8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) June 3, 2019

Digital Turbine, Inc.

(Exact Name of Registrant as Specified in Its Charter) 

Delaware	001-35958	22-2267658
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

111 Nueces St., Austin TX	78701
(Address of Principal Executive Offices)	(Zip Code)

(512) 387-7717

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below)

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	APPS	NASDAQ

Item 2.02 Results of Operations and Financial Condition.

On June 3, 2019, Digital Turbine, Inc. (the “Company”) issued a press release announcing financial results for the fiscal year ended March 31, 2019. The text of that announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filings.

This Form 8-K contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors and risks discussed from time to time in our SEC filings and reports. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

The attached press release includes non-GAAP financial measures relating to our operations and forecasted outlook. Certain of these non-GAAP terms will be used in our upcoming earnings conference call. In addition, the attached press release includes reconciliations of these GAAP to non-GAAP measures, as well as an explanation of how management uses these non-GAAP measures and the reasons why management views these measures as providing useful information for investors. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from our results should be carefully evaluated.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
99.1	Press release dated June 3, 2019, as issued by Digital Turbine, Inc. announcing financial results

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: June 3, 2019	Digital Turbine, Inc.
	By:	/s/ Barrett Garrison
		Barrett Garrison
		Executive Vice President, Chief Financial Officer

EXHIBITS INDEX

Exhibit No.	Description
99.1	Press release dated June 3, 2019, as issued by Digital Turbine, Inc. announcing financial results

EX-99.1

Exhibit 99.1

Digital Turbine Reports Fourth Quarter and Fiscal Full Year 2019 Results

Fiscal 2019 Revenue of $103.6 Million Represented 39% Annual Growth

Gross Margin Expansion and Operating Leverage Continue to Drive Improved Profitability

Austin, TX – June 3, 2019 – Digital Turbine, Inc. (Nasdaq: APPS) announced financial results for the fiscal full year and quarter ended March 31, 2019. All operating results discussed below, except as otherwise specifically noted, refer only to the continuing operations of the Company, and all comparisons to prior periods have been adjusted to reflect only continuing operations.

Recent Highlights:

· Fiscal fourth quarter revenue was $27.2 million, representing 30% growth when compared to the fiscal fourth quarter of 2018. Fiscal year 2019 revenue totaled $103.6 million, up 39% as compared to fiscal year 2018 revenue.

· GAAP net loss for the fiscal fourth quarter was $6.8 million, or ($0.09) per share, as compared to a GAAP net loss of $4.2 million, or ($0.06) per share for the fiscal fourth quarter of 2018. Non-GAAP adjusted net income¹ for the fiscal fourth quarter was $2.4 million, or $0.03 per share, as compared to a Non-GAAP adjusted net loss of $0.6 million, or ($0.01) per share in the fourth quarter of fiscal 2018.

· Non-GAAP adjusted EBITDA² for the fiscal fourth quarter was $3.3 million, as compared to Non-GAAP adjusted EBITDA of approximately zero in the fourth quarter of fiscal 2018. Non-GAAP adjusted EBITDA for full fiscal year 2019 totaled $8.9 million.

· GAAP cash provided by operating activities totaled $2.4 million in the fiscal fourth quarter. Non-GAAP free cash flow³ totaled $1.9 million in the fiscal fourth quarter.

· GAAP gross margin was 40% for the fourth quarter of fiscal 2019, as compared to a 33% GAAP gross margin in the fourth quarter of fiscal 2018. Non-GAAP adjusted gross margin⁴ was 42% for the fourth quarter of fiscal 2019, as compared to 36% in the fourth quarter of fiscal 2018 and 37% in the third quarter of fiscal 2019.

· The Company has surpassed 260 million total devices with Ignite installed to date, including more than 29 million devices installed during the March quarter.

· U.S. revenue-per-device (“RPD”) increased by 27%, respectively, when compared to the fiscal fourth quarter of 2018, highlighting continuing strong demand among advertisers for the Digital Turbine platform.

Digital Turbine Fourth Quarter and Fiscal 2019 Results

June 3, 2019

Page 2 of 12

· The Company ended fiscal 2019 with a cash balance of $10.9 million and zero total debt, following the conversion of all remaining convertible notes previously outstanding and full repayment of short-term debt.

