Q1 2027 Digital Turbine Inc Earnings Call
Speaker #1: Conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0.
Speaker #2: some commentary on AI and macroeconomic trends in our business.
Speaker #2: Revenue for the June quarter came in at $166 million, representing 27% year-over-year growth. We also achieved nearly
Speaker #1: After today's presentation, there'll 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.
Speaker #3: Good day and welcome to the Digital Turbine Reports fiscal 2027 first quarter financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0.
Speaker #2: 70% year-over-year growth in adjusted EBITDA during the same period, demonstrating significant operating leverage in our model as we scale. I'm also pleased with the dramatic improvement in our balance sheet, which benefits from our strong results.
Speaker #2: 70% year-over-year growth in
Speaker #1: Please note this event is being recorded. I would now like to turn the conference over to Brian Bartholomew, Senior Vice President of Capital Markets.
Speaker #2: Last June quarter, our net leverage ratio was greater than 5 turns, but today we're at a healthy 2.5 turns, and as implied in our increased outlook, we expect this positive trend to continue.
Speaker #3: 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.
Speaker #1: Please go ahead.
Speaker #2: Thank you. Good afternoon, and welcome to the Digital Turbine fiscal 2027 first quarter earnings conference call. Joining me today on the call to discuss our results are CEO Bill Stone and Interim CFO Josh Kincell.
Speaker #3: Please note this event is being recorded. I would now like to turn the conference over to Brian Bartholomew, Senior Vice President of Capital Markets.
Speaker #2: 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.
Speaker #3: Please go ahead.
Speaker #4: Thank you. Good afternoon, and welcome to the Digital Turbine fiscal 2027 first quarter earnings conference call. Joining me today on the call to discuss our results are CEO Bill Stone and Interim CFO Josh Kincell.
Speaker #2: 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.
Speaker #4: 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.
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 our forward-looking statements, please refer to the documents we file with the Securities and Exchange Commission.
Speaker #4: Although we believe that our assumptions are reasonable, they are not guarantees of future performance, and some will inevitably prove to be incorrect.
Speaker #2: 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.
Speaker #4: 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
Speaker #4: forward-looking statements, please refer
Speaker #2: Now I'd like to turn the call over to our CEO, Bill Stone.
Speaker #4: Exchange Commission.
Speaker #3: Thanks, Brian. Good afternoon, everyone. I want to open my remarks by recognizing our team. For delivering another quarter of strong results, that exceeded our expectations.
Speaker #4: 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
Speaker #3: The results are even more encouraging as they are not due to any single factor, but to do many factors. And I'll break those down in my prepared remarks, which will be across three areas.
Speaker #4: measures. Now, I'd like to turn the call over to our
Speaker #4: Stone.
Speaker #5: Thanks, Brian. Good afternoon, everyone. I want to open my remarks by recognizing our team. For delivering another quarter of strong results, that exceeded our expectations.
Speaker #3: First, we'll be looking back at our June quarter results. Second, I'll be some commentary on the operational and strategic elements of our business that are enabling us to raise our guidance for the remainder of the fiscal year.
Speaker #5: The results are even more encouraging as they are not due to any single factor, but to many factors. And I'll break those down in my prepared remarks, which will be across three areas.
Speaker #3: And then finally, I want to provide some commentary on AI and macroeconomic trends in our business. Revenue for the June quarter came in at $166 million, representing 27% year-over-year growth.
Speaker #5: First, we'll be looking back at our June quarter results. Second, I'll be some commentary on the operational and strategic elements of our business that are enabling us to raise our guidance for the remainder of the fiscal year.
Speaker #3: We also achieved nearly 70% year-over-year growth in adjusted EBITDA during the same period, demonstrating significant operating leverage in our model, as we scale. I'm also pleased with the dramatic improvement in our balance sheet that benefits from our strong results.
Speaker #5: And then finally, I want to provide some commentary on AI and macroeconomic trends in our business. Revenue for the June quarter came in
Speaker #5: And then finally, I want to provide some commentary on AI and macroeconomic trends in our business. Revenue for the June quarter came in at $166 million, CEO, Bill representing 27% year-over-year growth.
Speaker #3: Last June quarter, our net leverage ratio was greater than 5 turns, today we're at a healthy 2.5 turns, and as implied in our increased outlook, we expect this positive trend to continue.
Speaker #5: We also achieved nearly 70% year-over-year growth in adjusted EBITDA during the same period, demonstrating significant operating leverage in our model, as we scale. I'm also pleased with the dramatic improvement in our balance sheet that benefits from our strong results.
Speaker #3: If we break our results down by segment, our on-device solutions business generated $110 million in revenue in the June quarter, which was up approximately 15% from last year.
Speaker #5: Leverage ratio was greater than 5 turns; today we're at a healthy 2.5 turns, and as implied in our year-increased outlook, we expect this positive trend to continue.
Speaker #5: leverage ratio was greater than 5 turns, today we're at a healthy 2.5 turns and as implied in our year. increased outlook, we expect this positive
Speaker #3: In particular, it was encouraging to see double-digit year-over-year growth in global devices, despite macro headwinds on global device volumes due to DRAM pricing issues and the supply chain.
Speaker #5: continue. If we break
Speaker #5: our results down by segment, our on-device solutions business generated
Speaker #3: Growth in international ODS continues to be a bright spot, as higher device volumes combined with higher revenue per device, or RPD, drove nearly 80% year-over-year growth.
Speaker #3: Our application growth platform, or AGP business, results were another bright spot; it was our fourth consecutive quarter of year-over-year double-digit growth, and our second consecutive quarter of more than 50% year-over-year growth.
Speaker #2: In particular, it was encouraging to
Speaker #2: global devices, despite macro headwinds on global device volumes due to DRAM pricing issues and the supply chain. Growth in international ODS continues to be a bright spot, with higher device volumes combined with higher revenue per device or RPD drove nearly
Speaker #3: Meanwhile, this compares to a global digital advertising market that is growing in the high single digits. In other words, our AGP business is consistently growing many multiples more than the global industry growth rate each quarter.
