Digital Turbine APPS Q4 2025 Earnings Transcript

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DATE

Monday, June 16, 2025 at 4:30 p.m. ET

CALL PARTICIPANTS

Chief Executive Officer — Bill Stone

Chief Financial Officer — Stephen Lasher

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TAKEAWAYS

Revenue: $119.2 million in revenue for Q4 FY2025, up 6% year-over-year compared to Q4 fiscal year 2024 driven by double-digit year-over-year growth in the On Device Solutions segment and partially offset by a 3% decline in the App Growth Platform segment.

Adjusted EBITDA: $20.5 million in adjusted EBITDA for Q4 FY2025, representing 66% year-over-year growth in the fiscal fourth quarter due to both improved execution and cost-saving initiatives.

Free Cash Flow: $5.5 million in free cash flow in March, an increase of over $21 million compared to the prior-year period.

Non-GAAP Gross Margin: 48%, up from 46% in the prior-year period, primarily from product mix improvements in On Device Solutions and disciplined cost controls.

Cash Operating Expenses: $36.1 million in cash operating expenses in March, highlighting progress on expense management and automation.

GAAP Net Loss: $18.8 million GAAP net loss for Q4 FY2025, or $0.18 per share for the quarter.

Non-GAAP Net Income: $10.1 million non-GAAP net income for Q4 FY2025, or $0.10 per share in the fiscal fourth quarter on a non-GAAP basis.

Cash Balance: $40.1 million in cash at the end of the quarter, up $5 million from the December quarter.

Debt Balance: $408.7 million in debt at Q4 FY2025 quarter-end with no new borrowings during the period.

Credit Facility Extension: Management reported closing a short-term extension of the credit facility and is seeking a more permanent debt solution.

On Device Solutions (ODS) Segment Performance: ODS revenue increased 11% year-over-year, driven by more than 40% RPD growth year-over-year in the U.S. and over 100% RPD growth year-over-year internationally.

AGP Segment Revenue: $30 million in revenue, representing a 3% decrease year-over-year

IGNITE Platform Reach: The new version of IGNITE is now on more than 100 million devices, enabling faster service launches and improved offerings.

AI and Data Initiatives: The platform now ingests over 1,000 dimensions and 1,500 unique data events, supporting advanced machine learning and improved conversion rates.

DTX Exchange Growth: DTX exchange growth was driven by diversification.

Fiscal 2026 Outlook: Projected revenue of $515 million to $525 million for FY2026 and non-GAAP adjusted EBITDA of $85 million to $95 million for FY2026.

SUMMARY

Management emphasized a return to year-over-year growth and highlighted expense controls and operational efficiencies as key drivers of margin expansion. The extension of the credit facility and stated confidence in achieving a more permanent capital structure were cited as critical steps toward financial stability. In addition, the company pointed to progress in artificial intelligence, first-party data, and international device expansion as central elements for future growth and differentiation. Strategic relationships, including new wins such as T-Mobile going live with IGNITE and alternative app partnerships with leading publishers, were presented as evidence of competitive momentum.

Chief Financial Officer Stephen Lasher said, "fiscal fourth quarter marked a true inflection point for the company." referencing both top-line and EBITDA growth year-over-year.

Chief Executive Officer Bill Stone stated, "the business continues to build on that momentum, and our current June (Q1 FY2026) is trending positively" expressing expectations for further improvements both sequentially and year-over-year.

Lasher confirmed that cash operating expense levels are expected to remain "relatively flat" moving forward.

The management team noted progress in diversifying AGP and DTX supply, citing DTX revenues from non-gaming applications have nearly doubled over the past year and reduced dependency on gaming app inventory.

Stone described regulatory and legal trends globally as "favorable for us." outlining opportunities for Single Tap and alternative app distribution as regulatory environments become more open.

Lasher highlighted, "we are actively positioning the company for sustained growth in 2026 and beyond." reinforcing the focus on execution, financial discipline, and long-term value creation.

INDUSTRY GLOSSARY

ODS (On Device Solutions): Digital Turbine's segment focused on embedding and monetizing software directly on mobile devices through partnerships with OEMs and carriers.

AGP (App Growth Platform): Digital Turbine's business segment offering tools and services to grow app installs and engagement, mainly via mobile advertising solutions.

RPD (Revenue Per Device): A key performance metric indicating the average revenue generated from each installed device within a specific period.

DTX: Digital Turbine's consolidated advertising exchange, previously comprised of AdColony and Fyber supply, facilitating media transactions across mobile apps.

IGNITE: Digital Turbine's proprietary platform deployed on devices to enable app installation, user engagement, and monetization features for OEMs and partners.

