Digital Turbine, Inc. (NASDAQ:APPS) Q4 2024 Earnings Conference Call May 28, 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 Omar Dessouky - Bank of America Darren Aftahi - ROTH MKM Tim Nollen - Macquarie Operator Good day and welcome to the Digital Turbine Reports Fourth Quarter and Fiscal 2024 Financial Result ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-35958 DIGITAL TURBINE, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 22-2267658 (State or Other Jurisdiction of Incorporation or Organization)(I.R. ...

Revenue Performance - Q4 2024 revenue totaled $112.2 million, a 20% YoY decline compared to Q4 2023[2] - FY 2024 revenue totaled $544.5 million, with On Device Solutions revenue at $370.1 million and App Growth Platform revenue at $178.8 million[6] - Net revenue for Q4 2024 was $112.2 million, a decrease of 19.9% compared to $140.1 million in Q4 2023[28] - Revenue for Q1 2024 decreased by 20% to $112.2 million compared to $140.1 million in Q1 2023[36] - On Device Solutions revenue declined 19% to $78.5 million in Q1 2024 compared to $96.9 million in Q1 2023[36] - App Growth Platform revenue decreased 23% to $34.4 million in Q1 2024 compared to $45.0 million in Q1 2023[36] Net Loss and Impairment Charges - Q4 2024 GAAP net loss was $236.5 million, including a noncash goodwill impairment charge of $189.5 million[2] - FY 2024 GAAP net loss was $420.4 million, including a noncash goodwill impairment charge of $336.6 million[6] - Net loss for Q4 2024 was $236.5 million, compared to a net loss of $13.9 million in Q4 2023[28] - Goodwill impairment of $189.5 million was recorded in Q4 2024, contributing to the significant net loss[28] - Net loss for Q1 2024 was $236.5 million, compared to a net loss of $13.9 million in Q1 2023[34] - Goodwill impairment charge of $189.5 million was recorded in Q1 2024[34] Non-GAAP Financial Metrics - Q4 2024 Non-GAAP adjusted net income was $12.6 million, or $0.12 per share[2] - Q4 2024 Non-GAAP adjusted EBITDA was $12.3 million, compared to $23.1 million in Q4 2023[2] - FY 2024 Non-GAAP adjusted net income was $60.3 million, or $0.58 per share[6] - FY 2024 Non-GAAP adjusted EBITDA was $92.4 million, compared to $163.2 million in FY 2023[7] - Non-GAAP gross profit margin improved to 46% in Q1 2024 from 44% in Q1 2023[37] - Non-GAAP adjusted EBITDA was $12.3 million in Q1 2024, down from $23.1 million in Q1 2023[40] Cash Flow and Financial Position - Cash and cash equivalents decreased to $33.6 million in Q4 2024 from $75.6 million in Q4 2023[31] - Cash and cash equivalents decreased to $33.6 million at the end of Q1 2024 from $49.5 million at the beginning of the quarter[34] - Capital expenditures were $6.9 million in Q1 2024, up from $5.3 million in Q1 2023[42] - Non-GAAP free cash flow was negative $15.6 million in Q1 2024 compared to positive $12.5 million in Q1 2023[42] Balance Sheet Changes - Total assets decreased to $865.5 million in Q4 2024 from $1.27 billion in Q4 2023[31] - Accounts receivable increased to $191.0 million in Q4 2024 from $178.2 million in Q4 2023[31] - Long-term debt decreased to $383.5 million in Q4 2024 from $410.5 million in Q4 2023[31] Operating Expenses and Costs - Total costs of revenue and operating expenses increased to $320.1 million in Q4 2024 from $149.3 million in Q4 2023[28] Comprehensive Loss - Comprehensive loss attributable to Digital Turbine, Inc. was $239.0 million in Q4 2024, compared to $11.7 million in Q4 2023[28] Earnings Per Share - Basic and diluted net loss per share was $2.32 in Q4 2024, compared to $0.14 in Q4 2023[28] Future Guidance - FY 2025 revenue guidance is between $540 million and $560 million, with Non-GAAP adjusted EBITDA between $85 million and $95 million[8] Partnerships and Growth - New partnerships are expected to add over 70 million new devices globally[2]

Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $142.6 million, flat sequentially but down 12% year-on-year [17] - Adjusted EBITDA was $25.4 million, down from $40 million in the prior year [22] - Non-GAAP adjusted net income was $15.7 million or $0.15 per share, compared to $30 million or $0.29 per share in the same quarter last year [23] Business Line Data and Key Metrics Changes - On-device solutions (ODS) segment revenues were $94.3 million, down 2% year-on-year [17] - App growth platform (AGP) revenues were $49.2 million, growing 6.5% sequentially but declining 27% year-on-year [19] - Gross margin for the consolidated business was 45%, down from 50% in the prior year [20] Market Data and Key Metrics Changes - U.S. device sales faced significant headwinds, with a double-digit year-over-year decline noted [28] - Despite challenges, there were signs of improving spend levels from brand advertisers, with over 25% sequential growth in brand business [8] Company Strategy and Development Direction - The company is focusing on modernizing its tech stack, with 40% of the product and tech organization dedicated to future growth initiatives [11] - Expansion of relationships with Motorola and ONE Store aims to enhance device pipeline and revenue opportunities [9][14] - The company is positioning itself as a major player in the alternative app distribution market, leveraging partnerships and technology [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged persistent headwinds in U.S. device sales but expressed optimism about future improvements based on chipset supplier feedback [28] - The company expects to see material improvements from tech stack modernization over the next 12 months [30] - Future revenue growth is anticipated from new partnerships and successful execution against the pipeline in FY25 [25] Other Important Information - The company has taken equity stakes in ONE Store and Flexion to enhance its alternative app store strategy [14] - The Digital Markets Act (DMA) is expected to launch in early March in the EU, presenting new opportunities for the company [15] Q&A Session Summary Question: Device headwinds and market recovery - Management noted significant declines in U.S. device sales but indicated potential improvements as the year progresses, particularly with new device launches [28] Question: Tech stack implementation timeline - The tech stack modernization is expected to roll out over the next 12 months, with material improvements anticipated in upcoming quarters [30] Question: Economics of the ONE Store partnership - The partnership with ONE Store is seen as a phase one initiative, focusing on user acquisition and in-app advertising, with further strategic developments expected [34] Question: Leadership changes and organizational structure - The company is moving to a GM model for clearer accountability and faster decision-making, with leadership changes aimed at improving execution [39] Question: Revenue growth expectations for FY25 - Management expressed optimism about driving revenue growth in FY25, supported by ongoing initiatives and partnerships [50]

Financial Performance - Net revenue for the three months ended December 31, 2023, was $142,634, a decrease of 12.1% compared to $162,310 for the same period in 2022 [122]. - For the nine months ended December 31, 2023, net revenue was $432,259, down 17.8% from $525,802 in the prior year [123]. - On Device Solutions revenue decreased by $2,018 or 2.1% to $94,298 for the three months ended December 31, 2023, and by $31,811 or 9.8% to $291,608 for the nine months [125]. - App Growth Platform revenue fell by $18,226 or 27.0% to $49,181 for the three months and by $63,706 or 30.6% to $144,323 for the nine months [127]. - Total costs of revenue and operating expenses for the three months ended December 31, 2023, were $151,901, a slight decrease of 0.4% from $152,513 in 2022 [128]. - For the nine months, total costs increased by 27.3% to $598,858 compared to $470,488 in the previous year [129]. - Revenue share decreased by $3,006 or 4.1% to $70,364 for the three months ended December 31, 2023, and by $28,943 or 12.2% to $208,675 for the nine months [132]. - General and administrative expenses increased by 16.2% to $45,455 for the three months and by 11.4% to $127,339 for the nine months [128]. - The company reported a $214,665 thousand decrease in net income, which included a goodwill impairment charge of $147,181 thousand [167]. Goodwill Impairment - As of September 30, 2023, the company recognized a goodwill impairment charge of $147,181 for its AGP reporting unit due to a sustained decline in the market price of its common stock and unfavorable operating trends [112]. - The impairment of goodwill was recorded at $147,181 for the nine months ended December 31, 2023 [129]. - The company’s next annual evaluation of goodwill for impairment