Digital Turbine Earnings Show Revenue Gain, Margin Pressure
Digital Turbine earnings show revenue strength and raised guidance with profit outlook unchanged, forcing a tradeoff between growth and margin pressure.
KEY TAKEAWAYS
- Q2 revenue was $178.7 million, up 27% year over year.
- Fiscal-2027 revenue guidance was raised to $670 million-$690 million.
- Non-GAAP gross margin fell to 43% from 47% as revenue-share costs and product mix pressured margins.
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Digital Turbine (Nasdaq: APPS) reported fiscal second-quarter results on Nov. 9, 2026, showing revenue strength that led the company to raise its annual revenue outlook. Management said investments in artificial intelligence (AI) and data would keep profit guidance unchanged, creating margin pressure.
Revenue and Profit Snapshot
For the quarter ended Sept. 30, 2026, Digital Turbine reported revenue of $178.7 million, a 27% increase year over year. Non-GAAP adjusted EBITDA rose 46% to $39.8 million. GAAP net income was $10.3 million, or $0.06 per diluted share, while non-GAAP adjusted net income reached $23.4 million, or $0.18 per diluted share, compared with $16.5 million, or $0.15, a year earlier. Adjusted EBITDA margin improved by about 290 basis points to 22.3%.
Free cash flow on a non-GAAP basis was $10.5 million, and operating cash flow increased to $18.8 million from $14.5 million a year earlier. On-Device Solutions revenue rose 20% to $115.6 million, while App Growth Platform revenue climbed 42%, supporting the quarter’s top-line growth.
Guidance and Margin Pressure
Digital Turbine raised its fiscal 2027 revenue guidance to $670 million–$690 million from $650 million–$670 million, citing first-half results and ongoing momentum. The company reaffirmed its adjusted EBITDA outlook at $145 million–$155 million despite planning incremental investments in data, AI tools, personnel, and systems in the second half of the year.
Non-GAAP gross margin declined to 43% from 47%, with revenue share costs rising to 49.1% of revenue from 44.9% a year earlier. Operating income increased to $20.3 million from $6.5 million. Management attributed the gross-margin decline partly to higher revenue-share expenses and product mix, while adjusted EBITDA benefited from operating leverage and expense discipline.
The results reflect a company balancing growth investments with margin pressures. Management’s decision to raise revenue guidance while maintaining profit expectations highlights the trade-off between expanding capabilities and near-term profitability.
