What happened
Shares of Digital Turbine (APPS 17.91%) fell 12.5% in October, according to data from S&P Global Market Intelligence. The application delivery and monetization software company took a breather following its third quarter earnings report, despite beating analyst expectations for revenue growth and adjusted (non-GAAP) earnings per share. In addition, many tech growth stocks that had logged big gains this year sold off prior to the election, probably because of fears over higher capital gains taxes.
Image source: Getty Images.
So what
Digital turbine is well positioned to take advantage of the app-based economy on mobile phones, which has accelerated during the pandemic. In the its fiscal second quarter, revenue accelerated 116% to $70.9 million, with the bottom line swinging to a slight profit of $0.4 million from a loss of $1.3 million a year ago. Adjusted EBITDA also surged 265% to $16.5 million.
While these results were nothing short of terrific, Digital Turbine's stock actually fell following the report, as investors took profits following massive 493% gains year to date.
APPS Year to Date Total Returns (Daily) data by YCharts
Digital Turbine's services allow OEMs and mobile operators to control and monetize applications installed on mobile devices, and the company also makes money from programmatic advertising delivered either in-app, on a browser home page, or the unlock screen of a phone. While the overall advertising industry is a slump right now, many digital advertisers have seen strong results this year because of the pandemic and strong engagement with mobile devices.
Now what
Digital Turbine's platform appears to be taking off in 2020, especially following the February acquisition of Mobile Posse. Its software is now present on all major U.S. carriers, and the trend toward app-based programmatic advertising doesn't appear to be slowing down any time soon. In fact, since the calendar flipped to November and we appear to be headed for a divided government and lower taxes for longer, the company already erased October's losses and then some, with the stock soaring 47.6% month to date.