is scheduled for March 31, 2024, with potential for further impairments if growth rates decline [113]. - The company recorded a non-deductible, non-cash goodwill impairment charge of $147,181 for the AGP reporting unit for the quarter ended September 30, 2023 [150]. Business Transformation and Investments - The company incurred business transformation costs of $4,763 and $7,291 for the three and nine months ended December 31, 2023, respectively, related to the implementation of a new global cloud-based ERP system [119]. - The company is undertaking a multi-year business transformation initiative aimed at improving operational efficiency through new systems and platforms [118]. - The company entered into an agreement to invest $10,000 in One Store, the largest alternative app store in South Korea, with additional investments contingent on performance milestones [117]. - The company incurred total business transformation, severance, and transaction costs of $5,718 and $9,535 for the three and nine months ended December 31, 2023, respectively [131]. Economic and Market Conditions - The company has observed a decrease in mobile device sales volume, attributed to inflation and economic uncertainty, which may continue to impact its business and financial condition [106]. - The company’s financial performance is influenced by macroeconomic conditions, including inflation and consumer confidence, which have led to a global slowdown in economic activity [105]. - The company is actively monitoring geopolitical developments, including the conflict in Israel, which could potentially affect its operations given its significant presence in the region [108]. - The company continues to face risks from U.S. government actions against China-based developers, which could negatively impact its business operations [109]. Debt and Cash Management - As of December 31, 2023, the company had unrestricted cash of approximately $48,959 and $149,000 available to draw under the New Credit Agreement [156]. - Outstanding secured indebtedness under the New Credit Agreement is $376,000 as of December 31, 2023, with a maturity date of April 29, 2026 [160]. - The company amended its New Credit Agreement to increase the limit of permitted investments from $20,000 to $75,000 and adjusted the interest rate to SOFR plus between 1.50% and 2.75% [116]. - Cash flows from operating activities generated for the nine months ended December 31, 2023, amounted to $40,433 [156]. - Net cash provided by operating activities decreased to $40,433 thousand for the nine months ended December 31, 2023, down 58.5% from $97,514 thousand in the same period of 2022 [164]. - Net cash used in investing activities increased to approximately $26,997 thousand for the nine months ended December 31, 2023, compared to $25,306 thousand in the prior year, primarily due to capital expenditures [168]. - Net cash used in financing activities was approximately $39,275 thousand, a significant decrease from $116,701 thousand in the same period of 2022, mainly due to reduced debt repayment [169]. - The company has minimum purchase commitments under hosting agreements totaling approximately $278,600 thousand over the next four fiscal years [163]. Expenses and Costs - Product development expenses decreased by $1,182 or 8.3% to $13,036 for the three months ended December 31, 2023, compared to $14,218 for the same period in 2022 [136]. - Sales and marketing expenses decreased by $2,037 or 12.4% to $14,432 for the three months ended December 31, 2023, remaining at 10.1% of total net revenue [141]. - Interest expense, net, increased by $753 or 10.9% for the three months ended December 31, 2023, primarily due to an increase in interest rates of 201 basis points [154]. - Product development expenses as a percentage of total net revenue for the nine months ended December 31, 2023, increased to 9.1% from 7.8% in the prior year [140]. Foreign Currency and Interest Rate Risks - The company is exposed to foreign currency exchange risks, particularly with transactions in euros, Turkish lira, and British pounds, which may impact future revenues and cash flows [175]. - A hypothetical increase in market interest rates of 100 basis points would result in an increase in interest expense of $10 per year for every $1,000 of outstanding debt under the company's credit facility [174].

