0001628280-26-005047
SEC filingRevenue grew 12-14% YoY with operating profitability restored, driven by international ODS and AGP exchange growth.
For the three months ended December 31, 2025, total net revenue increased 12.4% to $151.4 million from $134.6 million in the prior-year quarter. Operating income swung to a profit of $21.7 million from a loss of $12.8 million, reflecting improved revenue mix and cost controls. Revenue share as a percentage of revenue fell from 52.0% to 42.6%, while other direct costs rose but remained manageable. General and administrative expenses decreased 32.5% due to lower stock-based compensation and amortization. Net income was $5.1 million compared to a net loss of $23.1 million. Interest expense increased to $13.6 million from $7.9 million due to higher rates and new debt terms, but operating improvements more than offset financing costs.
For the nine-month period, revenue grew 13.8% to $422.7 million, operating income was $23.5 million versus a loss of $42.4 million, and net loss narrowed to $30.4 million from $73.3 million. Cash from operations improved to $37.4 million from $0.4 million. The company recorded a $9.8 million loss on debt extinguishment related to refinancing.
On Device Solutions (ODS) revenue rose 8.5% in Q3 to $99.6 million, driven by a $7.5 million increase in application media from international volume growth and higher revenue-per-device. Content media increased modestly. The Asia Pacific and China regions led performance. US device volumes declined, partially offsetting gains.
App Growth Platform (AGP) revenue increased 18.9% to $52.6 million. Advertising exchange revenue jumped $9.7 million from onboarding new publishers and demand partners. Performance and brand advertising fell $1.1 million due to reduced demand from a major brand and lower private marketplace spend. Reseller partnerships declined slightly.
Management highlighted ongoing macroeconomic headwinds including inflation, geopolitical conflicts, and weak mobile device sales. The company is pursuing cost-saving opportunities and aims to refinance certain loan tranches under its Financing Agreement. The transformation program targeting $25 million in annual savings was substantially completed in fiscal 2025. No specific numerical guidance was provided. Liquidity includes $40.2 million cash and $375 million in secured debt. Compliance with financial covenants was confirmed as of December 31, 2025.
As of December 31, 2025, Digital Turbine held $40.2 million in cash and cash equivalents, with total current assets of $318.1 million. The company's total debt, net of discount and issuance costs, stood at $355.0 million, comprising a $375.0 million term loan under the new Financing Agreement, partially offset by unamortized discount and issuance costs. The revolver under the prior credit agreement was fully repaid and terminated. Shareholders' equity increased to $194.6 million from $154.0 million at March 31, 2025, driven primarily by proceeds from at-the-market equity offerings. The company reported derivative liabilities of $4.4 million related to warrants issued in connection with the Financing Agreement.
The company disclosed significant minimum purchase commitments under hosting agreements totaling approximately $201.9 million over the next five fiscal years. No other material contractual obligations or purchase commitments were detailed in the Notes. The company also has contingent consideration liabilities related to the In App acquisition, with a current balance of $0.9 million included in other current liabilities, and a remaining purchase price liability of $0.5 million for the One Store International acquisition.
Digital Turbine did not repurchase any shares or pay dividends during the period. The company's capital allocation was focused on debt management and capital expenditures. During the nine months ended December 31, 2025, the company made $55.0 million in principal payments on its term loans, funded primarily by proceeds from at-the-market equity issuances. Capital expenditures totaled $23.2 million, representing 5.5% of revenue. The company also incurred $9.8 million in loss on extinguishment of debt related to the refinancing.
The company reports two operating segments: On Device Solutions (ODS) and App Growth Platform (AGP). For the three months ended December 31, 2025, ODS generated $99.6 million in revenue and $46.0 million in segment profit, while AGP generated $52.6 million in revenue and $40.9 million in segment profit. Revenue share is the primary segment expense reviewed by the CODM. Geographically, revenue was diversified: United States and Canada contributed $62.8 million, Europe/Middle East/Africa $43.8 million, Asia Pacific/China $44.8 million, and Mexico/Central/South America $0.8 million. The ODS segment has a more balanced geographic mix, while AGP is more concentrated in the US and Canada.
Digital Turbine's operating cash flow (CFO) improved dramatically from $0.4 million to $37.4 million for the nine months ended December 31, 2025, despite a net loss of $30.4 million. The large divergence between net loss and positive CFO is primarily due to non-cash charges (depreciation and amortization of $54.8M, stock-based compensation of $12.2M, and debt-related losses) and a significant positive swing in working capital, notably accrued revenue share increasing by $58.7M. However, accounts receivable surged $64.0M, consuming cash—this may signal aggressive revenue recognition or collection challenges.
Capital expenditures remained elevated at $23.2M (vs. $20.5M prior), indicating continued investment. Free cash flow, though not explicitly stated, would be approximately $14.2M (CFO minus capex). Financing activities used $10.3M net, including $466M in debt repayments offset by $418.7M in new borrowings and $56.8M in equity issuance. The company paid $36.0M in interest and $12.1M in income taxes. Overall, cash generation improved but working capital volatility and high capex warrant monitoring.