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Digital Turbine (APPS) Q3 Earnings Miss, Revenues Rise Y/Y
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Digital Turbine (APPS - Free Report) reported third-quarter fiscal 2020 non-GAAP earnings of 5 cents per share, which missed the Zacks Consensus Estimate by 16.7%. However, the reported figure increased 25% from the year-ago quarter.
Revenues of $36.02 million also missed the consensus mark by 5.2% and fell short of the guided range of $37 million to $38.2 million, primarily due to soft device sales at core U.S. operators in November.
However, the figure increased 18.4% on a year-over-year basis primarily driven by higher revenue per device (RPD) from U.S.-based carrier partners and incremental contributions from newer platform products.
U.S. RPD increased year over year, driven by continued strong demand for the Digital Turbine platform among advertisers including Dynamic Installs and other, newer platform products.
Digital Turbine’s mobile device management platform, Ignite, has gained significant traction. As of Nov 4, 2019, more than 325 million devices had Ignite installed.
However, shares of the company decreased 4.8% in pre-market trading, apparently due to soft fourth-quarter guidance for revenues, which are expected to decline sequentially.
Digital Turbine, Inc. Price, Consensus and EPS Surprise
Revenue derived from international partners increased over 150% year over year and represented more than 10% of total revenues in the reported quarter.
Additionally, revenues generated from initial U.S. partners — Verizon (VZ - Free Report) , AT&T (T - Free Report) , Cricket and U.S. Cellular increased year over year and represented more than 70% of total revenues in the third quarter, compared with 85% in the year-ago quarter due to a decline in the total combined devices sold.
Notably, at the end of the fiscal third quarter, the company’s software was installed on more than 7 million unlocked Samsung devices across more than 75 countries.
Moreover, Digital Turbine continued integration with new demand sources from SingleTap partners like AppsFlyer, Branch and Kochava.
Operating Details
Non-GAAP gross margin expanded 320 basis points (bps) on a year-over-year basis to 40.1%, largely driven by the successful mix of partner and product diversification on the platform.
On a GAAP-basis, product development expenses increased 14.6% to $2.8 million attributed to higher development payroll and professional service-related expenses in the reported quarter.
Sales & marketing (S&M) expenses increased 43.5% to $2.8 million as a result of increased travel expenses related to the company's continued expansion globally and increased commissions of sales personnel.
General & administrative (G&A) expenses rose 12.5% to $4.3 million, attributed to higher employee-related and consulting expenses.
Operating expenses, as percentage of revenues, expanded 50 bps on a year-over-year basis to 27.5%.
Operating income on a GAAP basis was $4.1 million in the reported quarter. The company had reported operating income of $3.1 million in the year-ago quarter.
Balance Sheet & Cash Flow
The company's cash balance was $33.7 million as of Dec 31, 2019 compared with $25.2 million as of Sep 30. As of Dec 31, 2019, the company had no debt.
Cash provided by operating activities totaled $8.4 million in the reported quarter compared with $6.7 million in the previous quarter.
Non-GAAP free cash flow was $7.02 million in the reported quarter compared with $5.7 million in the previously reported quarter.
Guidance
For fourth-quarter fiscal 2020, Digital Turbine expects revenues between $33.2 million and $34.5 million.
The Zacks Consensus Estimate for revenues is currently pegged at $32.9 million.
Non-GAAP adjusted EBITDA is expected between $3.5 million and $4 million.
Zacks Rank & Stock to Consider
Currently, Digital Turbine carries a Zacks Rank #3 (Hold).
Alteryx is set to report the quarterly earnings on Feb 13.
Zacks Top 10 Stocks for 2020
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Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Digital Turbine (APPS) Q3 Earnings Miss, Revenues Rise Y/Y
Digital Turbine (APPS - Free Report) reported third-quarter fiscal 2020 non-GAAP earnings of 5 cents per share, which missed the Zacks Consensus Estimate by 16.7%. However, the reported figure increased 25% from the year-ago quarter.
Revenues of $36.02 million also missed the consensus mark by 5.2% and fell short of the guided range of $37 million to $38.2 million, primarily due to soft device sales at core U.S. operators in November.
However, the figure increased 18.4% on a year-over-year basis primarily driven by higher revenue per device (RPD) from U.S.-based carrier partners and incremental contributions from newer platform products.
U.S. RPD increased year over year, driven by continued strong demand for the Digital Turbine platform among advertisers including Dynamic Installs and other, newer platform products.
Digital Turbine’s mobile device management platform, Ignite, has gained significant traction. As of Nov 4, 2019, more than 325 million devices had Ignite installed.
However, shares of the company decreased 4.8% in pre-market trading, apparently due to soft fourth-quarter guidance for revenues, which are expected to decline sequentially.
Digital Turbine, Inc. Price, Consensus and EPS Surprise
Digital Turbine, Inc. price-consensus-eps-surprise-chart | Digital Turbine, Inc. Quote
International Partnerships
Revenue derived from international partners increased over 150% year over year and represented more than 10% of total revenues in the reported quarter.
Additionally, revenues generated from initial U.S. partners — Verizon (VZ - Free Report) , AT&T (T - Free Report) , Cricket and U.S. Cellular increased year over year and represented more than 70% of total revenues in the third quarter, compared with 85% in the year-ago quarter due to a decline in the total combined devices sold.
Notably, at the end of the fiscal third quarter, the company’s software was installed on more than 7 million unlocked Samsung devices across more than 75 countries.
Moreover, Digital Turbine continued integration with new demand sources from SingleTap partners like AppsFlyer, Branch and Kochava.
Operating Details
Non-GAAP gross margin expanded 320 basis points (bps) on a year-over-year basis to 40.1%, largely driven by the successful mix of partner and product diversification on the platform.
On a GAAP-basis, product development expenses increased 14.6% to $2.8 million attributed to higher development payroll and professional service-related expenses in the reported quarter.
Sales & marketing (S&M) expenses increased 43.5% to $2.8 million as a result of increased travel expenses related to the company's continued expansion globally and increased commissions of sales personnel.
General & administrative (G&A) expenses rose 12.5% to $4.3 million, attributed to higher employee-related and consulting expenses.
Operating expenses, as percentage of revenues, expanded 50 bps on a year-over-year basis to 27.5%.
Operating income on a GAAP basis was $4.1 million in the reported quarter. The company had reported operating income of $3.1 million in the year-ago quarter.
Balance Sheet & Cash Flow
The company's cash balance was $33.7 million as of Dec 31, 2019 compared with $25.2 million as of Sep 30. As of Dec 31, 2019, the company had no debt.
Cash provided by operating activities totaled $8.4 million in the reported quarter compared with $6.7 million in the previous quarter.
Non-GAAP free cash flow was $7.02 million in the reported quarter compared with $5.7 million in the previously reported quarter.
Guidance
For fourth-quarter fiscal 2020, Digital Turbine expects revenues between $33.2 million and $34.5 million.
The Zacks Consensus Estimate for revenues is currently pegged at $32.9 million.
Non-GAAP adjusted EBITDA is expected between $3.5 million and $4 million.
Zacks Rank & Stock to Consider
Currently, Digital Turbine carries a Zacks Rank #3 (Hold).
Alteryx is a better-ranked stock in the broader technology sector, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alteryx is set to report the quarterly earnings on Feb 13.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>