AUSTIN, Texas, Nov. 2, 2021 /PRNewswire/ -- Digital Turbine, Inc. (Nasdaq: APPS) announced financial results for the fiscal second quarter ended September 30, 2021. The Company completed the acquisitions of AdColony Holdings AS and Fyber N.V. on April 29 and May 25, 2021, respectively. Specific references made to "pro forma" results in this release provide investors with quarterly results and comparisons as if all acquired businesses were owned for the entirety of the second quarter of fiscal 2021. The Company believes that pro forma results, where applicable, can provide investors with more relevant year-over-year comparisons. The reconciliations between the pro forma and GAAP financial results for the relevant periods are provided in the tables following the Unaudited Consolidated Statements of Cash Flows below.
Recent Financial Highlights:
"I am pleased that we delivered record financial results in the second quarter, but even more pleased with how we have strategically laid the foundation to capture a dramatically expanded market opportunity set in future quarters and years," said Bill Stone, CEO. "Our first full quarter reporting as a consolidated entity provided early evidence of the financial benefits from our greater scope and scale. Meanwhile, we are now strategically positioning the Company for continued success in the future with a fully differentiated end-to-end platform. The integration is proceeding ahead of our own initial expectations and has been very well-received by partners and customers across the full spectrum of the platform. Revenue synergies are already materializing ahead of our expectations, even though we are merely at the onset of exploiting our platform's inherent competitive advantages. Execution continues to be our primary focus, as we confidently aspire to realize far greater, more strategic synergies in future quarters."
Mr. Stone concluded, "With respect to our financial performance during the September quarter, we continued to witness strong demand from app publishers and advertisers for our unique set of product offerings across the full range of the platform. Our On-Device Media revenue and our In-App Media revenue each increased more than 60% year-over-year on a pro forma basis. Within the On-Device Media segment, our primary health metric, revenue-per-device ("RPD"), increased more than 50% year-over-year on devices in the U.S., and more than 100% on devices outside of the U.S. during what was an all-time record quarter for the total number of new devices activated globally with our software installed. Scale efficiencies and disciplined expense controls once again enabled us to translate this top-line growth into non-GAAP adjusted EBITDA and non-GAAP EPS growth of more than 190% on a year-over-year basis. We expect to continue to demonstrate incremental profitable operating leverage, particularly as we realize considerable additional acquisition-related synergies. In summary, I am more upbeat than ever about the Company's future, as I believe that our 'One DT' platform is ideally positioned to not only adapt to, but will in fact fully benefit from, several key developing trends within our industry, such as the diversification of ad spend into other fully calculable performance-driven options, legislative and regulatory actions designed to foster alternative market opportunities, and the recent wave of ad-tech consolidation which has reduced the number of independent competitors, thereby further differentiating the uniqueness of our strategic market approach."
Fiscal 2022 Second Quarter Financial Results
Total revenue for the second quarter of fiscal 2022 was $310.2 million. Total "On-Device Media" revenue, which represents revenue derived from the Company's Application Media and Content Media platform products, increased 73% year-over-year to $129.4 million. Before intercompany eliminations, total "In-App Media" revenue, which represents revenue derived from the Fyber and AdColony businesses, increased 61% year-over-year on a pro forma basis to $187.2 million. Fyber contributed $125.7 million during the quarter, while AdColony contributed $61.5 million during the quarter.
GAAP net loss for the fiscal second quarter of 2022, inclusive of a $22.1 million fair value adjustment to the contingent acquisition-related earn-outs, was $5.9 million, or ($0.06) per share, as compared to GAAP net income from continuing operations of $0.4 million, or $0.00 per share for the second quarter of fiscal 2021. Non-GAAP adjusted net income1 for the second quarter of fiscal 2022 was $45.3 million, or $0.44 per share, as compared to Non-GAAP adjusted net income of $14.5 million, or $0.15 per share, in the second quarter of fiscal 2021.
