Digital Turbine, Inc. Aktie

Thank you. Biden Reports Fiscal 2027 First Quarter Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded.

I would now like to turn the conference over to Brian Bartholomew, Senior Vice President of Capital Markets. Please go ahead.

Thank you. Good afternoon and welcome to the Digital Turbine Fiscal 2027 First Quarter Earnings Conference Call. Joining me today on the call to discuss our results are CEO Bill Stone and Interim CFO Josh Kinsell. Before we get started, I'd like to take this opportunity to remind you that our remarks today will include forward-looking statements. These forward-looking statements are based on our current assumptions, expectations, and beliefs, including projected operating metrics, future products and services, anticipated market demand, and other forward-looking topics. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. Except as required by law, we undertake no obligation to update any forward-looking statements. discussion of the risk factors that could cause our actual results to differ materially from those contemplated by our forward-looking statements, please refer to the documents we filed with the Securities and Exchange Commission. Also during this call, we will discuss certain non-GAAP measures of our performance.

Non-GAAP measures are not substitutes for GAAP measures. Please refer to today's press release for important information about the limitations of using non-GAAP measures, as well as reconciliations of these non-GAAP financial results to the most comparable GAAP measures. Now I'd like to turn the call over to our CEO, Bill Stone. Thanks, Brian. Good afternoon, everyone.

I want to open my remarks by recognizing our team for delivering another quarter of strong results that exceeded our expectations. The results are even more encouraging as they are not due to any single factor but to many factors. And I'll break those down in my prepared remarks, which will be across three areas. First, we'll be looking back at our June quarter results. Second will be some commentary on the operational and strategic elements of our business that are enabling us to raise our guidance for the remainder of the fiscal year. And then finally, I want to provide some commentary on AI and macroeconomic trends in our business. Revenue for the June quarter came in at $166 million, representing 27% year-over-year growth.

We also achieved nearly 70% year-over-year growth in adjusted EBITDA during the same period, demonstrating significant operating leverage in our model as we scale. I'm also pleased with the dramatic improvement in our balance sheet that benefits from our strong results. Last June quarter, our net leverage ratio was greater than five turns. Today we're at a healthy two and a half turns and as implied in our increased outlook, we expect this positive trend to continue. If we break our results down by segment, our on-device solutions business generated $110 million in revenue in the June quarter, which was up approximately 15% from last year. In particular, it was encouraging to see double-digit year-over-year growth in global devices, despite macro headwinds on global device volumes due to DRAM pricing issues in the supply chain. Growth in international ODS continues to be a bright spot as higher device volumes combined with higher revenue per device, or RPD, drove nearly 80% year-over-year growth.

Our application growth platform, or AGP business results, were another bright spot. It was our fourth consecutive quarter of year-over-year double-digit growth and our second consecutive quarter of more than 50% year-over-year growth. Meanwhile, this compares to a global digital advertising market that is growing into high single digits. In other words, our AGP business is consistently growing many multiples more than the global industry growth rate each quarter. In June quarter, I was particularly pleased with our direct brand business growing over 70% and our DTX or SSP business growing over 40% year-over-year. It took longer than anticipated, but the combination of strong conviction to stay the course in our strategy, combined with the hard work to integrate our legacy SSP tech stacks with our brand demand. to a data-driven marketplace and AI-first platform is now paying dividends. Our key growth drivers in June quarter were both rates and volume that powered our improved performance.

On rates, we saw higher advertiser demand, which translated into improved pricing and fill rates, particularly for premium placements on our platform. This strong advertiser demand drove incremental international RPD expansion in our ODS business, resulting in nearly 80% growth year over year. We also had strong demand with our brand and DTX businesses, each growing rates by more than 40%. This is due to our platform delivering better return on ad spend for advertisers, which in turn allows for higher rates. This improvement in ad spend is being driven by AI for two reasons. First, our platform's first-party data is able to leverage our AI tools and machine learning models to drive better advertiser outcomes. And secondly, it's a tailwind where we're seeing brands migrate their spend away from the open web to other channels like apps, given traffic declines in the open web, which are caused by AI, and resulting in app usage growth as brands and agencies adopt the power of AI in the mobile app channel.

In addition to these positive pricing trends, we continue to see strong diversification of our demand with 80% of our advertiser spend on DTX coming from non-gaming partners. The second driver was increased supply. Our global devices grew double digits year over year, driven by strong volumes from our international partners. And within the devices we have our technology integrated, we are seeing operators and OEMs wanting to use our technology on new screens for monetization. In addition, our AGP supply continues to add new apps and publishers by expanding distribution of our SDK footprint. this globally with the growth in publishers, but in particular, it's helping driving strong performance with APAC, publisher supply, as well as adding non-gaming publishers and AI publishers looking for monetization. Turning to the future, we're increasing our guidance today for the fiscal year, and there are five drivers for this increased forecast. The first is AI and data.

Our ability to leverage our unique first-party data across our platform with DTIQ and Ignite Graph drives better outcomes. in turn drives more revenue because of better return on spend for advertisers. I'll provide some additional commentary later in my remarks on the macro impact of AI on our business. Second is the flywheel. Connecting our diversified demand and supply drives each other. We have nearly 3 billion devices and more than 80,000 apps using our ad tech technology. The opportunity for these apps to drive more user acquisition to our platform, and hence more monetization, will be a growth driver. The third driver is brand. Our brand business showed impressive 70% year-over-year growth. Our focus is leveraging the macro tailwinds of more time in apps, combined with our micro first-party data and audience targeting to drive even more scale and growth.

There are a variety of product and operational improvements being implemented real-time that are improving our ability to scale this important part of our business. Fourth driver is Ignite. Our international ODS momentum has been fueled by Latin America and Europe, and current and future supply winds are expected to mitigate concerns around the global device supply chain. In addition, our Ignite platform is showcasing there is more opportunity to not just grow device supply, but also leverage the platform capability as a software enabler for distribution of other products on the screens of devices versus just our current products such as single tap, out-of-the-box setups, and notifications. doing this today in the US with an AI first partner distributing AI agents to devices and we see this expanding to other areas such as e-commerce, lock screens, and other forms of content distribution. And finally, it's the growth of alternative applications. We continue to ramp and scale more and more partners, distributing their versions of applications, helping them get to devices, whether this is via our data targeting, single tap, our DSP, and so on. The recent outcome of the Epic Google case and the Google rulings in the EU are expected to open up opportunities for increased alternative distribution. Publishers are now seeing real-time what is happening to their businesses because of the impacts of AI on the open web and want to have more control over their destiny for the future versus being reliant on only one or two sources of distribution.

These five things are important because it showcases our business is not relying upon any single factor to drive future growth. We've got many shots on goal that provide optimism in our ability to drive top and bottom line growth. To close out my prepared remarks, I want to provide some commentary on the impact of AI and other macroeconomic factors to our business. Regarding AI, it's clearly transformational, an exciting time, and a tailwind for our business. It's reinventing businesses, including ours, in three main ways. First is the automation and simplification of workflows and processes, which is now showing up in our results. A year ago, our revenue per employee was about $800,000.

Today, it is in excess of $1 million. The driver of this efficiency is the ability to use AI and automation activities to scale our business. We've implemented numerous new AI and automation simplification activities and processes from areas such as quality assurance, our back office, campaign management, software development, and data management, just to name a few. We're seeing an acceleration in these activities as we organize our people, our systems, and our processes for this AI-first world. The second is leveraging AI in our data to improve outcomes for our customers. As you've seen in our recent Google and Databricks press announcements, we're combining our unique first-party data signals with AI enhancements to drive better outcomes for customers leveraging our DTIQ and IgniteGraph capabilities. These are not just impacting our strong results today, but will be revenue and EBITDA drivers for us in the future.

