Digital Turbine, Inc. Aktie

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.

Good afternoon, and welcome to the Digital Turbine Fiscal 2026 First Quarter Results 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, Drew. Good afternoon, and welcome to the Digital Turbine Fiscal 2026 First Quarter Earnings Conference Call. Joining me 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, and thank you for joining us for Digital Turbine's Fiscal First Quarter 2026 Earnings Call. We're excited to report on our continued business momentum that accelerated in the first quarter. We delivered $131 million of revenue and $25 million in EBITDA, reflecting 11% revenue growth and 73% EBITDA growth year-over-year.

These results are a testament to our strategic focus and improved execution across our platform and enabling us to increase our annual outlook for the fiscal year. Breaking it down by segment, our On Device Solutions business generated $95 million in revenue, which was up approximately 18% from June quarter of last year. Our Application Growth Platform business posted $35 million in revenue, which was modestly down year-over-year. However, we're encouraged by the nearly 10% sequential improvement compared to fiscal fourth quarter.

There are three key drivers that 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 30-plus percent year-over-year growth in our revenue per device or RPD, in both the U.S. and international markets for our On-Device business, and we also had solid double-digit year-over-year growth in our Content Media business. Our second driver was improved device volumes, particularly in North America and selected international markets.

This helped us expand our install footprint and monetization base. As an example, last year, we saw a decline of approximately 1 million devices here in the U.S. between March and June. And this year, we saw a modest increase in U.S. devices from March to June. Similarly, our international device volumes were up a few million units sequentially and year-over-year. Combined, these better RPDs and improved device volumes drove strong year-over-year growth.

And finally, we made meaningful progress on our first-party data and AI, machine learning platform, which is finally setting the foundation for smarter targeting, higher return on ad spend for advertisers and improved user experiences. Beyond near-term execution, we're also making strategic progress positioning Digital Turbine for the future. Our first-party data investments, coupled with real-time AI-driven decisioning, we're unlocking new levels of precision and scale.

These capabilities are becoming even more valuable as advertisers seek alternatives to the closed walled garden ecosystems and look for transparent, performant ways to engage mobile users. We will begin branding these unique advantages as they are important to showcase to customers and partners why Digital Turbine is special and unique. You'll see us branding our first-party data as the DT [ Ignite ] and our AI machine learning platform, leveraging those data insights to drive improved advertiser and user experiences will be branded as DTiQ.

We're also seeing increasing brand engagement directly on our platform, a trend driven by our audience scale, strong device footprint and proven ability to deliver measurable outcomes. The number of campaigns contributing to brand revenue increased by nearly 50% quarter-over-quarter. This signals stronger and more diversified demand. This diversification spans major advertisers across retail, consumer packaged goods, finance, insurance, entertainment, tech, telco and more, giving us increased confidence in our ability to scale both broadly and deeply across many verticals.

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 ], DTiQ and SingleTap, this trends positions us well. Regulatory momentum is accelerating in all geographies around the world to offer customer and publisher choice, including a reintroduction of the Open App Markets Act here in the United States as well as other recent legal rulings.

We've recently joined forces with companies such as Meta, Spotify and others in the Coalition for a Competitive Mobile Experience to work with regulators and other stakeholders to ensure a more open and competitive mobile marketplace for consumers and publishers. To wrap up, the first quarter was a promising start to our fiscal year, which showed solid year-over-year double-digit growth in revenue and EBITDA, driven by a healthy mix of execution, innovation and favorable industry dynamics.

We're building on 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 continue to deliver 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 first quarter represented another meaningful step forward for the company. Total revenue for the quarter was $130.9 million, reflecting 11% growth year-over-year. At a segment level, our ODS business delivered $95.4 million in revenue, up 18% year-over-year, driven by strong growth in both device volumes and revenue per device or RPD, particularly within our international partners.

We also saw continued strength in RPDs and modest improvement in activation trends in the U.S. market. Our AGP segment generated $36.3 million in revenue, representing a 5% decline year-over-year. However, on a sequential basis, AGP revenue increased 9%, reflecting early signs of stabilization and progress as we work to strengthen the platform, leveraging our unique first-party data and AI capabilities.

The combination of accelerated top line growth and improving operating efficiencies driven by the transformation initiatives we began late last year resulted in strong EBITDA performance this quarter. Adjusted EBITDA for our fiscal first quarter was $25.1 million, up 73% year-over-year, marking our highest quarterly EBITDA since calendar 2023. Free cash flow remained positive at $1.4 million, an improvement of approximately $7 million year-over-year.

