Digital Turbine (NASDAQ:APPS) executives told investors the company delivered a stronger-than-expected fiscal 2026 third quarter, citing accelerating momentum across its On-Device Solutions (ODS) and App Growth Platform (AGP) segments, improved operating leverage, and continued progress reducing leverage.
Quarterly results exceeded expectations
CEO Bill Stone said the December quarter reflected “accelerating business momentum” and highlighted growth across products and geographies. Total revenue was $151.4 million, up 12% year over year. The company reported quarterly EBITDA of about $39 million, up 76% year over year, with an EBITDA margin of 26%.
Segment performance: ODS driven by international strength, AGP sustained momentum
Digital Turbine’s ODS business generated nearly $100 million in revenue, with CFO Steve Lasher specifying $99.6 million, up 9% year over year. Management attributed the growth primarily to higher device volumes and higher revenue per device (RPD), driven mainly by international partners. Stone said international performance included more than a 20% increase in both devices and RPD, which helped drive international growth of more than 60% year over year. He also said that for the first time, more than 30% of Ignite platform revenues came from outside the U.S.
The AGP segment delivered $52.6 million in revenue, up 19% year over year (Stone referenced $53 million). Stone highlighted strength in the brand business and said DTX (its SSP business) grew more than 30%. He said the company’s efforts over the past few years to integrate legacy tech stacks into a common platform are now “paying dividends,” and management expects momentum to continue.
Supply and demand trends, plus vertical sales execution
Stone said improving supply and demand dynamics supported performance. While he noted continued softness in U.S. devices, he said overall devices grew 20% year over year due to stronger international volumes. Within AGP, he said supply volumes increased impressions by more than 20% year over year, driven by international strength and increases in non-gaming inventory.
On the demand side, management cited higher advertiser demand that improved pricing and fill rates, especially for premium placements. Stone said revenue per device grew year over year in both U.S. and international markets for the device business.
Stone also pointed to sales execution in the brand business after a reorganization of sales teams around verticals. He said increased spend was seen across consumer packaged goods, retail, telecom, and technology, and called out the retail vertical specifically, saying it delivered 5x growth compared to the prior holiday season as retail media initiatives gained traction with large retailers.
Margins expanded; cash operating expenses declined
Lasher said adjusted EBITDA was $38.8 million, up 76% year over year, and the 26% adjusted EBITDA margin marked the seventh consecutive quarter of expansion, improving by more than 900 basis points versus the prior year. He noted the comparison included approximately $3.5 million of one-time benefits, mainly tied to a sublease settlement and improved working capital.
Non-GAAP gross margin was 49%, up from 44% in the prior year, which Lasher attributed primarily to a more favorable product and segment mix. Cash operating expenses were $36 million, down 4% year over year. Lasher said the company aims to continue identifying efficiencies while maintaining targeted investments to support growth.
On the bottom line, Digital Turbine reported GAAP net income of $5.1 million, or $0.03 per share. On a non-GAAP basis, the company generated $21.7 million of net income, or $0.18 per share, based on 120 million shares outstanding.
Deleveraging progress and updated outlook
Management emphasized balance sheet progress. Stone said the company’s debt leverage ratio is now around three turns, down from more than five turns a year ago. Lasher said cash at quarter-end was $40 million, up about $1 million from the end of September, while total debt (net of issuance costs) fell by more than $41 million to $355 million.
Lasher said the reduction was driven by positive cash flow and proceeds from the company’s at-the-market (ATM) equity program. During the December quarter, Digital Turbine sold 6.8 million shares at an average price of $6.54, generating $44.6 million in gross proceeds. He added that the company decided to terminate the existing ATM program, citing improved performance and leverage, and said management believes liquidity and balance sheet strength eliminate the need for that funding source in its long-term capital strategy.
Following the quarter’s performance and improved visibility into the March quarter, Lasher said Digital Turbine is raising full-year fiscal 2026 guidance again. The company now expects:
- Revenue of $553 million to $558 million
- Adjusted EBITDA of $114 million to $117 million
At the midpoint, Lasher said the update represents an increase of $10 million in revenue guidance and more than $13 million in EBITDA guidance versus the prior outlook.
In the Q&A, Stone discussed the company’s “flywheel” priority of connecting its monetization technology with app developers’ user acquisition budgets, enabled by a more integrated tech stack. He also said Google’s Gemini-related announcement was a net positive for Digital Turbine because more games coming to market should increase distribution needs, while reiterating that the company has been diversifying beyond gaming inventory.
Stone added that three of the largest global mobile game developers signed in the December quarter are already live using SingleTap for alternative distribution efforts, including versions with “house billing” and “dual downloads,” which he said can reduce friction and costs for publishers and is generating revenue today.
About Digital Turbine (NASDAQ:APPS)
Digital Turbine, Inc (NASDAQ: APPS) is a mobile technology company that streamlines content delivery and app advertising across connected devices. Its platform enables carriers, OEMs, app developers and advertisers to engage users through personalized app recommendations, in-app promotions and turnkey monetization solutions. By integrating software directly on smartphones and tablets, Digital Turbine simplifies the user journey from discovery to installation without requiring additional downloads or redirects through traditional app stores.
The company’s flagship Ignite Platform offers end-to-end campaign management, combining demand-side advertising, real-time analytics and automated content fulfillment.
Further Reading
- Five stocks we like better than Digital Turbine
- The day the gold market broke
- Forget AI, This Will Be the Next Big Tech Breakthrough
- Ticker Revealed: Pre-IPO Access to “Next Elon Musk” Company
- ALERT: Drop these 5 stocks before the market opens tomorrow!
- Trump Planning to Use Public Law 63-43: Prepare Now
