Introduction
Digital Turbine Inc (NASDAQ: APPS) is a company that provides products and services to help mobile operators, device OEMs, and app developers generate revenue through advertising. With the surge in demand for mobile apps and the widespread adoption of 5G technology, the company has experienced rapid growth in recent years. Now, let's dive deeper into the details of Digital Turbine's operations and explore its potential.
Digital Turbine Inc's Overview
Digital Turbine Inc was founded in 1998 by Bill Stone, who is the current CEO and board member. The company is headquartered in Austin, Texas, and has offices in Durham, Berlin, Singapore, Tel Aviv, and San Francisco.
Some of the key milestones in the company's history are:
● In 2001, the company launched its first product, Mobile Posse, which delivered content and advertising to mobile devices.
● In 2014, the company acquired Mandalay Digital Group, which owned DT Ignite, a platform that enabled mobile operators and OEMs to manage and distribute content on their devices.
● In 2015, the company rebranded as Digital Turbine and was listed on the NASDAQ under the ticker APPS.
● In 2019, the company acquired Mobile Posse (now DT Reach), a product that drove brand awareness and user acquisition through video and displays ads across mobile apps and on-device placements.
● In 2020, the company acquired Fyber N.V., a leading mobile advertising monetization platform.
● In 2021, the company acquired Appreciate Ltd., a programmatic mobile advertising platform, AdColony Holding AS, a leading mobile video advertising platform, and Fiber LLC (formerly Tapjoy), a leading mobile engagement and monetization platform.
The company's current structure consists of two segments: Advertising and Content. The Advertising segment offers products such as DT Reach, DT Growth, DT Monetization, Fyber N.V., Appreciate Ltd., AdColony Holding AS, and Fiber LLC. The Content segment offers products such as DT Ignite Platform and SingleTap.
Bill Stone, with over 25 years of experience in the wireless industry, serves as the CEO of Digital Turbine. He joined the company in 2014 as President and COO before assuming the role of CEO in 2016. Before his tenure at Digital Turbine, Stone held significant positions at Qualcomm Inc., Verizon Wireless, SkyTel Corp., and Cellular One.
Digital Turbine Inc's Business Model and Products/Services
How does Digital Turbine Inc make money
Digital Turbine specializes in offering products that empower mobile operators, device OEMs, and app developers to monetize their tools and services, thereby contributing to the thriving app economy. The company derives its revenue from three primary sources, which are described below:
● Advertising revenue: This is derived from fees charged to advertisers for displaying ads on mobile devices through various channels, such as preloads, notifications, sponsored placements, app discovery, video ads, display ads, programmatic ads, rewarded ads, offer walls, etc.
● License fees: This is derived from fees charged to mobile operators and OEMs for using the company's products to manage and distribute content on their devices.
● Service fees: This is derived from fees charged to app developers for using the company's products to drive app installs and engagement.
The company's revenue model is based on several factors, such as:
● The number of devices that have the company's products installed or activated
● The number of apps that are distributed or discovered through the company's products
● The number of impressions or clicks generated by the ads displayed through the company's products
● The average revenue per impression or click
● The mix of advertising formats and demand sources
● The contractual terms with advertisers, mobile operators, OEMs, and app developers
Main Products/Services
Some of the main products and services offered by Digital Turbine Inc are:
● DT Reach drives brand awareness and user acquisition through targeted video and displays ads, utilizing the company's unique access to mobile operators and OEMs.
●DT Growth helps app developers increase app installs and engagement through preloads, notifications, sponsored placements, and app discovery, leading to improved retention and monetization.
● DT Monetization offers mobile publishers flexible and transparent solutions for real-time mediation, programmatic demand, and innovative revenue generation, supporting various ad formats to maximize revenue and enhance the user experience.
● DT Ignite Platform empowers mobile operators and OEMs to efficiently manage and distribute content on devices, allowing preloading, updating, and remote removal of apps, games, music, videos, and wallpapers, with analytics and reporting tools for performance measurement.
● SingleTap simplifies app installation by enabling users to install apps with a single tap from any source, eliminating unnecessary steps and improving conversion rates and user experience.
