UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30,~~December 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-35958

DIGITAL TURBINE, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware						22-2267658
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)
110 San Antonio Street, Suite 160, Austin, TX						78701
(Address of Principal Executive Offices)						(Zip Code)

(512) 387-7717

(Registrant’s Telephone Number, Including Area Code)

Securities Registered Pursuant to Section 12(b) of the Act:


Common Stock, Par Value $0.0001 Per Share	APPS	The Nasdaq Stock Market LLC
		(NASDAQ Capital Market)
(Title of Class)	(Trading Symbol)	(Name of Each Exchange on Which Registered)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November 1, 2022,~~February 5, 2023, the Company had ~~99,016,830~~99,197,058 shares of its common stock, $0.0001 par value per share, outstanding.

DIGITAL TURBINE, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED ~~September 30,~~December 31, 2022

PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

Digital Turbine, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except par value and share amounts)


		September 30, 2022		March 31, 2022			December 31, 2022		March 31, 2022
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash	Cash	$	82,653	$	126,768	Cash	$	79,307	$	126,768
Restricted cash	Restricted cash	560		394		Restricted cash	554		394
Accounts receivable, net	Accounts receivable, net	255,666		263,139		Accounts receivable, net	231,001		263,139
Prepaid expenses and other current assets	Prepaid expenses and other current assets	26,479		20,570		Prepaid expenses and other current assets	31,912		20,570
Total current assets	Total current assets	365,358		410,871		Total current assets	342,774		410,871
Property and equipment, net	Property and equipment, net	36,891		31,086		Property and equipment, net	38,759		31,086
Right-of-use assets	Right-of-use assets	11,358		15,439		Right-of-use assets	10,973		15,439
Intangible assets, net	Intangible assets, net	407,669		440,589		Intangible assets, net	395,181		440,589
Goodwill	Goodwill	548,240		559,792		Goodwill	560,340		559,792

Other non-current assets	Other non-current assets	4,613		732		Other non-current assets	4,648		732
TOTAL ASSETS	TOTAL ASSETS	$	1,374,129	$	1,458,509	TOTAL ASSETS	$	1,352,675	$	1,458,509

LIABILITIES AND STOCKHOLDER’S EQUITY	LIABILITIES AND STOCKHOLDER’S EQUITY					LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	171,571	$	167,858	Accounts payable	$	154,320	$	167,858
Accrued license fees and revenue share	Accrued license fees and revenue share	79,167		95,170		Accrued license fees and revenue share	75,380		95,170
Accrued compensation	Accrued compensation	14,932		28,775		Accrued compensation	16,206		28,775
Acquisition purchase price liabilities	Acquisition purchase price liabilities	—		50,000		Acquisition purchase price liabilities	—		50,000
Current portion of debt	Current portion of debt	—		12,500		Current portion of debt	—		12,500
Other current liabilities	Other current liabilities	46,931		30,960		Other current liabilities	43,460		30,960
Total current liabilities	Total current liabilities	312,601		385,263		Total current liabilities	289,366		385,263
Long-term debt, net of debt issuance costs	Long-term debt, net of debt issuance costs	447,193		520,785		Long-term debt, net of debt issuance costs	422,310		520,785
Deferred tax liabilities, net	Deferred tax liabilities, net	16,684		19,976		Deferred tax liabilities, net	18,786		19,976
Other non-current liabilities	Other non-current liabilities	11,948		16,270		Other non-current liabilities	14,586		16,270
Total liabilities	Total liabilities	788,426		942,294		Total liabilities	745,048		942,294
Commitments and contingencies (Note 13)	Commitments and contingencies (Note 13)					Commitments and contingencies (Note 13)
Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
Preferred stock	Preferred stock					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)	Series A convertible preferred stock at $0.0001 par value; 2,000,000 shares authorized, 100,000 issued and outstanding (liquidation preference of $1)	100		100		Series A convertible preferred stock at $0.0001 par value; 2,000,000 shares authorized, 100,000 issued and outstanding (liquidation preference of $1)	100		100
Common stock	Common stock					Common stock
$0.0001 par value: 200,000,000 shares authorized; 99,743,560 issued and 98,985,435 outstanding at September 30, 2022; 97,921,826 issued and 97,163,701 outstanding at March 31, 2022		10		10
$0.0001 par value: 200,000,000 shares authorized; 99,901,328 issued and 99,143,203 outstanding at December 31, 2022; 97,921,826 issued and 97,163,701 outstanding at March 31, 2022						$0.0001 par value: 200,000,000 shares authorized; 99,901,328 issued and 99,143,203 outstanding at December 31, 2022; 97,921,826 issued and 97,163,701 outstanding at March 31, 2022	10		10
Additional paid-in capital	Additional paid-in capital	803,276		745,661		Additional paid-in capital	810,994		745,661
Treasury stock (758,125 shares at September 30, 2022, and March 31, 2022)		(71)		(71)
Treasury stock (758,125 shares at December 31, 2022, and March 31, 2022)						Treasury stock (758,125 shares at December 31, 2022, and March 31, 2022)	(71)		(71)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(54,329)		(39,341)		Accumulated other comprehensive loss	(44,201)		(39,341)
Accumulated deficit	Accumulated deficit	(165,202)		(191,788)		Accumulated deficit	(161,183)		(191,788)
Total stockholders’ equity	Total stockholders’ equity	583,784		514,571		Total stockholders’ equity	605,649		514,571
Non-controlling interest	Non-controlling interest	1,919		1,644		Non-controlling interest	1,978		1,644
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,374,129	$	1,458,509	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,352,675	$	1,458,509

