• Brett Schafer

Thursday Deep Dive: Digital Turbine

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This week on our Thursday Deep Dive we discussed Digital Turbine (ticker: APPS). The written overview is going to be short this week so make sure to listen to the full show to get everything. Here are some quick bullet points on what we talked about:

  1. What do they do? It has a few smaller projects, but it mainly works as a supplier of pre-loaded apps on android devices. So if Uber has a deal with DT and someone gets a new phone and uses that pre-downloaded Uber app, DT gets a kickback. It also has various other initiatives we talked about on the show.

  2. History? The entity was founded in 1998 and has had six different names since its inception. It didn’t fully become Digital Turbine until 2015.

  3. Management? Bill Stone is the CEO. He previously worked at Verizon and Qualcomm, so he has a lot of experience in this industry.

  4. Valuation? DT trades at an EV/sales of 15.8 and an EV/EBTIDA of 97.

  5. Earnings? Latest quarter revenue of $70.9 million, up 116% YoY (some inorganic from the acquisition of Mobile Posse).

  6. Balance Sheet? $30 million in cash, $20 million in debt, $70 million in goodwill.

  7. Potential Competitive Advantages? Relationships with manufacturers and advertisers, and the fact the industry isn’t big enough for large competitors to want to squash them.

  8. Potential Future Growth Opportunities? CTV, acquisition of Mobile Posse, and getting into products that are not just a part of the install process.

  9. Highlights? Looks like they made a timely acquisition, profitable sales growth, and the fact they are moving away from a single revenue stream.

  10. Lowlights? They will never fit Apple’s ethos, and they may be at the mercy of large OEMs and other parts of the smartphone industry.

Disclosure: The author is not a financial advisor, and may have an interest in the companies discussed.

#APPS #DeepDive #DigitalTurbine

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