Investment Thesis
Digital Turbine demonstrates explosive revenue growth of 1510% YoY with strong gross margins of 56.1%, indicating successful business scaling. However, the company remains unprofitable with negative net income of -$30.4M and concerning leverage metrics including 1.82x debt-to-equity ratio and 0.7x interest coverage, raising questions about sustainable profitability and financial stability.
Strengths
- Extraordinary revenue growth of 1510% YoY demonstrating rapid market traction and business expansion
- Solid gross margin of 56.1% suggesting strong pricing power and operational efficiency at the product level
- Positive free cash flow of $37.4M despite net losses indicates underlying business quality and cash generation capability
Risks
- Negative net income of -$30.4M and negative net margin of -7.2% indicate the company is not yet profitable despite massive revenue scale
- High leverage with 1.82x debt-to-equity ratio and critically low 0.7x interest coverage ratio poses refinancing and solvency risks
- Operating margin of only 5.6% despite 56.1% gross margin suggests significant operating expense burden that must be controlled for profitability
Key Metrics to Watch
- Operating margin expansion toward profitability threshold
- Debt-to-equity ratio reduction and interest coverage ratio improvement
- Sustaining revenue growth momentum while achieving operating leverage
Financial Metrics
Revenue
422.7M
Net Income
-30.4M
EPS (Diluted)
$-0.27
Free Cash Flow
37.4M
Total Assets
858.2M
Cash
40.2M
Profitability Ratios
Gross Margin
56.1%
Operating Margin
5.6%
Net Margin
-7.2%
ROE
-15.6%
ROA
-3.5%
FCF Margin
8.9%
Balance Sheet & Liquidity
Current Ratio
1.10x
Quick Ratio
1.10x
Debt/Equity
1.82x
Debt/Assets
77.3%
Interest Coverage
0.69x
Long-term Debt
355.0M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-03-20T01:28:11.571412 |
Data as of: 2025-12-31 |
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