Q3 2024 Digital Turbine Inc Earnings Call

Good afternoon, everyone and welcome to the digital turbine reports fiscal 'twenty 'twenty four third quarter financial results Conference call.

Operator: Good afternoon, everyone, and welcome to the Digital Turbine Reports Fiscal 2024 Third Quarter Financial Results Conference Call. All participants will be in a listen-only mode.

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Operator: Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Brian Bartholomew, Head of Investor Relations. Please go ahead.

At this time I'd like to turn the floor over to Brian Bartholomew head of Investor Relations. Please go ahead.

Brian Bartholomew: Thank you.

Brian Bartholomew: Thank you. Good afternoon, and welcome to the Digital Turbine Fiscal Year 2024 3rd Quarter Earnings Conference Call. Joining me today on the 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 incorrect. Except as required by law, we undertake no obligation to update any forward-looking statements.

Brian Bartholomew: Good afternoon, and welcome to the digital turbine fiscal year 2024 third quarter earnings Conference call.

Brian Bartholomew: Joining me today on the call to discuss our results are CEO, Bill stone and CFO Barrett garrison.

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

Brian Bartholomew: 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.

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

Brian Bartholomew: 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.

Brian Bartholomew: 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.

Brian Bartholomew: Also during this call we will discuss certain non-GAAP measures of our performance non.

Brian Bartholomew: 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.

Brian Bartholomew: 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. Now, we'll turn the call over to our CEO, Bill Stone. Thanks, Brian, and thank you all for joining our call tonight.

Brian Bartholomew: Now I will turn the call over to our CEO Bill Stone.

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

Bill Stone: I'm going to break my remarks into three areas. First, I want to summarize our December results. Second, I want to describe the current state of our technology migrations and operations and changes we are making to improve our execution. And finally, I want to discuss the progress we're making against future opportunities, which are very encouraging. For the December quarter, we achieved $143 million of revenue, $25 million of EBITDA, and $0.15 of non-GAAP earnings per share.

Bill Stone: I'm going to break my remarks into three areas.

Bill Stone: First I want to summarize our December results.

Bill Stone: Second I will describe the current state of our technology migrations and operations and changes we are making to improve our execution and finally I want to discuss the progress, we're making against the future opportunities which are very encouraging.

Bill Stone: For the December quarter, we achieved $143 million of revenue $25 million of EBITDA and 15 cents of non-GAAP earnings per share.

Bill Stone: We finished in line with our outlook expert expectations for our <unk> business, but were below our expectations for Ods business.

Bill Stone: We finished in line with our Outlook expectations for our HEP business, but we're below our expectations for our ODS business. We experienced three unique issues in our ODS business late in the quarter that were the difference between coming in below versus above our overall outlook. First, despite our forecast for U.S. device sales to continue facing headwinds year-over-year, they were even more disappointing than our conservative expectations were. Secondly, we finalized the migration of our cloud hosting platform late in the quarter. The good news is that this is a major milestone and is now complete. However, some elements of our software that were working fine on our prior platform were not performing the same on the new platform for a few weeks. These issues have now been fixed.

Bill Stone: We experienced three unique issues and our ods business late in the quarter that where the difference between coming in below versus above our overall outlook.

Bill Stone: First despite our forecast in U S device sales to continue facing headwinds year over year, they were even more disappointing than what our conservative expectations were.

Bill Stone: Secondly, we find it we finalized the migration of our cloud hosting platform late in the quarter.

Bill Stone: The good news is that this is a major milestone is now complete.

Bill Stone: There are some elements of our software that were working fine and our prior platform were not performing to the same on the new platform for a few weeks.

Bill Stone: These issues have now been fixed.

Bill Stone: And finally, we made some changes to our AI and machine learning models for the holidays to drive improved engagement from our customers. The good news is that the engagement happened, but it happened at the expense of advertisers willing to pay more money to be on the platform for the holiday season and less focused on engagement. Combined, these three things were the difference between our results being below versus above our outlook.

Bill Stone: And finally, we made some changes to our AI and machine learning models for the holidays to drive improved engagement from our customers.

Bill Stone: The good news is that the engagement happened, but it happened at the expense of advertisers willing to pay more money to be on the platform for the holiday season and less focused on engagement.

Bill Stone: Combined these three things were the difference between our results being below versus above our outlook.

Bill Stone: I'll discuss later in my remarks what we are changing to improve our execution going forward, but we do view all three of these issues as temporary in nature and not structural. From a segment perspective, our AGP, or ad tech business, showed sequential growth driven by improved eCPM rates from our advertisers, despite our sunsetting of our legacy ad colony exchange, and now we are fully operational on our consolidated DT exchange. We are also now seeing growth from our new features, such as SDK bidding, contributing more material revenues to our business. On a bigger picture, we are seeing demand and advertisers return, which is much improved from 12 months ago. In particular, our brand business experienced more than 25% sequential growth despite one of our largest brand advertisers having their own temporary internal issues that impacted their spend on ours and others' networks. I'll provide more color later in my remarks on how we will continue to grow and scale our HEP business. The ODS business declined by 2% in the quarter, driven by the short-term issues described above.

Bill Stone: I'll discuss later in my remarks, what we're changing to improve our execution going forward, but we do view all three of these issues as temporary in nature and not structural.

Bill Stone: From a segment perspective, our AGP or AD Tech business showed sequential growth driven by improved E. C. P M rates from our advertisers.

Bill Stone: Our sunsetting of our legacy colony exchange and now we are fully operational on our consolidated D T exchange.

Bill Stone: We are also now seeing growth from our new features such as SDK bidding contributing more material revenues to our business.

Bill Stone: Bigger picture, we're seeing demand and advertisers return, which is much improved from 12 months ago.

Bill Stone: In particular, our brand business experienced more than 25% sequential growth. Despite one of our largest brand advertisers having their own temporary internal issues that impacted their spend on ours and others networks.

Bill Stone: I'll provide more color later in my remarks on how we will be continue to grow and scale our <unk> business.

Bill Stone: The Ods business declined by 2% in the quarter driven by short term issues described above.

Bill Stone: With one U.S. carrier exception that was only marginally up, our U.S. operators had a decline in devices from the prior quarter, which is unusual given it was the holiday selling season. We have heard some recent encouraging reports from chipset suppliers on future device volumes, which tend to be lead indicators for future demand. So we are hopeful for better trends in the future. But for now, this is a major headwind, and it is reflected in our guidance for the March quarter. In addition to this, we are working to expand our device pipeline. I'm pleased to announce that we are expanding our relationship with Motorola with more devices in more countries and also our relationship with one store in Korea that will add nearly 40 million devices with single tap capability.

Bill Stone: With one U S carrier exception that was only marginally up our U S operators had decline in devices from the prior quarter, which is unusual given it was the holiday selling season.

Bill Stone: We've heard some recent encouraging reports from chipset suppliers on future device volumes, which tend to be lead indicators for future demand. So we are hopeful for better trends into the future, but for now it is a major headwind and it is reflected in our guidance for the March quarter.

