apps-20221231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-35958

DIGITAL TURBINE, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware						22-2267658
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)
110 San Antonio Street, Suite 160, Austin, TX						78701
(Address of Principal Executive Offices)						(Zip Code)

(512) 387-7717

(Registrant’s Telephone Number, Including Area Code)

Securities Registered Pursuant to Section 12(b) of the Act:


Common Stock, Par Value $0.0001 Per Share	APPS	The Nasdaq Stock Market LLC
		(NASDAQ Capital Market)
(Title of Class)	(Trading Symbol)	(Name of Each Exchange on Which Registered)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of February 5, 2023, the Company had 99,197,058 shares of its common stock, $0.0001 par value per share, outstanding.

DIGITAL TURBINE, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED December 31, 2022

TABLE OF CONTENTS






























PART I	FINANCIAL INFORMATION	3
ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS	3
	CONDENSED CONSOLIDATED BALANCE SHEETS	3
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / (LOSS)	4
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	5
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY	6
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
ITEM 4.	CONTROLS AND PROCEDURES	34
PART II	OTHER INFORMATION	36
ITEM 1.	LEGAL PROCEEDINGS	36
ITEM 1A.	RISK FACTORS	36
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	36
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	36
ITEM 4.	MINE SAFETY DISCLOSURES	36
ITEM 5.	OTHER INFORMATION	36
ITEM 6.	EXHIBITS	37
	SIGNATURES	37

PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

Digital Turbine, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except par value and share amounts)


	December 31, 2022		March 31, 2022
	(Unaudited)
ASSETS
Current assets
Cash	$	79,307	$	126,768
Restricted cash	554		394
Accounts receivable, net	231,001		263,139
Prepaid expenses and other current assets	31,912		20,570
Total current assets	342,774		410,871
Property and equipment, net	38,759		31,086
Right-of-use assets	10,973		15,439
Intangible assets, net	395,181		440,589
Goodwill	560,340		559,792

Other non-current assets	4,648		732
TOTAL ASSETS	$	1,352,675	$	1,458,509

LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities
Accounts payable	$	154,320	$	167,858
Accrued license fees and revenue share	75,380		95,170
Accrued compensation	16,206		28,775
Acquisition purchase price liabilities	—		50,000
Current portion of debt	—		12,500
Other current liabilities	43,460		30,960
Total current liabilities	289,366		385,263
Long-term debt, net of debt issuance costs	422,310		520,785
Deferred tax liabilities, net	18,786		19,976
Other non-current liabilities	14,586		16,270
Total liabilities	745,048		942,294
Commitments and contingencies (Note 13)
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)	100		100
Common stock
$0.0001 par value: 200,000,000 shares authorized; 99,901,328 issued and 99,143,203 outstanding at December 31, 2022; 97,921,826 issued and 97,163,701 outstanding at March 31, 2022	10		10
Additional paid-in capital	810,994		745,661
Treasury stock (758,125 shares at December 31, 2022, and March 31, 2022)	(71)		(71)
Accumulated other comprehensive loss	(44,201)		(39,341)
Accumulated deficit	(161,183)		(191,788)
Total stockholders’ equity	605,649		514,571
Non-controlling interest	1,978		1,644
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,352,675	$	1,458,509

The accompanying notes are an integral part of these condensed consolidated financial statements.

Digital Turbine, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income / (Loss)1

(Unaudited)

(in thousands, except per share amounts)


	Three months ended December 31,				Nine months ended December 31,
	2022		2021		2022		2021
Net revenue	$	162,310	$	216,818	$	525,802	$	563,461
Costs of revenue and operating expenses
License fees and revenue share	73,370		109,053		237,618		284,369
Other direct costs of revenue	9,324		9,090		27,438		21,385
Product development	14,218		13,755		43,087		40,594
Sales and marketing	16,469		15,857		48,017		47,072
General and administrative	39,132		39,924		114,328		105,225
Total costs of revenue and operating expenses	152,513		187,679		470,488		498,645
Income from operations	9,797		29,139		55,314		64,816
Interest and other income / (expense), net
Change in fair value of contingent consideration	—		(18,200)		—		(40,287)
Interest expense, net	(6,913)		(2,195)		(16,224)		(5,307)
Foreign exchange transaction gain / (loss)	17		2,122		(595)		1,603

