Digital Turbine Inc (APPS) Faces Fiscal Challenges Despite Solid Cash Flow in Q2 FY2024
Second quarter revenue for Digital Turbine Inc (NASDAQ:APPS) declined by 18% year-over-year to $143.3 million.
GAAP net loss of $161.5 million included a significant noncash goodwill impairment charge.
Non-GAAP adjusted net income and EBITDA stood at $13.9 million and $27.7 million, respectively.
Free cash flow remained strong at $23.9 million, with a reduction in long-term debt balance.
On November 8, 2023, Digital Turbine Inc (NASDAQ:APPS) reported its financial results for the fiscal second quarter ended September 30, 2023. The company faced a challenging quarter with a year-over-year revenue decline of 18%, totaling $143.3 million. A significant noncash goodwill impairment charge heavily impacted the GAAP net loss, which stood at $161.5 million, or ($1.61) per share. This charge related to the App Growth Platform segment was $147.2 million, or ($1.46) per share. Despite these challenges, the company managed to generate a Non-GAAP adjusted net income of $13.9 million and Non-GAAP adjusted EPS of $0.13. Non-GAAP adjusted EBITDA also saw a 3% sequential increase to $27.7 million, although it represented a 43% year-over-year decline.
Income Statement Highlights
Digital Turbine Inc (NASDAQ:APPS) reported a mixed performance in its income statement. The company's revenue share and other direct costs of revenue were $68.7 million and $9.0 million, respectively. Product development, sales and marketing, and general and administrative expenses were relatively stable compared to the same quarter last year. However, the impairment of goodwill significantly affected the (loss) income from operations, which was $(152.6) million, compared to a positive income from operations of $21.1 million in the fiscal second quarter of 2023.
Balance Sheet and Cash Flow Statement Analysis
The balance sheet of Digital Turbine Inc (NASDAQ:APPS) reflected a decrease in total assets, primarily due to the impairment of goodwill. The company's cash position was $58.1 million, with a reduction in accounts receivable and a slight increase in prepaid expenses and other current assets. The company successfully reduced its long-term debt balance by $21.9 million to $383.8 million. The net cash provided by operating activities was a solid $27.5 million, and the company achieved a free cash flow of $23.9 million.
Future Business Outlook
Looking ahead, Digital Turbine Inc (NASDAQ:APPS) provided guidance for the third quarter of fiscal 2024, expecting revenue between $144 million and $150 million, Non-GAAP adjusted EBITDA between $27 million and $31 million, and Non-GAAP adjusted EPS between $0.16 and $0.19. The company noted the ongoing uncertainties in the macro environment and the difficulty in providing a business outlook for GAAP net income due to unpredictable changes in stock-based compensation expense and other items.
Management Commentary
"The mobile app distribution market is entering an exciting new era, and I believe that Digital Turbine is uniquely positioning itself to be a major player in its evolution," said Bill Stone, CEO. "We have made, and continue to make, important strategic investments in order to more effectively leverage our advantageous on-device presence to optimize measurable performance for app publishers and advertisers, and to simultaneously provide them access to alternative, newly-available, direct distribution models."
In conclusion, Digital Turbine Inc (NASDAQ:APPS) is navigating a challenging fiscal environment with a strategic focus on leveraging its platform for future growth. The company's solid cash flow and proactive debt reduction underscore its financial resilience, even as it manages the impacts of goodwill impairment and a competitive market landscape.
Explore the complete 8-K earnings release (here) from Digital Turbine Inc for further details.
This article first appeared on GuruFocus.
