Shares of small technology company Digital Turbine (APPS +2.86%) skyrocketed on Thursday, and I mean that quite literally. The company reported financial results for its fiscal third quarter of 2025. And as of 3 p.m. ET, Digital Turbine stock is up a dizzying 82%.
Digital Turbine could be turning a corner
On the surface, Digital Turbine's Q3 financial results don't seem worthy of an 82% gain. Quarterly revenue of $135 million was down 6% year over year. And its net loss of $23 million was bigger than its $14 million in the prior-year period. Granted, these numbers were better than investors had expected, but they still don't look great in isolation.
NASDAQ: APPS
Key Data Points
Digital Turbine's software is pre-installed on mobile devices from certain telecom companies, providing advertising opportunities. And in Q3, the company set records for revenue per mobile device, which is quite encouraging and sets up a good upcoming fiscal fourth quarter.
For Q4, Digital Turbine's management expects revenue of around $115 million, up from the same quarter of its fiscal 2024. Its profits are also expected to jump, which is why the stock skyrocketed today.
Expectations were too low in light of Q3 results
If you're still scratching your head about Digital Turbine stock, here's the final piece of context: Digital Turbine stock had plummeted to a basement valuation of less than 1 times its sales. Investors simply believed this business was in an inescapable downward spiral. But with growth back on the table for Q4, investors are rethinking that assumption.
Digital Turbine showed that progress in Q3 and Q4 is promising, but it still faces challenges ahead. The company relies on deals with a limited number of telecom companies, and much of its revenue comes from international markets where the advertising revenue opportunity can be lower than in the U.S. Nonetheless, it was a good quarter, and I understand why investors celebrated.
