Q4 2021 Digital Turbine Inc Earnings Call

Good day.

And welcome to the digital turbine reports fourth quarter and fiscal 2021 financial results Conference call.

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I would now like to turn the conference over to Brian Bartholomew on C. T as capital markets. Please go ahead.

Thanks, Darren good afternoon, and welcome to the digital turbine fourth quarter and fiscal 2021 earnings conference call.

Joining me on today's call to discuss our results are CEO, Bill stone and CFO Barrett garrison.

Before we get started I would like to take this opportunity to remind you that our remarks today will include forward looking statements.

These forward looking statements are based on our current assumptions expectations and beliefs, including projected operating metrics future products and services anticipated market demand and other forward looking topics.

Although we believe that our assumptions are reasonable they are not guarantees of future performance and some will inevitably prove to be correct.

Except as required by law, we undertake no obligation to update any forward looking statements.

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

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

I'll turn the call over to Chief Executive Officer, Mr. Bill Stone.

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

First I want to formally welcome the appreciate add colony and fiber teams to our team.

This is our first earnings call of being together and while the D. T team has written some great chapters to date, we think with the addition of the new teams. We've now assembled there are many even brighter chapters, we're gonna right together.

I think it's important to reiterate 2 investors that people make this business happen and from what I've seen so far we have a great global team that fits hand in glove with our D. Teach him. There also now all shareholders and what were building together.

Digital turbine has gone through an amazing transformation over the past 18 months and then in the midst of an accelerating profitable growth trajectory that very few companies Walker experience.

The operating leverage of our platform is clicking on all cylinders.

On our earnings call last February we talked about just having over $100 million annual revenue business with approximately 100 employees.

Today with the closing of fiber add Tony I appreciate and our own digital turbine triple digit organic growth. We are now a company that has over $1 billion of annualized revenue with nearly 1000 employees.

Given our closing of the add Tony and fiber transactions were completed in the middle of our current quarter Baird. We'll talk more about the details of our forward outlook later in his remarks, but I want to emphasize the strategic point regarding our forward outlook.

For our current June quarter, we are forecasting all 4 businesses to deliver approximately $280 million on revenue and $40 million on EBITDA. If we had owned all of them for the entire quarter.

This.

Presents nearly 90% topline growth at approximately 200% EBITDA growth on an apples to apples or pro forma basis.

These are strong businesses independently and even stronger businesses when we consider our expected synergies.

And this all showcases how we're now positioned with real scale to attacked on 300 billion dollar mobile media market.

I'll talk more about the details of how when and what we'll be doing later in my remarks as well as provide some commentary on how we see digital turbine positioned against some of the macro items on investors' mind, such as inflation post COVID-19 reopening trends and the impacts of Apple's recent privacy changes with idea Fay.

But suffice it to say that while our past and present results are impressive I'm, even more excited about our future.

But first I want to summarize our quarterly results and provide some real time operational updates on our business.

To close out fiscal 'twenty, 1 we continue to build on our breakout momentum with record results across the board.

We had over $313 million on revenue, which represented over 120% annual growth on an as reported basis and over 60% on a pro forma basis.

When we compare on March quarterly results. This year to last year higher gross margins and accelerating operating leverage enabled us to turn the strong revenue growth into more than 4 times, the EBITDA compared to the EBITDA generated ago and more than 400% growth in non-GAAP earnings per share.

There will provide more details on our numbers, but operationally I was pleased with the improving global reach of our platform our demand improvements on revenue per device or our P. D and a rebounding of device sales here in the United States.

During the fourth quarter, our international revenues from our supply partners, such as Samsung Xiaomi American mobile and others grew over 200% year over year, driven by a 32% increase in device volumes and 142% increase in revenue per device.

In the U S. We saw double digit increase in device sales year over year, driven by 5 G and pent up demand from Covid.

Our U S rpt's continue to strengthen and exceeded 50% year over year growth in the fourth quarter.

