights](index=1&type=section&id=Recent%20Financial%20Highlights) Digital Turbine reported Q2 FY25 revenue of $118.7 million, a 1% quarter-over-quarter increase but a 17% year-over-year decline, with GAAP net loss significantly improving while Non-GAAP adjusted net income and EBITDA decreased year-over-year, alongside a transformation program and acquisition announcement Q2 FY25 Key Financial Highlights (in millions) | Metric | Q2 FY25 | Q2 FY24 | | :-------------------------------- | :------ | :------ | | Revenue | $118.7 | $143.3 | | GAAP Net Loss | ($25.0) | ($161.5) | | GAAP EPS | ($0.24) | ($1.61) | | Non-GAAP Adjusted Net Income | $5.0 | $13.9 | | Non-GAAP Adjusted EPS | $0.05 | $0.13 | | Non-GAAP Adjusted EBITDA | $15.3 | $27.7 | - Revenue increased **1% quarter-over-quarter** but declined **17% year-over-year**; GAAP net loss improved significantly year-over-year, primarily due to a **$147.2 million** noncash goodwill impairment charge in Q2 FY24; Non-GAAP adjusted net income and EBITDA both declined year-over-year[2](index=2&type=chunk)[3](index=3&type=chunk) - The company initiated a transformation program targeting over **$25.0 million** in annual cash expense savings to drive efficiency and enhance cash flow; Digital Turbine also announced the acquisition of ONE Store International to create an alternative app ecosystem[3](index=3&type=chunk)[4](index=4&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Bill Stone noted a second consecutive quarter of sequential growth with expectations for continued sequential growth and a return to year-over-year growth in the March quarter, despite a reduced full fiscal year 2025 outlook due to legacy business headwinds and an ongoing strategic transformation project targeting over $25 million in annual cost savings - Achieved second consecutive quarter of sequential growth and anticipates continued sequential growth in the December quarter, with a return to year-over-year growth in the March quarter[5](index=5&type=chunk) - Fiscal 2025 outlook reduced due to significant anticipated headwinds in legacy businesses[5](index=5&type=chunk) - Enacted a strategic transformation project to drive greater efficiencies, enhance cash flow generation, and accelerate innovation, expected to yield over **$25 million** in annual cost savings[5](index=5&type=chunk) Detailed Financial Performance The company's Q2 FY25 revenue was $118.7 million with a GAAP net loss of $25.0 million, and it projects FY25 revenue between $475 million and $485 million [Fiscal 2025 Second Quarter Financial Results (GAAP & Non-GAAP)](index=2&type=section&id=Fiscal%202025%20Second%20Quarter%20Financial%20Results%20(GAAP%20%26%20Non-GAAP)) Total revenue for Q2 FY25 was $118.7 million, with On Device Solutions contributing $82.4 million and App Growth Platform $37.3 million before intercompany eliminations, resulting in a GAAP net loss of $25.0 million, a substantial improvement from the prior year's $161.5 million loss, while Non-GAAP adjusted net income was $5.0 million and Non-GAAP adjusted EBITDA was $15.3 million, both showing year-over-year declines Q2 FY25 Detailed Financial Results (in millions) | Metric | Q2 FY25 | Q2 FY24 | | :-------------------------------- | :------ | :------ | | Total Revenue | $118.7 | $143.3 | | On Device Solutions Revenue (pre-elim) | $82.4 | $99.1 | | App Growth Platform Revenue (pre-elim) | $37.3 | $46.2 | | GAAP Net Loss | ($25.0) | ($161.5) | | GAAP EPS | ($0.24) | ($1.61) | | Non-GAAP Adjusted Net Income | $5.0 | $13.9 | | Non-GAAP Adjusted EPS | $0.05 | $0.13 | | Non-GAAP Adjusted EBITDA | $15.3 | $27.7 | [Business Outlook for Fiscal Year 2025](index=2&type=section&id=Business%20Outlook%20for%20Fiscal%20Year%202025) For the full fiscal year 2025, Digital Turbine projects revenue to be between $475 million and $485 million, and Non-GAAP adjusted EBITDA to range from $65 million to $75 million, without providing a GAAP net income outlook due to the difficulty in estimating certain variable expenses FY25 Business Outlook (in millions) | Metric | Range | | :--------------------- | :------------------ | | Revenue | $475 - $485 | | Non-GAAP Adjusted EBITDA | $65 - $75 | - A business outlook for GAAP net income is not provided due to the inability to reasonably estimate changes in stock-based compensation expense and other difficult-to-predict items[7](index=7&type=chunk) Company Information Digital Turbine empowers mobile consumer experiences for telcos and advertisers, and held a conference call to discuss Q2 FY25 results [About Digital Turbine, Inc.](index=2&type=section&id=About%20Digital%20Turbine%2C%20Inc.) Digital Turbine empowers mobile consumer experiences and delivers results for leading telcos, advertisers, and publishers through its platform, which simplifies awareness, acquisition, and monetization, connecting partners with consumers across various devices, with headquarters in North America and global offices - Digital Turbine's core business is empowering superior mobile consumer experiences and results for telcos, advertisers, and publishers[8](index=8&type=chunk) - The company's end-to-end platform simplifies partners' abilities to supercharge awareness, acquisition, and monetization, connecting them with more consumers across more devices[8](index=8&type=chunk) [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) Digital Turbine hosted a conference call and webcast on November 6, 2024, at 6:00 p.m. ET to discuss Q2 FY25 financial results and operational updates, with replay options available for a week and an online webcast archive accessible for one year - A conference call and webcast were held on **November 6, 2024, at 6:00 p.m. ET** to discuss fiscal 2025 second quarter financial results and operational updates[9](index=9&type=chunk) - A playback was available through **November 13, 2024**, and an online webcast will be archived for one year on the Investor Relations section of Digital Turbine's website[10](index=10&type=chunk) Non-GAAP Financial Measures Digital Turbine uses various non-GAAP measures like adjusted net income, EBITDA, and free cash flow to provide a clearer view of core business performance by excluding specific non-recurring or non-cash items [Use and Definition of Non-GAAP Measures](index=3&type=section&id=Use%20and%20Definition%20of%20Non-GAAP%20Measures) Digital Turbine utilizes non-GAAP measures such as adjusted net income, EPS, EBITDA, free cash flow, and gross profit to complement GAAP financial statements, aiming to provide investors with a clearer understanding of the company's core business performance by excluding certain non-recurring or non-cash expenses, facilitating period-to-period comparisons and trend analysis, while emphasizing that these non-GAAP measures should not be considered in isolation or as a substitute for GAAP results - Non-GAAP measures (adjusted net income/EPS, EBITDA, free cash flow, gross profit) are used to supplement GAAP statements, enhancing understanding of current financial performance and prospects[11](index=11&type=chunk)[12](index=12&type=chunk) - These measures provide meaningful supplemental information by excluding expenses and benefits not indicative of recurring core business operating results, improving comparability and transparency[12](index=12&type=chunk) - Non-GAAP measures are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared in accordance with GAAP[12](index=12&type=chunk) [Non-GAAP Adjusted Net Income and EPS Definition](index=3&type=section&id=Non-GAAP%20Adjusted%20Net%20Income%20and%20EPS%20Definition) Non-GAAP adjusted net income and EPS are defined as GAAP net income and EPS, respectively, adjusted to exclude specific items including stock-based compensation expense, amortization of intangibles, business transformation costs, transaction-related expenses, severance costs, impairment of goodwill, changes in fair value of contingent considerations, and tax adjustments - Non-GAAP adjusted net income and EPS exclude stock-based compensation, amortization of intangibles, business transformation costs, transaction-related expenses, severance costs, impairment of goodwill, changes in fair value of contingent considerations, and tax adjustments[13](index=13&type=chunk) [Non-GAAP Adjusted EBITDA Definition](index=4&type=section&id=Non-GAAP%20Adjusted%20EBITDA%20Definition) Non-GAAP adjusted EBITDA is calculated by taking GAAP net income and excluding various cash and non-cash expenses, including 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, impairment of goodwill, changes in fair value of contingent considerations, and severance costs - Non-GAAP adjusted EBITDA is GAAP net income excluding 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, impairment of goodwill, changes in fair value of contingent considerations, and severance costs[14](index=14&type=chunk) [Non-GAAP Free Cash Flow Definition](index=4&type=section&id=Non-GAAP%20Free%20Cash%20Flow%20Definition) Non-GAAP free cash flow is a non-GAAP financial measure derived from net cash provided by operating activities, excluding transaction-related expenses, severance costs, and business transformation costs, and further reduced by capital expenditures - 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[15](index=15&type=chunk) [Non-GAAP Gross Profit Definition](index=4&type=section&id=Non-GAAP%20Gross%20Profit%20Definition) Non-GAAP gross profit is defined as GAAP income from operations adjusted to exclude specific cost categories, including product development costs, sales and marketing costs, general and administrative costs, impairment of goodwill, and depreciation of software - Non-GAAP gross profit is GAAP income from operations adjusted to exclude product development costs, sales and marketing costs, general and administrative costs, impairment of goodwill, and depreciation of software[16](index=16&type=chunk) Forward-Looking Statements and Risk Factors The report contains forward-looking statements subject to various risks, including operational challenges, industry competition, regulatory changes, intellectual property issues, and capital structure limitations [Forward-Looking Statements Disclaimer](index=5&type=section&id=Forward-Looking%20Statements%20Disclaimer) This news release contains forward-looking statements regarding future results, financial position, economic conditions, and product releases, which involve known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from expectations, and