Speaker #3: In June quarter, I was particularly pleased with our direct brand business growing over 70%, and our DTX, or SSP business growing over 40% year-over-year.
Speaker #2: growth. Our application growth platform, our AGP business, results were another bright spot; it was our fourth consecutive quarter of year-over-year double-digit
Speaker #3: It took longer than anticipated, but the combination of strong conviction to stay the course on our strategy, combined with a hard work to integrate our legacy SSP tech stacks with our brand demand, into a data-driven marketplace and AI-first platform is now paying dividends.
Speaker #2: growth, and our second consecutive quarter
Speaker #2: of more than 50% year-over-year
Speaker #2: growth. Meanwhile, this compares to a global digital advertising market that is growing in the high single digits. In other words, our AGP
Speaker #3: Our key growth drivers in June quarter were both rates and volume that powered our improved performance. On rates, we saw higher advertiser demand, which translated into improved pricing and fill rates, particularly for premium placements on our platform.
Speaker #2: quarter. In June quarter, I was particularly pleased with our direct brand business growing over 70%, and our DTX, or SST business, growing
Speaker #2: year-over-year. It took longer than anticipated, but the combination
Speaker #3: This strong advertiser demand drove incremental international RPD expansion in our ODS business, resulting in nearly 80% growth year-over-year. We also had strong demand with our brand and DTX businesses each growing rates by more than 40%.
Speaker #2: work to integrate our legacy SSP tech stacks with our brand demand into a data-driven marketplace and AI-first—70%—and our DTX, or SSP.
Speaker #2: dividends. Our key growth drivers in June quarter were both rates and volume that powered our improved
Speaker #3: This is due to our platform delivering better return on ad spend for advertisers, which in turn allows for higher rates. This improvement in ad spend is being driven by AI for two reasons.
Speaker #2: Advertiser demand, which translated into improved pricing and fill rates, particularly for premium placements on our platform. This strong advertiser demand drove improved pricing and incremental international fill.
Speaker #3: First, our platform's first-party data is able to leverage our AI tools and machine learning models to drive better advertiser outcomes. And secondly, is the tailwind we are seeing brands migrate their spend away from the open web to other channels like apps, given traffic declines in the open web, which are caused by AI, and resulting in app usage growth as brands and agencies adopt the power of AI in the mobile app channel.
Speaker #2: RPD expansion in our ODS business, resulting in nearly 80% growth
Speaker #2: year-over-year.
Speaker #2: DTX businesses, each growing rates by more than
Speaker #2: 40%. This is due to our platform delivering
Speaker #2: better return on ad spend for
Speaker #2: rates. This improvement in ad spend is being driven
Speaker #3: In addition to these positive pricing trends, we continue to see strong diversification of our demand with 80% of our advertiser spend on DTX coming from non-gaming partners.
Speaker #2: reasons.
Speaker #2: is able to leverage our AI tools and machine learning models to drive better advertiser
Speaker #3: The second driver was increased supply. Our global devices grew double digits year-over-year, driven by strong volumes from our international partners. And within the devices we have our technology integrated, we are seeing operators and OEMs wanting to use our technology on new screens for monetization.
Speaker #2: outcomes. digits year-over-year, driven by strong And secondly, is the tailwind we are seeing brands migrate their spend away from the open web to other channels like apps given traffic declines in the open web, which are caused by AI, and resulting in app usage growth as
Speaker #2: Outcomes. Digits year-over-year, driven by strong—and secondly, is the tailwind we are seeing as brands migrate their spend away from the open web to other channels like apps, given traffic declines in the open web, which are caused by AI and resulting in app usage growth, as brands and agencies adopt the power of AI in the mobile app channel.
Speaker #3: In addition, our AGP supply continues to add new apps and publishers by expanding distribution of our SDK footprint. We're seeing this globally with the growth in publishers, but in particular, it's helping drive in strong performance with APAC, publisher supply, as well as adding non-gaming publishers and AI publishers looking for monetization.
Speaker #5: 15% from last year. In particular, it was
Speaker #5: 15% from last year. In particular, it was encouraging to see double-digit year-over-year 15% from last growth in global devices despite macro headwinds on global device volumes due to DRAM pricing issues in the supply chain.
Speaker #2: partners. The volumes from our international
Speaker #2: year-over-year, driven by strong volumes from our international partners. And within the devices we have our technology integrated, we are seeing operators and OEMs wanting to use our technology on new screens for monetization.
Speaker #3: Turning to the future, we're increasing our guidance today for the fiscal year. And there are five drivers for this increased forecast. The first is AI and data.
Speaker #5: Growth in international ODS continues to be a bright spot, as higher device
Speaker #5: volumes combined with higher revenue per device year. or RPD drove
Speaker #3: Our ability to leverage our unique first-party data across our platform with DTIQ and IgniteGraph drives better outcomes. This, in turn, drives more revenue because of better return on spend for advertisers.
Speaker #5: nearly 80% year-over-year growth. Our application growth platform, our AGP business, results were another bright spot; it was our fourth consecutive quarter of year-over-year double-digit growth, and our second
Speaker #2: our SDK footprint. We're
Speaker #2: We're seeing this globally with the growth in publishers, but in particular, it's helping drive strong performance in APAC publisher supply, as well as adding non-gaming publishers and AI publishers looking for monetization.
Speaker #2: seeing this globally with the growth in
Speaker #3: I'll provide some additional commentary later in my remarks on the macro impact of AI on our business. Second is the flywheel. Connecting our diversified demand and supply drives each other.
Speaker #5: growth. Meanwhile, this compares to a global digital advertising market that see double-digit year-over-year growth in
Speaker #5: is growing in the high single
Speaker #3: We have nearly $3 billion devices in more than 80,000 apps using our ad tech technology. The opportunity for these apps to drive more user acquisition to our platform, and hence more monetization, will be a growth driver.