And the final area is how the broader AI landscape will leverage DT's distribution and on-device footprint and data to help their businesses grow. And there are three important macro trends that we expect to be tailwinds for us. The first is more applications. According to recent analysis from market intelligent provider AppFigures, worldwide app releases in first quarter of 2026 were up 60% year-over-year across both Apple's App Store and Google Play. AI makes it easier for anyone to create apps, driving both growth in app stores as creators no longer need technical skills to build mobile software. And these applications all need distribution to reach consumers, given the inherent discovery limitations in the legacy to app stores. The second trend is the increase in time spent in applications. Today the average consumer is spending about five hours per day in side applications, which is up about an hour over the past decade.

This trend is accelerating as integration of AI chatbots creates a shift in the channels of how we consume information, leaning towards apps and away from the open web. Multiple measurement sources have reported that AI has likely caused a 10% open web traffic to decline so far, with some informational categories seeing anywhere from 20% to 40% declines. The final trend bringing all of this together is monetization. And for centuries, one trend's been consistent. Media dollars follow eyeballs. And as our eyeballs continue to spend more and more time in applications because of enabling technologies like AI, which is creating more breadth of apps and more depth of time and spend in apps, this is a positive for us. In addition to AI, I've also been receiving many questions on potential macroeconomic impacts to our business, given wider fears around inflation, tariffs, and geopolitics. One of my favorite things about our mobile AI cloud business is that we are more insulated than the vast majority of companies, as our business is a digital one without the traditional input cost pressures many companies must navigate.

Plus, the majority of our customers are using our platform to sell their digital goods and services. versus goods that may be more sensitive to those risks. Of course, no single business is 100% insulated from macroeconomics, but as we saw during the pandemic, our business is a resilient one, insulated from these factors, given our mobile-first, high operating leverage approach matching where consumers are spending their time. We expect AI to only accelerate versus slow down these trends.

And with that, I'll turn it over to Josh to take you through the numbers. Thank you, Bill, and good afternoon, everyone. Let me turn to our first quarter fiscal 2027 results. We are off to a strong start to the new fiscal year with growth across both segments. Total net revenue for the quarter was $166 million, up 27% year over year, extending our strong fiscal to the annual 2026 exit momentum. On-device solutions net revenue was 110 million, up 15% year over year. Growth was again driven by our international business where higher device volumes and higher revenue per device continued to drive strong results.

At Growth Platform, net revenue was 56.6 million, up 56% year over year, continuing the growth we highlighted last quarter. This was led by DTX, where revenue increased by 54%. These results reflect both continued onboarding of publishers and demand partners, particularly in Asia Pacific, and the performance of our AI powered optimization capabilities. Turning to profitability, non-GAAP gross margin was 49.4% in the quarter, up from 47.3% in the year-ago period. This was driven by favorable segment and product mix as AGP continues to grow as a share of our business. Cash operating expenses were $39.5 million, up 7% year-over-year, reflecting a continued expense discipline even as we invest in our highest priority growth initiatives. Notably, we reached a significant milestone this quarter as our run rate revenue per employee has risen to over $1 million on an annual basis.

The combination of strong top line growth, favorable mix, and expense discipline drove another quarter of substantial adjusted EBITDA. Adjusted EBITDA totaled $42.5 million, up 69% year-over-year, with margin expanding nearly 640 basis points to 25.6% versus the year-ago quarter. Evidence of a meaningful operating leverage beginning to emerge in our model. On the bottom line, we reported a gap net loss of $3.2 million, or $0.03 per share, and improvement from a net loss of $14.1 million, or $0.13 per share, in the first quarter of fiscal 2026. It should be noted that we're finalizing a non-cash adjustment in our Form 10-Q that may be recorded against beginning retained earnings. This adjustment would impact the GAAP net loss, but not our non-GAAP results. On to our non-GAAP net income of $24.1 million or 19 cents per share based on 125.6 million diluted shares outstanding.

This is more than tripling our non-GAAP net income of $7 million or 6 cents per share in the year-ago quarter, driven by strong top-line growth and continued operating expense discipline. Moving on to the cash flow and the balance sheet, we generated $17.9 million of cash from operations in the quarter, more than double the $8.8 million we generated in the first quarter of last year. Non-GAAP free cash flow was $11.3 million, an improvement of approximately $10 million versus the prior year period. We also made progress in strengthening our balance sheet. We ended the quarter with cash and cash equivalents of $43.2 million, an increase of more than $5 million from the start of the fiscal year. Our total debt, net of debt issuance costs and discounts, reached approximately 352.9 million, which was down by more than 8 million during the quarter. We amended our financing agreement during the quarter to secure more favorable terms.

This reflected an improved leverage profile we have built over the past several quarters. Subsequent to quarter end, as a result of achieving certain leverage thresholds under that agreement, the applicable margin on our largest loan tranche was reduced by 50 basis points. continue to remain focused to further strengthen the balance sheet as we move through the fiscal year. Turning to our outlook, given our strong start to the year and the continued momentum we are seeing, we are raising our fiscal 2027 guidance. We now expect revenue in a range of $650 million to $670 million for the year. and adjusted EBITDA in a range of $145 million to $155 million, both up from the initial ranges of $630 to $650 million and $135 million to $145 million we provided last quarter. With that, let me hand it back to the operator to open the line for questions. Operator?.

Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw, please press star then 2. At this time, we will pause momentarily for questions. to assemble our roster. Our first question comes from Anthony Stos of Craig Hallam. Please go ahead.

Hey, Bill and team, congrats on the strong execution yet again. So, Bill, you talked about having many shots on that with your different product offerings. How do you prioritize the growth drivers for this year and next? And then I had a couple of follow-ups.

Yes, thanks, Tony. If we kind of look in the rearview mirror, I think the really the three stars of the show were the international ODS business, up 80%. And I know we've talked in the past around concerns around device headwinds on DRAM prices. As you've seen Apple and others raising prices on devices. And the fact that we're able to grow our devices almost 15% in the quarter, and then our RPDs were up 40 plus percent, I think it's an 80% growth rate. I think that was star number one. But star number two and three were really on the AGP side. And just seeing second consecutive quarter of more than 50% growth in that business with our brand business, our DTX business, business, really starting to show some nice momentum out in the marketplace.

We started the journey many years ago and the belief that we could create this mobile first channel for brand dollars coming on to the exchange where it's been largely focused on games. So that bearing fruit is something it's great to see. It's kind of turning forward and looking into the future. on the increase guide today, if I was going to prioritize, I think data and AI is at the top of the list for us. We've got a lot of untapped potential in that part of the business. Our brand business as well has got a lot of momentum behind it. So I'd probably put those in the short term as the top two priorities. And the other three things I talked about with Flywheels and Ignite and Alt Apps will be the catalyst to keep it going in the future.

Got it. And then there's been a lot of media reports about the whole saga between Google and Epic and the jury trials, etc. Is that affecting at all your alternative app initiatives? And then after that, I have one last question.

Yes, so we think that this is going to open up a lot of opportunities now that that injunction has been settled and Google has opened up their app store to other app stores. We think that's a tailwind. I actually just put a blog out on that. I think it was earlier today that They got published, and so I'd encourage everyone to go take a look at that for the details. But net-net is it's just showing more democratization of app stores, and so I think that's a positive for companies like us. Thank you.

Got you. Last question you kind of alluded to on the Ignite section of your call here about more deals coming and international business being strong. I'm just curious, it's been a month and a half or so since your Orange deal has been announced. Has that kind of rattled the cage, if you will, with some of the other European carriers to go in either on Ignite or Singletap? I'd love to hear.