The accompanying notes are an integral part of these condensed consolidated financial statements.

Digital Turbine, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income / (Loss)1

(Unaudited)

(in thousands, except per share amounts)


		Three months ended September 30,				Six months ended September 30,				Three months ended December 31,				Nine months ended December 31,
		2022		2021		2022		2021				2022		2021		2022		2021
Net revenue	Net revenue	$	174,859	$	188,568	$	363,492	$	346,643		Net revenue	$	162,310	$	216,818	$	525,802	$	563,461
Costs of revenue and operating expenses	Costs of revenue and operating expenses										Costs of revenue and operating expenses
License fees and revenue share	License fees and revenue share	76,881		91,508		164,248		175,316			License fees and revenue share	73,370		109,053		237,618		284,369
Other direct costs of revenue	Other direct costs of revenue	9,199		7,827		18,114		12,295			Other direct costs of revenue	9,324		9,090		27,438		21,385
Product development	Product development	14,736		13,915		28,869		26,839			Product development	14,218		13,755		43,087		40,594
Sales and marketing	Sales and marketing	15,490		17,479		31,548		31,215			Sales and marketing	16,469		15,857		48,017		47,072
General and administrative	General and administrative	37,471		41,307		75,196		65,301			General and administrative	39,132		39,924		114,328		105,225
Total costs of revenue and operating expenses	Total costs of revenue and operating expenses	153,777		172,036		317,975		310,966			Total costs of revenue and operating expenses	152,513		187,679		470,488		498,645
Income from operations	Income from operations	21,082		16,532		45,517		35,677			Income from operations	9,797		29,139		55,314		64,816
Interest and other income / (expense), net	Interest and other income / (expense), net										Interest and other income / (expense), net
Change in fair value of contingent consideration	Change in fair value of contingent consideration	—		(22,087)		—		(22,087)			Change in fair value of contingent consideration	—		(18,200)		—		(40,287)
Interest expense, net	Interest expense, net	(5,229)		(1,955)		(9,311)		(3,112)			Interest expense, net	(6,913)		(2,195)		(16,224)		(5,307)
Foreign exchange transaction loss		(281)		(249)		(612)		(519)
Foreign exchange transaction gain / (loss)											Foreign exchange transaction gain / (loss)	17		2,122		(595)		1,603

