Digital Turbine, Inc. (Nasdaq: APPS) announced financial results for the fiscal second quarter ended September 30, 2022
Second Quarter Revenue Totaled $174.9 Million
Second Quarter GAAP Net Income of $11.7 Million and GAAP EPS of $0.11; Second Quarter Non-GAAP Adjusted Net Income1 of $35.0 Million and Non GAAP EPS of $0.34
Second Quarter Non-GAAP Adjusted EBITDA2 of $48.2 Million Increased 1% Year-Over-Year
AUSTIN, Texas, Nov. 9, 2022 /PRNewswire/ -- Digital Turbine, Inc. (Nasdaq: APPS) announced financial results for the fiscal second quarter ended September 30, 2022.
Recent Financial Highlights:
"In these challenging macroeconomic times, I was pleased that we continue to showcase our profitable business model and ability to expand margins in an inflationary environment," said Bill Stone, CEO. "We managed to achieve financial results that exceeded the midpoints of our profitability guidance for the second quarter. Our fiscal second quarter adjusted EBITDA margin reached an all-time high of 28% during the second quarter, which is a testament to the relative efficiencies and inherent cash flow generation of our platform business model. We have now delivered more than three times the adjusted EBITDA in the past six quarters than we did in the previous six years combined."
Mr. Stone concluded, "Beyond the stated financial performance, I want to also acknowledge the significant progress that we are continuing to make with respect to a number of key strategic initiatives, such as OneDT Integration, SingleTap and AppHub, that we expect will be meaningful contributors to the next significant wave of growth at Digital Turbine. We believe that we are ideally positioned to help empower our telecom partners, as well as large global publishers and advertisers across our platform, to capitalize on an expanding range of innovative new app distribution opportunities. We look forward to detailing more specific progress made on these fronts in the quarters to come."
Fiscal 2023 Second Quarter Financial Results
Total revenue for the second quarter of fiscal 2023 was $174.9 million. Total On-Device Solutions revenue before intercompany eliminations, was $108.5 million. Before intercompany eliminations, total revenue from our App Growth Platform was $68.3 million.
GAAP net income for the second quarter of fiscal 2023 was $11.7 million, or $0.11 per share, as compared to a GAAP net loss of $5.9 million, or ($0.06) per share for the second quarter of fiscal 2022. Non-GAAP adjusted net income1 for the second quarter of fiscal 2023 was $35.0 million, or $0.34 per share, as compared to Non-GAAP adjusted net income of $45.3 million, or $0.44 per share, in the second quarter of fiscal 2022.
Non-GAAP adjusted EBITDA2 for the second quarter of fiscal 2023 was $48.2 million, representing an increase of 1% year-over-year when compared to Non-GAAP adjusted EBITDA of $47.9 million in the second quarter of fiscal 2022. The reconciliations between GAAP and Non-GAAP financial results for all referenced periods are provided in the tables immediately following the Unaudited Condensed Consolidated Statements of Cash Flows below.
Based on information available as of November 9, 2022, the Company currently expects the following for the third quarter of fiscal 2023:
It is not reasonably practicable to provide a business outlook for GAAP net income 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, 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.
Management will host a conference call today at 4:30 p.m. ET to discuss its fiscal 2023 second quarter financial results and provide operational updates on the business. To participate, interested parties should dial 888-317-6003 in the United States, or 412-317-6061 from international locations, and enter access code 5886959. 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 November 16, 2022. The replay can be accessed by dialing 877-344-7529 in the United States or 412-317-0088 from international locations, passcode 7899034.
The conference call will discuss forward guidance and other material information.
Use of Non-GAAP Financial Measures
To supplement the Company's condensed 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"), non-GAAP adjusted EBITDA, non-GAAP free cash flow, and non-GAAP gross profit. 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 expense, amortization of intangibles, change in fair value of contingent liability, and transaction-related expenses and compensation costs. 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: stock-based compensation expense, depreciation and amortization, net interest income/(expense), change in fair value of contingent liability, foreign exchange transaction gains/(losses), income tax provision, and transaction-related expenses and compensation costs. Non-GAAP adjusted EBITDA margin is calculated as non-GAAP adjusted EBITDA as a percentage of total revenue. 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.
3Non-GAAP free cash flow, which is a non-GAAP financial measure, is defined as net cash provided by operating activities (as stated in our Condensed Consolidated Statements of Cash Flows), excluding transaction-related expenses and compensation costs, reduced by capital expenditures. Readers are cautioned that free cash flow should not be construed as an alternative to net cash provided by operating activities determined in accordance with U.S. GAAP as an indicator of profitability, performance or liquidity, which is the most comparable measure under GAAP.
