Digital Turbine Q3 2026 Digital Turbine Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q3 2026 Digital Turbine Inc Earnings Call
Operator: Good afternoon, everyone, and welcome to the Digital Turbine Fiscal 2026 Third Quarter Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touchtone telephones. To withdraw your questions, you may press star and two. Please also note, this event is being recorded. I would now like to turn the conference call over to Brian Bartholomew, Senior Vice President of Capital Markets. Please go ahead.
Operator: Good afternoon, everyone, and welcome to the Digital Turbine Fiscal 2026 Third Quarter Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touchtone telephones. To withdraw your questions, you may press star and two. Please also note, this event is being recorded. I would now like to turn the conference call over to Brian Bartholomew, Senior Vice President of Capital Markets. Please go ahead.
Speaker #1: Good afternoon, welcome to everyone, and to the Digital Turbine Fiscal 2020 third quarter earnings conference call. All participants will be in a listen-only mode.
Speaker #1: If you need assistance, please see a conference specialist by pressing the star key, followed by zero. After that, there will be an opportunity to ask today's questions. To ask a question, you may press star and then one on your telephones.
Speaker #1: touchtone questions , you To withdraw may press your star and two . Please also note this event is being recorded . I would now like to turn the conference call over to Brian Bartholomew Senior Vice President of Capital Please go Markets .
Brian Bartholomew: Thanks, Jamie. Good afternoon, and welcome to the Digital Turbine Fiscal 2026 third quarter earnings conference call. Joining me today on the call to discuss our results are 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.
Brian Bartholomew: Thanks, Jamie. Good afternoon, and welcome to the Digital Turbine Fiscal 2026 third quarter earnings conference call. Joining me today on the call to discuss our results are 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.
Speaker #1: ahead
Speaker #1: . Thanks ,
Speaker #2: Good afternoon, Jamie, and welcome to the Digital Turbine Inc. fiscal 2026 third quarter earnings conference. Joining me today on the call to discuss our results are CEO Bill Stone and CFO Stephen Lasher.
Speaker #2: Before we get started I would like to take this opportunity to you that our remind today will include statements . These forward looking statements are based on our current assumptions , expectations and beliefs , including projected operating metrics , future and products services , anticipated market demand , and other forward looking topics .
Speaker #2: Although we believe that our assumptions are reasonable, guarantees are not of future performance, and some will inevitably prove to be incorrect.
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 file with the Securities and Exchange Commission. Also, during this call, we will discuss certain non-GAAP measures of our performance. Non-GAAP measures are not substitutes for GAAP measures. Please refer to today's press release for important information about the limitations of using non-GAAP measures, as well as reconciliations of these non-GAAP financial results to the most comparable GAAP measures. Now I'd like to turn the call over to our CEO, Bill Stone.
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 file with the Securities and Exchange Commission. Also, during this call, we will discuss certain non-GAAP measures of our performance. Non-GAAP measures are not substitutes for GAAP measures. Please refer to today's press release for important information about the limitations of using non-GAAP measures, as well as reconciliations of these non-GAAP financial results to the most comparable GAAP measures. Now I'd like to turn the call over to our CEO, Bill Stone.
Speaker #2: Except as required by law, we undertake no obligation to update any forward-looking statements. For discussion of the risk factors that could cause our actual results to differ materially from those contemplated by forward-looking statements, please refer to our filings.
Speaker #2: 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 performance.
Speaker #2: Please refer to the documents we filed with the Securities and Exchange Commission. Also, during this call, we will discuss certain non-GAAP measures. Our non-GAAP measures are not substitutes for GAAP measures.
Speaker #2: Please refer to today's press release for information about, as well as the use of, non-GAAP results and these reconciliations to the most comparable GAAP financial measures. With that, I’d like to turn the call over to our CEO, Bill Stone.
Bill Stone: Thanks, Brian, and thanks everyone for joining our call tonight. Our December quarter showcased accelerating business momentum across both our on-device solutions and app growth platform segments. Strong demand for our platform, combined with our disciplined operational execution, drove top and bottom line results that exceeded our expectations. Revenue for the quarter came in at $151.4 million, representing 12% year-over-year growth. We also achieved $39 million in quarterly EBITDA. That was 76% year-over-year growth, with EBITDA margins of 26%. All of these results are proof points demonstrating the inherent operating leverage in our model. In particular, there are three things at a corporate level I wanted to call out before getting into my detailed segment remarks. First is the diversification of our revenues and the double-digit growth across so many of our products and geographies.
Bill Stone: Thanks, Brian, and thanks everyone for joining our call tonight. Our December quarter showcased accelerating business momentum across both our on-device solutions and app growth platform segments. Strong demand for our platform, combined with our disciplined operational execution, drove top and bottom line results that exceeded our expectations. Revenue for the quarter came in at $151.4 million, representing 12% year-over-year growth. We also achieved $39 million in quarterly EBITDA. That was 76% year-over-year growth, with EBITDA margins of 26%. All of these results are proof points demonstrating the inherent operating leverage in our model. In particular, there are three things at a corporate level I wanted to call out before getting into my detailed segment remarks. First is the diversification of our revenues and the double-digit growth across so many of our products and geographies.
Speaker #2: .
Speaker #3: Thanks, Brian, and thanks, everyone, for joining our call tonight. The December quarter showcased accelerating business momentum across both our on-device solutions and app growth segments, with strong platform demand for our...
Speaker #3: Strong platform , combined with our disciplined operational execution , drove top and bottom line results that exceeded our expectations . Revenue for the quarter came in at $151.4 million , representing 12% year over growth year .
Speaker #3: We also achieved $39 million in quarterly EBITDA . That was 76% year over year growth , with EBITDA margins of 26% . these All of results are proof points , demonstrating the operating inherent leverage in our model there .
