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Digital Turbine Reports Fiscal 2022 First Quarter Financial Results

First Quarter Revenue Totaled $212.6 Million, Inclusive of Partial Acquisition Contributions; Pro Forma Revenue of $292.0 Million Represented 104% Year-over-Year Growth

Greater-than-Expected Profit Driven by Accelerating Organic Revenue Growth and Scaling Operating Leverage

Completion of AdColony and Fyber Transactions During the Quarter Empower Differentiated Full-Stack, End-to-End Platform Capabilities and Strategically Position the Company for Significantly Larger Addressable Market Opportunity

AUSTIN, Texas, Aug. 9, 2021 /PRNewswire/ — Digital Turbine, Inc. (Nasdaq: APPS) announced financial results for the fiscal first quarter ended June 30, 2021. All operating results discussed below, except as otherwise specifically noted, refer only to the continuing operations of the Company, and all comparisons to prior periods have been adjusted to reflect only continuing operations. The Company completed the acquisitions of AdColony Holdings AS and Fyber N.V. on April 29 and May 25, 2021, respectively. Therefore, the actual reported results discussed below, except as otherwise specifically noted, reflect only the partial contributions of those acquired businesses beginning on the dates the acquisitions closed. Specific references made to “pro forma” results in this release provide investors with quarterly results and comparisons as if all acquired businesses were owned for the entirety of the first quarters of fiscal 2021 and fiscal 2022. The Company believes that pro forma results, where applicable, can provide investors with more relevant year-over-year comparisons. The reconciliations between the pro forma and GAAP financial results for the relevant periods are provided in the tables following the Unaudited Consolidated Statements of Cash Flows below.

Recent Financial Highlights:

  • Fiscal first quarter of 2022 revenue totaled $212.6 million. On a pro forma basis, as if both Fyber and AdColony were owned for the full quarter, total consolidated pro forma revenue for the fiscal first quarter of 2022 was $292.0 million, representing a 104% increase year-over-year as compared to the comparable pro forma figure for the fiscal first quarter of 2021.

  • GAAP net income for the fiscal first quarter of 2022 was $14.3 million, or $0.14 per share, as compared to GAAP net income of $9.9 million, or $0.11 per share for the fiscal first quarter of 2021. Non-GAAP adjusted net income1 for the fiscal first quarter of 2022 was $33.4 million, or $0.34 per share, as compared to Non-GAAP adjusted net income of $12.5 million, or $0.13 per share, in the fiscal first quarter of 2021.

  • Non-GAAP adjusted EBITDA2 for the fiscal first quarter of 2022 was $39.8 million, as compared to Non-GAAP adjusted EBITDA of $14.1 million in the fiscal first quarter of 2021.

“We are off to a fast start in fiscal 2022 with more than 100% year-over-year pro forma revenue growth and more than 150% year-over-year growth in both EBITDA and non-GAAP EPS,” said Bill Stone, CEO. “Not only did we continue to showcase the inherent operating leverage of our platform model with our strong bottom-line performance, but even more importantly, we successfully completed the acquisition of full-stack, end-to-end platform capabilities that we believe strategically position the Company for continued prosperity well into the future. We are capitalizing on a unique opportunity to leverage our extensive on-device software presence and long-term partnerships with global carriers and OEMs to significantly expand our addressable app ecosystem market opportunity, and we are already witnessing a very positive initial reaction from advertisers all across the platform. We look forward to updating investors on the realized synergies for the Company and improved overall performance for app publishers and advertisers on the platform as fiscal 2022 progresses.”

Mr. Stone concluded, “With respect to our financial performance during the June quarter, escalating global demand from app publishers and advertisers for a growing number of product offerings across the full range of the platform drove On-Device Media revenue growth and In-App Media revenue growth of 93% and 117%, respectively, on a year-over-year basis. Scale efficiencies and disciplined expense controls enabled us to translate this top-line growth into EBITDA growth of 183% and non-GAAP EPS growth of 151% on a year-over-year basis. Looking forward, we expect to continue to demonstrate additional profitable operating leverage, particularly as we expect to realize considerable acquisition synergies – revenue synergies as well as cost synergies – in the coming quarters and years.”