Full Conference Call Transcript

Bill Stone: Thanks, Brian, and thank you all for joining our call tonight. Before breaking down our specific operating results and commentary, I wanted to provide three important updates. First, our business has returned to year-over-year growth on both the top and bottom lines. Not only did our top line grow from March of this year, compared to March of last year, but our year-over-year EBITDA grew by 66%. Our improved execution and actions are now bearing fruit. Secondly, the business continues to build on that momentum. Our current June is trending positively and we expect to show improved performance both sequentially and year-over-year. And finally, we extended our credit facility with our bank group.

We believe this extension combined with our improved execution provides more opportunities to lower our cost of capital into the future. To move to our fiscal '25 results, we achieved $119.1 million of revenue, $20.5 million of EBITDA, and $0.10 of non-GAAP earnings per share. It was an important transition year to begin our return to growth as our investments in a variety of activities set us up well for today and tomorrow. Specifically, our new version of Ignite, our material progress on managing and leveraging our first-party data into our AI machine learning platform, our launch of new improved bidding capabilities, and many back-end corporate systems that are simplifying and automating our work.

All of these things are helping drive improved performance in the present and into the future. For the March, on the on-device or ODS business, we showed double-digit year-on-year top-line growth. Devices on our legacy U.S. partners declined year-over-year but were offset by new device launches from outside the U.S. The real highlight of our ODS growth was due to improved revenue per device, or RPD. Our RPDs were up more than 40% year-over-year in the U.S. and over 100% internationally year-over-year. This was driven by strong advertiser demand and improved monetization over the right foot device.

As we've discussed on prior calls, the opportunity for organic growth with improved international revenue per device has been a focus area for us and I was really pleased to see us build upon our improved execution from the December. Our AGP business generated $30 million in revenue in the quarter. One of our AGP focus areas continues to be our investment in brands that want to leverage our first-party data to reach their existing potential customers over our global network. As discussed on prior calls, a strategic objective for us and something we've invested in to differentiate us from other players. We're now in a great position to continue to grow and we'll continue to invest here.

We believe we are building a moat given the high barriers to entry work required to earn the trust of top brands and agencies looking to find digital channels for their audiences are not just CTV or retail media. One of our other top priorities for the AGP business is improving our performance advertising by better leveraging our own first-party data and AI machine learning platform on our demand-side platform, or DSP. On the supply side, our consolidated exchange we brand as DTX, continues to return to growth as having focused on managing one versus multiple exchanges is paying dividends.

The legacy fiber and ad colony exchange businesses were focused on waterfall bidding with third-party performance DSPs primarily buying gaming advertising inside gaming applications. As expected, these DSPs have been executing their own supply path optimization strategies to vertically integrate their demand connected to their own supply. For those companies without a strong mediation footprint, it has become largely a commoditized ad tech gaming space for both iOS and Android. We saw this risk years ago, and that's why we invested in our own brand SDK bidding activities to mitigate that risk. Increase our own first-party data activities on our own network and continue to invest in mediation. These activities are bearing fruit our DTX business has returned to growth.

We've also been able to expand our AGP supply from being largely dependent on game publishers to much more diversified over non-gaming. To illustrate this point, our DTX revenues on non-gaming applications have nearly doubled over the past year. Turning to the future, our focus is continuing to build on our growth while building increased efficiency in our work. The keys to driving growth are more devices, improved performance from our legacy and new products, and a wider and deeper net of media and brand relationships. The key to efficiency is automation, aligning operating costs to gross profit, realigning our people, process, and systems for maximum benefit.

We've been able to realize significant efficiencies in our transformation cost savings but we still have more opportunities to add this fiscal year as we use AI to automate and simplify our operational processes and organizational structures and leverage our technology and system investments for greater efficiencies. To drive faster growth, the first driver is expanding our device footprint. Despite the soft device sales here in the U.S. with our legacy partners, I'm pleased to announce that T-Mobile is now live with us in the U.S. on Ignite. Internationally, we continue to grow with more and deeper relationships with our international partners in Europe, Asia, and Latin America.

Our second growth driver is expanding our product portfolio for both our ODS and AGP businesses. On the ODS side, the launch of our new version of IGNITE is an important milestone. It's now on over 100 million devices. It enables us to launch more services more quickly to generate revenue, be more efficient with our resources, and most importantly, improve the overall quality of our offerings to our customers and partners. We've also made significant strides in our first-party data leveraging our AI machine learning platform. We've been busy over the past two years, taking our rich data sets and getting the data organized into a scalable, usable, and consistent format in our data lake.

