Digital Turbine Inc: Penny Stock Tech Company Short on News, Big on Gains

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Digital Turbine Stock Surges on Strong Financial Results

Some tech companies inundate investors with press releases, hoping they will juice their share price. Then there are tech stocks that perform well because the companies report strong financial results and outlooks. Digital Turbine Inc (NASDAQ:APPS) fits perfectly in the latter category.

The Austin, Texas-based software company reported its best December quarterly results in the company’s history, and it expects its full-year 2019 revenue to increase 37.7% year-over-year.

Great financials and a solid outlook have helped Digital Turbine stock advance more than 160% since the beginning of October 2018 and almost 67% since the start of 2019. By all accounts, this is just the beginning for Digital Turbine’s gains in 2019.

Digital Turbine Inc Overview

When it comes to mobile apps, Digital Turbine Inc is a little bit like Big Brother— but the good kind, one that points you in the right direction, not the leader of a totalitarian state. Digital Turbine helps the right app get to the right person at the right time. (Source: “Digital Turbine,” Digital Turbine Inc, last accessed March 13, 2019.)

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The company provides products and solutions for mobile operators, original equipment manufacturers (OEMs), app advertisers, and mobile publishers. Digital Turbine’s products help its clients acquire targeted app users and promote their brands, turning online visitors into returning customers.

Digital Turbine has delivered about 1.6 billion sponsored app installs on more than 160 million devices—in more than 190 countries, for hundreds of advertisers. (Source: Ibid.)

Digital Turbine Stock Information
Market Cap $244.4 million
Beta 1.84
52-Week Change 1.6%
52-Week High $3.44
52-Week Low $1.12
Shares Outstanding 78.6 million
Float 52.1 million
50-Day Moving Average $2.77
200-Day Moving Average $1.89

(Source: “Digital Turbine, Inc. (APPS),” Yahoo! Finance, last accessed March 14, 2019.)

APP stock started its bullish trend in early November after reporting 50% second-quarter revenue growth; improved gross margins; and continued positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

Since then, Digital Turbine stock has been on a tear, as the following chart shows:


Chart courtesy of StockCharts.com

Q3 Revenue Up 34%, Losses Significantly Narrowed

On February 5, Digital Turbine announced that its revenue for the third quarter of fiscal 2019, ended December 31, 2018, increased 34% year-over-year to $30.4 million. Global revenue-per-device (RPD) was up seven percent while U.S. RPD jumped 41%. (Source: “Digital Turbine Reports Fiscal 2019 Third Quarter Results,” Digital Turbine Inc, February 5, 2019.)

The company reported a third-quarter net loss of $1.1 million ($0.01 per share), compared to a loss of $4.8 million ($0.07 per share) in the third quarter of fiscal 2018.

Third-quarter adjusted net income was $3.0 million ($0.04 per share) versus a loss of $0.8 million ($0.01 per share) in the third quarter of fiscal 2018.

Adjusted EBITDA for the fiscal third quarter was $3.8 million, compared to roughly zero in Q3 2018.

“Our December quarter was easily the strongest in the Company’s history across a wide range of operational and financial metrics,” said CEO Bill Stone. “More impressively, we were able to deliver these strong quarterly results amid a relatively weak U.S. smartphone market…” (Source: Ibid.)

During the second half of the year, Digital Turbine renewed its partnership agreements with Verizon Communications Inc. (NYSE:VZ), AT&T Inc. (NYSE:T), and Cricket Wireless LLC.

The company also added several high-profile advertisers, including Netflix, Inc. (NASDAQ:NFLX) and LinkedIn. It also inked a new multi-year partnership agreement with Samsung Electronics Co Ltd (OTCMKTS:SSNLF, KRX:005930).

“Solid execution over the past twelve months has positioned the company well for continuing growth and expanding profitability going forward,” said Stone. (Source: Ibid.)

To that end, Digital Turbine expects to report full-year fiscal 2019 revenue of between $102.5 and $103.5 million. At the midpoint, that represents year-over-year growth of 37.7%.

In 2018, revenue was up 86% year-over-year at $74.8 million. (Source: “Digital Turbine Reports Fourth Quarter and Fiscal Full Year 2018 Results,” Digital Turbine Inc, June 12, 2018.)

The company also expects to report full-year adjusted EBITDA of between $7.3 and $7.8 million. In fiscal 2018, Digital Turbine reported adjusted EBITDA of $2.6 million.

Analyst Take

What’s not to like about Digital Turbine? The company reported excellent third-quarter results that saw it top its own revenue and earnings estimates.

Digital Turbine Inc has a strong cash position, is renewing lucrative partnership agreements, and has signed on new high-profile advertisers—all of which is a testament to the value that the company brings to advertisers, mobile operators, and device OEMs.

Trading around $3.10 at the time of this writing, Digital Turbine stock is, by current definitions, a penny stock (for the sake of inflation, that definition includes stocks trading under $10.00).

But at its current pace, APPS stock may not be a penny stock for long. Digital Turbine is definitely worth watching in 2019.