Bill Stone: In addition to this we are working to expand our device pipeline.

Bill Stone: I'm pleased to announce that we are expanding our relationship with Motorola with more devices in more countries and also our relationship with one store in Korea that will add nearly 40 million devices with single tap capability.

Our pipeline remains robust and we look forward to sharing more device supply opportunities into the future.

Bill Stone: Our pipeline remains robust, and we look forward to sharing more device supply opportunities into the future. Improving revenue per device outside of the United States to mirror where we are seeing device growth is a top priority for us. We also made progress with different advertisers on single tap in the quarter as we continue to expand with new contracts and new advertisers. We are not yet live with our large social media partner pilot. It is not any operational or technical issue preventing us from launch but a final administrative issue that is being worked on their side.

Bill Stone: Improving revenue per device outside of the United States to mirror, where we are seeing the device growth is a top priority for us.

Bill Stone: We also made progress with different advertisers on single tap in the quarter as we continue to expand with new contracts and new advertisers.

Bill Stone: We are not yet live with our large social media partner pilot. It is not any operational or technical issue preventing us from launch, but a final administrative issue that is being worked on their side.

Bill Stone: The relationship with that party continues to be positive and becoming more strategic but we understand the frustration. We're all feeling on translating this enthusiasm into revenue.

Bill Stone: The relationship with that party continues to be positive and becoming more strategic, but we understand the frustration we are all feeling on translating this enthusiasm into revenue. I want to spend a few moments describing the changes we're making to improve our short-term execution that'll drive future growth. Our issue is unique, and it is neither the what nor the why.

Bill Stone: I want to spend a few moments describing the changes, we're making to improve our short term execution that will drive future growth.

Bill Stone: Our issue is unique and it is neither the what or the why we are confident that we are working on the correct items as we can demonstrate product market fit and also how to make money on those things we are prioritizing.

Bill Stone: We are confident that we are working on the correct items as we can demonstrate product market fit and also how to make money on those things we are prioritizing. We also have a very clear vision of why we are here. Digital Turbine can be a major disruptive force in alternative app distribution with our unique assets and subject matter expertise. Most companies facing headwinds suffer from one of those two issues. We are unique, as those are not our issues.

Bill Stone: We also have a very clear vision on the why we are here.

Bill Stone: Digital turbine can be a major disruptive force in the alternative app distribution with our unique assets and subject matter expertise most companies facing headwinds suffer from one of those two issues.

Bill Stone: We are unique as those are not our issues rather we have two things we need to do to improve our execution, which will drive future growth and cash flow.

Bill Stone: Rather, we have two things we need to do to improve our execution, which will drive future growth in cash flow. The first is the material investment we are making in the modernization of our tech stack, which impacts short-term results, and the second is how we are working to execute. We need to demonstrate the ability to ramp new things into the market at scale to replace the exited businesses and the headwinds described earlier in my remarks. Those require new systems, new processes, and new leadership models.

Bill Stone: The first is the material investment we are making on the modernization of our tech stack, which impact short term results and the second is how we are working to execute.

Bill Stone: We need to demonstrate the ability on how we ramp new things into the market at scale to replace the exited businesses and the headwinds described earlier in my remarks.

Bill Stone: Those require new systems, new processes, and new leadership models.

Bill Stone: On the Tech stack modernization, we have approximately 40% of our product and Tech organization working on building for the future versus working on short term non strategic revenues.

Bill Stone: On the tech stack modernization, we have approximately 40% of our product and tech organization working on building for the future versus working on short-term, non-strategic revenues. We're seeing early positive results from these modernization activities with things like our exchange consolidation, our hosting migrations, new ERP systems, and so on now live in the market, but we still have much work to do as we are implementing a lighter, more modular version of Ignite, a new demand-side platform or DSP, new back-end tools that will scale our AI machine learning efforts on the platform, and so on. All of this work is mission-critical to build a long-term company that will scale to all of our expectations, and we have made a conscious decision to prioritize this work.

Bill Stone: We're seeing early positive results from these modernization activities with things like our exchange consolidation are hosting migrations, new ERP systems and so on now live in the market, but we still have much work to do as we are implementing a lighter more modular version of ignite a new demand side platform or DSP, new back end tools that will.

Bill Stone: All our AI and machine learning efforts on the platform and so on.

Bill Stone: All of this work is mission critical to build a long term company that will scale to all of our expectations and we have made a conscious decision to prioritize this work.

Bill Stone: I want to be clear that it does come at the expense of a few items that could drive short-term revenue in EBITDA, but for long-term investors, I want to emphasize the importance of finishing the swing on these things, and you will see continued progress over the upcoming quarters as we are very close to completing these activities that have been in the works now, in some cases, for many years. In addition to the system level work, we're also changing our leadership model, our organizational structure, making some leadership changes, changing our internal processes for decision making, and finally, improving our focus on the things that are going to drive short and long-term growth.

Bill Stone: I want to be clear that it does come at the expense of a few items that could drive short term revenue and EBITDA, but for long term investors I want to emphasize the importance of finishing the swing on these things and you will see continued progress over the upcoming quarters. As we are very close to completing these activities. It had been in the works now in some cases for many years.

Bill Stone: Yes.

Bill Stone: In addition to the system level work, we're also changing our leadership model, our organizational structure, making some leadership changes changing our internal processes for decision, making and finally, improving our focus on the things that are going to drive short and long term growth.

Bill Stone: And as we change these things we're confident that the revenue and cash flow will follow as we know we have demand for our offerings in the marketplace.

Bill Stone: And as we change these things, we are confident that the revenue and cash flow will follow as we know we have demand for our offerings in the marketplace. We are laser-focused on these changes, which are being implemented in the current quarter, and these how-things are working to change what we are willing to be for the catalyst of returning Digital Turbine to a growth company. And what makes all of this worth it is the bright future.

Bill Stone: We are laser focused on these changes which are being implemented in the current quarter and how things are working to change the what where we're going to be for the catalyst of returning digital turbine to a growth company.

Bill Stone: And what makes all of this worth it is the bright future.

Bill Stone: We are uniquely positioned with our on-device technology, including our first-party data, our AI machine learning tools, and single tap, plus our extensive publisher relationships and our operator and OEM relationships. We've launched our first alternative app distribution products, which we brand as DT Hub, with five operators here in the United States. We are leveraging our Aptoide investment and are generating revenue today. And as a reminder, our equity investment in Aptoide is now approximately 20%. We've also taken a minority investment in Flexion so we can improve our partnership on building great alternative app experiences, as Flexion is a leading porting source for many alternative app stores such as Amazon, Samsung, Huawei, Xiaomi, and many others. And finally, many of you may have seen our press release from yesterday that we are also taking an equity stake in one store. OneStore is the largest alternative app store in Korea.