“Fiscal year 2019 was a breakout year for Digital Turbine, with strong growth on both the top-line and the bottom-line” said Bill Stone, CEO.  “During the March quarter, we grew revenues 30% year-over-year and generated more than $3 million in Adjusted EBITDA despite slower smartphone sales in the U.S. during the period. Revenue growth in the quarter was primarily driven by strong revenue-per-device (RPD) with our U.S. partners. Our average RPD with U.S. partners, a key health metric for the business, increased 27% during the March quarter, a testament to the strength of advertiser demand for access to the increasingly valuable device homescreen. We were also very pleased with the profitability metrics realized during the quarter. Notable gross margin expansion and continuing operating leverage led to markedly improved Adjusted EBITDA and Non-GAAP net income during the quarter.” 

“We began fiscal 2019 with a clear primary objective in mind - to firmly establish a scalable, high-growth, sustainably-profitable platform business. Strong demand for an enhanced Digital Turbine platform from carrier, OEM and advertiser partners enabled us to achieve this goal, as we generated nearly $9 million in total adjusted EBITDA during fiscal year 2019 while developing several promising new products and adding valuable new partners such as Samsung that provide strategic catalysts for meaningful future growth. Importantly, we also exited fiscal 2019 with a vastly improved balance sheet with approximately $11 million in cash and zero remaining debt.”

Mr. Stone concluded, “As we embark on fiscal 2020 and page forward to the next stage of growth for Digital Turbine, our primary objective is to efficiently scale the platform. On the business development side, we are actively recruiting additional partners to the platform, with an added emphasis on large international carriers and OEMs who can help to significantly expand our addressable market opportunity overseas. On the product development side, we are continuing to innovate and enact new product features that foster improved levels of conversion and engagement for advertisers, while providing a richer, more pertinent value-added experience for end users. We look forward to providing updates on our progress toward these key objectives as the year plays out. We believe that by continuing to deliver attractive returns for our many platform constituents, we can expect to deliver attractive returns for our investors.”

Fourth Quarter Fiscal 2019 Financial Results

Revenue for the fourth quarter of fiscal 2019 was $27.2 million, representing an increase of 30% year-over-year. Revenue growth was primarily driven by higher revenue-per-device with our large U.S.-based carrier partners, reflecting strong baseline advertiser demand for our platform products. Revenue growth during the March quarter was also supplemented by 129% year-over-year growth in revenue derived from international partners and Open Market devices.

Digital Turbine Fourth Quarter and Fiscal 2019 Results

June 3, 2019

Page 3 of 12

GAAP gross margin was 40% for the fourth quarter of fiscal 2019, as compared to a 33% GAAP gross margin in the fourth quarter of fiscal 2018. Non-GAAP adjusted gross margin⁴ increased to 42% for the fourth quarter of fiscal 2019, as compared to 36% for the fourth quarter of fiscal 2018.

Net loss from continuing operations for the fourth quarter of fiscal 2019 was $6.8 million, or ($0.09) per share, as compared to a net loss from continuing operations for the fiscal fourth quarter of 2018 of $4.2 million, or ($0.06) per share. Non-GAAP adjusted net income¹ for the fourth quarter of fiscal 2019 was $2.4 million, or $0.03 per share, as compared to a Non-GAAP adjusted net loss of $0.6 million, or ($0.01) per share, during the fiscal fourth quarter of 2018.

Non-GAAP adjusted EBITDA² was $3.3 million for the fourth quarter of fiscal 2019, as compared to Non-GAAP adjusted EBITDA of approximately zero for the fourth quarter of fiscal 2018. The reconciliation between GAAP and Non-GAAP financial results for all referenced periods is provided in a table immediately following the Unaudited Consolidated Statements of Operations and Comprehensive Income/(Loss) below.

Full Year Fiscal 2019 Financial Results

Revenue for fiscal 2019 totaled $103.6 million, representing an increase of 39% year-over-year. Revenue growth during fiscal 2019 was attributable to significantly higher revenue-per-device with our large U.S.-based carrier partners, as well as incremental contributions from international partners and other new partners that launched on the platform during the year.

