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DT

Digital Turbine, Inc. (APPS)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 returned to YoY growth: revenue $119.2M (+6% YoY) and non-GAAP gross margin 48% (vs 46% last year), with non-GAAP adjusted EBITDA $20.5M (+66% YoY) as transformation cost savings flowed through .
  • Results beat S&P Global consensus on revenue ($119.2M vs $116.6M*) and EPS ($0.10 vs $0.04*); on SPGI-standardized EBITDA, actual ($12.3M*) was below consensus ($17.6M*), while company-reported non-GAAP adjusted EBITDA was $20.5M; difference is definitional and reflects APPS’ non-GAAP adjustments .
  • FY2026 guide introduced: revenue $515–$525M and non-GAAP adjusted EBITDA $85–$90M (CFO on the call framed EBITDA as $85–$95M), signaling continued top- and bottom-line growth; note the call/press release range discrepancy .
  • Strategic catalysts: T-Mobile now live on Ignite in the U.S.; Ignite now on 100M+ devices; alternative app distribution momentum (Epic store partnership), and improving ODS RPDs (US >+40% YoY; International >+100% YoY), positioning narrative positively into FY26 .

What Went Well and What Went Wrong

  • What Went Well

    • Returned to growth with margin expansion: non-GAAP adjusted EBITDA up 66% YoY to $20.5M; non-GAAP gross margin to 48% (vs 46%) on mix/efficiency improvements .
    • ODS strength and monetization: segment revenue +11% YoY; RPDs were up >40% in the U.S. and >100% internationally YoY; T-Mobile now live on Ignite .
    • Strategic positioning in alternative app distribution and AI: “meaningful progress on AI and Machine Learning… optimize the value of our first-party data,” and APPS is “a major partner” supporting Epic’s alternative store rollout (40M installs per Epic) .

  • What Went Wrong

    • AGP revenue declined 3% YoY in Q4 and remains pressured by gaming-centric supply dynamics; mix remains in transition despite improvements in non-gaming (DTX non-gaming revenues nearly doubled YoY) .
    • SPGI-standardized EBITDA missed consensus (actual $12.3M* vs $17.6M*), highlighting definitional divergence vs company non-GAAP adjusted EBITDA ($20.5M) and the importance of clarity on adjustments for external comparisons .
    • Leverage remains elevated: long-term debt $408.7M; while the credit facility was extended, a more permanent capital structure solution is still being pursued .

Financial Results

MetricQ2 FY2025Q3 FY2025Q4 FY2025
Revenue ($M)$118.7 $134.6 $119.2
GAAP Diluted EPS ($)($0.24) ($0.22) ($0.18)
Non-GAAP Adjusted EPS ($)$0.05 $0.13 $0.10
Non-GAAP Gross Margin (%)45% 44% 48%
Non-GAAP Adjusted EBITDA ($M)$15.3 $22.0 $20.5
Non-GAAP Free Cash Flow ($M)($15.7) $6.4 $5.5

Versus S&P Global consensus (Q4 FY2025)

MetricActual (Company)S&P ConsensusResult
Revenue ($M)$119.2 $116.6*Beat
EPS (Primary/Adjusted) ($)$0.10 $0.04*Beat
EBITDA ($M)$12.3 (SPGI standardized)*$17.6*Miss (SPGI basis); Company non-GAAP adjusted EBITDA $20.5

Values marked with * are retrieved from S&P Global.

Segment revenue ($M)

SegmentQ2 FY2025Q3 FY2025Q4 FY2025
On Device Solutions$82.4 $91.7 $86.8
App Growth Platform$37.3 $44.2 $33.3
Eliminations($1.0) ($1.3) ($0.9)
Consolidated Revenue$118.7 $134.6 $119.2

Selected KPIs

KPIQ2 FY2025Q3 FY2025Q4 FY2025
Non-GAAP Gross Margin (%)45% 44% 48%
Non-GAAP Free Cash Flow ($M)($15.7) $6.4 $5.5
ODS RPD YoY (U.S.)——>+40% (YoY)
ODS RPD YoY (International)——>+100% (YoY)
Ignite Installed Base——100M+ devices

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)FY2025$475–$485 (11/6/24) $485–$490 (2/5/25) Raised
Non-GAAP Adjusted EBITDA ($M)FY2025$65–$75 (11/6/24) $69–$71 (2/5/25) Raised (narrowed)
Revenue ($M)FY2026—$515–$525 (6/16/25) New
Non-GAAP Adjusted EBITDA ($M)FY2026—$85–$90 (PR 6/16/25) ; CFO: $85–$95 (call) New; call vs PR range discrepancy