Non-GAAP gross margin for the fiscal first quarter was 47%, representing an improvement of more than 100 basis points compared to the same period last year. As a reminder, our gross margins are primarily influenced by shifts in product and segment mix, which will vary from period to period. Our cash operating expenses for the June quarter were $36.8 million, down 8% year-over-year, in addition to our gross profit of $62 million, which grew 14% over the same period, a strong proof point of the operating leverage of the company.

While we're encouraged by the progress made on cost discipline and operating efficiency, we remain committed to further streamlining our business processes even as we continue to make disciplined investments to support future growth. Turning now to the bottom portion of the income statement. We reported a GAAP net loss of $14.1 million or $0.13 per share in the fiscal first quarter. On a non-GAAP basis, we recorded net income of $5.8 million or $0.05 per share based on 110 million shares outstanding in the fiscal first quarter.

Looking at the balance sheet, we ended the quarter with a cash balance of $34.1 million, down approximately $6 million from the March quarter, primarily reflecting the timing of working capital. Our total debt stood at $400.5 million, a reduction of more than $8 million quarter-over-quarter. With respect to debt refinancing activities, we're pleased with our continued progress, and we'll share additional details as appropriate.

Now let me turn to our updated outlook for fiscal 2026. On the heels of a stronger-than-expected first quarter and improved visibility into the remainder of the year, we are raising our full-year revenue and adjusted EBITDA guidance. We now expect revenue to be in the range of $525 million to $535 million and adjusted EBITDA in the range of $90 million to $95 million for fiscal year 2026. At the midpoint, this represents an increase of $10 million in revenue guidance and $5 million in EBITDA guidance compared to our prior outlook.

In closing, we are actively positioning the company for sustainable growth in fiscal 2026 and beyond. While we are encouraged by recent momentum across key areas of the business, our focus remains squarely on disciplined execution, financial rigor and delivering long-term value for our shareholders.

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

[Operator Instructions] The first question comes from Anthony Stoss with Craig-Hallum.

Nice execution for sure. Bill, on the international carrier strength and strength on the RPD side on the international business, is that a combination of new international customers? Or is it largely just better take rates on the international side? And then I have a follow-up after that.

Yes. Thanks, Tony. Yes, our international business on our On-Device business in general was up 70%. It was driven by better device volumes and better RPDs. Specifically on the RPDs themselves, we're just getting better at execution. We're seeing also stronger demand coming into these geographies from other geographies.

So in other words, where we see a lot of demand coming in from Europe or Asia into the U.S., we've done a much better job, now -- been able to get that demand going into other markets such as Latin America or into Europe on European supply. And so those things are helping us drive better RPDs. But we continue to see strong performance there, especially combined with the stronger devices really helped drive some solid top line performance.

Got it. And then the brand revenue or brand portion of your business was exceptionally strong. Can you talk about the longevity of this business? Is it something new? Do you have a bunch of new customers that have come online? And what's your visibility into that continuing?

Yes. One of the things I was really excited about in the brand business for the quarter is just more diversification. I talked about -- in my prepared remarks that we saw nearly 50% increase in the amount of brand advertisers coming on the platform from more and more verticals. It's our job now to continue to grow and scale that.

But to see that diversification with more brands looking for solutions on our platform is incredibly encouraging for us. And we think we have something unique and differentiated here in terms of mobile first with our strategy in app and something that we're playing a long game with it and continuing to make good strides there.

Got it. Last question, Bill, related to just the ongoing potential breakup of Apple or the monopoly of Apple and Google for app stores. What are you seeing recently, just in terms of activity, of potential customers? And do you expect any additional customers to actually launch alternative app stores on top of Epic this year?

Yes. So it's really encouraging to see the recent legal ruling that came out from the judge reiterating what the jury decided in the Epic and Google case, really opening up alternative app stores within the Google Play ecosystem. That's an encouraging development in terms of just more fair, open and transparent.

And we're seeing that around the world, not just -- also in the United States, but also in Europe, Korea, Brazil, Japan, India, just to name a few. And so I think from our perspective, what we're seeing is very strong interest, first and foremost, from publishers.