Non-GAAP adjusted EBITDA2 for the second quarter of fiscal 2022 was $47.9 million as compared to Non-GAAP adjusted EBITDA of $16.5 million in the second quarter of fiscal 2021. The reconciliations between GAAP and Non-GAAP financial results for all referenced periods are provided in the tables immediately following the Unaudited Consolidated Statements of Cash Flows below.
Business Outlook
Based on information available as of November 2, 2021, the Company currently expects the following for the third quarter of fiscal 2022:
It is not reasonably practicable to provide a business outlook for GAAP net income because the Company cannot reasonably estimate the changes in stock-based compensation expense, which is directly impacted by changes in the Company's stock price, any adjustment to the contingent earn-out provisions, which will continue to be adjusted to fair value through the end of the earn-out periods, or other items that are difficult to predict with precision.
About Digital Turbine, Inc.
Digital Turbine is the leading independent mobile growth platform and levels up the landscape for advertisers, publishers, carriers and OEMS. By integrating a full ad stack with proprietary technology built into devices by wireless operators and OEMs, Digital Turbine supercharges advertising and monetization. The company is headquartered in Austin, Texas, with global offices in New York, Los Angeles, San Francisco, London, Berlin, Singapore, Tel Aviv and other cities serving top agency, app developer and advertising markets. For additional information visit www.digitalturbine.com.
Conference Call
Management will host a conference call today at 4:30 p.m. ET to discuss its fiscal 2022 second quarter financial results and provide operational updates on the business. To participate, interested parties should dial 855-238-2713 in the United States or 412-542-4111 from international locations. A webcast of the conference call will be available at ir.digitalturbine.com/events.
For those who are not able to join the live call, a playback will be available through November 9, 2021. The replay can be accessed by dialing 877-344-7529 in the United States or 412-317-0088 from international locations, passcode 10161500.
The conference call will discuss forward guidance and other material information.
Use of Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements presented in accordance with GAAP, Digital Turbine uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP adjusted net income and earnings per share ("EPS") and non-GAAP adjusted EBITDA. Reconciliations to the nearest GAAP measures of all non-GAAP measures included in this press release can be found in the tables below.
Non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance, prospects for the future and as a means to evaluate period-to-period comparisons. The Company believes that these non-GAAP measures provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of recurring core business operating results. The Company believes the non-GAAP measures that exclude such items when viewed in conjunction with GAAP results and the accompanying reconciliations enhance the comparability of results against prior periods and allow for greater transparency of financial results. The Company believes non-GAAP measures facilitate management's internal comparison of its financial performance to that of prior periods as well as trend analysis for budgeting and planning purposes. The presentation of non-GAAP measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
1Non-GAAP adjusted net income and EPS are defined as GAAP net income and EPS adjusted to exclude the effect of stock-based compensation, amortization of intangibles, adjustments in the fair value of earn-out liabilities associated with acquisitions, and transaction-related expenses and compensation costs. Readers are cautioned that non-GAAP adjusted net income and EPS should not be construed as an alternative to comparable GAAP net income figures determined in accordance with U.S. GAAP as an indicator of profitability or performance, which is the most comparable measure under GAAP.
2Non-GAAP adjusted EBITDA is calculated as GAAP net income excluding the following cash and non-cash expenses: net interest income/(expense), adjustments in the fair value of earn-out liabilities associated with acquisitions, income tax provision, depreciation and amortization, stock-based compensation expense, amortization of intangibles, foreign exchange transactions, and transaction-related expenses and compensation costs. Readers are cautioned that non-GAAP adjusted EBITDA should not be construed as an alternative to net income determined in accordance with U.S. GAAP as an indicator of performance, which is the most comparable measure under GAAP.
Non-GAAP adjusted EBITDA and non-GAAP adjusted net income and EPS are used by management as internal measures of profitability and performance. They have been included because the Company believes that the measures are used by certain investors to assess the Company's financial performance before non-cash charges and certain costs that the Company does not believe are reflective of its underlying business.
