Digital Turbine, Inc. (NASDAQ:APPS) Q4 2023 Earnings Conference Call May 24, 2023 4:30 PM ET Corporate Participants Brian Bartholomew - Senior Vice President, Capital Markets and Strategy Bill Stone - Chief Executive Officer Barrett Garrison - Chief Financial Officer Conference Call Participants Darren Aftahi - ROTH MKM Omar Dessouky - Bank of America Anthony Stoss - Craig-Hallum Dan Day - B. Riley Operator Good afternoon, and welcome to the Digital Turbine Fourth Quarter and Fiscal Year 2023 Financial Resu ...

Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $162.3 million, down 25% year-over-year, impacted by a deceleration in advertising spending and declines in U.S. device sales [26][28] - Non-GAAP gross profit margin increased to 50% from 46% year-over-year, with non-GAAP gross profit of $81.2 million, down 18% year-over-year [27][28] - Adjusted EBITDA was $40 million, a decrease of 30% year-over-year, with an EBITDA margin of 25% compared to 26% in the prior year [28][29] - Non-GAAP adjusted net income was $30.2 million or $0.29 per share, down from $50.9 million or $0.49 per share in Q3 2022 [29] Business Line Data and Key Metrics Changes - The on-device business saw a 10% year-over-year increase in overall devices, but U.S. device sales were the lowest since fiscal 2019, impacting quarterly results [15][26] - Revenue per device (RPD) in the U.S. was over $5, up year-over-year, while international RPD did not see the same growth due to a higher mix of devices in developing markets [15][16] - The app growth platform (AGP) business was flat quarter-over-quarter but down 24% year-over-year, primarily due to macro declines in ad rates and consolidation of AdColony business lines [18] Market Data and Key Metrics Changes - Global device shipments declined by 12% in 2022, the lowest level since 2013, with U.S. shipments at their lowest since 2019 [10][15] - ECPMs across all ad formats and geographies declined between 10% to 20% year-over-year, consistent with industry trends [19] Company Strategy and Development Direction - The company is focusing on capital allocation towards future projects, emphasizing growth in the brand business and SingleTap while deemphasizing legacy performance and reseller ad tech businesses [14] - The launch of alternative app stores is seen as a strategic growth opportunity, with plans to leverage on-device technology and partnerships to create new revenue streams [20][22] - The company aims to build a Shopify for app stores, addressing market pain points and enhancing app publisher experiences [21][22] Management's Comments on Operating Environment and Future Outlook - Management views the current macroeconomic challenges as temporary, with expectations for a rebound in digital ad spending as advertisers adjust their strategies [8][12] - The company is committed to running a lean and profitable business, with cash operating expenses decreasing year-over-year [30] - The outlook for fiscal 2023 revenue is projected to be between $660 million and $670 million, with adjusted EBITDA between $165 million and $170 million [31] Other Important Information - The company has extended contracts with AT&T and Verizon for three and four years, respectively, which is expected to provide stability [13] - The company is experiencing headwinds from prepaid content media products, which are not prioritized over other growth initiatives [54] Q&A Session Summary Question: Visibility on device numbers and assumptions for the March quarter - Management indicated that they had visibility on device forecasts from partners, but the holiday season did not meet expectations, leading to a haircut in assumptions for the current quarter [34][35] Question: Pipeline for SingleTap licensing - Management noted strong product market fit for SingleTap, with operational challenges being the main hurdle rather than interest from potential partners [36][37] Question: Impact of pricing and volume on revenue decline - Management clarified that the decline was primarily driven by pricing on the ad tech side, while volumes remained relatively flat [47][48] Question: Update on prepaid content media partnerships - Management acknowledged the need for improvement in content media partnerships but emphasized focus on other growth areas [52][54] Question: Challenges from SDK runtime changes - Management stated that they are not currently facing headwinds from SDK changes, focusing instead on ad tech enhancements [56]

