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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 September 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-35958
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 November 1, 2022, the Company had 99,016,830 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 September 30, 2022
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)
September 30, 2022March 31, 2022
(Unaudited)
ASSETS
Current assets  
Cash$82,653 $126,768 
Restricted cash560 394 
Accounts receivable, net255,666 263,139 
Prepaid expenses and other current assets26,479 20,570 
Total current assets365,358 410,871 
Property and equipment, net36,891 31,086 
Right-of-use assets11,358 15,439 
Intangible assets, net407,669 440,589 
Goodwill548,240 559,792 
Other non-current assets4,613 732 
TOTAL ASSETS$1,374,129 $1,458,509 
LIABILITIES AND STOCKHOLDER’S EQUITY  
Current liabilities 
Accounts payable$171,571 $167,858 
Accrued license fees and revenue share79,167 95,170 
Accrued compensation14,932 28,775 
Acquisition purchase price liabilities 50,000 
Current portion of debt 12,500 
Other current liabilities46,931 30,960 
Total current liabilities312,601 385,263 
Long-term debt, net of debt issuance costs447,193 520,785 
Deferred tax liabilities, net16,684 19,976 
Other non-current liabilities11,948 16,270 
Total liabilities788,426 942,294 
Commitments and contingencies (Note 13)
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; 99,743,560 issued and 98,985,435 outstanding at September 30, 2022; 97,921,826 issued and 97,163,701 outstanding at March 31, 2022
10 10 
Additional paid-in capital803,276 745,661 
Treasury stock (758,125 shares at September 30, 2022, and March 31, 2022)
(71)(71)
Accumulated other comprehensive loss(54,329)(39,341)
Accumulated deficit(165,202)(191,788)
Total stockholders’ equity583,784 514,571 
Non-controlling interest1,919 1,644 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$1,374,129 $1,458,509 
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 Income / (Loss)1
(Unaudited)
(in thousands, except per share amounts)
Three months ended September 30,
Six months ended September 30,
2022202120222021
Net revenue$174,859 $188,568 $363,492 $346,643 
Costs of revenue and operating expenses
License fees and revenue share76,881 91,508 164,248 175,316 
Other direct costs of revenue9,199 7,827 18,114 12,295 
Product development14,736 13,915 28,869 26,839 
Sales and marketing15,490 17,479 31,548 31,215 
General and administrative37,471 41,307 75,196 65,301 
Total costs of revenue and operating expenses153,777 172,036 317,975 310,966 
Income from operations21,082 16,532 45,517 35,677 
Interest and other income / (expense), net
Change in fair value of contingent consideration (22,087) (22,087)
Interest expense, net(5,229)(1,955)(9,311)(3,112)
Foreign exchange transaction loss(281)(249)(612)(519)
Other income / (expense), net312 (477)384 (512)
Total interest and other income / (expense), net(5,198)(24,768)(9,539)(26,230)
Income / (loss) before income taxes15,884 (8,236)35,978 9,447 
Income tax provision / (benefit)4,181 (2,349)9,317 1,081 
Net income / (loss)11,703 (5,887)26,661 8,366 
Less: net income / (loss) attributable to non-controlling interest39 (35)75 (66)
Net income / (loss) attributable to Digital Turbine, Inc.11,664 (5,852)26,586 8,432 
Other comprehensive loss
Foreign currency translation adjustment(9,246)(15,892)(14,788)(36,673)
Comprehensive income / (loss)2,457 (21,779)11,873 (28,307)
Less: comprehensive income / (loss) attributable to non-controlling interest32 (128)275 (921)
Comprehensive income / (loss) attributable to Digital Turbine, Inc.$2,425 $(21,651)$11,598 $(27,386)
Net income / (loss) per common share
Basic$0.12 $(0.06)$0.27 $0.09 
Diluted$0.11 $(0.06)$0.26 $0.08 
Weighted-average common shares outstanding
Basic98,887 96,157 98,324 93,807 
Diluted102,898 96,157 102,777 100,457 
1In the fiscal quarter ended June 30, 2021, the Company initiated two significant acquisitions. Please refer to Note 3 in the accompanying condensed consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
4


Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows1
(Unaudited)
(in thousands)
Six months ended September 30,
20222021
Cash flows from operating activities  
Net income$26,661 $8,366 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization40,010 24,981 
