Digital Turbine (APPS) 8 Aug 232024 Q1 Earnings call transcript

Good day, and welcome to the Digital Turbine Fiscal 2024 First Quarter Earnings Conference Call. Today, all participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that today’s event is being recorded.

I would now like to turn the conference over to Brian Bartholomew, Senior Vice President of Capital Markets. sir. ahead, go Please

afternoon, first to quarter Good fiscal Digital year XXXX earnings and Chris. the welcome Turbine Thanks, conference call.

the Stone, Garrison. on are me call discuss to Joining our CEO, Bill and Barrett CFO, today results

demand, to services, Before we like statements other forward-looking that projected I’d and and get are include metrics, anticipated based remarks will products These current operating remind assumptions, beliefs, this today expectations, topics. to our statements. you take started, market opportunity and forward-looking on future forward-looking our including

Although that guarantees update incorrect. to we believe prove some our we law, they assumptions obligation be are of will any are forward-looking not Except to and by no reasonable, as statements. required future performance, undertake inevitably

our our to contemplated Exchange exchange Securities For from those Commission. statements, materially forward-looking -- actual the results the a the we could discussion of documents by differ and refer risk please to factors with we file cause that

our Also, limitations GAAP during the reconciliations measures for non-GAAP non-GAAP we certain these substitutes will information are press discuss this as well comparable measures measures, to call, using of financial GAAP measures. the Please about most today’s refer performance. important results not release to Non-GAAP of for measures. as of non-GAAP

Now Mr. to I’ll our the over Bill turn call CEO, Stone.

all Thanks, tonight. Brian, our joining you and thank call for

a of guidance TAM. market have June and the the still expectations on both range, total the reach our our of the quarter, but both broader addressable top do of we to For I bottom internal end was beat pleased work we potential or top our and lines, to that lot

rather be make business the across investments tech we and very profitable not well a new investments to to strategy key for harvest performance, sequentially alternative had financial against we improved believe quarter will use SingleTap. We these technology our clean that to our but But capabilities, future our future financial pleased distribution, as short-term with growth. was products ad simply new our prove is profitability the served metrics. operationally performance our Hub, against capital platforming, app I

growth operational on on I’ll future the provide those after and updates updates providing current commentary drivers business. some

June the of we profit non-GAAP of share of and per earnings margins million revenue EBITDA, gross $X.XX $XX and were quarter, had million For XX.X%. $XXX.X

these of represented our financial March results. from metrics quarterly All improvements sequential

device set From a in continued million. to segment in the $XX.X continues grew with on per high business June RPD or I which pleased perspective, revenue also an was despite or all-time our soft ODS the device sales, improvement U.S., grow quarter. and Operationally, of device to our sequentially

years, XXXX, fiscal Over fiscal ‘XX our $X from just the $X past five and over now RPDs to in to XXXX over fiscal to XXXX $X in fiscal have is in accreted $X. in today year $X

and both years demand contributing today supply, see our big supply U.S. our from platform as a was it results revenue from to revenue two of device global each less of U.S. those continue Expanding device. our than more device and XX%. driver XX% has improved been per demand products is ago new strong to We advertisers approximately demand U.S. to also

movement applications, Chinese platform. on some on demand for which our increases seen overall their soften we’ve our the positive to particular, positions of In partners supply popular some the U.S. willingness

help expanding the weakness in in sales While relationships expect a we expect to global to devices, the strong the OEM softness offset we telcos current and macro U.S. any experience of continued quarter in future. pipeline device

made on our enablement. We also SingleTap progress

SingleTap. we five ways As have a monetize reminder

devices. demand demand via direct platform own to side and our where is we target AI our advertising leverage first enabled machine to The learning SingleTap

buy partners demand SingleTap is from enabling advertising companies our can second who on enabled The third-party other supply.