Fiscal 2022 First Quarter Financial Results

Total revenue for the first quarter of fiscal 2022 was $212.6 million. Total “On-Device Media” revenue, which represents revenue derived from the Company’s Application Media and Content Media platform products, increased 93% year-over-year to $120.3 million. Total “In-App Media” revenue, which represents revenue derived from the AdColony and Fyber businesses beginning on the dates when the acquisitions closed during the quarter, was $92.3 million. AdColony contributed $44.9 million during the quarter, while Fyber contributed $49.6 million during the quarter. On a pro forma basis, as if both Fyber and AdColony were owned for the full quarter, total consolidated pro forma revenue for the fiscal first quarter of 2022 was $292.0 million, representing a 104% increase year-over-year as compared to the comparable pro forma figure for the fiscal first quarter of 2021.

GAAP net income from continuing operations for the first quarter of fiscal 2022 was $14.3 million, or $0.14 per share, as compared to GAAP net income from continuing operations of $9.9 million, or $0.11 per share for the first quarter of fiscal 2021. Non-GAAP adjusted net income1 for the first quarter of fiscal 2022 was $33.4 million, or $0.34 per share, as compared to Non-GAAP adjusted net income of $12.5 million, or $0.13 per share, in the first quarter of fiscal 2021.

Non-GAAP adjusted EBITDA2 for the first quarter of fiscal 2022 was $39.8 million as compared to Non-GAAP adjusted EBITDA of $14.1 million in the first quarter of fiscal 2021. The reconciliations between GAAP and Non-GAAP financial results for all referenced periods are provided in the tables immediately following the Unaudited Consolidated Statements of Cash Flows below.

Business Outlook

Based on information available as of August 9, 2021, the Company currently expects the following for the second quarter of fiscal 2022:

  • Revenue of between $300 million and $306 million

  • Non-GAAP adjusted EBITDA2 of between $44 million and $46 million

  • Non-GAAP adjusted EPS1 of $0.38, based on approximately 105 million diluted shares outstanding

It is not reasonably practicable to provide a business outlook for GAAP net income from continuing operations 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, any adjustment to the contingent earn-out provisions, which will continue to be adjusted to fair value through the end of the earn-out periods, or other items that are difficult to predict with precision.

About Digital Turbine, Inc.

Digital Turbine is the leading independent mobile growth platform and levels up the landscape for advertisers, publishers, carriers and OEMS. By integrating a full ad stack with proprietary technology built into devices by wireless operators and OEMs, Digital Turbine supercharges advertising and monetization. The company is headquartered in Austin, Texas, with global offices in New York, Los Angeles, San Francisco, London, Berlin, Singapore, Tel Aviv and other cities serving top agency, app developer and advertising markets. For additional information visit www.digitalturbine.com.

Conference Call

Management will host a conference call today at 4:30 p.m. ET to discuss its fiscal 2022 first quarter financial results and provide operational updates on the business. To participate, interested parties should dial 855-238-2713 in the United States or 412-542-4111 from international locations. A webcast of the conference call will be available at ir.digitalturbine.com/events.

For those who are not able to join the live call, a playback will be available through August 16, 2021. The replay can be accessed by dialing 877-344-7529 in the United States or 412-317-0088 from international locations, passcode 10159167.

The conference call will discuss forward guidance and other material information.

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”) and non-GAAP adjusted EBITDA. 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, amortization of intangibles, adjustments in the earn-out liability associated with the Mobile Posse acquisition, changes in the fair value of derivatives associated with warrants issued in connection with the September 2016 convertible notes offering and transaction expenses. 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: net interest income/(expense), adjustments in the earn-out liability associated with the Mobile Posse acquisition, income tax provision, depreciation and amortization, stock-based compensation expense, amortization of intangibles, the change in fair value of derivatives associated with warrants issued in connection with the September 2016 convertible notes offering, other expense, loss on extinguishment of debt and transaction expenses. 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.