Non-cash interest expense408 298 
Stock-based compensation expense12,023 9,630 
Foreign exchange transaction (gain) / loss612  
Change in fair value of contingent consideration 22,087 
Right-of-use asset5,079 1,951 
Deferred income taxes(2,228)178 
(Increase) / decrease in assets:
Accounts receivable, gross9,916 (61,855)
Allowance for credit losses2,249 (31)
Prepaid expenses and other current assets(4,608)(4,917)
Other non-current assets160 95 
Increase / (decrease) in liabilities:
Accounts payable2,371 51,676 
Accrued license fees and revenue share(16,866)1,382 
Accrued compensation(15,109)(45,694)
Other current liabilities9,406 2,643 
Other non-current liabilities(5,775)(3,036)
Net cash provided by operating activities64,309 7,754 
Cash flows from investing activities
Business acquisitions, net of cash acquired (148,056)
Capital expenditures(12,930)(10,411)
Net cash used in investing activities(12,930)(158,467)
Cash flows from financing activities
Proceeds from borrowings 267,134 
Payment of debt issuance costs (2,988)
Options and warrants exercised939 2,155 
Payment of withholding taxes for net share settlement of equity awards(5,929) 
Repayment of debt obligations(86,500)(46,256)
Net cash provided by / (used in) financing activities(91,490)220,045 
Effect of exchange rate changes on cash and cash equivalents and restricted cash(3,838)(4,233)
Net change in cash and cash equivalents and restricted cash(43,949)65,099 
Cash and cash equivalents and restricted cash, beginning of period127,162 31,118 
Cash and cash equivalents and restricted cash, end of period$83,213 $96,217 
Supplemental disclosure of cash flow information
Interest paid$7,410 $2,199 
Income taxes paid$1,076 $693 
Supplemental disclosure of non-cash activities
Common stock issued for the acquisition of Fyber$50,000 $356,686 
Unpaid cash consideration for the acquisition of Fyber Minority Interest$2,578 $3,108 
Unpaid cash consideration for the acquisition of AdColony$ $100,000 
Fair value of unpaid contingent consideration in connection with business acquisitions$ $235,500 
1In the fiscal quarter ended June 30, 2021, the Company initiated two significant acquisitions. Please refer to Note 3 in the accompanying condensed consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
5


Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity1
(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, 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 
Issuance of restricted shares and vesting of restricted 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 
1In the fiscal quarter ended June 30, 2021, the Company initiated two significant acquisitions. Please refer to Note 3 in the accompanying condensed consolidated financial statements.



6


Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity1
(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, 202189,790,086 $10 100,000 $100 758,125 $(71)$373,310 $(903)$(227,334)$ $145,112 
Net income— — — — — — — — 14,284 (31)14,253 
Foreign currency translation— — — — — — — (20,019)— (762)(20,781)
Stock-based compensation expense— — — — — — 3,705 — — — 3,705 
Shares issued:
Exercise of stock options178,127 — — — — — 695 — — — 695 
Vesting of restricted and performance stock units207,758 — — — — — — — — — — 
Shares for acquisition of Fyber4,716,935 — — — — — 359,233 — — — 359,233 
Acquisition of non-controlling interests in Fyber— — — — — — — — — 24,558 24,558 
Balance at June 30, 202194,892,906 $10 100,000 $100 758,125 $(71)$736,943 $(20,922)$(213,050)$23,765 $526,775 
Net loss— — — — — — — — (5,852)(35)(5,887)
Foreign currency translation— — — — — — — (15,799)— (93)(15,892)
Stock-based compensation expense— — — — — — 5,925 — — — 5,925 
Shares issued:
Exercise of stock options480,422 — — — — — 1,460 — — — 1,460 
Issuance of restricted shares and vesting of restricted units28,477 — — — — — — — — — — 
Shares for acquisition of Fyber1,058,364 — — — — — (2,547)— — — (2,547)
Acquisition of non-controlling interests in Fyber— — — — — — — — — (21,452)(21,452)
Balance at September 30, 202196,460,169 $10 100,000 $100 758,125 $(71)$741,781 $(36,721)$(218,902)$2,185 $488,382 
*De minimis adjustment to previously disclosed share count; no impact on quarter-to-date or year-to-date earnings per share in any period presented.
