10-Q 1 apps-20231231.htm 10-Q apps-20231231
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-35958
DT-2022-Primary-Red-Black.jpg
DIGITAL TURBINE, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
 
22-2267658
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
110 San Antonio Street, Suite 160, Austin, TX
 
78701
(Address of Principal Executive Offices) (Zip Code)
(512) 387-7717
(Registrant’s Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
Common Stock, Par Value $0.0001 Per Share
APPS
The Nasdaq Stock Market LLC
(NASDAQ Capital Market)
(Title of Class)(Trading Symbol)(Name of Each Exchange on Which Registered)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes     No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated Filer
Non-Accelerated FilerSmaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No 
As of February 5, 2024, the Company had 102,021,342 shares of its common stock, $0.0001 par value per share, outstanding.



DIGITAL TURBINE, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED December 31, 2023
TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except par value and share amounts)
December 31, 2023March 31, 2023
(Unaudited)
ASSETS
Current assets  
Cash and cash equivalents$48,959 $75,058 
Restricted cash506 500 
Accounts receivable, net217,239 178,189 
Prepaid expenses and other current assets20,586 12,319 
Total current assets287,290 266,066 
Property and equipment, net43,598 39,327 
Right-of-use assets9,594 10,073 
Intangible assets, net330,531 379,632 
Goodwill411,055 561,576 
Other non-current assets24,567 9,882 
TOTAL ASSETS$1,106,635 $1,266,556 
LIABILITIES AND STOCKHOLDERS EQUITY  
Current liabilities 
Accounts payable$159,525 $119,338 
Accrued revenue share66,161 69,221 
Accrued compensation7,523 10,984 
Other current liabilities35,447 21,377 
Total current liabilities268,656 220,920 
Long-term debt, net of debt issuance costs374,034 410,522 
Deferred tax liabilities, net4,664 13,940 
Other non-current liabilities13,583 13,919 
Total liabilities660,937 659,301 
Commitments and contingencies
Stockholders’ equity  
Preferred stock
Series A convertible preferred stock at $0.0001 par value; 2,000,000 shares authorized, 100,000 issued and outstanding (liquidation preference of $1)
100 100 
Common stock
$0.0001 par value: 200,000,000 shares authorized; 102,454,268 issued and 101,696,143 outstanding at December 31, 2023; 100,216,494 issued and 99,458,369 outstanding at March 31, 2023
10 10 
Additional paid-in capital850,989 822,217 
Treasury stock (758,125 shares at December 31, 2023, and March 31, 2023)
(71)(71)
Accumulated other comprehensive loss(46,493)(41,945)
Accumulated deficit(358,837)(175,115)
Total stockholders’ equity445,698 605,196 
Non-controlling interest 2,059 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$1,106,635 $1,266,556 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income
(Unaudited)
(in thousands, except per share amounts)
Three months ended December 31,
Nine months ended December 31,
2023202220232022
Net revenue$142,634 $162,310 $432,259 $525,802 
Costs of revenue and operating expenses
Revenue share70,364 73,370 208,675 237,618 
Other direct costs of revenue8,614 9,324 27,244 27,438 
Product development13,036 14,218 42,873 43,087 
Sales and marketing14,432 16,469 45,546 48,017 
General and administrative45,455 39,132 127,339 114,328 
Impairment of goodwill
  147,181  
Total costs of revenue and operating expenses151,901 152,513 598,858 470,488 
(Loss) income from operations(9,267)9,797 (166,599)55,314 
Interest and other income (expense), net
Change in fair value of contingent consideration  372  
Interest expense, net(7,666)(6,913)(22,900)(16,224)
Foreign exchange transaction (loss) gain338 17 155 (595)
Other income / (expense), net(311)8 (67)392 
Total interest and other expense, net(7,639)(6,888)(22,440)(16,427)
(Loss) income before income taxes(16,906)2,909 (189,039)38,887 
Income tax (benefit) provision(2,845)(1,153)(5,097)8,164 
Net (loss) income (14,061)4,062 (183,942)30,723 
Less: net (loss) income attributable to non-controlling interest 43 (220)118 
Net (loss) income attributable to Digital Turbine, Inc.(14,061)4,019 (183,722)30,605 
Other comprehensive loss
Foreign currency translation adjustment3,585 10,144 (3,809)(4,644)
Comprehensive (loss) income(10,476)14,206 (187,751)26,079 
Less: comprehensive income attributable to non-controlling interest 59 519 334 
Comprehensive (loss) income attributable to Digital Turbine, Inc.$(10,476)$14,147 $(188,270)$25,745 
Net (loss) income per common share
Basic$(0.14)$0.04 $(1.83)$0.31 
Diluted$(0.14)$0.04 $(1.83)$0.30 
Weighted-average common shares outstanding
Basic101,376 99,108 100,643 98,623 
Diluted101,376 103,348 100,643 103,674 