Non-GAAP adjusted EBITDA and non-GAAP adjusted net income and EPS 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:

  • a decline in general economic conditions nationally and internationally

  • decreased market demand for our products and services

  • market acceptance and brand awareness of our products

  • risks associated with indebtedness

  • the ability to comply with financial covenants in outstanding indebtedness

  • the ability to protect our intellectual property rights

  • risks associated with adoption of our platform among existing customers (including the impact of possible delays with major carrier and OEM partners in the roll out for mobile phones deploying our platform)

  • actual mobile device sales and sell-through where our platform is deployed is out of our control

  • risks associated with our ability to manage the business amid the COVID-19 pandemic

  • the impact of COVID-19 on our partners, digital advertising spend and consumer purchase behavior

  • the impact of COVID-19 on our results of operations

  • risks associated with new privacy laws, such as the European Union’s GDPR and similar laws which may require changes to our development and user interface for certain functionality of our mobile platform

  • risks associated with the activities of advertisers

  • risks associated with the timing of our platform software pushes to the embedded bases of carrier and OEM partners

  • risks associated with end user take rates of carrier and OEM software pushes which include our platform

  • new customer adoption and time to revenue with new carrier and OEM partners is subject to delays and factors out of our control

  • risks associated with fluctuations in the number of our platform slots across US carrier partners

  • required customization and technical integration which may slow down time to revenue notwithstanding the existence of a distribution agreement

  • risks associated with delays in major mobile phone launches, or the failure of such launches to achieve the scale

  • customer adoption that either we or the market may expect

  • the difficulty of extrapolating monthly demand to quarterly demand

  • the challenges, given the Company’s comparatively small size, to expand the combined Company’s global reach, accelerate growth and create a scalable, low-capex business model that drives EBITDA (as well as adjusted EBITDA)

  • ability as a smaller company to manage international operations

  • varying and often unpredictable levels of orders; the challenges inherent in technology development necessary to maintain the Company’s competitive advantage such as adherence to release schedules and the costs and time required for finalization and gaining market acceptance of new products

  • changes in economic conditions and market demand

  • rapid and complex changes occurring in the mobile marketplace

  • pricing and other activities by competitors

  • technology management risk as the Company needs to adapt to a rapidly developing mobile device marketplace, complex specifications of different carriers and the management of a complex technology platform given the Company’s relatively limited resources

  • system security risks and cyberattacks

  • risks and uncertainties associated with the integration of the acquisition of AdColony, including our ability to realize the anticipated benefits of the acquisition and the satisfaction of related earn-out provisions

  • risks and uncertainties associated with the integration of the acquisition of Fyber, including our ability to realize the anticipated benefits of the acquisition and the satisfaction of related earn-out provisions

  • risks associated with the failure or inability to pay the future consideration due in the AdColony and Fyber acquisitions

  • challenges and risks associated with our rapid growth by acquisitions and resulting significant demands on our management and infrastructure

  • challenges and risks associated with our global operations and related business, political, regulatory, operational, financial, and economic risks as a result of our global operations

  • other risks including those described from time to time in Digital Turbine’s filings on Forms 10-K and 10-Q with the Securities and Exchange Commission (SEC), press releases and other communications.

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

Consolidated Statements of Operations and Comprehensive Income
(in thousands, except per share amounts)

Three months ended June 30,

2021

2020

(Unaudited)

(Unaudited)

Net revenues

$

212,615

$

59,012

Costs of revenues and operating expenses

License fees and revenue share

138,348

32,300

Other direct costs of revenues

2,533

560

Product development

15,547

4,408

Sales and marketing

13,736

4,318

General and administrative

23,296

6,804

Restructuring and impairment costs

10

Total costs of revenues and operating expenses

193,470

48,390

Income from operations

19,145

10,622

Interest and other income / (expense), net

Interest expense, net

(1,157)

(306)

Foreign exchange transaction loss

(270)

Other income / (expense), net

(35)

Total interest and other income / (expense), net

(1,462)

(306)

Income before income taxes

17,683

3,302

Income tax provision

3,430

376

Net income

14,253

2,926

Less: net loss attributable to non-controlling interest

(31)

Net income attributable to Digital Turbine, Inc.

