Digital Turbine - APPS

2021Q3 results posted today (to end of Dec 2020):

“About Digital Turbine, Inc.: Digital Turbine simplifies content discovery and delivers relevant content directly to consumer devices. The Company’s on-demand media platform powers frictionless app and content discovery, user acquisition and engagement, operational efficiency and monetization opportunities. Digital Turbine’s technology platform has been adopted by more than 40 mobile operators and OEMs worldwide, and has delivered more than three billion app preloads for tens of thousands of advertising campaigns.”

Financial Highlights from the release:

  • Q3 revenue $88.6M, up 146% from 2020Q3:

  • Application media revenue $56.9M

  • Content media revenue $31.7M (primarily related to the Feb 2020 acquisition of Mobile Posse)

  • Non-GAAP adjusted gross margin was 43% for 2021Q3, vs. 40% for Q32020.

  • Non-GAAP adjusted net income for 2021Q3 was $20.0 million, or $0.21 per share, vs. $5.0 million, or $0.05 per share for 2020Q3.

  • Non-GAAP adj. EBITDA $22.5M (up 300% from 2020Q3 $5.6M)

  • 278% growth in Non-GAAP EPS, and more than 200% growth in Non-GAAP free cash flow


  • Application Media software was installed on 65 million devices during 2021Q3, and has now been installed on more than 570 million devices to date

Outlook for full-year fiscal 2021 period:

  • Revenue of between $298 million and $300 million

  • Non-GAAP adjusted EBITDA of between $71 million and $72 million

  • Non-GAAP adjusted EPS of $0.67, based on approx.98M diluted shares outstanding

Currently up 8.5% after hours (from $64.44 to $73.00)



Thanks Roller - I was going to highlight this the board too.

Digital Turbine is up 10x since I highlighted it on the NPI board a year or two back, (unfortunately no I didn’t follow my own advice). I did pick up a micro position end of last year which is almost up 100%.

The way I was seeing things, given that we have 5G arriving and a barrage of new mobile phone launches including Apple iPhones and with the work from anywhere driving remote/mobile working and presumably new phones, new installs and new app downloads this was always going to a boom year.

Happy to see this forecast to continue.



Thank you, RollerCoaster.
It looks interesting.
Insiders hold just about 3% of the stock though (with CEO Stone approx. 1%).
Wouldn’t you consider this a negative?

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Thank you as well RollerCoaster.

I was surprised this company hasn’t gained more traction (146% YoY growth!!!), so I decided to do some digging on their numbers. Here is a quote from a quote, so I apologize I couldn’t find the original poster.

Lots of excitement over headline numbers but Digital Turbine did NOT grow +146%. They grew 88.7M plus 31.7M from major acquisition last year. Adjusting that out is +58% organic. Which yes is impressive acceleration from +50% last Q.

Acquired co did $59M in 2019 before. They are breaking out its latest numbers in last 2 earnings PRs but missed first after acq. See Q121 PR, showing 93% growth! False!

Investor presentations since are obscuring this acquisition and just calling it all revenue growth.

So yes this company is having a growth spurt and is accelerating (in organic numbers) but no it is not jumping to 92% and 145% growth rates.

RedeemStream: The major acquisition last year was Mobile Posse which closed in February 2020. While APPS is accelerating organically, a 58% organic growth is much different than 146% growth. The stock price as of Tuesday close is currently at $92.03.

No position in APPS


Just want to provide the organic growth number. Based off Q3 their YoY organic growth has accelerated from

Q1: <40%
Q2: 58%
Q3: 73%

Their QoQ growth in Q3 was 23% - this is an incredible number - 128% annualized.

The biggest number in the call for me was that, for the first time, their international revenue in App Install has exceeded their US revenue. They also called out that they will focus on growing Asia market as seen with their ongoing partnership with Samsung and Xiaomi. In phone markets outside of US it is the manufacturers who decide what goes on the phone as opposed to telecom companies in the US.

They are the best Android ad solution for companies that want to promote their apps.

Long APPS since last Aug, currently 30% of my position


You know this is software.
You know this has growth. Both organic and by M&A.
This has some aspects of it that are similar to software services delivered over the internet.

But, this is just a marketing platform for ‘crAppware’ to be automatically installed on phones and tablets. They justify some of it by suggesting that installing all these extra apps together over one shared underlying codebase saves space on users’ phones… (but not as much as is shared by not having them installed at all). The shared codebase underneath these ‘crApps’ is riddled with tracking mechanisms to monetize the owners of the phones, too. All of this smells identical to the pre-loaded AOL,, dial up service icons that were sitting on every PC in the late 1990s when you bought them.

They have 3 major customers: VZ, T, and (someone else?) who, as the gatekeepers for selling cheap Android phones, can each make a unilateral choice whether or not to remove Digital Turbine’s apps and maybe pursue their own marketing platform of ‘crApps’.

If Digital Turbine makes a ton of money, the carriers will cut them out and try to get it for themselves.

The is not a resilient business model.

-Another Rob


And it’s been through several ownership / structural transformations / acquisitions. It is just an adware purveyor that is installed by default on several brands of new phones in several countries. The business model itself does date back to AOL. To his point, it’s nothing like an innovative software company implementing subscription-based software to solve problems.


Since there are renewed interest in the company I want to present my personal investment thesis on $APPS. I don’t know if this counts as a high-growth company based on board rules or not, so please feel free to take it down if it isn’t. Thank you Saul for a wonderful place for discussion.


Their revenue by quarter

2019 22 24 30 27 = 103
2020 31 33 36 39 = 139
2021 59 71 88 (guiding 82) = 300

Acquisition of Mobile Posse happened in 2020 Q4 ($39M revenue) with $70M cash ear out and no share dilution.

