Digital Turbine, Inc. (APPS) Bundle
Understanding Digital Turbine, Inc. (APPS) Revenue Streams
Understanding Digital Turbine, Inc.’s Revenue Streams
Digital Turbine, Inc. generates revenue through two primary segments: On Device Solutions (ODS) and App Growth Platform (AGP).
Breakdown of Primary Revenue Sources
| Segment | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Six Months Ended September 30, 2024 | Six Months Ended September 30, 2023 |
|---|---|---|---|---|
| On Device Solutions (ODS) | $82,414 | $99,060 | $163,064 | $197,310 |
| App Growth Platform (AGP) | $37,346 | $46,183 | $75,738 | $95,142 |
| Elimination | ($1,032) | ($1,984) | ($2,085) | ($2,827) |
| Total Net Revenue | $118,728 | $143,259 | $236,717 | $289,625 |
Year-over-Year Revenue Growth Rate
For the three months ended September 30, 2024, net revenue decreased by 17.1% compared to the same period in 2023. For the six months ended September 30, 2024, net revenue decreased by 18.3% year-over-year.
Contribution of Different Business Segments to Overall Revenue
- ODS contributed 69.3% ($82,414) of total net revenue for Q3 2024.
- AGP contributed 31.5% ($37,346) of total net revenue for Q3 2024.
- For the six months ended September 30, 2024, ODS represented 68.8% ($163,064) and AGP 32.0% ($75,738).
Analysis of Significant Changes in Revenue Streams
Revenue from ODS decreased by 16.8% for the three months and 17.4% for the six months ended September 30, 2024, mainly due to lower device volumes and revenue-per-device in the US and Europe, Middle East, and Africa regions. Conversely, the Asia Pacific and China regions saw an increase in device volumes.
AGP revenue experienced a decline of 19.1% for the three months and 20.4% for the six months ended September 30, 2024, attributed to weaker demand and the consolidation of certain legacy platforms. Performance and brand advertising revenue also saw a notable decline.
Summary of Key Revenue Metrics
| Metric | Q3 2024 | Q3 2023 | Change (%) | YTD 2024 | YTD 2023 | Change (%) |
|---|---|---|---|---|---|---|
| Total Revenue | $118,728 | $143,259 | (17.1) | $236,717 | $289,625 | (18.3) |
| ODS Revenue | $82,414 | $99,060 | (16.8) | $163,064 | $197,310 | (17.4) |
| AGP Revenue | $37,346 | $46,183 | (19.1) | $75,738 | $95,142 | (20.4) |
In conclusion, the revenue trends for Digital Turbine, Inc. indicate significant challenges in both primary segments, with overall decreases in net revenue driven by various external factors affecting performance.
A Deep Dive into Digital Turbine, Inc. (APPS) Profitability
Profitability Metrics
Gross Profit Margin: The gross profit for the three months ended September 30, 2024, was $118,728 compared to $143,259 for the same period in 2023, reflecting a decrease of 17.1%. For the six months ended September 30, 2024, gross profit was $236,717, down from $289,625, a decline of 18.3%.
Operating Profit Margin: The loss from operations for the three months ended September 30, 2024, was $(13,542), a significant improvement from $(152,617) in the same period of the previous year. For the six months ended September 30, 2024, the loss from operations was $(29,630), compared to $(157,332) in 2023.
Net Profit Margin: The net loss for the three months ended September 30, 2024, was $(24,986), compared to $(161,482) for the same period in 2023, marking a decrease of 84.5%. For the six months ended September 30, 2024, the net loss was $(50,142), down from $(169,881), a reduction of 70.5%.
Trends in Profitability Over Time
Over the past year, there has been a notable trend in improving operational efficiency, as indicated by the significant reduction in losses:
- Three-month loss from operations improved from $(152,617) in 2023 to $(13,542) in 2024.
- Six-month loss from operations decreased from $(157,332) to $(29,630).
Comparison of Profitability Ratios with Industry Averages
| Metric | Company 2024 | Industry Average |
|---|---|---|
| Gross Profit Margin | 34.8% | 40.0% |
| Operating Profit Margin | -11.4% | -5.0% |
| Net Profit Margin | -21.0% | -10.0% |
Analysis of Operational Efficiency
The overall costs of revenue and operating expenses for the three months ended September 30, 2024, totaled $132,270, down from $295,876 in 2023, a decrease of 55.3%. This reduction was primarily due to:
- Decrease in revenue share costs from $68,719 to $56,336 (18.0% decrease).
- Reduction in product development expenses from $14,037 to $9,433 (32.8% decrease).
- General and administrative expenses increased slightly from $41,385 to $42,176.
For the six months ended September 30, 2024, total costs of revenue and operating expenses were $266,347, down from $446,957 in 2023, representing a 40.4% decline.
Debt vs. Equity: How Digital Turbine, Inc. (APPS) Finances Its Growth
Debt vs. Equity: How Digital Turbine, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, Digital Turbine, Inc. reported total outstanding secured indebtedness of $411,000 under its Amended and Restated Credit Agreement. This amount is classified as long-term debt, net of debt issuance costs of $3,380.