Earnings Call Themes & Trends

TopicQ2 FY2025 (prior-2)Q3 FY2025 (prior-1)Q4 FY2025 (current)Trend
AI/data & MLTransformation program initiated; acquisition of ONE Store to broaden ecosystem Profit-optimization measures; stronger ODS and brand demand Data lake largely complete; 1,000+ dimensions/1,500+ events powering AI/ML; conversion gains Accelerating execution
Alternative app distributionONE Store International acquisition announced —Partnering with Epic’s alternative store (APPS a major partner); global regulatory momentum vs Apple/Google Momentum building
ODS product performanceODS $82.4M ODS $91.7M ODS $86.8M; RPDs up >40% US and >100% international; T-Mobile live Structurally improving monetization
AGP performance/mixAGP $37.3M; YoY pressure AGP $44.2M AGP $33.3M (–3% YoY); DTX non-gaming nearly doubled YoY Mixed; diversification underway
Cost structureTransformation targeting >$25M annual cash savings Raised FY25 guide on execution and savings Cash OpEx $36.1M; continued efficiency push, automation Margin tailwinds
Capital structure—CFO transition Credit facility extended; pursuing permanent solution De-risking in progress
Regional/device trends——Intl device launches offset U.S. declines; expanding partners in EU/Asia/LatAm Broadening footprint

Management Commentary

  • CEO (press release): “These improvements are now paying dividends… enabling us to issue guidance today for continued top- and bottom-line growth in fiscal 2026. More strategically, meaningful progress on… AI and Machine Learning… and the emergence of new opportunities for Alternative Apps distribution…” .
  • CEO (call): “T-Mobile is now live with us in the U.S. on Ignite… [Ignite] is now on over 100 million devices” .
  • CEO (call): “Our RPDs were up more than 40% year-over-year in the U.S. and over 100% internationally year-over-year” .
  • CEO (call): “Many of you may have seen Epic’s announcement of 40 million installs of their alternative store, where we are a major partner…” .
  • CFO (call): “Non-GAAP gross margin expanded to 48%… cash operating expenses in the March quarter were $36.1M… expect additional expansion in adjusted EBITDA margins moving forward” .
  • CFO (call): “We expect [FY2026] revenue $515–$525M and adjusted EBITDA $85–$95M” .

Q&A Highlights

  • ODS monetization/RPD drivers: International RPD strength driven by broader demand onto APPS’ footprint, better market-specific execution, and expanding distribution (e.g., Motorola, Telefónica), increasing supply density and attractiveness to demand partners .
  • Alternative app/regulatory tailwinds: Growing publisher interest in SingleTap licensing and direct distribution as legislation and legal actions globally push toward a level playing field; APPS leverages device footprint and first-party data to provide scalable reach .
  • OpEx trajectory: CFO expects OpEx to be “relatively flat” as the business grows, reflecting discipline and automation initiatives .

Estimates Context

  • Q4 FY2025 vs S&P Global: Revenue beat ($119.2M vs $116.6M*), EPS beat ($0.10 vs $0.04*). On SPGI-standardized EBITDA, actual was $12.3M* vs $17.6M* consensus (miss), while company-reported non-GAAP adjusted EBITDA was $20.5M; definitional differences (APPS adds back items such as stock comp, transformation costs, etc.) drive the divergence .
  • FY2026 outlook likely modestly above current Street revenue run-rate given the $515–$525M guide; EBITDA range of $85–$90M (press release) or $85–$95M (call) implies continued margin expansion from FY2025’s $72.3M base .
  • Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Reacceleration is tangible: revenue growth resumed with margin expansion, and ODS monetization improvements (RPDs) appear durable given product and AI/ML advances .
  • FY2026 guide supports a positive estimate revision bias on revenue and adjusted EBITDA; watch for reconciliation of the $85–$90M (PR) vs $85–$95M (call) range .
  • Narrative catalysts: T-Mobile go-live, Ignite scale (100M+ devices), and alternative app distribution (Epic/Pinterest) should enhance pipeline visibility and mix quality into FY26 .
  • Mixed AGP near-term but improving mix (DTX non-gaming nearly doubled YoY) reduces gaming-dependence; continuation will be key to multiple re-rating .
  • Balance sheet/credit watch: facility extension de-risks near-term, but a permanent debt solution remains a 2026 narrative item; sustained FCF and EBITDA expansion can help drive cost of capital down .
  • Execution focus: management targeting flat OpEx and automation to leverage growth; track non-GAAP gross margin and adjusted EBITDA margin progress quarterly .

Other relevant press releases in the quarter:

  • Alcatel partnership in India to integrate DT tech (Dynamic Installs, SingleTap) into devices, expanding international footprint .
  • Advertible partnership highlights native rendering innovation and ecosystem relationships; APPS cites improved ad experiences and results across developers’ apps .