In our content business revenues in the March quarter pro forma increased by approximately 120% year over year.

This result was driven by our new content platform being fully deployed and legacy platform being sunset as well as improved advertising rates that are all driving better operating results.

I also want to reiterate from our prior earnings call that we are on track to launch with both AT&T and Verizon later this year with some of our content product offerings.

And as you've heard me say on prior calls diversification is a major strategic priority for the company.

Diversification of partners business models products geographies and advertisers.

We continue to have success with our U S based carrier partners, whom we grew revenues, 74% year over year during the fourth quarter, while our revenues with other partners outside of this group increased by over 200 per cent year over year.

Turning to the forward outlook I now want to provide some commentary on how we're positioned for future continued growth across each of our growth levers devices products and media.

First on devices after many quarters of flattish to declining trends in device sales in the U S. I am pleased to announce that we grew devices more than 10 per cent and you asked him more than 30% internationally compared to the last March quarter.

We're seeing approximately 30% of new devices sold with our larger carrier partners being 5 G, which is a material increase compared to prior quarters.

On the product front, our revenues from dynamic installs grew by 73% year over year in the fourth quarter, but now represent approximately 50% of our total revenues compared to over 70% last year.

Revenues derived from non dynamic install products grew over 300 per cent year over year as our content products single tap and others showed solid growth.

And while the strong gross exciting I believe it will be even better as we drive more revenue synergies on our content products continue to capture on the recent momentum on our single tap business and expand other emerging products such as notifications even faster.

It's important to note for investors, while we expect our dynamic dynamic install business to continue to grow it'll be less than 20 per cent of our total revenues as we begin reporting all revenues from our acquisitions.

Our recurring revenues now represent over 50% of our total revenues compared to over just 10% when we purchased the mobile posse business last year.

I also want to specifically call out our progress on single tap.

Been a long journey on our patented product, but patience and perseverance has paid off as the results are finally, beginning to match the potential.

Not including our social media integration with our large carrier partner 3 quarters ago, we talked about single tap being on a 7 figure annual run rate.

2 quarters ago, we talked about being a 7 figure quarterly business <unk>.

Last quarter, we talked about it being a 7 figure monthly business.

And today I am pleased to report, it's a 7 figure per week business.

The single tap revenue during the fourth quarter more than doubled the revenue from the third quarter and today is up more than 1000 per cent from a year ago.

Specifically, we're seeing nice growth from our demand side platform or DSP efforts from our appreciate acquisition and we'll look to continue to scale our AD Tech stack here, both in the United States as well as internationally.

The addressable market is many tens of billions of dollars for single tap and we believe we're just getting started against this large opportunity.

The bigger picture takeaway for investors is that we have growth occurring on multiple product fronts and will continue to make this diversification a major focus area of the business and we'll continue to proactively make investments in these areas.

On the media front. We're currently very focused on scaling our international demand to meet a significantly greater supply of international devices, while continuing to see international application developers want to be on U S devices.

Last year, approximately 35 per cent of our App media revenues were from international applications like Tictoc on Candy crush.

This year, we saw that number to increased over 50% as more media spending and our application media business is coming from companies that are not based on the United States.

And this was despite a 25% year over year growth from our U S Media partners.

We saw international media demand grow by over 200% in the fourth quarter.

And achieving this global scale from a broader set of demand partners is a direct reason why we saw revenue per device gross so much and it brings the benefits of global scale, where we see partner spending on more geographies and more devices outside of their home geography.

Whether that is Chinese companies like Alibaba 10 Center tick tock spending in Latin America, and Europe, and European companies and U S companies, such as Pinterest snap Uber Mcdonalds, all spending outside of their home respective geographies.

Yeah.

I now want to turn to our recent acquisitions and strategic game plan.

With the completion of the fiber acquisition last week.

Along with at colony and appreciate before it we now have successfully assembled the key pieces for a full stack and an AD tech platform.

I want to spend a minute here to highlight for investors what truly differentiates our platform approach versus other industry players.

