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Second Quarter Revenue Totaled $118.7 Million
Second Quarter GAAP Net Loss of $25.0 Million, or GAAP EPS of ($0.24); Second Quarter Non-GAAP Adjusted Net Income1 of $5.0 Million and Non-GAAP Adjusted EPS1 of $0.05
Second Quarter Non-GAAP Adjusted EBITDA2 Totaled $15.3 Million
AUSTIN, Texas, Nov. 6, 2024 /PRNewswire/ -- Digital Turbine, Inc. (Nasdaq: APPS) announced financial results for the fiscal second quarter ended September 30, 2024.
Recent Financial Highlights:
"The September quarter results marked our second consecutive quarter of sequential growth," said Bill Stone, CEO. "While we anticipate continued sequential growth in the current December quarter and a return to year-over-year growth in the March quarter, our outlook for the remainder of fiscal 2025 has been reduced as a result of more significant anticipated headwinds in some of our legacy businesses. In order to drive greater efficiencies with current operations and enhance cash flow generation while simultaneously accelerating innovation and maintaining our investment is several promising future growth initiatives, we have enacted a strategic transformation project. We expect this transformation project to yield more than $25 million in annual cost savings and position the Company for greater profit and cash flow leverage when top-line growth rates re-accelerate. We remain steadfastly confident in the future of Digital Turbine, but we also recognize that we must execute with greater expediency and efficiency while attacking the enormous market opportunity in front of us. We have a clear plan to achieve this core objective and maximally capitalize on our advantageous foothold position in the newly evolving mobile app marketplace."
Fiscal 2025 Second Quarter Financial Results
Total revenue for the second quarter of fiscal 2025 was $118.7 million. Total On Device Solutions revenue before intercompany eliminations was $82.4 million. Total App Growth Platform revenue before intercompany eliminations was $37.3 million.
GAAP net loss for the second quarter of fiscal 2025 was $25.0 million, or ($0.24) per share, as compared to GAAP net loss for the second quarter of fiscal 2024 of $161.5 million, or ($1.61) per share.
Non-GAAP adjusted net income1 for the second quarter of fiscal 2025 was $5.0 million, or $0.05 per share, as compared to Non-GAAP adjusted net income1 of $13.9 million, or $0.13 per share, in the second quarter of fiscal 2024.
Non-GAAP adjusted EBITDA2 for the second quarter of fiscal 2025 was $15.3 million, as compared to Non-GAAP adjusted EBITDA2 for the second quarter of fiscal 2024 of 27.7 million.
Business Outlook
Based on information available as of November 6, 2024, the Company currently expects the following for fiscal year 2025:
It is not reasonably practicable to provide a business outlook for GAAP net income because the Company cannot reasonably estimate the changes in stock-based compensation expense, which is directly impacted by changes in the Company's stock price, or other items that are difficult to predict with precision.
About Digital Turbine, Inc.
Digital Turbine empowers superior mobile consumer experiences and results for the world's leading telcos, advertisers, and publishers. Its end-to-end platform uniquely simplifies its partners' abilities to supercharge awareness, acquisition, and monetization – connecting them with more consumers, in more ways, across more devices. Digital Turbine is headquartered in North America, with offices around the world. For additional information visit www.digitalturbine.com.
Conference Call
Management will host a conference call and webcast today at 6:00 p.m. ET to discuss its fiscal 2025 second quarter financial results and provide operational updates on the business. The conference call will discuss forward guidance and other material information. The call can be accessed online via the webcast link: https:app.webinar.net/pvYVXg0ZeQo. The call can also be accessed by dialing 888-317-6003 in the United States (or 412-317-6061 from international locations) and entering access code 4716696.
A playback will be available through November 13, 2024. The replay can be accessed by dialing 877-344-7529 in the United States or 412-317-0088 from international locations, passcode 9360917. An online webcast will be archived for a period of one year and is available via the Investor Relations section of Digital Turbine's website.
