Digital Turbine (APPS) Q2 2027 Earnings Call Transcript

These proof points are giving us increased conviction to make additional data and AI investments to drive growth for next fiscal year and beyond. And I am also pleased that we will be adding another tier 1 operator win in the EU. And I will break down these details plus others in my prepared remarks. First, to summarize the September quarter, revenue came in at $179 million representing 27% year over year growth. We also achieved 46% year over year growth in adjusted EBITDA, demonstrating significant operating leverage in our model as we scale. In particular, I was pleased with the strong top line performance from both our On-Device Solutions and AppGrowth Platform segments, both delivering 20% or higher growth.

I was also pleased with the improvement in our balance sheet that benefits from our strong results. Last September quarter, our net leverage ratio was greater than 4.0x. Today, we are at a healthy 2.3x as implied in our increased outlook. We expect this positive trend to continue. As Josh will cover in his remarks, the sustained improvement in operating performance provides ample opportunities for us to reduce our cost of capital and continue to improve our free cash flow conversion. If we break down our results by segment, our On Device Solutions business generated $116 million in revenue in the September quarter. Which was up 20% from last year.

In particular, it was encouraging to see year over year growth in global devices despite macro headwinds on global device volumes due to DRAM pricing issues in the supply chain. Revenue growth in international ODS continues to be a bright spot as these higher device volumes combined with higher revenue per device or RPDs drove approximately 50% year over year growth. Our application growth or AppGrowth Platform business results were another bright spot driving this strong quarter. It was our fifth consecutive quarter of year over year double digit growth and our third consecutive quarter of more than 40% year over year growth.

Meanwhile, this compares to a global digital ad market that is growing in the high single digits, In other words, our AppGrowth Platform business is consistently growing many multiples more than the global industry growth rate each quarter and taking industry share from others. In the September quarter, our direct brand business outpaced our DTX or SSP business, both of which grew 40% year over year. It took longer than anticipated, but the combination of our strong conviction to stay the course on our strategy, combined with the hard work to integrate our legacy SSP tech stacks, with our brand demand into a data driven marketplace and AI first platform is now paying dividends.

Our key growth drivers were both rates and volumes powering the improved performance in the September quarter. On rates, we saw higher advertiser demand, which translated into improved pricing in fill rates particularly for premium placements on our platform. The strong advertiser demand drove international RPD expansion in our ODS business resulting in over 50% international revenue growth year over year. We also had strong demand with our Brand and DTX businesses combining for growth rates of >36%. This is due to our platform delivering better return on ad spend for advertisers which in turn allows for higher rates. This improvement in ad spend is being driven by AI for 2 reasons.

First, our platform's first party data is able to leverage our AI tools and machine learning models to drive better advertiser outcomes. And secondly, there is the tailwind we are seeing brands migrate their spend away from the open web to other channels like apps, given traffic declines in the open web caused by AI and the resulting app usage growth as brands and agencies adopt the power of AI in the mobile app channel. In addition to these positive pricing trends, we continue to see strong diversification of our demand, with ~40% of advertiser spend on DTX coming from nongaming partners. Our devices grew year over year driven by strong volumes from our international partners.

And within the devices, we have our technology integrated, we are seeing operators and OEMs wanting to use our technology on new screens for monetization. In addition, our AppGrowth Platform supply continues to add new publishers and apps by expanding distribution of our SDK footprint. We are seeing this globally with growth in publishers but in particular, it is helping drive strong performance with APAC Publisher Supply, as well as adding nongaming publishers and AI publishers looking for monetization. Turning to future increasing our revenue guidance today for the fiscal year. And there are 5 drivers for this increased forecast. AI and data is the first 1.

And as I mentioned in my opening remarks, our ability to leverage our unique first party data across our platform with DTIQ, our IgniteGraph, just drive better outcomes. And this, in turn, drives more revenue because of better return on ad spend for advertisers. Our progress here since the last earnings call has been noticeable, and in particular, the return on ad spend we are providing our customers is enabling more spend and growth of our top line. These improvements are almost entirely driven by our AI and first party data efforts, that are driving improvements in revenue per device on ODS and improvements on our DTX our performance advertising with our DSP. The second is our flywheel.

