Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Digital Turbine Inc (APPS, Financial) reported sequential growth in revenue, EBITDA, and non-GAAP earnings per share for Q1 2025.
- The company achieved $118 million in revenue, $15 million in EBITDA, and $0.07 in non-GAAP EPS.
- Significant progress was made on investment activities, including the new version of Ignite and improved bidding capabilities.
- The AGP business segment grew 11% sequentially, driven by solid ECPM improvements and increased first-party data traffic.
- The company has expanded its global device relationships, including a new partnership with a large Brazilian operator with over 60 million subscribers.
Negative Points
- Despite sequential growth, the ODR segment revenues were down 18% from the prior year.
- The company continues to face macro trends with softer U.S. device volumes.
- Cash flow from operations was negative $1.3 million, although it improved over $10 million from the previous quarter.
- The debt balance ended the quarter at $396 million, drawn on the revolving credit facility.
- The integration of systems, including the AdColony and Fyber combination, is not yet fully complete.
Q & A Highlights
Q: Congrats on the return to growth guys. Nice to see it again on Bill, a couple of questions. Can you within your full year fiscal guide, are you assuming or do you need on device sales to grow substantially to hit that number? Or can you hit it in either device sales stay flat and add a couple of.
A: Yes, sure, Tony. Our assumption right now is that we're not going to see an acceleration of devices or a deceleration in devices that we're going to kind of see the status quo. What we've seen is what our expectations are. So, anything that would go off in this current status quo could be either a headwind or tailwind for us on a lot of the growth that we're thinking about right now is coming from the addition of some of the new products I talked about extension, the relationships, expansion of the RPG.s and so on.
Q: And then can you confirm that all your systems integration, the fiber AdColony combination, the DTX. up, that's all behind you that's complete or is there still a little bit more work to go? I know you're seeing some of the fruits of it now, but I'm just curious if you're completely.
A: No, we still have we still have a little bit to go in a variety of areas, but the lion's share of the work on the especially on the exchange consolidation in particular, that is really helping us drive a lot of brand growth. We've been talking a long time around how we wanted to take the leverage, the AdColony brand business and the fiber supply business and bring those together. So getting that piece done on, it's very material for us in terms of and also be a material driver for our future growth. So that was the big one, but there's a variety of other things. So so going on here.
Q: And then one last question and I'll jump back in the queue. You highlighted kind of the you keep your eye on things on I know things have been out there for a while in terms of alternative app platforms is or is there something coming with the European guys he can talk about now, would you expect to land new customers and go live potentially by the end of this year. Just any more detail would be helpful.
A: Yes. So, we expect the European situation to be a big tailwind for us and that would obviously be good for things like Single Tap. No question around it. I mentioned in my remarks that we're going to see with the European Commission does as it relates to Apple's. I think our view on that is they're not very happy right now, and they're going to put some enforcement on Atlanta. The question is when and then I think you're going to see that be a catalyst not just for us in our activity with the telcos, but I think you're going to see other mega cap tech players in a variety of folks coming in more aggressively into this into the market once that regulation comes in place.
Q: Can you provide more details on the progress of your new version of Ignite and its impact on your business?
A: Our new hosting platform has moved from the migration phase to the optimization phase. We've launched improved bidding capabilities, showing positive growth with brands, and many new back-end corporate systems have been consolidated and launched. This is simplifying and automating our work, contributing to our return to growth in both our ODS and HGP business segments.
Q: How are you addressing the softness in U.S. device sales and what are your expectations for the future?
A: Despite continued softness in U.S. device sales, our revenue per device (RPD) improved by 15%. We expect this trend to reverse as we get to the back end of our fiscal year, driven by new ARAI features on OEM hardware and the anniversary of the migration from two to three-year leases in the U.S. market.
Q: What are the key drivers for your AGP business growth?
A: Our AGP business grew 11% sequentially, driven by solid ECPM improvements as advertisers see positive returns on ad spend and the ability to drive more first-party data traffic over our own network. Our strategy to leverage our unique assets on devices, our approach to working with big brands, and our integrated AdColony and Fyber exchanges, branded as DTX, are key differentiators.
Q: Can you elaborate on your alternative app strategy and its potential impact?
A: Our alternative app strategy is not just about new in-app payment revenues but also accelerating our existing lines of business. We have launched our first alternative app distribution products, branded as CT Hub, with five operators in the U.S. We expect to focus more on the EU market with the Digital Markets Act now in effect, which should provide significant opportunities.
Q: What are your expectations for revenue and EBITDA for fiscal year 2025?
A: We reaffirm our expectations of revenue to be in the range of $540 million to $560 million for fiscal year 2025. Our non-GAAP adjusted EBITDA is projected to be between $85 million and $95 million, reflecting our confidence in the underlying trajectory of our business and the momentum we are seeing in the market.
Q: How are you managing your debt and cash flow situation?
A: Our cash balance at the end of the quarter was $36 million, an increase of $2 million from the March quarter. We recently amended our credit facility to provide further flexibility for the Company to execute on our return to growth plans. Our debt balance ended the quarter at $396 million drawn on the revolving credit facility, and we expect to pay down our revolver in larger quarterly increments as our business strengthens.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