[Part I - Financial Information](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This part presents the company's unaudited financial statements, management's analysis, and market risk disclosures [Item 1. Consolidated Financial Statements](index=3&type=section&id=ITEM%201.%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Presents the unaudited condensed consolidated financial statements for the period ended December 31, 2022 [Condensed Consolidated Balance Sheets](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Balance Sheet Highlights | Balance Sheet Highlights (in thousands) | Dec 31, 2022 (Unaudited) | March 31, 2022 | | :--- | :--- | :--- | | Cash | $79,307 | $126,768 | | Accounts receivable, net | $231,001 | $263,139 | | Goodwill | $560,340 | $559,792 | | Intangible assets, net | $395,181 | $440,589 | | **Total Assets** | **$1,352,675** | **$1,458,509** | | Accounts payable | $154,320 | $167,858 | | Long-term debt, net | $422,310 | $520,785 | | **Total Liabilities** | **$745,048** | **$942,294** | | **Total Stockholders' Equity** | **$605,649** | **$514,571** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME%20%2F%20(LOSS)) Income Statement | Income Statement (in thousands) | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $162,310 | $216,818 | $525,802 | $563,461 | | Income from operations | $9,797 | $29,139 | $55,314 | $64,816 | | Net income | $4,062 | $7,062 | $30,723 | $15,428 | | Diluted EPS | $0.04 | $0.07 | $0.30 | $0.15 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Cash Flows | Cash Flows (in thousands) | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $97,514 | $43,462 | | Net cash used in investing activities | ($25,306) | ($163,884) | | Net cash provided by / (used in) financing activities | ($116,701) | $210,298 | | Net change in cash | ($47,301) | $84,322 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Details significant accounting policies, recent acquisitions, segment restructuring, and legal contingencies - On November 1, 2022, the Company acquired In App Video Services UK LTD for an estimated total consideration between **$2.25 million and $5.5 million**[30](index=30&type=chunk)[31](index=31&type=chunk) - Effective April 1, 2022, the company restructured its segments into **'On Device Solutions' (ODS)** and a single **'App Growth Platform' (AGP)** to drive efficiencies[53](index=53&type=chunk)[54](index=54&type=chunk) - As of December 31, 2022, the company had **$422.3 million in long-term debt**, net of issuance costs, primarily from its revolving credit facility[76](index=76&type=chunk) - The company is facing **shareholder class action and derivative complaints** related to its May 2022 announcement of a financial restatement, with an uncertain outcome[99](index=99&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=28&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management analyzes financial performance, including a quarterly revenue decline and segment results [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Net Revenue by Segment | Net Revenue by Segment (in thousands) | Q3 FY23 (ended Dec 31, 2022) | Q3 FY22 (ended Dec 31, 2021) | % Change | | :--- | :--- | :--- | :--- | | On Device Solutions | $96,316 | $133,594 | (27.9)% | | App Growth Platform | $67,407 | $89,113 | (24.4)% | | **Total net revenue** | **$162,310** | **$216,818** | **(25.1)%** | - **On Device Solutions (ODS) revenue decreased by 27.9% YoY** for the quarter, driven by the ending of a carrier partnership and weak new device demand[118](index=118&type=chunk) - **App Growth Platform (AGP) revenue decreased by 24.4% YoY** for the quarter, attributed to weak advertising demand and broader market weakness[120](index=120&type=chunk) - **License fees and revenue share decreased by 32.7% YoY** for the quarter, falling from 50.3% to 45.2% of total net revenue due to changes in revenue mix[124](index=124&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) - As of December 31, 2022, primary liquidity sources included **$79.3 million in unrestricted cash** and **$174.9 million available under its credit facility**[141](index=141&type=chunk) - **Cash flow from operating activities increased significantly to $97.5 million** for the nine months ended Dec 31, 2022, up from $43.5 million in the prior-year period[149](index=149&type=chunk) - The company has minimum purchase commitments under hosting agreements totaling approximately **$181.6 million over the next 4 years**[144](index=144&type=chunk) - **Net cash used in financing was $116.7 million** for the nine-month period, primarily due to debt repayments of $129.5 million[152](index=152&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Identifies primary market risks from interest rate fluctuations and foreign currency exchange exposure - The company is exposed to **interest rate risk** as its credit facility borrowings are at variable rates[155](index=155&type=chunk) - The company faces **foreign currency exchange risk** from transactions denominated in currencies other than the U.S. dollar, mainly the euro, Turkish