Digital Turbine Inc. ((APPS)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Digital Turbine’s recent earnings call conveyed a positive sentiment, showcasing significant achievements in revenue growth, transformation efforts, and brand engagement. Despite challenges such as softness in U.S. device volumes and declines in legacy DSPs, the company is effectively navigating these obstacles with strategic initiatives and cost reductions.
Exceeded Expectations in Q3
The company reported revenue of $135 million, $22 million in adjusted EBITDA, and $0.13 in non-GAAP EPS, all surpassing expectations and generating positive free cash flow. These figures underscore a robust financial performance for the quarter.
On-Device International Revenue Growth
International On-Device revenues saw a 100% year-over-year increase, driven by strong advertiser demand and enhanced execution. This growth highlights the company’s successful international expansion and market penetration.
AGP Business Performance
AGP revenues were reported at $44 million, with a 34% year-on-year growth in brand spending. The company effectively leveraged first-party data and focused on positive investments in brands, indicating strong business momentum in this area.
Cost Reduction Success
Digital Turbine achieved over $25 million in cost reductions through its transformation program, which is on track to exceed initial targets. This success in cost management is a testament to the company’s strategic efficiency efforts.
Positive Outlook for Q4
The company has guided for year-over-year revenue growth and nearly 50% growth in EBITDA for the March quarter. This positive outlook reflects strong advertiser demand and improved execution, setting a promising tone for future quarters.
Softness in US Device Volumes
There is continued softness in U.S. device volumes, which has partially offset strong performances in other segments. Addressing this challenge remains a key area of focus for the company.
Challenges in Legacy Performance DSP
The company faced declines in legacy performance DSPs due to transitions from waterfall to SDK bidding and supply path optimization. However, the strategies in place are expected to mitigate these impacts over time.
Decline in Gross Margin
Consolidated gross margin decreased to 44% from 46% in the prior year, influenced by changes in product mix within the ODS segment. This highlights an area where the company is working to balance operational efficiency with growth.
Forward-Looking Guidance
Digital Turbine’s forward-looking guidance for Fiscal 2025 emphasizes a strong growth trajectory. The company projects a 50% increase in EBITDA for the upcoming quarter, driven by strong advertiser demand and strategic initiatives. Additionally, they aim for significant savings in operating expenses while investing in strategic growth areas like alternative app distribution and brand partnerships.
In summary, Digital Turbine’s earnings call reflected a generally positive sentiment with significant achievements in financial performance and strategic growth areas. Despite certain challenges, the company’s proactive approach and forward-looking guidance suggest a promising future for its stakeholders.