Use of Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements presented in accordance with GAAP, Digital Turbine uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP adjusted net income and earnings per share ("EPS"), non-GAAP adjusted EBITDA, non-GAAP free cash flow and non-GAAP gross profit. Reconciliations to the nearest GAAP measures of all non-GAAP measures included in this press release can be found in the tables below.
Non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance, prospects for the future and as a means to evaluate period-to-period comparisons. The Company believes that these non-GAAP measures provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of recurring core business operating results. The Company believes the non-GAAP measures that exclude such items when viewed in conjunction with GAAP results and the accompanying reconciliations enhance the comparability of results against prior periods and allow for greater transparency of financial results. The Company believes non-GAAP measures facilitate management's internal comparison of its financial performance to that of prior periods as well as trend analysis for budgeting and planning purposes. The presentation of non-GAAP measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
1Non-GAAP adjusted net income and EPS are defined as GAAP net income and EPS adjusted to exclude the effect of stock-based compensation expense, amortization of intangibles, business transformation costs, transaction-related expenses, severance costs, impairment of goodwill, changes in fair value of contingent considerations, and tax adjustments. Readers are cautioned that non-GAAP adjusted net income and EPS should not be construed as an alternative to comparable GAAP net income figures determined in accordance with U.S. GAAP as an indicator of profitability or performance, which is the most comparable measure under GAAP.
2Non-GAAP adjusted EBITDA is calculated as GAAP net income excluding the following cash and non-cash expenses: stock-based compensation expense, depreciation and amortization, net interest income (expense), net other income (expense), business transformation costs, foreign exchange transaction gains (losses), income tax (benefit) provision, transaction-related expenses, impairment of goodwill, changes in fair value of contingent considerations, and severance costs. Non-GAAP adjusted EBITDA margin is calculated as non-GAAP adjusted EBITDA as a percentage of total revenue. Readers are cautioned that non-GAAP adjusted EBITDA should not be construed as an alternative to net income determined in accordance with U.S. GAAP as an indicator of performance, which is the most comparable measure under GAAP.
3Non-GAAP free cash flow, which is a non-GAAP financial measure, is defined as net cash provided by operating activities (as stated in our Consolidated Statements of Cash Flows), excluding transaction-related expenses, severance costs and business transformation costs, reduced by capital expenditures. Readers are cautioned that free cash flow should not be construed as an alternative to net cash provided by operating activities determined in accordance with U.S. GAAP as an indicator of profitability, performance or liquidity, which is the most comparable measure under GAAP.
4Non-GAAP gross profit is defined as GAAP income from operations adjusted to exclude the effect of product development costs, sales and marketing costs, general and administrative costs, impairment of goodwill, and depreciation of software. Readers are cautioned that non-GAAP gross profit should not be construed as an alternative to income from operations determined in accordance with U.S. GAAP as an indicator of profitability or performance, which is the most comparable measure under GAAP.
Non-GAAP adjusted EBITDA, non-GAAP adjusted net income and EPS, non-GAAP free cash flow and non-GAAP gross profit are used by management as internal measures of profitability and performance. They have been included because the Company believes that the measures are used by certain investors to assess the Company's financial performance before non-cash charges and certain costs that the Company does not believe are reflective of its underlying business.
Forward-Looking Statements
This news release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements in this news release that are not statements of historical fact and that concern future results from operations, financial position, economic conditions, product releases and any other statement that may be construed as a prediction of future performance or events, including financial projections and growth in various products are forward-looking statements that speak only as of the date made and which involve known and unknown risks, uncertainties and other factors which may, should one or more of these risks uncertainties or other factors materialize, cause actual results to differ materially from those expressed or implied by such statements. These factors and risks include:
Risks Specific to our Business
Risks Related to the Mobile Advertising Industry
Industry Regulatory Risks
Risks Related to Our Intellectual Property and Potential Liability
Risks Relating to Our Common Stock and Capital Structure
You should not place undue reliance on these forward-looking statements. The Company does not undertake to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Investor Relations Contact:
Brian Bartholomew
Digital Turbine, Inc.