direct into visitors uses traffic licensing web SingleTap title, our Epic then The that’s native versions Games DT the which whether on across Amazon media Hub such The users. as such so device. players rate Fortnite distribution and is distributing their its of from the own brands installs, And and is large conversion mobile fifth to Fortnite benefits to is distributors applications, of version alternative leverage entire as SingleTap version social web for third fourth network. of convert enabling application large

may And investors given to as talking versus be going utilize cases with with various operational overwhelming many case, there’s we’re metrics. use each aggregate we SingleTap so of individual going the confusing forward, about on SingleTap in use how focus which seen

the progress. operational this did some want and product in I on players particular, investor on given focus However, our updates in provide to interest social media

generated It’s own early wanted their users. version their have campaigns TikTok, to application of running for SingleTap is but who we advertisers, with use an to now days, our revenues first their

We users a U.S. user revenue later generating begin also this calendar base native the with launching mobile LinkedIn, in are company finally, another who’s converting this entire we here social year. large across to their their quarter media And users. app expect to web with pilot

markets Later I updates connect alternative we future. want with to see in app remarks, my the the where of distribution [Indiscernible] these SingleTap to operational

platform show to XX% sequential business, the our up the in Our or see HEP app growth business from June was quarter, nearly growth segment I pleased March quarter. which was

double-digit in our on to and from rates Bank. DSP business see we We sequential are seeing Chase advertisers, our demand Starbucks our growth such relationships as expand show sequential brand it large improved and both particular, as encouraging brand ECPM with was and advertisers

and stabilized has improving. is execution market our macro The

and publishers East, quarter business double-digit to had XX% solid in Asia Pacific. America, and XX% approximately Africa, In and with well our be exchange addition, the sequential in the North Europe, of diversified globally continues business Middle in South growth exchange in XX% our

to solutions integrating such now integration demand new We’ve services. ad AI can to our of are growth and a rendering, this bedding macro of expect and we as learning improved ad on tech year. year ad and companies machine performance. made enter last the We spend, upon stable to the optimizations, and as more our for with new the fiscal building of supply we drive new us combination business ad a and focus tech Combined enhancements numerous driver with are expansion ad finally the types capabilities new environment the spent for The capabilities formats, the products methodologies. what be new second-half allowing to improved controlling these control we

Turning are calls, to publishers. growth alternative as growth the on future, but my first I want longer app We’ve revenue I technology, in strategic earlier DT SingleTap publisher term a drivers. distribution we are in of Aptoide a to spend device for app expansion States, moments on and mentioned in launched our products, which generating opportunity, as alternative with distribution four we’re United the our uniquely our with operators We investment building relationships, operator our Hub brand we’ve prior our we highlighting our today. OEM believe mentioned positioned relationships. app leveraging remarks as and few here

and more devices feedback and app helping of higher supportive users. Hub very and yet cost carrier incremental with engaging impressive product, has days been revenues per are The not seeing and which our RPDs but to incremental it’s from purchase in acquire incremental install material is early combination publishers our revenues from results, we overall a

more devices, So driving focus more downloads. the us and engagement, is for more

revenue app being assets three do We of future. then started in stream but accretion have this we monetization distribution, capabilities app RPD drivers alternative this all add into And to advertising to our these into an expect that not of leveraging opportunity. additional the as

Netflix, Games and publisher, of of advertisement, Many can application for distribution We rather environment or device press traditional spend to to after run on app applications install additional provide such as vision. take direct its may concept This it its would talking I articles involving global store a thrust about the version also seen user moments believe cap to it. is a download But user where regulatory than of advertising app players. of to outside a application to have direct clicking few Direct describing want own a distribution the will Google the you mega stores. the the application. tech any strategic, this Epic with Spotify, the highly of the unique is an the Apple in or

own be a players things And the of all advertising store the it such may curation indirectly at Hub to managing wanting to Digital friction capabilities the that that port as their positioned managing our app their at audiences. market large to achieve need as this, apps to installing application, all; large there involved uniquely these And for to whether version, and not inside points making to the or through labeling payments our product, via and the directly are are is publishers deliver some new leverage pain there app without easy to a on, Turbine white be solved, the applications.

resources allocating areas, growth new these of be all accomplish to And will key.