the company explicitly states it does not undertake to update these statements, except as required by law - The news release includes forward-looking statements concerning future results, financial position, economic conditions, and product releases, which are predictions of future performance or events[18](index=18&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[18](index=18&type=chunk) - The Company does not undertake to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law[25](index=25&type=chunk) [Risks Specific to Digital Turbine's Business](index=5&type=section&id=Risks%20Specific%20to%20Digital%20Turbine%27s%20Business) Digital Turbine faces several business-specific risks, including a history of net losses, limited operating history for its current assets, significant demands on management due to growth, and global operational exposure to added business, political, regulatory, and economic risks, alongside highly variable financial results, reliance on a limited number of wireless carriers and customers, goodwill impairment, economic downturns, software errors, data security failures, IT system disruptions, cyber-attacks, talent retention challenges, acquisition integration issues, and potential litigation - Risks include a history of net losses, limited operating history for current assets, significant demands on management from growth, and global operational risks[19](index=19&type=chunk) - Financial results can vary significantly quarter-to-quarter, with a substantial portion of revenue derived from a limited number of wireless carriers and customers; there is also a risk of goodwill impairment and adverse effects from economic downturns[19](index=19&type=chunk) - Operational risks include software errors, data security failures, IT system failures, network disruptions, and cyber-attacks; challenges in hiring and retaining key talent, maintaining corporate culture, integrating future acquisitions, and potential litigation also pose risks[19](index=19&type=chunk) [Risks Related to the Mobile Advertising Industry](index=6&type=section&id=Risks%20Related%20to%20the%20Mobile%20Advertising%20Industry) The mobile advertising industry is intensely competitive and rapidly evolving, posing risks of market decline or limited growth, with Digital Turbine's business dependent on the continued growth of smartphone usage and its ability to adapt to rapidly changing wireless technologies, facing challenges from device complexity, incompatibilities, potential security vulnerabilities, and shifts in technology platforms by wireless carriers and device manufacturers, alongside external factors like legal liability, public health issues, geopolitical conditions, and U.S.-China relations - The mobile advertising industry is intensely competitive and rapidly evolving, with markets that may decline or experience limited growth[20](index=20&type=chunk) - Business is dependent on the continued growth in smartphone usage and the ability to work with rapidly changing wireless technologies, facing challenges from device complexity and incompatibilities[20](index=20&type=chunk) - Risks include actual or perceived security vulnerabilities, legal liability for mobile and online services, public health issues, geopolitical conditions, and the geopolitical relationship between the U.S. and China[20](index=20&type=chunk) [Industry Regulatory Risks](index=6&type=section&id=Industry%20Regulatory%20Risks) Digital Turbine is subject to rapidly changing and increasingly stringent laws and regulations concerning privacy, data security, and child protection, with its international operations also governed by anti-corruption, import/export, and government sanction laws, and potential government regulation of marketing methods that could restrict the company's ability to adequately advertise and promote its products and services in certain jurisdictions - The company is subject to rapidly changing and increasingly stringent laws, regulations, and contractual requirements related to privacy, data security, and protection of children[21](index=21&type=chunk) - International operations are subject to anti-corruption, import/export, government sanction, and similar laws[21](index=21&type=chunk) - Government regulation of marketing methods could restrict or prevent the ability to adequately advertise and promote content, products, and services[21](index=21&type=chunk) [Risks Related to Intellectual Property and Potential Liability](index=6&type=section&id=Risks%20Related%20to%20Intellectual%20Property%20and%20Potential%20Liability) Digital Turbine faces risks related to intellectual property, including the potential for third parties to improperly use its IP, which could adversely affect its competitive position if not adequately protected, and the company may also be sued for intellectual property infringement, leading to significant damage awards and business disruption, additionally, the platform's use of open-source software and indemnity provisions in various agreements expose the company to substantial liability for IP infringement, malicious software, and other losses - Third parties may obtain and improperly use the company's intellectual property, adversely affecting its competitive position if IP rights are not adequately protected[22](index=22&type=chunk) - The company may be sued for intellectual property infringement, which could prevent or limit IP use, disrupt business, and require significant damage awards[22](index=22&type=chunk) - The platform contains open-source software, and indemnity provisions in agreements potentially expose the company to substantial liability for intellectual property infringement, damages caused by malicious software, and other losses[23](index=23&type=chunk) [Risks Relating to Common Stock and Capital Structure](index=7&type=section&id=Risks%20Relating%20to%20Common%20Stock%20and%20Capital%20Structure) Digital Turbine's financial flexibility is limited by its secured and unsecured indebtedness, requiring significant cash generation for debt service and other obligations, with the market price of its common stock being highly volatile, and shareholders potentially unable to resell shares at or above their purchase price, alongside other risks including the inability to raise capital for growth, lack of securities or industry analyst research coverage, potential material weaknesses in internal control over financial reporting, and anti-takeover provisions in charter documents - Secured and unsecured indebtedness could limit financial flexibility, requiring significant cash generation dependent on factors beyond control[24](index=24&type=chunk) - The market price of common stock is likely to be highly volatile, with a risk of being unable to resell shares at or above the purchase price[24](index=24&type=chunk) - Risks include not being able to raise capital, lack of securities or industry analyst research coverage, potential material weakness in internal control over financial reporting, and anti-takeover provisions in charter documents[24](index=24&type=chunk) Condensed Consolidated Financial Statements Q2 FY25 financial statements show a net loss of $25.0 million, total assets of $844.5 million, and net cash used in operating activities of $8.7 million [Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20(Loss)%20Income) For the three months ended September 30, 2024, Digital Turbine reported a net loss of $25.0 million on net revenue of $118.7 million, representing a significant improvement from the net loss of $161.5 million in the prior year, which included a substantial goodwill impairment charge, with loss from operations also improving considerably Condensed Consolidated Statements of Operations (Three Months Ended September 30, in thousands) | Metric | Q2 FY25 | Q2 FY24 | | :------------------------------------ | :------ | :------ | | Net Revenue | $118,728 | $143,259 | | Total Costs of Revenue & Operating Expenses | $132,270 | $295,876 | | Loss from Operations | ($13,542) | ($152,617) | | Total Interest & Other Expense, Net | ($10,044) | ($9,578) | | Loss Before Income Taxes | ($23,586) | ($162,195) | | Income Tax Provision (Benefit) | $1,400 | ($713) | | Net Loss | ($24,986) | ($161,482) | | Basic EPS | ($0.24) | ($1.61) | | Diluted EPS | ($0.24) | ($1.61) | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2024, Digital Turbine's total assets were $844.5 million, a decrease from $865.5 million at March 31, 2024, while total liabilities increased to $662.1 million from $651.6 million, primarily driven by an increase in long-term debt, consequently, total stockholders' equity decreased to $182.4 million from $213.9 million Condensed Consolidated Balance Sheets (in thousands) | Metric | Sep 30, 2024 | Mar 31, 2024 | | :-------------------------------- | :----------- | :----------- | | Total Current Assets | $243,889 | $242,341 | | Total Assets | $844,486 | $865,540 | | Total Current Liabilities | $223,631 | $236,024 | | Long-term Debt, net | $407,620 | $383,490 | | Total Liabilities | $662,116 | $651,608 | | Total Stockholders' Equity | $182,370 | $213,932 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the three months ended September 30, 2024, net cash used in operating activities was $8.7 million, a shift from $27.5 million provided in the prior year, with net cash used in investing activities at $7.5 million, and net cash provided by financing activities significantly improved to $13.4 million, compared to $20.2 million used in the prior year, resulting in an overall decrease of $3.0 million in cash and cash equivalents during the quarter Condensed Consolidated Statements of Cash Flows (Three Months Ended September 30, in thousands) | Metric | Q2 FY25 | Q2 FY24 | | :------------------------------------ | :------ | :------ | | Net Cash Provided by (Used in) Operating Activities | ($8,719) | $27,454 | | Net Cash Used in Investing Activities | ($7,477) | ($7,001) | | Net Cash Provided by (Used in) Financing Activities | $13,406 | ($20,244) | | Net Change in Cash & Cash Equivalents | ($2,964) | ($420) | | Cash & Cash Equivalents, End of Period | $32,765 | $58,649 | Supplemental Financial Data Supplemental data provides detailed revenue by segment and reconciliations for non-GAAP metrics such as gross profit, adjusted net income, EBITDA, and free cash flow [Revenue by Segment](index=11&type=section&id=Revenue%20by%20Segment) In Q2 FY25, Digital Turbine's On Device Solutions