Other income / (expense), net	8		(86)		392		(598)
Total interest and other income / (expense), net	(6,888)		(18,359)		(16,427)		(44,589)
Income before income taxes	2,909		10,780		38,887		20,227
Income tax provision / (benefit)	(1,153)		3,718		8,164		4,799
Net income	4,062		7,062		30,723		15,428
Less: net income / (loss) attributable to non-controlling interest	43		48		118		(18)
Net income attributable to Digital Turbine, Inc.	4,019		7,014		30,605		15,446
Other comprehensive loss
Foreign currency translation adjustment	10,144		(8,389)		(4,644)		(45,062)
Comprehensive income / (loss)	14,206		(1,327)		26,079		(29,634)
Less: comprehensive income / (loss) attributable to non-controlling interest	59		(11)		334		(932)
Comprehensive income / (loss) attributable to Digital Turbine, Inc.	$	14,147	$	(1,316)	$	25,745	$	(28,702)
Net income per common share
Basic	$	0.04	$	0.07	$	0.31	$	0.16
Diluted	$	0.04	$	0.07	$	0.30	$	0.15
Weighted-average common shares outstanding
Basic	99,108		96,548		98,623		94,620
Diluted	103,348		103,287		103,674		101,346

1In the fiscal quarter ended June 30, 2021, the Company initiated two significant acquisitions. Please refer to Note 3, “Acquisitions,” in the accompanying condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Digital Turbine, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows1

(Unaudited)

(in thousands)


	Nine months ended December 31,
	2022		2021
Cash flows from operating activities
Net income	$	30,723	$	15,428
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	60,147		40,946
Non-cash interest expense	619		500

Stock-based compensation expense	19,643		15,369
Foreign exchange transaction (gain) / loss	581		(1,603)
Change in fair value of contingent consideration	—		40,287

Right-of-use asset	4,868		3,270
Deferred income taxes	(2,494)		4,799
(Increase) / decrease in assets:
Accounts receivable, gross	32,816		(104,535)
Allowance for credit losses	3,009		412
Prepaid expenses and other current assets	(11,397)		(5,760)
Other non-current assets	100		74
Increase / (decrease) in liabilities:
Accounts payable	(14,113)		38,467
Accrued license fees and revenue share	(20,324)		29,377
Accrued compensation	(13,131)		(33,506)
Other current liabilities	11,784		1,114
Other non-current liabilities	(5,317)		(1,177)


Net cash provided by operating activities	97,514		43,462

Cash flows from investing activities
Equity investments	(4,000)		—
Business acquisitions, net of cash acquired	(2,708)		(148,192)
Capital expenditures	(18,598)		(15,692)
Net cash used in investing activities	(25,306)		(163,884)

Cash flows from financing activities

Proceeds from borrowings	18,000		369,913
Payment of debt issuance costs	(94)		(4,044)
Payment of deferred business acquisition consideration	—		(98,175)
Options and warrants exercised	1,095		2,814
Payment of withholding taxes for net share settlement of equity awards	(6,202)		(7,587)
Repayment of debt obligations	(129,500)		(52,623)
Net cash provided by / (used in) financing activities	(116,701)		210,298

Effect of exchange rate changes on cash and cash equivalents and restricted cash	(2,808)		(5,554)

Net change in cash and cash equivalents and restricted cash	(47,301)		84,322

Cash and cash equivalents and restricted cash, beginning of period	127,162		31,118

Cash and cash equivalents and restricted cash, end of period	$	79,861	$	115,440

Supplemental disclosure of cash flow information
Interest paid	$	12,912	$	3,882
Income taxes paid	$	3,917	$	954

Supplemental disclosure of non-cash activities
Common stock issued for the acquisition of Fyber	$	50,000	$	356,686
Unpaid cash consideration for the acquisition of Fyber Minority Interest	$	2,578	$	3,106

Fair value of unpaid contingent consideration in connection with business acquisitions	$	2,738	$	204,500

The accompanying notes are an integral part of these condensed consolidated financial statements.