scale. June with addition details these a And platforms last are to for new running cash and investing are investments, allocating growth were products while our on year our will focused flat we quarter paying Barrett and despite efficient additional operating simultaneously in down opportunity. remarks. lean focused provide And as our legacy capital products, investments growth new team future we in dedicated with unlocking expenses on to In and his these the debt, from this future new

performance improved do. progress over away we key a and clean Barrett, take to work very our against longer metrics, had And I a we’re that to have making the before want it sequentially but to I vision, quarter much turn quarter we investors from operationally, still and financial business across term our

Hub investments to profitability platforms, new our capabilities, with Our distribution, new and strategy ad SingleTap. make that against and tech alternative app to technology use future is the

my it remarks. numbers. you to with the prepared concludes that, to And turn take And through Barrett this I’ll over

for Overall, the and measures. of quarter we in Bill, Thanks, both afternoon, profitability ahead results to top everyone. pleased line our were see expectations good and

in March from year-on-year of platform improving quarter. business and segments on slightly Within Revenue was the XX% ODS both million our growth the quarter ODS, solutions up our app down and up AGP from to sequentially and March of X% sequentially the sequentially with prior $XXX.X were or or the XX% down across device revenues quarter, year. revenues

impact referenced, both and device revenue However, QX, we while improved device, per softer in this exceeded per as by Bill increased which device offset U.S. saw quarter. was $X volumes sequentially

expect from in the grow the within to segment to December we continues from experience business has ODS comp this business run year-over-year over our quarter, content comparison, media in discussed quarter. stabilized past, off headwinds our prepaid our we’ve and QX by As the while a content

sequentially declined XX% our increased business, year. over AGP revenues prior On and QX X%

fiscal business, by year. improvement would the core expect consolidation this certain overall encouraged driven the these have be of ad we colony back the that largely and half we’re year-on-year the of impact While by discussed short-term comps decline the exiting in off run lines to we AGP legacy in the business And to by previously. continues fully of

earlier Bill’s future moves that a reiterate headwinds, we’re positive the are seeing bring benefits on return have businesses our these integration encouraged to the growth. near-term the I by expect we to comment from together despite investments we’re these making and

Our XX% of margins certain in in sequentially consolidated basis. largely QX, gross margin higher margin product increased products prior quarterly net or the a experienced combination we those are and was QX from was Improvements sequentially revenues the where mix an on QX down of where by from increase from year. in XX% were mix driven recognized which shifts, in the

quarter, $XX revenues we As as year and a with million opportunities. cash growth continue in were reminder, X% we of generally XX% the margin quarter-to-quarter, operating expenses on from rates fluctuate disciplined quarter. represented expansion execute margin and in expenses anticipate gross from remain prior long-term the We to increasing while can

and of highlight, we Bill These ensure on internal to alternative developing are Hub, growth the within on our focused expenses our integrating strategic growth office that have initiatives app and the namely capitalize platforms initiatives relatively remained strategy. assets. tech constant, technology our financial important Bill systems capabilities SingleTap. I’d distribution, making across investments are new potential ad back discussed, referenced while and and Also, full DT we

to our the growth the XXXX. the While results be completion into expect initiatives, begin reflected incur growth move will we new these both year current and of calendar integrations we the and on and increased, due to efficiencies near-term periods as to

During will this to remain we on investment efficiency. operating highly phase, continue focused

increased $X.X Turning adjusted quarter year. in the and profitability, down from to sequentially $XX the our EBITDA our of prior $XX million was in million million

fall and in in quarter. on sequentially we of integration expect from operating margin And measures the the enable the EBITDA as growth taking Our leverage those line. strengthen given model, active we bottom March to are the platform inherent grew XX% will the our a dollars business focus to we to greater return of efforts portion expense and XX%

income net share to $X.XX adjusted quarter non-GAAP per million in achieved share, $XX.X we $XX.X first year. the of million compared per quarter, as the In of last or or $X.XX the

interest by prior on our the incurred As rising expense greater we year, outstanding environment compared to rate driven debt.