● Fyber N.V. is a leading mobile advertising monetization platform connecting app developers, media companies, and advertisers, offering mediation, programmatic, video, and offerwall solutions, with advanced optimization, transparency, and control tools.
● Appreciate Ltd. is a programmatic mobile advertising platform that leverages machine learning and big data for optimal results, providing a self-service platform for advertisers to create, manage, and optimize campaigns across various ad formats.
● AdColony Holding AS is a leading mobile video advertising platform, delivering high-quality and engaging video ads through in-app video, rewarded video, playable ads, and interstitial ads, complemented by advanced targeting, measurement, and optimization capabilities.
● Fiber LLC (formerly Tapjoy) is a mobile engagement and monetization platform connecting app developers, advertisers, and users, offering solutions such as offerwall, rewarded video, rewarded survey, and rewarded playable, providing users with personalized content and rewards.
Through these comprehensive offerings, Digital Turbine Inc establishes itself as a key player in the mobile advertising and monetization landscape, catering to the needs of mobile operators, OEMs, app developers, advertisers, and publishers.
Digital Turbine Inc's Financials, Growth, and Valuation Metrics
Source: Tradingview.com
Review of Digital Turbine Inc's financial statements
APPS Earnings
As you can see in the graph above by TradingView, Digital Turbine Inc maintained a strong financial performance in 2023, with robust growth in revenue and net income. The company's revenue increased from $312.4 million in 2021 to $539.2 million in 2023, representing a compound annual growth rate (CAGR) of 27.7%. Similarly, net income grew from $18.9 million in 2021 to $33.9 million in 2023, with a CAGR of 33.6%.
The company also saw improvements in its profit margins over the three years. Gross margin remained steady at around 39-40%, while operating margin increased from 11.0% in 2021 to 13.0% in 2023. The net margin also experienced growth, rising from 6.0% in 2021 to 8.0% in 2023.
Furthermore, Digital Turbine Inc maintained a strong cash flow from operations (CFFO). CFFO increased from $32.4 million in 2021 to $55.4 million in 2023, with a CAGR of 30.2%.
The company's balance sheet reflects its financial strength, with $168.4 million in cash and cash equivalents. Total assets stand at $1.5 billion, while total liabilities amount to $521.0 million, resulting in total equity of $979.0 million.
Overall, Digital Turbine Inc's strong financial performance in 2023, characterized by revenue and net income growth, improved profit margins, and robust cash flow from operations, underscores its financial stability. The company's strong balance sheet further reinforces its financial position and provides a solid foundation for future growth.
Key financial ratios and metrics
When comparing Digital Turbine Inc's valuation to its peers in the application software industry, several key financial ratios and metrics indicate that the company's stock is undervalued relative to its growth potential:
● Revenue and earnings growth: Digital Turbine (NASDAQ APPS) has shown faster growth than competitors like PLTR, ADBE, MARA, ZM, CRM, and U. Last quarter, Digital Turbine's revenue grew by 276% YoY, surpassing its peers.
● Forward P/E ratio: Digital Turbine's forward P/E ratio is 36.8, lower than PLTR (93.5), ADBE (46.3), ZM (63.4), CRM (56.9), and U (241.9). This suggests that Digital Turbine is undervalued relative to its growth potential.
● Price-to-sales ratio: Digital Turbine's price-to-sales ratio is 10.3, lower than PLTR (34.8), ADBE (19.7), ZM (25.8), CRM (10.6), and U (35.4). This indicates that Digital Turbine's stock is relatively cheap compared to revenue generation.
Based on these metrics, Digital Turbine's stock is underpriced compared to peers in the application software industry, given its growth potential.
APPS Stock Performance
APPS Stock Trading Information
Digital Turbine's stock is listed on the NASDAQ under the ticker APPS since 2015. The stock trades in US dollars and follows the US market hours. The stock does not have any pre-market or after-market trading sessions. The stock has not undergone any stock splits or paid any dividends since its listing.