Connecting our diversified demand and supply drives each other. We have more than 2 billion devices and >80 thousand apps using our AdTech technology. The opportunity for these apps to drive more user acquisition to our platform and hence more monetization, will be a growth driver. We are making solid progress here, anticipate this will be a material growth driver. For us in the future. Our third area is brand. Our brand business showed impressive year over year growth. Our focus is leveraging the macro tailwinds of more time and apps combined with our micro first party data and audience targeting, to drive even more scale and growth.

There are a variety of product and operational improvements being implemented real time that are improving our ability to scale this important part of the business. The fourth area is Ignite. Our international ODS momentum has been fueled by Latin America and Europe. I have been pleased with our ability to increase device volumes despite the macro headwinds due to DRAM pricing in the supply chain.

We expect this trend to continue as we have our first dollars of revenue with Orange in this current quarter, the launch of incremental makes and models of new devices around the globe, and I am also excited about a new partnership with a tier 1 EU operator that we expect to launch in this current fiscal year. In addition, our Ignite platform is showcasing that there is more opportunity to not just grow device supply, but also leverage the platform capability as a software enabler for the distribution of other products on the screens of devices versus just our products such as SingleTap, out of the box setups, and notifications.

We are doing this today in The US with an AI first partner distributing AI agents to devices, and we are expanding into other areas such as e commerce, lock screens, rewards, and other forms of content distribution. And finally, it is the growth of alternative applications. We continue to ramp and scale more and more partners distributing their versions of applications helping them get to devices, whether this is via our data and targeting, SingleTap, our DSP, and so on. And the recent outcomes of the Epic Google case and Google rulings in The EU expected to open up even more opportunities for increased alternative distribution.

Publishers are seeing real time what is happening to their businesses because of the AI impacts on the open web and wanna have more control over their destiny for the future. Versus being reliant only on 1 or 2 sources of distribution. And these 5 things are important because it showcases our business as not relying upon any single factor to drive future growth. We have many shots on goal, provide optimism in our ability to drive top and bottom line growth. And AI is acting as a tailwind to accelerate these efforts across these dimensions driving more insight more efficiency, and leveraging our core strengths. Of data and distribution.

And to close out my prepared remarks, I want to welcome Daniel Lenz to DT our new CFO. I am looking forward to leveraging not just Daniel's public company financial experience, but also his technology, operational, and back office experiences. I also want to thank our chief accounting officer interim CFO, Joshua Kinsell, for his leadership over these past few quarters. As evidenced by our business results, Joshua ensured that we had great continuity in our business and financial operations. And Josh will continue in his CAO role with Daniel's start date later this month. With that, I will turn it over to Joshua to take you through the numbers.

Joshua Kinsell:Thank you, Bill, and good afternoon, everyone. Let me turn to our second quarter fiscal 2027 results. We delivered another strong quarter with growth across both segments. Total net revenue for the quarter was $178.7 million up 27% year over year, extending the sustained momentum. On device solutions net revenue was $115.6 million, up 20% year over year. Growth was again driven by our international supply and incremental product offerings. Even as global device volumes face macro headwinds from DRAM pricing in the supply chain. Revenue per device increased with expanded offerings and our strong demand strategy.

AppGrowth platform net revenue was $63.5 million, up 42% year over year our fifth consecutive quarter of double digit growth and our third consecutive quarter of more than 40% growth. Well ahead of our global digital ad market growing in the high single digits. This was led by our DTX Exchange where revenues increased by 42% and our brand business, which grew 45%. These results reflect both the continued onboarding of publishers and demand partners particularly in Asia Pacific, and the performance of our AI powered optimization capabilities. Turning to profitability. Non GAAP gross margin was 43% in the quarter compared to 47% in the year ago period.

