APPS · Digital Turbine
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $10.47
Note written ·
Price against the kill line
27.3% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $10.47, on record since 11 November 2026. The shares are down 37.8% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $10.47, the 50-day average of closes as of 11 November 2026, which would show the shares leading the S&P 500 again; or a raised fiscal 2027 adjusted EBITDA outlook above $155 million.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Financials
Quarter to 30 September 2026, filed 9 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 179
- Revenue, change on a year (%)
- +27.3
- Gross margin (%)
- 50.9
- Operating margin (%)
- 11.4
- Net cash, cash less debt ($M)
- −302
- Enterprise value to sales (×)
- 1.9
- Enterprise value to operating income (×)
- 16.7
All filed numbers
What Digital Turbine reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 179 | +27.3 | 50.9 | 11.4 |
| first filed restated | 166 | +26.8 | 57.2 | 12.7 |
| first filed | 143 | +19.6 | 59.3 | 7.4 |
| first filed | 151 | +12.4 | 57.4 | 14.3 |
| first filed | 140 | +18.2 | 55.1 | 4.7 |
| first filed | 131 | +11.0 | 55.6 | −3.6 |
| Pre-tax income ($M) | 13.0 |
| Net income ($M) four quarters: −5.2 | 10.3 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +18.4 |
| Operating cash flow ($M) | 55.3 |
| Capital spending ($M) | Not available |
| Free cash flow ($M) | Not available |
| Cash and short-term investments ($M) | 51.4 |
| Debt ($M) long-term debt | 354 |
| Net cash, cash less debt ($M) | −302 |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 266 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 197 |
| Market value ($M) | 928 |
| Enterprise value, market value plus net debt ($M) | 1,230 |
| Enterprise value to sales (×) | 1.9 |
| Enterprise value to operating income (×) | 16.7 |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 4.7 |
| Free-cash-flow yield (%) | Not available |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 9.5% of shares outstanding sold short, 4.5 days of average trading to cover, +12.0% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $2K |
The thesis
Digital Turbine shares are more likely to lag the S&P 500 over the next three months. Revenue is growing faster than profit, and the books need fixing. The 9 November 2026 report beat on revenue and raised the sales outlook. It also kept the profit outlook unchanged, showed gross margin down to 43% from 47%, revised a prior quarter's expenses and disclosed a material weakness in financial controls. The fiscal third-quarter report, expected in early 2027, will show whether margins stabilise and the controls problem stays contained.
The market's reaction was severe. The shares closed at $11.30 on 9 November 2026, before the evening release, then at $7.25 on 10 November 2026 and $7.76 on 11 November 2026, according to adjusted daily closes. Mobile-ad peers fell much less that day: 24/7 Wall St. reported Unity down 2% and AppLovin slightly lower on 10 November 2026. At $7.76 the price now reflects a mix of above-forecast revenue and unchanged profit guidance. It does not yet show any confidence that margins will recover.
Bullish and bearish views on Digital Turbine, Inc.
The bull case on Digital Turbine, Inc. (APPS), in brief: revenue beat and the outlook rose. The bear case: margins are shrinking as revenue grows.
Bull case
- Revenue beat and the outlook rose. Fiscal 2027 second-quarter revenue was $178.7 million, up 27% year over year, against a $166.75 million consensus estimate, per the company's 9 November 2026 release and Benzinga. Fiscal 2027 revenue guidance rose to $670–690 million from $650–690 million's prior range of $650–670 million.
- Profit swung positive on a GAAP basis. GAAP net income was $10.3 million in the quarter ended 30 September 2026, against a $21.4 million net loss a year earlier. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose 46% to $39.8 million, per the 9 November 2026 release as summarised by Panabee.
- App Growth Platform still grows fastest. The advertising-platform business posted $63.5 million of revenue, up 42% year over year, per 24/7 Wall St. on 10 November 2026. On Device Solutions, which places apps on new phones, grew 20% to $115.6 million.
- A permanent finance chief starts on 30 November 2026. An 8-K filed 5 November 2026 names Daniel Lentz, formerly chief financial officer of Commerce.com, as CFO. That ends a vacancy that began when Steve Lasher resigned on 22 May 2026.
Bear case
- Margins are shrinking as revenue grows. Non-GAAP gross margin fell to 43% from 47% a year earlier. Revenue share, the payments to carriers and device makers, rose to 49% of net revenue from 45%, per 24/7 Wall St. on 10 November 2026. Interim finance chief Josh Kinsell attributed part of the pressure to product mix.
- Profit guidance did not rise. Fiscal 2027 adjusted EBITDA guidance stayed at $145–155 million on 9 November 2026, even with $20 million more revenue at both ends of the sales range. On the call, CEO Bill Stone described spending on data and AI as a deliberate choice that weighs on profit.
- A second accounting correction in two quarters. The company revised prior-period statements to correct $3.5 million of revenue share expense that had been understated in the June 2026 quarter. It also listed a material weakness in internal control over financial reporting, per 24/7 Wall St. on 10 November 2026. In August, the first-quarter release was amended to show an $11.3 million GAAP net loss instead of $3.2 million.