lira, and British pound[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls were deemed ineffective due to a material weakness in financial reporting - Management concluded that **disclosure controls and procedures were not effective** as of December 31, 2022, due to a material weakness in internal control[161](index=161&type=chunk) - The material weakness relates to **business combinations**, where a control was not adequately designed to conform an acquiree's accounting policies to company standards[160](index=160&type=chunk) - **Remediation efforts are underway** and management expects the remediation to be complete by March 31, 2023[163](index=163&type=chunk)[164](index=164&type=chunk) [Part II - Other Information](index=40&type=section&id=PART%20II%20OTHER%20INFORMATION) Covers legal proceedings and updates to risk factors [Item 1. Legal Proceedings](index=40&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Details shareholder class action and derivative complaints related to a financial restatement - Shareholders filed **class action and derivative complaints** against the company and its officers in mid-2022 following the announcement of a financial restatement[168](index=168&type=chunk) - The claims allege violations of federal securities laws and breaches of fiduciary duties, which the company denies and plans to defend against[168](index=168&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=ITEM%201A.%20RISK%20FACTORS) Confirms no material changes to previously disclosed risk factors from the annual report - There are **no material changes** to the risk factors disclosed in the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2022[169](index=169&type=chunk)

Digital Turbine, Inc. (NASDAQ:APPS) Q2 2023 Results Conference Call November 9, 2022 4:30 PM ET Company Participants Brian Bartholomew - Senior Vice President, Capital Markets Bill Stone - Chief Executive Officer Barrett Garrison - Chief Financial Officer Conference Call Participants Dan Day - B. Riley Securities Darren Aftahi - ROTH Capital Partners Omar Dessouky - Bank of America Anthony Stoss - Craig-Hallum Arthur Chu - BofA Security Operator Good afternoon, and welcome to the Digital Turbine Fiscal Sec ...

Financial 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].

Digital Turbine, Inc. (NASDAQ:APPS) Q1 2023 Earnings Conference Call August 8, 2022 4:30 PM ET Company Participants Brian Bartholomew - SVP, Capital Markets & Strategy and IR William Stone - CEO & Director Barrett Garrison - EVP & CFO Conference Call Participants Daniel Day - B. Riley Securities Darren Aftahi - ROTH Capital Partners Anthony Stoss - Craig-Hallum Timothy Nollen - Macquarie Research Mitchell Pindus - Wells Fargo Clearing Services Operator Good day, and welcome to the Digital Turbine Fiscal Fir ...

Financial Position - The Company had $476,134 drawn against its revolving line of credit as of June 30, 2022, with an interest rate of 3.38%[94] - The company had cash totaling approximately $89,839 and $123,866 available to draw under the New Credit Agreement as of June 30, 2022[127] - The company's outstanding secured indebtedness under the New Credit Agreement was $476,134 as of June 30, 2022[131] - 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 the Quarterly Report[129] 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[95] - The Company recognized an $8,913 reduction in the earn-out payment obligation related to AdColony due to an amendment agreement[97] - 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[101] - The Company purchased an additional $18,341 of Fyber's outstanding shares, resulting in an ownership percentage of approximately 99.5% as of June 30, 2022[104] - The Company expects to complete the purchase of the remaining outstanding Fyber shares during fiscal year 2023[104] Revenue and Growth - Total net revenue for the three months ended June 30, 2022, was $188,633, an increase of 19.3% compared to $158,075 for the same period in 2021[113] - App Growth Platform revenue increased by $32,892 or 83.3% for the three months ended June 30, 2022, primarily due to the full quarter of operations from the AdColony and Fyber acquisitions[116] - On Device Solutions revenue decreased by $1,746 or 1.5% for the three months ended June 30, 2022, attributed to lower active daily users[115] Expenses - Costs of revenue and operating expenses increased by $25,268 or 18.2% for the three months ended June 30, 2022, primarily due to the AdColony and Fyber acquisitions[118] - General and administrative expenses increased by $13,731 or 57.2% for the three months ended June 30, 2022, including acquisition-related costs[123] - Interest expense, net, increased by $2,925 for the three months ended June 30, 2022, due to higher average outstanding