I want to start with our overriding mission statement, which is to become the largest independent mobile advertising monetization platform.

Leveraging our unique on divest technology and long term partner and advertiser relationships.

A couple of words that I want to stress here because this is what differentiates the <unk> platform.

First is having our technology on device.

The software presence on underlying devices provides us distinct advantages are critical 1 which is our ability to use our patented single tap technology to drive materially higher conversion rates on the platform.

Second is our independents, we have opted to vertically integrate by functionality. Unlike many other industry players who have drifted into the content arena, thereby compromise on your platform neutrality and posing potential conflicts of interest further app publishers and advertisers on the platform.

In essence, our on device technology presence and independent approach make our platform more attractive to app publishers and advertisers trying to optimize monetization and their return on investment.

It's obviously early days, but we've already seen positive feedback from numerous partners and customers validating our unique approach.

We're already benefiting from the revenue synergies within specific accounts and we look forward to sharing supportive data in specific case studies with you on future earnings calls.

But the final, but perhaps most important callout here in terms of our differentiated platform approach relates to the organizational culture.

Since <unk> been public companies you can all see the obvious recent business momentum as evidenced by the accelerating growth rates, but you can't see is the cultural mindset of the teams at fiber add colony appreciate and.

And how they're leaning company first hustle attitude mirrors, the same adherence digital turbine and facilitates a more seamless path towards integration towards a 1 day T organization.

And in any of US would learn in a business School case study and what we have digital turbine know firsthand from our prior experience with acquisitions. The number 1 factor that define success of mergers and acquisitions its not strategy, it's not numbers or other factors, it's cultural integration.

We've now fully integrated the appreciate team into digital turbine and that integration has gone very well as evidenced by our significant single tap progress we're now making.

We've begun early integration with AD, calling fiber with an initial focus on integrating back office functions like HR and finance and we have a joint team of executives from AD colony fiber and digital turbine that meet regularly to build out the detailed plans on DT.

These plans will ultimately shape deeper synergistic integrations later this year.

But I can't overstate, how optimistic I am that we will successfully integrate the platform and begin to execute on our plan to address the 300 billion dollar market opportunity, which is squarely on our crosshairs.

And finally before I turn it over to Barrett I want to comment on some of the macro items I hear from investors such as the impacts of the reopening the economy inflation and Apple's recent privacy changes with <unk>.

Regarding the reopening we believe our company was healthy and growing before Covid was healthy and growing during Covid and we'll continue to profitably grow post COVID-19 we.

We do not anticipate the secular tailwind of device sales and on device media and content consumption to slow down for our business. We're very optimistic that the reopening of the economy benefits digital turbine in a material way as more devices are sold and more advertisers try to reach consumers recognizing consumer eyeballs or on the applications and content.

Which is where the advertisers also need to be.

Regarding inflation, it's important to note the digital turbine doesn't have any material input costs.

Our cost of sales is just our revenue shares with our partners and our people costs are nominal and given we do more than $1 million of revenue per employee.

So on any potential inflationary environment, where company, that's insulated and benefits much more than other companies to those macro pressures to continue to profitably grow our business as we can raise prices without driving increases in input cost to support the revenues.

And finally, we've not seen any material impact to our AD colony of fiber business as a result of Apple's <unk> changes.

It doesn't mean, there's not any risk to the future, but the impact to date on our Io Io's advertiser rates had been mixed with some advertisers spending more on some spending less.

But more strategically I'd reference a Forbes article 2 investors that came out this past weekend. The highlighted from a sources that advertiser spend on androids jumped double digits. Since <unk> has been implemented which is a clear tailwind for our broader businesses and strategy.

In closing I want to emphasize that investors should distinguish between companies that are growing but not profitable versus the companies that are not growing but profitable from the companies that are both growing revenues and growing profitably.

We're excited about the operating leverage of our business that grew profitably at more than 300% while revenues grow over 100%.

