Notable Mover: Digital Turbine, Inc. (NASDAQ:APPS)

Digital Turbine, Inc. (NASDAQ:APPS) reported earnings for the three months ended March 2016 on June 13, 2016. The company earned $-0.09 per share on revenue of $23.03M. Analysts had been modeling earning per share of $-0.08 with $23M in revenue.

Digital Turbine, Inc. (NASDAQ:APPS) announced financial results for the fiscal year and three months ended March 31, 2016.

Recent Highlights:

  • The March quarter set a new record for bid rate increases from app developers and advertisers, showcasing the strengthening demand for unique access to the homescreen.
  • Ignite revenue is diversifying – thus far in June, no single partner accounts for more than 60% of total Ignite revenue, versus more than 80% derived from one partner in the March quarter.
  • Ignite scheduled to be deployed in calendar 2016 by Airtel, the third largest carrier in the world with more than 250 million subscribers in India and 350 million subscribers globally.
  • Deutsche Telekom scheduled to roll out additional devices in additional markets utilizing Ignite.
  • Ignite has been successfully deployed for embedded base applications push across multiple carriers in multiple geographies.
  • Ignite is launching in June with Vizio, the largest television seller by volume in North America, marking the Company’s initial foray into the connected home market.
  • Ignite Direct is launching in June to better capitalize on opportunities in the “Bring your own device” market via a unique SIM-activated dynamic app delivery platform.
  • DT Pay continues to gain meaningful traction in the mobile payment marketplace and is now live in the Philippines and India.
  • The Company announced a newly formed partnership with Amazon, which will leverage Digital Turbine’s recommendation technology and local customer relationships to extend the reach of its shopping app into India and Mexico.

Fourth Quarter 2016 Financial Results

As a result of growth in the Company’s Advertising business over the past year and the March 6, 2015 acquisition of Appia, Inc., management believes that sequential quarterly comparisons are better indicators of the performance of its business than year over year quarterly comparisons, given the substantial operational differences between the Company today and at this time last year. (However, as noted below, the full fiscal year revenue comparisons are presented on a year over year, pro forma basis). The Company has renamed the components of its Advertising segment to better reflect the entities with whom it partners.  Advertising is now comprised of Advertisers & Publishers (A&P), including the former “Appia Core” business, as well as the emerging RTB business; and Operators & OEMs (O&O), including Ignite, Discover and other professional advertising services.  Content continues to be comprised of Marketplace and Pay.

Revenue for the fiscal fourth quarter of 2016 was $23.0 million, down 4% when compared to the fiscal third quarter of 2016.  Advertising revenue of $15.0 million declined 14% versus the fiscal third quarter of 2016.  Within Advertising, O&O revenue of $8.0 million increased 15%, driven by continued penetration at our largest North American carrier, along with the contribution of several new carrier launches since the beginning of January.  A&P revenue of $7.1 million declined 33% stemming from a notable decline with one particular customer and seasonal weakness during the quarter as calendar year 2016 advertising budgets were reset.   Content revenue of $8.0 million increased 20% (19% on a constant currency basis) on the strength of record DT Pay adoption in the Southeast Asia region.

GAAP gross margin was 16% for the fourth quarter of fiscal 2016, consistent with 16% for the fiscal 2016 third quarter.  Excluding the amortization of intangibles, non-GAAP adjusted gross margin was 25%, as compared to 23% for the third quarter of fiscal 2016.

Digital Turbine, Inc. earnings per share showed an increasing trend of 28.2% for the current fiscal year. The company’s expected EPS decline rate for next fiscal year is -2%.Analysts project EPS growth over the next 5 years at 25%. It has EPS annual growth over the past 5 fiscal years of 25% when sales grew 56.6. It reported 125.5% sales growth, and 59.5% EPS growth in the last quarter.

The stock is trading at $1.07, up 46.58% from 52-week low of $0.73. The stock trades down -69.34% from its peak of $3.49 and % below the consensus price target of $2.74. Its volume clocked up at 0.42 million shares which is higher than the average volume of 0.34 million shares. Its market capitalization currently stands at $70.26M.

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