0001628280-25-048946
SEC filingRevenue grew 18.2% YoY driven by On Device Solutions and App Growth Platform, while operating income improved significantly.
For the three months ended September 30, 2025, Digital Turbine reported net revenue of $140.4 million, an increase of 18.2% compared to $118.7 million in the same period last year. The revenue growth was driven by strong performance in both segments. On Device Solutions (ODS) revenue increased 17.0% to $96.5 million, primarily due to higher device volumes internationally and an increase in revenue-per-device globally, particularly in the Asia Pacific and China regions. App Growth Platform (AGP) revenue increased 19.7% to $44.7 million, driven by a $10.0 million increase in advertising exchange revenue, partially offset by a $2.4 million decline in performance and brand advertising.
Total costs of revenue and operating expenses increased by only 1.2% to $133.8 million, significantly slower than revenue growth. Revenue share costs increased 12.0% to $63.1 million, in line with higher revenue, while general and administrative expenses decreased 19.2% to $34.1 million, driven by lower stock-based compensation and depreciation. This operating leverage resulted in income from operations of $6.5 million, compared to a loss of $13.5 million in the prior year period.
Net loss narrowed to $21.4 million from $25.0 million, despite significant non-recurring charges including a $9.8 million loss on extinguishment of debt and a $2.3 million unrealized loss on derivatives related to the August 2025 refinancing.
On Device Solutions (ODS) revenue grew 17.0% in Q2 and 17.7% for the six-month period. The growth was driven by application media revenue, which increased approximately $14.0 million in Q2 and $28.0 million year-to-date. Content media revenue remained flat in Q2 but increased slightly year-to-date due to higher daily active users on prepaid devices with a carrier. The segment benefited from higher device volumes internationally and improved revenue-per-device, though US volumes declined.
App Growth Platform (AGP) revenue grew 19.7% in Q2 and 6.9% year-to-date. The Q2 growth was primarily from a $10.0 million increase in advertising exchange revenue, driven by higher advertiser spend early in the quarter, particularly in Asia Pacific, China, and EMEA regions. This was partially offset by a $2.4 million decline in performance and brand advertising due to reduced demand from major brands. Reseller partnership revenues declined slightly.
Management highlighted ongoing macroeconomic uncertainties including inflation, geopolitical conflicts, and potential impacts from US government actions against China-based apps. The company is actively monitoring these factors and their potential impact on mobile device sales and advertiser demand.
The company completed a significant refinancing on August 29, 2025, entering into a $430 million Financing Agreement with a four-year term. The agreement includes financial covenants requiring a maximum leverage ratio and minimum liquidity of $10 million through March 2026, increasing to $20 million thereafter. The company is currently seeking to refinance certain loan tranches and exploring options to raise additional capital through its ATM program or other equity/debt financing.
Management's transformation program, which includes workforce reductions and system implementations, is targeted to yield more than $25 million in annual cash expense savings. The company believes its existing cash, cash flow from operations, and ATM program will be sufficient to meet working capital requirements for at least 12 months, assuming successful refinancing of certain loan tranches.
As of September 30, 2025, Digital Turbine reported cash and cash equivalents of $38.8M (excluding $0.4M restricted cash). Total debt stood at $396.4M, comprising $2.7M current portion and $393.8M long-term debt, net of discounts. The company refinanced its revolver with a new $430M term loan facility (Financing Agreement) on August 29, 2025, using proceeds to fully repay the prior $411M revolver. The new facility carries a SOFR-based rate with margins of 7.50%-8.00% and matures in fiscal 2030. Covenants include a maximum leverage ratio and minimum liquidity of $10M (increasing to $20M after April 2026). Stockholders' equity decreased to $148.1M from $154.0M at March 31, 2025, driven by net losses and foreign currency translation.
The company disclosed $213.4M in minimum purchase commitments under hosting agreements, with the obligation extending over the next five fiscal years. No other material commitments (e.g., leases, capital expenditures) were highlighted beyond normal operations. Contingent consideration liabilities related to the In App acquisition totaled $0.6M, all classified as current, with no fair value adjustments in the period.
No share buybacks or dividends were reported. The company used proceeds from an at-the-market offering ($14.0M gross, $13.6M net) to make a mandatory prepayment of $10.1M on the new term loans. Capital expenditures were $15.4M (5.7% of revenue), primarily for developed software and computer equipment. Debt activity included $418.7M in new borrowings (net of discount) and $421.1M in repayments, resulting in a net decrease of $2.4M. A loss on extinguishment of debt of $9.8M was recorded due to the refinancing.
Digital Turbine operates two segments: On Device Solutions (ODS) and App Growth Platform (AGP). For the six months ended September 30, 2025, ODS revenue grew 17.7% YoY to $191.9M, with segment profit of $83.7M (43.6% margin). AGP revenue increased 6.9% to $81.0M, with segment profit of $66.4M (82.0% margin). Geographic revenue was diversified: ODS saw strong growth in Asia Pacific and China (88.3% YoY), while AGP declined in the US/Canada (18.0% YoY) but grew in APAC (160.6%). Overall consolidated net revenue was $271.3M, up 14.6% YoY.
Operating cash flow of $23.2 million significantly improved from a $(10.1) million use in the prior year, despite a net loss of $(35.5) million. The primary driver was a large positive swing in accrued revenue share ($45.0M increase vs. a $4.5M decrease in 2024), partially offset by a $28.2M decrease in accounts payable and a $25.2M increase in accounts receivable. Non-cash add-backs (depreciation & amortization of $38.2M, stock-based compensation of $11.7M, and loss on debt extinguishment of $9.8M) also supported CFO.
Capital expenditures rose to $15.4M from $13.4M, indicating continued investment. Free cash flow (CFO minus capex) was approximately $7.9M, a sharp reversal from the $(23.5)M deficit in the prior period. The company did not repurchase shares or pay dividends. Financing activities consumed $8.2M, reflecting net debt repayments ($421.1M repaid vs. $418.7M in new borrowings) and $19.9M in debt issuance costs, partly offset by $13.6M in net proceeds from an at-the-market equity offering. Interest paid was $13.6M, and income taxes paid were $4.6M, up from $0.7M a year ago.