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Nine months ended December 31,
20232022
Cash flows from operating activities  
Net (loss) income$(183,942)$30,723 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization62,934 60,147 
Non-cash interest expense633 619 
Allowance for credit losses2,575 3,009 
Stock-based compensation expense27,020 19,643 
Foreign exchange transaction (gain) loss(155)581 
Change in fair value of contingent consideration(372) 
Right-of-use asset545 4,868 
Deferred income taxes(9,009)(2,494)
Impairment of goodwill
147,181  
(Increase) decrease in assets:
Accounts receivable, gross(44,427)32,816 
Prepaid expenses and other current assets(8,299)(11,397)
Other non-current assets(5,004)100 
Increase (decrease) in liabilities:
Accounts payable40,082 (14,113)
Accrued revenue share(2,836)(20,324)
Accrued compensation(3,441)(13,131)
Other current liabilities16,963 11,784 
Other non-current liabilities(15)(5,317)
Net cash provided by operating activities40,433 97,514 
Cash flows from investing activities
Equity investments(9,678)(4,000)
Purchase price adjustment related to business acquisition65 (2,708)
Capital expenditures(17,384)(18,598)
Net cash used in investing activities(26,997)(25,306)
Cash flows from financing activities
Proceeds from borrowings25,000 18,000 
Payment of debt issuance costs (94)
Repayment of debt obligations(62,134)(129,500)
Acquisition of non-controlling interest in consolidated subsidiaries(3,751) 
Payment of withholding taxes for net share settlement of equity awards(1,176)(6,202)
Options exercised2,786 1,095 
Net cash used in financing activities(39,275)(116,701)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(254)(2,808)
Net change in cash, cash equivalents, and restricted cash(26,093)(47,301)
Cash, cash equivalents, and restricted cash, beginning of period75,558 127,162 
Cash, cash equivalents, and restricted cash, end of period$49,465 $79,861 
Supplemental disclosure of cash flow information
Interest paid$22,876 $12,912 
Income taxes paid$536 $3,917 
Supplemental disclosure of non-cash activities
Common stock issued for the acquisition of Fyber$ $50,000 
Unpaid cash consideration for the acquisition of Fyber Minority Interest$ $2,578 
Fair value of unpaid contingent consideration in connection with business acquisitions$2,366 $2,738 
5


The accompanying notes are an integral part of these condensed consolidated financial statements.
6

Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands, except share counts)
Common Stock
Shares
AmountPreferred Stock
Shares
AmountTreasury Stock
Shares
AmountAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Non-Controlling InterestTotal
Balance at March 31, 202399,458,369 $10 100,000 $100 758,125 $(71)$822,217 $(41,945)$(175,115)$2,059 $607,255 
Net loss— — — — — — — — (8,179)(220)(8,399)
Foreign currency translation— — — — — — — (6,846)— 739 (6,107)
Stock-based compensation expense— — — — — — 10,017 — — — 10,017 
Shares issued:
Exercise of stock options378,507 — — — — — 731 — — — 731 
Issuance of restricted shares and vesting of restricted units449,781 — — — — — — — — — — 
Acquisition of non-controlling interests in Fyber— — — — — — (1,173)— — (2,578)(3,751)
Payment of withholding taxes related to the net share settlement of equity awards— — — — — — (931)— — — (931)
Balance at June 30, 2023100,286,657 $10 100,000 $100 758,125 $(71)$830,861 $(48,791)$(183,294)$ $598,815 
Net loss— — — — — — — — (161,482)— (161,482)
Foreign currency translation— — — — — — — (1,287)— — (1,287)
Stock-based compensation expense— — — — — — 9,924 — — — 9,924 
Shares issued:
Exercise of stock options575,599 — — — — — 1,998 — — — 1,998 
Issuance of restricted shares and vesting of restricted units226,890 — — — — — — — — — — 
Payment of withholding taxes related to the net share settlement of equity awards— — — — — — (106)— — — (106)
Balance at September 30, 2023101,089,146 $10 100,000 $100 758,125 $(71)$842,677 $(50,078)$(344,776)$ $447,862 
Net loss— — — — — — — — (14,061) (14,061)
Foreign currency translation— — — — — — — 3,585 — — 3,585 
Stock-based compensation expense— — — — — — 8,395 — — — 8,395 
Shares issued:
Exercise of stock options29,225 — — — — — 57 — — — 57 
Issuance of restricted shares and vesting of restricted units577,772 — — — — — — — — — — 
Payment of withholding taxes related to the net share settlement of equity awards— — — — — — (140)— — — (140)
Balance at December 31, 2023101,696,143 $10 100,000 $100 758,125 $(71)$850,989 $(46,493)$(358,837)$ $445,698 
7

Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands, except share counts)
Common Stock
Shares
AmountPreferred Stock
Shares
AmountTreasury Stock SharesAmountAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Non-Controlling InterestTotal
Balance at March 31, 202297,163,701 $10 100,000 $100 758,125 $(71)$745,661 $(39,341)$(191,788)$1,644 $516,215 
Net income— — — — — — — — 14,922 36 14,958 
Foreign currency translation— — — — — — — (5,749)— 207 (5,542)
Stock-based compensation expense— — — — — — 6,463 — — — 6,463 
Shares issued:
Exercise of stock options380,176 — — — — — 296 — — — 296 
Vesting of restricted and performance stock units7,763 — — — — — — — — — — 
Shares for acquisition of Fyber1,205,982 — — — — — 50,000 — — — 50,000 
Payment of withholding taxes related to the net share settlement of equity awards— — — — — — (4,357)— — — (4,357)
Balance at June 30, 202298,757,622 $10 100,000 $100 758,125 $(71)$798,063 $(45,090)$(176,866)$1,887 $578,033 
Net income— — — — — — — — 11,664 39 11,703 
Foreign currency translation— — — — — — — (9,239)— (7)(9,246)
Stock-based compensation expense— — — — — — 6,142 — — — 6,142 
Shares issued:
Exercise of stock options198,778 — — — — — 643 — — — 643 
Issuance of restricted shares and vesting of restricted units29,035 — — — — — — — — — — 
Payment of withholding taxes related to the net share settlement of equity awards— — — — — — (1,572)— — — (1,572)
Balance at September 30, 202298,985,435 $10 100,000 $100 758,125 $(71)$803,276 $(54,329)$(165,202)$1,919 $585,703 
Net income— — — — — — — — 4,019 43 4,062 
Foreign currency translation— — — — — — — 10,128 — 16 10,144 
Stock-based compensation expense— — — — — — 7,835 — — — 7,835 
Shares issued:
Exercise of stock options84,594 — — — — — 156 — — — 156 
Issuance of restricted shares and vesting of restricted units73,174 — — — — — — — — — — 
Payment of withholding taxes related to the net share settlement of equity awards— — — — — — (273)— — — (273)
Balance at December 31, 202299,143,203 $10 100,000 $100 758,125 $(71)$810,994 $(44,201)$(161,183)$1,978 $607,627 
The accompanying notes are an integral part of these condensed consolidated financial statements.
8