Digital Turbine, Inc. (NASDAQ:APPS) Q2 2024 Earnings Conference Call November 8, 2023 4:30 PM ET Company Participants Brian Bartholomew - SVP, Capital Markets Bill Stone - CEO Barrett Garrison - CFO Conference Call Participants Darren Aftahi - ROTH MKM Anthony Stoss - Craig-Hallum Tim Horan - Oppenheimer Operator Good afternoon and welcome to the Digital Turbine Reports Fiscal 2024 Second Quarter Results Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-35958 DIGITAL TURBINE, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware (State or Other Jurisdiction of Incorporation or Organization) 110 ...

Digital Turbine, Inc. (NASDAQ:APPS) Q1 2024 Earnings Conference Call August 8, 2023 4:30 PM ET Company Participants Brian Bartholomew - Senior Vice President, Capital Markets Bill Stone - Chief Executive Officer Barrett Garrison - Executive Vice President and Chief Financial Officer Conference Call Participants Arthur Chu - Bank of America Dan Day - B. Riley Securities Anthony Stoss - Craig Hallum Operator Good day, and welcome to the Digital Turbine Fiscal 2024 First Quarter Earnings Conference Call. Today ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-35958 DIGITAL TURBINE, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware (State or Other Jurisdiction of Incorporation or Organization) 110 San ...

Financial Performance and Results - Net revenue for 2023 was $665.9 million, down 10.9% from $747.6 million in 2022[307] - Net income attributable to Digital Turbine, Inc. was $16.67 million in 2023, a decrease of 53.1% from $35.55 million in 2022[307] - Basic net income per common share was $0.17 in 2023, down from $0.37 in 2022[307] - Diluted net income per common share was $0.16 in 2023, down from $0.35 in 2022[307] - Total costs of revenue and operating expenses decreased to $619.76 million in 2023 from $655.36 million in 2022, a 5.4% reduction[307] - Net income for the year 2023 was $16.87 million, a decrease from $35.57 million in 2022 and $54.88 million in 2021[309] - Net cash provided by operating activities in 2023 was $113.38 million, compared to $84.74 million in 2022 and $62.80 million in 2021[309] - Depreciation and amortization expenses increased to $81.07 million in 2023 from $57.45 million in 2022 and $7.11 million in 2021[309] - Stock-based compensation expense rose to $30.40 million in 2023, up from $19.30 million in 2022 and $5.88 million in 2021[309] - Net cash used in investing activities was $35.07 million in 2023, significantly lower than $172.00 million in 2022 and $37.81 million in 2021[309] - Net cash provided by (used in) financing activities was $(128.29) million in 2023, compared to $185.24 million in 2022 and $(15.22) million in 2021[309] - Common stock issued for the acquisition of Fyber was $50.00 million in 2023, down from $356.69 million in 2022[309] - Total stockholders' equity at March 31, 2023 was $516.22 million, up from $145.11 million in 2021[312] - Foreign currency translation loss was $(2.60) million in 2023, compared to $(38.44) million in 2022 and $(312) thousand in 2021[312] - Additional paid-in capital increased to $745.66 million in 2022 from $360.22 million in 2021, and further to $776.91 million in 2023[312] - The company's balance at March 31, 2023, was $99,458,369, with a net share settlement of equity awards resulting in a withholding tax payment of $6,709[313] Revenue Recognition and Segments - The company's revenue recognition is based on fixed CPM, CPI, or CPA arrangements, with revenue recognized upon ad rendering or end consumer action completion[320] - The company's On Device Solutions (ODS) segment operates under a revenue share model with OEMs and carriers, offering services such as SaaS platform access and hosting[322] - The company's ODS - Application Media segment operates through CPI, CPP, and CPA arrangements, with revenue recognized upon application delivery to end-user devices[323] - The company's ODS - Content Media segment offers programmatic advertising and targeted media content delivery under CPM and page-view arrangements[324] - The company's AGP - Marketplace segment facilitates real-time bidding auctions for ad inventory, with revenue recognized based on impressions and bid prices[327] - The company's AGP - Brand and Performance segment contracts directly with advertisers, recognizing revenue based on CPM or CPI rates[328] Acquisitions and Integration - The company recently completed acquisitions of Appreciate, AdColony, and Fyber, aiming to integrate these businesses to achieve strategic goals in mobile advertising and monetization[54] - Integration challenges with recent acquisitions could lead to unforeseen expenses, delays, or failure to realize anticipated benefits[54][57] - The company plans to pursue acquisitions to expand its business, but these could involve significant costs, integration challenges, and potential dilution of stockholder value[84][87] - The company initiated two significant acquisitions in the fiscal quarter ended June 30, 2021[313] Expenses and Costs - The company expects to increase expenses significantly due to