Is the Digital Turbine Comeback Real?
Key Points
Digital Turbine is back to positive double-digit year-over-year revenue growth with improving margins.
The company beat Q4 FY26 guidance and set respectable guidance for fiscal 2027.
Digital Turbine's network of global advertisers is expanding, which could lead to higher growth rates and consistent profitability in the future.
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It may have been a while since you last heard of Digital Turbine (NASDAQ: APPS), if you even remember it. The stock had been floating in penny-stock land for multiple years after collapsing by more than 95% from its 2021 highs.
However, the mobile adtech company's stock more than doubled in May, and it wasn't a meme rally. The fundamentals have changed meaningfully for Digital Turbine, and this may be the start of a massive turnaround.
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Revenue growth has recovered
Digital Turbine's multiyear stock decline was greatly deserved, as the company continued to lose ground in the adtech industry. Its fiscal 2024 results, for the year ended March 31, 2024, featured a 18% year-over-year revenue decrease. Digital Turbine's revenue then dropped by 10% year over year in fiscal 2025.
The script changed in Digital Turbine's fiscal 2026 (ending March 31, 2026), which featured 15% year-over-year revenue growth. That included a 20% year-over-year improvement in the company's fiscal 2026 Q4.
The revenue numbers indicate a turnaround, but what's actually driving it? Digital Turbine CEO Bill Stone touted the company's ability to better leverage first-party data and deliver stronger results for its "rapidly expanding" global network of advertisers.
Digital Turbine even posted impressive guidance for its fiscal 2027, with full-year revenue expected to range from $630 million to $650 million. The $640 million midpoint represents a 13% year-over-year improvement.
Digital Turbine is quickly returning to consistent profitability
A sudden revival in revenue growth also comes with expanding margins. Although Digital Turbine still hasn't returned to profitability, the company made strides in fiscal 2026, when net losses dropped from $64.9 million to $37.7 million.
Improvements accelerated in its fiscal 2026 Q4, when the company only reported a $7.3 million net loss. The company was profitable in its fiscal 2026 Q3, so it has recent experience with profitability.
Better margins and double-digit revenue growth rates suggest that Digital Turbine can return to profitability consistently in its fiscal 2027.
Its revenue and profits can grow even faster if the company continues to beat guidance. For instance, Digital Turbine told investors in its fiscal 2026 Q3 press release to expect $553 million to $558 million for the full fiscal year. Then, Digital Turbine beat the high end of its guidance by delivering $565.3 million in fiscal 2026 revenue.
A lot of things have to go right for Digital Turbine to approach $100 per share, as it tried to do a few years ago. However, the adtech stock has been battered for multiple years, and this turnaround has a fundamental basis, even if it doesn't reach triple-digit price-to-earnings ratios.
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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