Digital Turbine Pops 25% On Blowout 1Q; Analyst Sees 41% Stock Upside

Shares in Digital Turbine, Inc. are jumping 25% in pre-market trading after the cloud-based software mobile company said revenue leaped 93% in the first fiscal quarter exceeding analysts’ expectations.

The stock surged to $20.40 in Thursday’s pre-market trading. Digital Turbine’s (APPS) revenues in the first quarter of fiscal 2021 spiked to $59 million, beating analysts’ expectations by $10.4 million. Non-GAAP adjusted net income rose to $12.5 million from $4.2 million compared with the same period last year. Adjusted earnings per share increased to $0.13 from $0.05 year-on-year, exceeding the Street consensus by $0.04.

“Our fiscal first quarter was a breakout quarter”, said Digital Turbine CEO Bill Stone “Positive momentum trends throughout the business drove better-than-expected results and have the company well-positioned for continued strong performance going forward.”

“Advertisers are actively allocating spend toward platforms that offer directly measurable results, and our business is a clear beneficiary of this trend, particularly given the higher conversion rates generated by our platform as businesses and consumers everywhere are increasingly engaging with applications and mobile content as part of their daily routines”, he added.

Digital Turbine’s apps make content discovery and delivery simple, allowing mobile operators to accurately target content – and revenue-generating ads – directly to the users.

The Texas-based company said that its revenue per device performance continues to be driven by strong demand among advertisers across numerous categories, including brands, games and mobile-first applications such as Pandora, Disney+, Apple Music, Snap, Amazon and others.

Its Application Media software was deployed on more than 43 million devices during the fiscal first quarter, and has now been installed on more than 450 million devices to date.

Going forward, Digital Turbine forecasts fiscal Q2 revenues of $59 million-$61 million, which is above Street consensus for $51.2 millon. Adjusted EPS is expected to be between $0.11 and $0.12, based on about 95 million diluted shares outstanding. Analysts’ estimates are for $0.09 per share.

With shares up a whopping 128% year-to-date, the $15.55 analyst average price target implies 4.5% downside potential to current levels.

Meanwhile, the results prompted five-star analyst Timothy Horan at Oppenheimer to shore up the price target to $23 (41% upside potential) from $14 and reiterate a Buy rating on the stock, saying that the company is growing revenue at a “very strong clip, and adjusted EBITDA is benefiting from solid operating leverage”.

“We believe content media wins this quarter prove that APPS can sell the content platform to other existing customers,” Horan wrote in a note to investors. “Positively, the company’s global reach is accelerating and should drive a step-up in phones added.”

Overall APPS scores 5 Buys and 1 Hold adding up to a Strong Buy analyst consensus. (See Digital Turbine stock analysis on TipRanks)

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