Digital Turbine Inc Shares Up 270% Since March, Just Getting Started

Digital Turbine Stock Up 161% YoY, Poised to Double AgainDigital Turbine Inc Soars on Strong Financials And Acquisition

Digital Turbine Inc (NASDAQ:APPS) is an excellent tech stock that few seem to be discussing. That’s a shame, since the media and mobile communications company has been trouncing the broader stock market by every measure.

At the time of this writing, Digital Turbine stock has soared 597% since the start of 2019, 161% year-over-year, 80% year-to-date, and 270% since March.

Why the strong growth trajectory? The company continues to report strong financial results and provide an encouraging outlook. It also just recently closed on the strategic acquisition of a company that has reported rapid revenue and profitability growth over the past five years.

APPS Stock Overview

Digital Turbine helps people discover mobile apps before they even knew they wanted to. The company’s mobile advertising platform helps apps (mobile gaming, social media, news, content streaming,  home delivery, etc.) get discovered. (Source: “Digital Turbine Reports Fourth Quarter and Fiscal Full Year 2020 Results,” Digital Turbine, Inc., June 2, 2020.)

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The company provides media and mobile communication solutions to mobile operations, application developers, and original equipment manufacturers (OEMs) around the world.

The company’s “Ignite” software platform allows mobile operators and OEMs to control, manage, and monetize devices. Ignite has been installed in more than 405 million devices, including more than 40 million during the 2020 fiscal fourth quarter.

Digital Turbine also offers products and professional services directly related to Ignite.

Digital Turbine’s technology is used by more than 40 mobile operators and OEMs. The company has delivered more than three billion app preloads for tens of thousands of ad campaigns.

Acquisition of  Mobile Posse

In early March, Digital Turbine announced that it completed the acquisition of Mobile Posse, Inc., a mobile content discovery and advertising platform company, for approximately $66.0 million. (Source: “Mobile Posse Acquisition Summary March 2020,” Digital Turbine, Inc., last accessed July 22, 2020.)

“Firstly Mobile,”which is Mobile Posse’s content discovery platform, delivers media content directly to smartphone users and is a way for wireless carriers and handset OEMs to generate mobile ad revenue.

When you look at the company’s numbers, you can see why Digital Turbine snapped it up. In 2019, Mobile Posse reported revenue of $59.1 million (five-year compound annual growth rate of 48%), net income of $4.5 million, and adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) of $12.8 million.

Chart courtesy of StockCharts.com

Q4 Revenue Up 45%, Net Income of $14 Million

On June 2, Digital Turbine announced that its revenue for the fourth quarter of fiscal 2020, ended March 31, jumped 45% year-over-year to $39.4 million. (Source: Digital Turbine Inc, June 2, 2020, op. cit.)

The company reported fourth-quarter net income of $14.0 million, or $0.16 per share, compared to a net loss of $6.8 million, or a loss of $0.09 per share, in the fourth quarter of 2019.

Adjusted net income was $4.2 million, or $0.05 per share, a 75% increase over the $2.4 million, or $0.03 per share, recorded in the fourth quarter of fiscal 2019.

Bill Stone, CEO commented, “We executed well in our fiscal fourth quarter, delivering results that exceeded our expectations while completing the highly strategic Mobile Posse acquisition and tactically navigating the onset of unique challenges and opportunities presented by COVID-19.”

Looking ahead to fiscal 2021, Stone noted that he is “highly confident” that the company will meet its primary growth objectives. He believes that consumers’ increased usage of mobile gaming, social media, news, content streaming, and home delivery apps will continue to climb beyond the levels experienced during the pandemic period.

“We believe that our motivated team, profitable operating model, healthy balance sheet and unique platform offering give us the confidence to not just be able to weather near-term macro conditions, but to be able to continue to grow both our top and bottom lines despite these conditions,” concluded Stone. (Source: Ibid.)

Analyst Take

Digital Turbine was reporting strong financial results and growth before COVID-19, and it continues to do so during the pandemic. The company is expected to do even better when device activation levels return to normal levels.

That’s great news for the company’s customers, and for buy-and-hold investors of Digital Turbine stock.