Speaker #5: digits. In other words, our 80% year-over-year
Speaker #2: fiscal year. And there are five drivers for this increased forecast. The first is AI and data. Our ability to leverage our unique first-party data across our platform with DT IQ and IgniteGraph drives better outcomes.
Speaker #5: AGP business is consistently growing
Speaker #5: many multiples more than the global.
Speaker #5: quarter. In June
Speaker #5: brand business growing over
Speaker #3: The third driver is brand. Our brand business showed impressive 70% year-over-year growth. Our focus is leveraging the macro tailwinds of more time in apps combined with our micro first-party data and audience targeting to drive even more scale and growth.
Speaker #5: business, growing over 40% year-over-year.
Speaker #2: This, in turn, drives more revenue because of better return on spend for advertisers. I'll provide some today for the fiscal year.
Speaker #2: This, in turn, drives more revenue because of a better return on spend for advertisers. I'll provide some today for the fiscal year.
Speaker #5: combination of strong conviction to stay platform is now paying the course on our strategy, combined with a hard work to integrate our legacy SSP tech stacks with our brand demand, into a data-driven marketplace and AI-first platform is now paying dividends.
Speaker #2: additional commentary later in my remarks on
Speaker #3: There are a variety of product and operational improvements being implemented real-time that are improving our ability to scale this important part of our business.
Speaker #2: Demand and supply drive each other. We have nearly $3 billion devices in more than 80,000 apps using our ad tech technology. The opportunity for these apps to drive more user acquisition to our platform, and, hence, more monetization, will be a growth driver.
Speaker #5: Our key growth drivers in June quarter were both rates and volume that powered our improved performance. On rates, we saw higher advertiser demand, which
Speaker #3: The fourth driver is Ignite. Our international ODS momentum has been fueled by Latin America and Europe, and current and future supply winds are expected to mitigate concerns around the global device supply chain.
Speaker #2: The third driver is brand. Our brand business showed impressive 70% year-over-year growth. Our focus is leveraging the macro tailwinds of more time in apps combined with our micro first-party data and audience targeting to drive even more scale and growth.
Speaker #5: rates, particularly for premium placements on our platform. This strong advertiser demand drove incremental international RPD expansion in our ODS business, resulting in nearly 80% growth year-over-year.
Speaker #3: In addition, our Ignite platform is showcasing there is more opportunity to not just grow device supply, but also leverage the platform capability as a software enabler for distribution of other products on the screens of devices, versus just our current products such as single-top, single-tap, out-of-the-box setups, and notifications.
Speaker #5: We also had strong demand with our brand and DTX businesses, each growing rates by more than 40%. This is due to our platform delivering better return on ad spend for
Speaker #2: There are a variety of product and operational
Speaker #3: We are doing this today in the US with an AI-first partner distributing AI agents to devices, and we see this expanding to other areas, such as e-commerce, lock screens, and other forms of content distribution.
Speaker #5: higher
Speaker #5: rates. This improvement in ad spend
Speaker #5: is being driven by AI for two We also had strong demand with our brand and
Speaker #5: reasons. First, our platform's
Speaker #3: And finally is the growth of alternative applications. We continue to ramp and scale more and more partners distributing their versions of applications helping them get to devices, whether this is via our data targeting, single-tap, our DSP, and so on.
Speaker #5: first-party data is able to leverage our AI
Speaker #2: device supply
Speaker #5: tools and machine learning models to drive better advertiser
Speaker #2: platform is showcasing there is more 80,000 apps using our ad tech
Speaker #5: outcomes. And secondly, is the tailwind we are seeing—brands migrate advertisers, which in turn allows for higher spend away from the open web to...
Speaker #2: opportunity to not just grow device supply, but also leverage the platform capabilities as a software enabler for distribution of other products on the screens of devices
Speaker #2: There's an opportunity to not just grow device supply, but also leverage the platform's capabilities as a software enabler for distribution of other products on the screens of devices, not just our current products, such as single-tap, out-of-the-box setups, and notifications.
Speaker #5: other channels like apps given traffic declines in the open web, which are caused by
Speaker #3: The recent outcome of the Epic Google case and the Google rulings in the EU are expected to open up opportunities for increased alternative distribution.
Speaker #5: power of AI in the mobile app channel. In addition to these positive pricing trends, we continue to see strong diversification of our demand with
Speaker #2: AI-first partner, creating AI agents through...
Speaker #3: Publishers are now seeing real-time what is happening to their businesses because of the impacts of AI on the open web and want to have more control over their destiny for the future, versus being reliant on only one or two sources of distribution.
Speaker #2: devices, and we see this
Speaker #2: expanding to other. Such as
Speaker #5: 80% of our advertiser spend by AI for two
Speaker #2: forms of content driver.
Speaker #2: forms of content driver. Our Ignite platform is showcasing there is more
Speaker #2: of alternative applications. We continue to ramp scale more and more partners to bring their version of applications helping them get to distribution. devices, whether this is via our data targeting, single-tap, or DSP, and so on.
Speaker #5: non-gaming partners. The second driver was increased... First, our platform's first-party data...
Speaker #3: These five things are important, because it showcases our business is not reliant upon any single factor to drive future growth. We've got many shots on goal that provide optimism in our ability to drive top and bottom line growth.
Speaker #2: The recent outcome of the Epic Google case and the Google rulings in the EU are expected to open up opportunities for increased alternative distribution.
Speaker #5: have our technology integrated, we are seeing operators and OEMs partners. And within the devices we
Speaker #5: have our technology integrated, we are seeing operators and OEM partners. And within the devices, we are wanting to use our technology on new screens for monetization.
Speaker #3: To close out my prepared remarks, I want to provide some commentary on the impact of AI and other macroeconomic factors to our business. Regarding AI, it's clearly transformational and exciting time in a tailwind for our business.
Speaker #5: In addition, our AGP supply continues to add new apps and...
Speaker #2: Publishers are now seeing, in real time, what is happening to their businesses because of the growth. And finally, it's the AI-first partner distributing AI.
