Digital Turbine Reports Fiscal 2020 First Quarter Results

Revenue of $30.6 Million Represented 38% Annual Growth

Accelerated Revenue and Gross Profit Growth Drove Higher Profitability

AUSTIN, Texas, Aug. 5, 2019 /PRNewswire/ -- Digital Turbine, Inc. (Nasdaq: APPS) announced financial results for the fiscal first quarter ended June 30, 2019.  All operating results discussed below, except as otherwise specifically noted, refer only to the continuing operations of the Company, and all comparisons to prior periods have been adjusted to reflect only continuing operations. 

Recent Highlights:

  • Fiscal first quarter revenue was $30.6 million, representing 38% growth when compared to the fiscal first quarter of 2019.
  • GAAP net loss for the fiscal first quarter was $1.7 million, or ($0.02) per share, as compared to GAAP net income of $1.5 million, or $0.02 per share for the fiscal first quarter of 2019. Non-GAAP adjusted net income1 for the fiscal first quarter was $4.2 million, or $0.05 per share, as compared to a Non-GAAP adjusted net loss of $0.6 million, or ($0.01) per share, in the fiscal first quarter of 2019.
  • Non-GAAP adjusted EBITDA2 for the fiscal first quarter was $4.2 million, as compared to Non-GAAP adjusted EBITDA of $0.2 million in the fiscal first quarter of 2019.
  • GAAP cash provided by operating activities totaled $5.0 million in the fiscal first quarter. Non-GAAP free cash flow3 totaled $4.3 million in the fiscal fourth quarter.
  • GAAP gross margin was 39% for the fiscal first quarter of 2020, as compared to a 29% GAAP gross margin in the fiscal first quarter of 2019. Non-GAAP adjusted gross margin4 was 40% for the fiscal first quarter of 2020, as compared to 31% in the fiscal first quarter of 2019.
  • The Company has surpassed 290 million total devices with Ignite installed to date, including more than 30 million devices installed during the June quarter.
  • U.S. revenue-per-device ("RPD") increased by more than 30% when compared to the fiscal first quarter of 2019, highlighting strengthening demand from advertisers for the Digital Turbine platform.
  • The Company's cash balance was $16.2 million as of June 30, 2019, as compared to the March 31, 2019 balance of $10.9 million. The Company had zero total debt as of June 30, 2019.

"We are out of the gates strong as we begin our fiscal 2020," said Bill Stone, CEO.  "We have a lot of momentum, as not only did our results for the fiscal first quarter comfortably exceed our internal expectations driven largely by stronger revenue-per-device ("RPD") metrics during the latter half of the quarter, but we also made significant operational progress with valuable new partners and strategic platform initiatives that should help propel our growth in future quarters and years.  We managed to accelerate our year-over-year revenue growth to 38% and our Non-GAAP gross profit growth to 78% in the June quarter, as compared to 30% revenue growth and 50% Non-GAAP gross profit growth in the preceding March quarter.  This strong top-line momentum, along with continuing operating leverage, led to the generation of $4.2 million in Adjusted EBITDA and $4.3 million in free cash flow during the quarter, which in turn helped us further bolster a balance sheet that comprised of more than $16 million in cash and zero debt as of quarter-end." 

Mr. Stone concluded, "I remain highly encouraged by the inherent momentum of our increasingly differentiated platform offering and the deep collaboration shown by our valued operator and OEM partners.  While I am certainly proud of our strong financial results, our focus remains single-mindedly on effectively positioning and scaling the platform to ensure future success for our business and that of our partners.  We are continuing to aggressively recruit additional carriers and OEMs to further expand our scale and global footprint.  At the same time, we are continuing to work collaboratively with existing partners and advertiser clients to develop innovative new platform features designed to drive added monetization via higher levels of conversion and engagement for advertisers and end users alike.  I look forward to providing real-time updates on our progress toward these core objectives as fiscal 2020 matures."