Our expectations are that our acquisitions will generate even further operating leverage as scale begets more scale.

And winners of win disproportionately.

With that this concludes my prepared remarks, and I'll turn it over to Barrett to take you through the numbers.

Thanks, Bill and good afternoon, everyone before I cover our financial results I wanted to comment on the successful acquisitions closing on the recent months, including appreciate which closed in March and colony in April and most recently fiber, which closed at the end of May I would like to welcome all our new team members and thank all of our digital.

Our buying teams involved in the integration.

While we appreciate your business as small partial period contribution is included in our Q4 results. We will spend more time on the performance breakdown of bad colony on fiber on future earnings calls as the results will be included beginning in the Q1 reported period.

As Bill highlighted these strategic acquisitions are very important piece for digital turbine and our mission to develop 1 of the largest full stack fully independent mobile advertising solutions in the industry.

Now turning to our results, we're pleased with our strong fourth quarter performance, which exceeded our outlook and capped off another very strong year.

As a reminder, our content business includes results from our acquisition of mobile posse earlier in the year I will occasionally reference results on a pro forma basis were appropriate to provide additional insight into the underlying trends when comparing current performance against prior periods.

Also since the company has closed several significant transactions here at the end of our fiscal reporting period, which is utilized many of our internal teams and in addition, we have engaged a new audit firm to align with the growing scale and growth growing profile of the company. This has impacted the normal timing of completing our year end audit.

A result, we will file for a 15 day extension and anticipate reported in our 10-K in the coming days once the final order is completing completed confirming our results announced today.

My comments.

Yeah.

Today, we will refer to comparisons on a year over year basis, unless otherwise noted for the fiscal year 2021, we reported $316.6 million in revenue growing 126% as reported and 64% growth on a pro forma basis.

<unk> $75.6 million on adjusted EBITDA, an increase of 287% over prior year and delivered $71.5 million adjusted net income or <unk> 74 per share as compared to <unk> 20 per share in the prior year.

Now, let me turn to the specific financial performance in the quarter revs.

Revenue of $95.1 million in the quarter was up 142% as reported and 101% on a pro forma basis, adjusted EBITDA increased to $22.5 million growing 329% year over year, we continue to experience accelerating growth across both our application business.

And content business, our application media business delivered revenue of $67.2 million, representing 95% growth in the quarter.

We saw continued strength in advertiser demand and product expansion, leading to U S RPT growth of over 50%.

And more than 140% on international Rpgs, our content business generated $27.9 million on the quarter, which was up 120% year over year as we experienced improved performance on a fully deployed content platform combined with increasing advertising demands and yield.

Non-GAAP gross profit grew 150% to $39.4 million, which was up a 100% on a pro forma basis gross.

Gross margin on the platform was 41% in Q4 up from 40% in the prior year.

Our continued margin expansion is largely driven by the acceleration of our high margin content media business and year over year margin improvement on our apps business from momentum in new partner in new product revenue mix.

We also experienced continued impressive.

<unk> scale on the platform as cash expenses were $16.9 million in Q4 or 18% of revenue down from 27 per cent of revenue in the prior year and increased only 27% year over year on a pro forma basis, while revenues were up 101 percentage of the period.

Total operating expenses were $23.1 million, including approximately $3 million in transaction related costs and compared with total operating expenses of $12.4 million the prior year.

I will note that while the key rationale of our new acquisitions is based on driving new revenue growth and platform capabilities and not a cost reduction play we do expect to realize favorable expense synergies over time that will further complement the operating leverage and scale on the platform. We anticipate these cost benefits to be realized over.

On the coming quarters as integration efforts are successfully implemented and primarily generated from corporate overlap and other purchasing power cost efficiencies.

I will note that our operating leverage is being achieved even as we continue to make a number of focused investments primarily within our international sales force and technology teams to support new partners and products to drive future incremental revenues on the platform.

I continue to be pleased with the profitability and free cash flow delivered by our business in the quarter. We achieved non-GAAP adjusted net income of $24.5 million or 25 per share during the quarter.