borrowings and interest rates[126] Cash Flow - The company generated $36,629 in cash flows from operating activities for the three months ended June 30, 2022[127] - For the three months ended June 30, 2022, net cash provided by operating activities was $36,629, a significant increase of $65,626 compared to $(28,997) for the same period in 2021, primarily due to higher non-cash charges and changes in operating assets and liabilities[135] - Net cash used in investing activities for the three months ended June 30, 2022, was approximately $6,413, a decrease of $124,555 from $130,968 in the same period in 2021, mainly due to reduced cash expenditures for business acquisitions[136] - Net cash used in financing activities was approximately $64,569 for the year ended June 30, 2022, compared to net cash provided of $215,068 in the prior year, primarily due to increased repayment of debt obligations[137] - The company reported a repayment of debt obligations of $60,508 for the year ended June 30, 2022, compared to $19,680 in the previous year, reflecting a 207.5% increase in repayment[137] Capital Expenditures - Capital expenditures for the three months ended June 30, 2022, were $6,413, which included investments in product development for both the legacy ODS segment and the AGP segment[136] - The company’s net cash used in investing activities was entirely comprised of capital expenditures related to internally-developed software, indicating a focus on internal growth initiatives[136] Risk Factors - The company’s cash and cash equivalents are sensitive to interest rate changes, with a hypothetical 100 basis points increase in market interest rates resulting in an additional $10 in interest expense per $1,000 of outstanding debt[140] - Foreign currency exchange risk may impact future revenue and cash flows as the company expands its foreign operations, although many transactions are conducted in U.S. Dollars to mitigate this risk[141] Business Segments - The Company operates through two segments: On Device Solutions and App Growth Platform, following a restructuring effective April 1, 2022[107][108] - The App Growth Platform segment provides monetization solutions for mobile app publishers and developers through programmatic and direct advertising[108]

PART I [Business](index=5&type=section&id=ITEM%201.%20BUSINESS) Digital Turbine operates an independent mobile growth platform providing end-to-end solutions for the mobile ecosystem - Digital Turbine is an independent mobile growth platform offering end-to-end products for advertisers, publishers, carriers, and OEMs, focusing on brand discovery, user acquisition, and monetization[10](index=10&type=chunk) - The company executed a strategy to become a leading end-to-end solution for mobile advertising and monetization through the recent acquisitions of **Appreciate (March 2021)**, **AdColony (April 2021)**, and **Fyber (May 2021)**[11](index=11&type=chunk) - The business is organized into three main product and solution categories: **On Device Media (ODM)**, **In-App Media - Fyber (IAM-F)**, and **In-App Media - AdColony (IAM-A)**[23](index=23&type=chunk)[24](index=24&type=chunk)[26](index=26&type=chunk) Product Development Expenses (FY2020-FY2022) | Fiscal Year Ended March 31 | Product Development Costs (in thousands) | | :--- | :--- | | 2022 | $52,723 | | 2021 | $20,119 | | 2020 | $12,018 | - In fiscal year 2022, **no single customer represented more than 10% of net revenue**, a contrast to prior years where major carriers were significant revenue sources[36](index=36&type=chunk)[38](index=38&type=chunk) [Risk Factors](index=11&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant risks related to acquisition integration, industry competition, regulatory changes, and a material weakness in internal controls - The company's business is subject to numerous risks, including the failure to **successfully integrate recent acquisitions**, reliance on a limited number of wireless carriers, and the rapidly evolving nature of its markets[54](index=54&type=chunk) - The mobile advertising industry is **intensely competitive**, and the business depends on the continued growth of smartphone usage, which may be affected by changing technologies and consumer behavior[55](index=55&type=chunk) - The company is subject to increasingly stringent and rapidly changing laws related to privacy and data security, such as **GDPR and CCPA**, which could impose significant costs and restrictions[57](index=57&type=chunk) - A **material weakness in internal control over financial reporting** has been identified, which could result in material misstatements in financial statements if not remediated[62](index=62&type=chunk) - The **Russia-Ukraine conflict** is identified as a risk factor that could negatively impact geopolitical conditions, the global economy, and advertising spending, potentially affecting the company's operating results[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) [Unresolved Staff Comments](index=47&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments from the Securities and Exchange Commission - There are no unresolved staff comments[271](index=271&type=chunk) [Properties](index=47&type=section&id=ITEM%202.