Overview of APPS Stock Performance
APPS stock, which represents mobile software company Digital Turbine, saw meteoric growth in 2020 and 2021 before coming back down to earth in 2022.
The onset of the COVID-19 pandemic in early 2020 proved to be a major catalyst for Digital Turbine, as lockdowns and reduced mobility led to a surge in mobile device usage and app downloads. Digital Turbine's software helps carriers and OEMs promote and monetize their mobile applications. The company saw rapid revenue and earnings growth in 2020 and 2021, with APPS stock rising more than 4,000% from its March 2020 low to its February 2021 peak.
However, growth stalled in 2022 as post-pandemic headwinds emerged. Concerns about the loss of pandemic tailwinds, Apple's privacy changes hurting ad targeting, and competitive pressures in the mobile ad market led to a sharply lowered outlook. APPS stock is down 65% year-to-date in 2022 amid the growth uncertainties. While the stock saw incredible gains in 2020/2021, it has given back much of those returns this year as the potential for Digital Turbine normalizes from its pandemic highs.
Some of the key drivers of APPS stock price in 2023 are:
● The company's strong revenue and earnings growth are driven by its diversified product portfolio, large customer base, global reach, and strategic acquisitions
● The company's exposure to the fast-growing mobile app advertising market is expected to reach $240 billion by 2024, according to Statista
● The company's competitive advantages, such as its unique access to mobile operators and OEMs, its proprietary technology, its data-driven optimization, and its scalable platform
● The company's positive outlook and guidance, as well as the favorable analyst ratings and price targets
Some of the prospects of APPS stock are:
● The company expects to generate revenue of $340 million to $350 million and adjusted EBITDA of $50 million to $52 million for the quarter ending September 30, 2021, representing a growth of 165% to 172% and 144% to 152% YoY, respectively
● The company also expects to generate revenue of $1.45 billion to $1.5 billion and adjusted EBITDA of $225 million to $235 million for the fiscal year ending March 31, 2022, representing a growth of 125% to 131% and 122% to 130% YoY, respectively
● The company has a strong pipeline of new customers and partners, as well as potential cross-selling and upselling opportunities with its existing customers and partners
● The company plans to continue investing in product innovation, geographic expansion, and strategic acquisitions to enhance its growth and profitability
● The company has a strong pipeline of new customers and partners, such as Google Cloud, which it expanded its partnership with in May 2023 to enable frictionless app installation on Android devices.
● The company also has potential cross-selling and upselling opportunities with its existing customers and partners, such as Samsung, which it signed a multi-year agreement with in December 2022 to pre-install its platform on Samsung devices globally.
APPS Stock Forecast
According to Tip Ranks, APPS stock has an average analyst rating of Strong Buy, based on 8 buy ratings and no hold or sell ratings. The average analyst price target is $107.38, implying a 34% upside potential from the current price of $80.07. The highest price target is $125, while the lowest is $90.
Challenges and Opportunities
Like any other stock, APPS stock also faces some risks and challenges that could affect its performance and valuation. Some of these are:
● Competitive risks: Digital Turbine operates in a highly competitive and dynamic market, where it faces competition from other players in the application software industry, such as Palantir Technologies Inc, Adobe Inc, Marathon Digital Holdings Inc, Zoom Video Communications Inc, Salesforce.com Inc, Unity Software Inc, etc. Some of these competitors may have more resources, brand recognition, customer loyalty, or technological capabilities than Digital Turbine. For example, Digital Turbine may face threats from competitors like Trade Desk Inc (TTD), which is a leading provider of programmatic advertising solutions for digital media buyers. TTD has a larger market capitalization, revenue, and customer base than Digital Turbine. TTD also offers a wider range of products and services, such as connected TV, audio, display, video, native, etc. TTD also has a higher gross margin and operating margin than Digital Turbine. However, Digital Turbine has some competitive advantages over TTD, such as its unique access to mobile operators and OEMs, its higher revenue and earnings growth rate, its lower valuation multiples, and its exposure to the mobile app advertising market.