Fiscal First Quarter Financial Results

Revenue for the first quarter of fiscal 2020 was $30.6 million, representing an increase of 38% year-over-year. Revenue growth was primarily driven by higher revenue-per-device with our large U.S.-based carrier partners, reflecting strong advertiser demand for Dynamic Installs as well as incremental contributions from other, newer platform products.

GAAP gross margin was 39% for the first quarter of fiscal 2020, as compared to a 29% GAAP gross margin in the first quarter of fiscal 2019.  Non-GAAP adjusted gross margin4 increased to 40% for the first quarter of fiscal 2020, as compared to 31% for the first quarter of fiscal 2019.

Net loss from continuing operations for the first quarter of fiscal 2020 was $1.7 million, or ($0.02) per share, as compared to a net income from continuing operations for the first quarter of fiscal 2019 of $1.5 million, or $0.02 per share.  Non-GAAP adjusted net income1 for the first quarter of fiscal 2020 was $4.2 million, or $0.05 per share, as compared to a Non-GAAP adjusted net loss of $0.6 million, or ($0.01) per share, during the first quarter of fiscal 2019.

Non-GAAP adjusted EBITDA2 was $4.2 million for the first quarter of fiscal 2020, as compared to Non-GAAP adjusted EBITDA of $0.2 million for the first quarter of fiscal 2019. The reconciliation between GAAP and Non-GAAP financial results for all referenced periods is provided in a table immediately following the Unaudited Consolidated Statements of Cash Flows below.

Business Outlook

Based on information available as of August 5, 2019, the Company expects second quarter fiscal 2020 revenue of between $31 million and $32 million, and non-GAAP adjusted EBITDA2 of between $3.2 million and $3.7 million.  It is not reasonably practicable to provide a business outlook for GAAP net income from continuing operations because the Company cannot reasonably estimate the changes in the fair value of derivatives associated with outstanding warrants issued in connection with the September 2016 convertible notes offering, which are directly impacted by changes in the Company's stock price. 

About Digital Turbine, Inc.

Digital Turbine innovates at the convergence of media and mobile communications, connecting top mobile operators, OEMs and publishers with app developers and advertisers worldwide. Its comprehensive Mobile Delivery Platform powers frictionless user acquisition and engagement, operational efficiency and monetization opportunities. Digital Turbine's technology platform has been adopted by more than 30 mobile operators and OEMs worldwide, and has delivered more than one billion app preloads for tens of thousands advertising campaigns. The company is headquartered in Austin, Texas, with global offices in Durham, Mumbai, San Francisco, Singapore and Tel Aviv. For additional information visit www.digitalturbine.com.

Conference Call
Management will host a conference call today at 4:30 p.m. ET to discuss its first quarter financial results and provide operational updates on the business. To participate, interested parties should dial 855-238-2713 in the United States or 412-542-4111 from international locations. 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 August 12, 2019. The replay can be accessed by dialing 877-344-7529 in the United States or 412-317-0088 from international locations, passcode 10133868.

The conference call will discuss guidance and other material information.

Use of Non-GAAP Financial Measures
To supplement the Company's condensed consolidated financial statements presented in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), Digital Turbine uses non-GAAP measures of certain components of financial performance.  These non-GAAP measures include non-GAAP adjusted gross profit, non-GAAP gross margin, non-GAAP adjusted EBITDA and non-GAAP free cash flow.   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/(loss) and EPS are defined as GAAP net income/(loss) and EPS adjusted to exclude the effect of stock-based compensation, amortization of intangibles, severance, changes in the fair value of derivatives associated with warrants issued in connection with the September 2016 convertible notes offering, and loss on extinguishment of debt.  Readers are cautioned that Non-GAAP adjusted net income/(loss) 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/(loss) excluding the following cash and non-cash expenses: interest expense, foreign exchange transaction loss/(gain), income tax provision/(benefit), depreciation and amortization, stock-based compensation expense, severance, the change in fair value of derivatives associated with warrants issued in connection with the September 2016 convertible notes offering, other income/(expense), and a loss on extinguishment of debt.  Readers are cautioned that Non-GAAP adjusted EBITDA should not be construed as an alternative to net income/(loss) 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 Consolidated Statement of Cash Flows) 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 adjusted gross profit and gross margin are defined as GAAP gross profit and gross margin adjusted to exclude the effect of intangible amortization expense and depreciation of software.  Readers are cautioned that Non-GAAP adjusted gross profit and gross margin should not be construed as an alternative to gross margin 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 gross profit and gross margin, Non-GAAP adjusted EBITDA, Non-GAAP adjusted net income / (loss) and EPS, and Non-GAAP free cash flow are used by management as internal measures of profitability, performance and liquidity.  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:

  • risks associated with Ignite adoption among existing customers (including the impact of possible delays with major carrier and OEM partners in the roll out for mobile phones deploying Ignite)
  • actual mobile device sales and sell-through where Ignite is deployed is out of our control
  • risks associated with new privacy laws, such as the European Union's GDPR and similar laws which may require changes to our development and user interface for certain functionality of our Ignite product
  • risks associated with the timing of Ignite software pushes to the embedded bases of carrier and OEM partners
  • risks associated with end user take rates of carrier and OEM software pushes which include Ignite
  • new customer adoption and time to revenue with new carrier and OEM partners is subject to delays and factors out of our control
  • risks associated with fluctuations in the number of Ignite slots across US carrier partners
  • required customization and technical integration which may slow down time to revenue notwithstanding the existence of a distribution agreement
  • risks associated with delays in major mobile phone launches, or the failure of such launches to achieve the scale
  • customer adoption that either we or the market may expect
  • the difficulty of extrapolating monthly demand to quarterly demand
  • the challenges, given the Company's comparatively small size, to expand the combined Company's global reach, accelerate growth and create a scalable, low-capex business model that drives EBITDA (as well as Adjusted EBITDA)
  • ability as a smaller Company to manage international operations
  • varying and often unpredictable levels of orders; the challenges inherent in technology development necessary to maintain the Company's competitive advantage such as adherence to release schedules and the costs and time required for finalization and gaining market acceptance of new products
  • changes in economic conditions and market demand
  • rapid and complex changes occurring in the mobile marketplace
  • pricing and other activities by competitors
  • derivative and warrant liabilities on our balance sheet will fluctuate as our stock price moves and will also produce changes in our income statement; these fluctuations and changes might materially impact our reported GAAP financials in an adverse manner, particularly if our stock price were to rise
  • technology management risk as the Company needs to adapt to complex specifications of different carriers and the management of a complex technology platform given the Company's relatively limited resources, and
  • other risks including those described from time to time in Digital Turbine's filings on Forms 10-K and 10-Q with the Securities and Exchange Commission (SEC), press releases and other communications.

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 Contacts:

Brian Bartholomew
Digital Turbine
brian.bartholomew@digitalturbine.com

Digital Turbine, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income / (Loss)




(in thousands, except per share amounts)





3 Months Ended


3 Months Ended


June 30, 2019


June 30, 2018


(Unaudited)


(Unaudited)

Net revenues

$                  30,553


$                  22,112

Cost of revenues




License fees and revenue share

18,275


15,216

Other direct cost of revenues

278


507

Total cost of revenues

18,553


15,723

Gross profit

12,000


6,389

Operating expenses




Product development

2,794


3,109

Sales and marketing

2,278


1,836

General and administrative

3,888


2,704

Total operating expenses

8,960


7,649

Income / (Loss) from operations

3,040


(1,260)

Interest and other expense, net




Interest expense, net

-


(319)

Foreign exchange transaction gain / (loss)

(1)


8

Change in fair value of convertible note embedded derivative liability

-


1,620

Change in fair value of warrant liability

(5,226)


1,570

Other expense

409


(127)

Total interest and other income / (expense), net

(4,818)


2,752

Income / (loss) from operations before income taxes

(1,778)


1,492

Income tax benefit

(107)


(36)

Net income / (loss) from operations, net of taxes

$                  (1,671)


$                    1,528

Loss from discontinued operations

$                     (148)


$                   (1,044)

     Net loss from discontinued operations, net of taxes

$                     (148)