Yes, we've got a lot of momentum right now in that part of the business. Momentum gets momentum. I mentioned in my prepared remarks that the pipeline's looking really good. I'd say stay tuned for more momentum coming there.

Great job Bill, thank you. Great, thanks. Our next question comes from Dan Kernos of Stonex. Please go ahead.

Yes, great. Thanks. Good afternoon, Bill. Definitely a fun one to jump into here. Nice print. Just first, maybe can you give us a little bit more color and unpack the international ODS device growth, just any areas of strength, OEMs, just any additional color you can give, especially given the broader backdrop that you have. And then I want to follow up with follow up with several AGP questions. Thanks. Yes, sure. On the international ODS front, you know,.

We really saw growth from really the OEM partners in particular. So, you know, Motorola and Samsung were encouraging. And then some of our international operator partners also showed nice growth. And so that's a good news story, given, again, some of the broader macro things that we're all reading headlines around, you know, around just chipset prices and so on. So the fact to see growth in that part of our business is really something else also helps us bring more demand to the platform. So more supply actually brings more demand. And then you get a cumulative effect, which is showing up in the results of the 80% year-over-year growth.

Got it. And then to that point on demand, so brand up 70%, not that DTX is a slouch, up 40. We know that brand budgets can be be a little lumpier and more seasonal and programmatic. I mean, this is obviously an uneven ad market to say the least, although mobile has been doing particularly well and digital out of home. So how much of this is durable share gain and how should we kind of model that split for the next, you know, pick a number three,.

four, five, six quarters, because the momentum in AGP has been really strong. Yes, so we can probably spend some more time offline on some of the details around how to model it. But I think in terms of just kind of more generally speaking, we expect the growth to continue. A lot of the hard work we had to do to establish brand as a channel for mobile has been done in the As you're well aware, a lot of the digital brand dollars disproportionately go to things like CTV or go to things like retail media. So we had to establish this mobile-first channel for brand. And that required a lot of legwork externally with holding companies and agencies and a lot of the big names, the Procter & Gamble and Apple and Target and Amazon and so on, they're spending money with us today. So that took time to get those budgets and get those relationships, and we've done that externally.

And then internally, getting the tech stacks aligned, getting some of the legacy acquisition assets integrated together to be able to deliver those experiences, that's now paying dividends for us. we continue to leverage our data and our ability to target audiences, our expectation is that brands are going to continue to spend. So we're pretty optimistic about that being a growth driver for us.

And is there any way, Bill, because you brought up AI and yield execution here, is there any way to kind of parse out how much of the fill rate and CPM growth is kind of market wide versus company specific? Yes.

Yes, I don't have anything specific to talk about on the macro side other than what we've seen is kind of mid to high single digit growth from a macro perspective. And like I mentioned in my prepared remarks that our rates are kind of closer to north of 40% year over year. And that's driven by just better targeting, better outcomes, better formats.

formats, all helping to drive better rates. And last one is just what's the monetization lag on newly signed distribution? You talked about your SDK footprint expansion in APAC and non-gaming verticals, and I assume you've already kind of spent the CapEx build out associated with this.

Yes, so what we're seeing right now that's really encouraging is the trend on the spend is encouraging, which is part of what's powering the 40% growth in DTX. And you mentioned non-gaming specifically. So those could be news, weather, sports, e-commerce, AI. There's a whole variety of categories at all of these. fall into, you know, that we're starting to see encouraging trends for. And so, you know, we believe we're taking share from competitors as a result of that. And it's something that you're really great to see showing up in the results.

Got it. Thanks for bearing with me and congrats on the quarter. Yes, no, thanks. Once again, if you have a question, please press star, then one. This concludes our question and answer session. I would like to turn the conference back over to Bill for any closing remarks.

Yes, thanks all for joining our call tonight. We'll look forward to connecting in a few months to update you on our fiscal 27 second quarter earnings call. Have a great night.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Good day, and welcome to the Digital Turbine Fourth Quarter and Fiscal 2026 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Brian Bartholomew, Senior Vice President of Capital Markets. Please go ahead.

Thanks, Nick. Good afternoon, and welcome to the Digital Turbine Fourth Quarter and Fiscal Year 2026 Earnings Conference Call. Joining me today on the call to discuss our results are CEO, Bill Stone; and CFO, Steve Lasher. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. These forward-looking statements are based on our current assumptions, expectations and beliefs, including projected operating metrics, future products and services, anticipated market demand and other forward-looking topics. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect.

Except as required by law, we undertake no obligation to update any forward-looking statements. For a discussion of the risk factors that could cause our actual results to differ materially from those contemplated by our forward-looking statements, please refer to the documents we file with the Securities and Exchange Commission. Also, during this call, we will discuss certain non-GAAP measures of our performance. Non-GAAP measures are not substitutes for GAAP measures. Please refer to today's press release for important information about the limitations of using non-GAAP measures as well as reconciliations of these non-GAAP financial results to the most comparable GAAP measures. Now I'd like to turn the call over to our CEO, Bill Stone.

Thanks, Brian. Good afternoon, everyone. I want to open my remarks by recognizing our team for delivering another quarter of strong results that exceeded our expectations, both for the March quarter and for the fiscal year. Our current June quarter is off to a positive start, and combined with the broader business momentum, is enabling us to issue an annual outlook for fiscal year '27, guiding to another year of double-digit top and bottom line growth. I'm going to break my prepared remarks into 4 areas.

First, we'll be looking back at our fiscal '26 results in March. Second will be some commentary on the operational and strategic elements of our business, driving our expectations for continued double-digit growth this fiscal year. Third, I want to provide some commentary on AI and macroeconomic trends in our business. And finally, I wanted to provide an organizational update. Revenue for fiscal '26 came in at $565 million, representing 15% year-over-year growth. We also achieved nearly 70% year-over-year growth in adjusted EBITDA during the same period, demonstrating significant operating leverage in the model as we scale.

Breaking our results down by segment, our On-Device Solutions or ODS business generated $382 million in revenue in fiscal '26, up approximately 12% from last year. In particular, it was encouraging to see over 20% growth in global devices for the year. Growth in revenue per device, or RPD, continues to be the bright spot with over 20% year-over-year growth in both U.S. and international. Our Application Growth Platform or AGP business was another bright spot for the year, with revenue for the March quarter, growing 57% year-over-year and over 20% year-over-year for fiscal '26.

This compares to a global market that is growing in the high-single digits. In other words, our AGP business is growing 2x more than the global industry growth rate. In the quarter, I was particularly pleased with our brand business growing over 50%, and our DT Exchange or SSP business growing over 60% year-over-year. The hard work we did over the past 3 years to stay the course and integrate the legacy tech stacks into a common platform is now paying dividends, and we expect the momentum to continue into the future.

There were 3 key growth drivers powering our improved performance in the March quarter. First was higher advertiser demand, which translated into improving pricing and fill rates particularly for premium placements on our platform. This strong advertiser demand drove international RPD expansion in our ODS business, resulting in over 40% growth year-over-year. We also had strong demand with our brand and DT Exchange businesses, each growing over 50% in the March quarter compared to the last March quarter. And as I'll discuss later in my remarks on AI, we are seeing brands migrating spend away from the open web to applications as brands and agencies adopt the power of AI.

The second driver was increased supply. Our global devices grew more than 20% year-over-year driven by strong volume from our international partners. In addition, our AGP supply volumes increased impressions by over 15% year-over-year, driven by expanding distribution of our SDK footprint, strong performance in the APAC region and strong increases in non-gaming inventory. And finally, we made meaningful progress leveraging first-party data in our AI and ML platform, which is setting the foundation for smarter targeting, higher return on ad spend for advertisers and improved user experiences are the direct benefits of us better leveraging our data. Specifically, our rates were up 40% year-over-year in our AGP business, which is a direct result of better targeting AI capabilities as our advertisers are willing to pay more for better outcomes.