segment generated $82.4 million in revenue, a **17% year-over-year decrease**, while the App Growth Platform segment reported $37.3 million, down **19% year-over-year**, resulting in consolidated revenue for the quarter of $118.7 million, representing a **17% year-over-year decline** Revenue by Segment (Three Months Ended September 30, in thousands) | Segment | Q2 FY25 | Q2 FY24 | % Change | | :------------------ | :------ | :------ | :------- | | On Device Solutions | $82,414 | $99,060 | (17)% | | App Growth Platform | $37,346 | $46,183 | (19)% | | Consolidated | $118,728 | $143,259 | (17)% | [GAAP (Loss) Income from Operations to Non-GAAP Gross Profit Reconciliation](index=11&type=section&id=GAAP%20(Loss)%20Income%20from%20Operations%20to%20Non-GAAP%20Gross%20Profit%20Reconciliation) For Q2 FY25, Non-GAAP gross profit was $54.0 million, resulting in a Non-GAAP gross profit percentage of **45%**, a decrease from **47%** in Q2 FY24, with this reconciliation starting from GAAP loss from operations and adding back product development, sales and marketing, general and administrative costs, depreciation of software, and goodwill impairment Non-GAAP Gross Profit Reconciliation (Three Months Ended September 30, in thousands) | Metric | Q2 FY25 | Q2 FY24 | | :------------------------------------ | :------ | :------ | | (Loss) Income from Operations | ($13,542) | ($152,617) | | Add-back items (total) | $67,547 | $218,149 | | Non-GAAP Gross Profit | $54,005 | $67,032 | | Non-GAAP Gross Profit Percentage | 45% | 47% | [GAAP Net (Loss) Income to Non-GAAP Adjusted Net Income Reconciliation](index=11&type=section&id=GAAP%20Net%20(Loss)%20Income%20to%20Non-GAAP%20Adjusted%20Net%20Income%20Reconciliation) Non-GAAP adjusted net income for Q2 FY25 was $5.0 million, down from $13.9 million in Q2 FY24, with this figure reconciled from GAAP net loss by adding back stock-based compensation, amortization of intangibles, tax adjustments, business transformation costs, severance costs, and goodwill impairment, while adjusting for changes in fair value of contingent consideration Non-GAAP Adjusted Net Income Reconciliation (Three Months Ended September 30, in thousands) | Metric | Q2 FY25 | Q2 FY24 | | :------------------------------------ | :------ | :------ | | Net (Loss) Income | ($24,986) | ($161,482) | | Add-back items (net) | $30,009 | $175,398 | | Non-GAAP Adjusted Net Income | $5,023 | $13,916 | | Non-GAAP Adjusted Net Income per Common Share | $0.05 | $0.13 | [GAAP Net (Loss) Income to Non-GAAP Adjusted EBITDA Reconciliation](index=12&type=section&id=GAAP%20Net%20(Loss)%20Income%20to%20Non-GAAP%20Adjusted%20EBITDA%20Reconciliation) Non-GAAP adjusted EBITDA for Q2 FY25 was $15.3 million, a decrease from $27.7 million in Q2 FY24, with this reconciliation beginning with GAAP net loss and adding back various non-cash and non-recurring expenses, including stock-based compensation, depreciation and amortization, net interest expense, income tax provision, and goodwill impairment Non-GAAP Adjusted EBITDA Reconciliation (Three Months Ended September 30, in thousands) | Metric | Q2 FY25 | Q2 FY24 | | :------------------------------------ | :------ | :------ | | Net (Loss) Income | ($24,986) | ($161,482) | | Add-back items (total) | $40,300 | $189,146 | | Non-GAAP Adjusted EBITDA | $15,314 | $27,664 | [GAAP Cash Flow from Operating Activities to Non-GAAP Free Cash Flow Reconciliation](index=12&type=section&id=GAAP%20Cash%20Flow%20from%20Operating%20Activities%20to%20Non-GAAP%20Free%20Cash%20Flow%20Reconciliation) Non-GAAP free cash flow for Q2 FY25 was a negative $15.7 million, a significant change from a positive $23.9 million in Q2 FY24, derived from net cash used in operating activities by adjusting for capital expenditures, transaction-related expenses, severance costs, and business transformation costs Non-GAAP Free Cash Flow Reconciliation (Three Months Ended September 30, in thousands) | Metric | Q2 FY25 | Q2 FY24 | | :------------------------------------ | :-------- | :-------- | | Net Cash Provided by (Used in) Operating Activities | ($8,719) | $27,454 | | Capital Expenditures | ($7,477) | ($7,001) | | Transaction-related Expenses | — | $79 | | Severance Costs | $268 | $809 | | Business Transformation Costs | $237 | $2,528 | | Non-GAAP Free Cash Flow Provided (Used) by Operations | ($15,691) | $23,869 |

Core Insights - Digital Turbine is acquiring ONE Store International to enhance its app growth solutions and expand into North America, the EU, and LATAM [1][5] - The acquisition is part of a strategic partnership aimed at creating a fairer app ecosystem and empowering app developers [2][6] - ONE Store has over 38 million users and nearly $1 billion in annual transactions, indicating a strong market presence [5][7] Company Overview - Digital Turbine is a leader in mobile growth solutions, providing services to telcos, advertisers, and publishers globally [8] - ONE Store is the second-largest app marketplace in South Korea, backed by major shareholders including SK Square, Naver, and Microsoft [8] Strategic Partnership - The partnership aims to leverage Digital Turbine's device footprint and SingleTap technology for seamless app installations [5][6] - Both companies are committed to developing new technologies and distribution capabilities for iOS devices in the future [6] Market Impact - The acquisition is expected to create a competitive ecosystem beyond traditional app stores, offering more value to developers and consumers [6][7] - The partnership seeks to address high fees and limited choices in the app economy, promoting a more open mobile ecosystem [7]

Core Points - Digital Turbine, Inc. will host a conference call and webcast to discuss its fiscal 2025 second quarter financial results and operating progress on November 6th, 2024 [1] - The call will be led by CEO Bill Stone and CFO Barrett Garrison, and can be accessed via a provided webcast link or by dialing specific phone numbers [1] - A playback of the call will be available until November 13th, 2024, with access details for both domestic and international callers [2] Company Overview - Digital Turbine powers mobile consumer experiences for leading telcos, advertisers, and publishers through its end-to-end platform [3] - The company simplifies partners' ability to enhance awareness, acquisition, and monetization, connecting them with consumers across various devices [3] - Digital Turbine is headquartered in North America and has offices globally [3]

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Core Viewpoint - Digital Turbine's business may be stabilizing after a prolonged period of weakness, with a return to sequential growth and positive EBITDA in Q1, despite low valuation and ongoing challenges in device sales [2][5]. Market Conditions - Digital Turbine's reliance on device sales continues to pose challenges, with US device shipments declining 8% YoY in Q1 2024, marking the sixth consecutive quarter of decline [3]. - The company anticipates that the trend in device sales will remain consistent in the short term, influenced by a lack of innovation from smartphone OEMs and fewer software updates, which reduce monetization opportunities [3]. - The Digital Markets Act in Europe could provide a future tailwind, but its impact is still uncertain as it is in the early stages of implementation [3]. Business Updates - Digital Turbine has completed the consolidation of its DT exchange, contributing to brand growth, with brand revenue increasing 25% sequentially in Q1 [4]. - The company has improved its first-party traffic, which has grown from over 10% to over 40% in two years, leading to better results and higher margins [4]. - Revenue per device improved by 15% in Q1, with international markets showing strength, and the company is expanding partnerships with various device manufacturers [4]. Financial Analysis - Digital Turbine generated $118 million in revenue in Q1, a 5% sequential increase but a nearly 20% YoY decline [5]. - The company expects FY2025 revenue to be between $540 million and $560 million, indicating a potential return to solid double-digit growth later in the financial year [5]. - Gross margin in Q1 was 46%, with EBITDA margin at 12%, down YoY due to revenue decline, but improvements in cost control and growth are expected to enhance margins going forward [7][8]. Conclusion - Digital Turbine's share price rebound is likely if revenues stabilize and margins improve, although caution is warranted due to past disappointments [11]. - The expectation of a return to growth, even without stronger device sales, is viewed positively, with potential upside from the alternative app distribution business [11][12].

Core Viewpoint - Digital Turbine (NASDAQ:APPS) has experienced a significant decline in value over the past year, losing more than 70% of its market capitalization, but recent earnings reports indicate potential for a turnaround as the stock has risen sharply following the announcement [1][2] Financial Performance - In the fiscal first quarter of 2025, Digital Turbine reported revenue of $118.0 million, which is a 5% increase quarter-over-quarter compared to the fiscal fourth quarter of 2024, but a 19% decline year-over-year from the fiscal first quarter of 2024 [2] - The previous quarter (Q4 2024) saw revenue of $112.2 million, reflecting a 20% decline from $140.1 million in the same quarter the previous year, alongside a significant net loss of $236.5 million primarily due to a non-cash goodwill impairment charge of $189.5 million [2] Stock Performance - APPS stock has seen a notable increase of 60% in a single trading day, closing at nearly $3 after starting the day just above $2, marking the company's best trading day in months [2] - Despite the recent positive earnings report and short-term stock growth, the long-term outlook for Digital Turbine remains uncertain, with shares down approximately 60% since the beginning of the year [2]

Digital Turbine, Inc. (NASDAQ:APPS) Q1 2025 Results Conference Call August 7, 2024 4:30 PM ET Company Participants Brian Bartholomew - Senior Vice President, Capital Markets and Strategy Bill Stone - Chief Executive Officer Barrett Garrison - Executive Vice President and Chief Financial Officer Conference Call Participants Anthony Stoss - Craig-Hallum Operator Good afternoon, and welcome to the Digital Turbine Fiscal 2025 First Quarter Results Conference Call. All participants will be in listen-only mode. [ ...