Bill Stone: We are uniquely positioned with our on device technology, including our first party data, our AI and machine learning tools and single tap plus our extensive publisher relationships and our operator and OEM relationships.

Bill Stone: We've launched our first alternative app distribution products, which we brand as D. T hub with five operators here in the United States.

Bill Stone: We are leveraging our app trade investment and are generating revenue today.

Bill Stone: And as a reminder, our equity investment in <unk>.

It is now approximately 20%.

Bill Stone: We've also taken a minority investment in flex Sean So we can improve our partnership on building great alternative app experiences at <unk> is a leading porting source for many alternative apps stores, such as Amazon, Samsung Huawei, Xiaomi and many others.

Bill Stone: And finally, many of you may have seen our press release from yesterday that we are also taking an equity stake in one store.

Bill Stone: One store is the largest alternative app store in Korea and for context for investors not familiar with them they generate more revenue than Apple does in Korea for the Apple App store.

Bill Stone: And for context, for investors not familiar with them, they generate more revenue than Apple does in Korea for the Apple App Store. We are beginning our relationship with OneStore by enabling single tap on all of their 40 million Korean devices. And this has three benefits.

Bill Stone: We are beginning our relationship with one store by enabling single tap on all of their $40 million Korean devices.

Bill Stone: And this has three benefits.

Bill Stone: One is it will allow us to leverage our DSP to deliver friction free app downloads of alternative App versions to Korean customers. Secondly, it's a way for us to expand the scale of developed market device supply versus being constrained with the issues I mentioned here in the United States and finally, we'll look to enhance our partnership with one store into the.

Bill Stone: One is that it will allow us to leverage our DSP to deliver friction-free app downloads of alternative app versions to Korean customers. Secondly, it's a way for us to expand the scale of our developed market device supply versus being constrained with the issues I mentioned here in the United States. And finally, we'll look to enhance our partnership with OneStore in the future outside of Korea. And combined with our Aptoide and FlexShine relationships, we have the building blocks to be a dominant force in the alternative app market. And as a reminder for investors, the Digital Markets Act, or DMA, will be launched in early March in the EU, and we would encourage investors to pay close attention to the launch and the opportunities that it will present.

Bill Stone: Future outside of Korea, and combined with our App tweeter inflection relationships, we have the building blocks to be a dominant force in the alternative app market.

Bill Stone: And as a reminder for investors the digital markets Act or DNA will be launching in early March and the EU and we would encourage investors to pay close attention to the launch and the opportunity opportunities that it will present.

Bill Stone: Okay.

Bill Stone: I also want to emphasize that the alternative App strategy is not just about new revenues, but perhaps more importantly, we will also be a catalyst to return our current business to growth.

Bill Stone: I also want to emphasize that the alternative app strategy is not just about new revenues but, perhaps more importantly, will also be a catalyst to return our current business to growth. Today, approximately 50% of our business is driven by user acquisition, and 50% driven by in-app advertising. Our app providers want to find ways to acquire more users at lower cost with these alternative users, and we believe that this will open up new app providers to leverage our ad tech stack as part of this strategy, thereby driving more AGP or ad tech revenue growth. We are live today running both alternative app user acquisition campaigns and in-app advertising, leveraging our technologies to improve our current results.

Bill Stone: Today, approximately 50% of our business is driven by user acquisition and 50% driven by in App advertising.

Bill Stone: Our app providers want to find ways to acquire more users at lower cost with those alternative users and we believe that this will open up new app providers to leverage our AD Tech stack as part of this strategy, thereby driving more AGP or AD tech revenue growth.

Bill Stone: We are live today running both alternative App user acquisition campaigns and in App advertising leveraging our technologies into our current results.

Bill Stone: In other words, improving our present revenues and cash flows is both closely linked to the future strategy. To close out my prepared remarks, our future continues to be very exciting, but we need to improve our short-term execution and return our business to growth. We have many specific growth drivers from devices, products, media partners, and cost optimization activities in flight that will accomplish that this year. Those things are the things that are going to return DT to a growth company in the short term while we continue to pursue our very bright longer-term vision. And with that, that'll conclude my prepared remarks, and I'll turn it over to Barrett to take you through the numbers. Thanks, Bill. And good afternoon, everyone.

Bill Stone: In other words, improving our present revenues and cash flows are both closely linked to the future strategy.

Bill Stone: To close out my prepared remarks are our future continues to be very exciting, but we need to improve our short term execution and return our business to growth. We have any specific growth drivers from devices products media partners and cost optimization activities in flight that will accomplish that this year.

Bill Stone: Those things are the things that are going to return <unk> to a growth company in the short term, while we continue to pursue our very bright longer term vision.

Bill Stone: And with that that concludes my prepared remarks, and I'll turn it over to Barrett to take you through the numbers.

Barrett Garrison: Bill and good afternoon, everyone total revenue of $142 6 million in the quarter was flat sequentially and down 12% year on year within our own device solutions or Ods segment revenues of $94 $3 million were down 2% to prior year December quarter. These results were below our.

Barrett Garrison: Total revenue of $142.6 million in the quarter was flat sequentially and down 12% year-on-year. Within our on-device solutions, or ODS, segment, revenues of $94.3 million were down 2% to the prior year December quarter. These results were below our expectations we provided on our November earnings call, largely due to further softening in U.S. carrier device volumes during the holiday season, even against our conservative outlet. Combined with the temporary execution issues Bill referenced stemming from certain platform integration issues.

Expectations, we provided on our November earnings call largely due to further softening in U S carrier device volumes during the holiday season.

Barrett Garrison: Even against our conservative outlook.

Barrett Garrison: Bind with a temporary execution issues bill referenced stemming from certain platform integration efforts.

Barrett Garrison: These headwinds were partially offset by continued strength from improved U S revenue per device growth year on year.

Barrett Garrison: These headwinds were partially offset by continued strength from improved U.S. revenue per device growth year on year. Our content media revenues were slightly up sequentially in the quarter, and while this part of our business has experienced headwinds from prepaid content media from a year on year comparison, this headwind was fully lapped in the December quarter. We're encouraged by both the developments in our new partnership that Bill shared and our robust pipeline, providing the opportunity to leverage our existing device footprint and grow revenues on new supply, particularly outside the U.S. In our app growth platform, our AGP business Q3 revenues of 49.2 million, which performed in line with our guidance expectations, grew 6.5% sequentially and declined 27% over prior years. We saw improving signs of spend levels, particularly within the brand, evidenced by greater than 25% sequential revenue increases.

Barrett Garrison: Our content media revenues were slightly up sequentially in the quarter and while this part of our business has experienced headwinds from the prepaid content media from a year on year comparison. This headwind was fully lapped in the December quarter.

Barrett Garrison: We're encouraged by both the development of our new partnership to Bill shared and our robust pipeline.

Barrett Garrison: <unk> the opportunity to leverage our existing device footprint and grow revenues on new supply, particularly outside the U S.