brian.bartholomew@digitalturbine.com
Digital Turbine, Inc. and Subsidiaries Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited) (in thousands, except share and per share amounts) | ||||||||
Three months ended September 30, | Six months ended September 30, | |||||||
2024 | 2023 | 2024 | 2023 | |||||
Net revenue | $ 118,728 | $ 143,259 | $ 236,717 | $ 289,625 | ||||
Costs of revenue and operating expenses | ||||||||
Revenue share | 56,336 | 68,719 | 112,145 | 138,311 | ||||
Other direct costs of revenue | 8,438 | 9,017 | 16,228 | 18,630 | ||||
Product development | 9,433 | 14,037 | 20,147 | 29,837 | ||||
Sales and marketing | 15,887 | 15,537 | 32,134 | 31,114 | ||||
General and administrative | 42,176 | 41,385 | 85,693 | 81,884 | ||||
Impairment of goodwill | — | 147,181 | — | 147,181 | ||||
Total costs of revenue and operating expenses | 132,270 | 295,876 | 266,347 | 446,957 | ||||
Loss from operations | (13,542) | (152,617) | (29,630) | (157,332) | ||||
Interest and other income (expense), net | ||||||||
Change in fair value of contingent consideration | 200 | 372 | 200 | 372 | ||||
Interest expense, net | (9,232) | (7,844) | (17,482) | (15,234) | ||||
Foreign exchange transaction loss | (976) | (2,106) | (158) | (183) | ||||
Other income (expense), net | (36) | — | 78 | 244 | ||||
Total interest and other expense, net | (10,044) | (9,578) | (17,362) | (14,801) | ||||
Loss before income taxes | (23,586) | (162,195) | (46,992) | (172,133) | ||||
Income tax provision (benefit) | 1,400 | (713) | 3,150 | (2,252) | ||||
Net loss | (24,986) | (161,482) | (50,142) | (169,881) | ||||
Less: net loss attributable to non-controlling interest | — | — | — | (220) | ||||
Net loss attributable to Digital Turbine, Inc. | (24,986) | (161,482) | (50,142) | (169,661) | ||||
Other comprehensive income (loss) | ||||||||
Foreign currency translation adjustment | 2,157 | (1,287) | 944 | (7,394) | ||||
Comprehensive loss | (22,829) | (162,769) | (49,198) | (177,275) | ||||
Less: comprehensive income attributable to non-controlling interest | — | — | — | 519 | ||||
Comprehensive loss attributable to Digital Turbine, Inc. | $ (22,829) | $ (162,769) | $ (49,198) | $ (177,794) | ||||
Net loss per common share | ||||||||
Basic | $ (0.24) | $ (1.61) | $ (0.49) | $ (1.69) | ||||
Diluted | $ (0.24) | $ (1.61) | $ (0.49) | $ (1.69) | ||||
Weighted-average common shares outstanding | ||||||||
Basic | 103,041 | 100,604 | 102,722 | 100,272 | ||||
Diluted | 103,041 | 100,604 | 102,722 | 100,272 |
Digital Turbine, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands, except par value and share amounts) | ||||
September 30, 2024 | March 31, 2024 | |||
(Unaudited) | ||||
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | $ 32,765 | $ 33,605 | ||
Accounts receivable, net | 191,612 | 191,015 | ||
Prepaid expenses | 7,093 | 7,704 | ||
Other current assets | 12,419 | 10,017 | ||
Total current assets | 243,889 | 242,341 | ||
Property and equipment, net | 48,159 | 45,782 | ||
Right-of-use assets | 11,222 | 9,127 | ||
Intangible assets, net | 285,848 | 313,505 | ||
Goodwill | 221,059 | 220,072 | ||
Other non-current assets | 34,309 | 34,713 | ||
TOTAL ASSETS | $ 844,486 | $ 865,540 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current liabilities | ||||
Accounts payable | $ 148,062 | $ 159,200 | ||
Accrued revenue share | 29,518 | 33,934 | ||