14,284

2,926

Other comprehensive loss

Foreign currency translation adjustment

(20,781)

(142)

Comprehensive income / (loss)

(6,528)

2,784

Less: comprehensive income / (loss) attributable to non-controlling interest

(794)

Comprehensive income / (loss) attributable to Digital Turbine, Inc.

$

(5,734)

$

2,784

Net income per common share

Basic

$

0.16

$

0.11

Diluted

$

0.14

$

0.11

Weighted-average common shares outstanding

Basic

$

91,585

$

87,386

Diluted

$

98,822

$

93,108

Digital Turbine, Inc. and Subsidiaries

Consolidated Balance Sheets
(in thousands, except par value and share amounts)

June 30, 2021

March 31, 2021

(Unaudited)

ASSETS

Current assets

Cash

$

83,129

$

30,778

Restricted cash

883

340

Accounts receivable, net of allowances of $7,588 and $5,488, respectively

219,099

61,985

Prepaid expenses and other current assets

20,675

4,282

Total current assets

323,786

97,385

Property and equipment, net

18,927

13,050

Right-of-use assets

19,565

3,495

Deferred tax assets, net

12,963

Intangible assets, net

488,360

53,300

Goodwill

572,607

80,176

Other non-current assets

799

TOTAL ASSETS

$

1,424,044

$

260,369

LIABILITIES AND STOCKHOLDER’S EQUITY

Current liabilities

Accounts payable

$

155,378

$

34,953

Accrued license fees and revenue share

84,428

46,196

Accrued compensation

23,251

9,817

Short-term debt

20,415

14,557

Other current liabilities

21,659

5,626

Acquisition purchase price liabilities

313,413

Total current liabilities

618,544

111,149

Long-term debt, net of debt issuance costs

233,830

Deferred tax liabilities, net

24,676

Other non-current liabilities

20,219

4,108

Total liabilities

897,269

115,257

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 $1,000)

100

100

Common stock

$0.0001 par value: 200,000,000 shares authorized; 95,788,373 issued and 95,052,667 outstanding at June 30, 2021; 90,685,553 issued and 89,949,847 outstanding at March 31, 2021

10

10

Additional paid-in capital

736,943

373,310

Treasury stock (754,599 shares at June 30, 2021 and March 31, 2020)

(71)

(71)

Accumulated other comprehensive loss

(20,922)

(903)

Accumulated deficit

(213,050)

(227,334)

Total stockholders’ equity

503,010

145,112

Non-controlling interest

23,765

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

1,424,044

$

260,369

Digital Turbine, Inc. and Subsidiaries

Consolidated Statements of Cash Flows
(in thousands)

Three months ended June 30,

2021

2020

(Unaudited)

(Unaudited)

Cash flows from operating activities:

Net income

$

14,253

$

9,940

Adjustments to reconcile net income to net cash provided by / (used in) by
operating activities:

Depreciation and amortization

8,653

1,552

Non-cash interest expense

127

18

Stock-based compensation

2,365

1,438

Stock-based compensation for services rendered

1,340

173

(Increase) / decrease in assets:

Accounts receivable, gross

(48,817)

(10,686)

Allowance for credit losses

26

378

Deferred tax assets

12,966

Prepaid expenses and other current assets

(4,492)

456

Right-of-use asset

628

61

Other non-current assets

160

Increase / (decrease) in liabilities:

Accounts payable

35,396

(1,698)

Accrued license fees and revenue share

3,573

4,199

Accrued compensation

(46,956)

(1,018)

Other current liabilities

2,455

1,036

Deferred tax liabilities

(10,089)

Other non-current liabilities

(585)

163

Net cash provided by / (used in) operating activities

(28,997)

6,012

Cash flows from investing activities

Business acquisitions, net of cash acquired

(126,604)

