Digital Turbine(APPS)2024-11-07 01:26Financial Data and Key Metrics - Revenue for Q2 2025 was 15.3 million, showing modest sequential growth [41] - ODS segment revenue reached 37.3 million, with brand revenues up 26% year-over-year and 13% sequentially [45] - Consolidated gross margin was 45%, down from 46% in Q1 and 47% in the same quarter last year [46] - Non-GAAP adjusted net income was 0.05 per share, compared to 0.13 per share, in Q2 2024 [49] - Cash balance at the end of the quarter was 3 million from the previous quarter [50] Business Line Performance - International ODS revenues improved nearly 25% year-over-year, driven by better RPDs and new supply [15] - SingleTap licensing product continued to grow, expanding relationships with multiple partners [16] - AGP business saw double-digit sequential growth, with year-over-year growth exceeding 25% [18] - DTX revenues on non-gaming applications nearly doubled over the past year [22] - SDK bidding now accounts for approximately 70% of total impressions on the exchange, up from 5% a year ago [29] Market Performance - U.S. device sales declined, with Q2 device volumes experiencing the largest year-on-year percentage decline in the past four quarters [43] - International markets showed growth, particularly in the EU and Latin America, driven by partnerships like ONE Store [11][34] - Regulatory developments in the EU, Japan, Korea, India, and the U.S. are expected to create growth opportunities for alternative app distribution [33][36] Strategic Direction and Industry Competition - The company is focusing on growth and efficiency, with key drivers being expanding device footprint, improving product portfolio, and leveraging first-party data [24][25] - A multiyear agreement with a Tier 1 U.S. operator and the ONE Store partnership are expected to be significant growth catalysts [11][26] - The company is transitioning from waterfall bidding to SDK bidding, with investments in AI, machine learning, and first-party data to drive brand revenues [28][30] - Alternative app distribution is a critical growth initiative, with the launch of DT Hub in the U.S. and plans to expand in the EU and Latin America [34][35] Management Commentary on Operating Environment and Future Outlook - The company expects the trend of declining U.S. device sales to reverse in 2025, driven by new AI features on OEM hardware and the migration from two- to three-year leases [17] - Management emphasized the importance of improving execution to capitalize on the enormous market opportunity in front of the company [12] - The company is optimistic about the future, with a focus on strengthening the financial position, driving top-line and free cash flow growth, and achieving full potential [59] Other Important Information - The company has initiated a transformation program aimed at achieving more than 15 million already achieved in the current quarter [10][55] - The company plans to reinvest a portion of the savings into strategic growth areas, such as the alternative app business [55] - The company expects revenue for fiscal year 2025 to be in the range of 485 million, with non-GAAP adjusted EBITDA between 70 million [57] Q&A Session Question: Phone Activation and Performance Advertising - The company is seeing growth from new international partners but is still facing headwinds from declining U.S. device sales and reduced software updates [62] - Performance DSPs are executing their own supply path optimization strategies, which has impacted the company's performance advertising business [64] Question: RPD and Strategic Alternatives - RPDs improved outside the U.S. but declined slightly in the U.S. due to software update issues [67] - The company's focus is on executing its current strategy rather than exploring strategic alternatives [68]