Digital Turbine Inc Thrashing Broader Market, Could Triple Again

Digital Turbine Stock Soars 700% Over March Lows

Digital Turbine Inc (NASDAQ:APPS) used to be a small-cap tech stock that no one seemed to be discussing (except for us at Profit Confidential). Maybe investors were turned off by the fact that Digital Turbine stock was technically a penny stock, which for the sake of inflation, refers to any stock trading under $10.00.

Ignoring APPS stock was a big mistake.

It recently blew that imaginary threshold away and investors seem to be taking note. Digital Turbine stock has been thrashing the broader market, soaring 256% year-over-year, 290% year-to-date, and 715% since March. The stock is also up an impressive 120% since I last looked at the company in July.

Investors are finally cluing in to the fact that Digital Turbine has been an excellent tech stock for quite some time.

The company continues to report strong financial results, which have recently included record earnings. As per usual, Digital Turbine’s management has also provided strong guidance. And that’s more than enough to propel the company’s share price higher.

Admittedly, APPS stock has made serious moves over the last few weeks. In the first half or so of August, Digital Turbine stock has nearly doubled. Suffice it to say, short-term profit-taking could be in order. But the company’s long-term outlook remains spectacular.
 

Chart courtesy of StockCharts.com

APPS Stock Overview

Digital Turbine Inc’s mobile advertising platform makes it easier for companies’ apps to get discovered by consumers.

Digital Turbine 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 August 19, 2020.)

The company’s application media software, which allows mobile operators and OEMs to control, manage, and monetize devices, has been installed in more than 450 million devices. In the first quarter of fiscal 2021 alone, it was installed in 43 million devices. (Source: “Digital Turbine Reports Fiscal 2021 First Quarter Results,” Digital Turbine Inc, August 5, 2020.)

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

Q1 Revenue Up 93%, Record Net Income

On August 5, Digital Turbine announced its financial results for the first quarter of fiscal 2021, ended June 30, 2020. The report included the results of Mobile Posse, which Digital Turbine acquired on February 28. (Source: Ibid.)

The company announced that its revenue for the first quarter of fiscal 2021 jumped 93% year-over-year to $59.0 million. It also reported first-quarter 2021 net income of $9.9 million, or $0.11 per share, versus a first-quarter 2020 net loss of $1.7 million, or $0.02 per share.

Adjusted net income was $12.5 million, or $0.13 per share, a 197% increase over the first-quarter 2020 adjusted net income. Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) were $14.1 million, a 235% increase over the first-quarter 2020 adjusted EBITDA.

For the second quarter of fiscal 2021, Digital Turbine Inc expects to report revenue between $59.0 and $61.0 million, adjusted EBITDA between $11.0 and $12.0 million, and adjusted earnings per share (EPS) between $0.11 and $0.12.

Analyst Take

Digital Turbine Inc had been reporting strong financial results for quite some time now, but the first quarter of fiscal 2021 was a breakout period for the company.

According to CEO Bill Stone, “Positive momentum trends throughout the business drove better-than-expected results and have the Company well-positioned for continued strong performance going forward.” (Source: Ibid.)