Revenue share increased to 49% of net revenue from 45% a year ago, driven by product mix changes and revenue generated related to revenue share obligations. Other direct cost of revenue increased 2.3 million primarily from higher hosting cost bidding, and platform fees. Cash operating expenses were 37.6 million, down 3% year over year, and down 5% from the first reflecting continued expense discipline even as we invest in our highest priority growth initiatives. Our year to date annualized run rate revenue per employee is over $1 million on an annual basis, up from $700 thousand last year, showing our continued operating leverage and the use of AI to drive efficiencies across our overall headcount operating expenses.

We anticipate making incremental measured investments in AI in the second half of the year to drive our 5 growth initiatives, and our long term growth into the future. The combination of strong top line growth and expense discipline partially offset by higher revenue share from product mix, drove another quarter of substantial adjusted EBITDA growth. Adjusted EBITDA totaled $39.8 million up 46% year over year. With EBITDA margin expanding approximately 290 basis points to 22.3% vs. the year ago quarter. On the bottom line, we reported GAAP net income of $10.3 million or $0.06 per diluted share, compared to a net loss of $21.4 million or $0.20 per share in the second quarter of fiscal 26.

GAAP net income for the quarter also benefited from a 2.2 million noncash gain from the change in our fair value of derivative liabilities, related to our warrants and a $4.7 million gain on the sale of a dormant app asset. On a non GAAP basis, we generated net income of $23.4 million or $0.18 per share. Based on a 129.2 million diluted shares outstanding compared to non GAAP net income of $16.5 million or 15¢ per share in the year ago quarter. Moving to the cash flow and balance sheet. We generated $18.8 million of cash flow from operations in the quarter, up from $14.5 million in the second quarter, up last year.

Non GAAP free cash flow was $10.5 million, an improvement approximately 3.4 million versus the prior year period. For the first half of the year, non cash free cash flow was $21.8 million, more than 2.5 times the $8.4 million in the first half of last year. We ended the quarter with cash and cash equivalents of 51.6 million, an increase of approximately $13.7 million from the start of the fiscal year. Total debt net of debt issuance costs and discounts, is approximately 353.6 million, and includes 7 million of principal payments since the start of the fiscal year.

This sustained improvement on our operating performance gives us opportunities to reduce our cost of capital and continue free cash flow conversion. We remain focused on continuing to further strengthen the balance sheet as we move through the second half of the fiscal 27. Turning to our outlook. Given our strong first half and continued momentum we are seeing, we are raising our fiscal 27 guidance for revenue and reiterating our EBITDA guidance. We now expect revenue in a range of $670 million to $690 million for the year, up from the range of $650 million to $670 million. And we reaffirm our adjusted EBITDA range of $145 million to $155 million that we provided last quarter.

With that, let me hand it back to the operator to open the lines for questions. Operator?

Operator:Thank you. We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed, and you would like to withdraw your question, please press *2. At this time, we will pause momentarily to assemble our roster. The first question comes from Anthony Stoss with Craig Hallum. Please go ahead.

Anthony Stoss:Hey, guys. Bill, let me just get the elephant out of the room out of the way. You raised your revenue guidance but left your EBITDA unchanged. Can you maybe take us through in detail why that get raised as well.

William Gordon Stone:Yeah. I will start and then Joshua can provide any color if I do not hit everything here. Yeah. I think for us right now, as I mentioned in my prepared remarks, we have seen some really encouraging results on our performance advertising business since we talked last quarter. As a result of that encouraging top line performance, we are making some decisions as a business to think about the long term and run the business based on that to make some investments in data and AI both in terms of people and systems. And so we are encouraged because we are doing this based upon data. We are not doing this based on any hopium.

And as you are well aware, we have different businesses that have different profitability profiles based on where recognize things like gross and net. So we wanna make sure that we have we have achieved the first important thing, which is return on ad spend for advertisers using these new things, which is encouraging. that is step 1. Now we wanna scale it, and then we will scale it with margins as we go forward in the future. But we thought it was important to be prudent in our approach on the bottom line while we are scaling top line right now because we are seeing encouraging results.

But I do not know, Joshua, if you want to add anything else to Yeah.