GAAP gross margin was 34% for fiscal 2019, as compared to the 34% GAAP gross margin in fiscal 2018. Non-GAAP adjusted gross margin⁴ was 36% for fiscal 2019, as compared to 36% in fiscal 2018.

Net loss from continuing operations for fiscal 2019 was $4.3 million, or ($0.06) per share, as compared to a net loss from continuing operations for fiscal 2018 of $19.7 million, or ($0.28) per share. Non-GAAP adjusted net income¹ for fiscal 2019 was $5.9 million, or $0.08 per share, as compared to a Non-GAAP adjusted net loss of $3.6 million, or ($0.05) per share, during fiscal 2018.

Non-GAAP adjusted EBITDA² was $8.9 million for fiscal 2019, as compared to a Non-GAAP adjusted EBITDA loss of $0.2 million in fiscal 2018. The reconciliation between GAAP and Non-GAAP financial results for all referenced periods is provided in a table immediately following the Unaudited Consolidated Statements of Operations and Comprehensive Income/(Loss) below.

Digital Turbine Fourth Quarter and Fiscal 2019 Results

June 3, 2019

Page 4 of 12

Business Outlook

Based on information available as of June 3, 2019, the Company expects first quarter fiscal 2020 revenue of between $28.0 million and $28.5 million, and non-GAAP adjusted EBITDA² of between $2.2 million and $2.6 million. It is not reasonably practicable to provide a business outlook for GAAP net income from continuing operations because the Company cannot reasonably estimate the changes in the fair value of derivatives associated with warrants issued in connection with the September 2016 convertible notes offering, which are directly impacted by changes in the Company’s stock price.

About Digital Turbine, Inc.

Digital Turbine innovates at the convergence of media and mobile communications, connecting top mobile operators, OEMs and publishers with app developers and advertisers worldwide. Its comprehensive Mobile Delivery Platform powers frictionless user acquisition and engagement, operational efficiency and monetization opportunities. Digital Turbine’s technology platform has been adopted by more than 30 mobile operators and OEMs worldwide, and has delivered more than one billion app preloads for tens of thousands advertising campaigns. The company is headquartered in Austin, Texas, with global offices in Durham, Mumbai, San Francisco, Singapore and Tel Aviv. For additional information visit www.digitalturbine.com.

Conference Call

Management will host a conference call today at 4:30 p.m. ET to discuss its fourth quarter and fiscal 2019 financial results and provide operational updates on the business. To participate, interested parties should dial 855-238-2713 in the United States or 412-542-4111 from international locations. A webcast of the conference call will be available at ir.digitalturbine.com/events.

For those who are not able to join the live call, a playback will be available through June 10, 2019. The replay can be accessed by dialing 877-344-7529 in the United States or 412-317-0088 from international locations, passcode 10131961.

The conference call will discuss guidance and other material information.

Use of Non-GAAP Financial Measures

To supplement the Company’s condensed consolidated financial statements presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), Digital Turbine uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP adjusted gross profit, non-GAAP gross margin, non-GAAP adjusted EBITDA and non-GAAP free cash flow. Reconciliations to the nearest GAAP measures of all non-GAAP measures included in this press release can be found in the tables below.

Digital Turbine Fourth Quarter and Fiscal 2019 Results

June 3, 2019

Page 5 of 12

Non-GAAP measures are provided to enhance investors’ overall understanding of the Company's current financial performance, prospects for the future and as a means to evaluate period-to-period comparisons. The Company believes that these Non-GAAP measures provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of recurring core business operating results. The Company believes the non-GAAP measures that exclude such items when viewed in conjunction with GAAP results and the accompanying reconciliations enhance the comparability of results against prior periods and allow for greater transparency of financial results. The Company believes Non-GAAP measures facilitate management's internal comparison of its financial performance to that of prior periods as well as trend analysis for budgeting and planning purposes. The presentation of Non-GAAP measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

¹Non-GAAP adjusted net income/(loss) and EPS are defined as GAAP net income/(loss) and EPS adjusted to exclude the effect of stock-based compensation, amortization of intangibles, changes in the fair value of derivatives associated with warrants issued in connection with the September 2016 convertible notes offering, and loss on extinguishment of debt. Readers are cautioned that Non-GAAP adjusted net income/(loss) and EPS should not be construed as an alternative to comparable GAAP net income figures determined in accordance with U.S. GAAP as an indicator of profitability or performance, which is the most comparable measure under GAAP.