PART I - FINANCIAL INFORMATION Presents the company's unaudited consolidated financial statements, management's analysis, and market risk disclosures [ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements and accompanying notes for the quarter ended June 30, 2024 CONDENSED CONSOLIDATED BALANCE SHEETS | Metric | June 30, 2024 (Unaudited) (in thousands) | March 31, 2024 (in thousands) | | :--- | :--- | :--- | | **ASSETS** | | | | Total current assets | $252,688 | $242,341 | | Property and equipment, net | $46,375 | $45,782 | | Intangible assets, net | $298,064 | $313,505 | | Goodwill | $219,882 | $220,072 | | TOTAL ASSETS | $860,197 | $865,540 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $240,375 | $236,024 | | Long-term debt, net | $393,791 | $383,490 | | Total liabilities | $664,244 | $651,608 | | Total stockholders' equity | $195,953 | $213,932 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $860,197 | $865,540 | - Total assets decreased slightly from **$865,540 thousand** at March 31, 2024, to **$860,197 thousand** at June 30, 2024[7](index=7&type=chunk) - Total stockholders' equity decreased from **$213,932 thousand** at March 31, 2024, to **$195,953 thousand** at June 30, 2024[7](index=7&type=chunk) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME | Metric | Three months ended June 30, 2024 (in thousands, except per share data) | Three months ended June 30, 2023 (in thousands, except per share data) | | :--- | :--- | :--- | | Net revenue | $117,989 | $146,366 | | Total costs of revenue and operating expenses | $134,077 | $151,081 | | Loss from operations | $(16,088) | $(4,715) | | Total interest and other income, net | $(7,318) | $(5,223) | | Loss before income taxes | $(23,406) | $(9,938) | | Income tax provision (benefit) | $1,750 | $(1,539) | | Net loss | $(25,156) | $(8,399) | | Net loss attributable to Digital Turbine, Inc | $(25,156) | $(8,179) | | Basic Net loss per common share | $(0.25) | $(0.08) | | Diluted Net loss per common share | $(0.25) | $(0.08) | - Net revenue decreased by **19.4%** from $146,366 thousand in Q2 2023 to $117,989 thousand in Q2 2024[9](index=9&type=chunk) - Net loss attributable to Digital Turbine, Inc significantly increased from **$(8,179) thousand** in Q2 2023 to **$(25,156) thousand** in Q2 2024[9](index=9&type=chunk) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | Cash Flow Activity | Three months ended June 30, 2024 (in thousands) | Three months ended June 30, 2023 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(1,352) | $1,318 | | Net cash used in investing activities | $(5,931) | $(7,276) | | Net cash provided by (used in) financing activities | $9,966 | $(8,951) | | Net change in cash, cash equivalents, and restricted cash | $2,124 | $(16,489) | | Cash, cash equivalents, and restricted cash, end of period | $35,729 | $59,069 | - Operating activities shifted from providing **$1,318 thousand** in cash in Q2 2023 to using **$(1,352) thousand** in Q2 2024[10](index=10&type=chunk) - Financing activities provided **$9,966 thousand** in Q2 2024, a significant improvement from using $(8,951) thousand in Q2 2023, primarily due to higher proceeds from borrowings[10](index=10&type=chunk) CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | Metric (in thousands) | Balance at March 31, 2024 | Net Loss | Foreign Currency Translation | Stock-based Compensation Expense | Shares Issued (Exercise of Stock Options) | Shares Issued (Restricted Shares/Units) | Payment of Withholding Taxes | Balance at June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Common Stock Amount | $10 | — | — | — | — | — | — | $10 | | Preferred Stock Amount | $100 | — | — | — | — | — | — | $100 | | Treasury Stock Amount | $(71) | — | — | — | — | — | — | $(71) | | Additional Paid-In Capital | $858,191 | — | — | $8,424 | $14 | — | $(48) | $866,581 | | Accumulated Other Comprehensive Loss | $(48,955) | — | $(1,213) | — | — | — | — | $(50,168) | | Accumulated Deficit | $(595,343) | $(25,156) | — | — | — | — | — | $(620,499) | | Total | $213,932 | $(25,156) | $(1,213) | $8,424 | $14 | — | $(48) | $195,953 | - Total stockholders' equity decreased from **$213,932 thousand** at March 31, 2024, to **$195,953 thousand** at June 30, 2024, primarily due to a net loss of $(25,156) thousand and foreign currency translation loss of $(1,213) thousand, partially offset by stock-based compensation expense of $8,424 thousand[14](index=14&type=chunk) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1—Description of Business - Digital Turbine, Inc operates as a leading independent mobile growth platform, providing end-to-end products and solutions for advertisers, publishers, carriers, and device OEMs[20](index=20&type=chunk) - The Company's offerings facilitate brand discovery, advertising, user acquisition, engagement, and operational efficiency for advertisers, while also creating monetization opportunities for OEMs, carriers, and app developers[20](index=20&type=chunk) Note 2—Basis of Presentation and Summary of Significant Accounting Policies - The condensed consolidated financial statements are prepared in accordance with GAAP and include the accounts of the Company and its subsidiaries, with all intercompany balances and transactions eliminated[21](index=21&type=chunk) - As of June 30, 2024, the Company owned **100% of all its subsidiaries** after acquiring remaining minority interests in one subsidiary during Q2 2023 for $3,751 thousand[21](index=21&type=chunk) - Management's estimates, including revenue recognition, credit losses, stock-based compensation, and fair value of acquired assets, are subject to potential impacts from macroeconomic uncertainties like global conflicts, inflation, and supply chain disruptions[24](index=24&type=chunk)[25](index=25&type=chunk) Note 3—Fair Value Measurements - The Company holds non-marketable equity securities, primarily strategic investments in alternative app stores, with a carrying value of **$17,637 thousand** as of June 30, 2024 and March 31, 2024[28](index=28&type=chunk) - These investments are accounted for using the measurement alternative, adjusted for observable transactions or impairment, with no adjustments recorded for the three months ended June 30, 2024[29](index=29&type=chunk) - As of June 30, 2024, Level 1 equity securities recorded at fair value totaled **$501 thousand**, classified as other non-current assets[30](index=30&type=chunk) Note 4—Segment Information - Digital Turbine operates two reportable segments: **On Device Solutions (ODS)** and **App Growth Platform (AGP)**[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) | Segment | Net Revenue (Q2 2024) (in thousands) | Segment Profit (Q2 2024) (in thousands) | Net Revenue (Q2 2023) (in thousands) | Segment Profit (Q2 2023) (in thousands) | | :--- | :--- | :--- | :--- | :--- | | ODS | $80,650 | $31,507 | $98,250 | $39,952 | | AGP | $38,392 | $30,673 | $48,959 | $36,822 | | Consolidated | $117,989 | $62,180 | $146,366 | $76,774 | - Both ODS and AGP segments experienced a **decline in net revenue and segment profit** year-over-year[34](index=34&type=chunk)[35](index=35&type=chunk) | Geographic Area | Consolidated Net Revenue (Q2 2024) (in thousands) | Consolidated Net Revenue (Q2 2023) (in thousands) | | :--- | :--- | :--- | | United States and Canada | $58,967 | $69,858 | | Europe, Middle East, and Africa | $42,117 | $59,574 | | Asia Pacific and China | $17,460 | $16,990 | | Mexico, Central America, and South America | $498 | $787 | | Consolidated Total | $117,989 | $146,366 | Note 5—Goodwill and Intangible Assets | Segment | Goodwill as of March 31, 2024 (in thousands) | Foreign Currency Translation (in thousands) | Goodwill as of June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | ODS | $80,176 | — | $80,176 | | AGP | $139,896 | $(190) | $139,706 | | Total | $220,072 | $(190) | $219,882 | - Goodwill decreased slightly by **$190 thousand** due to foreign currency translation, primarily impacting the AGP segment[42](index=42&type=chunk) - **No goodwill impairment** was recognized for the three months ended June 30, 2024 or 2023, following significant impairment charges to the AGP reporting unit totaling **$336,640 thousand** during the fiscal year ended March 31, 2024[43](index=43&type=chunk)[44](index=44&type=chunk) | Intangible Asset | Weighted-Average Remaining Useful Life | Net (June 30, 2024) (in thousands) | Net (March 31, 2024) (in thousands) | | :--- | :--- | :--- | :--- | | Customer relationships | 11.99 years | $104,974 | $109,127 | | Developed technology | 4.06 years | $81,847 | $87,054 | | Trade names | 1.08 years | $19,888 | $24,487 | | Publisher relationships | 16.62 years | $91,355 | $92,837 | | Total | | $298,064 | $313,505 | - Total intangible assets, net, decreased from **$313,505 thousand** at March 31, 2024, to **$298,064 thousand** at June 30, 2024[46](index=46&type=chunk) Note 6—Accounts Receivable | Metric (in thousands) | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Billed | $134,612 | $136,604 | | Unbilled | $72,638 | $64,117 | | Allowance for credit losses | $(9,215) | $(9,706) | | Accounts receivable, net | $198,035 | $191,015 | - Net accounts receivable increased by **$7,020 thousand** from March 31, 2024, to June 30, 2024, driven by an increase in unbilled receivables[49](index=49&type=chunk) | Metric (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | | :--- | :--- | :--- | | Balance, beginning of period | $9,706 | $10,206 | | Provision for credit losses | $214 | $739 | | Write-offs, net of recoveries | $(705) | $(626) | | Balance, end of period | $9,215 | $10,319 | - The allowance for credit losses decreased to **$9,215 thousand** at June 30, 2024, from $9,706 thousand at the beginning of the period, primarily due to write-offs exceeding the provision for credit losses[51](index=51&type=chunk) Note 7—Property and Equipment | Metric (in thousands) | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Property and equipment, gross | $107,303 | $101,074 | | Accumulated depreciation | $(60,928) | $(55,292) | | Property and equipment, net | $46,375 | $45,782 | - Net property and equipment increased slightly to **$46,375 thousand** at June 30, 2024, from $45,782 thousand at March 31, 2024[52](index=52&type=chunk) - Depreciation expense for Q2 2024 was **$5,615 thousand**, up from $5,055 thousand in Q2 2023, with a significant portion related to internal-use software[52](index=52&type=chunk)[53](index=53&type=chunk) - Capitalized implementation costs for cloud computing arrangements, included in other non-current assets, were **$5,425 thousand** at June 30, 2024[54](index=54&type=chunk)[55](index=55&type=chunk) Note 8—Other Current Liabilities | Metric (in thousands) | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Accrued expenses | $7,773 | $7,376 | | Accrued interest | $3,352 | $3,414 | | Foreign income tax payable | $16,862 | $14,371 | | Other current liabilities | $8,259 | $10,520 | | Total | $36,246 | $35,681 | - Total other current liabilities increased to **$36,246 thousand** at June 30, 2024, from $35,681 thousand at March 31, 2024, primarily due to an increase in foreign income tax payable[57](index=57&type=chunk) Note 9—Other Non-Current Liabilities | Metric (in thousands) | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Non-current lease liabilities | $5,877 | $5,746 | | Contingent consideration | $1,015 | $1,015 | | Other long-term liabilities | $4,870 | $4,909 | | Total | $11,762 | $11,670 | - Total other non-current liabilities remained relatively stable at **$11,762 thousand** at June 30, 2024[59](index=59&type=chunk) - The fair value of contingent consideration related to the In App acquisition remained at **$1,015 thousand**, with no remeasurement recorded for Q2 2024[59](index=59&type=chunk)[60](index=60&type=chunk) Note 10—Debt | Debt Type | Balance (June 30, 2024) (in thousands) | Interest Rate (June 30, 2024) | Balance (March 31, 2024) (in thousands) | Interest Rate (March 31, 2024) | | :--- | :--- | :--- | :--- | :--- | | Revolver (variable interest rate) | $396,000 | 8.23% | $386,000 | 7.71% | - Outstanding borrowings under the Revolver increased by **$10,000 thousand** to $396,000 thousand at June 30, 2024, with the interest rate rising to **8.23%** from 7.71%[62](index=62&type=chunk)[63](index=63&type=chunk) - The Credit Agreement was amended on February 5, 2024, to adjust leverage and interest coverage covenants, increase permitted investments, and raise the annual interest rate based on the consolidated secured net leverage ratio[66](index=66&type=chunk) - As of June 30, 2024, the Company had **$29,000 thousand available** to draw on the revolving line of credit and was in compliance with all covenants[72](index=72&type=chunk) | Interest Expense Component | Three months ended June 30, 2024 (in thousands) | Three months ended June 30, 2023 (in thousands) | | :--- | :--- | :--- | | Interest expense, net | $(7,840) | $(7,114) | | Amortization of debt issuance costs | $(301) | $(212) | | Unused line of credit fees and other | $(109) | $(64) | | Total interest expense, net | $(8,250) | $(7,390) | Note 11—Stock-Based Compensation - As of June 30, 2024, **351,017 shares** of common stock were available for future awards under the 2020 Equity Incentive Plan[75](index=75&type=chunk) | Stock Option Activity | Number of Shares | Weighted-Average Exercise Price (per share) | | :--- | :--- | :--- | | Options outstanding as of March 31, 2024 | 5,797,869 | $13.26 | | Exercised | (8,645) | $1.58 | | Forfeited / Expired | (180,533) | $27.91 | | Options outstanding as of June 30, 2024 | 5,608,691 | $12.81 | | Exercisable as of June 30, 2024 | 4,820,073 | $11.62 | - Total unrecognized stock-based compensation expense for unvested stock options was **$9,142 thousand**, with an expected remaining recognition period of **1.63 years**[78](index=78&type=chunk) | Restricted Share Activity | Number of Shares | Weighted-Average Grant Date Fair Value | | :--- | :--- | :--- | | Unvested restricted shares outstanding as of March 31, 2024 | 3,919,842 | $12.44 | | Granted | 4,648,714 | $2.17 | | Vested | (420,743) | $11.13 | | Forfeited | (142,036) | $10.70 | | Unvested restricted shares outstanding as of June 30, 2024 | 8,005,777 | $6.57 | - Total unrecognized stock-based compensation expense for RSUs, PSUs, and RSAs was **$36,192 thousand**, with an expected remaining recognition period of **1.77 years**[81](index=81&type=chunk) - Stock-based compensation expense decreased to **$8,168 thousand** in Q2 2024 from $10,017 thousand in Q2 2023[83](index=83&type=chunk) Note 12—Earnings per Share | Metric | Three months ended June 30, 2024 (in thousands, except per share data) | Three months ended June 30, 2023 (in thousands, except per share data) | | :--- | :--- | :--- | | Net loss attributable to Digital Turbine, Inc | $(25,156) | $(8,179) | | Weighted-average common shares outstanding, basic | 102,396 | 99,877 | | Basic net (loss) income per common share | $(0.25) | $(0.08) | | Weighted-average common shares outstanding, diluted | 102,396 | 99,877 | | Diluted net (loss) income per common share | $(0.25) | $(0.08) | - Basic and diluted net loss per common share increased to **$(0.25)** in Q2 2024 from $(0.08) in Q2 2023[85](index=85&type=chunk) - Potentially dilutive securities of **9,638,950 shares** in Q2 2024 and 4,903,410 shares in Q2 2023 were excluded from diluted EPS calculation due to their anti-dilutive effect[85](index=85&type=chunk) Note 13—Income Taxes - For Q2 2024, the Company recognized a tax provision expense of **$1,750 thousand**, resulting in an effective tax rate of **(7.5)%**, primarily due to foreign income expense and a valuation allowance on loss from operations[86](index=86&type=chunk) - In Q2 2023, the Company recognized a tax benefit of **$1,539 thousand**, with an effective tax rate of **15.5%**[87](index=87&type=chunk) Note 14—Commitments and Contingencies - The Company has minimum purchase commitments under hosting agreements totaling approximately **$261,359 thousand** over the next six fiscal years[89](index=89&type=chunk) - Digital Turbine is involved in ongoing class action and derivative lawsuits related to its May 2022 financial restatement, with motions to dismiss pending[91](index=91&type=chunk) - Management is currently unable to assess a likely outcome or potential liability for these legal matters due to their early stages[91](index=91&type=chunk) Note 15—Subsequent Events - On August 6, 2024, the Company entered into a Fourth Amendment to its New Credit Agreement, renegotiating covenants, reducing the Revolver by **$100,000 thousand** to $425,000 thousand, increasing the annual interest rate for higher leverage ratios, and reducing the permitted investments threshold[92](index=92&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=22&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial condition and operational results for Q2 2024, including macroeconomic impacts and transformation initiatives Company Overview - Digital Turbine is a leading independent mobile growth platform offering end-to-end products and solutions to advertisers, publishers, carriers, and device OEMs[95](index=95&type=chunk) - The Company's technology enables brand discovery, advertising, user acquisition, engagement, and operational efficiency for advertisers, alongside monetization opportunities for its partners[95](index=95&type=chunk) Recent Developments - Macroeconomic conditions, including inflation, rising interest rates, and geopolitical developments, have **negatively impacted** mobile device sales and demand for the Company's services[96](index=96&type=chunk)[97](index=97&type=chunk)[99](index=99&type=chunk) - The Company is undertaking a multi-year business transformation initiative, including implementing a new global cloud-based ERP system and human resource system, with the first deployment phase completed in Q3 FY2024[104](index=104&type=chunk) - Business transformation costs incurred in Q2 2024 were **$1,072 thousand**, recorded in General and Administrative and Product Development expenses[106](index=106&type=chunk) Results of Operations | Metric (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | % of Change | | :--- | :--- | :--- | :--- | | Net revenue | $117,989 | $146,366 | (19.4)% | | Total costs of revenue and operating expenses | $134,077 | $151,081 | (11.3)% | | Loss from operations | $(16,088) | $(4,715) | 241.2% | | Total interest and other income, net | $(7,318) | $(5,223) | 40.1% | | Loss before income taxes | $(23,406) | $(9,938) | 135.5% | | Net loss | $(25,156) | $(8,399) | 199.5% | - Net revenue decreased by **19.4%**, leading to a significant increase in loss from operations (**241.2%**) and net loss (**199.5%**) year-over-year[108](index=108&type=chunk) Net Revenue | Segment | Net Revenue (Q2 2024) (in thousands) | Net Revenue (Q2 2023) (in thousands) | % of Change | | :--- | :--- | :--- | :--- | | On Device Solutions | $80,650 | $98,250 | (17.9)% | | App Growth Platform | $38,392 | $48,959 | (21.6)% | | Total net revenue | $117,989 | $146,366 | (19.4)% | - On Device Solutions (ODS) revenue decreased by **17.9%** due to lower new device volumes in the US and internationally, partially offset by increased revenue-per-device in the US and higher daily active users on prepaid devices[111](index=111&type=chunk) - App Growth Platform (AGP) revenue decreased by **21.6%** primarily due to declines in brand and performance advertising and advertising exchange, reflecting broader weakness in mobile advertising markets and consolidation of legacy platforms[112](index=112&type=chunk)[113](index=113&type=chunk) Costs of Revenue and Operating Expenses | Expense Category | Three months ended June 30, 2024 (in thousands) | Three months ended June 30, 2023 (in thousands) | % of Change | | :--- | :--- | :--- | :--- | | Revenue share | $55,809 | $69,592 | (19.8)% | | Other direct costs of revenue | $7,790 | $9,613 | (19.0)% | | Product development | $10,714 | $15,800 | (32.2)% | | Sales and marketing | $16,247 | $15,577 | 4.3% | | General and administrative | $43,517 | $40,499 | 7.5% | | Total costs of revenue and operating expenses | $134,077 | $151,081 | (11.3)% | - Total costs of revenue and operating expenses decreased by **11.3%**, primarily driven by lower revenue share due to decreased revenue and reduced product development costs[115](index=115&type=chunk) - Product development expenses decreased by **$5,086 thousand (32.2%)** due to lower employee-related costs and a decline in depreciation, amortization, hosting, and professional service fees[121](index=121&type=chunk) - General and administrative expenses