Joshua Kinsell:I mean, I think I think you hit it right on the head. I mean, we obviously had very, very good growth in several of our gross businesses from a gross revenue perspective. That drove that drove sort of margins down. But ultimately, you know, you know, we want to be measured in our investments across our business, and we wanna do that to obviously accelerate the growth in the future in FY 2028 and beyond.

Anthony Stoss:Got you. And then as a follow-up, you mentioned that Orange is going live this current quarter. How long do you think it will take to ramp them? And then also your new EU carrier win, I think you mentioned it is gonna launch in the March quarter, but is it gonna similar product, similar opportunity and size for you guys?

William Gordon Stone:Yeah. So as I mentioned, I will take the second 1 first. As I mentioned, it is a tier 1 operator, and we already have a number of Tier 1 operators in Europe. So I have been really pleased with our progress there because we have been at that for a while, that those agreements things take time. And so very pleased with that. And we will be launching different products with each of them.

But as you know from following our business over a number of years, usually, you see is that we start out with a few products and then, you know, a few markets and then those grow and grow and grow over time with more devices, more markets, more products. So I would not see either of those as material in our top line guide for the back end of this fiscal year. But as we think about next fiscal year, we think about the growth drivers, those both will absolutely be drivers for us.

Anthony Stoss:Perfect. Thanks, Bill.

William Gordon Stone:Thanks, Tony.

Operator:Thank you. The next question comes from Daniel Kurnos with Stonex. Please go ahead.

Daniel Kurnos:Yeah. Thanks. Good afternoon, Bill. I just want to follow up just on the investment question. We are getting a ton of inbound on it. And I think the question is, as you think about the payback period of what you are doing, is it you know, the systems need to be improved? Or is this a targeted growth opportunity? And, you know, as you think about what it could mean for an acceleration in 2028, you know, outside of what is going on with Orange and the other Tier 1, just how do we think about you know, how much this should improve the growth trajectory relative to the current pacing?

William Gordon Stone:Yes. I think that we are extremely optimistic, and that is why we took up the revenue guide above and beyond our beat. I think if you think about kind of the phases of how things happen, with our business, phase 1 is we have got to show that our data and AI can deliver good outcomes for advertisers. We have done that check. Now the next phase of that is that it can deliver incremental revenue. We are doing that real time, and we are seeing that in our results check. Now the next phase after that is ensure that you can optimize that and drive more and more gross profit dollars and, obviously, then EBITDA from that.

And so that is the next phase for us. We want to be prudent and thoughtful in terms of how we guided for that. But the first 2 things are the most important right now, and we are doing those And then we can get to more optimization of it. But because we are seeing those encouraging proof points in our results, you know, we made the decision that we wanted to make some incremental investments here to get after the opportunity because we believe that our unique first party data and our distribution approach is something that we have that others in the space do not.

Daniel Kurnos:Got it. that is helpful. Thanks.

William Gordon Stone:And then AGP, I mean, still continues to significantly outperform where we-- you know, where consensus is in both quarters now. it is slowing a little bit. We obviously have tougher comps As we think about sort of just the health of the broader market, obviously, you guys are seeing a lot of demand for both DTX and brand. I am just curious as we think about mix, nongaming mix, going forward, you know, where are some areas of optimism and, you know, are we. Should we anticipate a still higher elevated rate from AGP as we track through the rest of this year and into next? Yeah.

We continue to have a lot of optimism in our AppGrowth Platform business. We think a few quarters ago, we turned some important corners with our ability to grow and scale, and you are seeing that now happening on a sustained basis. I think there is a couple things that we will continue to see those growth rates continue. Number 1 is, you know, some, you know, not very sexy types of things, but just some operational back office targeting types of activities on the brand business that are going to allow us to cast wider nets with our audience targeting on our data. That is number 1.

Then number 2 is we are just seeing the, I think, broader macro spend of brand dollars now coming in to a mobile first channel, versus other channels such as the open web. So that gives us a lot of optimism on the brand side. On our DTX side, as you mentioned, our nongaming continues to grow in a very healthy way. We are also seeing a lot more AI apps and agentic AI apps that you know, want to leverage our SDK footprint international. So those are new opportunities for us to monetize.

