APPS

• Overall Financial & Balance Sheet Performance

  • Delivered stronger-than-expected quarterly results, with significant operating leverage as the business scales
  • Net leverage ratio improved dramatically from over 5x a year prior to a healthy 2.5x at quarter end, with positive deleveraging trends expected to continue
  • Improved financing agreement terms secured during the quarter, with a 50 basis point margin reduction on the largest loan tranche achieved post-quarter due to meeting leverage thresholds
  • Annualized run rate revenue per employee now exceeds $1 million, up from ~$800,000 one year prior
  • Cash flow from operations doubled year-over-year to $17.9 million, and non-GAAP free cash flow improved ~$10 million year-over-year to $11.3 million

• Key Quarterly Growth Drivers

  • Improved pricing and fill rates driven by higher advertiser demand, particularly for premium platform placements. RPD in ODS grew over 40% year-over-year, and rates for both brand and DTX businesses grew over 40%, fueled by improved advertiser return on ad spend enabled by AI tools
  • Expanded supply: Global device volumes grew double digits year-over-year, with OEMs and operators increasingly adopting Digital Turbine technology for new screen monetization. AGP expanded SDK footprint to new publishers globally, with strong growth in APAC supply, non-gaming publishers, and AI-focused app publishers
  • 80% of advertiser spend on DTX now comes from non-gaming partners, demonstrating successful demand diversification

• AI Impact on Business

  • AI automates and simplifies internal workflows across quality assurance, back office operations, campaign management, software development, and data management, driving improved efficiency and higher revenue per employee
  • AI leverages the company's unique first-party data via DTIQ and IgniteGraph to deliver better outcomes for advertisers, supporting current growth and future revenue expansion
  • Broader AI industry trends create structural tailwinds: AI enables faster app development, driving 60% year-over-year growth in global app releases; AI-driven open web traffic decline is shifting consumer time spent to mobile apps (average 5 hours per day, up 1 hour over the last decade); media ad spend follows consumer time, creating growing demand for mobile app monetization and distribution solutions

• Strategic Growth Pillars

  • Data and AI: Untapped potential to drive better advertiser outcomes and revenue growth
  • Flywheel effect: Connected diversified demand and supply across nearly 3 billion integrated devices and 80,000+ partner apps drives mutually reinforcing growth
  • Brand advertising: Fast-growing direct brand business leverages first-party data and audience targeting to capture growing mobile brand spend
  • Ignite platform: Strong international ODS momentum, with new opportunities to act as a software enabler for third-party product distribution (including AI agents, e-commerce content, and lock screen content) beyond core on-device ad solutions
  • Alternative app distribution: Recent regulatory rulings (Epic v. Google, EU Google rulings) open new opportunities for alternative app distribution, as publishers seek less reliance on duopoly app store platforms

• Management raised full fiscal 2027 guidance based on the strong first quarter performance and sustained growth momentum
• Revenue guidance was increased to a range of $650 million to $670 million, up from the prior guidance range of $630 million to $650 million
• Adjusted EBITDA guidance was increased to a range of $145 million to $155 million, up from the prior guidance range of $135 million to $145 million

Total company net revenue for the first quarter of fiscal 2027 was $166 million, representing 27% year-over-year growth. Adjusted EBITDA was $42.5 million, up 69% year-over-year, with an adjusted EBITDA margin of 25.6%.

1. On-Device Solutions (ODS): Generated $110 million in net revenue, up 15% year-over-year. This segment contributes 66.3% of total company revenue. International ODS delivered nearly 80% year-over-year growth, driven by higher device volumes and increased revenue per device (RPD).

2. Application Growth Platform (AGP): Generated $56.6 million in net revenue, up 56% year-over-year. This segment contributes 34.1% of total company revenue. Within AGP, the direct brand sub-segment grew over 70% year-over-year, while the DTX/SSP sub-segment grew over 40% year-over-year, marking the fourth consecutive quarter of double-digit year-over-year growth and the second consecutive quarter of over 50% growth.

• The company notes that forward-looking statements are not guarantees of future performance, and actual results could differ materially from projections, with key risks detailed in SEC filings
• Broader macroeconomic risks including inflation, tariffs, and geopolitical instability are present, though management notes Digital Turbine is more insulated than most firms due to its digital business model, lack of traditional input cost pressures, and focus on digital goods and services customers
• Global device market volumes face macro headwinds tied to DRAM pricing and supply chain issues, though the company has still delivered double-digit device volume growth to date
• Global digital advertising growth is only in the high single digits, creating a slower baseline market growth environment relative to the company's outperformance targets

Q: How does management prioritize its multiple growth drivers for this year and next, and what is the impact of the recent Epic v. Google rulings on the company's alternative app initiatives? Has the announced Orange European carrier deal increased pipeline momentum for other European carrier deals for Ignite or Singletap? / A: Management identifies the 80% growing international ODS business, 70% growing direct brand business, and 40% growing DTX business as the top three recent performers. For the near term, management prioritizes data and AI (which has large untapped potential) as the top growth priority, followed by the high-momentum direct brand business; flywheel effects, Ignite expansion, and alternative app distribution act as supporting catalysts. Recent Epic v. Google rulings and resulting app store democratization are a clear tailwind for alternative distribution, creating new opportunities for the company. The Orange deal has generated strong new pipeline momentum with other European carriers, with more announcements expected in the future.

Q: What regions and partner types are driving strong international ODS growth despite broader macro device market headwinds, and how durable is the strong AGP growth trend, particularly for the brand business? / A: International ODS growth is driven by strong performance from major OEM partners including Motorola and Samsung, plus solid growth from international operator partners, even against broader chipset and device supply headwinds. Management expects the strong AGP growth trend to continue: the hard work of building external relationships with major brand advertisers, holding companies, and agencies, plus internal integration of legacy technology to deliver mobile-first brand experiences, is now complete and paying dividends. As long as the company continues to leverage its data and targeting advantages, brand ad spend growth is expected to persist.

Q: How much of the company's strong fill rate and CPM growth is market-wide versus company-specific, and what is the monetization timeline for newly signed distribution expansion in APAC and non-gaming verticals? / A: The broader global digital ad market is only growing mid-to-high single digits, while the company's ad rates are growing over 40% year-over-year. The outperformance is driven by company-specific advantages: better AI-powered targeting, improved audience outcomes, and better ad formats that command higher prices. Encouraging early monetization trends are already visible for new APAC and non-gaming publisher partnerships, with these new partnerships contributing to the current 40% DTX growth rate as the company takes share from competitors.