was $X.XX on XXX.X $X.X shares to a prior GAAP loss compared per share, share per year Our or a $XX outstanding shares of net netting XXX.X $X.XX outstanding. a based and diluted million on million diluted or

cash million debt operation the end in quarter flows after Our $X to paying further position. $XX.X of additional balance deleverage cash was an from down at the our debt using million

flow Cash end we were of negatively of to free capital wait generating will toward revenues, timing and expect in return QX. by the to cash impacted the and positive the flow working quarter, which

quarterly to continue And larger down at our $XXX ended would business the balance as revolver drawn debt quarter credit our Our to revolving strengthen, increments. in we to million facility. expect continues pay our on

and to access be cost to our flow generation, model, given capital profit in continue our sheet credit low balance position We and our cash facility. confident

our let million per of revenue diluted turn tax to $XXX between million million. for on expect net to approximately a And and XX%. XXX EBITDA million $XX adjusted adjusted outstanding, shares fiscal to Now between $X.XX rate an million currently share based non-GAAP outlook. me and between be $XX be effective and be We to $X.XX diluted income $XXX and QX

it the open operator that, let hand to Operator? for me the back call With questions. to

Today’s Thank [Operator session. We’ll with begin question Dessouky question-and-answer Bank you. America. Omar from Please comes proceed. the of Instructions] first

question. for This guys. for the Omar. Hey, on Arthur Thanks taking is

the into bidding from initial a bit my initial sort know, seeing contribution we’re but question know, you next we you any been header and, just, understand was know, little of of guys testing, the integrations on Google’s from like, if And fiscal should the you you same if Thank bit, I the year? know, expecting wondering probably learnings of on what you sort note, are has fair away this is testing? in could So impact taking the for early be the some you. I [Indiscernible] revenue signals talk about, you

Yes, positive there short the of we’re seeing to share into increase yes. and sure. is benefits publishers. and the then The strategy you obviously I’ll platform, take one. mediation impacts is here answer our know, that voice which demand,

for I And us, [Indiscernible] characterize a or it Google still the bring to so, as having obviously is very early is days. to ability vast demand wouldn’t positive moving so.

as optimizing doing of, something go is that. of We’re for publishers it’s think into still, around demand, we bringing benefit kind something as will next Google we But, we to what credibility be absolutely more we’re a year, our think bringing us. the

Thank you. Understood.

Today’s Day Please with Riley B. proceed. Securities. question from comes Dan next

choppy Yes. Can Good that. was a at me? guys. hear little There you morning,

I Yes, think the it’s line. operator’s

great. Okay,

path SingleTap taking questions. calls, the around, when for thanks generation. on been pretty these You’ve talked Bill, the about of, in cautious kind the So, past, material you revenue to

pretty clear. been You’ve

sign be a I quarters should investors as it more it, past that? we a have into contributor, visibility or I you material than in Can that developing say time. reading you’re that know, this take patient. maybe that much have becoming any revenue you into just am hear too didn’t You you guys

to we’re SingleTap. but continue the I mean, right that the not lot no was future, material we to there’s that, excited now. there’s our it question Yes, about seeing quarter, catalysts it’s results not -- June in into a be

we see show really the catalyst take excitement will, to will improve some starting millions want devices, you but to of for and I starting many And it replicate. to remind know, we’re have I for are difficult it’s the thing and extremely And, of to that say scale about embedded anyone for of many, opportunity going signs to the this us, the so, hundreds base encouraging on that’s with that. really is product. to time, the on investors really

that, demand people I going want think something high, to publishers, in And new this app world of. so, I integrate advertisers, continue is that in know, amount platforms all side advantage you at the you the take that think are having global to and something out focus scale they’re devices going to to of that, and already market -- grow our know, to

is going ability -- SingleTap the important to have an publisher know, enabler non-Apple the to also distribute is integration users. our app rates the pressure And it’s And is mean, -- a get on to I stores, pay, built, want non-Google something -- new I this view make to this duopoly they’re think lower happen out to want there’s to of help a you increasing to on I point or alternative they to to going make that is customer. that, increasing the be app going today. stores with that acquire

that’s our do. be about that, something going existing leveraging we’re hub to excited So go and you to capabilities know,

thanks. second the came then fiscal the in. outlook, revenue Great, right fiscal for is just midpoint first so quarter And revenue where, around quarter

Just the for think any goes? on device material as difference do app quarter-over-quarter? growth between Or platform far flat segments, both outlet the pretty versus you as the

you in we we’re I think Dan, sequential improvements AGP business, improvement. touched Yes. think know, in QX, we’ve the you know, we about, near seen on seeing the XX%

we predict. we’re segment, of there’s there. is don’t lot you that, device We there. you give softness, a guidance on opportunity the some seeing touched by nice sometimes know, of You know, but, hard trends to We know, think

business think basis. nicely see guidance. of a kind the our think continued on expect is, be see. think the, know, might we’d growing trend we you And to I I in might know, you AGP for sequential a you embedded that But, is that’s that know, I near-term the

you Thank the taking questions. Appreciate guys. Perfect.