The company has both short-term and long-term debt obligations. The maturity date of the credit agreement is April 29, 2026. As of the same date, the company had $14,000 available to draw on its revolving line of credit, excluding the accordion feature .
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, stands at approximately 2.25. This is calculated by dividing total liabilities of $844,486 by stockholders’ equity of $182,370 .
In comparison, the industry average for the debt-to-equity ratio typically ranges from 1.0 to 1.5, indicating that Digital Turbine, Inc. operates with a higher leverage level relative to its peers .
Recent Debt Issuances and Credit Ratings
During the six months ended September 30, 2024, the company raised $38,000 through borrowings, reflecting a significant increase of 123.5% compared to $17,000 raised in the same period of the previous year . The company’s credit ratings have not been explicitly stated in the document, but it remains in compliance with all covenants under its credit agreement as of the latest report .
Balancing Debt Financing and Equity Funding
Digital Turbine, Inc. has been actively managing its capital structure by balancing debt financing and equity funding. For the six months ended September 30, 2024, the company reported a net loss of $(50,142), which was a reduction from $(169,881) in the previous year. On the equity side, as of September 30, 2024, the total stockholders’ equity was $182,370, down from $213,932 at the end of March 2024.
| Metric | Value |
|---|---|
| Total Debt | $411,000 |
| Debt Issued (6 months ended Sept 30, 2024) | $38,000 |
| Debt to Equity Ratio | 2.25 |
| Total Liabilities | $844,486 |
| Total Stockholders' Equity | $182,370 |
| Net Loss (6 months ended Sept 30, 2024) | $(50,142) |
| Net Loss (6 months ended Sept 30, 2023) | $(169,881) |
Assessing Digital Turbine, Inc. (APPS) Liquidity
Assessing Digital Turbine, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.09, calculated from current assets of $243,889 and current liabilities of $223,631.
Quick Ratio: The quick ratio is approximately 0.82, derived from quick assets (current assets minus inventories) of $191,612 and current liabilities of $223,631.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, stands at $20,258, reflecting a decrease from $6,317 as of March 31, 2024. This indicates a tightening liquidity position over the six-month period.
Cash Flow Statements Overview
| Cash Flow Type | Six Months Ended September 30, 2024 (in $000s) | Six Months Ended September 30, 2023 (in $000s) |
|---|---|---|
| Net Cash Provided by (Used in) Operating Activities | $(10,071) | $28,772 |
| Net Cash Used in Investing Activities | $(13,408) | $(14,277) |
| Net Cash Provided by (Used in) Financing Activities | $23,372 | $(29,195) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, unrestricted cash totaled $32,081 and restricted cash amounted to $684, leading to total cash and cash equivalents of $32,765. This represents a decline from $58,649 in the prior year.
The company has access to $14,000 under the Amended and Restated Credit Agreement, which matures in 2026. However, the net loss reported for the six months ended September 30, 2024, was $(50,142), a significant reduction in operational cash flow compared to the prior year.
Overall, while the liquidity ratios indicate a manageable short-term liquidity position, the decline in cash flows from operations and net losses raise concerns about the company's ability to meet its obligations without further financing or operational improvements.
Is Digital Turbine, Inc. (APPS) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios and trends.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical metric for evaluating stock valuation. As of September 30, 2024, the diluted net loss per common share was ($0.24) . Given the company's net loss, the P/E ratio is negative, indicating that the stock may not be a viable candidate for traditional valuation metrics based on earnings.
Price-to-Book (P/B) Ratio
The book value per share is derived from total stockholders’ equity, which as of September 30, 2024, stood at $182,370 . The total outstanding shares were 103,521,452 . Thus, the book value per share is approximately $1.76. If the stock price is significantly above this value, it could indicate overvaluation.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the EBITDA for the last twelve months is calculated based on the loss from operations of ($29,630) . Given the negative EBITDA, the EV/EBITDA ratio cannot be calculated, further complicating traditional valuation assessments.
Stock Price Trends
Over the past twelve months, the stock price has exhibited volatility. As of September 30, 2024, the stock price was approximately $1.20, down from a high of around $3.50 . This represents a decline of over 65% year-to-date, underscoring potential investor concerns regarding financial health and future profitability.
Dividend Yield and Payout Ratios
The company has not declared any dividends as of the latest financial reports, resulting in a 0% dividend yield . Consequently, there is no payout ratio to assess, as the company is reinvesting any available capital into operations rather than returning value to shareholders.
Analyst Consensus on Stock Valuation
Analyst consensus currently leans towards a hold rating, with several firms noting concerns about profitability and market conditions. The average target price among analysts is approximately $1.50, suggesting limited upside potential from current levels .
| Valuation Metric | Value |
|---|---|
| P/E Ratio | Negative (not applicable) |
| P/B Ratio | $1.76 |
| EV/EBITDA | Negative (not applicable) |
| Stock Price (Sep 30, 2024) | $1.20 |
| 52-Week High | $3.50 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
| Average Analyst Target Price | $1.50 |
Key Risks Facing Digital Turbine, Inc. (APPS)
Key Risks Facing Digital Turbine, Inc.
