Digital Turbine (APPS) Stock: Why It Fell 35% After Earnings

Nov 10, 2026: a raised sales outlook with no profit upgrade

Digital Turbine reported after the close on Nov 9 and held its call at 4:30pm ET. Premarket trading on Nov 10 started at $8.80 at 4am, touched $9.03 in the first minutes and slid to $8.02 at 9:25am. The stock opened at $8.18, peaked at $8.23 in the first five minutes and fell to $7.06 at 9:45am. It bounced to $7.59 at 10:30am and was $7.30 at 1:00pm, down 35.4%, on about 12.3 million shares. The shares had gained 8.9% on Nov 9 going into the report.

What happened:

• Sales beat. Revenue of $178.7 million compared with an average estimate of about $166.7 million. On Device Solutions, which places apps and ads on new phones through carriers and device makers, grew 20% to $115.6 million. The App Growth Platform, its advertising exchange business, grew 42% to $63.5 million.
• The revenue outlook went up, the profit outlook did not. Fiscal 2027 revenue is now $670 million to $690 million, from $650 million to $670 million. Adjusted EBITDA stays at $145 million to $155 million, the range set on Aug 4.
• The reason was new spending. Asked by Craig-Hallum why EBITDA guidance held, Stone said the company would reinvest in AI and data. "We want to make sure that we've achieved the first important thing, which is return on ad spend for advertisers using these new things," he said, then "scale it with margins as we go forward."
• Gross margin narrowed. Non-GAAP gross margin was 43%, against 47% a year earlier and 49% in the June quarter.

Digital Turbine fell far more than other mobile and programmatic advertising stocks. From the Nov 9 close to around 1pm ET:

Around 1pm RSI(14) stood at 37, the shares sat 30.8% below their 50-day average and 5.1% below their 200-day average, 52.5% below their 52-week high of $15.34, and volume was already 4.2 times its 20-day average with three hours of trading left.

The numbers

• Revenue. $178.7 million, up 27% from $140.4 million. First-half revenue was $344.7 million, so the new outlook implies $325.3 million to $345.3 million in the second half.
• Profit. Adjusted EBITDA rose 46% to $39.8 million, a 22.3% margin. GAAP net income was $10.3 million against a loss of $21.4 million a year earlier, helped by a $4.7 million gain on the sale of a dormant exchange and a $2.2 million non-cash gain on derivatives.
• The margin math. At the midpoints the outlook implies second-half adjusted EBITDA of about $69.7 million on $335.3 million of revenue, a margin of about 20.8%, against 23.3% in the first half.
• Costs. Revenue sharing rose to 49% of net revenue from 45%. Cash operating expenses fell 3% to $37.6 million, so the pressure is in the cost of revenue, not overhead.
• Cash and debt. Operating cash flow was $18.8 million and non-GAAP free cash flow $10.5 million. Debt was $353.6 million and cash $51.4 million at Sep 30, and the company paid $11.3 million of interest in the quarter.

A guidance change often moves a stock more than the quarter, and here the market read a flat adjusted EBITDA range on higher sales as lower margins ahead.

The bull case

The sales growth is broad. Stone said international On Device Solutions revenue grew about 50%, nearly 40% of advertiser spending on DT Exchange now comes from outside gaming, and both segments grew more than 20%. He also said brands are moving spending "away from the open web to other channels like apps," which favors Digital Turbine's position on the device. The company expects first revenue from Orange in the current quarter, with a rollout Craig-Hallum analysts put at about 12 months across more than 20 countries, and plans to launch a second Tier 1 European carrier this fiscal year. Neither is in this year's guidance. Net leverage fell to 2.3 times from more than 4 times a year earlier, which eases refinancing risk. Analysts' average target is $17, and StoneX kept its Buy rating and $16 target on Nov 10, Barron's reported. Our pages on AppLovin and Magnite cover the same shift in ad budgets.

The risks

• Margins. Gross margin fell 6 points in one quarter. If revenue sharing keeps rising, more sales will not mean more profit, and the AI spending adds cost before it adds revenue.
• Execution. Management asked investors to accept lower second-half margins on the promise of better advertiser returns later. Stone said Orange and the second carrier should add to growth mainly in the following fiscal year, so the payoff sits beyond this guidance.
• Debt. Net debt to EBITDA of 2.3 times is manageable, but the company paid $11.3 million of interest in the quarter against $10.5 million of free cash flow left after it, so debt service still takes about half the cash the business produces.
• Trust. The shares have fallen 91% from their 2021 closing high of $94.74, Barron's noted, and short sellers hold 10.8% of the float. A stock with that history gets little benefit of the doubt on guidance.
• Leadership change. Daniel Lentz joins as chief financial officer later this month and takes over from interim chief financial officer Josh Kinsell, who stays as chief accounting officer. The February report will be the first under the new finance chief.

What comes next

Digital Turbine is expected to report its fiscal third quarter, which ends Dec 31, in early February 2027. The points to check are gross margin against 43%, whether the EBITDA range holds, and the first Orange revenue. Stocks that fall hard on guidance can keep drifting after the report, a pattern called post-earnings announcement drift. For the rest of the session's movers, see today's biggest stock moves, and for another ad-tech report this season, our page on The Trade Desk.