Categories Analysis, Technology

Why is it a good idea to add Digital Turbine (APPS) to your watchlist

Mobile ad technology company Digital Turbine (NASDAQ: APPS) has been focused on expanding its portfolio through strategic acquisitions and partnerships. The widespread adoption of digital services during the pandemic catalyzed revenue growth, driving up quarterly results to record highs.

Investing in APPS

For the Austin-based company, which provides solutions to monetize mobile content, 2021 was a pivotal year in terms of business expansion. In recent years, the stock gained multi-fold and reached a peak in early 2021, but lost steam since then.  It got a much-needed boost last week after the company posted strong third-quarter results.

Read management/analysts’ comments on quarterly reports

The good news is that the stock has just begun the upward journey, according to analysts who unanimously recommend buying APPS. It is expected to gain a whopping 65% this year. The bullish target price, combined with the affordable stock price, should be seen as a rare buying opportunity.

Growth Drivers

Digital Turbine’s recent performance shows the management’s efforts to reposition the business to leverage its on-device competitive advantages — so as to effectively capitalize on the unfolding market opportunities this year and beyond — are paying off. The impressive device footprint should continue to drive growth going forward.

From Digital Turbine’s Q3 2022 earnings call transcript:

“We’ve been focused on integrating new systems like common HR, accounting, sales force, and technology platforms so we can operate like one versus four companies. Combined with that, is also focusing on unifying our processes like how we work on new clients, manage our people and manage our customer accounts. These things all allow us to operate more efficiently so we can capitalize on the future strategy.”

Strong Q3

In the third quarter of fiscal 2022, total revenues climbed to $375.5 million from $88.6 million in the same period of last year and came in above analysts’ forecast. Adjusted earnings rose to $0.49 per share during the three-month period from $0.21 per share. Unadjusted net income was $7.1 million or $0.07 per in the third quarter, compared to $14.5 million or $0.15 per share a year earlier.

The management forecasts that full-year adjusted earnings would be in the range of $1.66 per share to $1.68 per share. The bottom-line is expected to benefit from a marked increase in revenues to $1.225-$1.240 billion.

Apple tames supply chain hurdles; looks headed for a record year

In an important move, Digital Turbine recently entered into a multi-year strategic partnership with Google, which would allow the company to use the search giant’s enterprise and cloud solutions to build products to grow its footprint in the Android mobile ecosystem.

APPS has lost about 37% so far this year and it hovered near the $50-mark in recent sessions. The stock traded sharply higher on Monday afternoon.

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