%20PROPERTIES) The company's principal executive offices are in Austin, Texas, with additional leased offices in the US and internationally - The company's main offices are in Austin, Texas[271](index=271&type=chunk) - Digital Turbine leases additional office properties in Durham, NC; Arlington, VA; San Mateo, CA; Los Angeles, CA; and San Francisco, CA[271](index=271&type=chunk) - International leased properties are located in Singapore, Berlin, Germany, and Tel Aviv, Israel[271](index=271&type=chunk) [Legal Proceedings](index=48&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) Information regarding legal proceedings is incorporated by reference from the notes to the consolidated financial statements - Details on legal proceedings are provided in Note 13 of the financial statements[273](index=273&type=chunk) [Mine Safety Disclosures](index=48&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURE) This item is not applicable to the company's business operations - Not applicable[274](index=274&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=49&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%2C%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's stock trades on NASDAQ under "APPS," with no cash dividends anticipated and no equity repurchases in fiscal year 2022 - Common stock is traded on the NASDAQ Capital Market under the symbol **"APPS"**[276](index=276&type=chunk) - As of May 24, 2022, there were **99 holders of record** of the common stock[276](index=276&type=chunk) - The company has **not paid cash dividends** and does not plan to in the foreseeable future, with dividends also restricted by debt covenants[276](index=276&type=chunk) - **No purchases of equity securities** were made by the issuer during the fiscal year ended March 31, 2022[276](index=276&type=chunk) [Reserved](index=50&type=section&id=ITEM%206.%20RESERVED) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Fiscal year 2022 revenue grew 138.4% to $747.6 million, driven by organic growth and acquisitions, while expenses rose 157.6% Net Revenue by Segment (FY2022 vs. FY2021) | Segment | FY 2022 Net Revenue (in thousands) | FY 2021 Net Revenue (in thousands) | % Change | | :--- | :--- | :--- | :--- | | On Device Media | $502,636 | $313,579 | 60.3% | | In App Media - AdColony | $169,725 | $0 | 100.0% | | In App Media - Fyber | $92,611 | $0 | 100.0% | | Elimination | ($17,376) | $0 | (100.0)% | | **Total Net Revenue** | **$747,596** | **$313,579** | **138.4%** | Costs of Revenue and Operating Expenses (FY2022 vs. FY2021) | Expense Category | FY 2022 (in thousands) | FY 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | License fees and revenue share | $370,648 | $178,649 | 107.5% | | Other direct costs of revenue | $29,838 | $2,358 | 1,165.4% | | Product development | $52,723 | $20,119 | 162.1% | | Sales and marketing | $63,309 | $19,304 | 228.0% | | General and administrative | $138,837 | $33,940 | 309.1% | | **Total Costs & Expenses** | **$655,355** | **$254,370** | **157.6%** | - As of March 31, 2022, the company had **$524.1 million drawn against its revolving credit facility**, primarily to finance recent acquisitions[287](index=287&type=chunk) Cash Flow Summary (FY2022 vs. FY2021) | Cash Flow Activity | FY 2022 (in thousands) | FY 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $84,738 | $62,795 | | Net cash used in investing activities | ($172,002) | ($37,808) | | Net cash provided by / (used in) financing activities | $185,243 | ($15,216) | [Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks from interest rate fluctuations on its variable-rate debt and foreign currency exchange rates - The company's primary market risks are **interest rate fluctuations** and **foreign currency exchange risk**[382](index=382&type=chunk) - Borrowings under the credit facility are subject to variable interest rates; a **1% (100 basis points) increase** in market rates would increase annual interest expense by **$1 million for every $100 million of debt outstanding**[384](index=384&type=chunk) - Foreign currency risk exists due to revenue and expenses denominated in currencies other than the U.S. dollar, which affects reported financial results upon translation[385](index=385&type=chunk) [Financial Statements and Supplementary Data](index=67&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) The