Pro forma revenue growth after acquisition:

Q1 28%
Q2 58%
Q3 73%

QoQ growth: 20%, 23% in the last two quarters. (20% QoQ = 107% YoY annualized)

Their gross margin is in the 40-43% range for the last few quarters.

Who is their customer?

They are a B2B business and their customers are marketers that want to acquire mobile app users.

This part is my guess: I think they have a unique place on the market by being the ad exchange between telecom/phone manufacturers and the advertisers. It doesn’t make sense for telecom companies to have a team testing different app versions/android versions/phone models in order to start an advertising business. The revenue is too small for them to make the unit economies work. Mobile developers are expensive.

They have two main lines of businesses…

#1 App Install

  • They sell pre-installed slots on Android phones to App advertisers. This is one time revenue per phone.
  • SingleTap: this is a new business ($1M per month) that allows advertisers to skip Google App Store and directly install apps when phone users click on ads. They claim this is recurring revenue.

#2 Content Media (called Display Advertising on the site)

  • This comes from the Mobile Posse acquisition.
  • It looks like they build white-labeled software for Telecom companies e.g. T-Mobile that turns the telecom company’s app into an advertising engine. I may be wrong on this.
  • They claim this to be recurring revenue.

Recurring revenue has become >50% of the total revenue in the last two quarters.

Low margin

One thing that pops out about in the financials was their lower margin (40-43%) compared to SaaS stocks. In their 10-Q…

You can see that of the $88.6M revenue, they paid $50M, or 56% of their revenue, in License fees and revenue share.

My guess is that they are sharing ad revenue with telecom companies. In other words, they create value for the telecom company by letting them collect license fees. Due to this, I believe it is unlikely for telecom companies to start their own team and run the ad business - it’s hard to beat the easy money.

TAM for App Install

What’s their TAM? I don’t think they ever give a number like many of the SaaS company do. Here’s my attempt to estimate:

2.5 billion android users in the world
500M devices per year if each user replaces their phone once every 5 years
At $1 RPD per phone, the TAM for App Install is $500M.
Current App Install revenue is about $200M/year, so the penetration is quite high.

But on the other hand, what’s the real RPD to expect?

Copy pasting the metrics from here:…

(I can’t say if this is accurate or not but it is in line with the marketing metrics I’m familiar with)

Android costs: $0.44 globally and $1.72 in the US
Cost per install on Facebook: $1.8
Cost per install on Instagram: $2.23
Cost per install on Twitter: $2.53

Assuming that $APPS sells a total of 9 slots to advertisers. I would say the realistic RPD is around $5, or $0.5 per app, which pushes the realistic TAM to $2.5b/year.

If I am a mobile advertiser, I see working with $APPS a steal compared to Google or Facebook.

The CEO has said in the call repeatedly that their customers are seeing the conversion returns from their platform. In the meantime they lock in the ad rates for 6 months so the revenue in the calls are reflecting the price point they set 6 months ago.

I have no estimate the TAM for Content Media.

Some other things

Other things that boosted my confidence in $APPS

High revenue per employee

In their Q1 2020 call (last August) they said that they achieved $1 million revenue per employee. To me this is an incredible achievement in operational leverage. My other investments fall in the 300K ($DDOG) to 500K ($CRWD) range.

High employee satisfaction

They grant stock options to all employees regardless of title
On Glassdoor: 4.5 stars with 98% CEP approval
If you read into their reviews you can see a lot of them mentioned COVID response
They won a local award in Austin, TX if that means anything…

Acquisition execution

The Mobile Posse acquisition may be the best acquisition I have personally seen. They paid $70M in cash with no share dilution and basically get all of it back through new revenue in less than a year. And the content media business in itself is growing > 70% YoY organically. Acquisitions tend to destroy shareholder value so I am often doubtful. They have started a new credit line up to $200M with BoA in the last Q and I’m curious to see if they saw another opportunity.

Where could growth come from?

Their two main growth drivers are SingleTap and Content Media.

SingleTap - I’ll quote the call

Not including our social media integration with our large carrier partner, a few quarters ago we talked about SingleTap being on a seven-figure run rate. Last quarter we talked about it being on a seven-figure quarterly business for us. And today, I’m happy to say it’s now a seven-figure monthly business. The growth is becoming more material and we expect SingleTap to be a growth driver for the business in 2021 and beyond.

And what we’re seeing right now is the ability through leveraging our demand side platform to be able to go out and arbitrage in the marketplace. And what I mean by that is we’re aware of devices that have SingleTap capability. The rest of the market is not.

This is essentially a bidding ad exchange for app advertisers and not a one-time revenue like their previous App Install model.

Content media

Before acquisition, Mobile Posse’s customer is pretty much only T-mobile. Content Media has a large cross-selling opportunity to their current telecom and manufacturing partners that the CEO has expressed in the calls.

Aren’t they bloatware?

I understand where this argument comes from and I respect that. Personally, it doesn’t bother me. I see advertisement companies as the same: GOOG, FB, TTD, MGNI, APPS, to me they are all the same in the “selling your attention” business.

The CEO mentioned 5 apps customers, TikTok, Uber, Pinterest, McDonalds, Candy Crush mentioned in the Q3 call - I have 4 of them installed myself and use them regularly. I forgot which call was that the CEO basically said that they “don’t install junk.”


I don’t see telecom or phone manufacturers starting their own team is a risk per the revenue sharing argument.

The biggest risk comes from Google: if Google decided to remove all third party advertising on Android as what they are doing to Chrome third party cookies, then $APPS will lose a big chunk of revenue. If it happens then there’s really not much reason to not sell out.

I also agree that this isn’t as innovative as most SaaS companies discussed on the board. It will not warrant a 50X sales multiple like CRWD.

Thanks for the discussion.