We are also doing a much better job leveraging the signals into our DTX platform with our own DSP as well as partnering with other third party DSPs. And so all of those factors combined give us a lot of optimism around future growth of the AppGrowth Platform business.

Daniel Kurnos:Super helpful. And just last quick 1 on the new CFO. I know Daniel cannot speak for himself, but, obviously, I imagine you went through a pretty exhaustive process, you know, to land here. You talked a little bit in your prepared remarks, about what he brings to the table, but is there anything else you can add? I mean, you referenced kind of his tech background, so just anything that gets you excited about what he brings here that we can kind of anchor to? Thanks.

William Gordon Stone:Yeah. Sure. The first thing I will do is recognize Joshua. it is been-- it is tough because I think we did not backfill the CAO rules. he is been doing double lifting here for 6 months. And I want to thank and recognize him for doing an amazing job and a lot of work. You know, to really navigate, you know, some. You know, navigate things for us. So I really wanna recognize first, you know, Joshua from the job that he is been doing for us. As far as Daniel goes, Daniel is obviously a public company CFO. he is bringing public company CFO experience.

Some of you, you know, out there, I have already heard and you know him and are familiar with him with his current role. So, obviously, that. We are excited about that. But I. For me, personally, I am probably most excited about just his breadth of business, operational, and back office capabilities. His current role as the CFO and the COO. I think that, you know, not just bringing just the finance part of the job, but bringing you know, the broader business and execution and back office, you know, type that exhibit will be really, really beneficial to the company. So excited to get him going and get him in here later this month.

Daniel Kurnos:Got it. Super helpful. Thanks, Bill.

Operator:Thank you. The next question comes from Richard Baldry with ROTH Capital. Please go ahead.

Analyst:Thanks. When you look into the accelerated growth on the AGP side, how much do you think of that as your own share taking with sort of internal initiatives AI driven data targeting, etcetera, versus you know, a tailwind from dollars moving, you know, off the open web and looking for more effective places to land?

William Gordon Stone:Yeah. I think there is obviously a little bit of both. There we are seeing dollars migrate out of the open web is clearly a tailwind for our business at a macro level. We are seeing more and more apps in the App Store. You know, it is up by 30%. We are seeing more and more time spent in apps. As people-- our apps are becoming critical to AI. So, you know, both those are macro tailwinds for our business. But I think that for us, the combination of having the data and the broad distribution footprint you know, that we are seeing is something that is really attractive to advertisers that can deliver better outcomes.

And as we are seeing is that those incremental dollars that are coming into ad tech you have got to be able to deliver better outcomes, and those better outcomes deliver more and more dollars. it is-- there is a lot of acronyms in ad tech, but at the end of the day, it is about being able to deliver those incremental return on ad spend, and those. That will just generate more and more ad dollars in. I think that is what we are seeing right now, and we are seeing a lot of nice retention from our existing advertisers and adding more. So it is a combination of both the macro and the micro.

Analyst:And you look at the OpEx down 5% sequentially and some sort of ticking down, With some of the investments you are going to make, are we still going to see sort of down in places like G and A or R&D as you gain some efficiencies using and leveraging some new AI tools, etcetera. And, really, will the focus on the investments be sort of more in the demand driving areas?

Joshua Kinsell:Yeah. I mean, I think it is gonna be more on the demand driving areas. So I think the direct cost, but also our R&D cost. So know, not in the G&A, not in the sales and marketing, but more focused on investments. And in the AI space and data analyst and really putting our money there.

Analyst:And last for me, the. Sorry. You look at how much you have internally been able to adopt AI, we have seen some of our companies adding, you know, hundreds of basis points in efficiencies those tools have really been pressed into service. How far do you think about how far you think your adoption internally has been there? How much more is left to go? Under sort of current state of the technologies as they are?

William Gordon Stone:Yeah. Think we are still in the early days of that. When we think about our AI investments, we think about it in 3 areas. We think about it terms of just number 1, automate and simplify. Is where your question's going. Number 2, we think about the investments we are making to drive incremental top line. And gross margin dollars. And number 3 are the investments that we are making, you know, more strategically. To leverage distribution for other companies wanting to take advantage of their AI efforts. And so in terms of the first 1 where you are going with the automation and simplification, we are seeing very tangible results, you know, with that.

