Digital Turbine, Inc.

Good afternoon and welcome to the Digital Turbine Conference Call. All participants will be in a listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to the speakers. Please go ahead, sir.

Yeah, thanks, Greg. Good afternoon, and welcome to the Digital Turbine Fiscal 2021 First Quarter Earnings Conference Call. Joining me on the call today to discuss our results are CEO Bill Stone and CFO Barrett Garrison. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. These forward-looking statements are based on our current assumptions, expectations, and beliefs, including projected operating metrics, future products and services, anticipated market demand, and other forward-looking topics. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. Except as required by law, we undertake no obligation to update any forward-looking statements. for discussion of the risk factors that could cause our actual results to differ materially from those contemplated by our forward-looking statements. Please refer to the documents we filed with the Securities and Exchange Commission. Also, during this call, we will discuss certain non-GAAP measures of our performance. Non-GAAP measures are not substitutes for GAAP measures. Please refer to today's press release for important information about the limitations of using non-GAAP measures, as well as reconciliations of these non-GAAP financial results to the most comparable GAAP measures. Now I'd like to turn the call over to our Chief Executive Officer, Mr. Bill Stone.

Thanks, Brian, and thank you all for joining our call tonight. I'm going to break out my prepared remarks into three areas. First, I want to provide a summary of our first quarter results. Secondly, is some operational commentary on the present businesses, including some new partnership announcements. And finally, I'll conclude with some commentary about the future. To close out the June quarter, We finished with $59 million in revenue, $14 million in EBITDA, and 13 cents of non-GAAP earnings per share. To highlight our progress over the past year, last June quarter we reported $30.6 million in revenue, $4.2 million in EBITDA, and 5 cents of non-GAAP earnings per share. Our as-reported results represent nearly 100% growth in revenues, a 250% increase in EBITDA and over 150% growth in non-GAAP earnings per share, which showcased the inherent operating leverage of our platform. Barrett will take you through more detail on the numbers, but we have had many solid quarters over the past few years, but this quarter was a true breakout quarter for the company against our expectations. It was the best performance in the history of Digital Turbine. Specifically, the revenue growth of our application business grew 45% year over year. And our content business, which had a 12% revenue decline year over year for the month of March, had nearly a 20% growth rate in the month of June year over year as the combination of our swapping out the legacy Mobile Posse content platform during the April and May months to a new and improved content platform is beginning to show encouraging daily active user results plus improving advertiser rates. For the application business, we saw year-over-year revenue per device, or RPD, increases of over 25% here in the U.S. and over 50% for international. Demand remains strong, driven by our social media, gaming, streaming audio, and streaming video verticals. We continue to see improving conversion rates on our applications, which leads to higher bid rates as consumers are increasingly engaging in the applications we deliver. We are also starting to see new device growth, especially here in the U.S., rebound in growth from earlier in the year. The dynamic that our sequential device penetration grew to over 43 million devices in the quarter while the broader smartphone market declined by approximately 20% showcases how much room we have as a penetration story against the broader opportunity. Turning to the operations, our growth levers of devices, products, and media are accelerating their growth rates across the board. Regarding devices, I'm excited to announce The expansion of our platform to power over-the-top TV streaming. Specifically, we anticipate launching our software platform across all the major U.S. mobile operators, including T-Mobile, AT&T, and Verizon. As many of you know, the U.S. operators are launching over-the-top TV offerings to complement their existing offerings. We anticipate that our software will be assisting in powering the applications and management of the content on these devices, ranging from delivering the content, advertising, notifications, and ultimately may include cross-device integration in the living room. These launches should deepen our existing relationships with AT&T and Verizon and also should represent our first device launching with our Ignite software on the combined T-Mobile Sprint entity. Launch dates will vary depending upon operator, but we expect the first operator to launch this calendar year with our software, and then we'll be expanding with others in 2021. This is a nice proof point of the value add of our mission, which is to connect the dots between all the people who want to be on the devices to the devices themselves. I want to emphasize that this is not just about the TV opportunity and