4Non-GAAP gross profit is defined as GAAP income from operations adjusted to exclude the effect of product development costs, sales and marketing costs, general and administrative costs, and depreciation of software. Readers are cautioned that non-GAAP gross profit should not be construed as an alternative to income from operations determined in accordance with U.S. GAAP as an indicator of profitability or performance, which is the most comparable measure under GAAP.
Non-GAAP adjusted EBITDA, non-GAAP adjusted net income and EPS, non-GAAP free cash flow, and non-GAAP gross profit 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:
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:
Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income / (Loss)
(in thousands, except per share amounts)
Three months ended September 30,
Costs of revenue and operating expenses
License fees and revenue share
Other direct costs of revenue
General and administrative
Total costs of revenue and operating expenses
Interest and other income / (expense), net
Change in fair value of contingent consideration
Foreign exchange transaction loss
Other income / (expense), net
Total interest and other income / (expense), net
Income / (loss) before income taxes
Income tax provision / (benefit)
Less: net income / (loss) attributable to non-controlling interest
Net income / (loss) attributable to Digital Turbine, Inc.
Foreign currency translation adjustment
Comprehensive income / (loss)
Less: comprehensive income / (loss) attributable to non-controlling interest
Comprehensive income / (loss) attributable to Digital Turbine, Inc.
Net income / (loss) per common share
Weighted-average common shares outstanding
Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except par value and share amounts)
Prepaid expenses and other current assets
Property and equipment, net
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued license fees and revenue share
Acquisition purchase price liabilities
Other current liabilities
Total current liabilities
Long-term debt, net of debt issuance costs
Deferred tax liabilities, net
Other non-current liabilities
Commitments and contingencies (Note 13)
Series A convertible preferred stock at $0.0001 par value; 2,000,000 shares
authorized, 100,000 issued and outstanding (liquidation preference of $1)
$0.0001 par value: 200,000,000 shares authorized; 99,743,560 issued and
98,985,435 outstanding at September 30, 2022; 97,921,826 issued and
97,163,701 outstanding at March 31, 2022
Additional paid-in capital
Treasury stock (758,125 shares at September 30, 2022 and March 31, 2022)
Accumulated other comprehensive loss
Total stockholders' equity attributable to Digital Turbine, Inc.
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Three months ended September 30,
Cash flows from operating activities:
Adjustments to reconcile net income / (loss) to net cash provided by operating activities:
Depreciation and amortization
Non-cash interest expense
Stock-based compensation expense
Change in fair value of contingent consideration
Foreign exchange transaction (gain) / loss
(Increase) / decrease in assets:
Accounts receivable, gross
Allowance for doubtful accounts
Prepaid expenses and other current assets
Increase / (decrease) in liabilities:
Accrued license fees and revenue share
Other current liabilities
Other non-current liabilities
Net cash provided by operating activities
Cash flows from investing activities
Business acquisitions, net of cash acquired
Net cash used in investing activities
Cash flows from financing activities
Options and warrants exercised
Payment of withholding taxes for net share settlement of equity awards
Repayment of debt obligations
Net cash provided by / (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents and restricted cash
Net change in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash, beginning of period
Cash and cash equivalents and restricted cash, end of period
Three months ended September 30,
GAAP INCOME FROM OPERATIONS TO NON-GAAP GROSS PROFIT
Three months ended September 30,
General and administrative
Depreciation of software included in other direct costs of revenue
Non-GAAP gross profit percentage
GAAP NET INCOME TO NON-GAAP ADJUSTED NET INCOME
Three months ended September 30,
Stock-based compensation expense
Amortization of intangibles
Adjustment to estimated earn-out liability
Non-GAAP adjusted net income from continuing operations
Non-GAAP adjusted net income per share from continuing operations
Weighted-average common shares outstanding, diluted
GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDA
Three months ended September 30,
Net income / (loss) from continuing operations
Stock-based compensation expense
Depreciation and amortization
Other income / (expense), net
Change in fair value of contingent consideration
Foreign exchange transaction loss
Income tax provision / (benefit)
GAAP CASH FLOW FROM OPERATING ACTIVITIES TO NON-GAAP FREE CASH FLOW
Three months ended September 30,
Net cash provided by operating activities
Non-GAAP free cash flow provided by continuing operations
SOURCE Digital Turbine, Inc.