As compared to a $4.2 million or 5 cents per share in the fourth quarter of last year.

Adjusted EBITDA was 20, $22.5 million in the quarter up 329% over prior year and margins continue to expand to 24% this quarter from 13% in the prior year quarter.

Our non-GAAP free cash flow totaled $21.9 million, an increase of $10 million as compared to the prior year quarter, enabling us to exit Q4, with a cash balance of $30.8 million within the quarter, our ending cash position reflects both the final earn out payment of the $10.3 million.

Payment related to mobile posse acquisition, and the $23 million net payment on the appreciate transaction.

Our GAAP net income was 30, $30.1 million or <unk> 31 per share based on $97.6 million diluted shares outstanding compared to a fourth quarter of 2020 net income of $13.8 million or <unk> 15 per share.

I would also highlight with respect to the recent acquisitions. Each of these new businesses are high revenue growth companies and profitable on a standalone basis and are expected to be accretive to both our earnings and free cash flows further improving the profile of the digital turbine on enterprise.

Lastly to provide additional liquidity and capital for our recent acquisition purchases and for future growth opportunities on our business. We amended our credit facility led by Bank of America to increase the revolving line of credit from 100 million to $400 million with an accordion feature enabling upsizing the facility to 4 <unk>.

<unk> $75 million, we currently have drawn $237 million on this revolving line at the end of May and the interest rate currently less than 3%.

With our expanded credit facility, our healthy balance sheet and strong free cash flow generation combined with the transformative new acquisition data added to the platform.

We've exited fiscal 2021 poised to execute on our growth plans for fiscal 'twenty 'twenty 2 and beyond.

Now, let me turn to our outlook.

The momentum leading into the new year and progress underway in the quarter has positioned us for a strong fiscal 2022 in that context. We currently expect revenue for Q1 to grow to between $188 million and $192 million expected adjusted EBITDA to grow to between $32 million.

$34 million and adjusted net income per diluted share to be 31 cents based on approximately 100 million diluted shares outstanding.

Within our outlook, we have raised our guidance for both the improved performance in our core business as well as now incorporate the results from our recent closed acquisitions as a reminder, our guidance reflects partial period results for the recent acquisitions for the time in which the company own these new businesses within the quarter.

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

Thank you.

We will now begin the question and answer session.

Ask a question you May press Star then 1 on your Touchtone phone.

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At this time, we will pause momentarily to assemble our roster.

My first question comes from Anthony Stoss with Craig Hallum. Please go ahead.

Hi, guys. Congrats on the acquisition and special Congrats on single tap just phenomenal growth until the day Bill can you.

No. It's still early days with the acquisitions, but how much are they able to benefit from single tap already juice can you tell us they are already taking share from their current customers and then.

Maybe for Barrett.

With a full quarter under your belt with the acquisitions it looks like you're running at about a 15% adjusted EBITDA margin, where do you think that might go over the next you know year or so it would be helpful. Thanks.

Yes, Thanks, Tony.

As regards to the single tap on the acquisitions, Yeah, we're absolutely already leveraging.

The the single tap capability for now just appreciate who's buying on it right now, but also with our fiber and add colony. So theres absolutely synergies there to be had and they're already happening today. So we're excited that we think that technology can really help pull through a lot of synergies for the business and we're seeing that show up today So gray.

Progress, it's been a long journey as you're as you're well aware.

For us on single tap, it's great to start seeing the results match. It and also great timing in terms of the synergies coming together with the acquisitions and I'll, let Barry take the take the financial 1.

Yeah Tony.

Question on on EBITDA margins, just to remind us just.

4 quarters ago before mobile Posse acquisition, we were in the were in the low teens as far as EBITDA margins $13.14 per cent.

Growing up to 24 per cent margins in the last reported quarter.

We have guidance on the high teens as far as EBITDA margins and we would expect those to continue to expand.

And down the road I think we'll be.