Looking to the current fiscal year, we're guiding today for continued double-digit growth, both on the top and bottom lines. The drivers for these growth rates are first AI and data. I'll provide some additional commentary later in my remarks on the macro impact of AI on our business and how leveraging unique first-party data across our platform with DTiQ and Ignite Graph drives better outcomes which in turn drives more revenue. The second driver is the flywheel. Connecting our diversified demand and supply drives each other. We have nearly 3 billion devices and more than 80,000 applications using our ad tech technology today.

The opportunity for these apps to drive more user acquisition to our platform and hence, more monetization will be a growth driver. The third driver is our brand business. Our brand business showed impressive 50% year-over-year growth. Our focus is leveraging the macro tailwinds of more time being spent in apps combined with our data and audience targeting capabilities to drive even more scale and growth. The fourth driver is our Ignite platform. Our international ODS momentum has been fueled by Latin America and Europe, and the recent wins with partners like Orange, who have more subscribers than AT&T and Verizon combined, should accelerate our momentum in the EU. In addition, our Ignite platform is showcasing there is more opportunity to not just grow device supply with these new wins but also leverage the platform capability as a software enabler for distribution of other products on the screens of devices versus just our products today, such as Single-Tap, Out-of-the-Box Setups, Notifications and so on.

We're doing this today in the U.S. with an AI-first partner distributing AI agents to devices, and we see this expanding into other areas such as e-commerce, lock screens and other forms of content distribution. And the final driver is alternative applications. We continue to ramp and scale more and more partners distributing their versions of applications, helping them get to devices, whether this is via our data and targeting capabilities, Single-Tap, our DSP and so on. Mainstream partners like King, Zynga, Playtika and others are customers today, leveraging our platform to distribute their own alternative direct-to-consumer billing options to customers.

To close out my prepared remarks, I wanted to provide some commentary on the impact of AI and other macroeconomic factors to our business. Regarding AI, it's clearly transformational and an exciting time and a tailwind for our business. It's reinventing businesses, including ours in 3 main ways. First is the automation and simplification of workflows and processes. Over the past year, we grew our revenues by more than $70 million but we accomplished this with 4% less headcount as we were able to use AI and automation to drive efficiencies in our business. We have implemented numerous new AI automation and simplification activities and processes from areas such as quality assurance, our back office, campaign management, software development and data management, just to name a few. And we're seeing acceleration in these activities as we organize our people, our systems and our processes for this AI-first world.

The second is leveraging AI and our data to improve our outcomes for customers. As you have seen in our recent Google and Databricks press announcements, we're combining our unique first-party data signals with AI enhancements to drive better outcomes for customers, leveraging our DTiQ and Ignite Graph capabilities. These will be revenue and EBITDA drivers for us into the future. And the third area is how the broader AI landscape will leverage our distribution and on-device footprint and data to help their businesses grow. And there are 3 unique trends that we expect to be tailwinds for us. The first is more applications. According to recent analysis from Market Intelligence provider Appfigures, worldwide app releases in the first quarter of 2026 were up 60% year-over-year across both the Apple App Store and Google Play.

AI makes it easier for anyone to create apps, driving growth in both app stores as creators no longer need technical skills to build mobile software. And these applications all need distribution to reach consumers given the inherent discovery limitations in the 2 legacy app stores. The second trend is the increase in time spent in applications. Today, the average consumer is spending 5 hours per day inside applications, which is up an hour from the past decade. And this trend is accelerating as the integration of AI chatbots creates a shift in the channels of how we all consume information leaning towards apps and away from the open web.

Multiple measurement sources have reported that AI has likely caused a 10% drop of open web traffic so far with some informational categories seeing 20% to 40% declines. And the final trend, bringing all this together is monetization. For centuries, one trend has been consistent. Media dollars follow eyeballs. And as our eyeballs continue to spend more and more time in apps because of enabling technologies like AI, which is creating more breadth of apps and more depth of time spent in apps, this is a positive for us. In addition to AI, I've also been receiving many questions on potential macroeconomic impacts to our business.

One of my favorite things about our mobile AI cloud business is that we are more insulated than the vast majority of companies to things like tariffs, energy prices, recessions, inflation, any single geography and so on. Our business is a digital one without the traditional input cost pressures many companies must navigate, plus the majority of our customers are using our platform to sell their digital goods and services versus goods that may be more sensitive to these risks. Of course, no single business is 100% insulated from macroeconomics. But as we saw during the pandemic, our business is a resilient one insulated from these factors given our mobile-first approach matching where consumers are spending their time.

And finally, I wanted to provide an organizational update. Steve Lasher will be stepping down from his role as CFO and will support a transition in June as he pursues another opportunity outside of DT. One of my favorite expressions is leave it better than you found it, and Steve embodies this. I want to thank Steve for his significant contributions in particular, his leadership and strengthening our balance sheet through the refinancing of our debt as well as his role driving improved operating and business performance. And on a personal level, I've enjoyed really getting to know Steve and look forward to continuing to keep in touch with him during his next chapter. Josh Kinsell, our Chief Accounting Officer, will assume interim CFO duties. With that, I'll turn it over to Steve to take us through the numbers.

Thank you, Bill, and good afternoon, everyone. Before I turn to our financial results and our outlook for fiscal 2027, I'd like to say a few words about my time at Digital Turbine. As Bill mentioned, I will be leaving the company to pursue another opportunity, and I want to take a moment to reflect on what we've accomplished together. I'm exceptionally proud of where Digital Turbine stands today. It is a meaningfully stronger company than the one I joined. The platform's performance has improved dramatically, and that improvement is now drawing greater spend from advertisers and publishers who are looking for a stronger return on advertising spend.

The balance sheet is significantly stronger, following an important refinancing and subsequent deleveraging. And on a personal note, I've genuinely enjoyed the camaraderie of this team. I leave with many valued friendships and colleagues that I carry with me and I'm grateful. With that, let me turn to our fourth quarter and full year fiscal 2026 results. Our fourth quarter results reaffirm the momentum we have been building throughout the year. Starting with the top line, we delivered 20% year-over-year net revenue growth, with total net revenue for the quarter of $142.5 million. On-Device Solutions net revenue was $91 million, up 5% year-over-year. while App Growth Platform net revenue was $52.1 million, up 57% year-over-year.

With On-Device, growth was once again driven by our international partnerships, where we expanded both the number of international devices and revenue per device year-over-year. The standout in the quarter was App Growth Platform, the 57% year-over-year growth was the segment's highest growth rate in more than 3 years. These results reflect our strategic focus on better utilizing first-party data and on showcasing our AI-driven capabilities to deliver stronger outcomes for our publishers and advertiser partners. The combination of strong top line growth and sustained operational execution delivered 53% year-over-year adjusted EBITDA growth in the quarter.

Adjusted EBITDA totaled $31.4 million, with margin expanding nearly 500 basis points to 22% versus the year ago quarter. Non-GAAP gross margin reached 50% in the quarter, up 48% -- up from 48% in the prior year, driven primarily by favorable product and segment mix. Cash operating expenses were $40.5 million, up 12% year-over-year, reflecting continued expense discipline, streamlined business processes and targeted investments in our key growth initiatives. We will continue to identify additional efficiency opportunities while making the tactical investments needed to support future growth.

On the bottom line, we reported a GAAP net loss of $7.3 million or $0.06 per share in the fourth quarter. On a non-GAAP basis, we generated net income of $19.7 million or $0.16 per share based on 122.8 million shares outstanding. Let me comment briefly on the full year. Total net revenue was $565.3 million, up 15% year-over-year. Adjusted EBITDA was $122.5 million, up 69% year-over-year. GAAP net loss was $37.3 million or $0.33 per share. Non-GAAP net income was $64.9 million or $0.56 per share. And free cash flow was $11.8 million for the year, an improvement of more than $21 million versus the prior year.