Speaker #5: publishers by expanding distribution of our SDK
Speaker #2: impacts of AI on the open web
Speaker #5: We're seeing this globally with the growth. Our global devices grew double digits in publishers, but in particular, it's helping drive strong performance with APAC publisher supply, as well as adding non-gaming publishers and...
Speaker #3: It's reinventing businesses, including ours, in three main ways. First is the automation and simplification of workflows and processes, which is now showing up in our results.
Speaker #2: destiny for the future versus being reliant on only one or two sources of
Speaker #2: important because it showcases our business is not reliant upon any single factor to growth.
Speaker #5: AI publishers looking for monetization. Turning to the future, we're increasing our guidance
Speaker #3: Our year ago, our revenue per employee was about $800,000. Today it is in excess of $1 million. The driver of this efficiency is the ability to use AI and automation activities to scale our business.
Speaker #2: Optimism in our ability to drive top- and bottom-line growth. To close out my prepared remarks, I want to provide some commentary on the impact of AI and other macroeconomic factors on our business.
Speaker #3: We've implemented numerous new AI and automation simplification activities and processes, from areas such as quality assurance, our back office, campaign management, software development, and data management, just to name a few.
Speaker #5: Our
Speaker #5: ability to leverage our unique first-party data across our platform with DTIQ and IgniteGraph drives better outcomes. This, in turn, drives more AI and data.
Speaker #5: Our ability to leverage our unique first-party data across our platform with DTIQ and IgniteGraph drives better outcomes. This, in turn, drives more AI and data revenue because of better return on spend for advertisers.
Speaker #5: ability to leverage our unique first-party data across our platform with DTIQ and IgniteGraph drives better outcomes. This, in turn, drives more
Speaker #2: Regarding AI, it's clearly transformational and an exciting time in a tailwind for our
Speaker #2: Regarding AI, it's clearly transformational and an exciting time in a tailwind for our business. It's reinventing businesses, including ours, in three main ways. First is the automation and simplification of workflows and processes, which is now showing up in our results.
Speaker #3: We're seeing an acceleration in these activities as we organize our people, our systems, and our processes for this AI-first world. The second is leveraging AI in our data to improve outcomes for our customers.
Speaker #2: A year ago, our revenue per
Speaker #2: Employee was about improving outcomes for our $800,000. Today, it is in excess of $1 million.
Speaker #5: each other. We have nearly wheel. $3 billion devices and more than
Speaker #5: each other. We have nearly wheel. $3 billion devices and more than that are improving our ability to scale as
Speaker #3: As you've seen in our recent Google and Databricks press announcements, we're combining our unique first-party data signals with AI enhancements to drive better outcomes for customers, leveraging our DTIQ and IgniteGraph capabilities.
Speaker #5: technology. The opportunity for these apps to drive more user acquisition to our platform, and hence more monetization, will be a growth
Speaker #2: efficiency is the ability to use AI and automation activities to scale our business. We've implemented
Speaker #2: processes from areas such as quality assurance, our back office, and signals with AI enhancements to drive
Speaker #5: Driver is Brand. Our Brand business showed impressive 70% year-over-year growth. Our focus is leveraging the macro tailwinds of more time in apps, combined with our micro first-party data and audience targeting, to drive even more scale and growth.
Speaker #3: These are not just impacting our strong results today, but will be revenue and EBITDA drivers for us into the future. And the final area is how the broader AI landscape will leverage DT's distribution and non-device footprint and data to help their businesses grow.
Speaker #2: name a few. We're seeing an acceleration in these activities as we organize our people, our
Speaker #5: There are a variety of products and
Speaker #5: operational improvements being implemented real-time that are improving our ability to scale this important part of our business. Fourth driver is Ignite. Our international ODS momentum has been fueled by Latin America and Europe, and current and future supply winds are expected to mitigate concerns around the global device supply chain.
Speaker #3: And there are three important macro trends that we expect to be tailwinds for us. The first is more applications. According to recent analysis from Market Intelligent provider AppFigures, worldwide app releases in first quarter of 2026 were up 60% year-over-year across both Apple's App Store and Google Play.
Speaker #3: AI makes it easier for anyone to create apps, driving both growth in app stores as creators no longer need technical skills to build mobile software.
Speaker #5: In addition,
Speaker #5: opportunity to not just grow device supply, but also leverage the platform capability as a software
Speaker #3: And these applications all need distribution to reach consumers, given the inherent discovery limitations and the legacy to app stores. The second trend is the increase in time spent in applications.
Speaker #5: enabler for distribution of other products on the screens of devices versus just our current products, such as single-tap, out-of-the-box setups, and notifications. We are doing this today in the US with an...
Speaker #3: Today, the average consumer is spending about five hours per day inside applications, which is up about an hour over the past decade. This trend is accelerating as integration of AI chatbots creates a shift in the channels of how we consume information, leaning towards apps and away from the open web.
Speaker #5: agents to devices, and we see this expanding to other areas such as
Speaker #5: E-commerce, lock screens, and other forms of content distribution. And finally, there is the growth of alternative applications. We continue to ramp and scale more and more partners distributing their versions of applications, helping them get to devices—whether this is via our data targeting, SingleTap, our DSP, and so on.
Speaker #3: Multiple measurement sources have reported that AI is likely caused a 10% open web traffic to decline so far, with some informational categories seeing anywhere from 20 to 40 percent declines.
Speaker #5: The recent outcome of the Epic
Speaker #5: the EU are expected to open up and want to have more control over their opportunities for increased alternative distribution. Publishers are now seeing real-time what is happening to their businesses because of the impacts of AI on the open web and want to have more control over their destiny for the future versus being reliant on only one or two sources of distribution.
Speaker #3: The final trend, bringing all of this together, is monetization. And for centuries, one trend has been consistent: media dollars follow eyeballs. And as our eyeballs continue to spend more and more time in applications, because of enabling technologies like AI, which is creating more breadth of apps and more depth of time and spend in apps, this is a positive for us.
