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Digital Turbine Reports Fiscal 2018 First Quarter ResultsAUSTIN, Texas, Aug. 7, 2017 /PRNewswire/ -- Digital Turbine, Inc. (Nasdaq: APPS), the Company empowering operators and Original Equipment Manufacturers ("OEMs") around the globe with end-to-end mobile solutions, announced financial results for the fiscal first quarter ended June 30, 2017. Recent Highlights:
"Fiscal 2018 is off to a great start for Digital Turbine," said Bill Stone, CEO. "The June quarter marked an important milestone, as we achieved our first profitable quarter in the history of the company on a non-GAAP adjusted EBITDA basis, fueled primarily by 118% year-over-year revenue growth in our O&O business and the continued realization of operating expense efficiencies during the quarter. O&O revenue growth was once again driven by strong advertiser demand for a strategic presence on the homescreen of mobile devices. We achieved markedly higher revenue-per-slot on the S8 devices with our largest North American carrier partners than on the S7 devices at the same time last year. Additionally, we are making noteworthy progress with more recently-added carrier partners, such as AT&T and America Movil, with whom we have meaningfully increased the number of phones and slots available to our advertiser ecosystem in recent months. Finally, I remain encouraged by the pipeline of new partners that we expect to begin to add to the Ignite platform in the next few quarters. Achieving scale is an important goal for every platform business, and I believe that our Ignite platform has now achieved the critical scale necessary to empower a sustainably profitable business." Mr. Stone concluded, "I am extremely pleased with the recent progress that we have made as an organization. Operationally, we have worked diligently with our partners to dramatically improve our overall execution and develop an array of new products and services designed to expand our addressable market opportunity while enhancing the end-user experience. With this in mind, I expect that we will continue to grow our O&O revenues with both new and existing Ignite partners, as we introduce new devices to the market, work to ramp new carrier and OEM partners, recruit additional advertisers to the platform, and prepare for the commercial launch of promising new growth initiatives such as 'Ignite Delivers'. Over the same time period, we carefully re-allocated internal resources and imposed disciplined expense controls in order to expedite profitability in the near-term and optimize our return on investment over the longer-term. We also secured additional access to capital via our recently added credit facility to better support working capital and help fund future business initiatives. By virtue of these collaborative efforts, we have emerged a stronger company today than ever before, and I am extremely excited about the prospects for Digital Turbine as we look ahead to the remainder of fiscal 2018." Fiscal 2018 First Quarter Financial Results Total revenue for the fiscal first quarter of 2018 was $26.1 million, representing an increase of 17% sequentially and 9% year-over-year. Advertising segment revenue of $18.2 million increased 20% sequentially and increased 42% year-over-year. The Company further divides its Advertising segment revenues into two components – Operators & OEMs ("O&O") and Advertisers & Publishers ("A&P") – in order to better reflect the entities with whom it partners. O&O revenue of $15.2 million during the fiscal first quarter was up 31% sequentially and 118% year-over-year. Year-over-year growth in the O&O business was attributable to incremental contributions from pre-existing partners as well as new carrier and OEM partners added to the Ignite platform over the preceding 12 months. A&P revenue of $3.0 million declined 16% sequentially and 48% year-over-year. This decline once again stems from an ongoing industry-wide shift in advertiser budget allocation toward programmatic and RTB systems away from legacy business development deals. In response to this shift, the Company enacted a plan in late 2016/early 2017 to more efficiently re-align resources and right-size the A&P business in order to achieve profitability at lower revenue levels going forward. Content revenue of $7.9 million increased 10% sequentially and declined 29% year-over-year. The continuing rebound in Content revenues during the quarter was largely reflective of revenue growth for DT Pay with Australian carrier partners, as content providers have now adjusted to the imposition of new policies and regulations set in place last year. Additionally, the Company continues to move forward with new signed contracts and implementations in India, Singapore, Pakistan and the Philippines. GAAP gross margin was 25% for the fiscal first quarter of fiscal 2018, as compared to the 17% GAAP gross margin for the fiscal fourth quarter of 2017. Non-GAAP adjusted gross margin3 was 28% for the fiscal first quarter of 2018, unchanged from the fiscal fourth quarter of 2017. The flat non-GAAP gross margin, despite 17% sequential growth in revenues, was driven by a mix shift within the O&O business during the quarter, as a majority of the sequential