Digital Turbine, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
December 31, 2023
(in thousands, except share and per share amounts)
Note 1—Description of Business
Digital Turbine, Inc., through its subsidiaries (collectively “Digital Turbine” or the “Company”), is a leading independent mobile growth platform that levels up the landscape for advertisers, publishers, carriers, and device original equipment manufacturers (“OEMs”). The Company offers end-to-end products and solutions leveraging proprietary technology to all participants in the mobile application ecosystem, enabling brand discovery and advertising, user acquisition and engagement, and operational efficiency for advertisers. In addition, the Company’s products and solutions provide monetization opportunities for OEMs, carriers, and application (“app” or “apps”) publishers and developers.
Note 2—Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. The Company consolidates the financial results and reports non-controlling interests representing the economic interests held by other equity holders of subsidiaries that are not 100% owned by the Company. The calculation of non-controlling interests excludes any net income (loss) attributable directly to the Company. All intercompany balances and transactions have been eliminated in consolidation. The Company acquired the remaining minority interest shareholders’ outstanding shares in one of its subsidiaries during the three months ended June 30, 2023 for $3,751. As a result, the Company owned 100% of all its subsidiaries as of December 31, 2023.
These financial statements should be read in conjunction with the Company’s audited financial statements and related notes included in its Annual Report on Form 10-K for the fiscal year ended March 31, 2023.
Unaudited Interim Financial Information
These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary to present fairly the Company’s financial condition, results of operations, comprehensive income, stockholders’ equity, and cash flows for the interim periods indicated. The results of operations for the three and nine months ended December 31, 2023, are not necessarily indicative of the operating results for the full fiscal year.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include revenue recognition, including the determination of gross versus net revenue reporting, allowance for credit losses, stock-based compensation, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, fair value of contingent earn-out considerations, incremental borrowing rates for right-of-use assets and lease liabilities, and tax valuation allowances. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from management’s estimates using different assumptions or under different conditions.
Management considered the potential impacts of ongoing macroeconomic uncertainty due to global events such as the conflicts in Ukraine and Israel, inflation, disruptions in supply chains, recessionary concerns impacting the markets in which the Company operates, and others, on the Company’s critical and significant accounting
9

estimates. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates or judgments or revise the carrying value of its assets or liabilities as a result of such factors. Management’s estimates may change as new events occur and additional information is obtained. Actual results could differ from estimates and any such differences may be material to the Company’s condensed consolidated financial statements.
Summary of Significant Accounting Policies
There have been no significant changes to the Company’s significant accounting policies in Note 2—Basis of Presentation and Summary of Significant Accounting Policies, of the notes to the consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended March 31, 2023.
Note 3—Acquisitions
Acquisition of In App Video Services UK LTD.
On November 1, 2022, the Company completed the acquisition of all outstanding ownership interests of In App Video Services UK LTD. (“In App”), pursuant to a Stock Purchase Agreement (the “In App Acquisition”). Prior to the Acquisition, In App acted as a third-party representative of the Company’s App Growth Platform (“AGP”) segment’s products and services in the United Kingdom (“UK”). The acquisition of In App is part of the Company’s strategy to make investments that provide opportunities to grow market share and increase revenue in important markets and geographies like the UK.
The Company acquired In App for total estimated consideration in the range of $2,250 to $5,500, paid as follows: (1) $2,708 paid in cash at closing, including a working capital adjustment of approximately $460, with $1,000 of that amount held in escrow for one-year and (2) potential annual earn-out payments based on meeting annual revenue targets for the calendar years ended December 31, 2022, 2023, 2024, and 2025. The annual earn-out payments are up to $250 for the year ended December 31, 2022, and $1,000 for each of the calendar years ended December 31, 2023, 2024, and 2025. Also, an incremental earn-out payment will be made for each of the calendar years ended 2023, 2024, and 2025 in an amount equal to 25% of revenue that is more than 150% of that calendar year’s revenue target. The earn out was not achieved for the calendar year ended December 31, 2022. The Company expects to pay approximately $1,100 for the earn out for the calendar year ended December 31, 2023.
On the acquisition date, the Company recorded the fair values of the assets acquired and liabilities assumed in the In App Acquisition, which resulted in the recognition of: (1) current assets, net of cash acquired, of $836, (2) current liabilities of $401, (3) acquisition purchase price liability of $2,738, and (4) goodwill of $4,957.
During the three months ended December 31, 2023, the Company reassessed the fair value of the purchase price liability based on current forecasts. As a result of this assessment, no additional remeasurement was recorded. As of December 31, 2023, the total remeasurement gain was equal to $372. Changes in the fair value of the earn-out liability subsequent to the acquisition date are recognized in the condensed consolidated statements of operations and comprehensive (loss) income.
Additionally, during the three months ended December 31, 2023, the Company recorded a cumulative net measurement period adjustment that decreased goodwill by $65 (see Note 6). The Company made these measurement period adjustments to reflect the release and refund of escrow amounts in relation to the acquisition purchase price adjustment.