Speaker #3: There are three things that, in particular, corporately, I wanted to call out before getting into the detailed level segment remarks. First is the diversification of our revenues and the double-digit growth across so many of our products and geographies.
Bill Stone: We are seeing many drivers of our growth versus being tied to a single thing. Second is our improving use of AI and machine learning tools, not only in our data and targeting that power revenue, but also for our operations; that's driving improved efficiency in our coding, quality assurance, regression timelines, and a variety of other administrative and back-office tasks. As an example of this, in the December quarter, our gross profit dollars increased by more than 25%, while our operating expenses declined. Finally, is the strong progress we've made in strengthening our balance sheet. Our debt leverage ratio now stands at roughly 3 turns, down from more than 5 turns just a year ago. This disciplined deleveraging is positioning us exceptionally well to pursue the half a trillion-dollar market opportunity in front of us.
Bill Stone: We are seeing many drivers of our growth versus being tied to a single thing. Second is our improving use of AI and machine learning tools, not only in our data and targeting that power revenue, but also for our operations; that's driving improved efficiency in our coding, quality assurance, regression timelines, and a variety of other administrative and back-office tasks. As an example of this, in the December quarter, our gross profit dollars increased by more than 25%, while our operating expenses declined. Finally, is the strong progress we've made in strengthening our balance sheet. Our debt leverage ratio now stands at roughly three turns, down from more than five turns just a year ago. This disciplined deleveraging is positioning us exceptionally well to pursue the half a trillion-dollar market opportunity in front of us.
Speaker #3: We are seeing drivers of our many growth tied to a single thing versus being. Second is our improving use of AI and machine learning only in tools, not our data and targeting that power revenue, but also for our operations.
Speaker #3: That's driving improved efficiency in our coding, quality assurance, regression timelines, and a variety of other administrative and back office tasks, an example of this.
Speaker #3: in the December As quarter , our gross profit dollars increased by more than 25% , our while operating expenses declined And . finally , is the strong progress we've made in balance sheet strengthening our , our debt leverage ratio now stands roughly at three turns , down from more than five turns just a year ago .
Speaker #3: disciplined This positioning us deleveraging is exceptionally well to pursue the half $1 trillion market opportunity in front of us turning to breaking . Now , results out segment .
Bill Stone: Now, turning to breaking our results out by segment, our on-device solutions business generated nearly $100 million in revenue, which was up approximately 9% from the December quarter last year. In particular, our international business continues to be the driver of this growth, with a greater than 20% increase in both devices and revenue per device, or RPD, that drove more than 60% year-over-year international growth. And for the first time in our history, more than 30% of our revenues on our Ignite platform were from outside the United States. Our application growth platform, or AGP business, was another bright spot for the quarter and continued its momentum from the September quarter, with December year-over-year growth of 19%, posting $53 million in revenue.
Bill Stone: Now, turning to breaking our results out by segment, our on-device solutions business generated nearly $100 million in revenue, which was up approximately 9% from the December quarter last year. In particular, our international business continues to be the driver of this growth, with a greater than 20% increase in both devices and revenue per device, or RPD, that drove more than 60% year-over-year international growth. For the first time in our history, more than 30% of our revenues on our Ignite platform were from outside the United States. Our application growth platform, or AGP business, was another bright spot for the quarter and continued its momentum from the September quarter, with December year-over-year growth of 19%, posting $53 million in revenue.
Speaker #3: Our on device solutions by business generated nearly $100 million in which was up revenue , approximately 9% from the December quarter last year .
Speaker #3: In particular, our business international continues to be the driver of this growth, with a greater than 20% increase in both devices and revenue per device, or RPD.
Speaker #3: That drove more than 60% year over year in growth . And for the first time in our history , 30% of our revenues on our more than platform ignite were from outside the United States Our application .
Speaker #3: growth platform , or AGP business , was another bright spot for the quarter , and continued its momentum from the September quarter with December year over year growth posting of 19% , $53 million in revenue .
Bill Stone: In particular, I was pleased with the strong results in our brand business and also growth in our DTX or SSP business of over 30%. The hard work we did over the past few years to stay the course and integrate our legacy tech stacks into a common platform is now paying dividends, and we expect the momentum to continue into the future. For our growth drivers, improving supply and demand trends powered the improved performance. First, on increased supply, while we continue to see softness for US devices, our overall devices grew 20% year-over-year, driven by strong volumes from our international partners. In addition, our AGP supply volumes increased impressions by over 20% year-over-year, driven by strong performance internationally and strong increases in non-gaming inventory.
Bill Stone: In particular, I was pleased with the strong results in our brand business and also growth in our DTX or SSP business of over 30%. The hard work we did over the past few years to stay the course and integrate our legacy tech stacks into a common platform is now paying dividends, and we expect the momentum to continue into the future. For our growth drivers, improving supply and demand trends powered the improved performance. First, on increased supply, while we continue to see softness for US devices, our overall devices grew 20% year-over-year, driven by strong volumes from our international partners. In addition, our AGP supply volumes increased impressions by over 20% year-over-year, driven by strong performance internationally and strong increases in non-gaming inventory.
Speaker #3: In particular, I was pleased with the strong results in our brand business and also the growth in our DBT or MSP business of over 30%.
Speaker #3: The hard work we did over the past few stay the course and , integrate integrate our legacy tech stacks into a common platform is now paying dividends , and we expect the to continue future into the .
Speaker #3: For our growth drivers, improving supply and demand trends powered the improved performance. First, on increased supply, we see softness continue to, while we for.
Speaker #3: Us devices , overall our devices grew 20% year over year , driven by strong volumes from our international partners . In addition , our AGP supply volumes increased impressions by over 20% year over year , driven by strong performance internationally and strong increases in non-gaming inventory .