Thank you.

Today’s next Please question Difficulty] Roth. [Technical is proceed. from

for high $X. on in RPD the sort Darren. wanted talk U.S., about, [ph] to [Dylan] it’s an you Thanks my of I at of, mentioned Hey, all-time for questions. this sort is taking

full said you supply. sort think of I XX%

mean, strategies sort that growing sort just both after I the on of of side, in capturing what monetization the the on devices existing with RPD guess, the you’ve mentioned the I in different of partners are in of with and So some sort international markets devices your past? going higher more

right you it and particularly we’re Yes, United want was we’re point wanted of supply. coming well devices. that now and the now a U.S. advertisers, our the international know, sure. we’re to from those And where, demand I places Europe to outside of APAC you on What a because, seeing north encouraging, out, highlight is demand are diversification know, to know, on be XX% or U.S. of States lot supply to of from you in whether they the our

being like, whatever to bring and those so, And that happens whether demand out to strategic devices, social then media things you you particular and game as or that’s onto be, allows able deals know, in. whether can competition come international well know, or, we to type do carving

And so achieve that allows us rates. to higher

that’s really for So been that, us. has something encouraging

us, how or for Now Europe do the we what other that Latin America expand markets key is whether in or that’s you. to have

focus major would And That’s other advertiser outside. seeing area we’re U.S. side. the the then side. the part for to that product be So on on in replicate success us that the

is So, a added you know, so historically, growth started we’ve to portfolio, products other as as you’re the well product But dynamic installs also as enhancing aware, our RPD. with product. primary many we

combined more this results. of the more on combination the the the platform is really with accretion helping on and So those, drive demand products platform

you. Thank Great.

think mentioned, in start investments with that timeline the app follow-up OpEx, revenue, and you as tech, trade of bringing do dollars should how like, sort with really of of contribute? the the about in a investment to some those of, like, And you aren’t other incremental when of, the terms we that of off sort with ad see stores,

side. turn Yes, on side and we’ll OpEx start let the on over Barrett it the me revenue to then

you going into and short-term the think now end these it, that, these right prepared of future of as you at And with the it how and view thinking remarks SingleTap of mentioned You you in know, in show back about look know, see a on a things more And drivers. my know, growth. near-term we’re we AGP now how quarters, in right things we about as this AGP, we year, like know, from to mentioned get the I and in remarks is next things is I you sequential Hub our be think Barrett nice in ramping, know, and terms year, the terms perspective. you’re enhancements revenue/business of some will other his

over the side. it to investment talk about and turn to OpEx I’ll And the Barrett

that Yes, think, office we know, Dylan, we some on it today. integrating, financial systems, in those bringing have HR our of companies expenses are a Those touched the the know, the I as you we’re on. our excess systems incurring we’re Those -- as my systems. Those things the investments of that you costs lot model, know, in teams investments know, are your in together. are, you touched you for, well like place those back for remarks, Bill

of know, out we’re to the cost through as you’ll going both you calendar start as start levels, think expenses, pick begin revenues, and well investments similar as in we’ll those to year I to kind growth incremental in see, drop our to see carry at up of then those and well. the costs, off efficiencies the structure, those end

you. Thank Great.

