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Digital Turbine (APPS) Q1 Earnings Beat Estimates, Sales Rise

Zacks Equity Research
·4 min read

Digital Turbine APPS reported first-quarter fiscal 2021 non-GAAP earnings of 13 cents per share, which beat the Zacks Consensus Estimate by 44.4% and surged 160% from the year-ago quarter’s figure.

Revenues of $59 million beat the consensus mark by 22.9% and came ahead of the guidance of $47-$50 million. The top line increased 93.1% year over year, primarily driven by higher revenue per device (RPD) from U.S.-based carrier partners and incremental contributions from newer platform products.

RPD derived from U.S.-based partners increased 27% year over year. International business skyrocketed more than 200% in the quarter.

Digital Turbine’s mobile device management platform, Ignite, has gained significant traction. As of Jun 2, 2020, more than 405 million devices had Ignite installed.

Digital Turbine, Inc. Price, Consensus and EPS Surprise

Digital Turbine, Inc. Price, Consensus and EPS Surprise
Digital Turbine, Inc. Price, Consensus and EPS Surprise

Digital Turbine, Inc. price-consensus-eps-surprise-chart | Digital Turbine, Inc. Quote

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Notably, results for the first quarter include the tally of the Mobile Posse operations, which was acquired on Feb 28, 2020.

International Partnerships

For the application business, RPD increased 50% from international partners driven by Samsung and America Movil among others.

Notably, the company’s software was installed on more than 13 million unlocked Samsung devices across more than 75 countries at the end of the fiscal first quarter.

Additionally, revenues generated from initial U.S. partners — Verizon VZ, AT&T T, Cricket and U.S. Cellular — increased 25% year over year.

Moreover, the company’s diversified partner base including T-Mobile TMUS, a large content business partner, and rollouts with newer U.S.-based partners such as Tracfone in the fourth quarter contributed to revenue growth.

Content products contributed 35% to revenues, while more than 90% of SingleTap revenues were derived from social media platform integration with one of the Tier 1 U.S. operators.

Moreover, this Zacks Rank #2 (Buy) company continued integration with new demand sources from SingleTap partners like AppsFlyer, Branch and Kochava. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Operating Details

Non-GAAP gross margin expanded 510 basis points (bps) on a year-over-year basis to 45.2%.

On a GAAP-basis, product development expenses increased 57.8% to $4.4 million. Sales & marketing (S&M) expenses increased 89.6% to $4.3 million. General & administrative (G&A) expenses rose 75% to $6.8 million.

Operating expenses, as percentage of revenues, contracted 300 bps on a year-over-year basis to 26.3%.

Operating income on a GAAP basis was $10.6 million in the reported quarter. The company had reported operating income of $3.04 million in the year-ago quarter.

Balance Sheet & Cash Flow

The company's cash balance was $18.7 million as of Mar 31, 2020 compared with $21.5 million as of Mar 31, 2021.

Cash provided by operating activities totaled $6.01 million in the reported quarter compared with $13.5 million in the previous quarter.

Non-GAAP free cash flow was $4 million in the reported quarter compared with $11.8 million in the prior quarter.

Guidance

For second-quarter fiscal 2021, Digital Turbine expects revenues between $59 million and $61 million.

Non-GAAP adjusted EBITDA is expected between $11 million and $12 million.

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