Bill Stone: We also had higher advertiser demand, which translated into improving pricing and fill rates, particularly for premium placements on our platform. The strong advertiser demand resulted in year-over-year growth in revenue per device in both the US and international markets for our device business. For our brand business, we reorganized our sales teams last year around verticals, and I'm pleased to see those changes bearing fruit in our results as our focus on vertical sales areas, including consumer packaged goods, retail, telecom, and technology, all demonstrated increased spend. In particular, our retail vertical had 5x growth compared to last holiday season, as our retail media efforts are bearing fruit with large retailers wanting to extend their audiences. As we now enter 2026, we have five strategic priorities that we believe will continue to build on our profitable growth trajectory of both our ODS and AGP segments into the future.
Bill Stone: We also had higher advertiser demand, which translated into improving pricing and fill rates, particularly for premium placements on our platform. The strong advertiser demand resulted in year-over-year growth in revenue per device in both the US and international markets for our device business. For our brand business, we reorganized our sales teams last year around verticals, and I'm pleased to see those changes bearing fruit in our results as our focus on vertical sales areas, including consumer packaged goods, retail, telecom, and technology, all demonstrated increased spend. In particular, our retail vertical had 5x growth compared to last holiday season, as our retail media efforts are bearing fruit with large retailers wanting to extend their audiences. As we now enter 2026, we have five strategic priorities that we believe will continue to build on our profitable growth trajectory of both our ODS and AGP segments into the future.
Speaker #3: We also had higher advertiser demand , translated into which pricing and improving rates fill , particularly for premium placements on our platform . The advertiser demand in resulted year over strong year growth in per device in both the US and international our device markets for business .
Speaker #3: For our brand business, we reorganized our sales teams last year around verticals, and I'm pleased to see those changes bearing fruit in our results.
Speaker #3: As our focus on vertical sales areas , including consumer packaged goods , retail , telecom and technology all demonstrated increased spend in particular , our retail vertical had fivex growth compared to last holiday season as our retail media efforts are bearing fruit with large wanting retailers to extend their audiences .
Speaker #3: As we now enter 2026, we have five strategic priorities that continue to build on our profitable growth trajectory of both our ODS and AGP segments into the first strategic future.
Bill Stone: The first strategic priority is unlocking the value in our first-party data. This effort is centered on leveraging data signals across all of our DT products to create and enhance the Ignite Graph, and apply the DT iQ AI and machine learning models to drive better outcomes across our end consumer experiences. Our second priority is building the flywheel effect between our supply and demand. We have over 80,000 applications that have integrated our ad monetization technology. Leveraging that position in our demand side technology to acquire more users for these apps, creates a flywheel effect of increased monetization and higher investment into our platform. Our third priority is scaling our brand business. Over the last couple of years, we've established a brand and agency-facing business that diversifies and differentiates our monetization activities.
Bill Stone: The first strategic priority is unlocking the value in our first-party data. This effort is centered on leveraging data signals across all of our DT products to create and enhance the Ignite Graph, and apply the DT iQ AI and machine learning models to drive better outcomes across our end consumer experiences. Our second priority is building the flywheel effect between our supply and demand. We have over 80,000 applications that have integrated our ad monetization technology. Leveraging that position in our demand side technology to acquire more users for these apps, creates a flywheel effect of increased monetization and higher investment into our platform. Our third priority is scaling our brand business. Over the last couple of years, we've established a brand and agency-facing business that diversifies and differentiates our monetization activities.
Speaker #3: priority unlocking is the value in our first party This . effort is data data leveraging signals across all centered on products of our to create and the ignite enhance graph and apply the IQ , AI , and learning models machine to drive better outcomes across our end consumer experiences .
Speaker #3: Our second priority is building the flywheel effect between our supply and demand . We have that have over integrated our ad monetization technology , leveraging that position in our demand side technology to acquire more users for these creates a apps flywheel effect increased of monetization and higher investment into our platform .
Speaker #3: Our over the last couple of years , we've established a brand and agency facing business that diversifies and differentiates our monetization activities . This business has been showing positive growth and is the key scaling .
Bill Stone: This business has been showing positive growth, and scaling it is the key to the next phase of our growth. Fourth is expanding the services offered through our Ignite platform. Ignite's been the backbone of our highly scalable app distribution business, and we're looking to leverage its footprint across more than the 500 million devices to unlock better monetization and a superior user experience for our carrier and OEM partners. And finally, is the alternative app opportunity. We believe the app economy is entering an era of democratization beyond the traditional duopoly, and that the ecosystem will benefit from solutions that are agnostic to the format or path developers use to distribute apps or our users choose to discover and use them.
Bill Stone: This business has been showing positive growth, and scaling it is the key to the next phase of our growth. Fourth is expanding the services offered through our Ignite platform. Ignite's been the backbone of our highly scalable app distribution business, and we're looking to leverage its footprint across more than the 500 million devices to unlock better monetization and a superior user experience for our carrier and OEM partners. Fnally, is the alternative app opportunity. We believe the app economy is entering an era of democratization beyond the traditional duopoly, and that the ecosystem will benefit from solutions that are agnostic to the format or path developers use to distribute apps or our users choose to discover and use them.
Speaker #3: of our next phase to the It Fourth is expanding the . services offered through our ignite platform the Ignite has been of our backbone highly scalable app distribution and business , we're looking to leverage its across more of the more than the 500 million unlock better footprint superior user experience for our carrier and OEM monetization and a partners .
Speaker #3: And finally, is the alternative app opportunity. We believe the economy is entering an era of democratization beyond the traditional duopoly.
Speaker #3: And the ecosystem will benefit from solutions that are agnostic to what format developers use or how users choose to discover and use apps, or them.