Forward-Looking Statements
This news release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements in this news release that are not statements of historical fact and that concern future results from operations, financial position, economic conditions, product releases and any other statement that may be construed as a prediction of future performance or events, including financial projections and growth in various products are forward-looking statements that speak only as of the date made and which involve known and unknown risks, uncertainties and other factors which may, should one or more of these risks uncertainties or other factors materialize, cause actual results to differ materially from those expressed or implied by such statements. These factors and risks include:
You should not place undue reliance on these forward-looking statements. The Company does not undertake to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Investor Relations Contact:Brian BartholomewDigital Turbine, Inc.brian.bartholomew@digitalturbine.com
Digital Turbine, Inc. and Subsidiaries Consolidated Statements of Operations and Comprehensive Income (in thousands, except per share amounts)
| ||||||||
Three months ended September 30, | ||||||||
2021 | 2020 | |||||||
Unaudited | Unaudited | |||||||
Net revenues | $ | 310,205 | $ | 70,893 | ||||
Costs of revenues and operating expenses | ||||||||
License fees and revenue share | 213,145 | 40,532 | ||||||
Other direct costs of revenues | 3,838 | 662 | ||||||
Product development | 17,904 | 4,217 | ||||||
Sales and marketing | 17,479 | 4,835 | ||||||
General and administrative | 41,307 | 8,531 | ||||||
Total costs of revenues and operating expenses | 293,673 | 58,777 | ||||||
Income from operations | 16,532 | 12,116 | ||||||
Interest and other income / (expense), net | ||||||||
Change in fair value of contingent consideration | (22,087) | (10,757) | ||||||
Interest expense, net | (1,955) | (287) | ||||||
Foreign exchange transaction loss | (249) | — | ||||||
Other expense, net | (477) | (38) | ||||||
Total interest and other income / (expense), net | (24,768) | (11,082) | ||||||
Income / (loss) before income taxes | (8,236) | 1,034 | ||||||
Income tax provision / (benefit) | (2,349) | 661 | ||||||
Net income / (loss) | (5,887) | 373 | ||||||
Less: net loss attributable to non-controlling interest | (35) | — | ||||||
Net income / (loss) attributable to Digital Turbine, Inc. | (5,852) | 373 | ||||||
Other comprehensive loss | ||||||||
Foreign currency translation adjustment | (15,892) | (45) | ||||||
Comprehensive income / (loss) | (21,779) | 328 | ||||||
Less: comprehensive loss attributable to non-controlling interest | (128) | — | ||||||
Comprehensive income / (loss) attributable to Digital Turbine, Inc. | $ | (21,651) | $ | 328 | ||||
Net income / (loss) per common share | ||||||||
Basic | $ | (0.06) | $ | — | ||||
Diluted | $ | (0.06) | $ | — | ||||
Weighted-average common shares outstanding | ||||||||
Basic | 96,157 | 88,035 | ||||||
Diluted | 96,157 | 96,057 |
Digital Turbine, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands, except par value and share amounts)
| ||||||||
September 30, 2021 | March 31, 2021 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 95,522 | $ | 30,778 | ||||
Restricted cash | 695 | 340 | ||||||
Accounts receivable, net | 228,107 | 61,985 | ||||||
Prepaid expenses and other current assets | 20,852 | 4,282 | ||||||
Total current assets | 345,176 | 97,385 | ||||||
Property and equipment, net | 22,116 | 13,050 | ||||||
Right-of-use assets | 17,914 | 3,495 | ||||||