²Non-GAAP adjusted EBITDA is calculated as GAAP net income/(loss) excluding the following cash and non-cash expenses: interest expense, foreign exchange transaction loss/(gain), income tax provision/(benefit), depreciation and amortization, stock-based compensation expense, the change in fair value of derivatives associated with warrants issued in connection with the September 2016 convertible notes offering, other expense, and a loss on extinguishment of debt. Readers are cautioned that Non-GAAP adjusted EBITDA should not be construed as an alternative to net income (loss) determined in accordance with U.S. GAAP as an indicator of performance, which is the most comparable measure under GAAP.

³Non-GAAP free cash flow, which is a non-GAAP financial measure, is defined as net cash provided by operating activities (as stated in our Consolidated Statement of Cash Flows) reduced by capital expenditures. Readers are cautioned that free cash flow should not be construed as an alternative to net cash provided by operating activities determined in accordance with U.S. GAAP as an indicator of profitability, performance or liquidity, which is the most comparable measure under GAAP.

⁴Non-GAAP adjusted gross profit and gross margin are defined as GAAP gross profit and gross margin adjusted to exclude the effect of intangible amortization expense and depreciation of software. Readers are cautioned that Non-GAAP adjusted gross profit and gross margin should not be construed as an alternative to gross margin determined in accordance with U.S. GAAP as an indicator of profitability or performance, which is the most comparable measure under GAAP.

Non-GAAP adjusted gross profit and gross margin, Non-GAAP adjusted EBITDA, Non-GAAP adjusted net income / (loss) and EPS, and Non-GAAP free cash flow are used by management as internal measures of profitability, performance and liquidity. They have been included because the Company believes that the measures are used by certain investors to assess the Company’s financial performance before non-cash charges and certain costs that the Company does not believe are reflective of its underlying business.

Digital Turbine Fourth Quarter and Fiscal 2019 Results

June 3, 2019

Page 6 of 12

Forward-Looking Statements

This news release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements in this news release that are not statements of historical fact and that concern future results from operations, financial position, economic conditions, product releases and any other statement that may be construed as a prediction of future performance or events, including financial projections and growth in various products are forward-looking statements that speak only as of the date made and which involve known and unknown risks, uncertainties and other factors which may, should one or more of these risks uncertainties or other factors materialize, cause actual results to differ materially from those expressed or implied by such statements.

These factors and risks include:

· risks associated with Ignite adoption among existing customers (including the impact of possible delays with major carrier and OEM partners in the roll out for mobile phones deploying Ignite)

· actual mobile device sales and sell-through where Ignite is deployed is out of our control

· risks associated with new privacy laws, such as the European Union’s GDPR and similar laws which may require changes to our development and user interface for certain functionality of our Ignite product

· risks associated with the timing of Ignite software pushes to the embedded bases of carrier and OEM partners

· risks associated with end user take rates of carrier and OEM software pushes which include Ignite

· new customer adoption and time to revenue with new carrier and OEM partners is subject to delays and factors out of our control

· risks associated with fluctuations in the number of Ignite slots across US carrier partners

· required customization and technical integration which may slow down time to revenue notwithstanding the existence of a distribution agreement

· risks associated with delays in major mobile phone launches, or the failure of such launches to achieve the scale

· customer adoption that either we or the market may expect

· risks associated with the level of our secured and unsecured indebtedness

· ability to comply with financial covenants in outstanding indebtedness

· the difficulty of extrapolating monthly demand to quarterly demand

· the challenges, given the Company’s comparatively small size, to expand the combined Company's global reach, accelerate growth and create a scalable, low-capex business model that drives EBITDA (as well as Adjusted EBITDA)

· ability as a smaller Company to manage international operations

· varying and often unpredictable levels of orders; the challenges inherent in technology development necessary to maintain the Company's competitive advantage such as adherence to release schedules and the costs and time required for finalization and gaining market acceptance of new products

