Categories Analysis, Technology

Digital Turbine (APPS) banks on diversification to sustain growth

Management expects contributions from Mobile Posse, which was acquired earlier this year, to boost revenues going forward

Mobile technology provider Digital Turbine, Inc. (NASDAQ: APPS) expanded its market value continuously since the beginning of the year and reached a record high this week. Currently, the company is diversifying the business, with focus on expanding its offerings beyond smartphones.

The stock offers a good buying opportunity — thanks to the favorable valuation despite the recent growth – though it is estimated to pare a part of the gains in the coming weeks. The market will be closely following the performance at least until the company publishes its third-quarter results, which is scheduled for January 28. It is widely expected that earnings will rise to $0.16 per share from last year’s $0.05 per share.

Unique Offerings

Digital Turbine stands out in the mobile technology space with its unique offerings, serving a wide range of clients including telecom carriers like Verizon (VZ) and AT&T (T) and streaming service providers like Netflix (NFLX). The company has witnessed consistent growth in the number of mobile devices that use its technology and revenue per device – key metrics that indicate the health of the business.

While the growth in device activation was almost flat in the U.S this year, the performance in the international market has been encouraging, reflecting the strategic overseas partnerships with market leaders like Nokia and Xiaomi.


Roku delivers an earnings surprise in Q3


“We continue to see the benefits of global scale, where we see partners spending on more geographies and more devices outside their home geography, whether that’s for example, Chinese companies like Alibaba, Tencent, and ByteDance spending in Latin America and Europe, and the US, or European companies and US companies such as Pinterest, Snap, Uber, McDonald’s, King, Walmart, just to name a few, all spending with us outside of their respective home geographies,” said Digital Turbine’s chief executive officer Bill Stone while talking to analysts at the second-quarter earnings conference call.

Diversification

The widespread digital adoption and growing advertiser demand bode well for the company. Of late, the management has been focused on diversifying the business – in all the key areas including partnership, business model, products, and geographies – and leveraging the extensive distribution footprint across the world. Going forward, the company’s financial performance is expected to benefit from effective capital allocation and cost management initiates. Mobile Posse, the mobile content discovery platform that was acquired earlier this year, will continue to be a key revenue driver.

Blockbuster Q2

In the second quarter, revenues more than doubled to about $71 million and beat the Street view, with both the business segments registering double-digit growth. Consequently, adjusted earnings tripled to $0.15 per share, exceeding expectations.


Read management/analysts’ comments on earnings reports


The company’s stock surged to a record high on Monday, after staying on the growth path in the past several months. The value increased from single digits in the early days of the year to about $45 this week. In the last month alone, the stock gained about 57% and outperformed the sector and the broad market.

Looking for more insights?

Read the full conference call transcript here. It’s free!

Most Popular

Earnings calendar for the week of January 18

While the markets got a boost a couple of weeks ago after Congress passed the new stimulus bill, investors seem to have adopted a cautious stance as details of the

Can ReneSola count on pipeline, global expansion to stay on growth path?

After the initial lull, the renewables industry witnessed stable capacity addition during the pandemic, even as the lingering uncertainty underscored the need for energy self-reliance. Solar power companies like ReneSola

US retail sales fall for third straight month in December; 2020 holiday sales rise 8.3%

According to a report by the US Census Bureau, adjusted retail and food services sales totaled $540.9 billion in December 2020, down 0.7% from November 2020 but up 2.9% from

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top