Financial Data and Key Metrics Changes - Revenue for the quarter was $140.4 million, representing an 18% year-over-year growth [4][12] - Adjusted EBITDA grew by 78% year-over-year, reaching $27.2 million, with an EBITDA margin of 19.4% [4][13] - Free cash flow improved to $7 million, an increase of nearly $23 million year-over-year [13] - GAAP net loss was $21.4 million, or $0.20 per share, while non-GAAP net income was $16.5 million, or $0.15 per share [15] Business Line Data and Key Metrics Changes - On-Device Solutions (ODS) generated $96 million in revenue, up approximately 17% year-over-year, with international ODS revenue growing over 80% year-over-year [5][12] - App Growth Platform (AGP) revenue was $45 million, reflecting a 20% year-over-year increase [5][12] - Revenue per device in the ODS business saw over 30% year-over-year growth in both the US and international markets [6] Market Data and Key Metrics Changes - International revenues exceeded 25% of total ODS revenues for the first time in company history [5] - The company experienced a 40% sequential improvement in its brand business and a double-digit increase in its DTX or SSP business [6] Company Strategy and Development Direction - The company is focused on leveraging first-party data and AI-driven capabilities to enhance operational efficiency and drive growth [8][12] - Investments in AI, branded as DTIQ, are aimed at improving advertising outcomes and return on ad spend for clients [26][31] - The company is positioning itself to capitalize on the growing trend of alternative app distribution models [10][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain profitable growth, citing strong momentum across core businesses [11][16] - The company raised its full-year revenue guidance to a range of $540-$550 million and adjusted EBITDA guidance to $100-$105 million for fiscal year 2026 [16] Other Important Information - The company completed a successful debt refinancing with a new four-year term loan facility, enhancing liquidity for growth initiatives [5][15] - The Ignite Graph and DTIQ are seen as major growth drivers for the future, with over 1,000 unique data signals being utilized [9][30] Q&A Session Summary Question: Insights on brand business and ROI - Management highlighted the integration of platforms leading to improved results and noted that direct brand relationships accounted for 47% of total brand revenue in the September quarter [18][20] Question: International market penetration and RPD revenue - Management reported solid double-digit growth in international RPDs and emphasized the significance of international revenue exceeding 25% of ODS revenues [23] Question: Role of AI in operations and advertising - AI is a critical part of the company's strategy, with significant investments in DTIQ aimed at improving operational efficiency and advertising outcomes [25][26] Question: Impact of recent Supreme Court ruling on alternative app storefront - Management expressed excitement about the democratization of app distribution and the potential for growth in this area [27][28] Question: Competitive landscape changes - Management noted reduced competition in the device side of the business due to a major player exiting the market, while the AGP side remains competitive but focused on building demand-supply connections [32][34]

Core Insights - The mobile advertising technology sector is rapidly evolving due to the maturation of the digital economy and changing user privacy regulations, with Digital Turbine, Inc. (APPS) and AppLovin Corporation (APP) taking different approaches to growth and profitability [1] Digital Turbine - Digital Turbine's On-Device Solutions and App Growth Platform (AGP) are driving significant growth, with international On-Device revenues increasing by 100% year-over-year in Q3 of fiscal 2025, indicating strong advertiser demand and effective operational execution [2] - The company has expanded its global presence through partnerships with major device manufacturers like Motorola, Nokia, and Xiaomi, allowing for seamless app distribution and integration of its technologies across various regions [3] - Despite a near-term risk from softness in U.S. device volume due to extended hardware upgrade cycles, international growth and platform diversification provide substantial offsets [5] AppLovin - AppLovin benefits from integrating AI into its ad tech platform, catering to the increasing demand for data-driven solutions among mobile advertisers [6] - The divestiture of its gaming unit for $900 million allows AppLovin to focus on high-margin advertising solutions, aligning its resources with the global digital advertising market [7] - The AXON ad engine, which utilizes machine learning for enhanced targeting and performance, is central to AppLovin's growth strategy [8] - Financially, AppLovin reported a 44% year-over-year revenue increase and a 78% rise in adjusted EBITDA in Q4 of 2024, with net income growing by 248% year-over-year, showcasing strong demand and operational efficiency [9] Earnings Estimates - The Zacks Consensus Estimate for Digital Turbine's fiscal 2025 earnings has increased by 50% over the past 90 days, with a consistent earnings beat trend in the last four quarters [10] - Conversely, AppLovin's earnings estimates for 2025 have been revised downward by 2.8% in the past 30 days, although it has also consistently beaten earnings estimates in recent quarters [11] Stock Performance - Year-to-date, Digital Turbine shares have risen by 87.6%, while AppLovin's stock has declined by 10.8%, contrasting with a 5.8% drop in the S&P 500 [12] Investment Outlook - Digital Turbine is well-positioned for long-term growth due to strong advertiser demand and a growing network of partnerships, although macroeconomic challenges may temper near-term gains [15] - AppLovin's strong earnings momentum and focus on high-margin ad tech suggest positive long-term prospects, but recent downward revisions warrant caution [16]

Core Viewpoint - Digital Turbine (APPS) has experienced a significant stock price decline after reaching a 52-week high, yet it has shown strong year-to-date performance compared to its industry peers [1][2]. Year-to-Date Price Performance - APPS shares have increased by 58.6% year-to-date, outperforming the Zacks Computer & Technology sector and the Zacks Internet – Software industry [1]. - In contrast, Unity Software and AppLovin have seen declines of 19.2% and 27.1% respectively [2]. Factors Driving Digital Turbine Stock - The On-Device Solutions business has been a major growth driver, with international On-Device revenues increasing by 100% year-over-year in Q3 of fiscal 2025 [7]. - Strong advertiser demand and high revenue per device in both U.S. and international markets indicate the platform's efficiency and pricing power [7]. - Strategic partnerships with major mobile brands like Motorola, Nokia, and Xiaomi have expanded Digital Turbine's reach [8]. - The App Growth Platform, which includes Advertising Solutions and Ad Monetization Solutions, is a key growth engine, benefiting from increased ad spending on mobile [10]. - The company has diversified its AGP supply beyond game publishers, positioning itself for scalable growth in the mobile app segment [11]. Challenges to Consider - Despite strong performance, there are challenges such as softness in U.S. device volumes and fluctuating consumer demand, which could limit expansion opportunities [12]. - Recent earnings estimate revisions show a 50% increase for fiscal 2025, but no recent changes have been made [13]. Conclusion - Digital Turbine is positioned for long-term growth due to strong advertiser demand and global partnerships, with On-Device Solutions and the App Growth Platform as key drivers [15]. - However, macroeconomic uncertainties and competitive pressures may limit near-term upside, suggesting a hold rating is appropriate while awaiting clearer catalysts [15].