With that work largely complete, ingesting over 1,000 different dimensions and more than 1,500 unique data events by which we now can build our sophisticated AI machine learning models upon. We've already seen conversion rate improvements from these efforts and expect this work to be a growth driver for our top and bottom lines this year as we drive better outcomes for publishers, advertisers, and end customers. Our other product priority is growing and scaling our alternative app efforts. We see alternative apps in a few different dimensions. First is through our alternative store.

We're live here in the U.S. on many operators, including Verizon, and are working closely with many publishers, including Epic Games, King, and others to help in their distribution to a wider audience. Specifically, many of you may have seen the announcement of 40 million installs of their alternative store where we are a major partner with them leveraging our products such as single tap dynamic installs and others. Another way is helping publishers distribute their billing to end customers where we can leverage our on-device footprint products like Single Tap, AppMatch, and so on. Here, we partner with both the app publisher and the payment partners to help them drive more users.

We've seen the global regulatory and legal activity against Google and Apple accelerate over the past quarter, not just in the EU, but in other places such as Brazil, Japan, India, Turkey, and elsewhere as here in the U.S. Our final growth driver is broader and deeper media relationships. We continue to make positive progress with more brands and performance advertisers. A specific example here is Pinterest, who we've had a nice relationship with on our ODS products for many years, but recently expanded our relationship to include Single Tap licensing. We're also seeing new categories emerge, such as the large AI model players trying to improve their distribution footprints.

We've recently launched with one of them and see this as an interesting growth area. In conclusion, I want to give our team at Digital Turbine a shout-out. Due to their hard work and focus, we've regained busy momentum and growth. Building on our momentum and growing our top and bottom lines remains a top priority of the company. We're confident we have the right strategy, partners, market opportunity, commercial models, and products to have a very bright future. Being in the right space at the right time is critical for any technology company. With that, I'll turn it over to Steve to take you through the numbers.

Stephen Lasher: Thanks, Bill. Good afternoon, everyone. It's been a privilege to meet several of you during my time so far as CFO of Digital Turbine. I look forward to engaging with many more of you in the near future as we continue building value together. Before we get into the results, I want to briefly reflect on my three months as CFO at Digital Turbine. I spent this time focused on strengthening financial execution, improving cash flow visibility, tightening working capital management, and aligning more closely with our business and product teams to support smarter, more efficient growth. Importantly, we continue to make progress on our capital structure and adding stability as we move into fiscal year 2026.

Now turning to our performance in the fiscal fourth quarter and full year fiscal 2025. The fiscal fourth quarter marked a true inflection point for the company. As we return to year-over-year growth for both revenue and adjusted EBITDA during the quarter, revenue of $119.2 million represented 6% growth year-over-year. At a segment level, revenue for our ODS segment was up 11% year-over-year, while our revenue for the AGP segment was down 3% year-over-year. The combination of renewed top-line growth and the realization of expense savings via the enactment of our transformation program in late calendar 2025 led to more significant gains in EBITDA and free cash flow during the quarter.

Our fiscal fourth quarter adjusted EBITDA of $20.5 million represented 66% growth year-over-year. Perhaps more importantly, our positive free cash flow of $5.5 million in March represented an increase of more than $21 million as compared to the prior year period. We are pleased to be benefiting from the combination of renewed revenue growth and lower cash operating expenses and expect to realize additional expansion in adjusted EBITDA margins moving forward. Non-GAAP gross margin expanded to 48% in the fiscal fourth quarter, up from 46% in the year earlier period. This was primarily influenced by product mix changes in our ODS segment in addition to our continued focus on disciplined cost control measures.

Our cash operating expenses in March were $36.1 million, representing a 7% decline year-over-year and a 4% decline on a sequential basis. We have made real progress on a number of expense-related fronts, not merely with reduced headcount, but also with the migration to more cost-effective platforms and the implementation of more streamlined day-to-day business automation processes. While we're happy with the progress made around our transformation cost savings, we continue to focus on expense optimization efficiencies while still making the necessary strategic investments in the business to maximize the profitability of our growth strategy in fiscal year 2026. Turning now to the bottom portion of the income statement.

We reported a GAAP net loss of $18.8 million or $0.18 per share in the fiscal fourth quarter. On a non-GAAP basis, we recorded net income of $10.1 million or $0.10 per share on 108 million shares outstanding in the fiscal fourth quarter. For the full fiscal year 2025, we generated total revenue of $490.5 million, representing a year-over-year decline of approximately 10% compared to the $544.5 million generated in fiscal year 2024. EBITDA for the full fiscal year 2025 totaled $72.3 million as compared to EBITDA of $92.4 million for the fiscal year 2024.