Barrett Garrison: And our App growth platform, our AGP business Q3 revenues of $49 2 million, which.

Barrett Garrison: Which performed in line with our guidance expectations grew 665% sequentially and declined 27% over prior year, we saw improving signs of spend levels, particularly within brand evidenced by greater than 25% sequential revenue increases while the overall decline in <unk> year on year can.

Barrett Garrison: While the overall decline in AGP year-on-year continues to be impacted in the short term by the consolidation and exiting of certain legacy business lines that we have discussed previously, we're pleased that as of the beginning of this calendar year, the revenue lines have been integrated and fully operational on our consolidated DT exchange. I'd reiterate Bill's earlier comment that despite the near-term headwinds, we're encouraged by the platform consolidations we're making to bring the businesses together and expect these actions to have a positive return on our future growth. Our consolidated gross margin was 45% in Q3, which was down 180 basis points sequentially from Q2, and compared to 50% in Q3 in the prior year.

Barrett Garrison: <unk> to be impacted in the short term by the consolidation and exiting of certain legacy business lines that we have discussed previously we're pleased that as of the beginning of this calendar year. The revenue lines have been integrated and fully operational onto our consolidated D. T exchange.

Speaker Change: I'd reiterate bill's earlier comment that despite the near term headwinds we are encouraged by the platform consolidations, we're making to bring the businesses together and expect these actions to have a positive return on our future growth.

Speaker Change: Our consolidated gross margin was 45% in Q3, which was down 180 basis points sequentially from Q2 and compares to 50% from Q3 in the prior year sequentially margins were influenced by modest Ods product mix shifts, where we experienced an increase in the mix of certain lower margin products.

Barrett Garrison: Sequentially, margins were influenced by modest ODS product mix shifts, where we experienced an increase in the mix of certain lower-margin products. Last year's Q3 results also include the benefit of a contractual revenue share adjustment with an ODS partner, not repeated in this quarter with NAGP. We saw strength year-on-year in expanding margins by 500 basis points from improvement in overall brand margins and favorable product mix within the segment. As a reminder, while gross margin rates can fluctuate from quarter to quarter, we generally anticipate long-term margin expansion as we continue to execute on our gross track. We remain disciplined with expenses, and cash operating expenses were $38.8 million in Q3, a reduction of 6% from the prior year, and represented 27% of revenues in the quarter.

Speaker Change: Last year's Q3 results also include the benefit of a contractual revenue share adjustment with an ODM partner.

Speaker Change: Not repeated in this quarter within a GB.

Speaker Change: We saw strength year on year, and expanding margins of 500 basis points from improvement in overall brand margins and favorable product mix within the segment.

Speaker Change: As a reminder, while gross margin rates can fluctuate from quarter to quarter. We generally anticipate long term margin expansion as we continue to execute on our growth strategy.

Speaker Change: We remain disciplined with expenses and cash operating expenses were 38 8 million in Q3, a reduction of 6% from prior year and represented 27% of revenues in the quarter in.

Barrett Garrison: In the period, we incurred lower than normal performance compensation, and total GAAP operating expenses were $72.9 million, which were up 4% compared to the prior year, driven primarily by business transformation costs that we've discussed previously, relating to the initiative's focus on integrating the technology platforms and back office systems across our assets. While the recent periods have incurred increased costs due to the completion of these efforts and new growth initiatives, we expect both the efficiencies and growth to begin to be reflected in our results throughout fiscal 2025 and beyond. During this phase, we remain highly focused on operating efficiency and are encouraged by the savings we're realizing from these platform consolidations. Turning to profitability, our adjusted EBITDA of $25.4 million in the quarter declined $2.2 million sequentially and was down from $40 million in the prior year, driven primarily from lower revenues and partially offset by a reduction in cash off, an even a margin of 18% compared sequentially to 19% in September.

Speaker Change: In the period, we incurred lower than normal performance compensation expenses in total GAAP operating expenses were $72 9 million, which were up 4% compared to the prior year driven primarily by business transformation costs that we've discussed previously leaned to the initiatives focus on integrating the technology.

Speaker Change: Forms and back office systems across our assets.

Speaker Change: While the recent periods have incurred increased costs due to the completion of these efforts and new growth initiatives, we expect both the efficiencies and growth to begin to be reflected in our results throughout fiscal 2020 five and beyond.

Speaker Change: During this phase we remain highly focused on operating efficiency and are encouraged by the savings. We're realizing from these platform consolidations.

Speaker Change: Turning to profitability, our adjusted EBITDA of $25 4 million in the quarter declined $2 2 million sequentially. It was down 40% down from $40 million in the prior year, driven primarily from lower revenues and partially offset by a reduction in cash opex.

Speaker Change: Our EBITDA margin of 18% compared sequentially to 19% in the September quarter.

Barrett Garrison: Given the inherent operating leverage in our business model, we expect the active focus on expense measures and integration efforts we are taking will strengthen the platform as we return to growth and enable a greater portion of those dollars to fall to the bottom. In the quarter, we achieved non-gap adjusted net income of $15.7 million, or $0.15 per share, as compared to $30 million, or $0.29 per share, in the third quarter of last year. As compared to the prior year, we incur greater interest expense driven by rising rates and partially offset by lower outstanding debt. Our gap net loss was $14.1 million, or a negative 14 cents per share based on 103.3 million diluted shares outstanding compared to prior year net income of 4.1 million, or 4 cents per share.

Speaker Change: Given the inherent operating leverage in our business model, we expect to be active focus on expense measures and integration efforts. We are taking will strengthen the platform as we returned to growth and enable a greater portion of those dollars to fall to the bottom line.

Speaker Change: In the quarter, we achieved non-GAAP adjusted net income of $15 7 million or <unk> 15 per share as compared to $30 million or 29 cents per share in the third quarter of last year.

Speaker Change: As compared to prior year, we incurred greater interest expense driven by rising rates and partially offset by lower outstanding debt balance.

Our GAAP net loss was $14 1 million or a negative <unk> 14 per share based on $103 3 million diluted shares outstanding compared to prior year net income of $4 1 million or <unk> <unk> per share.

Barrett Garrison: The $14.1 million in free cash flows generated for the quarter enabled us to exit Q3 with $49 million in cash after paying down an additional $10 million in debt using free cash flow from operations to further de-leverage our deposits. Our debt balance into the quarter was $376 million drawn on our revolving credit. Also, in support of the key growth initiatives we've discussed, specifically around the pursuit of our alternative app store, strategic opportunity, and realizing the benefits from consolidating and modernizing our tech platforms, we recently amended our credit facility to provide additional flexibility and to align our capital requirements with our overall business needs, with these enhancements. We are confident in our ability to execute on our growth plans, and we continue to focus on balancing growth opportunities and cash flows to optimize financial performance and long-term enterprise value.

Speaker Change: $14 1 million in free cash flows generated for the quarter enabled us to exit Q3 with $49 million in cash after paying down an additional $10 million in debt using free cash flow from operations to further deleverage our debt position.

