Release Date: May 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Digital Turbine Inc (APPS, Financial) achieved $545 million in revenue for fiscal 2024, despite a challenging operating environment.
- The company has made significant progress on numerous investment activities, including a new version of Ignite and the launch of SDK Bidding.
- Digital Turbine Inc (APPS) is expanding its device footprint, anticipating an incremental 70 million-plus devices launching with various Ignite capabilities.
- The company has secured a global preferred partner status with GroupM, the largest media buying agency in the world, which is expected to unlock significant media dollars.
- Digital Turbine Inc (APPS) is seeing encouraging signs of growth in brand revenues, with a 15% year-over-year increase in the March quarter.
Negative Points
- Total revenue for the fiscal year 2024 was down 18% year-on-year.
- US device sales continue to be challenging, with postpaid upgrade rates implying an unsustainable eight-year upgrade cycle.
- The company faced a $20 million decrease in revenue from non-gaming Chinese companies due to distribution challenges in the US market.
- Adjusted EBITDA for fiscal 2024 was $92.4 million, down from the previous year.
- Digital Turbine Inc (APPS) reported a GAAP net loss of $2.32 per share in the fourth quarter, primarily due to a noncash goodwill impairment charge.
Q & A Highlights
Q: We saw a news article today saying that T-Mobile is about to acquire UScellular. I think UScellular is one of your biggest customers, but T-Mobile is working with one of your competitors. Do you foresee any impact on your business?
A: This is Bill Stone. The acquisition is expected to take over a year to close, so it's not imminent. UScellular has been a fantastic partner, generating the highest revenue per device for us. They currently account for about 1% to 2% of our revenue. We see this as an opportunity to potentially increase our revenue significantly if T-Mobile recognizes the value we've provided to UScellular.
Q: Apple has begun enforcing new privacy manifest policy at the beginning of May. Have you heard anything from clients, and do you expect any impact from the Apple side?
A: The impact depends on the type of app developer. For mid to hardcore gaming audiences, the changes are minimal. However, for lower-end, hyper-casual games that rely on advertising, the changes are more prohibitive. We expect EU regulators to weigh in on this later this year, which could have significant downstream impacts on telcos, OEMs, publishers, and mega-cap players.
Q: Bill, you talked about some traction with Tier 1 publishers on the open app distribution side. Could you elaborate on the traction you're seeing and its potential contribution this fiscal year?
A: We're seeing great relationships with gaming companies like King, Playtika, PlaySimple, and Scopely. These companies are looking to diversify away from paying a 30% tax to Apple or Google. Alternative distribution is highly attractive to them, and we look forward to being good partners to help them achieve their strategic goals.
Q: Barrett, you mentioned sequential improvement in June relative to the annual guide. Could you provide more details on the cadence in margin?
A: Our focus has been on providing annual guidance to simplify our approach and intent for growth. We anticipate flattish to modest growth sequentially between the June and March quarters.
Q: Could you update us on the deprecation of your AdColony exchange and its impact on your business?
A: We are rolling through the comps of the AdColony exchange deprecation, which had many long-tail publishers. As we move forward, this will no longer be a negative comp. We are consolidating around the Digital Turbine Exchange, which we believe is unique and special, especially with brand advertisers. Being certified by GroupM as a global distribution partner is a significant differentiator for us.
Q: Is the momentum and growth for next year more from brand advertisers or gaming advertisers?
A: We will continue to work with performance and gaming advertisers. However, the differentiation comes from brand dollars, whether direct, PMP, or from omni-DSPs like The Trade Desk or Google DV360. This is unique to us and something we are focusing on to differentiate our exchange.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
