Digital Turbine Quarterly Report: Q3 FY2022

Digital Turbine experienced a period of transformative expansion during the third quarter of fiscal year 2022, characterized by a 323.8% year-over-year increase in net revenue to $375.5 million. This substantial growth was primarily driven by the strategic integration of AdColony, Fyber, and Appreciate, which necessitated a comprehensive restructuring of operations into three distinct segments: On Device Media, In App Media – AdColony, and In App Media – Fyber. While these acquisitions significantly scaled the company’s market presence and total assets, which reached $1.47 billion by December 31, 2021, they also introduced higher operating expenses and a decline in net income to $7.0 million, down from $14.5 million in the prior year.

The company’s financial position reflects a heavy reliance on debt financing to facilitate its aggressive acquisition strategy. To fund these purchases and support working capital, Digital Turbine utilized a $525 million revolving credit facility, with $345.1 million drawn as of the quarter’s end. Furthermore, the company managed $253.7 million in acquisition-related purchase price liabilities, including a finalized $204.5 million earn-out payment for AdColony settled in early 2022. These obligations have introduced new financial risks, specifically regarding leverage and interest coverage covenants, though management maintains that current liquidity remains sufficient to meet obligations over the coming twelve months.

Despite the complexities of integrating large-scale acquisitions and managing increased debt, internal financial controls and disclosure procedures remain effective. The company continues to focus on operational synergy across its new segments, having achieved 99.4% ownership of Fyber by the end of the quarter. Moving forward, the organization remains committed to balancing its expanded market footprint with the ongoing management of interest rate fluctuations, foreign currency exposure, and the finalization of remaining acquisition-related share purchases.