Certainly back in the in the low twenties again soon.

Okay. It looks like a further 1 for bill.

Any progress on additional debt soon do you think you can start onboarding.

On the additional devices.

Yeah, sorry, sorry, Tony you were cutting out there a little bit that just didn't catch it.

Can you comment on any progress you're making with additional device.

Yeah, Yeah sure. So yeah. So we're making some we're making some nice progress on devices around around the globe specifically.

Companies like Telefonica Telecom Italia continued growth somewhere some relationships in Latin America, which we've got a nice beachheads with with American mobile and.

Samsung with so we're feeling pretty good about that and then.

I'd say kind of stay tuned for some other announcements, but in particular, we're really continuing to focus on not just not just that's just not just smartphones, but I'll just take another device types in terms of tablets and televisions and other device types as well to expand the market opportunity.

Perfect. That's good luck guys. Thank you.

Our next question comes from Tim Horan with Oppenheimer.

Please go ahead.

Hi, guys can you give us maybe the sequential revenue growth on a pro forma I know you well you may or may not have it in.

The 90 per se.

Year revenue growth, obviously pro forma is pretty phenomenal.

Any sense of what that could be for on a on a full year basis, I know, you're not giving exact guidance now but.

But was there anything exceptional or out of the ordinary there.

Yeah, I'll I'll start hi, Jim.

Theres nothing theres, nothing exceptional or out of the ordinary on on the growth in the quarter. Both as reported on our businesses that we just acquired on a on a pro forma basis.

You know, what we think theres a lot of strength in those businesses each 1 of them growing very nicely and.

While we're not calling out.

Annual guidance, we do think those growth rates are independent and.

And in.

In the medium term, we think some of the synergies that bill highlighted.

Can help even accrete those growth rates.

But for now we think we're going to be focused on integration and theirs.

There's not.

These businesses are or are doing very nicely. So we want to we want to continue that momentum.

And any sense on the sequential growth there just to see if the base getting when you're obviously growing 90%, it's pretty hard to keep that up with the base growing so any color on the sequential and then maybe also on the I D F E.

While the Apple impact here sorry.

Is that a net positive for the new pro forma combined company on net negative or how are you thinking about it.

Yes, So let me take the I'll take the idea of day, 1 bear can take the sequential 1 on.

On the on the idea of FA.

It's still to be seen I think theres a lot of unknowns out there in terms of whats going to happen over the over the long term here, but I would say that we think we're really well positioned here, obviously, given the lean towards Android given our unique on device positioning even if something were to change on Android, we still have identifiers on the device for that which we think is a strategic competitive advantage.

And some of the changes that were made an idea far in terms of things like you know view through attribution I think heard some of the real big players and those dollars are still there and benefits companies like digital turbine. So I think theres a lot of tailwind here for us against the broader market and I referenced in my prepared remarks I was an article written this past weekend and Forbes talking about Android seen double.

Digital spend increases since our idea phase launched which is which obviously benefits on our business being heavily.

Heavily in the Android So I think all in all I think we're going to be cautiously optimistic on the very short term because you have based on what we've seen but we're feeling pretty good about the long term.

Yeah, and then Tim Moore will be out with more details on the pro forma information.

You know certainly B pad, calling me on fiber have published their.

The results as a public company, we will be out with more details on the pro forma.

Soon on those pro forma results, but sequentially the revenues are growing.

Within our guidance in this current quarter.

Thank you.

Our next question comes from Darren <unk> with Roth Capital Partners. Please go ahead.

Hey, guys. Good afternoon. Thanks for my questions a couple if I may.

Bill could you just talk about.

With with single Tap you know it seems like the Domino was finally fallen.

Is that because of.

Just something structurally did appreciate to help accelerate that just.

It's moved pretty quickly and I'm, just kind of curious trying to understand what it is that kind of move the needle on staff.

Yes sure Darren.

You look back a.