initiatives such as new product development, international and domestic expansion, and infrastructure growth[50] - The company capitalized software development costs of $22,816, $23,784, and $8,859 for fiscal years 2023, 2022, and 2021, respectively[338] - The company's software development costs are amortized over a 3-year useful life[338] - The company made contributions to the 401(k) plan of $1,360, $811, and $558 for the years ended March 31, 2023, 2022, and 2021, respectively[342] Risks and Challenges - The company has a history of net losses and may incur substantial net losses in the future, potentially failing to achieve or sustain profitability[50] - The company faces risks in international operations, including regulatory compliance, cultural differences, and higher costs, which could hinder growth[59] - Revenue and operating results may vary significantly due to factors such as seasonal advertiser spending, product release timing, and economic conditions[62][63] - A significant portion of the company's revenue is derived from a limited number of wireless carriers and customers, making it vulnerable to changes in these relationships[64][67] - Advertising spend levels significantly impact revenue, and a reduction in advertising budgets could negatively affect financial performance[68] - The company may face goodwill impairment, potentially requiring a significant charge to earnings[70] - Global economic downturns, inflation, and geopolitical instability could adversely affect the company's business, operating results, and financial condition[71] - The company relies on complex software for its products and services, which may contain undetected errors, bugs, or vulnerabilities, potentially leading to customer dissatisfaction, delayed product launches, and financial losses[74] - The company handles confidential and personally identifiable information, and any failure to safeguard this data could result in reputational harm, legal liabilities, and financial damages[75][76] - Cybersecurity risks, including data breaches and cyber-attacks, could disrupt operations, damage the company's reputation, and negatively impact revenue and stock price[77][78] - The company faces challenges in hiring and retaining key talent, particularly in high-demand regions with high living costs, which could affect its ability to meet operational and managerial requirements[80][81] - The company is implementing a new ERP system globally, and any delays or issues in this process could disrupt business operations and financial reporting[88][89] - The company operates in a highly competitive mobile advertising industry, facing competition from major players like Google, Facebook, and Amazon, which could impact market share and profitability[93][94] - Rapid technological changes in mobile devices and networks require the company to continuously adapt its products and services, with failure to do so potentially limiting market opportunities[96][97] - The company must navigate evolving regulatory requirements, particularly in data protection, which could increase operational costs and restrict business activities[99] - The company's financial stability could be affected by adverse developments in the financial services industry, including liquidity issues or defaults by financial institutions[89][90] - The company's business depends on the continued growth in usage of smartphones, tablets, and other mobile connected devices, which could be inhibited by factors such as inadequate network infrastructure, security concerns, and changes in network carrier pricing plans[101][102] - Rapid changes in wireless communication technologies may require the company to invest heavily in product development to remain competitive, potentially delaying product releases and increasing costs[103] - The complexity and incompatibility among mobile devices necessitate continuous investment in product development and maintenance, which could lead to increased costs as more advanced devices are introduced[104] - A decline in wireless subscribers' use of mobile devices to access content and applications could adversely affect the company's business growth and future revenue[106] - Security vulnerabilities in mobile devices or wireless networks could lead to reduced user engagement and delayed adoption of new devices, negatively impacting the company's revenue[109] - The company faces potential legal liabilities related to intellectual property and data privacy, which could result in costly legal actions and require changes to its business operations[111] - The COVID-19 pandemic has caused significant disruptions to the global economy, and its ongoing impact on the company's operations and financial performance remains uncertain[113][114] - The Russia-Ukraine conflict has created geopolitical instability and economic disruptions, including inflation and supply chain issues, which could adversely affect the company's business[115] - Trade tensions between the U.S. and China, along with regulatory changes in China, could restrict the company's ability to operate in Chinese