increased by **$3,018 thousand (7.5%)**, mainly due to higher depreciation and amortization costs and professional service fees, partially offset by decreased stock-based compensation[123](index=123&type=chunk)[124](index=124&type=chunk) Interest and Other Income (Expense), Net | Metric (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | % of Change | | :--- | :--- | :--- | :--- | | Interest expense, net | $(8,250) | $(7,390) | 11.6% | | Foreign exchange transaction gain | $818 | $1,923 | (57.5)% | | Other income, net | $114 | $244 | (53.3)% | | Total interest and other income, net | $(7,318) | $(5,223) | 40.1% | - Total interest and other income, net, shifted from a net expense of $(5,223) thousand in Q2 2023 to **$(7,318) thousand** in Q2 2024, a **40.1% increase** in net expense[126](index=126&type=chunk) - Interest expense, net, increased by **11.6%** due to higher interest rates, despite lower average outstanding borrowings[127](index=127&type=chunk) - Foreign exchange transaction gain decreased by **57.5%**, primarily due to fluctuations in foreign exchange rates for trade accounts receivables and payables[128](index=128&type=chunk) Liquidity and Capital Resources - As of June 30, 2024, the Company had **$35,042 thousand** in unrestricted cash and **$29,000 thousand** available to draw under its New Credit Agreement[129](index=129&type=chunk) - The Company believes it has sufficient cash flow from operations and liquidity to meet business requirements for at least 12 months[131](index=131&type=chunk) - Outstanding secured indebtedness under the New Credit Agreement was **$396,000 thousand** as of June 30, 2024, maturing on April 29, 2026[132](index=132&type=chunk) - The Company was in compliance with all debt covenants as of June 30, 2024, but subsequently renegotiated covenants via a Fourth Amendment on August 6, 2024[135](index=135&type=chunk) - Minimum purchase commitments under hosting agreements total approximately **$261,359 thousand** over the next six fiscal years[136](index=136&type=chunk) Cash Flow Summary | Cash Flow Activity (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | % of Change | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(1,352) | $1,318 | (202.6)% | | Net cash used in investing activities | $(5,931) | $(7,276) | (18.5)% | | Net cash provided by (used in) financing activities | $9,966 | $(8,951) | (211.3)% | - Operating activities shifted from providing cash to using cash, a decrease of **$2,670 thousand**, primarily due to an increase in net loss and changes in operating assets and liabilities[138](index=138&type=chunk) - Net cash used in investing activities decreased by **$1,345 thousand**, mainly due to lower capital expenditures[141](index=141&type=chunk) - Net cash provided by financing activities significantly improved to **$9,966 thousand** from a net use of $(8,951) thousand, driven by higher proceeds from borrowings[142](index=142&type=chunk) Critical Accounting Policies and Estimates - Management's financial analysis relies on critical accounting policies and estimates, including revenue recognition, allowance for credit losses, stock-based compensation, and fair value of acquired assets[143](index=143&type=chunk) - These estimates involve significant judgments and assumptions that can affect reported amounts, and actual results may differ materially[143](index=143&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=30&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section outlines the Company's exposure to interest rate fluctuations and foreign currency exchange risks Interest Rate Fluctuation Risk - The Company is exposed to interest rate fluctuations due to its **variable-rate borrowings** under its credit facility[145](index=145&type=chunk) - A hypothetical **100 basis point increase** in market interest rates would result in an additional **$10 thousand** in interest expense per year for every $1,000 thousand of outstanding debt[145](index=145&type=chunk) - Digital Turbine has **not used derivative financial instruments** to manage its interest rate risk[145](index=145&type=chunk) Foreign Currency Exchange Risk - The Company faces foreign currency exchange risk from transactions denominated in currencies other than the U.S dollar, such as the euro, Turkish lira, and British pound[146](index=146&type=chunk)[147](index=147&type=chunk) - Fluctuations in exchange rates can impact future revenues, expenses, and cash flows, particularly as foreign operations expand[147](index=147&type=chunk) - The Company does **not use derivative financial instruments** to manage its foreign currency exchange risk[147](index=147&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=31&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section details management's evaluation of disclosure controls and procedures and changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures - As of June 30, 2024, management concluded that the Company's disclosure controls and procedures were **effective** at a reasonable assurance level[148](index=148&type=chunk) - Disclosure controls are designed to ensure timely recording, processing, summarizing, and reporting of information required by SEC rules[148](index=148&type=chunk) Changes in Internal Control Over Financial Reporting - **No changes** in internal control over financial reporting were identified during the three months ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[149](index=149&type=chunk) PART II - OTHER INFORMATION Provides details on legal proceedings, risk factors, equity sales, and other required disclosures [ITEM 1. LEGAL PROCEEDINGS](index=32&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section details the Company's involvement in legal claims related to a prior financial restatement - Digital Turbine is a defendant in consolidated class action complaints and several derivative actions alleging federal securities law violations and breach of fiduciary duties, stemming from a May 2022 financial restatement[152](index=152&type=chunk) - The Western District court granted the Company's motion to dismiss the class action case on July 19, 2023, but an amended complaint was filed, with a new motion to dismiss pending[152](index=152&type=chunk) - Due to the early stages of these cases, management **cannot assess a likely outcome or potential liability** at this time, but plans to vigorously defend against the claims[152](index=152&type=chunk) [ITEM 1A. RISK FACTORS](index=32&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section states there are no material changes to risk factors previously disclosed in the Company's Annual Report - The Company is not aware of any **material changes** to the risk factors previously set forth in its Annual Report on Form 10-K for the fiscal year ended March 31, 2024[153](index=153&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=32&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section indicates no unregistered sales of equity securities or use of proceeds were reported for the period - There were **no unregistered sales** of equity securities and use of proceeds to report[153](index=153&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=32&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section states there are no defaults upon senior securities to report for the period - This item is not applicable, indicating **no defaults** upon senior securities[153](index=153&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=32&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section indicates that mine safety disclosures are not applicable to the Company - This item is **not applicable**, indicating no mine safety disclosures[153](index=153&type=chunk) [ITEM 5. OTHER INFORMATION](index=32&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section states that there is no other information to report for the period - There is **no other information** to report under this item[153](index=153&type=chunk) [ITEM 6. EXHIBITS](index=33&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including agreements and certifications - Exhibits include Cash Incentive Compensation Agreements, a Cash Bonus Agreement, and the Fourth Amendment to the Amended and Restated Credit Agreement[155](index=155&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer are also filed[155](index=155&type=chunk) [SIGNATURES](index=33&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q, confirming its submission by authorized officers - The report is duly signed on behalf of Digital Turbine, Inc by William Gordon Stone III, Chief Executive Officer, and James Barrett Garrison, Chief Financial Officer, on August 7, 2024[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)

[Fiscal 2025 First Quarter Financial Overview](index=1&type=section&id=Fiscal%202025%20First%20Quarter%20Financial%20Overview) This section provides an overview of Digital Turbine's Q1 FY25 financial performance, including key metrics and CEO commentary on sequential growth drivers [Recent Financial Highlights](index=1&type=section&id=Recent%20Financial%20Highlights) Digital Turbine reported Q1 FY25 revenue of $118.0 million, showing sequential growth but a year-over-year decline, with increased GAAP net loss and decreased non-GAAP adjusted net income and EBITDA Fiscal First Quarter Financial Highlights | Metric | Q1 FY25 (Millions) | Q4 FY24 (Millions) | Q1 FY24 (Millions) | QoQ Change | YoY Change | | :-------------------------------- | :----------------- | :----------------- | :----------------- | :--------- | :--------- | | Revenue | $118.0 | - | - | +5% | -19% | | GAAP Net Loss | ($25.2) | - | ($8.4) | - | +199.9% | | GAAP EPS | ($0.25) | - | ($0.08) | - | +212.5% | | Non-GAAP Adjusted Net Income | $7.3 | - | $18.2 | - | -59.89% | | Non-GAAP Adjusted EPS | $0.07 | - | $0.18 | - | -61.11% | | Non-GAAP Adjusted EBITDA | $14.5 | - | $27.0 | +18% | -46% | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Bill Stone highlighted an encouraging start to the fiscal year with sequential growth in revenue and EBITDA, driven by increased international device adoption and stronger demand for platform offerings - The company returned to **quarterly sequential growth** in revenue and EBITDA, marking an encouraging start to the new fiscal year[2](index=2&type=chunk) - **On