Bill Stone: We've made some recent progress with three of the largest global mobile game developers signed in the December quarter, now using SingleTap capabilities in their alternative distribution efforts. Combined, these five things have a half a trillion dollar market opportunity in front of them, and our assets are uniquely positioned to go after this growth. You'll hear more about our progress on these areas on future calls. To wrap up, our business momentum is accelerating, and our priorities to continue our growth are focused and clear. We showed solid year-over-year double-digit growth in both revenue and EBITDA, driven by a healthy mix of disciplined execution, innovation, and favorable industry dynamics. We're building the right foundation through operational discipline and strategic investment to drive sustained, profitable growth.
Bill Stone: We've made some recent progress with three of the largest global mobile game developers signed in the December quarter, now using SingleTap capabilities in their alternative distribution efforts. Combined, these five things have a half a trillion dollar market opportunity in front of them, and our assets are uniquely positioned to go after this growth. You'll hear more about our progress on these areas on future calls. To wrap up, our business momentum is accelerating, and our priorities to continue our growth are focused and clear. We showed solid year-over-year double-digit growth in both revenue and EBITDA, driven by a healthy mix of disciplined execution, innovation, and favorable industry dynamics. We're building the right foundation through operational discipline and strategic investment to drive sustained, profitable growth.
Speaker #3: We've made some recent progress with three of the global mobile game developers signed in the December quarter, now using single-tap capabilities in their alternative distribution efforts.
Speaker #3: Combined, these five things have a half $1 trillion market front of opportunity in them, and our assets are uniquely go after positioned this growth to.
Speaker #3: hear more You'll progress on these about our future calls . To up our business momentum wrap is accelerating priorities to continue our and our focused and clear growth are .
Speaker #3: We showed year over year , solid double growth digit in both revenue and EBITDA , driven healthy mix of disciplined execution , innovation and favorable industry dynamics .
Bill Stone: We're excited by the traction we're seeing across our business, and confident in our ability to continue delivering 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.
Bill Stone: We're excited by the traction we're seeing across our business, and confident in our ability to continue delivering 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.
Speaker #3: We're building the right foundation through operational discipline and investment to drive sustained , strategic growth profitable . We're excited by the traction we're seeing across our business and confident in our ability to continue delivering value to partners , advertisers , users and shareholders .
Stephen Lasher: Thank you, Bill, and good afternoon, everyone. The fiscal third quarter results were reflective of sustained business momentum. We delivered another quarter of double-digit revenue growth, further expanded profit margins, and delivered top and bottom line results that surpassed expectations. We also made significant progress strengthening our balance sheet in the process. Now, let's get into the numbers. Total revenue for the fiscal third quarter was $151.4 million, representing 12% growth year-over-year. Both segments of our businesses, ODS and AGP, contributed positively to the overall growth and upside versus expectations. Our ODS business delivered $99.6 million in revenue, up 9% year-over-year. This growth was primarily driven by higher device volumes and RPDs, primarily with our international partners. Our AGP segment delivered $52.6 million in revenue, up 19% from the prior year.
Stephen Lasher: Thank you, Bill, and good afternoon, everyone. The fiscal third quarter results were reflective of sustained business momentum. We delivered another quarter of double-digit revenue growth, further expanded profit margins, and delivered top and bottom line results that surpassed expectations. We also made significant progress strengthening our balance sheet in the process. Now, let's get into the numbers. Total revenue for the fiscal third quarter was $151.4 million, representing 12% growth year-over-year. Both segments of our businesses, ODS and AGP, contributed positively to the overall growth and upside versus expectations. Our ODS business delivered $99.6 million in revenue, up 9% year-over-year. This growth was primarily driven by higher device volumes and RPDs, primarily with our international partners. Our AGP segment delivered $52.6 million in revenue, up 19% from the prior year.
Speaker #3: 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 .
Speaker #3: The fiscal third quarter results were reflective of sustained business momentum. We delivered another quarter of double-digit revenue growth. Further, profit margins expanded and we delivered top and bottom line results that surpassed expectations.
Speaker #3: We also made significant progress strengthening our balance sheet in the process. Now let's get into the numbers. Total revenue for the fiscal third quarter was $151.4 million, representing 12% growth year over year.
Speaker #3: Both segments of our businesses and ODS, AGP, contributed positively to the overall growth and upside versus expectations. Our ODS business delivered $99.6 million in revenue, up 9% year over year.
Speaker #3: This growth was driven primarily by higher device-driven volumes and RPDs, primarily with our international partners. Our AGP segment delivered $52.6 million in revenue, up 19% from the prior year.
Stephen Lasher: These results reflect the positive outcomes of our strategic focus to better utilize first-party data and showcase our AI-driven capabilities. The combination of strong top-line growth and efficient operational execution yielded 76% year-over-year growth in adjusted EBITDA in the quarter. Adjusted EBITDA for the fiscal third quarter totaled $38.8 million, representing a 76% increase year-over-year. EBITDA margin reached 26%, marking the seventh consecutive quarter of expansion and improvement of more than 900 basis points versus the prior year. This comparison includes approximately $3.5 million of one-time benefits in the period, primarily related to a sublease settlement and improved working capital. Free cash flow for our third quarter totaled $6.4 million. Our non-GAAP gross margin in the fiscal third quarter was 49%, well above the prior year figure of 44%.
Stephen Lasher: These results reflect the positive outcomes of our strategic focus to better utilize first-party data and showcase our AI-driven capabilities. The combination of strong top-line growth and efficient operational execution yielded 76% year-over-year growth in Adjusted EBITDA in the quarter. Adjusted EBITDA for the fiscal third quarter totaled $38.8 million, representing a 76% increase year-over-year. EBITDA margin reached 26%, marking the seventh consecutive quarter of expansion and improvement of more than 900 basis points versus the prior year. This comparison includes approximately $3.5 million of one-time benefits in the period, primarily related to a sublease settlement and improved working capital. Free cash flow for our third quarter totaled $6.4 million. Our non-GAAP gross margin in the fiscal third quarter was 49%, well above the prior year figure of 44%.