Dylan. Thanks,

Instructions] The Stoss Hallum. comes Craig Please next [Operator from from proceed. Anthony question

a are else functionality. this it discussing I would digital If were verge certainly wanted ask they article turbine, meta interviewing Hey, where they who and not, to like be? employee SingleTap could Bill. about sound

Yes. It’s somebody for on, like, comment from that things to hard Tony, speculation. came me, future on

into seeing, example, really highlight you was highlight, side up the it referencing. article of was opening and XX, But what I’d iOS the will things mega Meta say, on reality and I to deal Blizzard kind players you’re you’re that. And and that mega meta, Activision So cap I’d alternative others, away you’re Microsoft know, specifically a digital lot tech talking from an applications app about just seeing, Amazon, of now loading is like with as not distribution. players, in in I’m markets done, now seeing is act stay but the from that Europe, you’re coming going cap example, for interest getting

know, to you So lot interest, a of there’s now. see right starting

one have the manage and the know, you able is how of the you plumbing you But then the telco apps, unique internal, I -- how in becomes and of, kind on store. about, And if how free think to it’s get ported do you. question go interest advantages want this. versions, to a How the actually when how? to things you from with that okay, you apps key be the down it that, device make so that thing be experience, The different think direct do are effect your should all to. got It distributed curate to the to not friction it’s OEM partners? Those we’ve have

through mentioned I directly in to large when this app you doing players, spot, DT pretty or it comments unique it in we’re white wave with here a so other my know, think really Hub labeling capture I on And doing alternative of distribution.

of, and other these how And it’s today. alternative ago years and about a innings CTV you just distributions, you our something, you as CTV at say and almost something alternative of I know, know, really choice. regulations perspective, is and customers the publishers, from these I early some kind few about and, think wanting players so large know, app today

base of given technology that, really already I think them. embedded be going opportunities with uniquely the know, to some you positioned nice our just to devices it’s on really we’re

think often the a the of there carrier weak and you haven’t about, you’re that that’d talked -- planning then segments on Clearly, really Is anybody. if in covered think was And remarks, Bill, just update I couple anything past, that that? guys I’m to a done the shock on mean, you device be international quite helpful. offset prepared that launches. the could quarters, your highlight the markets -- new in to help of carriers launching will in it U.S, Okay. percent international on in lately. then not I you or used follow-ups I us, past you

expanding Yes, and strong absolutely. relationships. of OEM around, prepared a in know, global comment make pipeline did remarks telcos you the the I

I so of at And it dry kind that.

the have we addressable not here the reasons. know, here. in to for you our think call, we’re a going of now know, You But, continue to right names of, expand, we obvious market optimism lot terms on ability

Got year -- is to I for it. like And this in pretty can if it know, more was your seasonally. up then December you one muted it thoughts quarter last? on your seasonal Any slide normally Barrett, be you if strongly again expect

that’s Andrew, December? Maybe

Yes.

so right? Yes, you We was of, an markets year, odd know, last change Tony. December But quarter kind quickly. quite

I things you I closer don’t expect I but, -- as normalized like the holiday seasonal for we’re yes, seasonal know, quarter. ‘XX some a think, uplift to back sure not we’re now, to not we to, would know, seeing see, -- to would levels, to we’re know, you trend. we more that sure back see expect you

curious kind with where I think it is. Got just last know of to it. And hope, I at you’re one quickie for Love Bill. Aptoide? I’m hear more Aptoide, on you

our They’re has Yes, with. partnership you into today. They’ve continue our techs been technology great. know, we to great integrated product work been Hub Aptoide,

we We -- with that. think to my you think Barrett You in know, there’s the we’re an know, there’s want you them you expanding looking but even broader has to we’re that, with remarks. in fantastic, expanding looking in players than space, been forward think I lot investment it of heard a prepared others, know, there enormous about you to know, a the community, out and word Aptoide lot, forward

to mover want the space you some first and after really have how about get we we really advantages. know, So can, think

Thanks it. Appreciate guys.

Tony. you, Thank

Bill the questioner Difficulty] any we over I session. this time, concludes queue. back does now conference for closing Stone [Technical question-and-answer would remarks. like this our At And the in to to turn

Yes. call everyone Thanks for joining today. the

that night. progress our in we’ll quarter forward on reporting we Thanks, made again our have the and look few on call, call months. fiscal the to great and we’ll to know, You against ‘XX second all points you a talk a on

concluded. Thank now is and presentation today’s you you conference may for disconnect. The attending now