Digital Turbine Inc: Up 132% in Breakout Year, Set to Double Again

Digital Turbine Inc. Shares Up 132% in 2019, Poised To Double Again
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Digital Turbine Inc: Strong Financials Deliver Strong Returns

When it comes to small-cap tech stocks, few are as continually impressive as Digital Turbine Inc (NASDAQ:APPS). It’s a tech stock we’ve been following and one that continues to impress.

The company continues to report strong financial results, increased demand for its media and mobile applications, an enviable balance sheet with $11.0 million in cash and zero long-term debt, and a strong outlook.

Digital Turbine stock is up 111.5% over the last 52 weeks and up a more impressive 132% in 2019. Thanks to a breakout 2019 and strong guidance, APPS stock is set to double again in the coming quarters.

Digital Turbine Inc Overview

Digital Turbine is a digital software company focused on mobile apps. The company’s technology has delivered almost 1.6 billion app preloads to over 160 million devices in 90 countries.

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Digital Turbine has more than 30 partners, including Verizon Communications Inc. (NYSE:VZ), AT&T Inc. (NYSE:T), Uber Technologies Inc (NYSE:UBER), Twitter Inc (NYSE:TWTR), and Facebook, Inc. (NASDAQ:FB). (Source: “Digital Turbine,” Digital Turbine Inc, last accessed June 4, 2019.)

APPS Stock Information
Market Cap $363.9 million
Beta 1.79
52-Week Change: 150.9%
52-Week High $4.48
52-Week Low $1.12
Shares Outstanding 81.9 Million
Float 55.2 Million
50-Day Moving Average $3.80
200-Day Moving Average $2.89

(Source: “Digital Turbine, Inc. (APPS),” Yahoo! Finance, last accessed June 4, 2019.)

Digital Turbine stock has been bullish since early November. While the broader market was in the midst of a selloff, this stock was trending higher. It also shrugged off the December swoon faster than most tech stocks.

In early February, the company reported strong second-quarter results, which helped APPS stock soar through a tested resistance level at $2.50. As you can see in the following chart, it’s been all uphill since then:

Chart courtesy of StockCharts.com

Thanks to a strong outlook, that momentum should carry into 2020.

Q4 Revenue Up 30%, Full-Year Revenue Advanced 39%

On June 3, Digital Turbine announced that its fourth-quarter revenue (for the period ended March 31, 2019) increased 30% year-over-year to $27.2 million. The company reported a fourth-quarter net loss of $6.8 million ($0.09 per share), versus a loss of $4.2 million ($0.06 per share) in the same prior-year period. (Source: “Digital Turbine Reports Fourth Quarter and Fiscal Full Year 2019 Results,” Digital Turbine Inc, June 3, 2019.)

Digital Turbine reported fourth-quarter adjusted net income of $2.4 million ($0.03 per share), compared with an adjusted net loss of $0.6 million ($0.01 per share) in the fourth quarter of the prior year.

Fourth-quarter adjusted earnings before interest, tax, amortization, and depreciation (EBITDA) was $3.3 million, compared to adjusted EBITDA of zero in the fourth quarter of the previous year.

Full-year revenue was up 39%, at $103.6 million. The company reported a net loss from continuing operations of $4.3 million, or $0.06 per share. In fiscal 2018, Digital Turbine reported a net loss from continuing operations of $19.7 million, or $0.28 per share.

Full-year adjusted net income came in at $5.9 million ($0.08 per share), compared with an adjusted net loss of $3.6 million ($0.05 per share) in fiscal 2018. Adjusted EBITDA for fiscal 2019 was $8.9 million, as opposed to $0.2 million in fiscal 2018.

Digital Turbine ended fiscal 2019 with $10.9 million in cash and cash equivalents—and zero total debt.

“Fiscal year 2019 was a breakout year for Digital Turbine, with strong growth on both the top-line and the bottom-line,” said company CEO Bill Stone. “Importantly, we also exited fiscal 2019 with a vastly improved balance sheet with approximately $11 million in cash and zero remaining debt.”

Looking ahead, Digital Turbine Inc is expected to report first-quarter revenue (for the period ended June 3, 2019) of between $28.0 and $28.5 million. At the midpoint, that represents a year-over-year increase of 28%.

Also in the first quarter, the company expects to report adjusted EBITDA of between $2.2 and $2.6 million. In the prior-year first quarter, Digital Turbine reported adjusted EBITDA of $0.2 million.

Analyst Take

Thanks to strong top- and bottom-line growth, fiscal 2019 was a breakout year for Digital Turbine Inc. Despite slower U.S. smartphone sales, the company was able to grow its fourth-quarter revenue by 30% and generate in excess of $3.0 million in adjusted EBITDA.

What does that look like for investors? According to Stone, the company expects to “deliver attractive returns for [its] investors.”

Just what you want to hear from a CEO.