(7,232)

Capital expenditures

(4,364)

(2,011)

Net cash used in investing activities

(130,968)

(9,243)

Cash flows from financing activities

Proceeds from borrowings

237,041

Payment of debt issuance costs

(2,988)

Options and warrants exercised

695

437

Repayment of debt obligations

(19,680)

Net cash provided by financing activities

215,068

437

Effect of exchange rate changes on cash

(2,209)

(142)

Net change in cash

52,894

(2,936)

Cash and restricted cash, beginning of period

31,118

21,659

Cash and restricted cash, end of period

$

84,012

$

18,723

PRO FORMA REVENUE

(in thousands)

(Unaudited)

Three months ended June 30,

Pre-Ownership
Period

As-Reported
Period

Pro Forma 2021

Pro Forma 2020

% Change

On Device Media

$

$

120,383

$

120,383

$

62,298

93

%

AdColony

18,304

44,937

63,241

43,285

46

%

Fyber

63,824

49,641

113,465

38,049

198

%

Elimination

(2,695)

(2,346)

(5,041)

(767)

557

%

Consolidated

$

79,433

$

212,615

$

292,048

$

142,865

104

%

GAAP INCOME FROM OPERATIONS TO NON-GAAP GROSS PROFIT

(in thousands)

(Unaudited)

Three months ended June 30,

2021

2020

Continuing operations

Net revenues

$

212,615

$

59,012

Income from operations

19,145

10,622

Add-back items:

Product development

15,547

4,408

Sales and marketing

13,736

4,318

General and administrative

23,296

6,804

Depreciation of software included in other direct costs of revenue

700

431

Non-GAAP gross profit from continuing operations

$

72,424

$

26,583

Non-GAAP gross profit percentage from continuing operations

34

%

45

%

GAAP NET INCOME TO NON-GAAP ADJUSTED NET INCOME

(in thousands)

(Unaudited)

Three months ended June 30,

2021

2020

Continuing operations

Net income from continuing operations

14,253

9,940

Add-back items:

Stock and stock option compensation

3,705

1,611

Amortization of intangibles

7,101

670

Adjustment for estimated earn-out liability

Change in fair value of warrant liability

Tax adjustment (1)

Transaction expenses

8,345

300

Non-GAAP adjusted net income from continuing operations

$

33,404

$

12,521

Non-GAAP adjusted net income per share from continuing operations

$

0.34

$

0.13

Weighted-average common shares outstanding, diluted

$

98,822

$

93,108

GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDA

(in thousands)

(Unaudited)

Three months ended June 30,

2021

2020

Continuing operations

Net income from continuing operations

14,253

9,940

Add-back items:

Stock and stock option compensation

3,705

1,611

Amortization of intangibles

7,101

670

Depreciation expense

1,552

882

Interest expense / (income), net

1,157

306

Other expense / (income), net

35

Foreign exchange transaction loss

270

Income tax provision

3,430

376

Transaction expenses

8,345

300

Non-GAAP adjusted EBITDA from continuing operations

$

39,848

$

14,085

GAAP CASH FLOW FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS TO NON-GAAP FREE
CASH FLOW FROM CONTINUING OPERATIONS

(in thousands)

(Unaudited)

Three months ended June 30,

2021

2020

Net cash provided by operating activities – continuing operations

$

(28,997)

$

6,012

Capital expenditures

(4,364)

(2,011)

Payment of acquisition-related liabilities assumed

39,314

Transaction expenses

8,345

300

Non-GAAP free cash flow provided by continuing operations

$

14,298

$

4,301

Digital Turbine - Right App. Right Person. Right Time. (PRNewsFoto/Digital Turbine, Inc.) (PRNewsfoto/Digital Turbine, Inc.)

Digital Turbine – Right App. Right Person. Right Time. (PRNewsFoto/Digital Turbine, Inc.) (PRNewsfoto/Digital Turbine, Inc.)

Cision

Cision

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SOURCE Digital Turbine, Inc.