And that is showing up in the OpEx dollars right now. And we expect to see continue to see that show up on the OpEx dollars. And that will be partially offset by the investments that we are making you know, both in terms of you know, data science, machine learning personnel, compute, our relationships with our third parties to scale the top line. So, you know, those things are kind of, you know, working against each other from an OpEx perspective. Ultimately, we expect those over time to generate more and more EBITDA for the company.

Analyst:Great. Thanks for your help.

Operator:Thank you. The next question comes from Matt Swanson with RBC Capital Markets. Please go ahead.

Simran:Hey, guys. This is Simran on for Matt Swanson. Congrats on the quarter. Thanks for taking our question. So first for me, you talked about strong growth from both segments, and you spoke a bit about the AGP side. Anything to call out around ODS in terms of revenue per device and international And then, I guess, broadly, have the macros been pretty stable as to what you have been seeing 90 days ago. And then how you. How we should think about the second half across these 2 segments.

William Gordon Stone:Sure. Let me take the ODS question first. So we saw our ODS international growth up 50% year over year and so we continue to see really solid growth there in terms of both growing devices, which has been pretty difficult to do given the macro environment. For just handset pricing and smartphone shipments and there is a lot of macro data that you all you all seen around that. And so the fact that we are increasing our device volumes despite that is 1 of the drivers. But the real 1 is getting back to data and targeting some of the encouraging results that we are seeing by delivering better outcome for our advertisers.

And so that is allowing us to see better rates and those better rates are really a big driver there for our ODS international business. So a real bright spot there for us. And with some of things I mentioned in my prepared remarks, with our data AI investments combined with adding more devices from more partners around the world, you know, we are optimistic we will see that trend continue into the future. And as we think about the AppGrowth Platform side of the business, we expect to see continued growth in our brand business. We have a lot of momentum, you know, there right now. And then secondly, we expect to see growth in our DTX business.

As we continue to add bigger and bigger SDK footprint combined with more and more of our own demand in DSP, which continues to a bigger and bigger part of the traffic on our DTX as well as other third party DSPs.

Simran:Got it. that is super helpful. And then just double clicking on Ignite can you talk about that a bit more and how you decide, like, which new signal categories to prioritize for the ML models and how you are thinking about it more thematically.

William Gordon Stone:Yeah. So, you know, we. 1 of the things is a really unique differentiator about our company are these first party data signals that we get from Ignite. Then the ability to, you know, leverage those things that are deeper in the Android operating system to help use those signals. And so whether that is, you know, things like the packages or the apps around the phone and how long people spend on the devices, where the people are, the type of devices that they have, the apps that they are experimenting with and using. All of those factors allow us to have access to that first party data that perhaps others in the ecosystem do not have.

As a result of that, you deliver better advertising outcomes for your for your customers. So Ignite incredibly strategic, in that regard. Then secondly, we are able to also use Ignite, as I mentioned in my remarks, not just for the signals to help our performance business, but also to deliver things other than apps. And so our Ignite as a platform business has been also another bright spot and growth driver within ODS for us as well. So partnering with other third parties to deliver things other than our own applications. So we see that as a growth driver for us as well.

Simran:Great. Thanks, guys. Congrats again. Thanks.

Operator:Thank you. The next question comes from Luke Horton with Northland Securities. Please go ahead.

Luke:Yeah. Hey, guys. Thanks for taking the questions. I wanted to touch on the non-gaming now representing about 40% of the DTX ad spend. Just wondering if there is any sort of like, kind of midterm goal for this nongaming mix And then what sort of verticals are driving that diversification there?

William Gordon Stone:Yeah. So we wanna grow the entire pie. it is not just only a non. A non-gaming versus gaming story for us. But when you think about, you know, nongaming, the thing that I like and get excited about is these are things that are not necessarily tied to you know, energy prices and tariffs and things like that. A lot of these are really indexed on digital services that people are using, and so that can be you know, streaming audio streaming video, social media, things like that. So we continue to see, you know, nice growth in that part of our business. And we want to continue to diversify and not necessarily be tied to gaming or nongaming.