markets and impact its business[116][118] - The company is subject to stringent data protection laws, such as the GDPR and UK GDPR, which impose significant compliance requirements and potential fines for breaches[120][121] - The company is subject to the Brazilian General Data Protection Law enacted in September 2020, which imposes similar obligations to GDPR[123] - The California Consumer Privacy Act (CCPA) took effect on January 1, 2020, and became enforceable on July 1, 2020, creating new privacy rights for California consumers and increasing compliance costs[125] - The California Privacy Rights Act (CPRA) was passed on November 3, 2020, and will take substantial effect on January 1, 2023, expanding consumer rights and increasing regulation on online advertising[126] - Virginia, Colorado, and Utah have passed privacy laws taking effect in 2023, with Virginia's law effective January 1, 2023, Colorado's on July 1, 2023, and Utah's on December 31, 2023[127] - The EU-US Privacy Shield Framework was invalidated by the CJEU on July 16, 2020, creating uncertainty for cross-border data transfers from the EEA to the U.S.[129] - The U.S. and EU announced an "agreement in principle" on March 25, 2022, for a new trans-Atlantic data transfer framework, but its implementation and legal standing remain unclear[133] - China's Personal Information Protection Law and Data Security Law, effective November 1, 2021, impose stringent data transfer requirements, including data subject consent[134] - The Children's Online Privacy Protection Act (COPPA) in the U.S. requires parental consent for collecting personal information from children under 13, with increased enforcement in recent years[137] - The company faces potential fines, litigation, and reputational harm due to non-compliance with privacy laws, including GDPR, CCPA, and other global regulations[140] - The company is subject to anti-bribery laws such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, with risks increasing in countries with high corruption levels[140] - Regulatory changes in marketing and advertising could significantly impact the company's revenue and financial condition[144][145] - Potential health concerns related to mobile phone use may increase government regulation and reduce demand for the company's products[147] - Intellectual property risks include potential infringement claims and the need for costly litigation to protect rights[150][152][153] - Use of open-source software in the company's platform poses risks of security vulnerabilities and potential legal disputes[155][156][159] - The company faces potential litigation risks, including class action lawsuits, which could result in significant costs and management distraction[160][161] - Indemnity provisions in agreements with carriers and customers expose the company to substantial liability for intellectual property infringement and other losses[162] - The company has secured and unsecured indebtedness totaling $413,134 as of March 31, 2023, which could limit financial flexibility and increase vulnerability to economic conditions[164] - Variable interest rates on the company's credit facility expose it to interest rate fluctuations, potentially adversely affecting operations[165] - The company's ability to service debt and fund capital requirements depends on future performance and factors beyond its control[167] - The market price of the company's common stock is highly volatile and subject to wide fluctuations due to various external factors[168][170] - The company does not anticipate paying dividends due to restrictions from secured and unsecured indebtedness, and the Board of Directors does not intend to declare dividends for the foreseeable future[174] - A material weakness in internal control over financial reporting was identified, which could result in material misstatements if not remediated. Management concluded that internal controls were not effective as of March 31, 2022[176][177] - The company is exposed to interest rate fluctuation risk, with a hypothetical 100 basis points increase in market interest rates resulting in an additional $10 interest expense per year for every $1,000 of outstanding debt[283] - Foreign currency exchange risk impacts the company's operations, particularly with transactions in euros, Turkish lira, and British pounds. Fluctuations in exchange rates may affect future revenues, expenses, and cash flows[284] - The company's financial statements for the fiscal years ending March 31, 2023, and 2022 were audited and found to present fairly in accordance with U.S. GAAP[288] - A critical audit matter was identified regarding the goodwill impairment assessment of the App Growth Platform reporting unit, involving subjective and complex judgments in discounted future cash flow assumptions[292][293] - The company has not used derivative financial instruments to manage interest rate or foreign currency exchange risk exposure[283][284] - The company's internal control remediation efforts may divert management's attention from other business concerns, potentially harming operating