So if you're thinking about large gaming companies or even large nongaming companies looking to find different billing methods to their customers and our ability to leverage our platform with things like SingleTap, DTiQ and our [ Ignite ], I think it is something that's particularly encouraging to offer publishers options, first and foremost.

And then on the distribution side, we're seeing a lot of encouraging developments here, not just in the United States -- on partners like Verizon, where we're live, but also we've got traction in Latin America as well as in the EU from a lot of different operator and OEM partners that are excited about what happens here in the future with that.

The next question comes from Omar Dessouky with Bank of America.

This is Arthur on for Omar. Bill, maybe just on the AGP business, obviously, great to see sequential improvement here. What do you think needs to happen to bring this business back to year-over-year growth? Like are there specific products or business segments that you'd like to see more improvement in, this year?

Yes. I think -- in terms of our AGP business, our Supply side platform and our DTX product is showing nice year-over-year growth. I think the real key for us will be on the performance side of the business.

That's something we're making a lot of energy and investments and some of those first-party data and AI machine learning things that I referenced in my remarks will be super important here on the demand side of that to really show that top line growth. But as I mentioned in my remarks, we saw really nice sequential growth in that business that gives us encouragement that that's going to continue in quarters to come.

Got it. And then if I could just follow up on that. Any potential time line you could share with us in terms of just that work that you guys are doing on the performance DSP side?

Yes. We'll communicate our progress and time lines on -- in future calls right now. Again, I'm encouraged because what we've done now is we've been able to connect the actual performance DSP and all the bidding work to now the first-party data and AI machine learning algorithms, and we're getting much better and stronger at that. And that will be the key driver to improved top line performance in that business.

The next question comes from Mitchell Pindus with Wells Fargo Private Bank.

I'd like to also thank you for what looks like a nice confirmation of DT's turnaround with these numbers. A couple of quick questions. Device sales have, in recent quarters -- actually in recent years, been headwinds, but now it looks like we're starting to get evidence from Apple, from Verizon that there seems to be a turnaround and anecdotally in device sales. Can you talk a little bit as to how that can affect DT going forward?

Yes. Sure, Mitch. We see it really is helping us in two areas. First is just the macro trend, which is something that's been a headwind, as you mentioned, for us for the last couple of years. So this past quarter was an encouraging sign to see that turn around and become a tailwind and show growth from the June quarter to the March quarter and that sequential improvement. It's been a while since we've been able to talk about that.

So hopefully, that's an encouraging trend that continues. We've known for a long time that these long, elongated upgrade cycles that are in the U.S. are not sustainable, and we're going to see that turn around. So we're starting to see that. So that's a nice tailwind for us. But the second thing we can do is also continue to grow our share with getting our technology on more devices.

So for example, that could be T-Mobile here in the United States, which we just recently launched with Motorola and a variety of other things with Chinese OEMs and other partners in the EU. So growing our device footprint in addition to just the macro, tailwinds starting to emerge, gives us a lot of optimism that we can see good growth from this part of the business.

Great. And generally speaking, where are you seeing some of your growth geographically coming from?

So on the supply side of the business on AGP, I've been really pleased with our growth in Asia and Europe, in particular. And then for our On-Device business, we've really done a nice job on growing our business in the EU and Latin America. So those have been two bright spots for us. And then on the ODS business, you can see the double-digit growth back here in the United States. It Is also something that's been encouraging. So it's really a true global story that's starting to emerge here.

Got it. And are you -- when you're billing outside the country, are you billing in USD or the local currency?

Yes, predominantly, the vast majority of our revenues all come through USD.

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

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

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

Good day, and welcome to the Digital Turbine reports fourth quarter and fiscal 2025 financial results conference call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Brian Bartholomew, Head of Investor Relations. Please go ahead, sir.

Thank you, Chuck. Good afternoon, and welcome to the Digital Turbine Fourth Quarter and Fiscal 2025 Earnings Conference Call. Joining me on the call today 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 thank you all for joining our call tonight. Before breaking down our specific operating results and commentary, I wanted to provide 3 important updates. First, our business has returned to year-over-year growth on both the top and bottom lines. Not only did our top line growth from March of this year compared to March of last year but our year-over-year EBITDA grew by 66%. Our improved execution and actions are now bearing fruit.

Secondly, the business continues to build on that momentum. Our current June quarter is trending positively, and we expect to show improved performance, both sequentially and year-over-year. And finally, we extended our credit facility with our bank group. We believe this extension, combined with our improved execution, will provide more opportunities to lower our cost of capital into the future.

