0001628280-25-037888
SEC filingRevenue grew 11% YoY driven by On Device Solutions, but net loss narrowed 44% due to cost controls.
For the three months ended June 30, 2025, Digital Turbine reported total net revenue of $130.9 million, an 11.0% increase from $118.0 million in the prior-year quarter. The growth was primarily driven by the On Device Solutions segment, which saw an 18.3% revenue increase to $95.4 million, fueled by higher international device volumes and improved revenue-per-device. The App Growth Platform segment declined 5.5% to $36.3 million, reflecting a $4.7 million drop in brand and performance advertising, partially offset by a $2.9 million increase in advertising exchange revenue.
Gross margin improved to 47.3% from 46.1% in the prior year, as revenue share as a percentage of revenue decreased to 44.4% from 47.3%, benefiting from a favorable mix shift toward gross-basis revenue. Operating loss narrowed sharply by 71.0% to $4.7 million, driven by a 1.1% increase in total costs and operating expenses versus an 11.0% revenue increase. Net loss improved 43.9% to $14.1 million, aided by lower operating expenses and a $1.7 million increase in interest expense due to higher rates and borrowings.
On Device Solutions revenue grew 18.3% YoY to $95.4 million, driven by a $18.4 million increase in application media from higher international device volumes and revenue-per-device, partially offset by a decline in US device sales and the winding down of certain strategic demand contracts. Content media revenue increased $0.9 million due to higher daily active users on prepaid devices. App Growth Platform revenue declined 5.5% to $36.3 million, with brand and performance advertising down $4.7 million, partially offset by a $2.9 million increase in advertising exchange from higher advertiser purchases and a $0.3 million decline in reseller partnerships.
Management highlighted the transformation program, substantially completed in Q4 FY25, which is targeted to yield more than $25 million in annual cash expense savings. The company is actively seeking to refinance its $411 million Amended and Restated Credit Agreement before August 29, 2025, and is exploring options to raise additional capital. If successful, management believes existing cash, cash flow from operations, and any available balance under a new financing arrangement would be sufficient for at least 12 months. However, failure to refinance could result in reclassification of debt as short-term and materially adversely affect the business and stock price. The company continues to monitor macroeconomic headwinds including inflation, geopolitical conflicts, and potential impacts from U.S. actions against China-based apps.
Cash, cash equivalents, and restricted cash totaled $34.1M at June 30, 2025, down from $40.1M at March 31, 2025. The company held $33.4M in cash and equivalents. Total debt (gross) was $411.0M, net of $10.5M in debt issuance costs, resulting in a net debt of $400.5M. Shareholders' equity was $152.3M, slightly down from $154.0M. The company has $40 available to draw on its revolver, subject to covenants.
Under hosting agreements, Digital Turbine has minimum purchase commitments totaling $221.2M over the next five fiscal years. Additionally, contingent consideration related to the In App acquisition was $0.6M as of June 30, 2025. The company also has operating leases with right-of-use assets of $9.6M and related lease liabilities of $9.2M (current and non-current).
The company did not repurchase shares or pay dividends during the quarter. Capital expenditures were $7.6M (5.8% of revenue), primarily for internal-use software development. Net debt decreased by $0.04M due to a $40 repayment on the revolver. The company paid $9.3M in debt issuance costs related to the Fifth Amendment, which extended the revolver maturity to August 29, 2026, and increased the interest rate to 9.92% (SOFR+5.50% through August 2025).
Revenue is reported in two segments: On Device Solutions (ODS) and App Growth Platform (AGP). ODS generated $95.4M (73% of total), up 18.3% YoY, while AGP generated $36.3M, down 5.5% YoY. Segment profit (revenue minus revenue share) was $42.8M for ODS and $30.0M for AGP, totaling $72.8M, up from $62.2M. Geographic mix: US/Canada 41%, Europe/Middle East/Africa 29%, Asia Pacific/China 30%, and rest of world 1%.
Operating cash flow (CFO) of $8.8M significantly improved from a use of $1.4M in the prior year, despite a net loss of $14.1M. The primary driver was a large positive swing in working capital, notably a $44.5M increase in accrued revenue share and a $26.9M decrease in accounts payable. Depreciation and amortization of $23.3M and stock-based compensation of $6.3M were the main non-cash add-backs.
Capital expenditures (capex) rose to $7.6M from $5.9M, indicating continued investment in infrastructure. Free cash flow (CFO minus capex) was approximately $1.2M, a turnaround from negative $7.3M in the prior year.
Financing activities used $8.5M, driven by $9.3M in debt issuance costs and $0.5M in deferred acquisition consideration, partially offset by $1.6M in stock option exercises. No share repurchases or dividends were paid. The company ended the period with $34.1M in cash, cash equivalents, and restricted cash, down from $40.1M at the start of the quarter.