Digital Turbine Overview

“Digital Turbine Inc is an independent mobile growth platform. It offers end-to-end products and solutions to all participants in the mobile application ecosystem, enabling brand discovery and advertising, user acquisition and engagement, and operational efficiency for advertisers. Its operating segments are On Device Media (ODM); In App Media-AdColony; and In App Media-Fyber. The company derives key revenue from the ODM segment by providing solutions to all participants in the mobile application ecosystem who want to connect with end users and consumers who hold the device, including mobile carriers and device original equipment manufacturers (OEMs) that participate in the app economy, app publishers and developers, and brands and advertising agencies.”

The short version of their business model is to pre-install your app on an android device, or have it be available for a one-click install during the setup for the first boot of the phone. This model reduces a ton of friction between the customer and the product, especially if you are already a well known brand. If I saw a button to pre-install the mcdonalds app on my phone while I was setting it up, I probably would have clicked “install” for fun, even though I don't usually go to mcdonalds. Then they give you a free reward, and before you know it, you're spending your money at mcdonalds. It's surprisingly power to have a one-click install, and they're expanding it to the general web to prevent people from being redirected to the app store.

They also generally do mobile advertising, including but not limited to singletap, notifications, in-app monetization, brand video, and multiple apps/device (according to the 10-K

MOAT

Digital Turbine is one of a few services that I know of that works with Google and OEM to pre-install these apps. They service exclusively android devices, which is 72% market share of mobile OS'. So far, they have pre-installed on 750,000,000 devices. So the moat here is moderate, there are a couple of other services that do the same sort of thing.

GROWTH

Revenue at the moment has been compounding at something like 30% a year for the past 10 years. It's crazy. There was recently a large acquisition added to their financial statements. These acquisitions are used to create a more end-to-end experience for customers, and to create a significantly larger total addressable market. They used to be just the app install market, which was about a 100 billion dollar market, now after two acquisitions they have a TAM of 370 Billion.

The company has also just reached profitability and positive cash flow. So the multiples are quite high but even after a few more quarters those multiples will drop drastically.

INDUSTRY GROWTH

Mobile Advertising is expected to have a conservative compound annual growth rate between 15-20%.

The current valuation for the is market is 340 billion, expected to reach over 600 billion by 2025.

Also, the cellphone turnover rate is somewhere around 3 years, giving recurring revenue due to the phones being replaced.
The population of the world will continue to increase, providing a constant stream of new customers and even more replacements in the future as a cell phone is a necessity in modern society.

Also, third world advertising revenue is still in it's infancy, leading to that high growth rate because all the developing countries are not running IOS.

point is, this company has a very, very long runway becoming a knows advertising platform for mobile devices.

OTHER NOTABLE ATTRIBUTE- EXTREME PIVOT

This one is hard to explain, but this company has made a MASSIVE pivot in the past couple years. The 10-k's from just a couple years ago seem extremely outdated due to the pace that this company can pivot it's business model. It seems to have gotten simpler and simpler. For example, now that the business works directly with the OEM's of the devices, the company that wants it's app per-installed can go directly to digital turbine, pay them for the spot on the setup page for a one-click install, and then implement it directly with the OEM. This allows digital turbine to keep capital expenditures low and allow the customer to keep most of the profit that the advertising generates. They state in recent 10-K's the advantages of the “new” vs “old” business they had, it's something I don't fully understand and need to do more research on.

VALUATION

$1.87B Market Cap
15.54$/share as of writing.
41 P/E
1.88 P/S (Very low compared to normal fast growing tech companies)

If the market for mobile advertisement reaches 1 Trillion by 2030, and digital turbine captures even 3% of that, this stock is a 20 bagger over the course of 10 years. even if it did HALF of that it's straight out of the park.

I do, however, think the a good buy-in price is closer to 10-12 dollars, I still opened a position today with intentions of averaging down heavily if it drops.

THESIS- two sentences or less
Digital turbine is in a unique and dependable position with google, OEM's, and advertiser's to capitalize on the massively growing mobile advertisement industry.