Other income / (expense), net	Other income / (expense), net	312		(477)		384		(512)			Other income / (expense), net	8		(86)		392		(598)
Total interest and other income / (expense), net	Total interest and other income / (expense), net	(5,198)		(24,768)		(9,539)		(26,230)			Total interest and other income / (expense), net	(6,888)		(18,359)		(16,427)		(44,589)
Income / (loss) before income taxes		15,884		(8,236)		35,978		9,447
Income before income taxes											Income before income taxes	2,909		10,780		38,887		20,227
Income tax provision / (benefit)	Income tax provision / (benefit)	4,181		(2,349)		9,317		1,081			Income tax provision / (benefit)	(1,153)		3,718		8,164		4,799
Net income / (loss)		11,703		(5,887)		26,661		8,366
Net income											Net income	4,062		7,062		30,723		15,428
Less: net income / (loss) attributable to non-controlling interest	Less: net income / (loss) attributable to non-controlling interest	39		(35)		75		(66)			Less: net income / (loss) attributable to non-controlling interest	43		48		118		(18)
Net income / (loss) attributable to Digital Turbine, Inc.		11,664		(5,852)		26,586		8,432
Net income attributable to Digital Turbine, Inc.											Net income attributable to Digital Turbine, Inc.	4,019		7,014		30,605		15,446
Other comprehensive loss	Other comprehensive loss										Other comprehensive loss
Foreign currency translation adjustment	Foreign currency translation adjustment	(9,246)		(15,892)		(14,788)		(36,673)			Foreign currency translation adjustment	10,144		(8,389)		(4,644)		(45,062)
Comprehensive income / (loss)	Comprehensive income / (loss)	2,457		(21,779)		11,873		(28,307)			Comprehensive income / (loss)	14,206		(1,327)		26,079		(29,634)
Less: comprehensive income / (loss) attributable to non-controlling interest	Less: comprehensive income / (loss) attributable to non-controlling interest	32		(128)		275		(921)			Less: comprehensive income / (loss) attributable to non-controlling interest	59		(11)		334		(932)
Comprehensive income / (loss) attributable to Digital Turbine, Inc.	Comprehensive income / (loss) attributable to Digital Turbine, Inc.	$	2,425	$	(21,651)	$	11,598	$	(27,386)		Comprehensive income / (loss) attributable to Digital Turbine, Inc.	$	14,147	$	(1,316)	$	25,745	$	(28,702)
Net income / (loss) per common share
Net income per common share											Net income per common share
Basic	Basic	$	0.12	$	(0.06)	$	0.27	$	0.09		Basic	$	0.04	$	0.07	$	0.31	$	0.16
Diluted	Diluted	$	0.11	$	(0.06)	$	0.26	$	0.08		Diluted	$	0.04	$	0.07	$	0.30	$	0.15
Weighted-average common shares outstanding	Weighted-average common shares outstanding										Weighted-average common shares outstanding
Basic	Basic	98,887		96,157		98,324		93,807			Basic	99,108		96,548		98,623		94,620
Diluted	Diluted	102,898		96,157		102,777		100,457			Diluted	103,348		103,287		103,674		101,346

1In the fiscal quarter ended June 30, 2021, the Company initiated two significant acquisitions. Please refer to Note 3, “Acquisitions,” in the accompanying condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Digital Turbine, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows1

(Unaudited)

(in thousands)