They are both important for us. But we are seeing a lot of nongaming things, especially as it relates to you know, AgenTik AI apps as well. So we-- we will-- we will continue to think that will be a nice growth area for us as we go forward in the future.

Joshua Kinsell:The 1 thing I will And then yeah. Go ahead. Yeah. The 1 thing I wanna add here is obviously the 40% of non-gaming's on the demand side. The supply side is actually quite a bit higher, which is an important factor and a differentiator for us.

Luke:Okay. Got it. And then just on kind of rate versus volume. The brand and DTX combined, I think you said >36%. I guess, going forward, what are sort of the expectations around rate expansion versus higher volumes just from a growth perspective?

William Gordon Stone:Yes. We are going continue to focus on both. I mean it is not really 1 or not an or question; it is an and question. So we want to-- we are going to focus on both and we have got pretty aggressive plans on both sides of it. I think for today and what we have seen over the last few quarters is both have been growing, but rates have been growing better just because of our better execution against the data. Itself and, you know, using the AI tools against it.

The combination of, you know, the data and AI is really driving more on the demand and rate side because, you know, as you deliver better return on ad spend for advertisers, they are gonna continue to spend more money, and that allows you to have more competition and be able to charge higher pricing. So, you know, that is really the key there for us. And we are we are focused on both. But the rate side has been driving more of the results than just the supply side.

Luke:Got it. Well, thanks for taking the questions, guys. Thank you.

Operator:Thank you. Next question comes from Brian Kinstlinger with Alliance Global Partners. Please go ahead.

Analyst:Great. Thanks so much for taking my questions and nice quarter. Can you talk about what is driving the elevated growth rates in on the AppGrowth Platform side for the last several quarters? And can customers measure the better performance using your first party data? And AI compared to other ad tech solutions? And if so, is there any quantitative details you can share?

William Gordon Stone:Yes. 1 of the great things about our business and our platform is that it is all data driven. So if people are not seeing results and seeing performance, they are not gonna spend. And if they are seeing results and performance, they are going to spend more it is pretty binary like that. And so as we have now put up you know, a number of quarters consecutively with pretty impressive growth rates, that is exactly what is happening is we are seeing better results from the platform, and that is being driven by AI. it is been driven by data.

Driven by other targeting and other operational execution elements that are allowing us to deliver better outcomes for advertisers. And, you know, then-- and that, in turn is driving better rates. So that is really the story there. And the thing about that is it is happening not just on the brand side, which we have talked about for the prior few quarters and it continued this quarter. But the real turnaround that we have seen know, since our last earnings call has been on the performance side. With our own DSP as we are seeing a lot better improvements there.

And so that is something that gives us a lot of optimism to continue the growth in that part of the business for us. Great. My follow-up, I may have missed it. I think you mentioned a new EU partner. You give us any details on the size in terms of customers, devices, countries or any other relevant KPIs for this new customer? Yeah. Not yet. You know, I would say stay tuned for more details on that. it is an exciting win for us. it is a proof point of what we are doing, and we are getting traction in our international ODS business continues to be growing at a nice clip.

And so, you know, with Orange and now this new partner plus our existing partners in the EU, we expect to see that continue into fiscal the next fiscal year for us. So we were really excited about it. And, again, as I mentioned in my prepared remarks, they are gonna be launching this current fiscal year. So it is not something that is way out in the future. it is something that we anticipate seeing some results in soon.

Analyst:Okay. Thanks for taking my questions. Yeah. Thank you.

Operator:Thank you. This concludes our question and answer session. I would like to turn the conference back over to Bill Stone for any closing remarks.

William Gordon Stone:Yes. Thanks all for joining our call tonight. And we will look forward to connecting with you guys in a few months to update you on our fiscal 27 third quarter earnings call. Thank you, and have a great night.

Operator:The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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See the 10 stocks »

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Digital Turbine (APPS) Q2 2027 Earnings Call Transcript was originally published by The Motley Fool