To move to our fiscal '25 results, we achieved $119.1 million of revenue, $20.5 million of EBITDA and $0.10 of non-GAAP earnings per share. It was an important transition year to begin our return to growth as our investments in a variety of activities to set us up well for today and tomorrow. Specifically, our new version of Ignite, our material progress on managing and leveraging our first-party data into our AI machine learning platform, our launch of new improved bidding capabilities and many back-end corporate systems that are simplifying automating work, and all of these things are helping drive improved performance in the present and into the future.

For the March quarter on the On Device or ODS business, we showed double-digit year-on-year top line growth. Devices on our legacy U.S. partners declined year-over-year but was offset by new device launches from outside the U.S. The real highlight of our ODS growth was due to improved revenue per device, or RPD. Our RPDs were up more than 40% year-over-year in the U.S. and over 100% internationally year-over-year. This was driven by strong advertiser demand and improved monetization over the life of the device. And as we've discussed on prior calls, the opportunity for organic growth with improved international revenue per device has been a focus area for us, and I was really pleased to see us build upon our improved execution from the December quarter.

Our AGP business generated $33 million in revenue in the quarter. One of our AGP focus areas continues to be our investment in brands that want to leverage our first-party data to reach their existing and potential customers over our global network. As discussed on prior calls, it's a strategic objective for us and something we've invested in to differentiate us from other players. We're now in a great position to continue to grow, and we'll continue to invest here as we believe we are building a moat, given the high barriers to entry and work required to earn the trust of top brands and agencies looking to find digital channels for their audiences that are not just CTV or retail media.

One of our other top priorities for the AGP business is improving our performance advertising by better leveraging our own first-party data and AI machine learning platform on our Demand Side Platform, or DSP. On the supply side, our consolidated exchange, which we brand as DTX continues to return to growth as having focused on managing 1 versus multiple exchanges is paying dividends.

The legacy Fyber and AdColony exchange businesses were focused on waterfall bidding with third-party performance DSPs, primarily buying gaming and advertising inside gaming applications. And as expected, these DSPs have been executing their own supply path optimization strategies to vertically integrate their demand connected to their own supply. And for those companies without a strong mediation footprint, it has become largely a commoditized adtech gaming space for both iOS and Android.

We saw this risk years ago, and that's why we invested in our own brand and SDK bidding activities to mitigate that risk, increase our own first-party data activities on our own network and continue to invest in mediation. These activities are bearing fruit as our DTX business has returned to growth. We've also been able to expand our AGP supply from being largely dependent on game publishers to much more diversified over nongaming. To illustrate this point, our DTX revenues on nongaming applications have nearly doubled over the past year.

Turning to the future, our focus is continuing to build on our growth while building increased efficiency in our work. The keys to driving growth are more devices, improved performance from our legacy and new products, and a wider and deeper net of media and brand relationships. The key to efficiency is automation, aligning operating cost to gross profit, realigning our people, process and systems for maximum benefit. And we've been able to realize significant efficiencies in our transformation cost savings, but we still have more opportunities to add this fiscal year as we use AI to automate and simplify our operational processes and organizational structures and leverage our technology and system investments for greater efficiencies.

To drive faster growth, the first driver is expanding our device footprint. And despite the soft device sales here in the U.S. with our legacy partners, I'm pleased to announce that T-Mobile is now live with us in the U.S. on Ignite. And internationally, we continue to grow with more and deeper relationships with our international partners in Europe, Asia, and Latin America.

Our second growth driver is expanding our product portfolio for both our ODS and AGP businesses. On the ODS side, the launch of our new version of Ignite is an important milestone. It's now on over 100 million devices. It enables us to launch more services more quickly to generate revenue, be more efficient with our resources and most importantly, improve the overall quality of our offerings to our customers and partners. We've also made significant strides in our first-party data, leveraging our AI machine learning platform.

We've been busy over the past 2 years taking our rich data sets and getting the data organized into a scalable, usable and consistent format in our data lake. And with that work largely complete, we're ingesting over 1,000 different dimensions and more than 1,500 unique data events by which we now can build our sophisticated AI machine learning models upon. We've already seen conversion rate improvements from these efforts and expect this work to be a growth driver for our top and bottom lines this year as we drive better outcomes for publishers, advertisers and end customers.