$                   (1,044)

Net income / (loss)

$                  (1,819)


$                       484

Foreign currency translation adjustment

98


-

Comprehensive income / (loss):

$                  (1,721)


$                       484

Basic and diluted net income / (loss) per common share




Continuing operations

$                    (0.02)


$                      0.02

Discontinued operations

$                    (0.00)


$                     (0.01)

Net income / (loss)

$                    (0.02)


$                      0.01

Weighted average common shares outstanding, basic

81,814


76,204

Weighted average common shares outstanding, diluted

81,814


79,598

 

Digital Turbine, Inc. and Subsidiaries




Consolidated Balance Sheets








(in thousands, except par value and share amounts)










June 30, 2019


March 31, 2019


(Unaudited)







ASSETS




Current assets




Cash and cash equivalents

$                       16,222


$                       10,894

Restricted cash

165


165

Accounts receivable, net of allowances of $961 and $895, respectively

22,733


22,707

Prepaid expenses and other current assets

1,511


1,331

Current assets held for disposal

1,817


2,026

Total current assets

42,448


37,123

Property and equipment, net

3,748


3,430

Right-of-use asset

2,168


-

Deferred tax assets

85


40

Goodwill

42,268


42,268

TOTAL ASSETS

$                      90,717


$                      82,861

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Accounts payable

$                       18,916


$                       14,912

Accrued license fees and revenue share

12,833


16,205

Accrued compensation

1,456


2,441

Other current liabilities

1,922


826

Current liabilities held for disposal

3,654


3,924

Total current liabilities

38,781


38,308

Warrant liability

12,525


8,013

Other non-current liabilities

2,178


182

Total liabilities

53,484


46,503

Stockholders' equity




Preferred stock




Series A convertible preferred stock at $0.0001 par value;
2,000,000 shares authorized, 100,000 issued and outstanding
(liquidation preference of $1,000)

100


100

Common stock




Common Stock at $0.0001 par value: 200,000,000 shares authorized; 83,220,668 issued and 82,486,212 outstanding at June 30, 2019; 82,354,940 issued and 81,620,484 outstanding at March 31, 2019

10


10

Additional paid-in capital

335,389


332,793

Treasury stock (754,599 shares at June 30, 2019 and March 31, 2019)

(71)


(71)

Accumulated other comprehensive loss

(258)


(356)

Accumulated deficit

(297,937)


(296,118)

Total stockholders' equity

37,233


36,358

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$                      90,717


$                      82,861

 

Digital Turbine, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)






3 Months Ended


3 Months Ended


June 30, 2019


June 30, 2018


(Unaudited)


(Unaudited)

Cash flows from operating activities




Net income / (loss) from continuing operations, net of taxes 

$                       (1,671)


$                         1,528

Adjustments to reconcile net income / (loss) to net cash provided by / (used in) operating activities:




Depreciation and amortization

462


729

Change in allowance for doubtful accounts

66


278

Non-cash interest expense

-


161

Stock-based compensation

560


463

Stock-based compensation for services rendered

122


85

Change in fair value of convertible note embedded derivative liability

-


(1,620)

Change in fair value of warrant liability

5,226


(1,570)

(Increase)/decrease in assets:




Accounts receivable

(92)


(2,574)

Deferred tax assets

(45)


(36)

Prepaid expenses and other current assets

(151)


(52)

Right-of-use asset

(2,168)


-

Increase/(decrease) in liabilities:




Accounts payable

3,982


(1,603)

Accrued license fees and revenue share

(3,347)


3,259

Accrued compensation

(993)


(1,781)

Other current liabilities

1,096


344

Other non-current liabilities

1,997


(6)

Net cash provided by / (used in) operating activities - continuing operations

5,044


(2,395)

Net cash used in operating activities - discontinued operations

(230)


(1,224)

Net cash provided by / (used in) operating activities

$                         4,814


$                       (3,619)





Cash flows from investing activities




Capital expenditures

$                          (783)


$                          (411)

Cash used in investing activities - continuing operations

(783)


(411)

