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What's in Store for Digital Turbine (APPS) in Q2 Earnings?

Zacks Equity Research

Digital Turbine APPS is set to release second-quarter fiscal 2020 results on Nov 4.

For the quarter, the company expects revenues between $31 million and $32 million. The Zacks Consensus Estimate for revenues is currently pegged at $31.6 million, indicating 32.3% growth from the figure reported in the year-ago quarter.

Moreover, the Zacks Consensus Estimate for earnings stands at 4 cents, unchanged over the past 30 days and suggests growth of 500% from the figure reported in the year-ago quarter.

In the last reported quarter, the company reported non-GAAP earnings of 5 cents per share, which beat the Zacks Consensus Estimate by 3 cents. The company had reported non-GAAP loss of 1 cent in the year-ago quarter.

Revenues of $30.6 million also surpassed the consensus mark of $28 million and increased 38.2% on a year-over-year basis.

The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 125%.

Let’s see how things have shaped up prior to this announcement.

Digital Turbine, Inc. Price and EPS Surprise

Digital Turbine, Inc. Price and EPS Surprise

Digital Turbine, Inc. price-eps-surprise | Digital Turbine, Inc. Quote

Factors to Consider

Digital Turbine is expected to have benefited from strength in its mobile device management platform, Ignite, which gained significant traction during the second quarter.

As of Aug 5, 2019, more than 290 million devices had Ignite installed.

During the quarter, the company focused on adding strategic resources to improve international revenue-per-device (RPD) and scale partnerships and infrastructure, which is expected to have driven incremental increases in spending by high profile multinational advertising clients such as Pinterest, Twitter and Uber.

Notably, in the first quarter, U.S. RPD increased 38% year over year, reflecting strong demand for the Digital Turbine platform among advertisers.

Additionally, improving global RPD indicated by solid demand for the company’s ad solutions is expected to have benefited the company in the second quarter.

Moreover, strong contributions from products like SingleTap, Folders, App Wizard and Notifications are expected to have contributed to the company’s top line.

Digital Turbine’s partnerships with AppsFlyer, Branch, Kochava and Singular in the previous quarter are likely to have boosted SingleTap’s capabilities in the second quarter. These are well-known attribution and analytics companies, covering roughly 85% of the global mobile applications market.

During the second quarter, the company worked with Branch to integrate the latter’s Deep Linking capabilities into Single-Tap.

Notably, SingleTap streamlines the app installation process by enabling app delivery from any mobile ad in just one tap. Its impressive click-to-install conversion rate has helped in increasing its demand among advertisers and application providers.

Further, an expanding partner base, which includes Pandora, Twitter, Pinterest and others, is likely to have enhanced penetration in the second quarter.

During the last quarter earnings call, the company stated its intention to expand from 12 to 50 countries with its new partner, Samsung, by the end of second-quarter fiscal 2020. This is likely to have boosted the company’s growth and credibility among international advertisers and other global OEM partners.

Also, partnerships in the United States with the likes of Verizon VZ and AT&T T are expected to have helped the company pull demand from its media partners and advertising clientele in the United States during the quarter.

Furthermore, expansion into markets in Europe and Latin America is expected to have driven the top line despite sluggish growth and a saturating smartphone market.

What Our Model Says

According to the Zacks model, the combination of two key ingredients — a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — increases the odds of a positive earnings surprise.

Digital Turbine has an Earnings ESP of 0.00% and a Zacks Rank #2, which makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stock to Consider

Here is a company, which, per our model, has the right combination of elements to post an earnings beat in its upcoming release.

Advanced Energy Industries AEIS has an Earnings ESP of +4.17% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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