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DATE

Feb. 3, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — William Gordon Stone
  • Chief Financial Officer — Stephen Andrew Lasher

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TAKEAWAYS

  • Total Revenue -- Digital Turbine (APPS 1.39%) reported $151.4 million in the fiscal third quarter ended Dec. 31, 2025, up 12% year over year, reflecting increased platform demand across multiple products and geographies.
  • Adjusted EBITDA -- $38.8 million in the fiscal third quarter, representing 76% year-over-year growth and a margin of 26%, supported by expense discipline and operational leverage.
  • On Device Solutions (ODS) Revenue -- $99.6 million in the fiscal third quarter, up 9% year over year, with more than 60% growth in international revenues driven by over 20% increases in both devices and revenue per device.
  • In App Media – AGP Segment Revenue -- $52.6 million, up 19% year over year, benefiting from higher brand business and over 30% growth in the DTX/SSP business line.
  • Non-GAAP Gross Margin -- 49%, an increase from 44% the prior year, driven by favorable product and segment mix.
  • Cash Operating Expenses -- $36 million, down 4% year over year due to ongoing cost controls and operational efficiency improvements.
  • Free Cash Flow -- $6.4 million for the quarter, supporting balance sheet improvements.
  • GAAP Net Income -- $5.1 million, or $0.03 per share; Non-GAAP net income was $21.7 million, or $0.18 per share, based on 120 million shares outstanding.
  • Debt Reduction -- Total debt (net of issuance costs) declined by more than $41 million to $355 million during the quarter; debt leverage ratio reduced from over five turns to approximately three turns year over year.
  • At-The-Market Equity Offering -- 6.8 million shares sold at an average price of $6.54, generating $44.6 million in gross proceeds, with the program now terminated due to balance sheet strength.
  • Ignite Platform International Mix -- For the first time, over 30% of Ignite platform revenues came from outside the United States.
  • Strategic Priorities -- Management outlined five areas: leveraging first-party data and AI, building supply-demand flywheel, scaling brand business, expanding services through Ignite, and expanding into alternative app distribution channels.
  • Guidance Raised -- New full-year outlook expects $553 million to $558 million in revenue and $114 million to $117 million in adjusted EBITDA, representing $10 million and over $13 million increases, respectively, at the midpoint versus prior guidance.
  • Key Customer Wins -- Three of the largest global mobile gaming developers signed in December to use Single Tap technology for alternative app distribution, already generating revenue.

SUMMARY

Management discontinued the at-the-market equity program following balance sheet enhancements and improved leverage, signaling less reliance on external capital. CFO Stephen Andrew Lasher stated, “EBITDA margin reached 26%, marking the seventh consecutive quarter of expansion and improvement of more than 900 basis points versus the prior year.” New client adoption of alternative distribution tools was highlighted as immediately revenue-generative, and management committed to ongoing cost controls to sustain margin expansion. Across all regions, the company achieved improvements in both device volumes and monetization metrics. The revised guidance reflects management’s increased confidence in the business outlook supported by improved operational efficiency and diverse growth drivers.

  • CEO William Gordon Stone said, “retail vertical had 5x growth compared to last holiday season,” underscoring expanding vertical market participation.
  • AI and machine learning contributed directly to both top-line growth and reduced operating expenses, with management citing AI-driven improvements to coding, quality assurance, and administrative workflows.
  • Company achieved its first quarter with over 30% of Ignite revenues sourced internationally, reflecting advances in global market penetration.
  • International device growth and rising revenue per device in both U.S. and non-U.S. regions contributed to the acceleration in segment results.
  • Company leadership communicated a strategic focus on first-party data, new brand and supply initiatives, and the expansion of Ignite capabilities to drive further growth.

INDUSTRY GLOSSARY

  • ODS (On Device Solutions): Digital Turbine’s business segment focused on preloading and distributing mobile apps via carrier and OEM devices.
  • AGP (Application Growth Platform): Segment providing mobile user acquisition and in-app monetization tools for publishers and advertisers.
  • RPD (Revenue Per Device): Revenue generated per individual device through the company’s on-device media platform.
  • DTX/SSP: DTX refers to Digital Turbine’s marketplace; SSP (Supply Side Platform) enables publishers to monetize mobile ad inventory programmatically.
  • Ignite: Digital Turbine’s proprietary scalable app distribution platform embedded on new devices by carriers and OEMs.
  • Single Tap: Technology that allows one-click app installs and related distribution solutions, tailored for large global app developers.

Full Conference Call Transcript

William Gordon Stone, and CFO, Stephen Andrew Lasher. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. These forward-looking statements are based on our current assumptions, expectations, and beliefs, including projected operating metrics, future products and services, anticipated market demand, and other forward-looking topics. Although we believe that our assumptions are reasonable, they are not guarantees of future performance, and some will inevitably prove to be incorrect. Except as required by law, we undertake no obligation to update any forward-looking statements.

