Digital Turbine (Nasdaq: APPS) is a company based in Austin, Texas, that helps you get more out of your mobile devices. Think of it as providing the behind-the-scenes magic connecting mobile users with apps and advertising.
Digital Turbine works with phone companies, app makers, and advertisers to make sure the right content reaches the right people, improving your mobile experience while helping businesses grow. It makes it easier for people to find and use apps and for companies to make money from them.
The stock has been on quite a journey over the past year with significant ups and downs, including a notable surge in early 2025, another spike to a new 52-week high earlier this week, and then a steep drop over the past couple of days.
In the fourth quarter of fiscal 2025 (which ended on March 31), revenue grew by 6% year over year, hitting $119.2 million. For the full fiscal year, revenue was $490.5 million.
While the company reported a net loss of $18.8 million for the fourth quarter, that was a big improvement from a much larger loss last year. Furthermore, Digital Turbine’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), a key measure of operating earnings, jumped a healthy 66% in the fourth quarter to $20.5 million.
However, we need to take a closer look at the company’s cash flow. Over the past four quarters, Digital Turbine had three quarters where it burned through cash.
This means the company spent more cash than it brought in from its main operations. This is a red flag for value investors, as consistent cash generation is crucial for a healthy business.
Let’s run Digital Turbine through The Value Meter to see whether it’s a bargain or a value trap.
First, we look at its enterprise value-to-net asset value (EV/NAV) ratio, which is 5.20. This is better than the average of 12.37 for similar companies with positive net assets, suggesting that you’re paying less for Digital Turbine’s assets than you would for its peers’. That’s a good start.
But as I mentioned, the company’s free cash flow has been a concern. Its free cash flow-to-net assets (FCF/NAV) ratio is -3.96%. While this is better than the -5.70% average for companies with similar cash flow issues, it still shows the company is burning cash.
When we combine these factors, we see a mixed picture. The company’s assets appear to be available at a discount relative to similar businesses, which is attractive. Yet the ongoing cash burn means it needs to improve its efficiency at turning those assets into actual cash.
The recent increases in revenue and adjusted EBITDA are encouraging, but the consistent negative free cash flow means there’s still work to be done.
The Value Meter rates Digital Turbine as “Slightly Overvalued.”
What stock would you like me to run through The Value Meter next? Post the ticker symbol(s) in the comments section below.
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