Digital Turbine(APPS) - 2026 Q1 - Quarterly Report

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