Note 4—Fair Value Measurements
Equity securities without readily determinable fair values
During the three months ended December 31, 2023, the Company purchased certain non-marketable equity securities for total proceeds of $9,138. As of December 31, 2023 and March 31, 2023, the carrying value of the Company’s investments in equity securities without readily determinable fair values totaled $17,637 and $8,499, respectively, and is included in “Other non-current assets” in the accompanied consolidated balance sheet. The Company’s investments in these equity securities without readily determinable fair values represents a strategic
10

investment in one of the largest independent Android application stores.
As the non-marketable equity securities are investments in a privately held company without a readily determinable fair value, the Company elected the measurement alternative to account for these investments. Under the measurement alternative, the carrying value of the non-marketable equity securities are adjusted based on price changes from observable transactions of identical or similar securities of the same issuer or for impairment. Any changes in carrying value are recorded within other income (loss), net in the Company's condensed consolidated statement of operations.
For the three and nine months ended December 31, 2023, there were no adjustments to the carrying value of equity securities without readily determinable fair values.
Fair Value Measurements
The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2. Significant other inputs that are directly or indirectly observable in the marketplace.
Level 3. Significant unobservable inputs which are supported by little or no market activity.
As of December 31, 2023 and March 31, 2023, Level 1 equity securities recorded at fair value were $546 and $0, respectively, and are classified as other non-current assets.

Note 5—Segment Information
Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company has determined that its Chief Executive Officer is the CODM. The Company reports its results of operations through the following two segments, each of which represents an operating and reportable segment, as follows:
On Device Solutions (“ODS”) - This segment generates revenue from the delivery of mobile application media or content to end users with solutions for all participants in the mobile application ecosystem that want to connect with end users and consumers who hold the device. This includes mobile carriers and device OEMs that participate in the app economy, app publishers and developers, and brands and advertising agencies. This segment's product offerings are enabled through relationships with mobile device carriers and OEMs.
App Growth Platform (“AGP”) - AGP customers are primarily advertisers and publishers, and the segment provides platforms that allow mobile app publishers and developers to monetize their monthly active users via display, native, and video advertising. The AGP platforms allow demand side platforms, advertisers, agencies, and publishers to buy and sell digital ad impressions, primarily through programmatic, real-time bidding auctions and, in some cases, through direct-bought/sold advertiser budgets. The segment also provides brand and performance advertising products to advertisers and agencies.
The Company’s CODM evaluates segment performance and makes resource allocation decisions primarily based on segment net revenue and segment profit, as shown in the segment information summary table below. The Company’s CODM does not allocate other direct costs of revenue, operating expenses, interest and other income (expense), net, or provision for income taxes to these segments for the purpose of evaluating segment performance. Additionally, the Company does not allocate assets to segments for internal reporting purposes as the CODM does not manage the Company’s segments by such metrics.
A summary of segment information follows:
11

Three months ended December 31, 2023
ODSAGPEliminationsConsolidated
Net revenue$94,298 $49,181 $(845)$142,634 
Revenue share
60,276 10,933 (845)70,364 
Segment profit$34,022 $38,248 $ $72,270 
 Three months ended December 31, 2022
ODSAGPEliminationsConsolidated
Net revenue$96,316 $67,407 $(1,413)$162,310 
Revenue share
57,555 17,228 (1,413)73,370 
Segment profit$38,761 $50,179 $ $88,940 
Nine months ended December 31, 2023
ODSAGPEliminationsConsolidated
Net revenue$291,608 $144,323 $(3,672)$432,259 
Revenue share
179,554 32,793 (3,672)208,675 
Segment profit$112,054 $111,530 $ $223,584 
 Nine months ended December 31, 2022
ODSAGPEliminationsConsolidated
Net revenue$323,419 $208,029 $(5,646)$525,802 
Revenue share
185,791 57,473 (5,646)237,618 
Segment profit$137,628 $150,556 $ $288,184 
Geographic Area Information
Long-lived assets, excluding deferred tax assets, by region follow:
 December 31, 2023March 31, 2023
United States and Canada$30,128 $25,903 
Europe, Middle East, and Africa13,394 13,395 
Asia Pacific and China76 29 
Consolidated property and equipment, net$43,598 $39,327 
 December 31, 2023March 31, 2023
United States and Canada$139,588 $122,377 
Europe, Middle East, and Africa186,493 252,524 
Asia Pacific and China4,450 4,731 
Consolidated intangible assets, net$330,531 $379,632 
Net revenue by geography is based on the billing addresses of the Company’s customers and a reconciliation of disaggregated revenue by segment follows:
12

