APPS - Digital Turbine: Execution Issues

2024-03-08 03:03:42 ET

Summary

• Digital Turbine's Q3 FY2024 results were weak, with declining revenue and margins. Forward guidance was also soft, suggesting the company's issues will not be resolved quickly.
• The alternative app distribution business has not shown significant growth, and a near-term inflection point is now looking less likely.
• While Digital Turbine's stock could prove to be extremely cheap if it can turn itself around, the company's near-term prospects continue to deteriorate.

Digital Turbine's ( APPS ) Q3 FY2024 results were soft and forward guidance suggests continued deterioration in the underlying business. While there are still headwinds impacting the business, most of Digital Turbine's current issues appear to be self-inflected. I have been skeptical of Digital Turbine's business but felt that cash flows would support the stock price while alternative app distribution could provide significant upside. Cash flows continue to fall though on the back of a weak demand environment, execution problems and the significant investments being made in turning around the business....

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