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Digital Turbine (APPS) Q3 Earnings Beat, Sales Increase Y/Y

Digital Turbine APPS reported third-quarter fiscal 2021 non-GAAP earnings of 21 cents per share, which beat the Zacks Consensus Estimate by 31.3% and surged 320% year over year.

Revenues of $88.6 million beat the consensus mark by 18.1% and came ahead of the guidance of $72-$75 million. The top line increased 146% year over year, primarily driven by higher revenue per device (RPD) from international partners and incremental contributions from newer platform products.

RPD derived from U.S.-based partners increased 25% year over year. International RPD grew nearly 70% in the reported quarter.

This Zacks Rank #2 (Buy) company added 65 million of devices in the quarter, representing growth of over 50% year over year. This growth was achieved despite an overall decrease for Android devices in the macro global market.

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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

International Partnerships

For the application business, RPD increased 70% from international partners, driven by Samsung, Xiaomi and Nokia, among others.

During the three months ended Dec 31, 2020, carrier partners including Verizon VZ Wireless, AT&T Inc. T, including its Cricket subsidiary, T-Mobile US Inc. TMUS including Sprint and other subsidiaries and America Movil Inc., a carrier partner, primarily through its subsidiary TracFone Wireless Inc., generated 16.5%, 20.3%, 30.6% and 10.4% respectively, of the company’s net revenues.

For the content business, revenues increased 108% year over year to $31.7 million, driven by improved performance on fully deployed content platform combined with increasing advertising demand and yields.

Operating Details

Non-GAAP gross margin expanded 330 basis points (bps) on a year-over-year basis to 43.4%.

On a GAAP-basis, product development expenses increased 86.9% to $5.2 million. Sales & marketing (S&M) expenses grew 85.4% to $5.2 million. General & administrative (G&A) expenses rose 56.9% to $6.7 million.

Operating expenses, as a percentage of revenues, contracted 810 bps on a year-over-year basis to 19.3%.

Operating income on a GAAP basis was $20.5 million in the reported quarter. The company had reported an operating income of $4.1 million in the year-ago quarter.

Balance Sheet & Cash Flow

The company's cash balance was $43.6 million as of Dec 31, 2020, compared with $33 million as of Sep 30, 2020.

Cash provided by operating activities totaled $18.9 million in the reported quarter compared with $23.7 million in the previous quarter.

Non-GAAP free cash flow was $22 million in the reported quarter compared with $21.5 million in the prior quarter.

Key Developments

On Feb 3, 2021, the company entered into a new credit facility agreement with Bank of America, N.A., which provides for a revolving line of credit of $100 million, with an accordion feature enabling upsizing to $200 million, to be used for acquisitions, working capital and general corporate purposes. The revolving line of credit matures in 2024 and replaced the company's prior term loan and credit facility.

Guidance

For fiscal 2021, Digital Turbine expects revenues between $298 million and $300 million.

Non-GAAP adjusted EBITDA is expected between $71 million and $72 million. Adjusted earnings per share are expected to be 67 cents.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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