 Three months ended December 31, 2023
ODSAGPTotal
United States and Canada$37,927 $33,671 $71,598 
Europe, Middle East, and Africa42,947 11,290 54,237 
Asia Pacific and China12,823 4,201 17,024 
Mexico, Central America, and South America601 19 620 
Elimination— — (845)
Consolidated net revenue$94,298 $49,181 $142,634 
 Three months ended December 31, 2022
ODSAGPTotal
United States and Canada$38,949 $29,911 $68,860 
Europe, Middle East, and Africa42,321 26,449 68,770 
Asia Pacific and China12,975 10,564 23,539 
Mexico, Central America, and South America2,071 483 2,554 
Elimination— — (1,413)
Consolidated net revenue$96,316 $67,407 $162,310 
 Nine months ended December 31, 2023
ODSAGPTotal
United States and Canada$117,044 $96,844 $213,888 
Europe, Middle East, and Africa137,317 33,808 171,125 
Asia Pacific and China35,480 13,588 49,068 
Mexico, Central America, and South America1,767 83 1,850 
Elimination— — (3,672)
Consolidated net revenue$291,608 $144,323 $432,259 
 Nine months ended December 31, 2022
ODSAGPTotal
United States and Canada$152,890 $115,957 $268,847 
Europe, Middle East, and Africa125,463 68,118 193,581 
Asia Pacific and China39,989 22,837 62,826 
Mexico, Central America, and South America5,077 1,117 6,194 
Elimination— — (5,646)
Consolidated net revenue$323,419 $208,029 $525,802 
Note 6—Goodwill and Intangible Assets
Goodwill
Changes in the carrying amount of goodwill by segment follows:
ODSAGPTotal
Goodwill as of March 31, 2023
$80,176 $481,400 $561,576 
Purchase price adjustment (65)(65)
Foreign currency translation (3,275)(3,275)
Impairment of goodwill$ $(147,181)$(147,181)
Goodwill as of December 31, 2023
$80,176 $330,879 $411,055 

The Company evaluates goodwill for impairment at least annually or upon the occurrence of events or circumstances that indicate they would more likely than not reduce the fair value of a reporting unit below its carrying value. During annual testing as of March 31, 2023, the Company determined that the fair value of both
13

reporting units was in excess of their carrying value. As a result of this review, the Company did not record an impairment charge in fiscal year 2023.

During the three months ended September 30, 2023, as a result of sustained decline in the quoted market price of the Company’s common stock, increase in interest rates, and the Company’s forecasted operating trends, the Company identified interim indicators of impairment related to the goodwill assigned to the AGP reporting unit. The Company completed an impairment assessment of its goodwill, and as a result of this review, recorded a $147,181 non-deductible, non-cash goodwill impairment charge for the AGP reporting unit for the three months ended September 30, 2023. There was no impairment of goodwill for the ODS reporting unit during the fiscal year.

The fair value of each reporting unit was estimated using a weighted combination of the income approach, which incorporates the use of the discounted cash flow method, and the market approach (the “Guideline Public Company Method”). The Company’s September 30, 2023 testing reflected a 75%/25% allocation between the income and market approaches. The Company believes the 75% weighting to the income approach is appropriate, as it directly reflects its future growth and profitability expectations.

For the three months ended December 31, 2023, no goodwill impairment charges were recorded.

As of December 31, 2023, the Company recorded a purchase price adjustment of $65 associated with the acquisition of In App Video.
Intangible Assets
The components of intangible assets were as follows as of the periods indicated:
 
As of December 31, 2023
Weighted-Average Remaining Useful LifeCostAccumulated AmortizationNet
Customer relationships12.01 years$169,106 $(54,525)$114,581 
Developed technology4.55 years152,561 (60,204)92,357 
Trade names1.58 years70,032 (40,922)29,110 
Publisher relationships17.10 years109,134 (14,651)94,483 
Total$500,833 $(170,302)$330,531 
 
