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Digital Turbine(APPS) - 2025 Q3 - Earnings Call Transcript
APPSDigital Turbine(APPS)2025-02-05 23:03
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Financial Data and Key Metrics Changes - Revenue for Q3 2025 was 135million,representinga13135 million, representing a 13% sequential increase and a 3% decrease year-over-year [10][39] - Adjusted EBITDA was 22 million, with a projected nearly 50% growth in EBITDA for the March quarter [10][11] - Non-GAAP EPS was 0.13,downfrom0.13, down from 0.15 in the same quarter last year [49] - Gross margin for Q3 was 44%, down from 45% in Q2 and 46% in Q3 of the prior year [42] Business Line Data and Key Metrics Changes - On-Device Solutions (ODS) segment revenues reached 92million,an1192 million, an 11% sequential increase but down 3% year-over-year [12][39] - Revenue per device (RPD) reached record levels in both the US and international markets, driven by strong advertiser demand [40] - Advertising Growth Platform (AGP) revenues were 44 million, with a 17% sequential growth and a 34% year-over-year growth in brand spending [14][41] Market Data and Key Metrics Changes - International ODS revenues increased by 100% year-over-year, indicating strong advertiser demand and improved execution [13] - The company is expanding its global device relationships despite soft device sales in the US, with partnerships including Motorola, Nokia, and T-Mobile [22] Company Strategy and Development Direction - The company is focused on growth and efficiency, targeting more than 25millioninannualoperatingexpensesavings[20][48]−Investmentsinbrandrelationshipsandfirst−partydataareseenaskeydifferentiatorsinacompetitivemarket[15][19]−ThetransitionfromwaterfallbiddingtoSDKbiddingisastrategicmovetoimproveperformanceadvertising[16][24]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthecompany′stransformationandgrowthstrategy,highlightingtheimportanceofleveragingfirst−partydata[31][68]−TheupcomingDigitalMarketsActinEuropeisanticipatedtocreatenewopportunitiesforthecompany[61]−Thecompanyexpectsrevenueforfiscalyear2025tobeintherangeof25 million in annual operating expense savings [20][48] - Investments in brand relationships and first-party data are seen as key differentiators in a competitive market [15][19] - The transition from waterfall bidding to SDK bidding is a strategic move to improve performance advertising [16][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's transformation and growth strategy, highlighting the importance of leveraging first-party data [31][68] - The upcoming Digital Markets Act in Europe is anticipated to create new opportunities for the company [61] - The company expects revenue for fiscal year 2025 to be in the range of 485 million to 490million,withprojectednon−GAAPadjustedEBITDAbetween490 million, with projected non-GAAP adjusted EBITDA between 69 million and 71million[52]OtherImportantInformation−ThecompanyannouncedaleadershiptransitionwithSteveLasherjoiningasthenewCFO[7][33]−Cashbalanceattheendofthequarterwas71 million [52] Other Important Information - The company announced a leadership transition with Steve Lasher joining as the new CFO [7][33] - Cash balance at the end of the quarter was 34.6 million, with free cash flow of $6.4 million [50] Q&A Session Summary Question: What has changed for big brand names to return to Digital Turbine for advertising? - Management attributed the return to hard work and relationship building, emphasizing the importance of trust with brands [57][58] Question: Are other large publishers preparing to launch their own app stores? - Management noted increased awareness and interest from major players like Epic and Microsoft, with potential for more aggressive moves in 2025 [60][61] Question: What are the key dynamics for 2025 compared to this year? - Management highlighted the importance of leveraging first-party data and expanding device relationships as key growth drivers for the upcoming year [67][70]