Digital Turbine(APPS) - 2026 Q1 - Quarterly Results

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