Q1 2026 Digital Turbine Inc Earnings Call

Turbine fiscal 2026 first quarter results. Call participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Brian Bartholomew, Senior Vice President, Capital Markets. Please go ahead.

Thanks, Drew. Good afternoon, and welcome to the Digital Turbine fiscal 2026 first quarter earnings conference call.

Joining me on the call to discuss our results are our CEO, Bill Stone, and CFO, Steve Lasher.

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,

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 Gap missions. 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, I'd like to turn the call over to our CEO Bill Stone.

Thanks, Brian. Good afternoon, everyone, and thank you for joining us for Digital Turbine's fiscal first quarter 2026 earnings call.

We're excited to report on our continued business. Business momentum, that accelerated in the first quarter.

We delivered 131 million of Revenue and 25 million in a bit of reflecting, 11% Revenue, growth and 73%, ebit growth year-over-year.

These results are a testament to our strategic focus and improved execution across our platform, enabling us to increase our annual outlook for the fiscal year.

Breaking it down by segment.

Our on-device solution business, generated 95 million in Revenue, which was up approximately 18% from June quarter of last year.

Our application growth platform, business posted 35 million in Revenue which was modestly down year over year. However, we're incurred by the nearly 10% sequential Improvement compared to fiscal fourth quarter.

There are 3 key drivers that powered our improved performance this quarter.

First was higher Advertiser demand, which translated into improved pricing and fill rates particularly for premium placements on our platform.

This strong Advertiser demands resulted in 30 plus percent year-over-year growth in our Revenue per device or RPD in both the US and international markets for our own device business. And we also had solid double-digit year-over-year growth in our content media business.

Our second driver was improved device volumes, particularly in North America and select International markets. This helped us expand our install footprint and monetization base.

As an example. Last year, we saw a decline of approximately 1 million devices here in the US between March and June. And this year, we saw a modest increase in US devices from March to June

Similarly, our International device volumes were up a few, a few million units, sequentially and your over year.

Combined these better rpds and improved device volumes drove. Strong year-over-year growth.

And finally, we made meaningful progress in our first-party data. In AI machine learning platform, which is finally setting, the foundation for smarter targeting higher return on ad, spend for advertisers and improved user experiences.

Beyond near-term execution, we're also making strategic progress positioning Digital Turbine for the future.

Our first-party data Investments coupled with real-time AI driven, decisioning were unlocking, new levels of precision and scale.

These capabilities are becoming even more valuable as advertisers seek alternatives to the closed-wall garden ecosystems and look for transparent, performant ways to engage mobile users.

In branding these unique advantages as they are important to Showcase to customers and partners why digital turbine is special and unique.

You'll see us branding our first-party data as the DT ignite graph, and our AI machine learning platform leveraging. Those Data Insights to drive improved Advertiser and user experiences will be branded as dtiq.

We're also seeing increasing brand engagement directly on our platform.

A trend driven by our audience scale, strong device footprint and proven ability to deliver measurable outcomes.

The number of campaigns.

Contributing to Brand Revenue increased by nearly 50% quarter of a quarter, this signal stronger, and more Diversified demand.

This diversification spans major advertisers across retail.

Consumer packaged goods, finance, insurance, entertainment, tech, telco, and more, giving us increased confidence in our ability to scale both broadly and deeply across many verticals.

moreover, the macro environment continues to shift in favor of direct distribution and alternative app distribution models,

With the combination of our Tech enablers such as ignite graph dtiq and single tap, this trend positions as well.

Regulatory momentum is accelerating all geographies around the world to offer, customer and publisher Choice, including our reintroduction of the open app markets act here in the United States as well as other recent legal rulings.

We've recently joined forces with companies such as meta Spotify and others in the Coalition for competitive mobile experience to work with Regulators. In other stakeholders to ensure a more open and competitive mobile Marketplace for consumers and publishers.

To wrap up. The first quarter was a promising, start to our fiscal year. We showed solid year-over-year, double digit growth in revenue and ibida driven by a healthy. Mix of execution, Innovation and favorable industry Dynamics. We're building on the right foundation, through operational, discipline, and Strategic investment, to drive sustained, profitable growth,

We're excited by the traction. We're seeing across the business and confident in our ability to continue to deliver value to Partners advertisers users and shareholders.

With that, I'll turn it over to Steve to take you through the financials in more detail.

Thank you, Bill and good afternoon everyone. The fiscal first quarter represented, another meaningful. Step forward for the company, total revenue for the quarter was 130.9, Million reflecting, 11% growth year-over-year.

And a segment level, our ODS business delivered 95.4 million in Revenue up 18% year-over-year. Driven by strong growth in both devices and revenue per device or RPD particularly within our International Partners. We also saw continued strength in rpd's and modest Improvement in activation Trends in the US market.