- Legal and dilution overhangs are open. On 10 November 2026, law firm Block & Leviton announced an investigation of Digital Turbine for potential securities law violations. On 1 October 2026 the company filed an automatic mixed securities registration of undisclosed size. No offering has been announced since.
- Debt is heavy and expensive. The 10-Q for the quarter ended 30 June 2026 showed $343.5 million of long-term debt, net, and an 11.65% average secured-loan rate. Panabee's summary of the second-quarter filing puts quarterly net interest expense at $14.2 million. A $5.0 million duration fee applies if certain term-loan tranches are not prepaid by 31 December 2026.
Price setup
The shares closed at $7.76 on 11 November 2026. That is 49.4% below the 52-week intraday high of $15.34, set on 7 August 2026, and 38.5% below the $12.62 close of 13 August 2026, three months earlier. The 52-week closing low is $2.82, from 10 April 2026.
Before the report, the shares rallied from $9.54 on 4 November 2026 to $11.30 on 9 November 2026. The 10 November 2026 close of $7.25 erased that rally and more. The last close now sits far below the 50-day average of closes and just above the 200-day average of $7.69, both as of 11 November 2026. A sustained move back above the 50-day average would show the market looking past the margin and controls issues. Closes below the 200-day average would put the April-to-August rally itself in question.
SEC Form 4 filings since late August show only stock awards on 2 September 2026 and shares withheld for tax by Chief Accounting Officer Josh Kinsell in October. No open-market insider purchases or sales are reported.
Catalysts ahead
- 30 November 2026: Daniel Lentz starts as Chief Financial Officer. Puts a permanent finance chief in charge of fixing the material weakness that was disclosed on 9 November 2026.
- 31 December 2026: Deadline for prepaying certain term-loan tranches to avoid a $5.0 million duration fee. A prepayment or refinancing shows whether the company can lower its financing costs. Missing the deadline adds the fee.
- ~9 February 2027 (est.): Fiscal 2027 third-quarter results (quarter ending 31 December 2026). Shows whether gross margin stabilises from 43%, whether adjusted EBITDA guidance holds or rises, and whether any further accounting revisions appear.
What would change the view
A daily close above $10.47, the 50-day average of closes as of 11 November 2026, which would show the shares leading the S&P 500 again; or a raised fiscal 2027 adjusted EBITDA outlook above $155 million.
What it trades with
Digital Turbine trades on its own results and accounting. The largest moves of the past three months came on company events: the 5 August 2026 report, the 30 October 2026 report delay and the 10 November 2026 drop after the second-quarter release. On 10 November 2026 the shares fell far more than Unity or AppLovin, per 24/7 Wall St., so peer moves in mobile advertising explain little of this stock's path. Interest-rate and credit conditions matter more than for most ad-tech peers because of the term-loan debt and its refinancing deadline.
The evidence, claim by claim (8)
- Fiscal 2027 second-quarter revenue was $178.7 million, up 27% year over year, against a $166.75 million consensus estimate; adjusted EPS was $0.18 against a $0.17 estimate. Digital Turbine fiscal 2027 second-quarter release (8-K); Benzinga · as of
- Fiscal 2027 revenue guidance was raised to $670–690 million from $650–670 million; adjusted EBITDA guidance was held at $145–155 million. Digital Turbine fiscal 2027 second-quarter release (8-K) · as of
- Non-GAAP gross margin was 43%, down from 47% a year earlier; revenue share rose to 49% of net revenue from 45%. 24/7 Wall St., 10 November 2026 · as of
- The company revised prior-period statements for $3.5 million of understated revenue share expense in the June 2026 quarter and listed a material weakness in internal control over financial reporting. 24/7 Wall St., 10 November 2026; Digital Turbine 10-Q filed 9 November 2026 · as of
- App Growth Platform revenue was $63.5 million, up 42%; On Device Solutions revenue was $115.6 million, up 20%; adjusted EBITDA was $39.8 million, up 46%; GAAP net income $10.3 million. Digital Turbine fiscal 2027 second-quarter release, per Panabee · as of
- Board appointed Daniel Lentz as Chief Financial Officer, starting 30 November 2026; Josh Kinsell remains Chief Accounting Officer. Digital Turbine Form 8-K filed 5 November 2026 · as of
- Long-term debt, net, was $343.5 million at an 11.65% average secured-loan rate, with a $5.0 million duration fee if certain loans are not repaid by 31 December 2026. Digital Turbine fiscal 2027 first-quarter Form 10-Q · as of
- Block & Leviton announced an investigation of Digital Turbine for potential securities law violations. Block & Leviton announcement · as of
Sources
- Digital Turbine Plunges 23% Despite Revenue Beat as Margins Shrink and Profit Outlook Stays Put; Unity Slides 2%, AppLovin Dips · 247wallst.com ·
- Digital Turbine Shares Crash Tuesday: What's Going On? · benzinga.com
- Digital Turbine Q2 Revenue Jumps 27% to $179 Million as Adjusted EBITDA Rises 46% · panabee.com ·
- Digital Turbine Stock Drops After Q2 Earnings · benzinga.com
- Digital Turbine, Inc. - Form 8-K - FY2026 · sec.gov ·
- Digital Turbine Sinks 12% on One-Week Earnings Delay for “Review and Finalization” of Financials · tikr.com ·
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