Digital Turbine: Rapid Growth Makes It An Attractive Prospect

Summary

• Digital Turbine is a technology company, an intermediary that helps app creators and advertisers get positioned on mobile carrier networks and mobile Android manufacturers.
• Although relatively young, the company is financially solid and profitable. Its rapid growth has attracted institutional investors who now own almost two-thirds of the company.
• Based on the price chart, we would expect it to be wildly overvalued, but a look at EBITDA growth rates leads us to a more modest overvaluation.

Your thoughts on seeing this chart of Digital Turbine, Inc. (NASDAQ:APPS) for the first time would likely be the same as mine. Highly overvalued:

But I've had second thoughts since looking at the fundamentals. And before jumping into those details, let's look at the company.

What is Digital Turbine?

Here's how the company describes itself on the home page of its website:

"Digital Turbine's On-Device Media Platform makes it easier than ever before for people to discover new apps and content, for operators and OEMs to boost their revenue and for advertisers to reach users at scale."

That's a lot of information in one sentence, so let's parse it out:

• On-device: Wikipedia explained this phrase as meaning, "On-Device Portals (ODPs) allow mobile phone users to easily browse, purchase and use mobile content and services."
• Media platform: This refers to technology that provides a backbone for the distribution of content to users.
• Operators and OEMs: Telecom operators and Android manufacturers who want engaging content that helps keep customers loyal to their platforms.
• Advertisers: The organizations that want to reach a broad or targeted audience to encourage the purchase of products/services or the downloading of apps.

As the company puts it, "Digital Turbine simplifies content discovery and delivers it directly to the device. Its On-Device Media Platform powers frictionless app and content discovery, user acquisition and engagement, operational efficiency and monetization opportunities."

It also reports its technology platform has been adopted by more than 40 mobile operators and OEMs (Original Equipment Manufacturers). More than 3 billion app preloads for tens of thousands of advertising campaigns have been delivered.

Based in Austin, Texas, it has multiple offices in the U.S. and abroad.

Competition

Digital Turbine acknowledges it is in a highly competitive business. In its 10-K for 2020, it advises it competes for advertising 'partners' based

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.