Speaker #3: These results reflect the positive outcomes of our strategic data better first party and utilize showcase AI our driven capabilities . The combination of strong top line growth and efficient operational execution yielded 76% year over year growth in EBITDA in the quarter adjusted .
Speaker #3: Adjusted EBITDA for the third quarter fiscal totaled $38.8 million, representing a 76% increase year over year. EBITDA margin reached 26%, marking the seventh consecutive quarter of expansion and improvement of more than 900 basis points versus the prior year.
Speaker #3: Comparison includes this approximately $3.5 million of one-time benefits in the period, primarily related to a sublease settlement and working capital.
Speaker #3: Free cash improved flow for our third quarter totaled $6.4 million. Our non-GAAP gross margin in the fiscal third quarter was 49%, well above the prior year figure of 44%.
Stephen Lasher: This expansion was primarily the result of a more positive product and segment mix during the quarter. Cash operating expenses were $36 million, down 4% year over year. We're pleased with the progress we've made on our cost controls and operational discipline, which allowed us to achieve double-digit year-over-year revenue growth with lower cash operating expenses. We will continue to do that, to identify areas of additional efficiency while maintaining targeted, disciplined investments to support future growth. Turning to the bottom line, we reported a GAAP net income of $5.1 million, or $0.03 per share in the fiscal third quarter. On a non-GAAP basis, we generated net income of $21.7 million, or $0.18 per share, on 120 million shares outstanding.
Stephen Lasher: This expansion was primarily the result of a more positive product and segment mix during the quarter. Cash operating expenses were $36 million, down 4% year-over-year. We're pleased with the progress we've made on our cost controls and operational discipline, which allowed us to achieve double-digit year-over-year revenue growth with lower cash operating expenses. We will continue to do that, to identify areas of additional efficiency while maintaining targeted, disciplined investments to support future growth. Turning to the bottom line, we reported a GAAP net income of $5.1 million, or $0.03 per share in the fiscal third quarter. On a non-GAAP basis, we generated net income of $21.7 million, or $0.18 per share, on 120 million shares outstanding.
Speaker #3: This expansion was primarily the result of a positive more product and segment quarter during the . Cash operating expenses were down year . We're 4% year over pleased with the progress we've made on our cost controls and discipline , operational which allowed us to achieve double digit year over year year , revenue growth with lower cash operating expenses .
Speaker #3: We continue to identify areas of additional efficiency while maintaining targeted , disciplined investments to support future growth . Turning to the bottom line , we reported a GAAP net income of $5.1 million , or $0.03 per share , in the fiscal third quarter .
Speaker #3: a non-GAAP On basis , we generated net income of $21.7 million , or $0.18 per share , on 120 million shares outstanding . Looking at the balance sheet , we ended the December quarter with a cash of $40 million , balance up 1 million from the end of the approximately quarter September .
Stephen Lasher: Looking at the balance sheet, we ended the December quarter with a cash balance of $40 million, up approximately $1 million from the end of the September quarter. Meanwhile, our total debt, net of debt issuance costs, declined during the quarter by more than $41 million and ended the quarter at $355 million. This decline was the result of strong positive cash flow generation, supplemented by proceeds from our at-the-market offering. The company sold a total of 6.8 million shares at an average price of $6.54 during the December quarter, yielding $44.6 million in gross proceeds. We are pleased with the progress we have made to our balance sheet in recent months. To that end, we made the decision to terminate our existing at-the-market equity program.
Stephen Lasher: Looking at the balance sheet, we ended the December quarter with a cash balance of $40 million, up approximately $1 million from the end of the September quarter. Meanwhile, our total debt, net of debt issuance costs, declined during the quarter by more than $41 million and ended the quarter at $355 million. This decline was the result of strong positive cash flow generation, supplemented by proceeds from our at-the-market offering. The company sold a total of 6.8 million shares at an average price of $6.54 during the December quarter, yielding $44.6 million in gross proceeds. We are pleased with the progress we have made to our balance sheet in recent months. To that end, we made the decision to terminate our existing at-the-market equity program.
Speaker #3: Meanwhile, our total debt, net of debt issuance costs, declined during the quarter by more than $41 million and ended the quarter at $355 million.
Speaker #3: decline This was the result positive cash flow of , supplemented by proceeds from our at the market offering . The company sold a total of 6.8 million shares at an average price of $6.54 during the December quarter , yielding $44.6 million in gross proceeds .
Speaker #3: pleased with the progress we We are have made to our balance recent sheet and months . To that end , we made the decision to terminate our existing at the market equity program .
Stephen Lasher: Given our performance and improved leverage profile, we believe our current liquidity and balance sheet strength eliminates the need for this funding source as a component of our long-term capital management strategy. Now, let me turn to the updated outlook for fiscal 2026. Following the stronger than expected December quarter performance, and with improved visibility into the current March quarter, we are once again raising our full-year revenue and Adjusted EBITDA guidance. We now expect revenue to be in the range of $553 million to $558 million, and Adjusted EBITDA to be in the range of $114 million to $117 million for fiscal year 2026. At the midpoint, this represents an increase of $10 million in revenue guidance, and over $13 million in EBITDA guidance compared to our prior outlook.