Digital Turbine Fourth Quarter and Fiscal 2019 Results

June 3, 2019

Page 7 of 12

· changes in economic conditions and market demand

· rapid and complex changes occurring in the mobile marketplace

· pricing and other activities by competitors

· derivative and warrant liabilities on our balance sheet will fluctuate as our stock price moves and will also produce changes in our income statement; these fluctuations and changes might materially impact our reported GAAP financials in an adverse manner, particularly if our stock price were to rise

· technology management risk as the Company needs to adapt to complex specifications of different carriers and the management of a complex technology platform given the Company's relatively limited resources, and

· other risks including those described from time to time in Digital Turbine's filings on Forms 10-K and 10-Q with the Securities and Exchange Commission (SEC), press releases and other communications.

You should not place undue reliance on these forward-looking statements.  The Company does not undertake to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Investor Relations Contacts:

Brian Bartholomew
Digital Turbine
brian.bartholomew@digitalturbine.com

SOURCE Digital Turbine, Inc.

Digital Turbine Fourth Quarter and Fiscal 2019 Results

June 3, 2019

Page 8 of 12

Digital Turbine, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share amounts)

	3 Months Ended			3 Months Ended			12 Months Ended			12 Months Ended
	March 31, 2019			March 31, 2018			March 31, 2019			March 31, 2018
	(Unaudited)			(Unaudited)
Net revenues	$	27,192		$	20,961		$	103,569		$	74,751
Cost of revenues
License fees and revenue share		15,768			13,623			65,981			47,967
Other direct cost of revenues		470			453			2,023			1,729
Total cost of revenues		16,238			14,076			68,004			49,696
Gross profit		10,954			6,885			35,565			25,055
Operating expenses
Product development		2,973			2,118			11,147			9,653
Sales and marketing		2,501			2,043			8,212			6,087
General and administrative		3,546			4,063			12,761			15,124
Total operating expenses		9,020			8,224			32,120			30,864
Income / (loss) from operations		1,934			(1,339	)		3,445			(5,809	)
Interest and other expense, net
Interest expense, net		(472	)		(252	)		(1,120	)		(2,067	)
Foreign exchange transaction gain / (loss)		(4	)		(87	)		3			(148	)
Change in fair value of convertible note embedded derivative liability		(2,104	)		(1,249	)		(1,008	)		(7,559	)
Change in fair value of warrant liability		(5,720	)		(682	)		(4,875	)		(3,208	)
Loss on extinguishment of debt		(406	)		(619	)		(431	)		(1,785	)
Other income / (expense)		322			2			153			(72	)
Total interest and other expense, net		(8,384	)		(2,887	)		(7,278	)		(14,839	)
Loss from continuing operations before income taxes		(6,450	)		(4,226	)		(3,833	)		(20,648	)
Income tax benefit / (provision)		312			(14	)		469			(951	)
Net loss from continuing operations, net of taxes		(6,762	)		(4,212	)		(4,302	)		(19,697	)
Loss from discontinued operations		(96	)		(34,213	)		(1,708	)		(33,160	)
Net loss from discontinued operations, net of taxes		(96	)		(34,213	)		(1,708	)		(33,160	)
Net loss from operations, net of taxes	$	(6,858	)	$	(38,425	)	$	(6,010	)	$	(52,857	)
Foreign currency translation adjustment		(28	)		1			(31	)		(4	)
Comprehensive loss:	$	(6,886	)	$	(38,424	)	$	(6,041	)	$	(52,861	)
Basic and diluted net loss per common share
Continuing operations	$	(0.09	)	$	(0.06	)	$	(0.06	)	$	(0.28	)
Discontinued operations	$	-		$	(0.46	)	$	(0.02	)	$	(0.47	)
Net loss	$	(0.09	)	$	(0.52	)	$	(0.08	)	$	(0.75	)
Weighted average common shares outstanding, basic		79,404			75,160			77,440			70,263
Weighted average common shares outstanding, diluted		79,404			75,160			77,440			70,263

Digital Turbine Fourth Quarter and Fiscal 2019 Results

June 3, 2019

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Digital Turbine, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except par value and share amounts)