Moving to the balance sheet. We ended fiscal 2026 with cash of $38 million, and total debt net of issuance costs of $361 million, down from $409 million at the start of the year. The improvement reflects positive cash flow generation, supplemented by proceeds from the at-the-market offering, which we terminated earlier this year. We are pleased with the progress we have made on the balance sheet in recent quarters. and we intend to continue deploying free cash flow towards further deleveraging in fiscal 2027.

Turning now to our fiscal 2027 outlook. Given our stronger-than-expected fiscal 2026 performance and the continued momentum we are seeing in the June quarter to date, we expect another year of robust revenue and EBITDA growth. We are introducing fiscal 2027 guidance today with revenue in the range of $630 million to $650 million and adjusted EBITDA in the range of $135 million to $145 million. With that, let me hand the call back to Nick, our operator, to open the line up for questions. Nick?

[Operator Instructions] Showing no questions. This will conclude our question-and-answer session. I'd like to turn the conference back over to Bill Stone for any closing remarks.

Yes. Thanks, Nick, and thanks for everybody for joining the call tonight. We look forward to connecting with you in a few months to update you on our fiscal '27 first quarter earnings call. Have a great night. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good afternoon, everyone, and welcome to the Digital Turbine Fiscal 2026 Third Quarter Earnings Conference Call [Operator Instructions] Please also note this event is being recorded.

I would now like to turn the conference call over to Brian Bartholomew, Senior Vice President of Capital Markets. Please go ahead.

Thanks, Jamie. Good afternoon, and welcome to the Digital Turbine Fiscal 2026 Third Quarter Earnings Conference Call. Joining me today on the call to discuss our results are CEO, Bill Stone; and CFO, Steve Lasher. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. These forward-looking statements are based on our current assumptions, expectations and beliefs, including projected operating metrics, future products and services, anticipated market demand and other forward-looking topics.

Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. Except as required by law, we undertake no obligation to update any forward-looking statements. For a discussion of the risk factors that could cause our actual results to differ materially from those contemplated by our forward-looking statements, please refer to the documents we file with the Securities and Exchange Commission.

Also, during this call, we will discuss certain non-GAAP measures of our performance. Non-GAAP measures are not substitutes for GAAP measures. Please refer to today's press release for important information about the limitations of using non-GAAP measures as well as reconciliations of these non-GAAP financial results to the most comparable GAAP measures.

Now I'd like to turn the call over to our CEO, Bill Stone.

Thanks, Brian, and thanks, everyone, for joining our call tonight. Our December quarter showcased accelerating business momentum across both our on-device solutions and App Growth Platform segments. Strong demand for our platform, combined with our disciplined operational execution drove top and bottom line results that exceeded our expectations.

Revenue for the quarter came in at $151.4 million, representing 12% year-over-year growth. We also achieved $39 million in quarterly EBITDA that was 76% year-over-year growth with EBITDA margins of 26%. All of these results are proof points demonstrating the inherent operating leverage in our model.

In particular, there are 3 things at a corporate level I wanted to call out before getting into my detailed segment remarks. First is the diversification of our revenues and a double-digit growth across so many of our products and geographies, we are seeing many drivers of our growth versus being tied to a single thing. Second is our improving use of AI and machine learning tools, not only in our data and targeting that power revenue, but also for our operations that's driving improved efficiency in our coding, quality assurance, regression time lines and a variety of other administrative and back-office tasks. As an example of this, in the December quarter, our gross profit dollars increased by more than 25%, while our operating expenses declined. And finally, is the strong progress we've made in strengthening our balance sheet.

Our debt leverage ratio now stands at roughly 3 turns, down from more than 5 turns just a year ago. This disciplined deleveraging is positioning us exceptionally well to pursue the $0.5 trillion market opportunity in front of us.

Now turning to breaking our results out by segment. Our -- On Device Solutions business generated nearly $100 million in revenue, which was up approximately 9% from the December quarter last year. In particular, our international business continues to be the driver of this growth with a greater than 20% increase in both devices and revenue per device, or RPD, that drove more than 60% year-over-year international growth. And for the first time in our history, more than 30% of our revenues on our Ignite platform were from outside the United States.

Our application growth platform, our AGP business was another bright spot for the quarter and continued its momentum from the September quarter with December year-over-year growth of 19%, posting $53 million in revenue. In particular, I was pleased with the strong results in our brand business and also growth in our DTX or SSP business of over 30%. The hard work we did over the past few years to stay the course and integrate our legacy tech stacks into a common platform is now paying dividends and we expect the momentum to continue in the future.

For our growth drivers, improving supply and demand trends power the improved performance. First, on increased supply. While we continue to see softness for U.S. devices, our overall devices grew 20% year-over-year, driven by strong volumes from our international partners. In addition, our AGP supply volumes increased impressions by over 20% year-over-year, driven by strong performance internationally and strong increases in non-gaming inventory. We also had higher advertiser demand, which translated into improving pricing and fill rates, particularly for premium placements on our platform. The strong advertiser demand resulted in year-over-year growth in revenue per device in both the U.S. and international markets for our advice business.

For our brand business, we reorganized our sales teams last year around verticals, and I'm pleased to see those changes bearing fruit in our results as our focus on vertical sales areas, including consumer packaged goods, retail, telecom and technology, all demonstrated increased spend. In particular, our retail vertical had 5x growth compared to last holiday season as our retail media efforts are bearing fruit with large retailers wanting to extend their audiences.

As we now enter 2026, we have 5 strategic priorities that we believe will continue to build on our profitable growth trajectory of both our ODS and AGP segments into the future. The first strategic priority is unlocking the value in our first-party data. This effort is centered on leveraging data signals across all of our DT products to create and enhance the Ignite graph and apply DTiQ AI and machine learning models to drive better outcomes across our end consumer experiences. Our second priority is building the flywheel effect between our supply and demand. We have over 80,000 applications that have integrated our ad monetization technology, leveraging that position in our demand side technology to acquire more users for these apps creates a flywheel effect of increased monetization and higher investment into our platform.

Our third priority is scaling our brand business. Over the last couple of years, we've established a brand and agency-facing business that diversifies and differentiates our monetization activities. This business has been showing positive growth and scaling it is the key to the next phase of our growth. Fourth is expanding the services offered through our Ignite platform. Ignite has been the backbone of our highly scalable app distribution business and we're looking to leverage its footprint across more than the 500 million devices to unlock better monetization and a superior user experience for our carrier and OEM partners.

And finally is the alternative app opportunity. We believe the app economy is entering an era of democratization beyond the traditional duopoly and that the ecosystem will benefit from solutions that are agnostic to the format or path developers use to distribute apps or how users choose to discover and use them. We've made some recent progress with 3 of the largest global mobile game developers signed in the December quarter now using Single-Tap capabilities in their alternative distribution efforts. Combined, these 5 things have $0.5 trillion market opportunity in front of them and our assets are uniquely positioned to go after this growth. You'll hear more about our progress on these areas on future calls.

To wrap up, our business momentum is accelerating, and our priorities to continue our growth are focused and clear. We showed solid year-over-year double-digit growth in both revenue and EBITDA, driven by a healthy mix of disciplined execution, innovation and favorable industry dynamics. We're building the right foundation through operational discipline and strategic investment to drive sustained profitable growth. We're excited by the traction we're seeing across our business and confident in our ability to continue delivering value to partners, advertisers, users and shareholders.

With that, I'll turn it over to Steve to take you through the financials in more detail.