Stephen Lasher: Given our performance and improved leverage profile, we believe our current liquidity and balance sheet strength eliminates the need for this funding source as a component of our long-term capital management strategy. Now, let me turn to the updated outlook for fiscal 2026. Following the stronger than expected December quarter performance, and with improved visibility into the current March quarter, we are once again raising our full-year revenue and Adjusted EBITDA guidance. We now expect revenue to be in the range of $553 million-$558 million, and Adjusted EBITDA to be in the range of $114 million-$117 million for fiscal year 2026. At the midpoint, this represents an increase of $10 million in revenue guidance, and over $13 million in EBITDA guidance compared to our prior outlook.
Speaker #3: Given our performance and improved profile, we believe our current liquidity and balance sheet strength eliminates the need for this funding source. As a component of our long-term capital management strategy, this eliminates the need.
Speaker #3: Now , let me turn to the updated for outlook fiscal Following the 2026 . stronger expected December quarter than performance with and improved visibility into the current March quarter , we are once again raising our full year revenue and adjusted EBITDA guidance .
Speaker #3: We now expect revenue to be in the range of $553 million to $558 million, and adjusted EBITDA to be in the range of $114 million to $117 million for fiscal year 2026.
Speaker #3: At the midpoint, this represents an increase of $10 million in revenue guidance and over $13 million in EBITDA compared to our prior outlook.
Stephen Lasher: In closing, I want to reiterate Bill's earlier comments, that momentum across our core business remains strong, and we're increasingly confident in our ability to build on this performance as we move forward. With that, let me hand the call back to the operator to open up the line for questions. Jamie?
Stephen Lasher: In closing, I want to reiterate Bill's earlier comments, that momentum across our core business remains strong, and we're increasingly confident in our ability to build on this performance as we move forward. With that, let me hand the call back to the operator to open up the line for questions. Jamie?
Speaker #3: In closing, I want to reiterate Bill's earlier comments that momentum across our core business remains strong, and we're increasingly confident in our ability to build on this performance as we move forward.
Operator: Ladies and gentlemen, at this time, if you would like to ask a question, you may press Star and then One using a touch-tone telephone. To withdraw your questions, you may press Star and Two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. 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 Anthony Stoss from Craig-Hallum. Please go ahead with your question.
Operator: Ladies and gentlemen, at this time, if you would like to ask a question, you may press Star and then One using a touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. 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 Anthony Stoss from Craig-Hallum. Please go ahead with your question.
Speaker #3: With that, let me hand the call back to the operator to open up the line for questions. Jamie
Speaker #1: gentlemen , at . Ladies and time , if you would like to ask a star and then question , you may one using a touch tone press .
Speaker #1: this
Speaker #1: To withdraw your question, you may press star and two if you are using a speakerphone. We do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality.
Speaker #1: 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 Anthony Star from Craig-Hallum.
[Analyst] (Craig-Hallum): Great, thanks. I have a couple, so I'll go one at a time. Bill, I'd love to hear, you know, you used the word flywheel. What are you seeing in terms of maybe the app install business, if those same customers are now giving you advertising within the app? Any thoughts just on how things are starting to come in faster and faster? I'd love to hear it.
Anthony Stoss: Great, thanks. I have a couple, so I'll go one at a time. Bill, I'd love to hear, you used the word flywheel. What are you seeing in terms of maybe the app install business, if those same customers are now giving you advertising within the app? Any thoughts just on how things are starting to come in faster and faster? I'd love to hear it.
Speaker #1: Please go ahead with your question.
Speaker #4: Thanks . Great . I have a couple , so I'll just I'll go one at a time . Bill , I'd love to hear you use the word flywheel .
Speaker #4: What are you seeing in terms of the in-app business? If app install customers are now giving those to you, are you advertising within the app?
Bill Stone: Yeah, sure, Tony. Yeah, this is, as I mentioned, this is one of our five strategic priorities in the business. There's an enormous opportunity, given that we have over 80,000 different applications with our technology, and those applications are all out trying to acquire users. So the ability for us to integrate in their budgets that we're paying them back into acquiring users, both with our own DSP as well as our own device business, then feeds back into the monetization and becomes a flywheel, feeding on itself, to generate incremental growth in revenue and better margins. So this is a big area to integrate those. Now that we have the tech stacks integrated, that we had not had over the prior few years, we can put a lot more energy behind this.
Bill Stone: Yeah, sure, Tony. Yeah, this is, as I mentioned, this is one of our five strategic priorities in the business. There's an enormous opportunity, given that we have over 80,000 different applications with our technology, and those applications are all out trying to acquire users. The ability for us to integrate in their budgets that we're paying them back into acquiring users, both with our own DSP as well as our own device business, then feeds back into the monetization and becomes a flywheel, feeding on itself, to generate incremental growth in revenue and better margins. This is a big area to integrate those. Now that we have the tech stacks integrated, that we had not had over the prior few years, we can put a lot more energy behind this.
Speaker #4: Any thoughts on how things are starting to come together, and faster? I'd love to hear your thoughts on it.
Speaker #3: Yeah , sure . Tony . Yeah , As I this . mentioned , this is one of our five strategic priorities in the business .
Speaker #3: And there's an enormous opportunity that we have, given over applications, with our 80,000 different technology and applications. Are all those acquired to users?
Speaker #3: So the ability for Integrate us to their and budgets that we're paying them back into acquiring users, both with our own DSP as well as our own device business, then feeds back into the and becomes a monetization flywheel feeding on itself.
Speaker #3: To incremental generate growth in revenue and better margins . So this is a big area to integrate those . Now that we have the stacks tech integrated , that we had not had over the prior few years , we can put a lot more energy behind this .
Bill Stone: So we're really excited about this being a driver for growth for us, as we look into the future.
Bill Stone: We're really excited about this being a driver for growth for us, as we look into the future.
[Analyst] (Craig-Hallum): Got it. And then, Bill, I've fielded a couple calls in the last few days regarding the Google Gemini announcement. Maybe you can help us understand how you think that'll impact you.