Digital Turbine, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity1

(Unaudited)

(in thousands, except share counts)


	Common Stock Shares	Amount		Preferred Stock Shares	Amount		Treasury Stock Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Non-Controlling Interest		Total
Balance at March 31, 2022	97,163,701	$	10	100,000	$	100	758,125	$	(71)	$	745,661	$	(39,341)	$	(191,788)	$	1,644	$	516,215
Net income	—	—		—	—		—	—		—		—		14,922		36		14,958
Foreign currency translation	—	—		—	—		—	—		—		(5,749)		—		207		(5,542)
Stock-based compensation expense	—	—		—	—		—	—		6,463		—		—		—		6,463
Shares issued:
Exercise of stock options	380,176	—		—	—		—	—		296		—		—		—		296
Issuance of restricted shares and vesting of restricted units	7,763	—		—	—		—	—		—		—		—		—		—
Shares for acquisition of Fyber	1,205,982	—		—	—		—	—		50,000		—		—		—		50,000



Payment of withholding taxes related to the net share settlement of equity awards	—	—		—	—		—	—		(4,357)		—		—		—		(4,357)
Balance at June 30, 2022	98,757,622	$	10	100,000	$	100	758,125	$	(71)	$	798,063	$	(45,090)	$	(176,866)	$	1,887	$	578,033
Net income	—	—		—	—		—	—		—		—		11,664		39		11,703
Foreign currency translation	—	—		—	—		—	—		—		(9,239)		—		(7)		(9,246)
Stock-based compensation expense	—	—		—	—		—	—		6,142		—		—		—		6,142
Shares issued:
Exercise of stock options	198,778	—		—	—		—	—		643		—		—		—		643
Issuance of restricted shares and vesting of restricted units	29,035	—		—	—		—	—		—		—		—		—		—




Payment of withholding taxes related to the net share settlement of equity awards	—	—		—	—		—	—		(1,572)		—		—		—		(1,572)
Balance at September 30, 2022	98,985,435	$	10	100,000	$	100	758,125	$	(71)	$	803,276	$	(54,329)	$	(165,202)	$	1,919	$	585,703
Net income	—	—		—	—		—	—		—		—		4,019		43		4,062
Foreign currency translation	—	—		—	—		—	—		—		10,128		—		16		10,144
Stock-based compensation expense	—	—		—	—		—	—		7,835		—		—		—		7,835
Shares issued:
Exercise of stock options	84,594	—		—	—		—	—		156		—		—		—		156
Issuance of restricted shares and vesting of restricted units	73,174	—		—	—		—	—		—		—		—		—		—




Payment of withholding taxes related to the net share settlement of equity awards	—	—		—	—		—	—		(273)		—		—		—		(273)
Balance at December 31, 2022	99,143,203	$	10	100,000	$	100	758,125	$	(71)	$	810,994	$	(44,201)	$	(161,183)	$	1,978	$	607,627

Digital Turbine, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity1

(Unaudited)

(in thousands, except share counts)


	Common Stock Shares	Amount		Preferred Stock Shares	Amount		Treasury Stock Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Non-Controlling Interest		Total
Balance at March 31, 2021	89,790,086	$	10	100,000	$	100	758,125	$	(71)	$	373,310	$	(903)	$	(227,334)	$	—	$	145,112
Net income	—	—		—	—		—	—		—		—		14,284		(31)		14,253
Foreign currency translation	—	—		—	—		—	—		—		(20,019)		—		(762)		(20,781)
Stock-based compensation expense	—	—		—	—		—	—		3,705		—		—		—		3,705
Shares issued:
Exercise of stock options	178,127	—		—	—		—	—		695		—		—		—		695
Vesting of restricted and performance stock units	207,758	—		—	—		—	—		—		—		—		—		—
Shares for acquisition of Fyber	4,716,935	—		—	—		—	—		359,233		—		—		—		359,233
Acquisition of non-controlling interests in Fyber	—	—		—	—		—	—		—		—		—		24,558		24,558



Balance at June 30, 2021	94,892,906	$	10	100,000	$	100	758,125	$	(71)	$	736,943	$	(20,922)	$	(213,050)	$	23,765	$	526,775
Net loss	—	—		—	—		—	—		—		—		(5,852)		(35)		(5,887)
Foreign currency translation	—	—		—	—		—	—		—		(15,799)		—		(93)		(15,892)
Stock-based compensation expense	—	—		—	—		—	—		5,925		—		—		—		5,925
Shares issued:
Exercise of stock options	480,422	—		—	—		—	—		1,460		—		—		—		1,460
Issuance of restricted shares and vesting of restricted units	28,477	—		—	—		—	—		—		—		—		—		—
Shares for acquisition of Fyber	1,058,364	—		—	—		—	—		(2,547)		—		—		—		(2,547)
Acquisition of non-controlling interests in Fyber	—	—		—	—		—	—		—		—		—		(21,452)		(21,452)



Balance at September 30, 2021	96,460,169	$	10	100,000	$	100	758,125	$	(71)	$	741,781	$	(36,721)	$