Speaker #1: Cars per day inside applications, which is up about an hour over the past decade. This trend is accelerating as integration of AI chatbots creates a shift in the channels of how we consume information, leaning toward apps and away from the open web.
Speaker #5: These five things are important because they showcase our business is not reliant upon any single factor to drive future growth.
Speaker #1: Multiple measurement sources have reported that AI is likely caused a 10% open web traffic to decline so far, with some informational categories seeing anywhere from 20% to 40% declines.
Speaker #3: In addition to AI, I've also been receiving many questions on potential macroeconomic impacts to our business, given wider fears around inflation, tariffs, and geopolitics.
Speaker #5: We've got many shots on goal that drive future growth. provide optimism in our ability to drive
Speaker #1: The final trend bringing all of this together is monetization. For centuries, one trend has been consistent: media dollars follow eyeballs. As our eyeballs continue to spend more and more time in applications—because of enabling technologies like AI, which is creating more breadth of apps and more depth of time and spend in apps—this is a positive for us.
Speaker #3: One of my favorite things about our mobile AI cloud business is that we are a more insulated than the vast majority of companies as our business is a digital one without the traditional input cost pressures many companies must navigate, plus the majority of our customers are using our platform to sell their digital goods and services versus goods that may be more sensitive to those risks.
Speaker #5: business. Regarding AI, it's clearly transformational and exciting time in a tailwind for our business. It's reinventing businesses, including ours, in three main ways. First is the automation and simplification of workflows and processes which is now showing up in our We've got results.
Speaker #5: business. Regarding AI, it's clearly transformational and exciting time in a tailwind for our business. It's reinventing businesses, including ours, in three main ways. First is the automation and simplification of workflows and processes which is now showing up in our We've got
Speaker #3: Of course, no single business is 100% insulated from macroeconomics, but as we saw during the pandemic, our businesses are resilient one, insulated from these factors, given our mobile-first, high operating leverage approach, matching where consumers are spending their time.
Speaker #5: Our year ago, our revenue per employee was about $800,000. Today it is in excess of 1 million. The driver of this efficiency is the ability to use AI and automation activities to scale our business.
Speaker #3: We expect AI to only accelerate versus slow down these trends. And with that, I'll turn it over to Josh to take you through the numbers.
Speaker #5: We've implemented numerous new AI and automation initiatives—many shots on goal—that provide...
Speaker #5: processes from areas such as quality assurance, our back office, campaign management,
Speaker #2: Thank you, Bill. And good afternoon, everyone. Let me turn to our first quarter fiscal 2027 results. We are off to a strong start to the new fiscal year with growth across both segments.
As our business is a digital 1 without the traditional input cost pressures. Many companies must navigate
plus the majority of our customers are using our platform to sell their digital goods and services.
Versus Goods that may be more sensitive to those risks.
Speaker #5: our systems, and our processes for this AI-first world. The second is leveraging AI in our data to
Speaker #2: Total net revenue for the quarter was $166 million, up 27% year-over-year, extending our strong fiscal 2026 exit momentum. On-device solutions net revenue was $110 million, up 15% year-over-year.
Speaker #5: customers. As you've seen in our recent Google and Databricks press announcements, we're The driver of this combining our unique first-party data
Of course, no single business is 100% insulated from macroeconomics, but as we saw during the pandemic, our businesses are resilient and insulated from these factors given our mobile-first, high operating leverage approach, matching where consumers are spending their time.
Speaker #2: Growth was again driven by our international business, where higher device volumes and higher revenue per device continue to drive strong results. App growth platform net revenue was $56.6 million, up 56% year-over-year, continuing the growth we highlighted last quarter.
Speaker #5: better outcomes for customers, leveraging our DTIQ and IgniteGraph capabilities. These are not just impacting our strong results today, but will be revenue and EBITDA drivers for us into the future.
Speaker #5: better outcomes for customers, leveraging our DTIQ and IgniteGraph capabilities. These are not just impacting our strong results today, but will be revenue and EBITDA drivers for us into the
We expect AI to only accelerate versus slow down these trends.
And with that, I'll turn it over to Josh to take you through the numbers.
Speaker #2: This was led by DTX, where revenue increased by 54%. These results reflect both continued onboarding of publishers and demand partners, particularly in Asia-Pacific, and the performance of our AI-powered optimization capabilities.
Speaker #5: Distribution and non-device footprint, and data to help their businesses grow. And there are three important macro trends that we expect to be tailwinds for campaign management software use.
Thank you, Bill and good afternoon, everyone. Let me turn to our first quarter fiscal 2027 results. We are off to a strong start to the new fiscal year with growth. Across both segments, total net revenue for the quarter was 166. Million of 27% year-over-year, extending our strong, fiscal 2026 exit momentum.
Speaker #5: The first
Speaker #2: Turning to profitability, non-GAAP gross margin was 49.4% in the quarter, up from 47.3% in the year ago period. This was driven by favorable segment and product mix, as AGP continues to grow as a share of our business.
Speaker #5: AppFigures: Worldwide app releases in development and data management, just for the first quarter of 2026, were up 60% year over year across both Apple's App Store and Google.
On Device Solutions, net revenue was $110 million, up 15% year-over-year. Growth was again driven by our international business, where higher device volumes and higher revenue per device continue to drive strong results.
Speaker #5: Play. AI makes it
Speaker #5: easier for anyone to create apps, driving both growth in app stores as creators no longer need technical skills to build mobile systems, and our processes for this
Speaker #2: Cash operating expenses were $39.5 million, up 7% year-over-year, reflecting a continued expense discipline, even as we invest in our highest priority growth initiatives. Notably, we reached a significant milestone this quarter as our run-rate revenue per employee has risen to over $1 million on an annual basis.
Top growth platform, net revenue was 56.6 million up, 56%, year-over-year, continuing the growth. We highlighted last quarter.
This was led by DTX, where revenue increased by 54%.
These results reflect both continued onboarding of publishers and demand partners, particularly in Asia-Pacific, and the performance of our AI-powered optimization capabilities.