growth was derived via our largest, lower-margin North American carrier partners. The reconciliation between GAAP and non-GAAP financial results for all referenced periods is provided in a table immediately following the Unaudited Consolidated Statements of Operations and Comprehensive Loss below. Net loss for the first quarter of fiscal 2018 was $4.2 million, or ($0.06) per share, as compared to the net loss for the fiscal fourth quarter of 2017 of $6.9 million, or ($0.10) per share. Non-GAAP adjusted net loss1 was $0.9 million, or ($0.01) per share, in the fiscal first quarter of 2018, as compared to a net loss of $1.4 million, or ($0.02) per share, in the fiscal fourth quarter of 2017. Non-GAAP adjusted EBITDA2 for the first quarter of fiscal 2018 was $0.2 million, as compared to a Non-GAAP adjusted EBITDA loss of $0.7 million for the fiscal fourth quarter of 2017. Non-GAAP adjusted EBITDA profitability was achieved primarily via the combination of strong revenue growth in the O&O business and effective expense management during the quarter. Please see 'Use of Non-GAAP Measures' at the end of this press release for the definition of Non-GAAP adjusted EBITDA and a reconciliation to GAAP net loss. Business Outlook Based on information available as of August 7, 2017, the Company expects fiscal second quarter 2018 revenue of approximately $27 million, along with further sequential improvement in non-GAAP adjusted EBITDA2. The Company expects to generate positive non-GAAP adjusted EBITDA2 for the full year fiscal 2018. About Digital Turbine, Inc. Digital Turbine works at the convergence of media and mobile communications, delivering end-to-end products and solutions for mobile operators, device OEMs, app advertisers and publishers, that enable efficient user acquisition, app management and monetization opportunities. The company's products include Ignite™, a mobile device management solution with targeted app distribution capabilities, Discover™, a customized user experience and app discovery tool, Marketplace™, an application and content store, and Pay™, a content management and mobile payment solution. Digital Turbine Media encompasses a leading independent user acquisition network as well as an advertiser solution for unique and exclusive carrier inventory. Digital Turbine has delivered more than 150 million app installs for hundreds of advertisers. In addition, more than 31 million customers use Digital Turbine's solutions each month across more than 20 global operators. The company is headquartered in Austin, Texas, with global offices in Durham, San Francisco, Singapore, Sydney and Tel Aviv. For additional information visit www.digitalturbine.com or connect with Digital Turbine on Twitter at @DigitalTurbine. www.digitalturbine.com Conference Call Management will host a conference call today at 4:30 p.m. ET to discuss its first quarter financial results and provide operational updates on existing 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 August 14, 2017. The replay can be accessed by dialing 877-344-7529 in the United States or 412-317-0088 from international locations, passcode 10110991. The conference call will discuss guidance and other material information. Use of Non-GAAP Financial Measures To supplement the Company's condensed financial statements presented in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), Digital Turbine uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP adjusted gross profit, non-GAAP gross margin, non-GAAP adjusted EBITDA, and Non-GAAP adjusted net income and EPS. 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, and changes in the fair value of derivatives and warrants related to the September 2016 convertible notes offering. 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 loss excluding the following cash and non-cash expenses: interest expense, foreign transaction gains (losses), income taxes, depreciation and amortization, stock-based compensation expense, the change in fair value of derivatives and warrants that are recorded related to the September 2016 convertible notes offering, other income / (expense), impairment of intangible assets, loss on disposal of fixed assets, and loss on extinguishment of debt. Readers are cautioned that Non-GAAP adjusted EBITDA should not be construed as an alternative to net income (loss) determined in accordance with U.S. GAAP as an indicator of performance, which is the most comparable measure under GAAP. 3Non-GAAP adjusted gross profit and gross margin are defined as GAAP gross profit and gross margin adjusted to exclude the effect of intangible amortization expense, impairment of intangible assets, and depreciation of software. Readers are cautioned that Non-GAAP adjusted gross profit and gross margin should not be construed as an alternative to gross margin determined in accordance with U.S. GAAP as an indicator of profitability or performance, which is the most comparable measure under GAAP. Non-GAAP adjusted gross profit and gross margin, 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 the U.S. federal securities laws. 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:
Investor Relations Contacts: Brian Bartholomew
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