APPS Q3 Earnings Beat Estimates, Revenues Up Y/Y, Shares Fall

Core Insights - Digital Turbine (APPS) shares have declined 1.8% since the company reported its third-quarter fiscal 2026 results on February 3, 2026, primarily due to softness in U.S. device volumes impacting operations [2][4] Financial Performance - The company reported non-GAAP earnings of 16 cents per share, exceeding the Zacks Consensus Estimate by 77.78%, compared to 5 cents in the same quarter last year [2][9] - Non-GAAP revenues reached $151.4 million, reflecting a 12% year-over-year increase, driven by strong demand and effective execution [3][9] - On Device Solutions contributed 65.8% of total revenues, increasing approximately 9% year-over-year to nearly $100 million, while App Growth Platform revenues rose 19% year-over-year to $53 million, accounting for 34.8% of total revenues [3][9] - Non-GAAP gross margin expanded by 520 basis points year-over-year to 49% [5][9] - Non-GAAP EBITDA was $38.8 million, a 76% increase from $22 million in the year-ago quarter, with a non-GAAP operating margin of 14.3%, up from an operating loss of 9.5% [6][9] Cost Management - Sales and marketing expenses as a percentage of revenues decreased by 200 basis points to 9.5%, while general and administrative expenses fell from 31.8% to 19.1% [5] - Product development expenses also decreased by 100 basis points to 6.5% [5] Cash Flow and Balance Sheet - As of December 31, 2025, cash and cash equivalents were $40 million, up from $1 million as of September 30, 2025 [7] - The company generated cash flow from operations of $14.17 million, slightly down from $14.46 million in the previous quarter, and free cash flow was $6.4 million compared to $7 million in the prior quarter [7] Future Guidance - For the full fiscal year 2026, Digital Turbine expects non-GAAP revenues between $553 million and $558 million, with adjusted EBITDA projected in the range of $114 million to $117 million [10]