Six months ended September 30,
2022 2021
Cash flows from operating activities
Net income $ 26,661 $ 8,366
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 40,010 24,981
Non-cash interest expense 408 298
Stock-based compensation expense 12,023 9,630
Foreign exchange transaction (gain) / loss 612 —
Change in fair value of contingent consideration — 22,087
Right-of-use asset 5,079 1,951
Deferred income taxes (2,228) 178
(Increase) / decrease in assets:
Accounts receivable, gross 9,916 (61,855)
Allowance for credit losses 2,249 (31)
Prepaid expenses and other current assets (4,608) (4,917)
Other non-current assets 160 95
Increase / (decrease) in liabilities:
Accounts payable 2,371 51,676
Accrued license fees and revenue share (16,866) 1,382
Accrued compensation (15,109) (45,694)
Other current liabilities 9,406 2,643
Other non-current liabilities (5,775) (3,036)
Net cash provided by operating activities 64,309 7,754
Cash flows from investing activities
Business acquisitions, net of cash acquired — (148,056)
Capital expenditures (12,930) (10,411)
Net cash used in investing activities (12,930) (158,467)
Cash flows from financing activities
Proceeds from borrowings — 267,134
Payment of debt issuance costs — (2,988)
Options and warrants exercised 939 2,155
Payment of withholding taxes for net share settlement of equity awards (5,929) —
Repayment of debt obligations (86,500) (46,256)
Net cash provided by / (used in) financing activities (91,490) 220,045
Effect of exchange rate changes on cash and cash equivalents and restricted cash (3,838) (4,233)
Net change in cash and cash equivalents and restricted cash (43,949) 65,099
Cash and cash equivalents and restricted cash, beginning of period 127,162 31,118
Cash and cash equivalents and restricted cash, end of period $ 83,213 $ 96,217
Supplemental disclosure of cash flow information
Interest paid $ 7,410 $ 2,199
Income taxes paid $ 1,076 $ 693
Supplemental disclosure of non-cash activities
Common stock issued for the acquisition of Fyber $ 50,000 $ 356,686
Unpaid cash consideration for the acquisition of Fyber Minority Interest $ 2,578 $ 3,108
Unpaid cash consideration for the acquisition of AdColony $ — $ 100,000
Fair value of unpaid contingent consideration in connection with business acquisitions $ — $ 235,500


	Nine months ended December 31,
	2022		2021
Cash flows from operating activities
Net income	$	30,723	$	15,428
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	60,147		40,946
Non-cash interest expense	619		500

Stock-based compensation expense	19,643		15,369
Foreign exchange transaction (gain) / loss	581		(1,603)
Change in fair value of contingent consideration	—		40,287

Right-of-use asset	4,868		3,270
Deferred income taxes	(2,494)		4,799
(Increase) / decrease in assets:
Accounts receivable, gross	32,816		(104,535)
Allowance for credit losses	3,009		412
Prepaid expenses and other current assets	(11,397)		(5,760)
Other non-current assets	100		74
Increase / (decrease) in liabilities:
Accounts payable	(14,113)		38,467
Accrued license fees and revenue share	(20,324)		29,377
Accrued compensation	(13,131)		(33,506)
Other current liabilities	11,784		1,114
Other non-current liabilities	(5,317)		(1,177)


Net cash provided by operating activities	97,514		43,462

Cash flows from investing activities
Equity investments	(4,000)		—
Business acquisitions, net of cash acquired	(2,708)		(148,192)
Capital expenditures	(18,598)		(15,692)
Net cash used in investing activities	(25,306)		(163,884)

Cash flows from financing activities

Proceeds from borrowings	18,000		369,913
Payment of debt issuance costs	(94)		(4,044)
Payment of deferred business acquisition consideration	—		(98,175)
Options and warrants exercised	1,095		2,814
Payment of withholding taxes for net share settlement of equity awards	(6,202)		(7,587)
Repayment of debt obligations	(129,500)		(52,623)
Net cash provided by / (used in) financing activities	(116,701)		210,298

Effect of exchange rate changes on cash and cash equivalents and restricted cash	(2,808)		(5,554)

Net change in cash and cash equivalents and restricted cash	(47,301)		84,322

Cash and cash equivalents and restricted cash, beginning of period	127,162		31,118

Cash and cash equivalents and restricted cash, end of period	$	79,861	$	115,440

Supplemental disclosure of cash flow information
Interest paid	$	12,912	$	3,882
Income taxes paid	$	3,917	$	954

Supplemental disclosure of non-cash activities
Common stock issued for the acquisition of Fyber	$	50,000	$	356,686
Unpaid cash consideration for the acquisition of Fyber Minority Interest	$	2,578	$	3,106

Fair value of unpaid contingent consideration in connection with business acquisitions	$	2,738	$	204,500

The accompanying notes are an integral part of these condensed consolidated financial statements.