A few quarters ago, we may we made a decision to go out and start buying our own advertising to really control the data because as you're well aware, we had a lot of operational issues for a long time to try to get the last mile for this to scale. Although it was great results on an individual basis, we just couldn't do it at scale.

So we made a decision to really go out and start leasing some capacity and as a DSP and we saw some nice success with that and as a result of the success. We saw with it we decided to acquire it and appreciate and now having the appreciate team really fully focused on this it was really helped kind of kick it up to another gear.

So the ability for us now to do this at real scale and target.

<unk>.

Now it can be tens and hundreds of millions of people with single tap capabilities enable on their device really allows us to go after a really broad market right now and so our view is we're just getting started against the opportunity, but it's really nice to see the progress here in terms of taking something that we always thought was a great idea and we always been excited about it but really now.

Take it to something that is generating great results for all of us.

Great and then on your your upped guidance am I think Bert you spoke to that being partially.

Acquisition related and partially just stronger core business.

Fiber put out their own kind of updated.

Our guide for the year and I know, you're not commenting on that but it seems like the <unk>.

Marginal.

Profit flow through on on the change in the guide is a lot higher than kind of what fiber did so I'm just kind of curious if you could maybe do duplicate.

Maybe what its fiber impact what is kind of are seeing stronger traction with your core business and then you know.

How much better operating leverage can you guys extract out of these that colony and need a fiber acquisition.

Yeah, Let me take let me take the guidance portion of a low.

Invite bill to talk about.

Some of the synergies.

So yes, it's just for a reference on a on a U S dollar basis.

<unk> fiber reported.

About $100 million in revenue for their March quarter. So we just closed that transaction. So we would own them at the end of May so largely 1 third of that quarter. So.

You can kind of take that as far as the lift in our guidance.

From that portion and then.

Because we heard about our results on our on our D T core business growing really quite nicely.

Been reflected.

As we outpaced our own internal expectations.

So Dan I hope that helps but it's a bit of both here with nice growth on the core plus layering in the day expectations of fiber now that they're owned by digital turbine.

And Darrin on the on the synergy side and this is why we're really excited to the business has been performing so well independently, but we're already getting feedback on the marketplace. Both on the demand side and the supply side, that's encouraging and so on the demand side, you can think of companies like Mcdonald's and Starbucks and BP either already.

Now <unk> been add colony clients and customers that we're now able to bring on to the digital turbine platform, which kind of expansion of a much broader moat for us which is fantastic and then on the supply side. If you think about the App publishers.

And you know our ability to give them reach on device to the horizons on samsung's et cetera of the world.

The ability now to basically have some of the fiber and add colony and appreciate technology now part of their monetization and.

Now we can pull those those dollars through which we have historically not participated in it.

And it's been difficult for those companies that do it because they haven't had the unique advantage that we have with on device. So those things all working together.

And it gets us pretty excited in terms of being able to not just monetize the app in terms of getting paid to get it to a customer's device, but now that the many hundreds of billions of dollars spent on all of that advertising over the life of device that we can now tap into as a result of being able to do this on an end to end basis.

Great and just 1 last 1 for me bear when we sort of think about and maybe not the June quarter, because it's but when we think about sort of.

Cash opex for the entire company and kind of blended gross margins I appreciate that things kind of move around but could you just maybe.

Hold our hand, a little bit and help us understand kind of what that might look like even if its a pro forma is that you owned everything.

But from April 1st.

Yeah. So.

Our guidance would imply if you looked at kind of similar.

Yeah.

Levels, where we're we're in the kind of mid teens as far as Opex cash opex as a percentage of revenue so call it 16% to 17%.

And we think that that will have a you know throughout.

Throughout the year and overtime that will continue to scale and we will continue to see that per cent of our revenue declined steadily.

Over the next few quarters.

And then beyond.

So going from high teens to hopefully.

Hopefully mid teens towards.

Over time as the acquisitions are.

Implemented.

Yes.

Got it thank you.

Our next question comes from Austin Moeller day with Canaccord. Please go ahead.