For a discussion of the risk factors that could cause our actual results to differ materially from those contemplated by our forward-looking statements, please refer to the documents we 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, William Gordon Stone.

William Gordon 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, the double-digit growth across so many of our products and geographies. 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 December, our gross profit dollars increased by more than 25% while our operating expenses declined. And 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 $5 trillion market opportunity in front of us. 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 December. 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 September with December year-over-year growth of 19% posting $53 million in revenue. 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 power the improved performance. First, on increased supply. While we continue to see softness for U.S. 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 nongaming inventory. 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 U.S. and international markets. For our on-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, 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. 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 machine learning models to drive better outcomes across your 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.

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. Ignite's been the backbone of our highly scalable app distribution business, we're looking to leverage its footprint across more than 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 how users choose to discover and use them.

Made some recent progress with three of the largest global mobile game developers signed in December now using single tap capabilities in their alternative distribution efforts. Combined, these five things have a half 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, our priority is 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. 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 Stephen Andrew Lasher to take you through the financials in more detail.

Stephen Andrew 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 margin, and delivered top and bottom-line results that surpassed expectations. We also made significant progress in 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. These results reflect 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%. 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. Looking at the balance sheet. We ended December with a cash balance of $40 million, up approximately $1 million from the end of September. Meanwhile, our total debt net of debt issuance cost declined during the quarter by more than $41 million and ended the quarter at $355 million. This decline was a result of tax-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 December, 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. Given our performance and improved leverage profile, we believe our current liquidity and balance sheet strength eliminate 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 performance, and with improved visibility into the current March, we are once again raising our full-year revenue and adjusted EBITDA guide. 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. 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.

Operator: Jamie? Ladies and gentlemen, at this time, if you would like to ask a question, you may press star and then one. To withdraw your questions, you may press star and 2. 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 1. Join the question queue. We'll pause momentarily to assemble the roster. And our first question today comes from Anthony Joseph Stoss from Craig Hallum. Please go ahead with your question.

Anthony Joseph Stoss: Great. Thanks. I have a couple, so I'll just go one at a time. Bill, I 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? Love to hear it.

William Gordon Stone: Yeah. Sure, Tony. Yeah. This is, as I mentioned, this is one of our five strategic priorities in the business. And there's 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 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 few years, we can put a lot more energy behind this. So, you know, we're really excited about this being a driver for growth for us as we look into the future.

Anthony Joseph Stoss: Got it. And then, Bill, I've fielded a couple of calls in the last few days regarding the Google Gemini announcement. You can help us understand how you think that'll impact you.

William Gordon Stone: Yeah. So, you know, first, you know, for us, we made a concentrated effort I mentioned in my remarks, to diversify away from just strictly gaming inventory and increase nongaming 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 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.

So our ability to leverage our extensive distribution footprint both on device and with our DSP, I think it's going to bring more games to market, and those they're 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 in 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.

Anthony Joseph Stoss: Got it. And, yeah, I just wanna call out your mentioning of the three largest global gaming companies have signed in December for Single Tap. How do they plan on using it? What's kind of the timing? And how quickly do you think it'll ramp?

William Gordon Stone: Yeah. So I'm excited to say they're live today. And so they're using it today to distribute all alternative applications of 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. And what that is the ability to download an application with Single Tap, but also download the store that goes with that. So in other words, if a large gaming studio, you want you, Tony, want wanted wants a game, download it.

Well, you also get the store that can be delivered in the background once you enter in your credentials and pay through that app or game you've downloaded, now it's prewired for anything that publisher wants to do. So it reduces the friction in the future. It lowers the cost structure for the app publishers. So Single Tap's a key enabler to make that happen. So yeah, we're excited about that, and it's already generating revenue today.

Anthony Joseph Stoss: Thanks, Bill, for everything, and great job, guys. Nice results.

William Gordon 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 2. Our next question comes from Arthur Chu from Bank of America. Please go ahead with your question.

Arthur Chu: Hey, guys. This is Arthur on 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 carrying a little bit more active on iOS?

William Gordon Stone: Yeah. So nothing to comment specifically on them and iOS here. I would just say from a competitive perspective, I'm excited to see that the overall market grew kind of mid to high single digits, you know, in December. And our growth, you know, on the AGP side was 20%. So in other words, you know, 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 more on Android, you know, given our unique on-device position there. So nothing specific on Meta to comment on this call. But in terms of what we're doing, you know, we're outgrowing the market right now.

Arthur Chu: Got it. That's really helpful color. Thanks a lot, guys.

Operator: And ladies and gentlemen, I'm showing no additional questions at this time. I'd like to turn the floor back over to William Gordon Stone for any closing remarks.

William Gordon Stone: Thanks, everyone, for joining our call tonight. We'll talk to you again on our fiscal '26 fourth-quarter call in a few months. Thanks, and have a great night.

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.