results and financial condition[180] - The company's bylaws include anti-takeover provisions that could limit stockholder actions and affect the market price of its common stock[182][183] - The company's foreign operations may face increased exposure to currency exchange rate fluctuations as they expand[284] Assets and Liabilities - Total assets decreased to $1.266 billion in 2023 from $1.458 billion in 2022, a decline of 13.2%[305] - Cash and cash equivalents dropped to $75.06 million in 2023 from $126.77 million in 2022, a 40.8% decrease[305] - Accounts receivable decreased to $178.19 million in 2023 from $263.14 million in 2022, a 32.3% reduction[305] - Long-term debt decreased to $410.52 million in 2023 from $520.79 million in 2022, a 21.2% reduction[305] Internal Controls and Audits - The company maintained effective internal control over financial reporting as of March 31, 2023[299] - A material weakness in internal control over financial reporting was identified, which could result in material misstatements if not remediated. Management concluded that internal controls were not effective as of March 31, 2022[176][177] - The company's internal control remediation efforts may divert management's attention from other business concerns, potentially harming operating results and financial condition[180] Stock and Dividends - The market price of the company's common stock is highly volatile and subject to wide fluctuations due to various external factors[168][170] - The company does not anticipate paying dividends due to restrictions from secured and unsecured indebtedness, and the Board of Directors does not intend to declare dividends for the foreseeable future[174] - The company's bylaws include anti-takeover provisions that could limit stockholder actions and affect the market price of its common stock[182][183] Taxation and Accounting - The company accounts for income taxes using FASB ASC 740-10, recognizing deferred tax assets and liabilities based on expected future tax consequences[343] - The company evaluates its ability to realize deferred tax assets using all available evidence and determines if a valuation allowance is needed[344] - The company reported foreign currency translation adjustment losses of $2,386, $39,395, and $312 for the years ended March 31, 2023, 2022, and 2021, respectively[345] Technology and Development - The company relies on complex software for its products and services, which may contain undetected errors, bugs, or vulnerabilities, potentially leading to customer dissatisfaction, delayed product launches, and financial losses[74] - The company uses the Black-Scholes option pricing model to value stock options, involving subjective assumptions like expected volatility, interest rates, dividend rates, and option's expected life[341] Regulatory Compliance - The company is subject to stringent data protection laws, such as the GDPR and UK GDPR, which impose significant compliance requirements and potential fines for breaches[120][121] - The company is subject to the Brazilian General Data Protection Law enacted in September 2020, which imposes similar obligations to GDPR[123] - The California Consumer Privacy Act (CCPA) took effect on January 1, 2020, and became enforceable on July 1, 2020, creating new privacy rights for California consumers and increasing compliance costs[125] - The California Privacy Rights Act (CPRA) was passed on November 3, 2020, and will take substantial effect on January 1, 2023, expanding consumer rights and increasing regulation on online advertising[126] - Virginia, Colorado, and Utah have passed privacy laws taking effect in 2023, with Virginia's law effective January 1, 2023, Colorado's on July 1, 2023, and Utah's on December 31, 2023[127] - The EU-US Privacy Shield Framework was invalidated by the CJEU on July 16, 2020, creating uncertainty for cross-border data transfers from the EEA to the U.S.[129] - The U.S. and EU announced an "agreement in principle" on March 25, 2022, for a new trans-Atlantic data transfer framework, but its implementation and legal standing remain unclear[133] - China's Personal Information Protection Law and Data Security Law, effective November 1, 2021, impose stringent data transfer requirements, including data subject consent[134] - The Children's Online Privacy Protection Act (COPPA) in the U.S. requires parental consent for collecting personal information from children under 13, with increased enforcement in recent years[137] - The company faces potential fines, litigation, and reputational harm due to non-compliance with privacy laws, including GDPR, CCPA, and other global regulations[140] - The company is subject to anti-bribery laws such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, with risks increasing in countries with high corruption levels[140] - Regulatory changes in marketing and advertising could significantly impact the company's revenue and financial condition[144][145] - Potential health concerns related to mobile phone use may increase government regulation and reduce demand for the company's products[147]