auditor issued an unqualified opinion on financial statements but an adverse opinion on internal controls due to a material weakness - The independent auditor, Grant Thornton LLP, issued an **unqualified opinion on the financial statements** but an **adverse opinion on the company's internal control over financial reporting** as of March 31, 2022[392](index=392&type=chunk)[404](index=404&type=chunk) - The adverse opinion on internal controls was due to a **material weakness** related to the failure to adequately conform the accounting policies of acquired companies to U.S. GAAP, specifically concerning revenue presentation and classification[405](index=405&type=chunk) Consolidated Balance Sheet Highlights (as of March 31) | Account | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Total Assets | $1,458,509 | $260,369 | | Goodwill | $559,792 | $80,176 | | Total Liabilities | $942,294 | $115,257 | | Long-term debt, net | $520,785 | $0 | | Total Stockholders' Equity | $514,571 | $145,112 | Consolidated Statement of Operations Highlights (Year Ended March 31) | Account | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net Revenue | $747,596 | $313,579 | | Income from continuing operations | $92,241 | $59,209 | | Net Income | $35,569 | $54,884 | | Diluted EPS | $0.35 | $0.57 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=101&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURES) The company reports no changes in or disagreements with its accountants on accounting principles, practices, or financial disclosures - None reported[574](index=574&type=chunk) [Controls and Procedures](index=101&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls were not effective as of March 31, 2022, due to a material weakness in internal control - Management concluded that disclosure controls and procedures were **not effective** as of March 31, 2022, due to a material weakness in internal control over financial reporting[576](index=576&type=chunk)[578](index=578&type=chunk) - The material weakness relates to the company's internal control for business combinations, which did not adequately ensure that accounting policies of acquired companies were conformed to company policy and GAAP[584](index=584&type=chunk) - The error led to the **improper gross presentation of certain revenues** that should have been reported net and the misclassification of certain hosting costs[582](index=582&type=chunk)[583](index=583&type=chunk) - A **remediation plan** is in place to strengthen accounting policy reviews for acquisitions, standardize contract review processes, and formalize the approval process for changes to the global chart of accounts[586](index=586&type=chunk) [Other Information](index=102&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) The company reports no other information for this item - None[587](index=587&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=102&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) The company reports no information for this item - None[587](index=587&type=chunk) PART III [Directors, Executive Officers, and Corporate Governance](index=103&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%2C%20AND%20CORPORATE%20GOVERNANCE) Required information is incorporated by reference from the company's Proxy Statement for the 2022 Annual Meeting of Stockholders - Information is incorporated by reference to the Proxy Statement for the 2022 Annual Meeting of Stockholders[589](index=589&type=chunk) [Executive Compensation](index=103&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Required information is incorporated by reference from the company's Proxy Statement for the 2022 Annual Meeting of Stockholders - Information is incorporated by reference to the Proxy Statement for the 2022 Annual Meeting of Stockholders[589](index=589&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=103&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Required information is incorporated by reference from the company's Proxy Statement for the 2022 Annual Meeting of Stockholders - Information is incorporated by reference to the Proxy Statement for the 2022 Annual Meeting of Stockholders[589](index=589&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=103&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%20AND%20DIRECTOR%20INDEPENDENCE) Required information is incorporated by reference from the company's Proxy Statement for the 2022 Annual Meeting of Stockholders - Information is incorporated by reference to the Proxy Statement for the 2022 Annual Meeting of Stockholders[589](index=589&type=chunk) [Principal Accountant Fees and Services](index=103&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Required information is incorporated by reference from the