• Revenue: $134.6 million, up 13% sequentially.
• Adjusted EBITDA: $22 million.
• Non-GAAP EPS: $0.13 per share.
• Free Cash Flow: $6.4 million.
• ODS Segment Revenue: $91.7 million, 11% increase from the September quarter.
• AGP Business Revenue: $43.8 million, 17% sequential growth.
• Gross Margin: 44%, down from 45% in Q2.
• Cash Operating Expenses: $37.6 million, down 3% sequentially.
• Non-GAAP Adjusted Net Income: $13.7 million.
• GAAP Net Loss: $23.1 million.
• Cash Balance: $34.6 million, an increase of $2.5 million from the September quarter.
• Debt Balance: $408 million.
• Fiscal Year 2025 Revenue Outlook: $485 million to $490 million.
• Fiscal Year 2025 Adjusted EBITDA Outlook: $69 million to $71 million.

• Warning! GuruFocus has detected 8 Warning Signs with APPS.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Digital Turbine Inc (NASDAQ:APPS) exceeded expectations with $135 million in revenue, $22 million in adjusted EBITDA, and $0.13 in non-GAAP EPS.
• The company reported a 100% year-over-year increase in On-Device international revenues, driven by strong advertiser demand.
• Digital Turbine Inc (NASDAQ:APPS) achieved double-digit sequential growth in its AGP business, with brand spending accelerating to 34% year-on-year.
• The company is on track to achieve over $25 million in annual operating expense savings, enhancing efficiency and profitability.
• Digital Turbine Inc (NASDAQ:APPS) is expanding its global device relationships, including partnerships with Motorola, Nokia, and T-Mobile, contributing to growth in international RPDs.

Negative Points

• The company experienced continued softness in US device volumes, impacting overall performance.
• Gross margin declined to 44% from 45% in the previous quarter, influenced by product mix changes in the ODS segment.
• The transition from waterfall bidding to SDK bidding on the exchange has been challenging, impacting legacy performance DSP declines.
• Despite positive growth, the company reported a GAAP net loss of $23.1 million or $0.22 per share.
• Digital Turbine Inc (NASDAQ:APPS) faces a commoditized ad tech gaming space, with DSPs executing their own supply path optimization strategies.

Q & A Highlights

Q: Bill, could you elaborate on why big brand names are returning to Digital Turbine for advertising? Was it due to a seasonally strong December quarter? A: Bill Stone, CEO: The return of big brands is attributed to persistent hard work and building trust over time. It's not just about seasonal strength but about establishing strong relationships with brands and their agencies. Our efforts are now reflected in our business results, and we are excited about the potential for growth in this area.

Q: With Epic's alternative app store gaining traction, do you see other large publishers launching their own app stores using Digital Turbine? A: Bill Stone, CEO: Epic has done a great job in raising awareness and educating the market. We are also working with Microsoft and their Xbox group. The European Commission's Digital Markets Act and Apple's compliance in 2025 will be key moments to watch. We are well-positioned to capitalize on these developments.

Q: What are the key dynamics you are considering for fiscal 2025 relative to this year? A: Bill Stone, CEO: Our focus is on building and scaling the initiatives we've started. Key areas include expanding our brand relationships, leveraging first-party data, and increasing device growth with new operators. We aim to continue the momentum we've built and translate it into revenue and EBITDA growth.

Q: Can you provide more details on the cost reduction efforts and their impact on the business? A: Barrett Garrison, CFO: We are on track to achieve over $25 million in annual cost reductions. These savings come from streamlining operations, optimizing our cost structure, and enhancing processes like billing and invoicing. This is not just about cutting costs but creating a more agile organization to support long-term growth.

Q: How is the transition from waterfall bidding to SDK bidding impacting your AGP business? A: Bill Stone, CEO: The transition to SDK bidding is showing strong growth, now accounting for over 70% of total impressions compared to 5% a year ago. This shift is crucial for unlocking brand spending and diversifying away from the commoditized ad tech gaming space, positioning us for future growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.