Accrued compensation | 7,408 | 7,209 | ||
Other current liabilities | 38,643 | 35,681 | ||
Total current liabilities | 223,631 | 236,024 | ||
Long-term debt, net of debt issuance costs | 407,620 | 383,490 | ||
Deferred tax liabilities, net | 17,460 | 20,424 | ||
Other non-current liabilities | 13,405 | 11,670 | ||
Total liabilities | 662,116 | 651,608 | ||
Commitments and contingencies | ||||
Stockholders' equity | ||||
Preferred stock | ||||
Series A convertible preferred stock at $0.0001 par value; 2,000,000 shares authorized, 100,000 issued and outstanding (liquidation preference of $1) | 100 | 100 | ||
Common stock | ||||
$0.0001 par value: 200,000,000 shares authorized; 104,279,577 issued and 103,521,452 outstanding at September 30, 2024; 102,877,057 issued and 102,118,932 outstanding at March 31, 2024 | 10 | 10 | ||
Additional paid-in capital | 875,827 | 858,191 | ||
Treasury stock (758,125 shares at September 30, 2024 and March 31, 2024) | (71) | (71) | ||
Accumulated other comprehensive loss | (48,011) | (48,955) | ||
Accumulated deficit | (645,485) | (595,343) | ||
Total stockholders' equity | 182,370 | 213,932 | ||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 844,486 | $ 865,540 |
Digital Turbine, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) | ||||
Three months ended September 30, | ||||
2024 | 2023 | |||
Cash flows from operating activities: | ||||
Net (loss) income | $ (24,986) | $ (161,482) | ||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Depreciation and amortization | 19,352 | 20,668 | ||
Non-cash interest expense | 456 | (147) | ||
Allowance for credit losses | 1,084 | 475 | ||
Stock-based compensation expense | 8,999 | 9,016 | ||
Change in estimate of remaining contingent consideration | (200) | (372) | ||
Right-of-use asset | (2,304) | 1,173 | ||
Foreign exchange transaction loss | 976 | 2,106 | ||
Impairment of goodwill | — | 147,181 | ||
(Increase) decrease in assets: | ||||
Accounts receivable, gross | 3,183 | 8,102 | ||
Prepaid expenses | (161) | (334) | ||
Other current assets | (451) | — | ||
Other non-current assets | (96) | (2,566) | ||
Increase (decrease) in liabilities: | ||||
Accounts payable | (20,435) | 1,663 | ||
Accrued revenue share | 3,025 | 5,350 | ||
Accrued compensation | 434 | (1,906) | ||
Other current liabilities | 2,079 | 11,808 | ||
Deferred income taxes | (1,035) | (12,351) | ||
Other non-current liabilities | 1,361 | (930) | ||
Net cash provided by (used in) operating activities | (8,719) | 27,454 | ||
Cash flows from investing activities | ||||
Capital expenditures | (7,477) | (7,001) | ||
Net cash used in investing activities | (7,477) | (7,001) | ||
Cash flows from financing activities | ||||
Proceeds from borrowings | 21,000 | 12,000 | ||
Payment of debt issuance costs | (1,561) | — | ||
Repayment of debt obligations | (6,000) | (34,136) | ||
Acquisition of non-controlling interest in consolidated subsidiaries | — | — | ||
Payment of withholding taxes for net share settlement of equity awards | (112) | (106) | ||
Options exercised | 79 | 1,998 | ||
Net cash provided by (used in) financing activities | 13,406 | (20,244) | ||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (174) | (629) | ||
Net change in cash and cash equivalents and restricted cash | (2,964) | (420) | ||
Cash and cash equivalents and restricted cash, beginning of period | 35,729 | 59,069 | ||