Speaker Change: Our debt balance ended the quarter at $376 million drawn on our revolving credit facility.

Speaker Change: Also in support of the key growth initiatives, we've discussed specifically around the pursuit of our alternative app store strategic opportunity and realizing the benefits from consolidated and modernizing our tech platforms. We recently amended our credit facility to provide additional flexibility and to align our capital requirements with the.

Speaker Change: Overall business needs with these enhancements.

Speaker Change: We are confident in our ability to execute on our growth plans and we continue to focus on balancing growth opportunities and cash flows to optimize financial performance and long term enterprise value.

Barrett Garrison: Before covering our outlook, I wanted to provide some visibility into our guidance system. Within our revenue guidance, we anticipate the headwinds associated with volume device declines to continue into Q4, principally in the U.S. While we believe future device trends should improve, we've seen accelerating declines early in the March quarter, and at this time, we have limited visibility into the performance of the recent Samsung flagship device launch. And therefore, we have further tempered our ODS volume expectations.

Speaker Change: Before covering our outlook I wanted to provide some visibility into our guidance assumptions within our revenue guidance, we anticipate the headwinds associated with volume device declines to continue into Q4.

Speaker Change: Principally on U S operators.

Speaker Change: We believe these we believe future devices trends should improve we've seen accelerating declines early in the March quarter and at this time have limited visibility to the performance of the recent Samsung flagship device launch and therefore, we have further tempered our odious volume expectations, we are optimistic.

Barrett Garrison: We are optimistic about future revenue growth from new partners and the successful execution of our pipeline in FY25. However, we do not expect material new revenue from these partner launches in our March quarter. I'd also point out as a reminder that, in addition to the typical historical seasonal sequential impact experience in Q4, with the exchange platform migration now completed, there will be approximately a $4 million sequential revenue migration headwind from the completed exchange platform consolidation in Q4.

Speaker Change: About the future revenue growth from new partners and the successful execution against our pipeline in FY 'twenty. Five however, we do not expect material new revenues from these partner launches and our March quarter. I'd also point out as a reminder, that in addition to the typical historical seasonal sequential impact experienced in.

Speaker Change: In Q4.

Speaker Change: With the exchange platform migration now completed there will be approximately a 4 million dollar in sequential revenue migration headwind from the completed exchange platform consolidation in Q4 and as we've highlighted previously we're encouraged by the future benefits of this integration.

Barrett Garrison: And, as we've highlighted previously, we're encouraged by the future benefits of this integration. Now, let me turn to our... We currently expect revenue for full year fiscal 2024 to be between $547 million and $553 million, and adjusted EBITDA to be between $90 million and $94 million, and non-GAAP adjusted net income per diluted share to be between $0.50 and $0.54, based on approximately $104 million diluted shares outstanding and an effective tax rate of $25. With that, let me hand it back to the operator to open the call for questions. Operator?

Speaker Change: Now, let me turn to our outlook.

Speaker Change: We currently expect revenue for full year fiscal 2024 to be between $547 million and $553 million and adjusted EBITDA to be between 90 million and 94 million and non-GAAP adjusted net income per diluted share to be between 50 and 54 cents based.

Speaker Change: Approximately 104 million diluted shares outstanding and an effective tax rate of 25%.

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

Speaker Change: Ladies and gentlemen at this time, we'll begin the question and answer session.

Operator: Ladies and gentlemen, at this time we'll begin the question and answer session. Once again, to join the question queue, you may press star and then one. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality.

Speaker Change: Again, she joined the question Keay, you May Press Star and then one.

Speaker Change: So all your questions you May press star two.

Speaker Change: If you are using a speaker phone, we do ask that you. Please pickup your handset prior.

Speaker Change: The key is to ensure the best sound quality.

Operator: Once again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster, and our first question today comes from Darren. Tavi from Roth MKM.

Speaker Change: But again that is star and then wanted to join the question queue.

Speaker Change: Pause momentarily to assemble the roster.

Speaker Change: And our first question today comes from Erinn.

hobby: Its hobby from Roth and Kam. Please go ahead with your question.

Darren: Please go ahead with your question. Hey guys, thanks for your questions. I know the first one may not be an easy one to answer, but it seems like the device headwind is pretty persistent. I'm just kind of curious.

Erinn: Hey, guys. Thanks for taking my questions a couple if I may.

Erinn: The first one may not be an easy one to answer but it seems like the.

Erinn: Device headwind is pretty persistent and just kind of curious.

Erinn: Yeah.

Bill Stone: Are there any kind of green shoots you're seeing in the market? I know, Barrett, you've made some comments about accelerated declines in the U.S., but any kind of sense for when this should kind of reverse itself? Bill, your comments about the tech stack. I'm just kind of curious. When are we going to be fully complete with the implementation of that? And then lastly, on the open app store initiatives and some of the stuff you're doing and investing in, when do you think that's going to start to have an impact on your P&L in a more material way? Yeah, thanks, Darian. I'll jump in on those, and Barrett can provide any color.

Speaker Change: Are there any kind of green shoots you're seeing in the market I know Barry you made some comments about.

Speaker Change: Accelerated declines in the U S, but any kind of sense for when you see kind of reverse itself.

Speaker Change: You bet.

Speaker Change: Bill your comments about the tech stack I'm, just kind of curious.

Speaker Change: When are we going to be fully complete.

Barry: Implementation of that and then just lastly on the open App store initiatives and some of the stuff youre doing in investing and when do you think thats going to start to have an impact on your P&L in a more material way. Thanks.

Speaker Change: Yes, Thanks, Derik I'll jump in on those and Barrick can provide any color.

Bill Stone: On the device headwinds, yeah, here in the United States, we saw double-digit year-over-year declines with our U.S. partners, which was something that we weren't expecting, that precipitous of a decline, even though we'd forecasted one. So, you know, that continues to be an issue for us, and as Barrett referenced in his comments, January was off to a slow start, which reflects some of You know, the first weekend was encouraging for the S24.

Speaker Change: On the on the device headwinds here in the United States, we saw double digit year over year declines with our U S partners, which was something we weren't expecting that precipitous of a decline even though we had forecasted one so that continues to be an issue for us.

Speaker Change: As Barry referenced in his comments January was off to a slow start which reflects some of the things you saw in our outlook.

Speaker Change: First weekend was encouraging for the S 24, although weekend does not make a trend we will see but we want to make sure that we're being extra cautious regarding that based on some of the comments we've heard from chipset suppliers. It sounds like those device supplies will get better as the year goes on.

Bill Stone: Although a weekend does not make a trend, we'll see, but we want to make sure that we're being, you know, extra cautious regarding that. Based on some of the comments we've heard from chipset suppliers, it sounds like those device supplies will get better as the year goes on. Also, as we start seeing anniversary out of three-year anniversaries of lease contracts here in the United States on both Apple and Android devices from U.S. operators, I think it will also be helpful, and then the thing for us is, rather than get focused on those uncontrollables, what can we control? Well, we can control getting more devices in places like Korea, as I mentioned. We can also expand our relationships with some of our other partners. We can take advantage of a pretty attractive competitive environment, you know, right now by bringing in new device supply. So we're really focused on doing that right now versus relying upon some of the, you know, operators here in the United States.

