Digital Turbine Inc Near Record Levels on Raft of New Acquisitions & Record Q3 Results

Digital Turbine stockDigital Turbine Stock Up 1,586% Year-Over-Year & Just Getting Started

I’ve been bullish on Digital Turbine Inc (NASDAQ:APPS) stock for a number of years now.

And the company hasn’t disappointed. APPS stock had a big year in 2019, soaring 285%. But 2020 was even better, with Digital Turbine stock advancing 684%. That momentum has carried over into 2021, with APPS stock up 31% year-to-date. Since the start of 2019, the stock has jumped 3,982%.

Digital Turbine stock comes by those gains honestly. The company continues to report record financial results and provide strong guidance.

Digital Turbine Inc has also announced a raft of acquisitions that will help it create one of the largest, most comprehensive mobile advertising solutions in the industry.

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APPS stock has made incredible moves over the last two years, but it could still easily double or triple from its current level.

Chart courtesy of StockCharts.com

APPS Stock Overview

Have you ever opened your phone and found an app on your home screen you hadn’t downloaded? Digital Turbine Inc might have been behind that stealth move. The company’s mobile advertising platform makes it easier for businesses to get their apps discovered by consumers.

The company provides on-demand media and mobile communication solutions to mobile operators, application developers, and original equipment manufacturers (OEMs) around the world. (Source: “Investor Presentation: November 2020,” Digital Turbine Inc, last accessed March 25, 2021.)

Digital Turbine’s technology has been adopted by more than 40 mobile operators and OEMs, and has delivered more than three billion app preloads for tens of thousands of advertising campaigns in virtually every sector.

Definitive Agreement to Purchase AdColony Holding AS

In February, Digital Turbine announced that it had entered a definitive purchase agreement to acquire AdColony Holding AS. AdColony provides a leading mobile advertising platform that serves advertisers and publishers with a reach of more than 1.5 billion monthly global users. (Source: “Digital Turbine Announces Definitive Purchase Agreement to Acquire AdColony,” Digital Turbine Inc, February 26, 2021.)

AdColony’s proprietary video technologies and rich media formats are used by well-known global brands such as Walt Disney Co. (NYSE:DIS), Amazon.com, Inc. (NASDAQ:AMZN), and Bayerische Motoren Werke AG (ETR:BMW, OTCMKTS:BMWYY)—otherwise known as BMW.

Acquisition of Triapodi Ltd

In early March, Digital Turbine announced that it had acquired Triapodi Ltd (doing business as Appreciate) for $22.5 million in cash. (Source: “Digital Turbine Announces Acquisition of Triapodi Ltd. (d/b/a Appreciate), a Programmatic Demand Side Platform (“DSP”) Company,” Digital Turbine Inc, March 2, 2021.)

Appreciate is a programmatic mobile advertising company. Its demand-side platform is designed to optimize user-acquisition and return on investment for mobile marketers. Appreciate currently runs roughly 60 billion daily auctions on its platform.

Agreement to Acquire Fyber N.V.

On March 22, Digital Turbine announced that it had entered a definitive purchase agreement to acquire 95% of Fyber NV (ETR:FBEN), which has a leading mobile advertising monetization platform. The $600.0-million transaction is expected to close in the second quarter. (Source: “Digital Turbine Announces Definitive Purchase Agreement to Acquire Fyber N.V.,” Digital Turbine Inc, March 22, 2021.)

Fyber has an extensive network of more than 180 programmatic demand partners that reach 650 million unique monthly active users in more than 180 countries.

Digital Turbine’s CEO, Bill Stone, said that, combining the Fyber deal with the AdColony and Appreciate acquisitions, the company “will have all of the critical elements of a truly unique next-generation ad-tech ecosystem that, once integrated, will enable Digital Turbine to play a far more prominent and profitable role in the fast-growing and secularly-thriving $200+ billion mobile advertising and connected TV marketplace.” (Source: Ibid.)

Record Third-Quarter Results

For the third quarter of fiscal 2021 ended December 31, 2020, Digital Turbine announced that its revenue increased 146% year-over-year to $88.6 million. (Source: “Digital Turbine Reports Fiscal 2021 Third Quarter Results,” Digital Turbine Inc, February 3, 2021.)

The company’s net income was $14.5 million ($0.15 per share), versus $3.3 million ($0.04 per share) in the third quarter of fiscal 2019. Its adjusted net income was $20.0 million ($0.21 per share), compared to $5.0 million ($0.05 per share) in the same prior-year period.

Digital Turbine Inc’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $22.5 million, an increase of more than 300% over the $5.6 million in the third quarter of fiscal 2020.

For the fourth quarter of fiscal 2021, Digital Turbine expects to report:

  • Revenue between $298.0 and $300.0 million
  • Adjusted EBITDA between $71.0 and $72.0 million
  • Adjusted earnings per share of $0.67, based on approximately 98 million diluted shares outstanding

Analyst Take

What’s not to like about Digital Turbine Inc?

The company has a strong balance sheet, growing footprint, and expanding operations. It recently reported record revenue, profitability, and free cash flow. Management believes that Digital Turbine is in its early stages of growth as the company follows its core diversification strategy.

This bodes well for Digital Turbine stock investors in 2021 and beyond.