Our AGP segment generated 36.3 million in Revenue, representing a 5% decline year-over-year. However, on a sequential basis AGP, Revenue increased 9%, reflecting early signs of stabilization and progress as we work to strengthen. The platform, leveraging, our unique first-party data and AI capabilities,

The combination of accelerated, Topline, growth and improving operate efficiencies driven by the transformation initiatives. We began late last year resulted in strong ibida performance, this quarter.

Adjusted ibida for our fiscal. First quarter was 25.1 million up 73% year-over-year marking our highest quarterly ibida. Since calendar 2023, free cash flow remained positive at 1.4 million and Improvement of approximately 7 million year-over-year.

Growth margin for the fiscal first quarter was 47%, representing an improvement of more than 100 basis points compared to the same period last year.

As a reminder, our gross margins are primarily influenced by shifts in product and segment mix which will vary from period to period.

Our cash operating expenses for the June quarter were $36.8 million, down 8% year-over-year. In addition to our gross profit of $62 million, which grew 14% over the same period, this is a strong proof point of the operating leverage of the company.

Committed to further streamlining our business processes. Even as we continue to make discipline Investments to support future growth.

Turning now to the bottom portion of the income statement, we reported a gaap. Net loss of 14.1 million or 13 cents per share in the fiscal first quarter.

On a non-gaap basis. We recorded net, income of 5.8 million or 5 cents per share, based on 110 million shares outstanding, and the fiscal first quarter,

Looking at the balance sheet, we ended the quarter with a cash balance of 34.1 million down approximately 6 million from the March quarter primarily reflecting the timing of working capital.

Our total debt stood at 400.5% of more than 8 million quarter over quarter with respect to debt refinancing activities, were pleased with our continued progress and will share additional details as appropriate.

Now, let me turn to our updated outlook for fiscal 2026.

On the heels of a stronger than expected. First quarter and improved visibility into the remainder of the year. We are raising our full year revenue and adjusted ebit guidance.

We now expect revenue to be in the range of $525 million to $535 million and adjusted EBITDA in the range of $90 million to $95 million for fiscal year 2026.

At the midpoint.

This represents an increase of 10 million in Revenue, guidance and 5 million in, Iva guidance compared to our prior Outlook.

In closing, we are actively positioning the company for sustainable growth in fiscal 2026 and beyond. While we are encouraged by recent momentum across key areas of the business, our focus remains squarely on disciplined execution, financial rigor, and delivering long-term value for our shareholders.

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

We will now begin the question and answer session to ask a question. You may press star then 1 on your telephone keypad. If you're using a speaker-phone please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question please press star then 2 again it is star then 1 to ask a question.

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

The first question comes from Anthony STS. With Craig Hallam, please go ahead.

Hi guys. Uh, nice execution. For sure. Bill on the international carrier strength and strength on the RPD side. On the international business, is that

Uh, a combination of new international customers. There's a largely just better take uh, rates on the international side and then I had a follow-up after that.

Yeah, thanks. Thanks, Tony. Yeah, our, our international business on our on device business, in general, was up 70%. It was driven by, uh, better device volumes and better rpds um, specifically on the rpds themselves. Um, we're just getting better at execution. Um, we're seeing also stronger demand coming into these geographies from other geographies. So in other words, where we see, um, a lot of Demands coming in from, from Europe, or Asia into the us, we've done a much better job. Now me be able to get that demand going into other markets such as Latin America or into Europe on European Supply. Um, and so those things are are helping us drive, uh, better rpds, but, uh, we continue to see strong performance there, um, especially combined with the stronger devices. Uh, really helped Drive Some solid Topline performance.

Got it. And then um, the brand Revenue, our brand portion of business was exceptionally strong C. Can you talk about the longevity of this business? Is it something new? Do you have a bunch of new customers that have come online and and what's your visibility into that continuing?

Yeah, and 1 of the things I was really excited about in the brand business, um, for the quarters is just more diversification. I talked about, in my prepared remarks that we saw, you know, nearly 50% increase in the amount of brand advertisers coming on the platform from more and more verticals. Um, it's our job now to continue to grow and scale that. Um, but to see that diversification with more Brands, looking for, uh, Solutions on our platform is is incredibly encouraging for us? And we think we have something unique and differentiated here. Uh in terms of mobile first with our strategy uh in app. And something that uh we're playing the long game with it. Um and continue to make uh make good strides here.

Got it. Last question Bill related to um,

Potential customers. And do you expect any additional customers to actually launch uh, alternative app stores on top of Epic this year?