Speaker Change: So as we start seeing anniversarying out of three year three year anniversaries of our lease contracts here in the United States I know, both Apple and Android devices from the U S operators I think will also be helpful.

Speaker Change: And then the thing for us is rather than <unk>.

Focused on those uncontrollable is what can we control while we can't control getting more devices in places like Korea that I mentioned.

Speaker Change: Can also expand our relationships with some of our other partners. We can take advantage of at a pretty attractive competitive environment right now with bringing on new device supply and so we're really focused on doing that right now versus being relying upon some of the.

Speaker Change: Operators here in the United States on the second question regarding the tech stack, that's going to be.

Bill Stone: On the second question regarding the tech stack, you know, it's going to be rolling. So, you know, every quarter, you're going to see improvements from us. You know, my expectation is that over the next 12 months, that will be done. But, you know, you're going to see material improvements in the next quarter when we get on the call and in the following quarter and the following quarter and so on. You know, it's a super high priority for us because, you know, in order to get to the business that we all want, to get to a real scalable business, and we've got to create a lighter, more modular tech stack, and be able to take advantage of all the data science and learnings on that. And those things are in flight.

Speaker Change: You're rolling so every quarter, you're going to see improvements from us and my expectation is that over the next 12 months that will be done.

Speaker Change: Youre going to see material improvements into next quarter, we get on the call and in the following quarter and the following quarter and so on.

Speaker Change: It's a super high priority for us because.

Speaker Change: In order to get to the business that we all want to get to a real scalable business and we've got to create a lighter more modular tech stack to be able to take advantage of all the data science and learnings on that and those things are in flight.

Bill Stone: And I'm pleased that we're making good progress. The issue is, just right now, it's cannibalizing some very, very short-term issues where we could perhaps, you know, have some improved revenues. But it's absolutely not the right thing to do to just get too focused on the short term at the expense of where we want to go with the business.

Speaker Change: I am pleased that we're making good progress on the issue is its just right now it's cannibalizing some very very short term issues, where we could perhaps have.

Speaker Change: Some improved revenues, but it's absolutely not the right thing to do just get too focused on the short term at the expense of where we want to go with the business and then finally on the App store P&L. It is already in our business. We are already seeing about rough let's call. It roughly a seven figure run rate of revenues.

Bill Stone: And then finally, on the App Store P&L, it is already in our business. You know, we're already seeing a rough, let's call it roughly a seven-figure run rate of revenues from the alternative App Store business. I mentioned in my remarks that we're running campaigns through our pipes now in terms of the ad tech side as well as the in-app purchasing side and the user acquisition side. So this is not just theoretical.

Speaker Change: From the alternative App store business I mentioned in my remarks that we're running now campaigns through our pipes in terms of on the AD Tech side as well as the in App purchasing side and the user acquisition side. So this is not academic. It is early days as we get into 2024, I think youre going to see it to be a more material growth driver and yes.

Bill Stone: It is early days. As we get, you know, into 2024, I think you're going to see it be a more material growth driver and begin building each quarter for us. Thanks, Phil.

Speaker Change: Begin building each quarter for us.

Speaker Change: Thanks Bill.

Speaker Change: Our next question comes from Omar <unk> from Bank of America. Please go ahead with your question.

Omar Dasuki: Our next question comes from Omar Dasuki from Bank of America. Please go ahead with your question. Hi guys, thank you for taking my question. I was intrigued by your partnership and your investment in one store. And I was hoping that you could talk about the economics of the deal. For example, you know, what's the fee structure, like price per install, revenue share, things like that.

Omar: Hi, guys. Thank you for taking my question.

Omar: I was intrigued by your partnership and your investment had one store and I was hoping that you could talk about the economics of the deal.

Omar: For example.

Omar: What's the fee structure like price per install revenue share things like that.

Omar: And then secondly, what part of the consumer journey are you going to be involved in with regards to.

Bill Stone: And then secondly, what part of the consumer journey are you going to be involved in with regards to, I guess, Korean customers? Is it just going to be the app install or the in-app ads or potentially the in-app purchases as well? Yeah, sure, Omar.

Omar: I guess Korean customers.

Omar: Is it just going to be the app install.

Omar: Or the <unk>.

Omar: In app ads or potentially the in app purchases as well.

Speaker Change: Yeah sure sure Omar Yeah. So we're viewing our relationship with one store is this is really phase one if something you were planning to do something bigger with those guys as we get into the future and I think that as we as the digital markets Act becomes alive over the next 30 days or so.

Bill Stone: Yeah, so you know, we're viewing our relationship with OneStore. This is really phase one of something that we're planning to do something, you know, bigger with those guys as we get into the future. And I think that, you know, as the Digital Markets Act becomes live, you know, over the next 30 days or so, we're looking forward to really collaborating with them, you know, in the EU with the opening up of the Google Play Store and Apple Store there. So I kind of stay tuned for something more strategic, more tactical in Korea. We've got to really do three things. We've got number one, we've got to show that we can improve our device volumes, as I just answered the prior question from Darren.

Speaker Change: We're looking forward to really collaborating with them in the EU with the opening up of the.

Speaker Change: Google play store in an Apple store, there so I kind of stay tuned for something more strategic more tactically in Korea. We've got it really do three things we've got a number one we've got to show that we can improve our dice volumes as I just answer on the prior question from Darrin and this helps us get our tech on about $40 million devices in Korea immediately we can do.

Bill Stone: And this, you know, helps us get our tech on about 40 million devices in Korea. Immediately, we can do that kind of in one fell swoop. Number two is we can drive user acquisition now with single tap, you know, so we can be able to acquire more users into the one-store-shop with those alternative apps, you know, leveraging our DSP and our single tap capabilities in a friction-free way for Korean customers. And then, number three, we can work with the local app publishers in Korea and then get our own in-app advertising tech stack onto those, you know, whether those are games or other types of applications, and now provide a new revenue stream for us on our AGP side.

Speaker Change: That kind of as one fell swoop number two is we can drive user acquisition now with single tap.

Speaker Change: So we can be able to acquire more users into the one store store with those alternative apps, leveraging our DSP and our single tap capabilities in a friction free way for Korean customers and and number three we can work with the local App publishers in Korea, and then get our own in App advertising Tech stack on.

Speaker Change: To those.

Speaker Change: Those are games or other types of applications and now provides a new revenue stream for us and our AGP side. So so those are really the things that we're focused on I am not obviously can disclose any specific terms of how we're working the revenue I'm with one store other than say that I think it's a good win win partnership for both sides.

