Digital Turbine Stock Bullish on Acquisitions & Financials
For the most part, Wall Street ignores penny stocks. It’s tough to promote a stock when all it takes is a few million dollars to take a meaningful position. That said, there are times when a lowly penny stock is too good to ignore.
Digital Turbine Inc (NASDAQ:APPS) is one of those stocks.
I’ve been shouting about the long-term benefits of APPS stock for a couple years now. And frankly, it hasn’t disappointed. In 2019, Digital Turbine stock rallied by 285%. In 2020, a year racked by COVID-19, the stock jumped by another 684%.
That momentum has continued in 2021, with APPS stock up by 585% year-over-year and 24% year-to-date (as of this writing). In comparison, the Nasdaq is up by 42% year-over-year and roughly 10% year-to-date.
Digital Turbine Inc has been riding tailwinds from three strategic acquisitions that have turned it into one of the largest, most comprehensive mobile advertising solutions companies in the industry.
A long history of strong financial results certainly hasn’t hurt Digital Turbine stock’s price.
The outlook for APPS stock is bullish, with the average 12-month share-price target from Wall Street being $107.60 and the high estimate being $132.00. That points to upside for Digital Turbine Inc of 56% and 88.5%, respectively.
Those estimates are certainly within reach. Digital Turbine stock needs to climb by roughly 47% to get to its March all-time intra-day high of $102.56.
Chart courtesy of StockCharts.com
APPS Stock Overview
Digital Turbine is a one-stop-shop for businesses looking to make their apps more discoverable and monetize their mobile content.
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: May 2021,” Digital Turbine Inc, last accessed June 21, 2021.)
Digital Turbine operates in one business segment: advertising. The company provides an advertiser solution to carriers and OEMs consisting of services such as “Ignite,” a mobile device management platform, and “Discover,” an intelligent application discovery platform.
Digital Turbine Inc’s advertising partners include McDonald’s Corp (NYSE:MCD), Ford Motor Company (NYSE:F), and Amazon.com, Inc. (NASDAQ:AMZN).
Its mobile customers include AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), and T-Mobile US Inc (NASDAQ:TMUS).
Recent Acquisitions Tap Into Larger Market Opportunities
Over the last several months, Digital Turbine has made strategic acquisitions that have helped it tap into larger opportunities, generate new recurring revenues, and boost its revenue per device.
In February, the company entered an agreement to purchase AdColony Holding AS, a top-tier mobile advertising platform that serves leading global brands and agencies with studio and mobile video advertising technology. (Source: “Digital Turbine Announces Definitive Purchase Agreement to Acquire AdColony,” Digital Turbine Inc, February 26, 2021.)
In early March, Digital Turbine announced that it had acquired Triapodi Ltd. (doing business as Appreciate), a programmatic mobile advertising company. The deal was 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.)
In late March, Digital Turbine announced that it had entered a definitive purchase agreement to acquire 95% of Fyber N.V., which has a leading independent mobile mediation and in-app media exchange platform. That platform features advanced analytics tools and expertise in video advertising and real-time bidding. (Source: “Digital Turbine Announces Definitive Purchase Agreement to Acquire Fyber N.V.,” Digital Turbine Inc, March 22, 2021.)
Another Quarter of Excellent Financial Results
For the fourth quarter of its fiscal 2021, ended March 31, Digital Turbine announced that its revenue increased by 142% year-over-year to $95.1 million. Its full-year revenue went up by 126% to $313.6 million. (Source: “Digital Turbine Reports Fourth Quarter and Fiscal 2021 Financial Results,” Digital Turbine Inc, June 1, 2021.)
The company reported fourth-quarter net income of $30.1 million ($0.31 per share), a 115% increase over the fourth-quarter 2020 net income of $14.0 million ($0.15 per share). Its full-year net income came in at $54.9 million ($0.57 per share), compared to $14.3 million ($0.16 per share) in 2020.
Digital Turbine Inc’s adjusted fourth-quarter net income was $24.5 million ($0.25 per share), a big increase from the $4.2 million ($0.05 per share) recorded for the same prior-year period. Its full-year adjusted net income was $71.5 million ($0.74 per share), up from $17.5 million ($0.20 per share) in fiscal 2020.
For the first quarter of fiscal 2022, ended June 30, 2021, Digital Turbine expects to report:
- Revenue between $188.0 and $192.0 million
- Adjusted earnings before interest, taxes, depreciation, and amortization between $32.0 and $34.0 million
- Adjusted earnings per share of $0.31
Fiscal 2020 was monumental for Digital Turbine Inc, and its fiscal 2021 was a breakout year. Despite a global pandemic, the company accelerated its revenue on unprecedented demand for its applications and content media offerings.
On top of that, its three recent acquisitions position the company to capture a larger share of the $300+ billion mobile media advertising market and log more than $1.0 billion in profitable annualized revenue.
All things being equal, fiscal 2022 looks like it will be another incredible year for Digital Turbine stock investors.