Device Solutions revenue grew 3% sequentially**, largely due to newly added international devices and higher average revenue-per-device[2](index=2&type=chunk) - **App Growth Platform revenue increased 11% sequentially**, attributable to stronger demand for Brand and Exchange offerings[2](index=2&type=chunk) - **EBITDA margin expanded by 135 basis points sequentially**, driven by top-line growth and continued expense discipline[2](index=2&type=chunk) [Detailed Fiscal 2025 First Quarter Financial Results](index=2&type=section&id=Detailed%20Fiscal%202025%20First%20Quarter%20Financial%20Results) This section details Digital Turbine's Q1 FY25 financial results, presenting revenue breakdowns by segment and comprehensive GAAP and non-GAAP performance metrics [Revenue Breakdown by Segment](index=2&type=section&id=Revenue%20Breakdown%20by%20Segment) For Q1 FY25, Digital Turbine's total revenue was $118.0 million, with On Device Solutions contributing $80.7 million and App Growth Platform contributing $38.4 million before intercompany eliminations Q1 FY25 Revenue by Segment (before intercompany eliminations) | Segment | Revenue (Millions) | | :-------------------- | :----------------- | | On Device Solutions | $80.7 | | App Growth Platform | $38.4 | | Total Revenue | $118.0 | [GAAP Financial Performance](index=2&type=section&id=GAAP%20Financial%20Performance) The company reported a GAAP net loss of $25.2 million, or ($0.25) per share, for Q1 FY25, a significant increase in loss compared to $8.4 million, or ($0.08) per share, in Q1 FY24 GAAP Net Loss and EPS | Metric | Q1 FY25 (Millions) | Q1 FY24 (Millions) | | :-------------------- | :----------------- | :----------------- | | GAAP Net Loss | ($25.2) | ($8.4) | | GAAP EPS | ($0.25) | ($0.08) | [Non-GAAP Financial Performance](index=2&type=section&id=Non-GAAP%20Financial%20Performance) Non-GAAP adjusted net income for Q1 FY25 was $7.3 million, or $0.07 per share, down from $18.2 million, or $0.18 per share, in Q1 FY24, while non-GAAP adjusted EBITDA also decreased to $14.5 million from $27.0 million year-over-year Non-GAAP Adjusted Financials | Metric | Q1 FY25 (Millions) | Q1 FY24 (Millions) | | :-------------------------- | :----------------- | :----------------- | | Non-GAAP Adjusted Net Income | $7.3 | $18.2 | | Non-GAAP Adjusted EPS | $0.07 | $0.18 | | Non-GAAP Adjusted EBITDA | $14.5 | $27.0 | [Business Outlook](index=2&type=section&id=Business%20Outlook) Digital Turbine reaffirmed its fiscal year 2025 expectations, projecting revenue between $540 million and $560 million and non-GAAP adjusted EBITDA between $85 million and $95 million, while noting it cannot reasonably provide a GAAP net income outlook Fiscal Year 2025 Business Outlook | Metric | Range (Millions) | | :-------------------------- | :----------------- | | Revenue | $540 - $560 | | Non-GAAP Adjusted EBITDA | $85 - $95 | - The company cannot reasonably provide a business outlook for **GAAP net income** due to difficulties in estimating stock-based compensation expense and other unpredictable items[5](index=5&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) This section provides an overview of Digital Turbine, Inc., detailing its mission and global presence, alongside information regarding the Q1 FY25 conference call [About Digital Turbine, Inc.](index=2&type=section&id=About%20Digital%20Turbine%2C%20Inc.) Digital Turbine enhances mobile consumer experiences and delivers results for telcos, advertisers, and publishers through its end-to-end platform, simplifying awareness, acquisition, and monetization across various devices globally - Digital Turbine empowers **superior mobile consumer experiences** and results for leading telcos, advertisers, and publishers[6](index=6&type=chunk) - Its **end-to-end platform** simplifies partners' abilities to supercharge awareness, acquisition, and monetization across more consumers and devices[6](index=6&type=chunk) - Digital Turbine is headquartered in **North America**, with offices around the world[6](index=6&type=chunk) [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) Management hosted a conference call and webcast on August 7, 2024, at 4:30 p.m. ET to discuss Q1 FY25 financial results and provide operational updates, with a replay available through August 14, 2024 - A conference call and webcast were held on **August 7, 2024, at 4:30 p.m. ET** to discuss fiscal 2025 first quarter financial results and operational updates[7](index=7&type=chunk) - A playback was available through **August 14, 2024**, and an online webcast will be archived for one year on the Investor Relations section of Digital Turbine's website[8](index=8&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) This section defines Digital Turbine's non-GAAP financial measures, including adjusted net income, EPS, EBITDA, free cash flow, and gross profit, and explains their purpose [Purpose and General Definition](index=3&type=section&id=Purpose%20and%20General%20Definition) Digital Turbine uses non-GAAP financial measures to supplement GAAP statements, providing enhanced understanding of current and future financial performance by excluding certain non-recurring or non-operating expenses and benefits, but these are not substitutes for GAAP results - **Non-GAAP measures** are provided to enhance investors' overall understanding of the Company's current financial performance and future prospects[10](index=10&type=chunk) - These measures exclude certain expenses and benefits that may not be indicative of **recurring core business operating results**[10](index=10&type=chunk) - The presentation of non-GAAP measures is not intended to be considered in isolation or as a substitute for, or superior to, **financial information prepared in accordance with GAAP**[10](index=10&type=chunk) [Non-GAAP Adjusted Net Income and EPS Definition](index=3&type=section&id=Non-GAAP%20Adjusted%20Net%20Income%20and%20EPS%20Definition) Non-GAAP adjusted net income and EPS are defined as GAAP net income and EPS adjusted to exclude the effect of stock-based compensation expense, amortization of intangibles, business transformation costs, transaction-related expenses, severance costs, and tax adjustments - **Non-GAAP adjusted net income and EPS** exclude stock-based compensation, amortization of intangibles, business transformation costs, transaction-related expenses, severance costs, and tax adjustments[11](index=11&type=chunk) [Non-GAAP Adjusted EBITDA Definition](index=3&type=section&id=Non-GAAP%20Adjusted%20EBITDA%20Definition) Non-GAAP adjusted EBITDA is calculated as GAAP net income, excluding cash and non-cash expenses such as stock-based compensation, depreciation and amortization, net interest income/expense, other income/expense, business transformation costs, foreign exchange gains/losses, income tax provision/benefit, transaction-related expenses, and severance costs - **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, and severance costs[12](index=12&type=chunk) [Non-GAAP Free Cash Flow Definition](index=3&type=section&id=Non-GAAP%20Free%20Cash%20Flow%20Definition) Non-GAAP free cash flow is defined as net cash provided by operating activities, excluding transaction-related expenses, severance costs, and business transformation costs, further reduced by capital expenditures - **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[12](index=12&type=chunk)[13](index=13&type=chunk) [Non-GAAP Gross Profit Definition](index=4&type=section&id=Non-GAAP%20Gross%20Profit%20Definition) 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, and depreciation of software - **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, and depreciation of software[14](index=14&type=chunk) [Forward-Looking Statements and Risk Factors](index=4&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section outlines the forward-looking statement disclaimer and details various risks specific to Digital Turbine's business, the mobile advertising industry, regulatory environment, intellectual property, and capital structure [Forward-Looking Statement Disclaimer](index=4&type=section&id=Forward-Looking%20Statement%20Disclaimer) The news release contains forward-looking statements regarding future results, financial position, and economic conditions, which are subject to known and unknown risks and uncertainties that could cause actual results to differ materially, and the company does not undertake to update these statements unless required by law - The news release includes **forward-looking statements** concerning future results from operations, financial position, economic conditions, and product releases[15](index=15&type=chunk) - These statements involve **known and unknown risks, uncertainties, and other factors** that may cause actual results to differ materially[15](index=15&type=chunk) - The Company does not undertake to update forward-looking statements, except as required by law[21](index=21&type=chunk) [Risks Specific to Digital Turbine's Business](index=4&type=section&id=Risks%20Specific%20to%20Digital%20Turbine%27s%20Business) Key business risks include a history of net losses, limited operating history for current assets, demands on management from growth, global operational risks, significant quarter-to-quarter financial variability, reliance on a limited number of carriers/customers, goodwill impairment risk, and effects of economic downturns - Risks include a **history of net losses**, limited operating history for current assets, and significant demands on management and infrastructure due to growth[15](index=15&type=chunk) - The company faces **global operational risks**, highly variable and difficult-to-predict financial results, and reliance on a limited number of wireless carriers and customers[15](index=15&type=chunk) - Other risks involve **software errors, data security failures, IT system disruptions**, inability to hire and retain key talent, challenges in maintaining corporate culture, and potential disruptions from future acquisitions[16](index=16&type=chunk) [Risks Related to the Mobile Advertising Industry](index=5&type=section&id=Risks%20Related%20to%20the%20Mobile%20Advertising%20Industry) Risks in the mobile advertising industry include intense competition, rapidly evolving markets, dependence on smartphone usage growth, challenges with new wireless