Our other product priority is growing and scaling our alternative app efforts. We see alternative apps in a few different dimensions. First is through our alternative store. Though live here in the U.S. on many operators, including Verizon, and are working closely with many publishers, including Epic Games, King, and others to help in their distribution to a wider audience. Specifically, many of you may have seen Epic's announcement of 40 million installs of their alternative store where we are a major partner with them, leveraging our products such as SingleTap, Dynamic Installs, and others.

Another way is helping publishers distribute their billing to end customers where we can leverage our on-device footprint and products like such as SingleTap, AppMatch and so on. Here, we partner with both the app publisher and the payment partners to help them drive more users. We've seen the global regulatory and legal activity against Google and Apple accelerate over the past quarter, not just in the EU, but in other places such as Brazil, Japan, India, Turkey, and elsewhere here in the U.S.

Our final growth driver is broader and deeper media relationships. We continue to make positive progress with more brands and performance advertisers. A specific example here is Pinterest who we've had a nice relationship with on our ODS products for many years but recently expanded our relationship to include SingleTap licensing. We're also seeing new categories emerge such as the large AI model players trying to improve their distribution footprints. We've recently launched with one of them and see this as an interesting growth area into the future.

In conclusion, I want to give our team at DT a shout-out. Due to their hard work and focus, we've regained business momentum and growth. Building our momentum and growing our top and bottom lines remains a top priority of the company. We're confident we have the right strategy, partners, market opportunity, commercial models and products to have a very bright future as we're in the right space at the right time, which is critical for any technology company. And with that, I'll turn it over to Steve to take you through the numbers.

Thanks, Bill, and good afternoon, everyone. It's been a privilege to meet several of you during my time so far as CFO of Digital Turbine. And I look forward to engaging with many more of you in the near future as we continue building value together. Before we get into the results, I want to briefly reflect on my 3 months as CFO at Digital Turbine. I spent this time focused on strengthening financial execution, improving cash flow visibility, tightening working capital management and aligning more closely with our business and product teams to support smarter, more efficient growth. Importantly, we continue to make progress on our capital structure and adding stability as we move into fiscal year 2026.

Now turning to our performance in the fiscal fourth quarter and full year fiscal 2025. The fiscal fourth quarter marked a true inflection point for the company as we returned to year-over-year growth for both revenue and adjusted EBITDA. During the quarter, revenue of $119.2 million represented 6% growth year-over-year. At a segment level, revenue for our ODS segment was up 11% year-over-year, while our revenue for the AGP segment was down 3% year-over-year. The combination of renewed top line growth and the realization of expense savings via the enactment of our transformation program in late calendar 2025 led to more significant gains in EBITDA and free cash flow during the quarter.

Our fiscal fourth quarter adjusted EBITDA of $20.5 million represented 66% growth year-over-year. And perhaps more importantly, our positive free cash flow of $5.5 million in the March quarter represented an increase of more than $21 million as compared to the prior year period. We are pleased to be benefiting from the combination of renewed revenue growth and lower cash operating expenses and expect to realize additional expansion in adjusted EBITDA margins moving forward.

Non-GAAP gross margin expanded to 48% in the fiscal fourth quarter, up from 46% in the year-earlier period. This was primarily influenced by product mix changes in our ODS segment in addition to our continued focus on disciplined cost control measures. Our cash operating expenses in the March quarter were $36.1 million, representing a 7% decline year-over-year and a 4% decline on a sequential basis.

We have made real progress on a number of expense-related fronts, not merely with reduced headcount but also with the migration to more cost-effective platforms and the implementation of more streamlined day-to-day business automation processes. While we're happy with the progress made around our transformation cost savings, we continue to focus on expense optimization efficiencies while still making the necessary strategic investments in the business to maximize the profitability of our growth strategy in fiscal year 2026.

Turning now to the bottom portion of the income statement. We reported a GAAP net loss of $18.8 million or $0.18 per share in the fiscal fourth quarter. On a non-GAAP basis, we recorded net income of $10.1 million or $0.10 per share on 108 million shares outstanding in the fiscal fourth quarter. For the full fiscal year 2025, we generated total revenue of $490.5 million, representing a year-over-year decline of approximately 10% compared to the $544.5 million generated in fiscal year 2024. EBITDA for the full fiscal year 2025 totaled $72.3 million as compared to EBITDA of $92.4 million for the fiscal year 2024.