Cash used in investing activities - discontinued operations

-


(41)

Net cash used in investing activities

$                          (783)


$                          (452)





Cash flows from financing activities




Options and warrants exercised

$                         1,199


$                              39

Repayment of debt obligations

-


(50)

Net cash provided by / (used in) financing activities

$                         1,199


$                            (11)





Effect of exchange rate changes on cash and cash equivalents and restricted cash

$                              98


$                                -





Net change in cash and cash equivalents and restricted cash

$                         5,328


$                       (4,082)





Cash and cash equivalents and restricted cash, beginning of period

$                       11,059


$                       13,051





Cash and cash equivalents and restricted cash, end of period

$                       16,387


$                         8,969

 

GAAP GROSS MARGIN TO NON-GAAP GROSS MARGIN






(in thousands)













3 Months Ended


3 Months Ended



June 30, 2019


June 30, 2018



(Unaudited)


(Unaudited)

Continuing Operations:





Revenue


$                        30,553


$                        22,112

Gross profit


$                        12,000


$                          6,389

Gross margin percentage


39%


29%

Add back items:





Amortization of intangibles


$                                  -


$                             335

Depreciation of software


$                             278


$                             172

Non-GAAP gross profit from continuing operations


$                        12,278


$                          6,896

Non-GAAP gross margin percentage from continuing operations


40%


31%

 

GAAP NET INCOME / (LOSS) TO NON-GAAP ADJUSTED NET INCOME / (LOSS)






(in thousands)

















3 Months Ended


3 Months Ended



June 30, 2019


June 30, 2018



(Unaudited)


(Unaudited)

Continuing Operations:





Net income / (loss) from continuing operations


$                    (1,671)


$                     1,528

Add back items:





Stock and stock option compensation


682


548

Amortization of intangibles


-


335

Change in fair value of convertible note
embedded derivative and warrant liability


5,226


(3,190)

Non-recurring severence expense


-


145

Non-GAAP adjusted net income / (loss) from continuing operations


$                     4,237


$                       (634)






Non-GAAP adjusted net income / (loss) per share from continuing operations


$                       0.05


$                      (0.01)

Weighted average common shares outstanding, basic


81,814


76,204

Weighted average common shares outstanding, diluted


81,814


79,598

 

GAAP NET INCOME / (LOSS) TO NON-GAAP ADJUSTED EBITDA






(in thousands)








3 Months Ended


3 Months Ended



June 30, 2019


June 30, 2018

Continuing Operations:


(Unaudited)


(Unaudited)

Net income / (loss) from continuing operations


$                   (1,671)


$                    1,528

Add back items:





Stock and stock option compensation


682


548

Amortization of intangibles


-


335

Depreciation expense


482


394

Interest expense, net


-


319

Other income / (expense)


(409)


121

Change in fair value of convertible note
embedded derivative and warrant liability


5,226


(3,190)

Loss on extinguishment of debt


-


6

Non-recurring severence expense


-


145

Foreign exchange transaction loss / (income)


1


(8)

Income tax benefit


(107)


(36)

Non-GAAP adjusted EBITDA from continuing operations


$                     4,204


$                       162

 

GAAP CASH FLOW FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS TO NON-GAAP FREE CASH FLOW FROM CONTINUING OPERATIONS






(in thousands)

















3 Months Ended


3 Months Ended



June 30, 2019


June 30, 2018



(Unaudited)


(Unaudited)

Net cash provided by / (used in) operating activities from continuing operations


$                                5,044


$                            (2,395)

Capital expenditures


(783)


(411)






Non-GAAP free cash flow provided by / (used in) continuing operations


$                                4,261


$                            (2,806)

 

Digital Turbine - Right App. Right Person. Right Time. (PRNewsFoto/Digital Turbine, Inc.) (PRNewsfoto/Digital Turbine, Inc.)

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/digital-turbine-reports-fiscal-2020-first-quarter-results-300896469.html

SOURCE Digital Turbine, Inc.

Contact

Get in touch to see how we can help your company

CONTACT US
ShareThis Copy and Paste