Revisiting Digital turbine

This forum discussed APPS a few times, it made to some of board member’s list as well. But I don’t think anybody has a significant position. Lately the stock has been a short target (AKA UPST, a few weeks ago.

Lately the board, in general has moved on from SNOW, DOCU and ZM…may be now is a right time to take a second look at Digital Turbine stock.I believe another 1/2 quarters of hyper growth will break it away from short shackles.

I did Saul’s style analysis of the stock and here are the excerpts

Non GAAP adjusted EBITDA
2020: 4.2 4.5 5.6 5.3 = 19.6
2021: 14.1 16.5 22.5 22.5 = 75.6
2022: 39.8 44(f)


Q3 2020: 36
Q4 2020: 39.3
Q1 2021: 59
Q2 2021: 70
Q3 2021: 88.6
Q4 2021: 95.1
Q1 2022: 212.6
Q2 2022 300 (forcast)

APPS has near monopoly on Android apps space and lately in a M&A spree to lead the mobile ad tech market.

PEG ratio (combined from yahoo finance and earning release, is less than 0.8. It has also been included today in S&P 400 finance index.

Other important takeaway from call transcript

-they are seeing per device revenue of $4, in a market which is growing at 50% YOY
-revenue growth rate in international is more than US

  • They are not anymore super dependent on pre installing mobile app revenue, which is still growing at 50%+ rate. They are growing mobile content ads by 130%+
  • They’ll soon start seeing more revenue from media ads ($300B) market, as compared to $100B TV ad market because of M&A

I have been wavering on APPS since it was first introduced to the board sometime in late 2020, and I have never quite been able to pull the trigger on it.

Quick Overview (my understanding): Digital Turbine is more of a conglomerate of 5 separate businesses. The legacy business would pre-install apps on the phones based on the user’s preferences (think of the yes/no questions when you first boot up a new phone). The new companies purchased through M&A gave it a ROKU-like platform having both supply-side and demand-side advertising. I believe all four major purchases have some sort of recurring revenue tied to them (Mobile Posse, AdColony, Fyber, Appreciate). The Appreciate acquisition gave them a one-tap installation feature which is either pending a patent or they have one. That is their moat combined with the ecosystem they are creating and the networking effects associated with that.

Bull Case

Android Devices they are installed on:
Q4 2020: 410m (13.9% sequentially)
Q1 2021: 450m (9.8%)
Q2 2021: 510m (13.3%)
Q3 2021: 580m (13.7%)

Glassdoor Reviews: Bill Stone, while not the founder, has been with the company since 2012 and has really been the one setting the direction of the company we know now. 4.1/5 stars to work out, 93% approve of CEO.

Sales and Marketing: Much smaller than our other companies on the board. May be a lever they can pull even more to help revenue returns if needed (~7-8% of revenue generally).

Refer to the above post on Non-GAAP EBITDA and Revenue Growth, which are both impressive.

Bear Case

Debt/Liabilities: There is a lot of debt on the balance sheet associated with buying all these companies. What is different from many of our SaaS companies is that it is long-term debt. Long-term debt (net of debt issuance costs) is $234m. They have been managing for awhile, but there are some liabilities on this company that you don’t see with some of the other favorites.

Concentration Risk: I feel like this is lessened with Fyber, Appreciate, and AdColony purchases this year, but they still get a bulk of revenue from carriers and manufacturers. Those purchases have shifted revenue away from the legacy business and more into the advertising space which can be less affected by the hard installs, but I would be worried if the amount of devices they are installed on start to decrease. In addition, the revenue was small enough in this space before that the Verizon’s of the world didn’t start their own app installation. If ad spend increase, I could see the verizons and manufacturers wanting a slice of the pie. (If their ecosystem is strong enough, though, they may continue to carve out a large niche as ROKU has).

Acquisitions: Integration is not always a given. I would need to link a previous post, but some of the growth has slowed down after purchase.

Google: Their single tap patent allows people to bypass the Google Playstore (they are concentrated in the Android space primarily). If Google doesn’t allow their single tap, it would really hurt their core identity.


I find this stock on my permanent watch list, but it seems to fit in a 20+ stock portfolio much better than a concentrated one. I would not be terribly surprised if ad money continued to flow to the mobile space and, if revenue growth continues to remain high for two quarters, I could see APPS surpassing returns on some of my favorite stocks. There are a couple question marks that could heavily impact their revenue growth, though, so I can’t seem to find a spot for them in my portfolio.

Hope this helps. There has been some great posts on this company previously that are worth reviewing as well.

-Redeemed (no position in APPS)


I know members of the board have really struggled to understand Digital Turbine; what it does and why the acquisitions were made and what they bring to the table.

This conference call really helps explain both the bigger picture and the fine details a whole lot better than I have come across before. I found it very encouraging not just regarding the positive momentum in the business but addressing the risks concerning big tech regulation and the market opportunity.…



One thing to note, regarding their first quarter revenue vs second quarter, per their conference call the first quarter pro forma revenue would have been $292 million if you included their two newest acquisitions for entire quarter. $300 million for Q2 forecast doesn’t look nearly as crazy growth wise when you compare it to that. Even if they sandbagged by 10%, that would put them at 13% growth Q/Q.