GAAP net loss for all of fiscal year 2025 was $92.1 million or $0.89 per share as compared to a GAAP net loss of $420.4 million or $4.15 per share in full fiscal year 2024. On a non-GAAP basis, net income for full fiscal year '25 totaled $36.1 million or $0.34 per share as compared to non-GAAP net income of $60.3 million or $0.58 per share recorded in fiscal year 2024.

Moving to the balance sheet. Our cash balance at the end of the quarter totaled $40.1 million, an increase of approximately $5 million as compared to the balance at the end of December quarter. We had no new borrowings in the March quarter, and our debt balance at the end of the quarter stood at $408.7 million. As Bill mentioned, we closed on a short-term extension of our credit facility with the existing bank group and are working on a more permanent debt solution with a variety of debt providers. And we feel confident in being able to deliver an attractive solution for stakeholders after these 2 most recent quarters, which point to the strength and stability of our core business. We'll share more of these details as appropriate.

Now let me turn to our outlook for fiscal year 2026. We expect revenue to be in the range of $515 million to $525 million for the fiscal year 2026, reflecting our continued trajectory and momentum we are seeing in the market. Additionally, we project non-GAAP adjusted EBITDA to between $85 million and $95 million as we continue to drive operational efficiencies and deliver value for our shareholders.

In closing, we are actively positioning the company for sustained growth in 2026 and beyond. Our business is showing encouraging signs of continued momentum, and we remain focused on execution, financial discipline and creating long-term value for our shareholders. With that, let me turn the call back to our operator, Chuck. Chuck, let's open it up for questions.

[Operator Instructions] And the first question will come from Anthony Stoss with Craig-Hallum.

Nice execution, guys, and welcome aboard, Steve. First question, Bill. I just wanted to focus on your RPD was up quite a bit internationally. Can you talk about the opportunities that you're seeing? Are they with new device makers, new carriers or both? Any color would be helpful, and then I had a couple of follow-ups.

Yes. Thanks, Tony. Yes, on the international RPDs, as you know, we've been at this for a long time to really close the gap between what we see here in the U.S. and internationally. And it's really just pleased on a few fronts. One is our ability to take our international demand, whether that's coming from the U.S. to our international partners or from Asia or coming from Europe and then bringing on to our international footprint is really number one, increase in our breadth.

Number two is we've really improved our execution operationally to match a lot of the things that we do in terms of how things work in a market like Brazil or India or the U.K. versus how we've optimized it for here in the U.S., that execution has been better for us. And third is just increasing our distribution footprint to be able to cast a wider net to go after partners. So all of those 3 things together have really helped.

And then as we add more and more devices in these regions from partners like Motorola, Telefonica and so on, it adds to more density of that supply to -- where more demand partners want to be honest. So all of those things combined together really helped drive improved results for us.

Got it. And then, Bill, you talked about the regulatory environment, definitely the trend heading your way. I'm just curious if you've seen an increase in activity from the app publishers. Interested in either SingleTap or your AppInstall technology. And maybe you could share with us the number of new licensees signed last quarter?

Yes. So the regulatory environment continues to be favorable for us. What we're seeing right now is people want to see a level playing field. They want to make sure that publishers have access to customers without having to go through some of the gatekeepers that we see, and that's a global phenomena. And the awareness continues to build.

I think it is important to separate out legislation from legal lawsuits. What we see here in the U.S., those are different things and have different implications. But regardless of them, those are things that are positive for us as they're just continuing to build awareness, an opportunity for us to distribute that. And one of the ways, as you mentioned, we distribute that is through our SingleTap licensing capabilities. And we've got a number of good partners. You heard me talk about Epic in my remarks. You heard me mention Pinterest on my remarks and a number of those we've talked about in the past.

We continue to see people wanting to figure out how can they reach consumers in a very scalable way in our device footprint that we've been building over many, many years as a way to go do that, and then combine that with the data that we've got access to is something that's got a lot of interest and excitement.

Got you. And if I can include Steve, not to put him on the spot, but when you look at OpEx going forward, great adjusted EBITDA in the quarter and for the guide. Do you expect your expense level needs to change quite a bit or is it going to be held relatively flat going forward?

When we look at it, it'd be relatively flat going forward. You may see increases as we continue to grow the business, but for the most part, it'd be relatively flat.

Perfect. Thanks for the color guys.

[Operator Instructions] This will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Bill Stone for any closing remarks. Please go ahead, sir.

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

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