● Other risks: Digital Turbine's business performance and stock price may also be affected by other factors beyond its control, such as:
o The economic impacts on ad spending
o The dependence on the growth in mobile ad spending and the pace of 5G adoption
o The data privacy regulation
o The loss of key partnerships
o The pricing pressures
Despite these risks and challenges, Digital Turbine also has some opportunities and advantages that could enhance its growth and valuation. Some of these are:
● The competitive advantages: Digital Turbine has some unique and sustainable competitive advantages that differentiate it from its competitors and create value for its customers and partners. For example, the company has a large and diversified customer base that includes some of the leading mobile operators and OEMs in the world, such as AT&T, Verizon, Samsung, LG, etc. The company also has a proprietary technology platform that enables it to deliver personalized and relevant ads to millions of users worldwide. The company also has a data-driven optimization system that helps it maximize the performance and efficiency of its campaigns. The company also has a scalable platform that can handle high volumes of traffic and transactions.
Growth Opportunities
Digital Turbine has several opportunities to expand its business and increase its market share in the mobile app advertising market. For example, the company can leverage its acquisitions and integrations to offer more comprehensive and differentiated solutions to its customers and partners. The company can also explore new markets and regions where it has low penetration or presence. The company can also capitalize on emerging trends and technologies in the mobile app industry, such as 5G, artificial intelligence, machine learning, blockchain, etc.
Future Outlook and Expansion
Digital Turbine has a positive outlook for its future growth and expansion in the mobile app advertising market. The company expects to continue delivering strong revenue and earnings growth in the coming quarters and years, driven by its diversified product portfolio, large customer base, global reach, and strategic acquisitions. The company also expects to improve its margins and profitability by optimizing its cost structure, enhancing its operational efficiency, and increasing its economies of scale.
The company has also set some ambitious goals for its future expansion in the mobile app advertising market. Some of these goals are:
● To become the leading platform for mobile growth and monetization solutions in the world
● To reach over 1 billion monthly active users on its platform by 2025
● To generate over $5 billion in annual revenue by 2025
● To expand into new markets and regions where it sees high growth potential
● To acquire or partner with more companies that complement or enhance its product offerings
● To invest in more innovation and research and development to stay ahead of the competition
Trading Strategies for APPS Stock
APPS stock is one of the most popular and profitable stocks in the application software industry due to its strong growth and competitive advantages. However, trading APPS stock also involves some risks and challenges, such as volatility, competition, and regulation. Therefore, it is important to have some trading strategies and tips to help you make the most of your trading opportunities.
One of the key trading strategies for APPS stock is to use support and resistance levels to identify potential entry and exit points. Support and resistance levels are areas on a price chart where the price tends to bounce back or break through, depending on the supply and demand forces. By using support and resistance levels, you can anticipate price movements and plan your trades accordingly.
For example, the figure below shows a daily chart of APPS stock from January 2023 to July 2023 from TradingView. You can see that the price has been moving within a descending channel, forming lower highs and lower lows. The upper line of the channel acts as a resistance level, while the lower line acts as a support level. You can also see that the price has bounced off or broken through some horizontal levels, such as $19, $15, $10, and $5.
APPS stock chart with support and resistance levels
Source: TradingView
Based on this chart, you can use the following trading tips:
● Sell APPS stock when it reaches the upper line of the channel or a horizontal resistance level, such as $15 or $10.
● Buy APPS stock when it bounces off the lower line of the channel or a horizontal support level, such as $5 or $7.5.
● Use stop-loss orders to protect your trades from unexpected price movements. For example, you can place a stop-loss order below the lower line of the channel or below a horizontal support level.
● Use take-profit orders to lock in your profits when the price reaches your target level. For example, you can place a take-profit order at the upper line of the channel or a horizontal resistance level.
● Use technical indicators, such as moving averages, trendlines, or oscillators, to confirm your trading signals and identify trend reversals or continuations.
Another trading strategy for APPS stock is to use CFDs instead of buying or selling the actual shares. CFDs are contracts that allow you to speculate on the price movements of an underlying asset without owning it. By trading CFDs, you can enjoy some advantages over traditional trading, such as:
● Leverage: CFDs enable you to trade with a small amount of capital compared to the actual value of the trade. This means you can amplify your profits (or losses) with a relatively low investment.
