Digital Turbine(US:APPS)2022-11-09 22:07Financial Performance - For the three months ended September 30, 2022, total net revenue decreased by $13,709 or 7.3% year-over-year, while for the six months, it increased by $16,849 or 4.9%[129]. - On Device Solutions revenue for the three months ended September 30, 2022 decreased by $20,983 or 16.2%, primarily due to lower daily active users (DAU) for content media[131]. - App Growth Platform revenue for the three months ended September 30, 2022 increased by $4,079 or 6.4%, driven by strong demand for banner advertising[134]. - License fees and revenue share decreased by $14,627 or 16.0% to $76,881 for the three months ended September 30, 2022, representing 44.0% of total net revenue[137]. - Other direct costs of revenue increased by $1,372 or 17.5% to $9,199 for the three months ended September 30, 2022, accounting for 5.3% of total net revenue[141]. - Product development expenses increased by $821 or 5.9% to $14,736 for the three months ended September 30, 2022, primarily due to higher employee-related costs[142]. - Sales and marketing expenses decreased by $1,989, or 11.4%, to $15,490 for the three months ended September 30, 2022, representing 8.9% of total net revenue[144]. - General and administrative expenses decreased by $3,836, or 9.3%, to $37,471 for the three months ended September 30, 2022, accounting for 21.4% of total net revenue[145]. - Interest expense, net, increased by $3,274, or 167.5%, for the three months ended September 30, 2022, compared to the same period in 2021[150]. Cash Flow and Financing - Cash provided by operating activities was $64,309 for the six months ended September 30, 2022, a significant increase of 729.4% compared to $7,754 for the same period in 2021[159]. - Net cash used in investing activities decreased by $145,537 to approximately $12,930 for the six months ended September 30, 2022, primarily due to reduced business acquisitions[161]. - Net cash used in financing activities was approximately $91,490 for the six months ended September 30, 2022, primarily due to repayment of debt obligations of $86,500[162]. - The Company had unrestricted cash of approximately $82,653 and $149,866 available to draw under the New Credit Agreement as of September 30, 2022[151]. - The outstanding secured indebtedness under the New Credit Agreement was $450,134 as of September 30, 2022[156]. - The Company believes it will generate sufficient cash flow from operations to meet its business requirements for at least twelve months from the filing date of this Quarterly Report[154]. Acquisitions - The acquisition of AdColony was completed for an estimated total consideration of $400,000 to $425,000, including an earn-out of $200,000 to $225,000 based on future revenue targets[112]. - The Company recognized an earn-out payment of $204,500 for the AdColony acquisition on January 15, 2022[115]. - The acquisition of Fyber was completed for an estimated aggregate consideration of up to $600,000, including approximately $150,000 in cash and 5,816,588 newly-issued shares valued at $359,233[118]. - As of September 30, 2022, the Company owned approximately 99.5% of Fyber following additional purchases of $18,341 worth of shares[122]. - The Company expects to complete the purchase of the remaining outstanding Fyber shares during fiscal year 2023[122]. - Costs related to the AdColony acquisition were recognized as $64 and $214 for the three and six months ended September 30, 2022, respectively[116]. - Costs related to the Fyber acquisition were recognized as $443 and $1,003 for the three and six months ended September 30, 2022, respectively[122]. - The Company recorded no charges for changes in fair value of contingent consideration for the three and six months ended September 30, 2022, compared to $22,087 for the same periods in 2021[149]. Market Environment - The Company operates in a competitive environment with substantial risks and uncertainties affecting future performance[105]. - The Company continues to monitor the impact of macroeconomic factors, including inflation and geopolitical developments, on its operations and financial results[126]. - The Company experienced limited inflationary cost impacts, primarily in modest wage pressures and carrier and OEM supply chain challenges[127]. - The decline in content media revenue was partially offset by an increase in application media revenue, which included approximately $8,700 due to a contract amendment[131]. Currency Risk - The company has foreign operations that expose it to foreign currency exchange risk, which may affect future revenue, costs, and cash flows[167]. - The company transacts primarily in U.S. Dollars for certain foreign operations, reducing exposure to foreign currency exchange risk[167]. - Gains and losses from translating cash balances, trade accounts receivable, and payable balances impact the company's net income[167]. - As foreign operations expand, the company's results may be more affected by fluctuations in exchange rates of the currencies in which it operates[167]. Credit Agreement - The Company has a revolving line of credit of up to $600,000, with $450,134 drawn as of September 30, 2022, at an interest rate of 4.57%[111]. - The Company has amended its credit agreement multiple times, with the latest amendment replacing LIBOR with SOFR for interest calculations[111].