About APPS

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1

Hi,

There’s some move from google recently,mostly like to keep their major income source Which is Ad. We saw it’s shortly benefiting TTD and some programmatic ad player. And seems like they doing some changed after this August about new app type, from a AAP to APK. Does that hurt Digital Turbine?
Here is link,
https://www.theverge.com/2021/6/30/22557390/google-apk-app-b…

Hope someone have more opinions on this topic. APPS dropped more than 10% today and I added before I noticed that. I think Digital Turbine should already for this ,IMH.

Cheers

Long APPS

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Hope someone have more opinions on this topic. APPS dropped more than 10% today and I added before I noticed that. I think Digital Turbine should already for this ,IMH.

I also have a small position in APPS and was puzzled by the large drop today on higher volume on no apparent news. I read one engineer’s opinion that the Google move shouldn’t affect Digital Turbine but I don’t have any expertise myself and don’t know if this is a reliable opinion.

I have also read speculation that the drop might have been due to Digital Turbine’s removal from the Russell Microcap Index which was effective June 28:

https://seekingalpha.com/news/3706246-cleanspark-and-kopin-a…

I wonder if Disco Gator who has a position in APPS has any thoughts.

I will watch for any further news before taking any actions.

Dave

Long APPS

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I just read a post on the Yahoo APPS board which gave a response from Digital Turbine’s Vice President of Capital Markets and Strategy, Brian Bartholomew, to an email asking about the drop today:

"CRAZY day today, to be sure. The Google policy-shift noise was the source of our weakness today…and was severely misinterpreted by investors today…

There are scarier, more (wrongfully-)opinionated versions of the same story floating around out there today, some of which seem to wish to imply that Google is working to effectively remove all other app install sources. This is UNTRUE – we are fully onboard with Google in this “bundle” effort that is rooted in other, more logical incentives. Most importantly, this has ZERO impact on our business (we fully applaud the movement to app bundles and support app bundles already as part of our platform).

There is NO way that our stock should be down on this noise.

Total madness today. Speculation led to outright fear. We fully support Google’s efforts in this area…just as they fully accept & support our participation in the ecosystem. Our business is just as fully healthy as it was yesterday…and will ideally continue to be going forward.

Have a safe & sane (& fun) weekend.

-Brian"

Dave

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New poster, so some introduction.

I am an Index fund investor turned Reddit Ape, now turning to hyper-growth investing. I am a lurker here for more than 3 months. I Started position on all of Saul’s fav 9.

Although I have taken a small position today in low 70s. There are some inherent risks to the way this company performs its operation.

APPS depends heavily on contract agreements between carriers, itself, and phone manufacturers. In fact, profit is shared equally for each app installation between these three entities. Any loss of contract with ATT or Verizon may bring the price down, immediately as `65% of gross profit comes from these two network globally.

APPS goes for 2-year contract with their partners, so AT&T and Verizon will be always risky till the company expands globally. AT&T contract (the one cited in annual report) has expired in 2020. No SEC filing so far about its renewal status. (One possible reason behind today’s fall). Its contract with Verizon will be up for renewal in 1st quarter 2022.

Its technology, installing apps unwantedly on people’s android phones while setting up a new phone, may be a questionable practice to some judges and can severely impact its performance. (we can’t deny this risk ever). Although PC makers are pre-installing apps in our computers for ages.

The last possible reason could be, it’s a monthly trend for this stock. One month up violently, another month down violently.

With a valuation at par with TTD while growing faster than TTD, and the fact that they don’t have competitors at all, the new price after today is a good entry point for me.

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And to specifically answer google related concerns. Their ignite product is a firmware code, that runs below the OS (Android) level. So Google has not much control over APPS technology

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Sudito74, it’s good to point out APPS’ heavy reliance on revenue from the major U.S. carriers; but the picture is not as bad as you suggest. Here are the stats from its most recent 10-K for the last 3 years:

2021 During the fiscal year ended March 31, 2021, T-Mobile US Inc., including Sprint and other subsidiaries, a carrier partner, generated 26.4%, AT&T Inc., including its Cricket subsidiary, a carrier partner, generated 22.3%, Verizon Wireless, a subsidiary of Verizon Communications, a carrier partner, generated 18.5%, and America Movil, primarily through its subsidiary Tracfone Wireless Inc., a carrier partner, generated 10.8% of our net revenues.

2020 During the fiscal year ended March 31, 2020, Verizon Wireless, a subsidiary of Verizon Communications, a carrier partner, generated 37.3%, AT&T Inc., including its Cricket subsidiary, a carrier partner, generated 30.0%, and America Movil, primarily through its subsidiary Tracfone Wireless Inc., a carrier partner, generated 10.7% of our net revenues.

2019 During the fiscal year ended March 31, 2019, Verizon Wireless, a subsidiary of Verizon Communications, a carrier partner, generated 45.9% and AT&T Inc., including its Cricket subsidiary, a carrier partner, generated 38.7% of our net revenues.

Regarding the contract with AT&T, for which the 2 year term expired on October 20, 2020:
"This Agreement shall have a term (the “Term”) commencing on the Effective Date and ending on the date which is two years from the Commercial Launch Date (the “Initial Term”). After the expiration of the Initial Term, this Agreement will be automatically renewed for successive ninety-day terms (each, a “Renewal Term”) until terminated by either Party with at least thirty (30) days’ written notice prior to the end of the Initial Term or any Renewal Term. The Initial Term and any Renewal Term are collectively referred to as the “Term.”

Don’t know how much you can read into the following, but the very original contract was inked on November 2, 2015 contained the same 2 year term. It was not “formally” extended until October 17, 2018–so 11 months after the original contract expired.

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I love how Digital Turbine was quick to respond to the FUD being broadcast that was causing their stock to drop. It definitely helps to put investors’ minds at ease. I can’t think of any better time than now to add to my position and look to do so tomorrow

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I’m a happy, long-time Digital Turbine shareholder, and added to my APPS shares during the dip last Friday. Their revenue grew 126% YoY in the latest quarter, and this is one of those growth companies that is actually generating positive earnings.

In fact, GAAP Net Income in 4Q was $30 million out of a total 4Q revenue of $95 million. That means that net company profits, after paying all expenses, were almost 1/3 of total revenues! This is by far the highest net profit margin of any company I own.

Because the company has profits, we can calculate the PEG ratio, which is the P/E ratio divided by the earnings growth rate. Peter Lynch liked to invest in companies where the PEG was less than 1.0. APPS fits that bill, with a PEG ratio of 0.78.

More details on the bull case for Digital Turbine can be found at

https://seekingalpha.com/article/4437906-digital-turbine-its…

Cheers, and hope everyone had a great July 4th weekend!

-Ron

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