	March 31, 2019			March 31, 2018
ASSETS
Current assets
Cash and cash equivalents	$	10,894		$	12,720
Restricted cash		165			331
Accounts receivable, net of allowances of $895 and $512, respectively		22,707			17,050
Prepaid expenses and other current assets		1,331			901
Current assets held for disposal		2,026			8,753
Total current assets		37,123			39,755
Property and equipment, net		3,430			2,757
Deferred tax assets		40			596
Intangible assets, net		-			1,231
Goodwill		42,268			42,268
TOTAL ASSETS	$	82,861		$	86,607
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	14,912		$	19,895
Accrued license fees and revenue share		16,205			8,232
Accrued compensation		2,441			2,966
Short-term debt, net of debt issuance costs of $0 and $205, respectively		-			1,445
Other current liabilities		826			1,142
Current liabilities held for disposal		3,924			12,726
Total current liabilities		38,308			46,406
Convertible notes, net of debt issuance costs and discounts of $0 and $1,827, respectively		-			3,873
Convertible note embedded derivative liability		-			4,676
Warrant liability		8,013			3,980
Other non-current liabilities		182			-
Total liabilities		46,503			58,935
Stockholders' equity
Preferred stock
Series A convertible preferred stock at $0.0001 par value; 2,000,000 shares authorized, 100,000 issued and outstanding (liquidation preference of $1,000)		100			100
Common stock
$0.0001 par value: 200,000,000 shares authorized; 82,354,940 issued and 81,620,484 outstanding at March 31, 2019; 76,843,278 issued and 76,108,822 outstanding at March 31, 2018		10			10
Additional paid-in capital		332,793			318,066
Treasury stock (754,599 shares at March 31, 2019 and March 31, 2018)		(71	)		(71	)
Accumulated other comprehensive loss		(356	)		(325	)
Accumulated deficit		(296,118	)		(290,108	)
Total stockholders' equity		36,358			27,672
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	82,861		$	86,607

Digital Turbine Fourth Quarter and Fiscal 2019 Results

June 3, 2019

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Digital Turbine, Inc. and Subsidiaries

Consolidated Statement of Cash Flows

(in thousands)

	3 Months Ended			3 Months Ended
	March 31, 2019			March 31, 2018
	(Unaudited)			(Unaudited)
Cash flows from operating activities
Net loss from continuing operations, net of taxes	$	(6,762	)	$	(4,212	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		621			702
Change in allowance for doubtful accounts		(42	)		68
Non-cash interest expense		547			143
Stock-based compensation		595			519
Stock-based compensation for services rendered		155			100
Change in fair value of convertible note embedded derivative liability		2,104			1,249
Change in fair value of warrant liability		5,720			682
Loss on extinguishment of debt		406			618
(Increase)/decrease in assets:
Accounts receivable		1,586			5,636
Deferred tax assets		399			-
Prepaid expenses and other current assets		131			(249	)
Increase/(decrease) in liabilities:
Accounts payable		(7,640	)		1,075
Accrued license fees and revenue share		4,715			1,547
Accrued compensation		867			90
Other current liabilities		(1,088	)		(246	)
Other non-current liabilities		127			(67	)
Net cash provided by operating activties - continuing operations		2,441			7,655
Net cash used in operating activties - discontinued operations		(265	)		(1,175	)
Net cash provided by operating activties	$	2,176		$	6,480
Cash flows from investing activities
Capital expenditures	$	(533	)	$	(772	)
Cash used in investing activties - continuing operations		(533	)		(772	)
Cash used in investing activties - discontinued operations		-			(50	)
Net cash used in investing activities	$	(533	)	$	(822	)
Cash flows from financing activities
Options exercised	$	511		$	78
Repayment of debt obligations		(1,600	)		(250	)
Warrants exercised		-			350
Net cash provided by / (used in) financing activities	$	(1,089	)	$	178
Effect of exchange rate changes on cash and cash equivalents and restricted cash	$	(26	)	$	1
Net change in cash and cash equivalents and restricted cash	$	528		$	5,837
Cash and cash equivalents and restricted cash, beginning of period	$	10,531		$	6,883
Cash and cash equivalents and restricted cash, end of period	$	11,059		$	12,720