new device types. but more importantly, as a proof point of the depth and breadth of the relationships we have with our U.S. operator partners. We've also made additional international progress. Our Samsung relationship continues to scale with 13 million devices added in the June quarter. This compares to 130,000 devices in the June quarter of a year ago. We are also pleased to announce new supply relationships with both Telecom Italia and Nokia that will launch later this calendar year to complement our recently announced relationships with Telefonica, Xiaomi, LG, and AT&T Mexico that are all in various launch phases right now. Our international device momentum is accelerating and combined with the television opportunity and 5G US launches make us bullish on our ability to continue to grow device volumes. On the product front, our diversification efforts continue to showcase momentum. Our dynamic install business grew by over 40% year over year, but today is approximately 60% of the revenues, which compares to 85% a year ago. Our content business is now over 35% of our revenues, and I'm pleased to announce our first of hopefully many cross-selling wins from our mobile posse acquisition as we launch our first content media offerings with TrackPhone in blue here in the United States and Latin America. We expect continued revenue synergies in the future as global momentum is strong. I'm really excited about the total addressable market for our content business. Today, we're generating approximately $15 million a quarter across over 8 million daily active users or DAOs. And as we grow DOWs with our existing partners and expand the DOWs to our other distribution partners, that growth should be a catalyst to continue top line growth for years to come, given the recurring nature of these revenue streams. And today, our overall recurring revenues are now over 35% compared to 5% a year ago. Turning to other products, as recently as March, over 90% of our single tap revenues were derived from our social media platform integration with one of our tier one US operators. That revenue has been relatively consistent over time, but is now roughly only half of our single tap revenues as we've begun scaling single tap with many other partners, as well as scaling our own single tap demand side platform. As a result of these efforts, our single tap revenues have doubled since the March quarter and for a non-social media platform integration, Singletap revenues have already surpassed in the September quarter what they were achieved in the June quarter. It's still not as material as we believe it can be, but the trajectory is becoming more meaningful each day with some very strong momentum behind it. On the media side, we've signed a master service agreement with T-Mobile's advertising team and anticipate distributing their brand relationships with names like Shell, Nike, Walgreens and so on onto our platform. And as you've heard me say on prior calls, continuing to diversify our channel relationships on the demand side of our business is a key driver of growth. And this is a nice proof point of our expanding T-Mobile relationship and our expanding channel reach which scales our global demand. We continue to leverage our other global relationships as showcased in our results. For example, we are seeing Asian demand growing on U.S. supply and LATAM supply and are seeing our U.S. demand grow on our LATAM and Asian devices and so on. Global scale brings more global scale, and the global scale of these deeper media relationships with global companies like Alibaba, TikTok, Pandora, King, Snap, Zynga, and so on is paying dividends against our global supply. Turning to the future, I've never been more optimistic about our prospects. We have the right products to the right customers at the right time. And equally important, as a mobile cloud software company, the global scale and operating leverage flywheel is now in full effect. We're laser focused on increasing our device footprint, product diversity, and global media expansion. The combination of all three of these things is what creates platform network effects that we are seeing evolve real time in our results. We'll look to continue to horizontally expand to additional supply partners and also look for opportunities in our content business to vertically integrate our offerings that should create additional margin enhancements and increased recurring revenues. And last, but probably should be first, is a shout out to our DT team. The past few months have been traumatic at a macro level for all of us. Lives are being disrupted, but our team remains focused, committed, and is hustling to deliver results in a virtual environment. Sometimes when we hear people are the difference, many here may roll their eyes, sounds like a platitude or cliche, but in this case, it's a fact. The global team is a team I've never been prouder of in these challenging times. And for investors, I can't emphasize enough the power of having an all-in team that's busting their tails to execute on the vision. This team's lean in delivering approximately $1 million of revenue per employee per year, which is world-class performance with very few companies anywhere that can claim that kind of efficiency. And with that, let me turn it over to Barrett to take you through the numbers.