Anthony Stoss: Got it. Then, Bill, I've fielded a couple calls in the last few days regarding the Google Gemini announcement. Maybe you can help us understand how you think that'll impact you.
Speaker #3: So excited about this . Being a driver for growth for we're really us as we look into future .
Speaker #4: Got it. And then, Bill, I've fielded a couple of calls in the last few days regarding the Google Gemini announcement.
Bill Stone: Yeah. So, you know, first, you know, for us, you know, we made a concentrated effort, I mentioned in my remarks, to, you know, diversify away from, you know, just strictly gaming inventory and increase non-gaming inventory. And so that's been a growth driver for us. As it relates to Google's announcement specifically, I think it's a great thing for our company. And what I mean by that is we don't - we're not in the game business. We don't, we don't, we don't make games, you know, we distribute them. And so as more games come into the market, they're all gonna need distribution.
Bill Stone: Yeah. First, for us, we made a concentrated effort, I mentioned in my remarks, to, diversify away from, just strictly gaming inventory and increase non-gaming inventory. That's been a growth driver for us. As it relates to Google's announcement specifically, I think it's a great thing for our company. What I mean by that is we don't - we're not in the game business. We don't, we don't, we don't make games we distribute them. As more games come into the market, they're all gonna need distribution.
Speaker #4: Maybe you can help us how you think that will impact understand you .
Speaker #3: Yeah . So first , for us , we've made a effort . I mentioned in my remarks to diversify from gaming strictly away just increased non-gaming inventory and inventory .
Speaker #3: that's been a growth driver for us as it relates to Google's announcement . Specifically , I think it's a great thing for our company .
Speaker #3: And what I mean by that is we don't, we're not in the game business. We don't, we don't make, we don't weave games.
Bill Stone: So, you know, our ability to leverage our extensive distribution footprint, both on device and with our DSP, I think is going to bring, you know, more games to market, and those are gonna need more distribution to acquire the users, regardless of how they're generating the technology to make the game. So, I view it as positive, you know, for our business. And as I mentioned, our remarks more broadly around AI, it's driving revenue growth for us and it's driving efficiencies in the back office. So, I look at it as a net positive. I can't speak for other companies, but for us, we're excited about it.
Bill Stone: Our ability to leverage our extensive distribution footprint, both on device and with our DSP, I think is going to bring, more games to market, and those are gonna need more distribution to acquire the users, regardless of how they're generating the technology to make the game. I view it as positive, for our business. As I mentioned, our remarks more broadly around AI, it's driving revenue growth for us and it's driving efficiencies in the back office.I look at it as a net positive. I can't speak for other companies, but for us, we're excited about it.
Speaker #3: You know , we distribute them . And so as more games come into the market , they're all going to need distribution . So our ability to leverage our extensive distribution footprint , both on device and with our DSP , I going to think is bring more games to market .
Speaker #3: And those are going to need more distribution to acquire the users regardless of how they're generating the technology to game . So I view it as , you know , for positive for our I mentioned , business .
Speaker #3: And as a broader remark around AI, it's driving revenue growth for us, and it's driving efficiencies in the back office.
[Analyst] (Craig-Hallum): Got it. And yeah, I just wanna call out you're mentioning of the three largest global gaming companies have signed in the December quarter for SingleTap. How do they plan on using it? What's kind of the timing, and how quickly do you think it'll ramp?
Anthony Stoss: Got it. Yeah, I just wanna call out you're mentioning of the three largest global gaming companies have signed in the December quarter for SingleTap. How do they plan on using it? What's the timing, and how quickly do you think it'll ramp?
Speaker #3: So I look at it as a net positive. I can't speak for other companies, but for us, we're excited about it.
Speaker #4: Got it. And I just want to call out your mentioning of the three largest companies globally that have signed in the gaming vertical during the December quarter for single.
Bill Stone: Yeah, so I'm excited to say they're live today. They're using it today to distribute alternative applications or their own versions that can be their own house billing, if you will, versus using, you know, one of the duopolies' billing for that. They're also using it for a thing called dual downloads. You know, what that is, is the ability to download an application with SingleTap, but also download the store that goes with that. In other words, if a large gaming studio, you want, you, Tony, want it—wants a game, you download it, well, you also get the store that can be delivered in the background.
Speaker #4: How do you plan on using it? What kind of timing are you expecting, and how quickly do you think it will ramp?
Bill Stone: Yeah, so I'm excited to say they're live today. They're using it today to distribute alternative applications or their own versions that can be their own house billing, if you will, versus using, one of the duopolies' billing for that. They're also using it for a thing called dual downloads. What that is, is the ability to download an application with SingleTap, but also download the store that goes with that. In other words, if a large gaming studio, Tony wants a game, you download it, well, you also get the store that can be delivered in the background.
Speaker #3: Yeah , so I'm they're live today so they're using it today to distribute . alternative And applications or their own versions that can be their own house billing , will , if you versus using one of the duopolies billing for that .
Speaker #3: They're also using it for what's called a thing, dual downloads. And what that is, is the ability to download an application with a single tap.
Speaker #3: But also download the store that goes with that . So in other words , if a gaming studio you want you Tony wanted once a game you download it .
Bill Stone: So, once you enter in your credentials and pay through that app or game you've downloaded, now it's, it's pre-wired for anything that that publisher wants to do. So it reduces the friction, in the future, and lowers the cost structure for the app publishers. And so SingleTap's a key, key enabler to make that happen. So, you know, we're excited about that, and it, it, you know, it's already, you know, generating revenue today.
Bill Stone: Once you enter in your credentials and pay through that app or game you've downloaded, now it's, it's pre-wired for anything that that publisher wants to do. It reduces the friction, in the future, and lowers the cost structure for the app publishers. SingleTap's a key, key enabler to make that happen. We're excited about that, and it, it, you know, it's already, you know, generating revenue today.