Digital Turbine Fourth Quarter and Fiscal 2019 Results

June 3, 2019

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GAAP GROSS MARGIN TO NON-GAAP GROSS MARGIN

(in thousands)

	3 Months Ended			3 Months Ended			12 Months Ended			12 Months Ended
	March 31, 2019			March 31, 2018			March 31, 2019			March 31, 2018
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Continuing Operations:
Revenue	$	27,192		$	20,960		$	103,569		$	74,751
Gross profit	$	10,954		$	6,885		$	35,565		$	25,055
Gross margin percentage		40	%		33	%		34	%		34	%
Add back items:
Amortization of intangibles	$	224		$	453		$	1,231		$	1,416
Depreciation of software	$	148		$	202		$	696		$	313
Non-GAAP gross profit from continuing operations	$	11,326		$	7,540		$	37,491		$	26,785
Non-GAAP gross margin percentage from continuing operations		42	%		36	%		36	%		36	%

GAAP NET LOSS TO NON-GAAP ADJUSTED NET INCOME / (LOSS)

(in thousands)

	3 Months Ended			3 Months Ended			12 Months Ended			12 Months Ended
	March 31, 2019			March 31, 2018			March 31, 2019			March 31, 2018
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Continuing Operations:
Net loss from continuing operations	$	(6,763	)	$	(4,212	)	$	(4,302	)	$	(19,697	)
Add back items:
Stock and stock option compensation		750			619			2,531			2,978
Amortization of intangibles		224			453			1,231			1,416
Change in fair value of convertible note embedded derivative and warrant liability		7,824			1,931			5,883			10,767
Loss on extinguishment of debt		406			619			431			1,785
Non-recurring severance expense		-			-			145			-
Tax adjustment (1)		-			-			-			(849	)
Non-GAAP adjusted net income / (loss) from continuing operations	$	2,441		$	(590	)	$	5,919		$	(3,601	)
Non-GAAP adjusted net income / (loss) per share from continuing operations	$	0.03		$	(0.01	)	$	0.08		$	(0.05	)
Weighted average common shares outstanding, basic		79,404			75,160			77,440			70,263
Weighted average common shares outstanding, diluted		79,404			75,160			77,440			70,263

(1) Non-cash charges to the tax provision / (benefit) are largely due to updates resulting from finalization of a transfer pricing study

Digital Turbine Fourth Quarter and Fiscal 2019 Results

June 3, 2019

Page 12 of 12

GAAP NET LOSS TO NON-GAAP ADJUSTED EBITDA

(in thousands)

	3 Months Ended			3 Months Ended			12 Months Ended			12 Months Ended
	March 31, 2019			March 31, 2018			March 31, 2019			March 31, 2018
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Continuing Operations:
Net loss from continuing operations	$	(6,763	)	$	(4,212	)	$	(4,302	)	$	(19,697	)
Add back items:
Stock and stock option compensation		750			619			2,531			2,978
Amortization of intangibles		224			453			1,231			1,416
Depreciation expense		396			248			1,535			1,244
Interest expense, net		472			252			1,120			2,067
Other income		(316	)		(2	)		(153	)		72
Change in fair value of convertible note embedded derivative and warrant liability		7,824			1,931			5,883			10,767
Loss on extinguishment of debt		406			619			440			1,785
Non-recurring severance expense		-			-			145			-
Foreign exchange transaction loss / (gain)		4			87			(3	)		148
Income tax provision / (benefit)		312			(16	)		469			(951	)
Non-GAAP adjusted EBITDA from continuing operations	$	3,309		$	(21	)	$	8,896		$	(173	)

GAAP CASH FLOW FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS TO NON-GAAP FREE CASH FLOW FROM CONTINUING OPERATIONS

(in thousands)

	3 Months Ended			3 Months Ended
	March 31, 2019			March 31, 2018
	(Unaudited)			(Unaudited)
Net cash provided by operating activities from continuing operations	$	2,441		$	7,655
Capital expenditures		(533	)		(772	)
Non-GAAP free cash flow provided by continuing operations	$	1,908		$	6,883