Thank you, Bill, and good afternoon, everyone. The fiscal third quarter results were reflective of sustained business momentum. We delivered another quarter of double-digit revenue growth, further expanded profit margins and delivered top and bottom line results that surpass expectations. We also made significant progress strengthening our balance sheet in the process.

Now let's get into the numbers. Total revenue for the fiscal third quarter was $151.4 million, representing 12% growth year-over-year. Both segments of our businesses, ODS and AGP, contributed positively to the overall growth and upside versus expectations. Our ODS business delivered $99.6 million in revenue, up 9% year-over-year. This growth was primarily driven by higher device volumes and RPDs primarily with our international partners. Our AGP segment delivered $52.6 million in revenue, up 19% from the prior year. These results reflect the positive outcomes of our strategic focus to better utilize first-party data and showcase our AI-driven capabilities.

The combination of strong top line growth and efficient operational execution yielded 76% year-over-year growth in adjusted EBITDA in the quarter. Adjusted EBITDA for the fiscal third quarter totaled $38.8 million, representing a 76% increase year-over-year. EBITDA margin reached 26% marking the seventh consecutive quarter of expansion and improvement of more than 900 basis points versus the prior year. This comparison includes approximately $3.5 million of onetime benefits in the period primarily related to a sublease settlement and improved working capital. Free cash flow for our third quarter totaled $6.4 million.

Our non-GAAP gross margin in the fiscal third quarter was 49%, well above the prior year figure of 44%. This expansion was primarily the result of a more positive product and segment mix during the quarter. Cash operating expenses were $36 million, down 4% year-over-year. We're pleased with the progress we've made on our cost controls and operational discipline which allowed us to achieve double-digit year-over-year revenue growth with lower cash operating expenses. We will continue to identify areas of additional efficiency while maintaining targeted disciplined investments to support future growth.

Turning to the bottom line. We reported a GAAP net income of $5.1 million or $0.03 per share in the fiscal third quarter. On a non-GAAP basis, we generated net income of $21.7 million or $0.18 per share on 120 million shares outstanding. Looking at the balance sheet. We ended the December quarter with a cash balance of $40 million, up approximately $1 million from the end of the September quarter. Meanwhile, our total debt net of debt issuance cost declined during the quarter by more than $41 million and ended the quarter at $355 million. This decline was a result of a positive cash flow generation supplemented by proceeds from our at-the-market offering. The company sold a total of 6.8 million shares at an average price of $6.54 during the December quarter, yielding $44.6 million in gross proceeds.

We are pleased with the progress we have made to our balance sheet in recent months. To that end, we made the decision to terminate our existing at-the-market equity program. Given our performance and improved leverage profile, we believe our current liquidity and balance sheet strength eliminates the need for this funding source as a component of our long-term capital management strategy.

Now let me turn to the updated outlook for fiscal 2026. Following the stronger-than-expected December quarter performance and with improved visibility into the current March quarter, we are once again raising our full year revenue and adjusted EBITDA guidance. We now expect revenue to be in the range of $553 million to $558 million and adjusted EBITDA to be in the range of $114 million to $117 million for fiscal year 2026. At the midpoint, this represents an increase of $10 million in revenue guidance and over $13 million in EBITDA guidance compared to our prior outlook. In closing, I want to reiterate Bill's earlier comments, that momentum across our core business remains strong, and we're increasingly confident in our ability to build on this performance as we move forward.

With that, let me hand the call back to the operator to open up the line for questions. Jamie?

[Operator Instructions] We'll pause momentarily to assemble the roster. And our first question today comes from Anthony Stoss from Craig Hallum.

Great. I have a couple, so I'll just -- I'll go one at a time. Bill, I'd love to hear you use the word flywheel. What are you seeing in terms of maybe the App Install business, if those same customers are now giving you advertising within the app, any thoughts just on how things are starting to come in faster and faster. I'd love to hear it.

Yes. Sure, Tony. Yes, this, as I mentioned, this is 1 of our 5 strategic priorities in the business, and there's an enormous opportunity given that we have over 80,000 different applications with our technology and those applications are all out trying to acquire users. So the ability for us to integrate their budgets that were paying them back into acquiring users both with our own DSP as well as our own device business, then feeds back into the monetization and becomes a flywheel feeding on itself to generate incremental growth in revenue and better margins. So this is a big area to integrate those. Now that we have the tech stacks integrated that we had not had over the prior few years. We can put a lot more energy behind this. So we're really excited about this being a driver for growth for us as we look into the future.

Got it. And then, Bill, I've fielded a couple of calls in the last few days regarding the Google Gemini announcement. Maybe you can help us understand how you think that will impact you.

Yes. So first, for us, we've made a concentrated effort I mentioned in my remarks to diversify away from just strictly gaming inventory and increased non-gaming inventory. And so that's been a growth driver for us. As it relates to Google's announcement specifically, I think it's a great thing for our company. And what I mean by that is we don't -- we're not in the game business. We don't make games we distribute them. And so as more games come into the market, they're all going to need distribution. So our ability to leverage our extensive distribution footprint, both on device and with our DSP, I think, is going to bring more games to market and they're going to need more distribution to acquire the users regardless of how they're generating the technology to make the game. So I view it as positive for our business. And as I mentioned in our remarks more broadly around AI, it's driving revenue growth for us and is driving efficiencies in the back office. So I look at it as a net positive. I can't speak for other companies, but for us, we're excited about it.

Got it. And I just want to call out, you're mentioning of the 3 largest global gaming companies have signed in the December quarter for Single-Tap. How do they plan on using it? What's kind of the timing and how quickly do you think it will ramp? .

Yes. So I'm excited to say they're live today. And so they're using it today to distribute alternative applications or their own versions that can be their own house billing, if you will, versus using 1 of the duopolies billing for that. They're also using it for a thing called dual downloads and what that is, is the ability to download an application with Single-Tap, but also download the store that goes with that.

So in other words, if a large gaming studio, you want you, Tony, want a game, you download it, well, you also get the store that can be delivered in the background once you enter in your credentials and pay through that app or game you've downloaded, now it's pretty wired for anything that, that publisher wants to do. So it reduces the friction in the future. It lowers the cost structure for the app publishers so Single-Tap's a key enabler to make that happen. So we're excited about that, and it's already generating revenue today.

Our next question comes from Omar Dessouky from Bank of America.

This is Arthur on for Omar. Bill, there's been some recent chatter about Meta back on iOS bidding for non-IDFA traffic. I think after a couple of years only bidding on the IDFA traffic. Any sort of observations you have around maybe just any changes in the competitive landscape as a result of Meta being caring a little bit more active on iOS? .

Yes. So nothing to comment specifically on them and iOS here. I would just say, from a competitive perspective, I'm excited to see that the overall market grew kind of mid- to high single digits in the December quarter. And our growth on the AGP side was 20%. So in other words, our growth is 2x the market. So from a competitive perspective, we're out taking share. Obviously, we're focused -- we have iOS and Android. We're focused on more on Android, given our unique device position there. So nothing specific on Meta to comment on this call. But in terms of what we're doing, we're outgrowing the market right now.

Ladies and gentlemen I'm showing no additional questions at this time, I'd like to turn the floor back over to Bill Stone for any closing remarks.

Thanks, everyone, for joining our call tonight. We'll talk to you again on our fiscal 26 fourth quarter call in a few months. Thanks, and have a great night. .

Ladies and gentlemen, that will conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.

Good afternoon, and welcome to the Digital Turbine Fiscal 2026 Second Quarter Financial Results Conference Call.

[Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Brian Bartholomew, Senior Vice President of Capital Markets. Please go ahead.

Thank you. Good afternoon, and welcome to the Digital Turbine Fiscal 2026 Second Quarter Earnings Conference Call.