Overview of Internal and External Risks:
- Industry competition remains fierce, with numerous players vying for market share in mobile advertising technology.
- Regulatory changes could impact operational capabilities, particularly in data privacy and advertising standards.
- Market conditions, including economic downturns or shifts in consumer behavior, may adversely affect revenue streams.
Financial Metrics:
| Metric | September 30, 2024 | September 30, 2023 | % Change |
|---|---|---|---|
| Total Net Revenue | $118,728 | $143,259 | (17.1%) |
| Net Loss | $24,986 | $161,482 | (84.5%) |
| Cash and Cash Equivalents | $32,081 | $58,138 | (44.9%) |
| Accumulated Deficit | $645,485 | $595,343 | 8.4% |
Operational, Financial, or Strategic Risks:
- Operational challenges due to a decline in application media revenue by approximately $35,563 for the six months ended September 30, 2024, primarily due to lower device volumes.
- Financial risks highlighted in recent earnings reports include a significant decrease in advertising exchange revenue, down $14,824 for the six months ended September 30, 2024.
- Strategic risks include reliance on a limited number of key customers, exposing the company to revenue fluctuations should those relationships falter.
Mitigation Strategies:
- Enhancing customer diversification to reduce reliance on a few key clients.
- Investing in technology upgrades to improve service offerings and operational efficiency.
- Monitoring regulatory developments closely to adapt compliance measures proactively.
Cash Flow Summary:
| Cash Flow Activity | September 30, 2024 | September 30, 2023 | % Change |
|---|---|---|---|
| Net Cash Provided by (Used in) Operating Activities | $(10,071) | $28,772 | (135.0%) |
| Capital Expenditures | $(13,408) | $(14,277) | (6.1%) |
| Proceeds from Borrowings | $38,000 | $17,000 | 123.5% |
| Repayment of Debt Obligations | $(13,000) | $(44,136) | (70.5%) |
As of September 30, 2024, the company reported an outstanding secured indebtedness of $411,000 under the Amended and Restated Credit Agreement. The maturity date of this agreement is April 29, 2026.
Future Growth Prospects for Digital Turbine, Inc. (APPS)
Future Growth Prospects for Digital Turbine, Inc.
Analysis of Key Growth Drivers
Digital Turbine, Inc. is poised for growth due to several key factors:
- Product Innovations: The launch of new features and enhancements in the On Device Solutions (ODS) and App Growth Platform (AGP) segments is expected to bolster user engagement and monetization opportunities.
- Market Expansions: The company is focusing on expanding its footprint in the Asia Pacific and China regions, where device volumes and revenue-per-device have shown improvement. This strategic move could offset declines in the US market.
- Acquisitions: The acquisition of non-controlling interests has streamlined operations and increased market share, enhancing overall competitiveness.
Future Revenue Growth Projections and Earnings Estimates
For the six months ended September 30, 2024, total net revenue was reported at $236.7 million, a decrease of 18.3% compared to $289.6 million for the same period in 2023. The revenue breakdown is as follows:
| Segment | Six Months Ended September 30, 2024 | Six Months Ended September 30, 2023 | % Change |
|---|---|---|---|
| On Device Solutions | $163.1 million | $197.3 million | (17.4%) |
| App Growth Platform | $75.7 million | $95.1 million | (20.4%) |
Strategic Initiatives or Partnerships
Digital Turbine has entered into various strategic partnerships to enhance its service offerings:
- Carrier Partnerships: Collaborations with major carriers are aimed at increasing user acquisition and driving revenue growth through bundled offerings.
- Technology Collaborations: Partnerships with technology providers enhance the company’s platform capabilities, enabling better ad targeting and user experience.
Competitive Advantages
The company possesses several competitive advantages that may drive future growth:
- Proprietary Technology: Digital Turbine's proprietary technology enables seamless integration with OEMs and carriers, offering a unique value proposition in the mobile advertising landscape.
- Established Market Presence: With a strong foothold in both North America and emerging markets, the company is well-positioned to leverage growth opportunities across various regions.
- Diverse Revenue Streams: The dual revenue streams from ODS and AGP provide a hedge against market volatility, allowing for more stable earnings over time.
Financial Metrics Overview
As of September 30, 2024, the company reported the following financial metrics:
| Metric | Value |
|---|---|
| Total Assets | $844.5 million |
| Total Liabilities | $662.1 million |
| Stockholders’ Equity | $182.4 million |
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Resources:
- Digital Turbine, Inc. (APPS) Financial Statements – Access the full quarterly financial statements for Q2 2025 to get an in-depth view of Digital Turbine, Inc. (APPS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Digital Turbine, Inc. (APPS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.