GAAP net loss for all of fiscal year 2025 was $92.1 million or $0.89 per share as compared to a GAAP net loss of $420.4 million or $4.16 per share in full fiscal year 2024. On a non-GAAP basis, net income for full fiscal year 2025 totaled $36.1 million or $0.34 per share as compared to non-GAAP income of $60.3 million or $0.58 per share recorded in fiscal year 2024. Moving to the balance sheet, our cash balance at the end of the quarter totaled $40.1 million, an increase of approximately $5 million as compared to the balance at the December quarter.

We had no new borrowings in March and our debt balance at the end of the quarter stood at $408.7 million. As Bill mentioned, we closed on a short-term extension of our credit facility with the existing bank group and are working on a more permanent debt solution with a variety of debt providers and we feel confident being able to deliver an attractive solution for stakeholders. After these two most recent quarters, which point to the strength and stability of our core business, we'll share more of these details as appropriate. Now let me turn to our outlook for fiscal year 2026.

We expect revenue to be in the range of $515 million to $525 million for fiscal year 2026, reflecting our continued trajectory and momentum we are seeing in the market. Additionally, we project non-GAAP adjusted EBITDA to be between $85 million and $95 million as we continue to drive operational efficiencies and deliver value for our shareholders. In closing, we are actively positioning the company for sustained growth in 2026 and beyond. Our business is showing encouraging signs of continued momentum, and we remain focused on execution, financial discipline, and creating long-term value for our shareholders. With that, let me turn the call back to our operator, Chuck. Chuck, let's open up for questions.

Operator: Yes, sir. We will now begin the question and answer session. If you would like to withdraw your question, press two. The first question will come from Anthony Stoss with Craig Hallum. Please go ahead.

Anthony Stoss: Thanks. Nice execution, guys, and welcome aboard, Steve. First question, Bill, I just wanted to focus on your RPD which was up quite a bit internationally. Can you talk about opportunities that you're seeing? Are they with new device makers, new carriers, or both? Any color would be helpful and then I had a couple of follow-ups.

Bill Stone: Yes, thanks, Tony. Yes, on the international RPU RPDs, as you know, we've been at this for a long time to really close the gap between what we see here in the U.S. and internationally. I was really just pleased on a few fronts. One is our ability to take our international demand that's coming from the U.S. to our international partners or from Asia or coming from Europe and then bringing it onto our international footprint is really, number one, increasing our breadth.

Number two is we've really improved our execution operationally to match a lot of the things that we do in terms of how things work in a market like Brazil or India or the U.K. versus how we've optimized it for here in the U.S. That execution has been better for us. And third is just increasing our distribution footprint to be able to cast a wider net to go after partners. So all of those three things together have really helped. And then as we add more and more devices in these regions from partners like Motorola, Telefonica, and so on, it adds to more density of that supply to where more demand partners want to be.

So all those things combined together really helped drive improved results for us.

Anthony Stoss: Got it. And then Bill, you talked about the regulatory environment. Definitely, the trend is heading your way. I'm just curious if you've seen an increase in activity from the app publishers interested in either Single Tap or your app install technology and maybe you could share with us a number of new licensees signed last quarter?

Bill Stone: Yes. So the regulatory environment continues to be favorable for us. What we're seeing right now is people want to see a level playing field. They want to make sure that publishers have access to customers without having to go through some of the gatekeepers that we see, and that's a global phenomenon. The awareness continues to build. I think it is important to separate out legislation from legal lawsuits, what we see here in the U.S. Those are different things and have different implications. But regardless of them, those are things that are positive for us as they just continue to build awareness and opportunity for us to distribute that.

In other ways, as you mentioned, we distribute that through our Single Tap licensing capabilities. We've got a number of good partners. You heard me talk about Epic and you heard Jeremy mention Pinterest in remarks and a number of those we've talked about in the past. We continue to see people wanting to figure out how they can reach consumers in a very scalable way and our device footprint that we've been building over many, many years is a way to go do that and then combine that with the data that we've got access to is something that's got a lot of interest and excitement.

Anthony Stoss: Got you. And if I can include Steve to put him on the spot, but when you look at OpEx going forward, great adjusted EBITDA in the quarter and for the guide. Do you expect your expense level needs to change quite a bit or is it going to be held relatively flat going forward?

Stephen Lasher: When we look at it, it would be relatively flat going forward. You may see increases as we continue to grow the business. But for the most part, it would be relatively flat.

Anthony Stoss: Perfect. Thanks for the color guys.

Bill Stone: Thank you.

Stephen Lasher: Thanks, Tony.

Operator: This will conclude our question and answer session. I would like to turn the conference back over to Mr. Bill Stone for any closing remarks. Please go ahead, sir.

Bill Stone: Yes. Thanks, Chuck, and thanks, everyone, for joining the call today. We'll talk to you again in our fiscal 2026 first quarter call in a few months. Thanks, and have a great night.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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