Deferred tax assets, net | — | 12,963 | ||||||
Intangible assets, net | 467,528 | 53,300 | ||||||
Goodwill | 559,033 | 80,176 | ||||||
Other non-current assets | 844 | — | ||||||
TOTAL ASSETS | $ | 1,412,611 | $ | 260,369 | ||||
LIABILITIES AND STOCKHOLDER'S EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 167,104 | $ | 34,953 | ||||
Accrued license fees and revenue share | 81,881 | 46,196 | ||||||
Accrued compensation | 23,675 | 9,817 | ||||||
Short-term debt | 13,423 | 14,557 | ||||||
Other current liabilities | 20,549 | 5,626 | ||||||
Acquisition purchase price liabilities | 335,500 | — | ||||||
Total current liabilities | 642,132 | 111,149 | ||||||
Long-term debt, net of debt issuance costs | 244,001 | — | ||||||
Deferred tax liabilities, net | 19,571 | — | ||||||
Other non-current liabilities | 18,525 | 4,108 | ||||||
Total liabilities | 924,229 | 115,257 | ||||||
Commitments and contingencies (Note 13) | ||||||||
Stockholders' equity | ||||||||
Preferred stock | ||||||||
Series A convertible preferred stock at $0.0001 par value; 2,000,000 shares authorized, 100,000 issued and outstanding (liquidation preference of $1) | 100 | 100 | ||||||
Common stock | ||||||||
Series A convertible preferred stock at $0.0001 par value; 2,000,000 shares authorized, 100,000 issued and outstanding (liquidation preference of $1) | 10 | 10 | ||||||
Additional paid-in capital | 741,781 | 373,310 | ||||||
Treasury stock (754,599 shares at September 30, 2021 and March 31, 2021) | (71) | (71) | ||||||
Accumulated other comprehensive loss | (36,721) | (903) | ||||||
Accumulated deficit | (218,902) | (227,334) | ||||||
Total stockholders' equity attributable to Digital Turbine, Inc. | 486,197 | 145,112 | ||||||
Non-controlling interest | 2,185 | — | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,412,611 | $ | 260,369 |
Digital Turbine, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands)
| ||||||||
Three months ended September 30, | ||||||||
2021 | 2020 | |||||||
(Unaudited) | (Unaudited) | |||||||
Cash flows from operating activities: | ||||||||
Net income / (loss) | $ | (5,887) | $ | 373 | ||||
Adjustments to reconcile net income / (loss) to net cash provided by by operatingactivities: | ||||||||
Depreciation and amortization | 16,328 | 1,689 | ||||||
Non-cash interest expense | 171 | 18 | ||||||
Stock-based compensation | 3,330 | 2,230 | ||||||
Stock-based compensation for services rendered | 2,595 | 285 | ||||||
Change in fair value of contingent consideration | 22,087 | 10,757 | ||||||
Right-of-use asset | 1,323 | 183 | ||||||
Deferred income taxes | (2,699) | — | ||||||
(Increase) / decrease in assets: | ||||||||
Accounts receivable, gross | (13,038) | (3,049) | ||||||
Allowance for credit losses | (57) | 219 | ||||||
Prepaid expenses and other current assets | (425) | 1,181 | ||||||
Other non-current assets | (65) | — | ||||||
Increase / (decrease) in liabilities: | ||||||||
Accounts payable | 16,280 | 6,474 | ||||||
Accrued license fees and revenue share | (2,191) | (1,422) | ||||||
Accrued compensation | 1,262 | 2,243 | ||||||
Other current liabilities | 188 | 2,969 | ||||||
Other non-current liabilities | (2,451) | (496) | ||||||
Net cash provided by operating activities | 36,751 | 23,654 | ||||||
Cash flows from investing activities | ||||||||
Business acquisitions, net of cash acquired | (21,452) | (736) | ||||||
Capital expenditures | (6,047) | (2,168) | ||||||
Net cash used in investing activities | (27,499) | (2,904) | ||||||
Cash flows from financing activities | ||||||||
Proceeds from borrowings | 30,093 | — | ||||||