Speaker #2: The combination of strong top-line growth, favorable mix, and expense discipline drove another quarter of substantial adjusted EBITDA. Adjusted EBITDA totaled $42.5 million, up 69% year-over-year, with margin expanding nearly 640 basis points to 25.6% versus the year ago quarter.
Turning to profitability, non-GAAP gross margin was 49.4% in the quarter, up from 47.3% for the year-ago period. This was driven by favorable segment and product mix as AGP continues to grow as a share of our business.
Speaker #2: Evidence of a meaningful operating leverage beginning to emerge in our model. On the bottom line, we reported a GAAP net loss of $3.2 million, or 3 cents per share, an improvement from a net loss of $14.1 million or 13 cents per share in the first quarter of fiscal 2026.
Cash operating expenses were 39.5 million up 7%, year-over-year reflecting a continued expense discipline. Even as we invest in our highest priority growth initiatives,
Notably, we reached a significant milestone in this quarter as our run rate Revenue per employee has risen to over 1 million on an annual basis.
Speaker #2: It should be noted that we are finalizing a non-cash adjustment in our Form 10-Q that may be recorded against beginning retained earnings. This adjustment would impact the GAAP net loss, but not our non-GAAP results.
The combination of strong top-line growth, favorable mix, and expense discipline drove another quarter of substantial adjusted EBITDA.
Speaker #2: Onto our non-GAAP net income of $24.1 million or 19 cents per share, based on 125.6 million diluted shares outstanding. This is more than tripling our non-GAAP net income of $7 million or 6 cents per share in the year ago quarter, driven by strong top-line growth and continued operating expense discipline.
Adjusted even a total of 42.5 million up 69% year-over-year with margin expanding nearly 640 basis points to 25.6% versus the year ago quarter.
Evidence of a meaningful operating leverage beginning to emerge in our model.
On the bottom line, we reported a gaap, net loss of 3.2 million or 3 cents per share and improvement from a net loss of 14.1 million or 13 cents per share in the first quarter of fiscal 2026.
Speaker #2: Moving on to the cash flow and the balance sheet, we generated $17.9 million of cash from operations in the quarter, more than double the $8.8 million we generated in the first quarter of last year.
it should be noted that we're finalizing a non-cash adjustment in our form 10 q that may be recorded against beginning, beginning retained earnings,
This adjustment would impact the Gap, net loss, but not our non-gaap results.
Speaker #2: Non-GAAP free cash flow was $11.3 million and an improvement of approximately $10 million versus the prior year period. We also made progress in strengthening our balance sheet.
Onto our non-gaap.
Speaker #2: We ended the quarter with cash and cash equivalents of $43.2 million and increase of more than $5 million from the start of the fiscal year.
Speaker #2: Our total debt net of debt issuance costs and discounts reached approximately $352.9 million, which was down by more than $8 million during the quarter.
Uh, net income of 24.1 million or 19 cents per share based on 125.6 million diluted shares outstanding. This is more than tripling, our non-gaap net, income of 7 million dollars or 6 cents per share in the year ago, quarter driven by strong Topline growth and continued operating expense discipline
Moving on to the cash flow and the balance sheet.
Speaker #2: We amended our financing agreement during the quarter to secure more favorable terms. This reflected an improved leverage profile, we have built over the past several quarters.
$8.8 million—we generated it in the first quarter of last year.
Speaker #2: Subsequent to quarter end, as a result of achieving certain leverage thresholds under that agreement, the applicable margin on our largest loan tranche was reduced by 50 basis points.
Non-gaap free cash flow was 11.3 million and Improvement of approximately 10 million versus the prior year period.
Speaker #2: We continue to remain focused to further strengthen the balance sheet as we move through the fiscal year. Turning to our outlook, given our strong start to the year and the continued momentum we are seeing, we are raising our fiscal 2027 guidance.
Speaker #2: We now expect revenue in a range of $650 million to $670 million for the year. An adjusted EBITDA in a range of $145 million to $155 million both up from the initial ranges of $630 to $650 million and $135 million to $145 million we provided last quarter.
We also made progress in strengthening our balance sheet. We ended the quarter with cash and cash equivalents of $43.2 million, an increase of more than $5 million from the start of the fiscal year. Our total debt, net of debt issuance costs and discounts, uh, reached approximately $352.9 million, which was down by more than $8 million during the quarter.
We amended our financing agreement during the quarter to secure more favorable terms, this reflected an improved leverage profile. We have built over the past several quarters.
Speaker #2: With that, let me hand it back to the operator to open the line for questions. Operator?
Subsequent to quarter in. As a result of achieving certain leverage thresholds. Under that agreement, the applicable margin on our largest loan. Terms was reduced by 50 basis points.
Speaker #3: Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad.
We continue to remain focused to further, strengthen the balance sheet as we move through the fiscal year.
Turning to our Outlook.
Speaker #3: If you are using a speakerphone, please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw, please press star, then 2.
Given our strong start to the year, and the continuum of momentum we are seeing, we are raising our fiscal 2027 guidance.
We now expect revenue in a range of $650 million to $670 million for the year.
Speaker #3: At this time, we will pause momentarily to assemble our roster. Our first question comes from Anthony Stoss of Craig Hallam. Please go ahead.
And adjusted EBITDA in a range of $145 million to $155 million, both up from the initial ranges of $130 million to $150 million and $135 million to $145 million we provided last quarter.
Speaker #4: Hey, Bill and team. Congrats on the strong execution yet again. So, Bill, you talked about having many shots on net with your different product offerings.
With that, let me hand it back to the operator to open the line for questions. Operator?
Thank you.
Speaker #4: How do you prioritize the growth drivers for this year and next? And then I had a couple of follow-ups.
Speaker #2: Yeah, thanks, Tony. If we kind of look in the rearview mirror, I think the really the three stars of the show were the international ODS business, you know, up 80%.
Speaker #2: And, you know, I know we've talked in the past around, you know, concerns around device headwinds on DRAM prices as, you know, you've seen Apple and others raising prices on devices.