Speaker #3: also get Well , you the store that can be delivered in the background . So once you your credentials and enter in pay through that app or game you've downloaded , now it's it's pre-wired for anything that that publisher wants to do .
Speaker #3: So it reduces the friction in the lowers the future and cost structure for the app tap is so single publishers . a key , key enabler to make that happen .
[Analyst] (Craig-Hallum): Thanks, Phil, Bill, for everything, and great job, guys. Nice results.
Anthony Stoss: Thanks, Phil, Bill, for everything, and great job, guys. Nice results.
Speaker #3: So, you know, excited about where we are. And you know already it's generating revenue today.
Bill Stone: Thanks, Tony.
Bill Stone: Thanks, Tony.
Operator: Once again, if you would like to ask a question, please press Star and then One. To withdraw your questions, you may press Star and Two.... Our next question comes from Omar Dessouky from Bank of America. Please go ahead with your question.
Operator: Once again, if you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and two. Our next question comes from Omar Dessouky from Bank of America. Please go ahead with your question.
Speaker #4: Bill, for everything. And great thanks, job guys. Nice results.
Speaker #3: Tony Thanks .
Speaker #1: If you would like to ask a question, please press star, then one. To withdraw your question, you may press star, then two.
Speaker #1: And our question comes from next, Omar Dasuki from Bank of America. Please go ahead with your question. Hey guys, it's Arthur Omar.
[Analyst] (Bank of America): Hey, guys, this is Arthur Ong for Omar. Thanks for taking my question. Bill, there's been some recent chatter about Meta back on iOS bidding for non-IDFA traffic, I think after a couple of years of only bidding on the IDFA traffic. Any sort of observations you have around maybe just, you know, any changes in the competitive landscape as a result of Meta being apparently a little bit more active on iOS?
[Analyst] (Bank of America): Hey, guys, this is Arthur Ong for Omar. Thanks for taking my question. Bill, there's been some recent chatter about Meta back on iOS bidding for non-IDFA traffic, I think after a couple of years of only bidding on the IDFA traffic. Any observations you have around maybe just, you know, any changes in the competitive landscape as a result of Meta being apparently a little bit more active on iOS?
Speaker #2: taking my Thanks for question .
Speaker #5: There's been some recent chatter about meta back on being iOS for traffic . I think after a couple years of for only bidding on the Idfa traffic , it any any sort of observations have around maybe just any changes in the competitive landscape as a result of meta apparently a little more active on iOS
Bill Stone: Yeah, so nothing to comment specifically on them and iOS, you know, here. I would just say from a competitive perspective, you know, I'm excited to see that, you know, the overall market grew kind of mid- to high-single digits, you know, in the December quarter, and our growth, you know, on the AGP side was 20%. So in other words, you know, our growth is 2x the market. So from a competitive perspective, you know, we're out taking share. Obviously, we're focused; we have iOS and Android. We're focused on more on Android, you know, given our unique on-device position there. So nothing specific on Meta to comment on, on this call. But in terms of what we're doing, you know, we're outgrowing the market right now.
Bill Stone: Yeah, so nothing to comment specifically on them and iOS, here. I would just say from a competitive perspective, you know, I'm excited to see that, the overall market grew mid- to high-single digits, in the December quarter, and our growth, on the AGP side was 20%. In other words, our growth is 2x the market. From a competitive perspective we're out taking share. Obviously, we're focused; we have iOS and Android. We're focused on more on Android, given our unique on-device position there. Nothing specific on Meta to comment on, on this call. In terms of what we're doing, we're outgrowing the market right now.
Speaker #3: So
Speaker #3: to nothing ? Yeah . comment specifically on iOS . in You know , them would just say from a competitive here I perspective , to see excited that the I'm market overall grew of mid kind to high single digits .
Speaker #3: You know , in the December quarter . And our the on the you know , on growth , AGP side was , was 20% .
Speaker #3: So, words, our growth is two in other x. The market, competitive. So from a perspective, you know, we're out taking share.
Speaker #3: Obviously we're focused . We have Android but on on Android iOS and given our unique position there we're focused nothing . So specific on on on meta to comment on on this call .
[Analyst] (Bank of America): Got it. That's really helpful color. Thanks a lot, guys.
[Analyst] (Bank of America): Got it. That's really helpful color. Thanks a lot, guys.
Bill Stone: Yeah.
Bill Stone: Yeah.
Speaker #3: But in terms of what we're doing, you know, we're outgrowing the market right now.
Operator: Ladies and gentlemen, in showing no additional questions at this time, I'd like to turn the floor back over to Bill Stone for any closing remarks.
Operator: Ladies and gentlemen, in showing no additional questions at this time, I'd like to turn the floor back over to Bill Stone for any closing remarks.
Speaker #5: Got it . That's really helpful . Color . Thanks a lot , guys .
Speaker #6: Thanks .
Speaker #1: ladies and gentlemen , in And showing no additional questions at this time , I'd like to turn the floor back over to Bill Stone for any closing remarks .
Bill Stone: Thanks, everyone, for joining our call tonight. We'll talk to you again on our fiscal 2026 Q4 call in a few months. Thanks, and have a great night.
Bill Stone: Thanks, everyone, for joining our call tonight. We'll talk to you again on our fiscal 2026 Q4 call in a few months. Thanks, and have a great night.
Speaker #3: everyone , for Thanks , joining our call tonight . to you We'll talk again on our fiscal 26 fourth quarter call in . night Thanks months great and have a .
Operator: Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.
Operator: Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.
Speaker #1: Ladies and gentlemen . a few With that , we'll conclude today's conference call and presentation . We thank you for joining . You may now disconnect your lines .