Cash and cash equivalents and restricted cash, end of period | $ 32,765 | $ 58,649 |
REVENUE BY SEGMENT | ||||||
(in thousands) | ||||||
(Unaudited) | ||||||
Three months ended September 30, | ||||||
2024 | 2023 | % Change | ||||
On Device Solutions | $ 82,414 | $ 99,060 | (17) % | |||
App Growth Platform | 37,346 | 46,183 | (19) % | |||
Elimination | (1,032) | (1,984) | (48) % | |||
Consolidated | $ 118,728 | $ 143,259 | (17) % |
GAAP (LOSS) INCOME FROM OPERATIONS TO NON-GAAP GROSS PROFIT | ||||
(in thousands) | ||||
(Unaudited) | ||||
Three months ended September 30, | ||||
2024 | 2023 | |||
Net revenue | $ 118,728 | $ 143,259 | ||
(Loss) income from operations | (13,542) | (152,617) | ||
Add-back items: | ||||
Product development | 9,433 | 14,037 | ||
Sales and marketing | 15,887 | 15,537 | ||
General and administrative | 42,176 | 41,385 | ||
Depreciation of software included in other direct costs of revenue | 51 | 1,509 | ||
Impairment of goodwill | — | 147,181 | ||
Non-GAAP gross profit | $ 54,005 | $ 67,032 | ||
Non-GAAP gross profit percentage | 45 % | 47 % | ||
GAAP NET (LOSS) INCOME TO NON-GAAP ADJUSTED NET INCOME | ||||
(in thousands) | ||||
(Unaudited) | ||||
Three months ended September 30, | ||||
2024 | 2023 | |||
Net (loss) income | $ (24,986) | (161,482) | ||
Add-back items: | ||||
Stock-based compensation expense | 8,999 | 9,016 | ||
Amortization of intangibles | 13,505 | 16,157 | ||
Change in fair value of contingent consideration | (200) | (372) | ||
Tax adjustment (1) | 7,200 | — | ||
Business transformation costs | 237 | 2,528 | ||
Transaction-related expenses | — | 79 | ||
Severance costs | 268 | 809 | ||
Impairment of goodwill | — | 147,181 | ||
Non-GAAP adjusted net income | $ 5,023 | $ 13,916 | ||
Non-GAAP adjusted net income per common share | $ 0.05 | $ 0.13 | ||
Weighted-average common shares outstanding, diluted | 105,345 | 103,428 | ||
(1) Valuation allowance |
GAAP NET (LOSS) INCOME TO NON-GAAP ADJUSTED EBITDA | ||||
(in thousands) | ||||
(Unaudited) | ||||
Three months ended September 30, | ||||
2024 | 2023 | |||
Net (loss) income | $ (24,986) | $ (161,482) | ||
Add-back items: | ||||
Stock-based compensation expense | 8,999 | 9,016 | ||
Depreciation and amortization | 19,352 | 20,668 | ||
Interest expense, net | 9,232 | 7,844 | ||
Other income (expense), net | 36 | — | ||
Change in fair value of contingent consideration | (200) | (372) | ||
Business transformation costs | 237 | 2,528 | ||
Foreign exchange transaction (gain) loss | 976 | 2,106 | ||
Income tax provision (benefit) | 1,400 | (713) | ||
Transaction-related expenses | — | 79 | ||
Severance costs | 268 | 809 | ||
Impairment of goodwill | — | 147,181 | ||
Non-GAAP adjusted EBITDA | $ 15,314 | $ 27,664 |
GAAP CASH FLOW FROM OPERATING ACTIVITIES TO NON-GAAP FREE CASH FLOW | ||||
(in thousands) | ||||
(Unaudited) | ||||
Three months ended September 30, | ||||
2024 | 2023 | |||
Net cash provided by (used in) operating activities | $ (8,719) | $ 27,454 | ||
Capital expenditures | (7,477) | (7,001) | ||
Transaction-related expenses | — | 79 | ||
Severance costs | 268 | 809 | ||
Business transformation costs | 237 | 2,528 | ||
Non-GAAP free cash flow provided (used) by operations | $ (15,691) | $ 23,869 |
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SOURCE Digital Turbine, Inc.