Digital Turbine, Inc. Q4 FY2026 earnings call

### Overall Performance Recognition - Management reports that Q4 FY26 and full fiscal 2026 results exceeded internal expectations, with the current Q1 FY27 off to a positive start supporting a new annual outlook. - Full fiscal 2026 total revenue was $565 million, growing 15% year-over-year; adjusted EBITDA grew nearly 70% year-over-year to $122.5 million, demonstrating significant operating leverage as the business scales. Q4 FY26 adjusted EBITDA grew 53% year-over-year to $31.4 million, with margin expanding 500 basis points to 22%.

### Key Q4 Growth Drivers - Higher advertiser demand: Improving pricing and fill rates for premium placements, driven by brands shifting ad spend away from the open web to mobile apps amid AI adoption. - Increased supply: Global devices grew over 20% year-over-year led by international partners; AGP SDK footprint expanded, with strong impression growth in the APAC region and increased non-gaming inventory. - AI and first-party data leverage: Smarter targeting has improved advertiser return on ad spend and user experiences, driving a 40% year-over-year rate increase in the HEP business as advertisers pay more for better outcomes.

### Strategic Growth Pillars for FY27 - AI and first-party data: Proprietary capabilities including DTIQ and IgniteGraph combine unique first-party data with AI to deliver improved customer outcomes that drive revenue growth. - Flywheel effect: The business currently supports nearly 3 billion devices and over 80,000 applications, creating network effects between diversified demand and supply that drive incremental user acquisition and monetization. - Brand business: Leverage the macro tailwind of increased consumer time spent in apps, paired with the company's data and targeting capabilities, to scale the fast-growing brand business that grew 50% year-over-year in Q4. - Ignite platform: Recent large partner wins (including Orange, which has more combined subscribers than AT&T and Verizon) will accelerate international ODS momentum in Europe. The platform is expanding beyond ad distribution to act as a software enabler for third-party product distribution, including AI agents, e-commerce content, and lock screen content. - Alternative application distribution: Scale partnerships with mainstream gaming customers (King, Zynga, Playtika, among others) distributing alternative direct-to-consumer billing options to end users.

### AI Transformational Impact - Operational efficiency: AI automation allowed the company to grow revenue by more than $70 million in FY26 while reducing headcount by 4%, with AI deployed across quality assurance, back office operations, campaign management, software development, and data management. - Improved customer outcomes: Partnerships with Google and Databricks enhance the company's ability to combine proprietary data with AI to deliver stronger advertiser and publisher results. - Broader AI industry tailwinds: AI has driven a 60% year-over-year increase in global app releases in Q1 2026, as low-code/no-code tools lower barriers to app creation; all new apps require distribution to overcome discovery limitations on the major app stores. AI has also driven an acceleration in consumer time spent in apps, with open web traffic declining 10% on average (and up to 40% in some informational categories) as consumption shifts to app-based AI chatbots. Ad spend follows consumer attention, creating structural growth for the company's mobile ad platform.

### Organizational Update - CFO Steve Lasher will step down in June 2026 to pursue an external opportunity, after leading balance sheet strengthening via debt refinancing and driving improved operating performance. Chief Accounting Officer Josh Kinsell will serve as interim CFO.

### Balance Sheet Progress - Ended FY26 with $38 million in cash and $361 million in net debt, down from $409 million at the start of the fiscal year. The company will continue deploying free cash flow to further reduce leverage in FY27.

For the full fiscal 2026: - On-Device Solutions (ODS): Generated $382 million in total revenue, representing 12% year-over-year growth. This segment contributed 67.6% of Digital Turbine's total fiscal 2026 revenue. Global devices grew over 20% year-over-year, with revenue per device (RPD) growing over 20% year-over-year in both the U.S. and international markets, and international RPD grew 40% year-over-year in Q4 FY26. In Q4 FY26, ODS net revenue was $91 million, up 5% year-over-year. - Application Growth Platform (AGP/HEP): Generated $183.3 million in total fiscal 2026 revenue, representing over 20% year-over-year growth, which is twice the global industry growth rate. This segment contributed 32.4% of Digital Turbine's total fiscal 2026 revenue. In Q4 FY26, AGP net revenue was $52.1 million, up 57% year-over-year (the segment's highest growth rate in over three years). Within Q4, brand business grew over 50% year-over-year, DT Exchange (SSP business) grew over 60% year-over-year, and total platform impressions grew over 15% year-over-year.

• Management guides fiscal 2027 to double-digit top-line and bottom-line growth, supported by strong Q1 FY27 momentum to date and stronger-than-expected FY26 performance. • Fiscal 2027 total revenue guidance is set at a range of $630 million to $650 million, representing 11.4% to 15% year-over-year growth over FY26's $565.3 million total revenue. • Fiscal 2027 adjusted EBITDA guidance is set at a range of $135 million to $145 million, representing 10.2% to 18.4% year-over-year growth over FY26's $122.5 million adjusted EBITDA. • The company will continue prioritizing deleveraging, using free cash flow to further reduce outstanding debt in FY27.

• Management acknowledges that no business is 100% insulated from macroeconomic conditions, including recessions, inflation, and geographic risk factors. However, it notes that Digital Turbine's digital mobile business is more resilient to traditional input cost pressures (such as tariffs and energy prices) than most companies, as the majority of its customers sell digital rather than physical goods, a profile that held up well during the COVID-19 pandemic. • All forward-looking statements are inherently uncertain, and actual results may differ materially from current projections due to unforeseen risks, as detailed in the company's SEC filings. • No operational failures were discussed during the call.

No participant questions were submitted during the open Q&A session, so the session concluded early without any exchanges.