Digital Turbine, Inc. Q3 FY2025 earnings call

• Announcement of Steve Lasher joining as new CFO and Barrett transitioning to a consultant role. - Q3 results: $135 million revenue, $22 million adjusted EBITDA, $0.13 non-GAAP EPS. - ODS segment: International On-Device revenues up 100% y-o-y; US device volumes still soft but expecting stable sales in 2025. - AGP segment: Double-digit sequential growth in brand spending; transitioning from waterfall bidding to SDK bidding; DTX revenues on non-gaming applications nearly doubled. - Transformation program: On track to achieve over $25 million in annual operating expense savings. - Alternative app strategy: Positioned to leverage regulatory opportunities, not just for in-app payments but to accelerate existing business lines.

In the ODS segment, revenues reached $91.7 million, an 11% increase from the September quarter and down 3% compared to the same period last year. Revenue per device or RPD reached record levels across both US and international devices. For the AGP business, Q3 revenues came in at $43.8 million, representing 17% sequential quarter growth. Revenues from brand spending continued to be a positive area with the rate of growth accelerating to 34% year-on-year.

• For the March quarter, guiding for nearly 50% growth in EBITDA. - Fiscal 2025 outlook: Guided revenue range of $485 million to $490 million, non-GAAP adjusted EBITDA between $69 million and $71 million. - On track to accomplish over $25 million of annual operating expense savings from transformation work.

• Transitioning from waterfall bidding to SDK bidding on AGP exchange. - Impact of continued softness with US device volumes. - Commoditization of ad tech gaming space for both iOS and Android due to DSPs' supply path optimization strategies.

Q: Good afternoon, guys. Welcome aboard Steve and Barrett best of luck. It was nice working with you through the years. Bill, I wanted to focus on your comments about the brand, big brand names coming back to you on the advertising side. Was that because it was a seasonally strong December quarter? What's changed that they're getting more comfort in coming back to Digital Turbine? And I had a follow-up.

A: Yes. Thanks, Tony. On the brand business, I'd just like to say it's a good old fashioned hard work. It's perseverance. It takes time to build those relationships on some of the names I mentioned in my prepared remarks. There's advertising agencies, obviously, the brands themselves and a lot of people involved in earning their trust. And so it's something we've been talking about for a long time. And it's been really nice to start seeing it showing up in the results for the business and getting approved to be the in-app choice versus a CTV or retail media and things like that. There are a lot of brand dollars are going to today for a lot of these players is something we think we can really build around right now that we're excited about.

Q: Hey, guys. It's Arthur on for Omar. Thanks for taking my question. So Bill I know it's still early and you guys are not providing outlook for next year yet. But I'm just curious like what are some of the key sort of moving pieces or dynamics you contemplate when thinking about how 2025 would look like probably relative to this year?

A: Yes. As I think about going into next year and then we'll provide an annual guide. Our anticipation would be as we get into, on our next earnings call, as you're well aware, we start on a March fiscal year, not a calendar year. And as we kind of think about what's important going into this current year, for us, it's really just building on the things we've done over the past year. And now we're in a point to really grow and scale it. So Tony had asked a question on brand. That's absolutely one of those things. I spent a lot of time in my remarks talking about the importance of our data and first-party data and how we better leverage that. We made some real progress on the plumbing for that. Now it's time to take advantage of all the plumbing we've done and actually turn it into revenue and EBITDA for us in the coming year. I talked a lot about devices and that was really something I'd keep an eye on is just our growth in devices from those operators that haven't been our legacy ones over a number of years. I think there's a lot of exciting things happening there and that's when that growth showed up in the December quarter. And so those would be kind of the keys that I think about in terms of our growth into next year, but it's absolutely our intention to continue the momentum that we've been building here.