We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw, please press star, then 2. At this time, we will pause momentarily to assemble our roster.
Speaker #2: And, you know, the fact that we're able to grow our devices, you know, almost 15% in the quarter, and then in our RPDs, we're up 40-plus percent, tickets to an 80% growth rate.
Our first question comes from Anthony stosh of Craig Hallam. Please go ahead.
Speaker #2: I think that was star number one. But, you know, star number two and three were really on the AGP side. And, you know, just seeing second consecutive quarter of more than 50% growth in that business with our brand business, our DTX business, you know, really starting to, you know, show some nice momentum.
Hey, Bill and team. Congrats on the strong execution yet again. So Bill you talked about having many shots on that with your your different product offerings. How do you prioritize
The growth drivers for this year and next, and then I had a couple follow-ups.
Speaker #2: You know, out in the marketplace and, you know, we started the journey many years ago, and the belief that we could create this mobile-first channel for brand dollars coming onto the exchange where it's been largely focused on games and so that bearing fruit is something it's great, great to see.
Yeah. Thanks, Tony. Um, if we kind of look in the rear-view mirror, I think that really the three stars of the show were the international ODS business, you know, up 80%. And, you know, I know we've talked in the past around concerns around device headwinds on DRAM prices. As you know, you've seen Apple and others raising prices on devices. And, you know, Zach, we were able to grow our devices, you know, almost 15% in the quarter and—
Speaker #2: Just kind of turning forward and looking into the future, you know, on the increased guide today, you know, if I was going to prioritize, I think data and AI is at the top of the list for us.
Speaker #2: You know, we've got, you know, a lot of untapped potential in that part of the business. Our brand business as well has got a lot of momentum behind it.
In our RPDS, we're up 40-plus percent in tickets and 80% growth rate. I think that was star number one. Um, but you know, star number two and three were really on the AGP side, and uh, you know, just seeing um,
Speaker #2: So I'd probably put those in the short term as the top two priorities. And then the other three things I talked about, you know, with Flywheels and Ignite, and alt apps will be the catalyst to keep it keep it going into the future.
Speaker #4: Got it. And then there's been a lot of media reports about the whole saga between Google and Epic and the jury trials, et cetera.
Speaker #4: Is that affecting at all your alternative app initiatives? And then after that, I have one last question.
Speaker #2: Yeah. So you know, we think that, you know, this is going to open up a lot of opportunities. You know, now that that injunction's been settled and, you know, Google's opened up the app their app store to other app stores, we think that's a tailwind.
Speaker #2: I actually just put a blog out on that. I think I think it was earlier today. They got published, and so I'd encourage everyone to go take a look at that for the details.
Second consecutive quarter of more than 50% growth in that business with our, uh, brand business there in DTX business. Uh, you know, really starting to, uh, you know, show some nice momentum, you know, out in the marketplace and, you know, we we started the journey, many years ago and the belief that we could create this mobile first channel for brand dollars coming on to, um, The Exchange where it's been largely focused on games. And so that bearing fruit is just something. Um, it's it's great, it's great great to see. Um, it's kind of turning forward and looking into the future. You know, on the increased guide today, um, you know, if I was going to prioritize I think data and AI is is at the top of the list for us. You know, we've got, you know, a lot of untapped potential. Um in that part of the business, um, our brand business as well. It's got a lot of momentum behind it. So I'd probably put those in the short term as the top 2 parties. And the other is the 3 things I talked about um you know with flywheels and ignite and all Taps will be the Catalyst to keep it. Uh keep it going into the future.
Speaker #2: But net-net is it's just showing more democratization of app stores and so I think that's a positive for companies like us.
Speaker #4: Gotcha. Last question. You kind of alluded to on the Ignite section of your call here. About more deals coming and international business being strong.
Got it. And then there have been a lot of media reports about the whole saga between Google and Epic, and the jury trials, etc. Is that affecting at all your alternative app initiatives? And then, after that, I have one last question.
Speaker #4: I'm just curious, you know, it's been a month and a half or so since your Orange deal's been announced. Has that kind of rattled the cage, if you will, with some of the other European carriers to go in either on Ignite or single tap?
Speaker #4: I'd love to hear.
Speaker #2: Yeah, we've got a lot of momentum right now in that part of the business. And, you know, momentum gets momentum and, you know, I mentioned in my prepared remarks that the pipeline's looking really good.
Speaker #2: So I'd say stay tuned for more momentum coming there.
Speaker #4: Great job, Bill. Thank you.
Um, yeah. So you know, we think that uh, you know, this is going to open up a lot of opportunities, you know, now that, that that injunction has been settled and, you know, Google's opened up the uh, the app there are App Store to other app stores and we think that's a, that's a Tailwind. Um, I actually just put a Blog out on that. I think that I think it was earlier today, um, the guy that got published and so, I would encourage everyone to go take a look at that, for, for the details. But netet is it's just showing more democratization of App Stores. Um, and so, I think that's a, that's a positive for companies like us.
Speaker #2: All right, thanks.
Speaker #3: Our next question comes from Dan Kurnos of Stonex. Please go ahead.
Speaker #5: Yeah, great. Thanks. Good afternoon. Bill definitely a fun one to jump into, here. Nice print. Just first, maybe can you give us a little bit more color and unpack the international ODS device growth, just any areas of strength, OEMs, just any additional color you can give, especially given the broader backdrop that you have.
Got you, last question, you kind of alluded to on the ignite section of your uh your call here about more deals coming and international business, being strong. I'm just curious app, you know, it's about a month and a half or so, since you're orange deal has been announced. Has that kind of rattled the cage if you will with some of the other European carriers that go in either on ignite or single tap, I would love to hear
Speaker #5: And then I want to follow up with a several AGP questions. Thanks.
In uh, in the in that part of the business and uh, you know, momentum gets momentum and you know, I mentioned in my prepared remarks that the, the pipeline's looking really good. So I'd say stay tuned for for a moment. More momentum coming there.
Great job Bill. Thank you.
Great, thanks.