technologies, complexities of mobile devices, potential decline in mobile content usage, platform shifts by carriers/manufacturers, security vulnerabilities, legal liability for mobile services, public health issues, and geopolitical conditions - The mobile advertising business is **intensely competitive**, with rapidly evolving markets that may decline or experience limited growth[17](index=17&type=chunk) - Business is dependent on **continued growth in smartphone usage** and adapting to rapidly changing wireless technologies and device complexities[17](index=17&type=chunk) - Risks include **platform shifts by wireless carriers, security vulnerabilities, legal liability**, public health issues, and geopolitical conditions[17](index=17&type=chunk) [Industry Regulatory Risks](index=6&type=section&id=Industry%20Regulatory%20Risks) The company faces risks from rapidly changing and stringent laws regarding privacy, data security, and child protection, and is also subject to anti-corruption, import/export, and government sanction laws, especially in international operations, and regulatory requirements concerning marketing, advertising, and promotion 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[18](index=18&type=chunk) - It is also subject to **anti-corruption, import/export, government sanction**, and similar laws, especially related to international operations[18](index=18&type=chunk) - Government regulation of marketing methods could restrict or prevent the ability to adequately **advertise and promote content, products, and services**[18](index=18&type=chunk) [Risks Related to Intellectual Property and Potential Liability](index=6&type=section&id=Risks%20Related%20to%20Intellectual%20Property%20and%20Potential%20Liability) Risks include third parties improperly using the company's intellectual property, potential lawsuits for intellectual property infringement, the use of open-source software, and substantial liability from indemnity provisions in agreements - Third parties may obtain and improperly use the company's **intellectual property**, adversely affecting its competitive position[19](index=19&type=chunk) - The company may be sued for **intellectual property infringement**, potentially leading to significant damage awards and business disruption[19](index=19&type=chunk) - The platform contains **open source software**, and indemnity provisions in agreements potentially expose the company to substantial liability[19](index=19&type=chunk) [Risks Relating to Common Stock and Capital Structure](index=6&type=section&id=Risks%20Relating%20to%20Common%20Stock%20and%20Capital%20Structure) Risks related to common stock and capital structure include secured and unsecured indebtedness limiting financial flexibility, significant cash requirements for debt service and operations, highly volatile stock price, inability to raise capital, lack of analyst coverage, and potential material weaknesses in internal controls - The company has **secured and unsecured indebtedness**, which could limit its financial flexibility and require significant cash to service[20](index=20&type=chunk) - The market price of **common stock is likely to be highly volatile**, and there is a risk of not being able to raise capital for business growth[20](index=20&type=chunk) - A **material weakness in internal control over financial reporting** could result in material misstatements, and anti-takeover provisions could make an acquisition more difficult[20](index=20&type=chunk) [Condensed Consolidated Financial Statements](index=8&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents Digital Turbine's condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows for the first quarter of fiscal year 2025 [Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20%28Loss%29%20Income) The statement of operations shows a net loss of $25.16 million for Q1 FY25, significantly higher than the $8.40 million loss in Q1 FY24, primarily due to lower net revenue and increased general and administrative expenses Condensed Consolidated Statements of Operations (Unaudited, in thousands) | Metric | Three months ended June 30, 2024 | Three months ended June 30, 2023 | | :----------------------------------------- | :------------------------------- | :------------------------------- | | Net revenue | $117,989 | $146,366 | | Total costs of revenue and operating expenses | $134,077 | $151,081 | | Loss from operations | ($16,088) | ($4,715) | | Net loss | ($25,156) | ($8,399) | | Basic Net loss per common share | ($0.25) | ($0.08) | | Diluted Net loss per common share | ($0.25) | ($0.08) | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2024, total assets were $860.20 million, a slight decrease from $865.54 million at March 31, 2024, while total liabilities increased to $664.24 million from $651.61 million, and total stockholders' equity decreased to $195.95 million from $213.93 million over the same period Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2024 (Unaudited) | March 31, 2024 | | :--------------------------------- | :------------------------ | :--------------- | | Total current assets | $252,688 | $242,341 | | Total assets | $860,197 | $865,540 | | Total current liabilities | $240,375 | $236,024 | | Total liabilities | $664,244 | $651,608 | | Total stockholders' equity | $195,953 | $213,932 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For Q1 FY25, net cash used in operating activities was $1.35 million, a shift from $1.32 million provided in Q1 FY24, net cash used in investing activities decreased to $5.93 million from $7.28 million, while net cash provided by financing activities was $9.97 million, a significant improvement from $8.95 million used in Q1 FY24 Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) | Metric | Three months ended June 30, 2024 | Three months ended June 30, 2023 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Net cash provided by (used in) operating activities | ($1,352) | $1,318 | | Net cash used in investing activities | ($5,931) | ($7,276) | | Net cash provided by (used in) financing activities | $9,966 | ($8,951) | | Net change in cash and cash equivalents and restricted cash | $2,124 | ($16,489) | | Cash and cash equivalents and restricted cash, end of period | $35,729 | $59,069 | [Reconciliation of Non-GAAP Financial Measures](index=11&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations of GAAP to non-GAAP financial measures, including revenue by segment, gross profit, adjusted net income, adjusted EBITDA, and free cash flow [Revenue by Segment](index=11&type=section&id=Revenue%20by%20Segment) In Q1 FY25, On Device Solutions revenue was $80.65 million, an 18% decrease year-over-year, and App Growth Platform revenue was $38.39 million, a 22% decrease year-over-year, resulting in consolidated revenue declining by 19% to $117.99 million Revenue by Segment (Unaudited, in thousands) | Segment | Three months ended June 30, 2024 | Three months ended June 30, 2023 | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | | On Device Solutions | $80,650 | $98,250 | (18)% | | App Growth Platform | $38,392 | $48,959 | (22)% | | Consolidated | $117,989 | $146,366 | (19)% | [GAAP (Loss) Income from Operations to Non-GAAP Gross Profit](index=11&type=section&id=GAAP%20%28Loss%29%20Income%20from%20Operations%20to%20Non-GAAP%20Gross%20Profit) Non-GAAP gross profit for Q1 FY25 was $54.52 million, with a non-GAAP gross profit percentage of 46%, down from $68.92 million and 47% in Q1 FY24, after adding back product development, sales and marketing, general and administrative costs, and depreciation of software to GAAP loss from operations GAAP (Loss) Income from Operations to Non-GAAP Gross Profit (in thousands) | Metric | Three months ended June 30, 2024 | Three months ended June 30, 2023 | | :-------------------------- | :------------------------------- | :------------------------------- | | (Loss) income from operations | ($16,088) | ($4,715) | | Non-GAAP gross profit | $54,524 | $68,917 | | Non-GAAP gross profit percentage | 46% | 47% | [GAAP Net (Loss) Income to Non-GAAP Adjusted Net Income](index=11&type=section&id=GAAP%20Net%20%28Loss%29%20Income%20to%20Non-GAAP%20Adjusted%20Net%20Income) Non-GAAP adjusted net income for Q1 FY25 was $7.35 million, or $0.07 per share, a decrease from $18.21 million, or $0.18 per share, in Q1 FY24, primarily due to adjustments for stock-based compensation, amortization of intangibles, and tax adjustments GAAP Net (Loss) Income to Non-GAAP Adjusted Net Income (in thousands) | Metric | Three months ended June 30, 2024 | Three months ended June 30, 2023 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Net (loss) income | ($25,156) | ($8,399) | | Non-GAAP adjusted net income | $7,346 | $18,210 | | Non-GAAP adjusted net income per common share | $0.07 | $0.18 | | Weighted-average common shares outstanding, diluted | 103,143 | 103,509 | [GAAP Net (Loss) Income to Non-GAAP Adjusted EBITDA](index=12&type=section&id=GAAP%20Net%20%28Loss%29%20Income%20to%20Non-GAAP%20Adjusted%20EBITDA) Non-GAAP adjusted EBITDA for Q1 FY25 was $14.53 million, a significant decline from $26.96 million in Q1 FY24, with key add-back items including depreciation and amortization, interest expense, and stock-based compensation GAAP Net (Loss) Income to Non-GAAP Adjusted EBITDA (in thousands) | Metric | Three months ended June 30, 2024 | Three months ended June 30, 2023 | | :-------------------- | :------------------------------- | :------------------------------- | | Net (loss) income | ($25,156) | ($8,399) | | Non-GAAP adjusted EBITDA | $14,528 | $26,963 | [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) Non-GAAP free cash flow used in operations for Q1 FY25 was $5.65 million, comparable to $5.56 million used in Q1 FY24, after adjusting net cash from operating activities by capital expenditures and certain business transformation and severance costs GAAP Cash Flow from Operating Activities to Non-GAAP Free Cash Flow (in thousands) | Metric | Three months ended June 30, 2024 | Three months ended June 30, 2023 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Net cash provided by (used in) operating activities | ($1,352) | $1,318 | | Capital expenditures | ($5,931) | ($7,276) | | Non-GAAP free cash flow provided (used) by operations | ($5,654) | ($5,555) |