Digital Turbine, Inc. Q2 FY2025 earnings call

• Business progress: Results for the September quarter were marginally better than prior quarters, but progress is below expectations. The company is undergoing a transformation project to cut over $25M in annual costs. - Investment activities: Notable progress on new version of Ignite, hosting platform optimization, improved bidding capabilities showing positive growth, and consolidated back-end corporate systems. - ODS segment: International ODS revenues up nearly 25% YOY due to better RPDs and new supply; content media business saw sequential and YOY growth; SingleTap licensing product continued to grow. Headwinds include soft U.S. device volumes and reduced software updates. - AGP business: Brand revenues showed double-digit sequential and over 25% YOY growth; SDK bidding capabilities growing (now ~70% of total impressions on exchange); diversifying away from waterfall bidding; investment in first-party data and DTX; Appreciate acquisition showing renewed growth. Need to improve performance advertising leveraging first-party data. - Transformation program: Aimed at over $25M in cost reductions by streamlining processes, cutting non-strategic areas, and reinvesting savings into strategic growth areas like alternative app business.

ODS segment: Revenues reached $82.4 million, a 2% increase from the June quarter but down 17% compared to the same period last year. International ODS revenues improved nearly 25% year-over-year driven by better revenue per device (RPD) and new supply. AGP business: Q2 revenues came in at $37.3 million, a modest sequential decline. Brand revenues were up 26% year-over-year and 13% sequentially, but the exchange business underperformed expectations. ODS revenue contribution: ~69.2% ($82.4M of $119M total revenue); AGP revenue contribution: ~31.3% ($37.3M of $119M total revenue)

• Fiscal 2025 revenue expected in the range of $475 million to $485 million. - Projected non-GAAP adjusted EBITDA between $65 million and $70 million. - Anticipate continued sequential revenue growth in Q3. - Lap residual impact of exited legacy businesses in Q4, positioning for year-on-year top line growth in the March quarter.

• Soft U.S. device volumes impacting performance. - Decline in legacy performance advertising on the exchange. - Regulatory developments globally that could affect business operations. - Legacy performance DSPs executing supply path optimization strategies, commoditizing the ad tech gaming space.

Q: Could you lay out the RPD and comment on when the Board might explore strategic alternatives?

A: RPDs improved outside the U.S. but declined a bit in the U.S. primarily due to software issues mentioned. As for strategic alternatives, the focus is on executing in the business with the belief they have the right assets to reach a bright future