Bill Stone: So those are really the things that we're focused on. I am not going to disclose any specific terms of how we're working out the revenue with One Store other than to say that, you know, I think it's a good win-win partnership for both sides. And could I just ask as well, how should we think about the strategic value of these deals kind of coming together? Right, you have Aptoide, and you have OneStore.

Speaker Change: And could I, just ask as well.

Speaker Change: How should we think about the strategic value of these deals kind of coming together right. You have the appetite do you have a one store.

Speaker Change: How do we think about the synergies and the strategic value.

Bill Stone: How do we think about synergies and strategic value across regions and with multiple assets? Yeah, I think that I think what's important for investors is if you believe that the alternative app store space is going to, you know, grow and be extremely disruptive over the upcoming years, which obviously we believe that we believe we're uniquely positioned in partnering with the companies that continue to bring the capabilities, because in order to enable this, there's a lot of things behind the scenes that have to happen, whether that's porting the apps into the alternative versions, managing the payments, doing it in a friction free way with customers, having the publisher relationships to do multivariant, I can go on and on about all the different things.

Speaker Change: Across regions.

Speaker Change: With multiple assets now.

Speaker Change: Yes, I think they I think what's important for investors is if you believe that the alternative app store space is going to grow and be extremely disruptive over the upcoming years, which obviously, we believe that we believe we're uniquely positioned in partnering with the companies that continue to bring the capabilities because in order to enable this theres a lot of things behind that.

Speaker Change: <unk> have to happen, whether that's porting the apps into the alternative versions managing the payments doing it in a friction free way with customers, having the publisher relationships that you multi variance I can go on and on about all the different things, but anybody that wants to do that whether it's us direct or whether it's with other mega cap tech companies that have ambitions to go do this.

Bill Stone: But you know, anybody that wants to do that, whether it's us directly or whether it's with other megacap tech companies that have ambitions to go do this, there's a lot of those plumbing and electricity things that have to happen that make us super uniquely positioned to go out and help enable that. So now having these relationships with these companies, you know, all together, it's something that I think is going to make it, you know, easier for a one-stop shop for any app publisher to come to what we're doing to be able to, you know, solve the single biggest issue they have on their P&L, which is the egregious 30% tax that is getting paid to the two that are running the duopoly today. Okay, great. I appreciate the explanation. Very clear. Thanks.

Speaker Change: There's a lot of those plumbing and electricity things that have to happen that make us super uniquely position to go out and help enable that.

Speaker Change: <unk> now having these relationships with these companies all together is something that I think is going to make it easier for a one stop shop for any app publisher to come to what we're doing to be able to solve the single biggest issue. They have on their P&L, which is the the egregious 30% tax that is getting paid to the two that are running.

Speaker Change: To operate today.

Speaker Change: Okay, Great I appreciate the explanation very clear thank you.

Dan Day: Great, thanks. Our next question comes from Dan Day from B. Reilly Securities. Please go ahead with your question.

Speaker Change: Great. Thanks.

Speaker Change: Our next.

Speaker Change: She comes from Dan <unk> from B Riley Securities. Please go ahead with your question.

Dan: Yeah, guys. Thanks for taking the question so bill in the prepared remarks, he talked about.

Bill Stone: Yeah, guys, thanks for taking the question. So, Bill, in his prepared remarks, he talked about changes in leadership and your structure, which would be great. If you could elaborate on that, you know, planning to bring in totally new people to run certain business lines, just sort of switching around position reports should be good to get a sense of what you're looking to accomplish with those changes.

Dan: And leadership in York structure, just it'd be great. If you could elaborate on that.

Dan: Would you be planning to bring entirely new people to run certain business lines, just sort of switching around positions or imports should.

Speaker Change: It'd be good to get a sense of what you're looking to accomplish with those changes.

Bill Stone: Yeah, absolutely. I think the biggest issue we need to improve our execution is just getting alignment around the organization. So we need to make faster decisions. We need to have clearer accountability for what we're driving right now.

Speaker Change: Yeah, absolutely I think the biggest issue we need to improve our execution is just getting alignment around the organization. So we need to make faster decisions, we need to have clearer accountability and what we're driving right now so one of the things we're gonna be doing is moving our business into a GM model, where we'll be able to have clearer accountability to make results and drive.

Bill Stone: So one of the things we're gonna be doing is moving our business into a GM model, where we'll be able to have clearer accountability to make results and drive the short-term profit and loss for different business lines each quarter. So, you know, we're making leadership changes to accomplish that. But this is really about us just getting better focus externally with our customers and better alignment internally between our different functions. And so, you know, we've got to change what we're doing.

Speaker Change: The short term profit and loss for a different business lines each quarter. So we're making leadership changes to accomplish that but this is really about I was just getting better focus externally with our customers and better alignment internally between our different functions and so we've got to change what we're doing and we've done a nice job assembling the.

Bill Stone: And we've done a nice job assembling the companies, the legacy companies we've acquired, and now have standardized a lot of things about how we work versus the legacy DT way versus the ad colony way versus the fiber way, and so on. So now we're at a point where we can take that standardization and now decentralize that standardization out to be closer to customers and have clear accountability internally to who's making decisions. So yeah, what we're doing is really aligned around that. Okay, great, thanks. And then just for me, you know, you've consistently said that USRPD has sat around, you know, over $5 for the last few quarters. Has that held pretty steady, even if the devices have been a lot softer than you thought?

Speaker Change: <unk> the legacy companies, we've acquired and now are standardized a lot of things of how we've worked versus the legacy D T way versus the add Tony weigh versus the fiber way and so on so now we're at a point in that where we can take that standardization and now decentralized that standardization out that's closer to customers and have clear accountability internally to make a decision.

Speaker Change: So what we're doing is really aligned around that.

Speaker Change: Yeah.

Speaker Change: Okay, Great. Thanks, and then just for me you know you you've consistently said that U S. <unk>.

Speaker Change: Sit around.

Speaker Change: $5 for the last few quarters.

Speaker Change: Has that held pretty steady even devices had been not softer than you thought.

Speaker Change: Yes device device rpt's or have been pretty consistent they were marginally down in the December quarter from the September quarter, and that was a 100% driven by those two execution issues I mentioned earlier in my remarks, if you take out those two issues it would've accreted again.

Bill Stone: Yeah, device RPDs have been pretty consistent. They were marginally down in the December quarter from the September quarter. And that was 100% driven by those two execution issues I mentioned earlier in my remarks. If you take out those two issues, it would have accreted again. All right. Great. Thanks for taking any questions, guys. Thanks, Dan. Once again, if you would like to ask a question, please press star and one to withdraw your questions. You may press the star and two.

Speaker Change: Alright, great. Thanks for taking the question guys. Thanks.

Speaker Change: Thanks, Dan.

Speaker Change: Once again, if you would like to ask a question. Please press star and one sort of draw your questions you May press star two.

Speaker Change: Our next question comes from Anthony Stoss from Craig Hallum. Please go ahead with your question.