Joining me today on the call to discuss our results are CEO, Bill Stone; and CFO, Steve Lasher. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. These forward-looking statements are based on our current assumptions, expectations and beliefs, including projected operating metrics, future products and services, anticipated market demand and other forward-looking topics.

Although, we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. Except as required by law, we undertake no obligation to update any forward-looking statements. For a discussion of the risk factors that could cause our actual results to differ materially from those contemplated by our forward-looking statements, please refer to the documents we file with the Securities and Exchange Commission.

Also during this call, we will discuss certain non-GAAP measures of our performance. Non-GAAP measures are not substitutes for GAAP measures. Please refer to today's press release for important information about the limitations of using non-GAAP measures as well as reconciliations of these non-GAAP financial results to the most comparable GAAP measures.

Now I'd like to turn the call over to our CEO, Mr. Bill Stone.

Thanks, Brian. Thanks, everyone, for joining our call tonight. Our September quarter showcased accelerating business momentum across both our On Device Solutions and App Growth Platform segments.

Strong demand for our platform, combined with disciplined operational execution, drove top and bottom line results that exceeded expectations. Revenue for the quarter came in at $140.4 million, representing 18% year-over-year growth. We also achieved 78% year-over-year growth in adjusted EBITDA, demonstrating significant operating leverage in our model as we scale.

We continue to execute against our strategy of connecting app developers, operators and OEMs in a mobile-first world. The combination of our installed base, monetization capabilities and growing partner network uniquely positions Digital Turbine to capture a meaningful share of the $1 trillion, $0.5 trillion market opportunity in front of us.

Also in September, we successfully completed our debt refinancing through a new 4-year term loan facility, providing additional flexibility and a stronger balance sheet to support growth initiatives. Breaking our results down by segment. Our On Device Solutions business generated $96 million in revenue, up approximately 17% from the September quarter last year. In particular, it was encouraging to see 10% growth in both Global Devices and revenue per device year-over-year, with the bright spot continues to be our international ODS business, which drove 80% year-over-year revenue growth.

And we also achieved a nice milestone in the quarter as for the first time in our history, our international revenues exceeded 25% of our total ODS revenues. Our application growth platform business was another bright spot for the quarter and returned to year-over-year growth posted $45 million in revenue, which was up 20% year-over-year. In particular, I was pleased with the over 40% sequential improvement in our brand business and also a double-digit increase in our DTX or SSP business.

The hard work we did over the past few years to stay the course and integrate the legacy tech stacks into a common platform is now paying dividends, and we expect the momentum to continue into the future. Three key drivers powered our improved performance this quarter. First was higher advertiser demand, which translated into improved pricing and fill rates, particularly for premium placements on our platform.

This strong advertiser demand resulted in over 30% year-over-year growth in revenue per device in both the U.S. and international markets for On Device business. The second driver was increased supply. Our global devices grew year-over-year driven by strong volumes from our international partners.

In addition, our AGP supply volumes increased impressions by nearly 30% year-over-year driven by expansion of our distribution of our SDK footprint, strong performance in our APAC region and strong increases in non-gaming inventory. And finally, we made meaningful progress on our first-party data and AI machine learning platform, which is setting the foundation for smarter targeting higher return on ad spend for advertisers and improved user experiences, all being direct benefits of us leveraging our data.

Beyond just near-term execution, we're also making strategic progress positioning in Digital Turbine for the future. Our first-party data investments, coupled with real-time AI-driven decisioning are unlocking new levels of precision and scale. These capabilities are becoming even more valuable as advertisers seek alternatives to the closed wall garden ecosystems and look for transparent performance ways to engage mobile users.

We ran these unique advantages as the DT Ignite graph, which yields our AI machine learning platform, and we also brand our AI machine learning platform as DTiQ. Scaling our Ignite graph and DTiQ are one of our top priorities in the business, and we see these capabilities as a major growth driver for our business into the future. We're also seeing increasing brand engagement directly on our platform.

We continue to expand the number of brands leveraging our capabilities. Much of this growth comes through traditional media buying agencies, but we were especially excited is with brands that have brought their media buying in-house, and want a direct relationship with Digital Turbine, particularly in the retail and consumer packaged goods categories. In fact, direct brands accounted for 47% of our total brand revenue in the September quarter, which was up from 22% in the prior quarter.

This growth reflects the value we deliver through meaningful supply path optimization savings enabled by our extensive SDK footprint and a truly differentiated offering from omnichannel SSPs through our unique on-device scale. Moreover, the macro environment continues to shift in favor of direct distribution and alternative app distribution models.

With the combination of our tech enablers such as Ignite Graft DTiQ, SingleTap and dual downloads, which enabled the distribution of application and alternative app stores directly distributed to devices. As an example, our use of SingleTap technology grew 45% sequentially, which is a nice example of helping publishers create a simple user experience to distribute their applications.

And adding our ad tech tools on top of these capabilities helps them acquire more users. Regulatory momentum is accelerating in all geographies around the world to offer customer and publisher choice. In other words, our alternative strategy is simply leveraging our existing technology, capabilities and strengths for Android and iOS into a new and growing channel of distribution.

To wrap up, our growth accelerated in the second quarter. We showed solid year-over-year double-digit growth in both revenue and EBITDA, driven by a healthy mix of disciplined execution, innovation, and favorable industry dynamics. We're building the right foundation through operational discipline and strategic investment to drive sustained profitable growth.

We're excited by the traction we're seeing across the business and confident in our ability to continually deliver value to partners, advertisers, end users and shareholders.

With that, I'll turn it over to Steve to take you through the financials in more detail.

Thank you, Bill, and good afternoon, everyone. The fiscal second quarter represented another meaningful step forward for digital turbine. We accelerated revenue growth expanded product margins and delivered top and bottom line results that exceeded our expectations. We also advanced several key strategic initiatives and strengthened our balance sheet with a new longer-term credit facility. As we look at the numbers, total revenue for the fiscal second quarter was $140.4 million, representing 18% growth year-over-year. At a segment level, our ODS business delivered $96.5 million in revenue, up 17% year-over-year.

This growth was driven by higher device volumes and revenue per dice, particularly from our international partners. International ODS revenue reached a record high in surge more than 80% year-over-year. We are pleased to see our AGP segment returned to year-over-year growth, delivering $44.7 million in revenue, up 20% from the prior year.

These results reflect the early benefits of our strategic efforts to better harness our proprietary first-party data and AI-driven capabilities. The combination of accelerated top line growth and ongoing operational efficiencies produced another strong profitability quarter. Adjusted EBITDA for our fiscal second quarter was $27.2 million, up 78% year-over-year. EBIT margin of 94 -- EBITDA margin of 19.4% expanded for the sixth consecutive quarter.

Free cash flow for our second quarter was $7 million, an improvement of nearly $23 million year-over-year. Our non-GAAP gross margin for the fiscal second quarter was 47%, representing an improvement of 200 basis points compared to the same period last year, driven largely by product and segment mix. Cash operating expenses were $38.9 million, flat year-over-year.

We are very pleased with the progress we are making on cost control and operational discipline, which allowed us to achieve 18% of year-over-year revenue growth with flat operating expenses. We will continue to identify areas for additional efficiency while maintaining targeted disciplined investments to support future growth.

Turning to the bottom line. We reported a GAAP net loss of $21.4 million or $0.20 per share in the fiscal second quarter. On a non-GAAP basis, we generated net income of $16.5 million or $0.15 per share based on 113 million shares outstanding.

Looking at the balance sheet. We ended the quarter with a cash balance of $39 million, up approximately $5 million from the end of the June quarter. Our total debt, net of debt issuance costs stood at $396 million. In early September, we completed a successful debt refinancing with a new 4-year term loan facility. This financing meaningfully extends our maturity time line and ensures ample liquidity to execute our growth strategy in the years ahead.