Hi, Thanks for taking my questions.

You mentioned gross margin was improving within the applications segment itself. So.

Do you anticipate those improvements to be sustainable and what's the current willingness of your customers to.

To pay those maybe incrementally higher revenue shares traditional turbine on the new products.

Yeah. So so Austin all taken in Barrick can provide some color on it and I think we see a couple of things that are that are favorable for us over time here.

The first 1 is that as we do you know newer agreements they tend to have more favorable terms than the earlier agreements and as the mix begins to shift and become more and more sorts of new versus the old debt that benefits us on the <unk>.

Factor is a lot of these devices that get recycled and put out into the open market.

So they don't necessarily have a carrier tied to them anymore.

As that base gets bigger and bigger that also.

Also helps us accrete margins over time for us as well and I think that you know as we think about look even more strategically going forward.

As we start bringing on now the AD colony in fiber.

<unk> solutions, and we know much more visibility to the broader AD tech stack for you.

Rather than just saying, it's a dollar out to the carrier to get an app on a phone, but now there's $5 of economics that go with a particular app to have all of that advertising.

It may allow us opportunities to do things to actually encourage the carriers to do more because there's more dollars at play here, which you would hopefully I have the opportunity to accrete margin. So I think we're feeling pretty optimistic on the App media side that we've got a pretty strong business here just as evidenced by the results we've been able to put up consistently show on progress here.

Gotcha.

Okay.

Can you speak about.

What's required on the technology side of things in order to integrate at colony on fiber.

Yeah, 1 of the great things about the acquisitions as in many cases the pipes are all already connected in terms of AD, calling your fiber are already working together.

At colony and appreciate I appreciate on fiber you're already working together on a commercial basis.

So since a lot of those things are already there in place in the very short term a lot of its just business development work working with the App publishers or with the advertisers to pull it together. So that that's something that is really encouraging longer term, we're going to have to look at how we want to manage to you know how we want to manage.

Multiple DSP and exchanges, an SDK and all those kinds of things that are that are on device and it obviously makes sense over time to harmonize those but in the very short term a lot of it to get to get to what the customer wants is.

This is encouraging because a lot of the pipes are already connected.

Alright, thanks very much.

Our next question comes from Allen Klee with Maxim Group. Please go ahead.

Yes, Hi, I know you guys are on the early days of our attractive international expansion can you talk a little as your customers are starting to be with you a little more in terms of your ability to add more more to them to increase the rpgs and but the op.

Opportunity might be.

Yeah sure Alan on 1 of the things.

See here in the United States that it's much like to use the shopping mall analogy is that Macy's.

And Nordstrom as anchor tenants, it's easier to kind of pull through and more revenue with the shops in between those 2 and I kind of feel like that in our U S partner business, we're able to do that with like a Verizon and AT&T as anchor tenancy pull through a lot of other partners, where you get a rising tide lifts all boats in terms of the revenue opportunity versus those things being on their own and for a long time internationally.

We didn't have that and now I look at a market.

I'll look at Brazil, as an example for US where we have American mobile, we have Samsung and Thats pulled through other relationships with whether it be other Latin American carriers or other Latin American Oems.

Accrete, our PD and then you bring on more supply of devices. It brings on more demand, which allows you to increase your <unk>.

Revenue per device and so just that kind of scale begets scale is really important to what we're doing here to get the flywheel going and so I feel like that our progress is evidenced by the last year International is youre starting to see that effect and that is quite encouraging for us and something that we're obviously going to look to continue to build upon.

Okay. Thank you.

This concludes our question and answer session I would like to turn the conference back over to Bill stone for any closing remarks.

Yes, thanks, everyone for joining our call Tonight.

Look forward to reported on our progress against all the points. We made on today's call and we'll look to talk to you again on our fiscal 'twenty 2 first quarter call in a few months, thanks and have a great day.

That's clear.

Hopkins call. Thank you for attending today's presentation you may now disconnect.

Okay.