company's Proxy Statement for the 2022 Annual Meeting of Stockholders - Information is incorporated by reference to the Proxy Statement for the 2022 Annual Meeting of Stockholders[590](index=590&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=104&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the documents filed as part of the report, including financial statements and various material exhibits - This section contains the index to Consolidated Financial Statements and a list of all exhibits filed with the report[592](index=592&type=chunk) - Financial statement schedules are omitted because they are not applicable or the required information is already included in the financial statements[592](index=592&type=chunk) [Form 10-K Summary](index=106&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) The company provides no summary for this item - None[597](index=597&type=chunk)

Financial Data and Key Metrics Changes - For fiscal year 2022, the company reported revenues of $748 million, representing a growth of 138% compared to the previous year, with EBITDA of $195 million, up 158%, and non-GAAP earnings per share of $1.66, an increase of 124% [10][24][30] - In Q4 2022, revenue reached $184.1 million, a 94% increase year-over-year, with adjusted EBITDA of $50.4 million, up 124% [26][30] Business Line Data and Key Metrics Changes - The On-Device solutions business saw revenue per device increase from $4.70 in fiscal 2022, up from $3.30 in fiscal 2021, driven by more devices and diversified product offerings [12][13] - The app growth platform business experienced over 30% year-over-year revenue growth, attributed to stronger rates and increased volumes, particularly in video advertising [14][20] Market Data and Key Metrics Changes - The company added over 266 million devices in fiscal 2022, with significant growth in international markets, while U.S. device sales saw marginal increases [12][13] - The APAC region reported strong annual growth exceeding 75%, particularly in video advertising [14] Company Strategy and Development Direction - The company is focusing on expanding its SingleTap licensing business, which is expected to drive significant revenue growth and enhance margins [16][19] - Strategic investments are being made to consolidate ad tech platforms and improve operational efficiencies, with expectations of generating tens of millions in incremental revenue [21][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the macroeconomic challenges, including inflation and geopolitical issues, but emphasized the company's resilience and profitability [7][8] - The outlook for Q1 2023 anticipates revenue growth between $183 million and $187 million, with adjusted EBITDA expected to be between $49 million and $51 million [32] Other Important Information - The company has integrated three key acquisitions and is transitioning to a unified brand, phasing out the Appreciate, AdColony, and Fyber brands [23][31] - Cash operating expenses remained flat year-over-year, despite ongoing investments in growth initiatives [22][28] Q&A Session Summary Question: Can you contextualize the traction with SingleTap licensing? - Management indicated that they are in trial phases with several Tier 1 partners and expect to generate revenue in the next quarter, with positive feedback on integration efforts [36][37] Question: How is the Samsung relationship expanding? - The company is now working with Samsung on tens of millions of devices across approximately 75 countries, with expectations for further growth driven by SingleTap [39] Question: What are the expectations for SingleTap revenue? - Management discussed plans to make SingleTap a significant revenue driver, potentially exceeding direct revenue from their demand-side platform [42][43] Question: What are the material investments being made for the unified platform? - Management highlighted that investments are being funded through efficiencies and synergies, with no incremental cash operating expenses required [45] Question: Where is the current weakness in the business? - Management noted ad spend softness in Europe and Russia, similar to trends observed during the IDFA changes, but emphasized the company's ability to correlate ad spend with returns [52]

Digital Turbine, Inc. (NASDAQ:APPS) Q3 2022 Earnings Conference Call February 8, 2022 4:30 PM ET Company Participants Brian Bartholomew – Senior Vice President of Capital Markets Bill Stone – Chief Executive Officer Barrett Garrison – Chief Financial Officer Conference Call Participants Anthony Stoss – Craig-Hallum Tim Horan – Oppenheimer Darren Aftahi – ROTH Capital Partners Tim Nollen – Macquarie Allen Klee – Maxim Operator Good afternoon, and welcome to the Digital Turbine Fiscal 2022 Third Quarter Finan ...