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Digital Turbine, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share and per share amounts)
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, our products and solutions provide monetization opportunities for OEMs, carriers, and application (“app” or “apps”) publishers and developers.
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.
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, 2022.
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 six months ended September 30, 2022, 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 impacts of both global inflation as well as the continued effects of COVID-19 pandemic on the Company’s critical and significant accounting 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 global inflation or the COVID-19 pandemic.
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.
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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, 2022, other than the “Recent Accounting Pronouncements” disclosed below and changes to the Company’s segment reporting disclosed in Note 4, “Segment Information.”
Accounting Pronouncements Adopted During the Period
ASU 2020-04
In March 2020, the Financial Accounting Standards Board issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to amendments to contracts, hedging relationships, and other contractual transactions impacted by the discontinuation of the London Inter-Bank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities through December 31, 2022 and can be adopted as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020. The Company has adopted the update as of the quarter ended September 30, 2022 and the impact of the adoption was not material to the Company’s consolidated financial statements.
3.    Acquisitions
Acquisition of Fyber N.V.
On May 25, 2021, the Company completed the initial closing of the acquisition of 95.1% of the outstanding voting shares (the “Majority Fyber Shares”) of Fyber N.V. (“Fyber”) pursuant to a Sale and Purchase Agreement (the "Fyber Acquisition") between Tennor Holding B.V., Advert Finance B.V., and Lars Windhorst (collectively, the “Seller”), the Company, and Digital Turbine Luxembourg S.ar.l., a wholly-owned subsidiary of the Company. The remaining outstanding shares in Fyber (the “Minority Fyber Shares”) are (to the Company’s knowledge) held by other shareholders of Fyber (the “Minority Fyber Shareholders”) and are presented as non-controlling interests within these financial statements.
Fyber is a leading mobile advertising monetization platform empowering global app developers to optimize profitability through quality advertising. Fyber’s proprietary technology platform and expertise in mediation, real-time bidding, advanced analytics tools, and video combine to deliver publishers and advertisers a highly valuable app monetization solution. Fyber represents an important and strategic addition for the Company in its mission to develop one of the largest full-stack, fully-independent, mobile advertising solutions in the industry. The combined platform offering is advantageously positioned to leverage the Company’s existing on-device software presence and global distribution footprint.
The Company acquired Fyber in exchange for an estimated aggregate consideration of up to $600,000, consisting of:
i.Approximately $150,000 in cash, $124,336 of which was paid to the Seller at the closing of the acquisition and the remainder of which is to be paid to the Minority Fyber Shareholders for the Minority Fyber Shares pursuant to the tender offer described below;
ii.5,816,588 newly-issued shares of common stock of the Company to the Seller, which such number of shares was determined based on the volume-weighted average price of the common stock on NASDAQ during the 30-day period prior to the closing date, equal in value to $359,233 at the Company’s common stock closing price on May 25, 2021, as follows.
1.3,216,935 newly-issued shares of common stock of the Company equal in value to $198,678, issued at the closing of the acquisition;
2.1,500,000 newly-issued shares of common stock of the Company equal in value to $92,640, issued on June 17, 2021;
3.1,040,364 newly-issued shares of common stock of the Company equal in value to $64,253, issued on July 16, 2021;
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