Anthony Joseph Stoss: Our next question comes from Anthony Stoss on behalf of Craig Hallam. Please go ahead with your question. Hey, Bill, I just wanted to follow up on your comment about why the single tap trial wasn't live. You talked about administrative issues. Can you give us a little bit more color on that when you expect that to be resolved? And then I had a couple of follow-up questions. Yeah, sure, Tony. Yeah, as we know, we've all been impatiently waiting for MUST to go live.

Anthony Joseph Stoss: I just wanted to follow up on your comment about why the single tap.

Anthony Joseph Stoss: Trial wasn't live you talked about administrative issues can you give us a little bit more color on that when do you expect that to be resolved and then I had a couple of follow ups.

Speaker Change: Yes, sure Tony Yes.

Speaker Change: Yes.

Speaker Change: We know we've all been impatiently waiting for us to go live and we would work through the kind of final tech and ops issues. They may be confident and talk about it yes, theres a theres a final administrative decision that the partner wants to make it with some other considerations.

Bill Stone: And we've worked through the kind of final tech and ops issues that made me confident to talk about it. Yeah, there's a final administrative decision that the partner wants to make with some other considerations that they're looking at in the bigger picture. And they're going through that internal discussion right now. So as soon as that discussion is done, then I expect us to go live with the pilot. I don't have a timeline, at least given our past year, that I want to commit to on the call today, but I would just consider it to say that it's important for both sides to work through that. Got it. Then maybe, this is probably more for Barrett, for your March Guide to Downsequencing Revenues, can you break out how much of the decline was from ODS or your expectations versus AGP? Are they both?

Speaker Change: They're looking at bigger picture and Theyre going through that internal discussion right now so as soon as that discussion is done then I expect us to go live with a pilot I don't have a timeline I believe you know given our past here that I want to commit to on the call today, but I would just consider it to say, it's a it's important for both sides to work through that.

Speaker Change: Got it and then maybe just.

Speaker Change: As a framework for Barrett for your March guide the down sequential revenues can you breakout how much of the decline was from Ods are your expectations versus AGP are they both.

Anthony Joseph Stoss: kind of down equally, or is one worse than the other? Yeah. Hey, Tony. Yeah. Here's what I would say. You know, we obviously don't guide by segment, but I would say... Our seasonality is that, if you look back at our seasonality for the AGP business, it's relatively constant.

Speaker Change: Okay that would equally or as one of the worst or the other.

Barrett Garrison: Yeah, Here's what I would say wed obviously don't guide by segment, but I would say.

Speaker Change: Our seasonality is that you'd look if you look back at our seasonality for AGP business, it's relatively constant.

Barrett Garrison: We even, you know, we got a little bit of the headwind I mentioned as we completed the consolidation of the exchange. The real factor driving the changes is kind of an accelerating decline in the Q4 US devices that we've contemplated in our guide. Gotcha.

Speaker Change: We even got a little bit of headwind I mentioned on.

Speaker Change: As we completed the consolidation of the exchange.

Speaker Change: The real factor that.

Speaker Change: On the changes as kind of an accelerating decline on the on the Q4 U S devices that we've contemplated in our guidance.

Bill Stone: And Bill, back to you. I'm just curious if you could talk about what you're seeing in the competitive environment, you know, if one source is having issues or not, just what you expect. And then after that, I had one last question.

Speaker Change: Got you.

Speaker Change: Bill back to you I was just curious if you could talk about what youre seeing in the competitive environment.

Bill Stone: One sources, having issues or not just what you expect and then I had one last question after that.

Bill Stone: Yeah, I think in the competitive environment, you know, obviously, there's been a lot of announced changes in the market for one of our competitors. So, you know, we're looking at it as an opportunity for our business, especially as we talk about these softnesses and our device supply. And while we expect that to rebound with some of the things I was talking about with chipset suppliers and flagship devices and all that, we also have to take matters in our own hands. And so, you know, we're viewing some of those changes happening in the macro environment with some of the competitors as positive for us. And there are a lot of, you know, encouraging things going on in the pipeline right now. Gotcha. And then, hopefully, you can answer this or give everybody a sense of it. It's been a frustrating stock for some time.

Bill Stone: Yes, I think in the <unk>.

Bill Stone: They've environment, obviously, theres been a lot of announced changes.

Speaker Change: Out there.

And the market for one of our competitors. So we're looking at that as an opportunity for our business, especially as we talked about the softness in U S device supply.

Speaker Change: While we expect that to rebound by some of the things I was talking about with chipset suppliers in flagship devices and all of that we also have to take matters into our own hands and so we're viewing some of those changes happen in the macro environment with some of the competitors is a positive for us and there's a lot of encouraging things going on in the pipeline right now.

Speaker Change: Got you and then hopefully you can answer this or give everybody a sense. It's been a frustrating stock for some time numbers could go down when you look over the next 12 months of fiscal 2025 would you expect at least a revenue growth of 25 over 24.

Anthony Joseph Stoss: Numbers keep going down. When you look over the next 12 months, so fiscal 2025, would you expect at least revenue growth in 2025 over 2024? Tony, your question around run rate growth? No, just do you expect fiscal year 2025 revenues, your next, you know, they call it June through the next March quarter, do you expect growth given everything that's going on in the tech stack and the issues that that's created? Yeah, all the things we're working towards all the things we have in our planning and execution that we talked about are to drive growth. That would be the expectation.

Speaker Change: So to your question around run rate growth.

Speaker Change: No.

Speaker Change: Fiscal year 2025 revenues Youre next.

Speaker Change: Call. It June through the next March quarter, do you expect growth given everything thats going on in the tech stack and the issues that Thats created.

Speaker Change: Yeah all of the all the things we're working towards all of the things we have on in our planning and execution that we talked about.

Speaker Change: To drive growth next year.

Bill Stone: OK, thank you. Thanks, Tony. And ladies and gentlemen, with that, we'll be ending today's question and answer session. I'd like to turn the floor back over to our CEO, Bill Stone, for any closing remarks. Yeah, thanks everyone for joining the call tonight. We'll look forward to reporting on our progress against all the points we made on the call tonight. And we'll talk to you again on our fiscal 24 fourth quarter call in a few months. Thanks, and have a great night. Ladies and gentlemen, that will conclude today's conference call. We thank you for attending today's presentation. You may now disconnect your line.

Speaker Change: And that would be the expectation.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks, Tony.

Speaker Change: And ladies and gentlemen, with that we'll be ending today's question and answer session I'd like to turn the floor back over to our CEO Bill stone for any closing remarks.

Bill Stone: Yes, thanks, everyone for joining the call Tonight, we will look forward to reporting on our progress against all the points. We made on the call Tonight, and we'll talk to you again on our fiscal 'twenty four fourth quarter call in a few months, thanks and have a great night.

Speaker Change: Ladies and gentlemen that will conclude today's conference call. We thank you for attending today's presentation. You may now be knocked your lines.