Payment of contingent consideration | — | (9,302) | ||||||
Options and warrants exercised | 1,460 | 3,091 | ||||||
Repayment of debt obligations | (26,576) | (250) | ||||||
Net cash provided by / (used in) financing activities | 4,977 | (6,461) | ||||||
Effect of exchange rate changes on cash | (2,024) | (45) | ||||||
Net change in cash | 12,205 | 14,244 | ||||||
Cash and restricted cash, beginning of period | 84,012 | 18,723 | ||||||
Cash and restricted cash, end of period | $ | 96,217 | $ | 32,967 |
PRO FORMA REVENUE | |||||||||||
(in thousands) | |||||||||||
(Unaudited) | |||||||||||
Three months ended September 30, | |||||||||||
2021 | 2020 | % Change | |||||||||
On Device Media | $ | 129,449 | $ | 74,700 | 73 | % | |||||
AdColony | 61,495 | 51,592 | 19 | % | |||||||
Fyber | 125,727 | 64,988 | 93 | % | |||||||
Elimination | (6,466) | (1,123) | 476 | % | |||||||
Consolidated | $ | 310,205 | $ | 190,157 | 63 | % |
GAAP INCOME FROM OPERATIONS TO NON-GAAP GROSS PROFIT | ||||||||
(in thousands) | ||||||||
(Unaudited) | ||||||||
Three months ended September 30, | ||||||||
2021 | 2020 | |||||||
Net revenues | $ | 310,205 | $ | 70,893 | ||||
Income from operations | 16,532 | 12,116 | ||||||
Add-back items: | ||||||||
Product development | 17,904 | 4,217 | ||||||
Sales and marketing | 17,479 | 4,835 | ||||||
General and administrative | 41,307 | 8,531 | ||||||
Depreciation of software included in other direct costs of revenue | 771 | 431 | ||||||
Non-GAAP gross profit | $ | 93,993 | $ | 30,130 | ||||
Non-GAAP gross profit percentage | 30 | % | 43 | % | ||||
GAAP NET INCOME TO NON-GAAP ADJUSTED NET INCOME | ||||||||
(in thousands) | ||||||||
(Unaudited) | ||||||||
Three months ended September 30, | ||||||||
2021 | 2020 | |||||||
Net income / (loss) | $ | (5,887) | $ | 373 | ||||
Add-back items: | ||||||||
Stock and stock option compensation | 5,925 | 2,515 | ||||||
Amortization of intangibles | 13,999 | 670 | ||||||
Adjustment for estimated earn-out liability | 22,087 | 10,757 | ||||||
Transaction-related expenses and compensation costs | 9,159 | 150 | ||||||
Non-GAAP adjusted net income | $ | 45,283 | $ | 14,465 | ||||
Non-GAAP adjusted net income per share | $ | 0.44 | $ | 0.15 | ||||
Weighted-average common shares outstanding, diluted | 102,721 | 96,057 |
GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDA | ||||||||
(in thousands) | ||||||||
(Unaudited) | ||||||||
Three months ended September 30, | ||||||||
2021 | 2020 | |||||||
Net income / (loss) | $ | (5,887) | $ | 373 | ||||
Add-back items: | ||||||||
Stock and stock option compensation | 5,925 | 2,515 | ||||||
Amortization of intangibles | 13,999 | 670 | ||||||
Depreciation expense | 2,329 | 1,019 | ||||||
Interest expense, net | 1,955 | 287 | ||||||
Other expense, net | 477 | 38 | ||||||
Change in fair value of contingent consideration | 22,087 | 10,757 | ||||||
Foreign exchange transaction loss | 249 | — | ||||||
Income tax provision | (2,349) | 661 | ||||||
Transaction-related expenses and compensation costs | 9,159 | 150 | ||||||
Non-GAAP adjusted EBITDA | $ | 47,944 | $ | 16,470 |
GAAP CASH FLOW FROM OPERATING ACTIVITIES TO NON-GAAP FREE CASH FLOW | ||||||||
(in thousands) | ||||||||
(Unaudited) | ||||||||
Three months ended September 30, | ||||||||
2021 | 2020 | |||||||
Net cash provided by operating activities | $ | 36,751 | $ | 23,654 | ||||
Capital expenditures | (6,047) | (2,168) | ||||||
Transaction-related expenses and compensation costs | 9,159 | 150 | ||||||
Non-GAAP free cash flow | $ | 39,863 | $ | 21,636 |
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SOURCE Digital Turbine, Inc.