Let me turn to our updated outlook for fiscal 2026. Following a stronger-than-expected quarter and with improved visibility into the remainder of the fiscal year, we are raising our full year revenue and adjusted EBITDA guidance. We now expect revenue to be in the range of $540 million to $550 million, and adjusted EBITDA in the range of $100 million to $105 million for fiscal year 2026.

At the midpoint, this represents an increase of $12.5 million in revenue guidance and $9 million in EBITDA guidance compared to our prior outlook. In closing, we have positioned the company for sustainable growth in fiscal 2026 and beyond.

Momentum across our core businesses remain strong, and we are confident in our ability to build on this performance moving forward.

With that, let me hand it back to the operator to open the line for questions. Operator?

[Operator Instructions] Our first question comes from Anthony Stoss of Craig-Hallum.

Congrats on the continued nice execution. Bill, maybe to dig a little bit deeper on the brand business is accelerating. You're lighting new customers. Maybe can you talk about what they're seeing on the ROI? Are these kind of get the similar ROI elsewhere or just the fact that you've tied in all the different platforms, you have something so unique? And then also, maybe if you can update us if you have any thoughts on whether or not you'll land -- or not land but go live with additional SingleTap people by the end of the year.

Yes. Thanks, Tony. First, on your brand question, let me lift it up and talk about just AGP in general. We did the acquisitions a few years back. And we could have easily just focused on revenue, but we made the tough decisions to integrate the platforms. And that was a lot of hard work. And we're really happy to see that starting to bear fruit, and you're seeing that show up in the results with nice double-digit increases because it's really a flywheel in terms of how the demand and supply work for each other.

And then we're starting to see that. And that's super important as we think about where we're going to grow that business in the future. One of the inputs into that flywheel, the brand business. And as I mentioned in my prepared remarks, we're great to see our direct brand relationships account for almost half of our total brand revenue in the September quarter.

So we've worked really hard to get approved and certified by the large advertising agencies and that's something -- it's really bearing fruit for us. But we're seeing this trend towards a lot of brands bringing media buying in-house, and they can spend more time understanding the audiences. And so especially with consumer packaged, goods brands and retail brands in particular, you're starting to see some really nice growth and momentum there.

So it's something we're excited about, specially we get into the holiday season. And as far as your question on SingleTap, as I mentioned in my prepared remarks, we saw almost 50% increase in SingleTap installs quarter-after-quarter. I think that would be the metric that I'd point you to in terms of our progress here versus any single one brand name or a partner that we're working with is we're working with a lot that are names that you are familiar with. But we're excited to see that platform continue to be a benefit to end users and advertisers. We're just simplifying the experience of getting apps to device. So that growth that we saw in the quarter is something that we're encouraged by.

Just kind of a follow-up here on the international side. It was really strong yet again. If you could step back, how much or -- how penetrated do you think that international market is? And you highlighted that the RPD revenue was strong? Can you give us any more detail on what it was up to be quarter-to-quarter or year-over-year?

Yes. So in terms of international RPDs, we saw a really nice solid double-digit growth year-over-year in that. And obviously, solid growth in devices that drove the 80% increase that we have year-over-year. And so I mentioned that for the first time in the history and obviously, you've been around the company for a long time, we've talked about international for many, many quarters. And so forth now exceed 25% of our revenues for ODS is something that I was really happy to see.

And it's a combination of more devices, better demand, better execution. And so really proud of the team on this one, generator strong results.

Our next question comes from Mitch Pindus of Wells Fargo.

I echo previous sentiments. A nice quarter. Well done. I have a question related to AI. And I wanted to find out a little bit more about if it's playing a role with Digital Turbine as it relates to either operations or advertising?

Yes. Yes. Sure, Mitch. Yes, AI is a really critical part of our strategy going forward. And it's been a part looking back as well and being able to use AI to simplify and automate our business and our business processes to make our business more efficient, is something that we've been doing and continue to make investments in.

And that -- those investments will drive future operating expense and operating leverage for the business. And then on the customer side, we've made some material investments in AI specifically, which we're branding as DTiQ, that is our AI machine learning platform that can deliver better models, better outcomes, better predictions for our advertisers to drive better return on ad spend. And so big material investments for us. We're starting to see some fruits of that show up in the current quarter.

But as we think about our growth drivers into 2026 and beyond, this will be a major driver for us, and this is one of our major focus areas of the company.

One more question. After the recent Supreme Court ruling, which was reversed to Google Play, are you seeing any effect to DT as an alternative app storefront alternative? And if so, can you speak to the progress and your thoughts for potential of that business?

Yes, Mitch. It's something we're really excited about is, we see more democratization of app distribution and the rulings obviously support that. And so what we see going forward is a lot of app publishers that you want to have direct access with their billing to their subscribers or look at other third parties to do that, and we enable both of those.

So how I would think about it is, that business is going to happen regardless of whatever Digital Turbine does. But in terms of facilitating that in terms of distributing those alternative apps, or being able to help those app postures acquire more users, that's where we come in. And I think we can really help provide a lot of value to those app publishers that want to do that. So another major focus area for our business going forward is something we anticipate to see a lot of growth and momentum for -- in 2026 and beyond.

Our next question comes from Arthur Chu of Bank of America.

This is Arthur for [ Omar ]. Bill, maybe just a follow-up on Ignite Graph and DTiQ. What types of data that the AI/ML platform is using that is -- that are sort of unique to Digital Turbine that could perhaps help advertise survey some conversion signals that are different from what some of the other ad platforms are doing?

Yes. Sure, Arthur. So we've got over 1,000 different signals that come in from all over our network. And that network could be more than the $0.5 billion devices that we have Ignite on or the -- between 2 billion and 3 billion devices that we have our SDK footprint in terms of leveraging the signals that come from all of those places. .

And specifically, we think part of our unique secret sauce is really on the Ignite side of the business in terms of not in terms of having the access to the data in terms of what applications are on the device in terms of how they're used and install, not install, user engagement and the rest of that.

And so I think with those unique signals for us can help drive better outcomes for advertisers in a more efficient way, which obviously leverages our set of capabilities. So all of that really produces a DT Ignite Graph that we can use then to build models and prediction on and what we're calling that AI machine learning platforms is DTiQ. And so we're excited about the early returns that we're seeing on that. But as we go forward, that's going to be a major investment and focus area for us.

Got it. That's super helpful. Maybe if I can just ask another follow-up question. This one is on the competitive landscape. What are you seeing -- let's say, if you just look back into the past 6 to 12 months, what are you seeing -- are you seeing any changes in the competitive landscape with -- perhaps some of the other players like putting out in the market. Just wondering like if there are any changes that you're seeing there?

Yes. I think on the competitive landscape, on the On Device side of the business, we've we're actually seeing a little bit less competition as one of the major players exited that business over the past 6 months or so. So that's something I think that is good news for us, although it continues to remain robust, competitive with other players, other large mega players.

On the AGP side of the business. We're really focused on just building out our flywheel in terms of how we can better connect our demand to our supply more so than competition, and a lot of the name in the industry may be competition on one part of the business, SSP or exchange side, but they're customers for ours on the DSP side. So it's a little bit nuanced in terms of getting into the details on this call. But I would say we haven't seen anything material happen in the competitive landscape on the AGP side over the past 6 months or so.

This concludes the question-and-answer session. I would now like to hand the conference back over to Bill Stone for any closing remarks.

Yes. Thanks, everyone, for joining our call today. We'll talk to you again on our fiscal '26 third quarter call in a few months. Thanks, and have a great night. .

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.