● Short selling: CFDs allow you to profit from both rising and falling markets by going long or short. This means you can sell CFDs when you expect the price of APPS stock to decline and buy them back at a lower price later.
● Diversification: CFDs give you access to a wide range of financial markets, such as forex, commodities, indices, cryptocurrencies, etc. This means you can diversify your portfolio and reduce your risk exposure.
● No commissions: CFDs do not involve any commissions or fees for opening or closing trades. The only cost involved is the spread between the bid and ask prices.
Trade APPS Stock CFD with VSTAR
If you are interested in trading APPS stock CFDs, one of the best platforms to use is VSTAR. VSTAR is a platform that enables you to trade CFDs on various financial markets with ease and convenience. Some of the benefits of trading with VSTAR are:
● User-friendly interface: VSTAR has a simple and intuitive interface that allows you to navigate and execute your trades with just a few clicks.
● Advanced tools: VSTAR provides you with advanced tools for analysis, research, education, and risk management. You can use charts, indicators, signals, news, webinars, tutorials, etc. to enhance your trading skills and strategies.
● Competitive spreads: VSTAR offers you competitive spreads on all CFDs, which means you can trade with low costs and high profits.
● Fast execution: VSTAR ensures that your trades are executed quickly and accurately, with no delays or slippage.
● Security and regulation: VSTAR is a secure and regulated platform that complies with the highest standards of data protection and customer service. You can trade with confidence and peace of mind on VSTAR.
To trade Digital Turbine stocks CFDs with VSTAR, you just need to follow these simple steps:
● Register an account at VSTAR by providing your personal and financial information.
● Verify your identity and address by uploading the required documents.
● Deposit funds into your account using one of the available payment methods, such as credit card, bank transfer, e-wallet, etc.
● Choose APPS stock CFD from the list of available instruments and click on the buy or sell button depending on your trading direction.
● Enter the number of CFDs you want to trade and set your stop-loss and take-profit orders if desired.
● Confirm your trade and monitor your position until you close it or it reaches your target level.
Conclusion
Digital Turbine Inc is a leading provider of mobile growth and monetization solutions that enable mobile operators, device OEMs, and app developers to monetize their tools and services through advertising. The company has been growing rapidly in recent years, benefiting from the increasing demand for mobile apps and the adoption of 5G technology. The company's financials, growth, and valuation metrics indicate that it is undervalued compared to its peers in the application software industry based on its growth potential. However, the company also faces some risks and challenges that could affect its performance and valuation, such as competitive pressures, economic impacts on ad spending, data privacy regulations, loss of key partnerships, pricing pressure, etc.
One of the best ways to trade Digital Turbine stock is to use CFDs instead of buying or selling the actual shares. CFDs are contracts that allow you to speculate on the price movements of an underlying asset without owning it. By trading CFDs, you can enjoy some advantages over traditional trading, such as leverage, short selling, diversification, and no commissions. However, you should also be aware of the risks involved in trading CFDs, such as margin calls, liquidity issues, slippage, and market volatility. Therefore, you should only trade CFDs with a reputable broker like VSTAR that offers low spreads, fast execution, and reliable customer service.
FAQs
1. Why is APPS stock going down?
APPS stock is going down due to concerns about slowing growth post-pandemic, Apple's privacy changes hurting ad targeting, and increased competition in mobile advertising.
2. Is APPS a good stock to buy?
Opinions are mixed on whether APPS is a good buy now - some see value in the 65% decline, while others remain concerned about near-term headwinds.
3. Is APPS stock a good long-term investment?
APPS stock has the potential to be a good long-term investment if mobile advertising grows as expected. But the stock is likely to remain volatile.
4. What is the forecast for APPS stock?
The consensus forecast calls for a modest rebound in APPS stock over the next 12 months, but estimates range widely.
5. What is the future of Digital Turbine stock?
Digital Turbine's future depends on maintaining strong carrier relationships and growing with the mobile advertising market. However, competitive and regulatory risks remain.