Speaker #2: Yeah, sure. On the international ODS front, you know, we really saw growth from really the OEM partners in particular. So you know, Motorola and Samsung were encouraging and then some of our international operator partners also showed nice growth.
Our next question comes from Dan Kernos of StoneX. Please go ahead.
Speaker #2: And so that's a good news story given, again, some of the broader macro things that, you know, we're all reading headlines around, you know, around just chipset prices and so on.
Speaker #2: So the fact to see, you know, growth in that part of our business, is really something else also helps us bring more demand to the platform.
Speaker #2: So more supply actually brings more demand. And then you get a cumulative effect, which is showing up in the results of the 80% year-over-year growth.
Yeah, great thanks. Uh, good afternoon. Um, Bill, definitely a fun 1 to uh, jump into here. Um, nice print. Uh, just first maybe. Can you give us a little bit more color and unpack the international ODS uh, device growth. Um, just any areas of strength. Oems just any any additional color, you can give especially given the the broader backdrop that you have and then I want to follow up with a several AGB questions. Thanks.
Speaker #5: Got it. And then to that point on demand, so brand up 70%, the DTX was a slouch up 40. We know that brand budgets can be a little lumpier and more seasonal and programmatic.
Speaker #5: I mean, this is obviously an uneven ad market, to say the least, although mobile's been doing particularly well and digital out of home. So I mean, how much of this is durable share gain and how should we kind of model that split?
Speaker #5: You know, for the next, you know, pick a number, three, four, five, six quarters, because the momentum in AGP has been really strong.
Uh, yeah sure. On the international ODS front. Um, you know, we really saw growth from really the OEM Partners, uh, in particular. So, you know, Motorola and Samsung were were encouraging. Uh, and then some of our International operator Partners also showed, um, nice growth. And so that that's a that's a good news story given again, some of the broader macro things that, you know, we're all reading headlines around, you know, around just chipset prices and, and so on. So the fact to see your growth in that part of our business, um, is really something else also helps us bring more demand to the platform. So, more Supply, actually brings more demand. Um, and then you get a, you get a cumulative effect which is showing up in the results of the 80%, uh, year-over-year growth.
Speaker #2: Yeah, so you know, we can probably spend some more time offline on some of the details, around how to model it. But I think in terms of just kind of more generally speaking, we expect the growth to continue a lot of the hard work we had to do to establish brand as a channel, for mobile's been done.
Speaker #2: As you're well aware, a lot of the digital brand dollars disproportionately go to things like CTV or go to things like retail media. So you know, we had to establish this mobile-first channel for brand.
Speaker #2: And that required a lot of legwork externally with holding companies and agencies and a lot of the big names, you know, the Procter & Gambles and Apples and Targets and Amazons and so on that are spending money with us today.
Got it. And then to, to that point on demand. So brand up, 70%, not the DTX is a slouch up, 40. We know that brand budgets can be a little lumpier and more seasonal in programmatic. I mean, this is obviously an uneven add Market to say the least, although Mobile's been doing particularly, well, in digital out of home. So, I mean, how much of this is durable, share, gain, and, and how should we kind of model that split, you know, for the next, you know, pick a number 34564 because the momentum and AGP has been really strong
Yeah. So uh
Speaker #2: So that took time to get those budgets and get those relationships. And we've done that externally. And then internally, getting the tech stacks aligned, you know, getting some of the legacy acquisition assets integrated together to be able to deliver those experiences.
Speaker #2: That's now paying dividends for us. And as long as we continue to leverage our data and our ability to target audiences, you know, our expectation is that brands are going to continue optimistic about that being a growth driver for us.
Speaker #5: And is there any way, Bill, because you brought up AI and yields, execution here, is there any way to kind of parse out how much of the fill rate and CPM growth is kind of market-wide versus company-specific?
Details um, around how to how to model it. But I think in terms of just kind of more generally speaking, um, we expect the growth to continue a lot of the hard work. We had to do to establish brand as a channel. Um, for mobile has been done, is, is you're, well, aware a lot of this digital brand dollars. Um, disproportionately go to things like CTV and or go to things like retail media. So, you know, we had to establish this mobile first channel for Brands and that required. A lot of leg work externally with holding companies and agencies and a lot of the, the big names, you know, the, uh, the Procter and Gamble and apples and targets, and Amazon, and so on. There's many, many with us today, I'm trying to get those to get those budgets and get those relationships. And we got
Speaker #2: Yeah, I don't have anything specific to talk about on the macro side other than what we've seen is kind of, you know, you know, mid to high single-digit growth from a macro perspective.
Speaker #2: And like I mentioned in my prepared remarks, that, you know, our rates are, you know, kind of closer to north of 40%, you know, year over year.
Speaker #2: And that's driven by just, you know, better, you know, better targeting, better outcomes, better formats, you know, all helping to drive better rates.
Speaker #5: And last one is just, what's the monetization lag on newly signed distribution? I mean, you talked about your SDK footprint expansion in APAC and non-gaming verticals.
Speaker #5: And I assume you've already kind of spent the CapEx build-out associated with this.
Speaker #2: Yeah, so what we're seeing right now that's really encouraging, you know, is the trend on the spend is encouraging, which is part of what's powering the 40% growth in DTX.
Speaker #2: And you mentioned non-gaming specifically. So those are you know, those could be news, weather, sports, e-commerce, AI, there's a whole variety of categories that all of these fall into.
Speaker #2: You know, that we're starting to see encouraging trends for. And so, you know, we believe we're taking share from competitors as a result of that.
Speaker #2: And it's something that you're really great to see it showing up in the results.
Speaker #5: Got it. Thanks for bearing with me and congrats on the quarter.
Speaker #2: Yeah, no, thanks.
Speaker #3: Once again, if you have a question, please press star, then one. This concludes our conference back over to Bill for any closing remarks.
Speaker #2: Yeah, thanks all for joining our call tonight. We'll look forward to connecting in a few months to update you on our fiscal '27 second quarter earnings call.
Speaker #2: Have a great night.