Yeah. So, you know, you know, it's really encouraging to see the, uh, you know, recent legal ruling that came out. Uh, you know, from from the judge, uh, reiterating with the jury had decided in the Epic, uh, in Google case, you know, really opening up, um, you know, the Alternatives alternative App Stores, um, within the, uh, you know, Google play, uh, ecosystem. Um, that's an that that's an encouraging development in terms of just more fair open transparent, um, and we're seeing that around the world. Not just also in the United States, but also in in Europe, Korea, Brazil, uh, Japan, India, just the name of a few. Um, and so I think, you know, from our perspective, uh, what we're seeing is very strong interests, first, and foremost from Publishers. Um, you know, so if you're thinking about large gaming companies or even large non-gaming companies, um, you know, looking to find uh, different billing methods to the, to their customers, and our ability to leverage our platform with things like single tap. Uh, and the dtiq and our ignite graph. I think is something that's particularly encouraging to offer Publishers options, first and foremost,

And then on the distribution side, um, you know we're seeing a lot of encouraging developments here, not just in the United States. I'm, I'm partners like Verizon where we're live, uh, but also we've got you know, good Traction in Latin America and as well as in the in the EU um from a lot of different uh operator and OEM partners that are excited about what happens here in the future with that.

Perfect. Thanks Bill. Congrats on the strong results again. All right, thanks honey.

The next question comes from Omar duki with Bank of America. Please go ahead.

Hey guys, it's Arthur. Thanks for taking the question. Uh Bill maybe just on the AGP business, obviously great to see gradually Improvement here. Uh, what do you think needs to happen to bring this business back a year of growth? Like Are there specific products or you know, business segments, that you you like to see uh more information this year?

Um, yeah, I think, you know, in terms of, in terms of our AGP business, um, our supply side platform, and our DTX product is showing, um, nice year-over-year growth. I think the real key for us will be on the, uh, performance, uh, the performance side of the business. Um, you know, that's something we're making a lot of energy and Investments. And, and some of the first part of data and AI machine learning things that I reference in my remarks will be super important here on the demand side of that to really show that, uh, Topline growth. Um, but as I mentioned, my work actually saw a really nice sequential growth in that business, it gives us encouragement that that's going to continue in quarters to come.

Got it and then if I could just follow up on that uh, any any potential timeline, uh, you could share with us in terms of uh you know, just that work that you guys are doing on the performance these DSD side.

Um, yeah, you're all communicate our progress and timelines on the, on, you know, future future calls right now, again, I'm encouraged because what we've done now is we've been able to connect, um, the actual performance DSP, and all the bidding work to now, the first party data and the AI machine learning algorithms, and we're getting much better and stronger at that, and that would be the key driver to, uh, improve Topline performance in that business.

Awesome. Thank you. Appreciate it.

Thanks. Arthur.

The next question comes from Mitchell. Pendis with Wells, Fargo private bank, please go ahead.

Sure. Hi, gentlemen. I'd like to also thank you for what looks like a nice confirmation of DT's turnaround with these numbers.

um,

Device sales have, in recent quarters—actually, in recent years—been headwinds. But now, it looks like we're starting to get evidence from Apple and Verizon that there seems to be a turnaround, and anecdotally in device sales. Can you talk a little bit about how that can affect DT going forward?

Yeah, sure Mitch. Um, you know, we see it really helping us in in 2 areas. Um, you know, first is just the macro Trend, which is, you know, something that's been a headwind as you mentioned, um, for us for, you know, the last couple of years. So this past quarter was encouraging sign to see that turn around and become a tailwind and show growth from uh, the June quarter to the March quarter. And that, uh, that's the

Footprint. In addition, just the macro uh, Tailwind start to emerge. Um, gives us a lot of optimism um, that, you know, we can see good growth um from this part of the business.

Great, thank you. And, um, generally speaking, where are you seeing some of your growth geographically coming from?

Yes. So, so on the, um, on the supply side of the business on on AGP, I've been really pleased with our growth in, uh, Asia and Europe, um, in particular and then, um, for

Um, our on-device business, um, we've really done a nice job growing our business in the EU and Latin America. Um, so those have been two bright spots for us. Um, and then, on the ODS business, to see the double-digit growth back here in the United States, you know, is also something that's been encouraging. So it's really a true global story that's starting to emerge here. Got it. And, uh, are you...

When you're billing outside, the country are you billing in USD or the local currency?

Uh yeah, predominantly the vast majority of our revenues all come through in USD.

Okay.

All right. Well, that's all from me. Thank you. Okay thanks Mitch.

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

Thanks everyone for joining our call today. We'll talk to you again on our fiscal. 26 second quarter, call in a few months. Thanks, and have a great night.

The conference has now concluded, thank you for attending today's presentation. You may now disconnect