As of March 31, 2023
Weighted-Average Remaining Useful LifeCostAccumulated AmortizationNet
Customer relationships12.06 years$170,281 $(39,925)$130,356 
Developed technology5.28 years146,596 (38,813)107,783 
Trade names2.33 years69,983 (27,115)42,868 
Publisher relationships17.83 years109,028 (10,403)98,625 
Total$495,888 $(116,256)$379,632 
The Company recorded amortization expense of $15,936 and $48,282, respectively, during the three and nine months ended December 31, 2023, and $16,120 and $48,422, respectively, during the three and nine months ended December 31, 2022, in general and administrative expenses on the condensed consolidated statements of operations and comprehensive income (loss).
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Estimated amortization expense in future fiscal years is expected to be:
Fiscal year 2024$16,102 
Fiscal year 202555,759 
Fiscal year 202641,484 
Fiscal year 202735,356 
Fiscal year 202835,356 
Thereafter146,474 
Total$330,531 
Note 7—Accounts Receivable
December 31, 2023March 31, 2023
Billed$140,668 $136,921 
Unbilled85,295 51,474 
Allowance for credit losses(8,724)(10,206)
Accounts receivable, net$217,239 $178,189 
Billed accounts receivable represent amounts billed to customers for which the Company has an unconditional right to consideration. Unbilled accounts receivable represent revenue recognized but billed after period-end. All unbilled receivables as of December 31, 2023 are expected to be billed and collected (subject to the allowance for credit losses) within twelve months.
Allowance for Credit Losses
The Company maintains reserves for current expected credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, current economic trends, and changes in customer payment patterns to evaluate the adequacy of these reserves.
The Company recorded $1,348 and $2,575 of credit loss expense during the three and nine months ended December 31, 2023, respectively, and $683 and $2,932 of credit loss expense during the three and nine months ended December 31, 2022, respectively, in general and administrative expenses on the condensed consolidated statements of operations and comprehensive income (loss).
Note 8—Property and Equipment
December 31, 2023March 31, 2023
Computer-related equipment$4,209 $3,527 
Developed software83,776 63,891 
Furniture and fixtures2,142 2,103 
Leasehold improvements3,754 3,647 
Property and equipment, gross93,881 73,168 
Accumulated depreciation(50,283)(33,841)
Property and equipment, net$43,598 $39,327 
Depreciation expense was $5,073 and $14,657 for the three and nine months ended December 31, 2023, respectively, and $4,014 and $11,722 for the three and nine months ended December 31, 2022, respectively. Depreciation expense for the three and nine months ended December 31, 2023, includes $4,501 and $10,820, respectively, related to internal-use software included in general and administrative expense and $572 and $3,837, respectively, related to internally-developed software to be sold, leased, or otherwise marketed included in other direct costs of revenue. Depreciation expense for the three and nine months ended December 31, 2022, includes $2,394 and $7,139, respectively, related to internal-use software included in general and administrative expense and $1,620 and $4,583, respectively, related to internally-developed software to be sold, leased, or otherwise
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marketed included in other direct costs of revenue.
Cloud Computing Arrangements
As of December 31, 2023, the net carrying value of capitalized implementation costs related to cloud computing arrangements that were incurred during the application development stage was $7,302, of which $1,239 was included in prepaid expenses and other current assets and $6,063 was included in other non-current assets. As of March 31, 2023, the net carrying value of capitalized implementation costs related to cloud computing arrangements that were incurred during the application development stage was $736, and was included in other non-current assets.
As of December 31, 2023 and 2022, amortization expenses for implementation costs of cloud-based computing arrangements were $310 and $0, respectively.
Note 9—Debt
The following table summarizes borrowings under the Company’s debt obligations and the associated interest rates:
December 31, 2023
BalanceInterest RateUnused Line Fee
Revolver (subject to variable interest rate)$376,000 7.49 %0.30 %
Debt obligations on the condensed consolidated balance sheets consist of the following:
December 31, 2023March 31, 2023
Revolver$376,000 $413,134 
Less: Debt issuance costs(1,966)(2,612)
Long-term debt, net of debt issuance costs$374,034 $410,522 
Revolver
On February 3, 2021, the Company entered into a credit agreement (the “Credit Agreement”) with Bank of America, N.A. (“BoA”), which provided for a revolving line of credit (the “Revolver”) of up to $100,000 with an accordion feature enabling the Company to increase the total amount up to $200,000.
On April 29, 2021, the Company amended and restated the Credit Agreement (the “New Credit Agreement”) with BoA, as a lender and administrative agent, and a syndicate of other lenders, which provided for a revolving line of credit of up to $400,000. The revolving line of credit matures on April 29, 2026, and contains an accordion feature enabling the Company to increase the total amount of the Revolver by $75,000 plus an amount that would enable the Company to remain in compliance with its consolidated secured net leverage ratio, on such terms as agreed to by the parties. The New Credit Agreement was subsequently amended as follows:
First Amendment: Increase in the Revolver to $525,000 while retaining the $75,000 accordion feature discussed above, for a total potential revolving line of credit of $600,000 on December 29, 2021.
Second Amendment: LIBOR was replaced with the Term Secured Overnight Financing Rate (“SOFR”). As a result, borrowings under the New Credit Agreement where the applicable rate was LIBOR will accrue interest at an annual rate equal to SOFR plus between 1.50% and 2.25% beginning on the effective date of the Second Amendment, which was October 26, 2022.
The First and Second Amendments discussed above made no other changes to the terms of the New Credit Agreement, which contains customary covenants, representations, and events of default and also requires the Company to comply with a maximum consolidated secured net leverage ratio and minimum consolidated interest coverage ratio.
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The Company incurred debt issuance costs of $4,064 for the New Credit Agreement, inclusive of costs incurred for the First and Second Amendments. Deferred debt issuance costs are recorded as a reduction of the carrying value of the debt on the condensed consolidated balance sheets. All deferred debt issuance costs are amortized on a straight-line basis over the term of the loan to interest expense.
As of December 31, 2023, the Company had $376,000 drawn against the New Credit Agreement, classified as long-term debt on the condensed consolidated balance sheets, with remaining unamortized debt issuance costs of $1,966.
As of December 31, 2023, amounts outstanding under the New Credit Agreement accrue interest at an annual rate equal to, at the Company’s election, (i) SOFR plus between 1.50% and 2.25%, based on the Company’s consolidated secured net leverage ratio, or (ii) a base rate based upon the highest of (a) the federal funds rate plus 0.50%, (b) BoA’s prime rate, or (c) SOFR plus 1.00% plus between 0.50% and 1.25%, based on the Company’s consolidated secured leverage ratio. Additionally, the New Credit Agreement is subject to an unused line of credit fee between 0.15% and 0.35% per annum, based on the Company’s consolidated leverage ratio. As of December 31, 2023, the interest rate was 7.49% and the unused line of credit fee was 0.30%.
The Company’s payment and performance obligations under the New Credit Agreement and related loan documents are secured by its grant of a security interest in substantially all of its personal property assets, whether now existing or hereafter acquired, subject to certain exclusions. If the Company acquires any real property assets with a fair market value in excess of $5,000, it is required to grant a security interest in such real property as well. All such security interests are required to be first priority security interests, subject to certain permitted liens.
As of December 31, 2023, the Company had $149,000 available to draw on the revolving line of credit under the New Credit Agreement, excluding the accordion feature, subject to the required covenants. As of December 31, 2023, the Company was in compliance with all covenants. The fair value of the Company’s outstanding debt approximates its carrying value.
The Company entered into a Third Amendment to the New Credit Agreement on February 5, 2024 to provide further financing flexibility to fund growth initiatives and meet general corporate obligations. Refer to Note 14 for further discussion.
Interest expense, net
Interest expense, net, amortization of debt issuance costs, and unused line of credit fees were recorded in interest expense, net, on the condensed consolidated statements of operations and comprehensive income (loss), as follows:
Three months ended December 31,
Nine months ended December 31,
2023202220232022
Interest expense, net$(7,351)$(6,671)$(22,008)$(15,538)
Amortization of debt issuance costs(211)(211)(635)(619)
Unused line of credit fees and other(104)(31)(257)(67)
Total interest expense, net$(7,666)$(6,913)$(22,900)$(16,224)
Note 10—Stock-Based Compensation
2020 Equity Incentive Plan of Digital Turbine, Inc. (the “2020 Plan”)
On September 15, 2020, the Company’s stockholders approved the 2020 Plan, pursuant to which the Company may grant equity incentive awards to directors, employees and other eligible participants. A total of 12,000,000 shares of common stock were reserved for grant under the 2020 Plan. The types of awards that may be granted under the 2020 Plan include incentive and non-qualified stock options, stock appreciation rights, restricted stock, and restricted stock units. The 2020 Plan became effective on September 15, 2020, and has a term of ten years. Stock options may be either incentive stock options, as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or non-qualified stock options. As of December 31, 2023, 4,407,643 shares of common stock were available for issuance as future awards under the 2020 Plan.
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Stock Options
The following table summarizes stock option activity:
Number of SharesWeighted-Average Exercise Price
(per share)
Weighted-Average Remaining
Contractual
Life
(in years)
Aggregate Intrinsic Value
(in thousands)