Digital Turbine Inc: 2020 Was Transformational as Stock Soared 684%

Will Digital Turbine Stock Repeat its Strong Performace in 2021?

I’ve been beating the drum for Digital Turbine Inc (NASDAQ:APPS) for years now. And the digital mobile software company is finally getting its due. APPS stock had a breakout year in 2019, advancing 285%.

Optimistic investors were looking for that momentum to carry into 2020. The coronavirus pandemic put a monkey wrench in those plans, but not even COVID-19 could hold Digital Turbine stock back.

2020 was transformational for Digital Turbine Inc, with the price of APPS stock soaring 684% that year. Lucky investors who happened to buy Digital Turbine stock when it bottomed in March 2020 saw their investments rocket by 1,525% by the end of the year.

Despite those meteoric gains, APPS stock continues to have excellent long-term growth potential. That’s because the company has continued to report solid financial results and provide strong guidance.

Chart courtesy of StockCharts.com

APPS Stock Overview

Digital Turbine Inc’s mobile advertising platform makes it easier for businesses to get their apps discovered by consumers. If you’ve ever opened your phone and discovered an app there that you didn’t download, you can thank (or blame) Digital Turbine.

The company provides on-demand media and mobile communication solutions to mobile operators, application developers, and original equipment manufacturers (OEMs) around the world. (Source: “Company Overview,” Digital Turbine Inc, last accessed January 14, 2021.)

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

Record Q2 Results

In late October, Digital Turbine announced that its revenue for the second quarter of fiscal 2021, ended September 30, 2020, increased 116% year-over-year to a record $70.9 million. (Source: “Digital Turbine Reports Fiscal 2021 Second Quarter Results,” Digital Turbine Inc, October 29, 2020.)

The company reported second-quarter net income—inclusive of a $10.8-million adjustment to the contingent earn-out related to the February 2020 acquisition of Mobile Posse, Inc.—of $400,000, or $0.00 per share. For the second quarter of 2019, Digital Turbine reported a net loss of $1.3 million, or a $0.02 loss per share.

Digital Turbine Inc’s adjusted net income was $14.5 million, or $0.15 per share, compared to $4.1 million, or $0.05 per share, in the second quarter of fiscal 2020.

Cash provided by operating activities totaled $23.7 million in the second quarter of fiscal 2021, versus $6.7 million in the second quarter of fiscal 2020.

Gross margin was 42% for the fiscal second quarter of 2021, as compared to 38% in the fiscal second quarter of 2020.

Digital Turbine’s application media software was installed in more than 60 million devices during the second quarter, and it has been installed on more than 500 million devices to date.

For the third fiscal quarter, Digital Turbine Inc expects to report:

• Revenue between $72.0 and $75.0 million, compared to $36.0 million in Q3 2020
• Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $17.0 and $18 million, versus $5.6 million in Q3 2020
• Adjusted earnings per share between $0.15 and $0.16, versus $0.05 in Q3 2020

Analyst Take

Digital Turbine Inc may be light on news, but the company makes up for it with stellar financial results and guidance.

The company’s second-quarter financials exceeded its guidance and built on its breakout momentum from the first fiscal quarter. Calendar year 2021 is still in its infancy, but it looks like it will be another transformational one for Digital Turbine stock.