Digital Turbine, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity1

(Unaudited)

(in thousands, except share counts)


		Common Stock Shares	Amount		Preferred Stock Shares	Amount		Treasury Stock Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Non-Controlling Interest			Total				Common Stock Shares			Amount			Preferred Stock Shares			Amount			Treasury Stock Shares			Amount				Additional Paid-In Capital				Accumulated Other Comprehensive Loss				Accumulated Deficit				Non-Controlling Interest				Total
Balance at March 31, 2022	Balance at March 31, 2022	97,163,701	$	10	100,000	$	100	758,125	$	(71)	$	745,661	$	(39,341)	$	(191,788)	$	1,644		$	516,215	Balance at March 31, 2022		97,163,701			$	10		100,000			$	100		758,125			$	(71)			$	745,661			$	(39,341)			$	(191,788)			$	1,644			$	516,215
Net income	Net income	—	—		—	—		—	—		—		—		14,922		36			14,958		Net income		—			—			—			—			—			—				—				—				14,922				36				14,958
Foreign currency translation	Foreign currency translation	—	—		—	—		—	—		—		(5,749)		—		207			(5,542)		Foreign currency translation		—			—			—			—			—			—				—				(5,749)				—				207				(5,542)
Stock-based compensation expense	Stock-based compensation expense	—	—		—	—		—	—		6,463		—		—		—			6,463		Stock-based compensation expense		—			—			—			—			—			—				6,463				—				—				—				6,463
Shares issued:	Shares issued:																				Shares issued:
Exercise of stock options	Exercise of stock options	380,176	—		—	—		—	—		296		—		—		—			296		Exercise of stock options		380,176			—			—			—			—			—				296				—				—				—				296
Issuance of restricted shares and vesting of restricted units	Issuance of restricted shares and vesting of restricted units	7,763	—		—	—		—	—		—		—		—		—			—		Issuance of restricted shares and vesting of restricted units		7,763			—			—			—			—			—				—				—				—				—				—
Shares for acquisition of Fyber	Shares for acquisition of Fyber	1,205,982	—		—	—		—	—		50,000		—		—		—			50,000		Shares for acquisition of Fyber		1,205,982			—			—			—			—			—				50,000				—				—				—				50,000

Payment of withholding taxes related to the net share settlement of equity awards	Payment of withholding taxes related to the net share settlement of equity awards	—	—		—	—		—	—		(4,357)		—		—		—			(4,357)		Payment of withholding taxes related to the net share settlement of equity awards		—			—			—			—			—			—				(4,357)				—				—				—				(4,357)
Balance at June 30, 2022	Balance at June 30, 2022	98,757,622	$	10	100,000	$	100	758,125	$	(71)	$	798,063	$	(45,090)	$	(176,866)	$	1,887		$	578,033	Balance at June 30, 2022		98,757,622			$	10		100,000			$	100		758,125			$	(71)			$	798,063			$	(45,090)			$	(176,866)			$	1,887			$	578,033
Net income	Net income	—	—		—	—		—	—		—		—		11,664		39			11,703		Net income		—			—			—			—			—			—				—				—				11,664				39				11,703
Foreign currency translation	Foreign currency translation	—	—		—	—		—	—		—		(9,239)		—		(7)			(9,246)		Foreign currency translation		—			—			—			—			—			—				—				(9,239)				—				(7)				(9,246)
Stock-based compensation expense	Stock-based compensation expense	—	—		—	—		—	—		6,142		—		—		—			6,142		Stock-based compensation expense		—			—			—			—			—			—				6,142				—				—				—				6,142
Shares issued:	Shares issued:																				Shares issued:
Exercise of stock options	Exercise of stock options	198,778	—		—	—		—	—		643		—		—		—			643		Exercise of stock options		198,778			—			—			—			—			—				643				—				—				—				643
Issuance of restricted shares and vesting of restricted units	Issuance of restricted shares and vesting of restricted units	29,035	—		—	—		—	—		—		—		—		—			—		Issuance of restricted shares and vesting of restricted units		29,035			—			—			—			—			—				—				—				—				—				—

Payment of withholding taxes related to the net share settlement of equity awards	Payment of withholding taxes related to the net share settlement of equity awards	—	—		—	—		—	—		(1,572)		—		—		—			(1,572)		Payment of withholding taxes related to the net share settlement of equity awards		—			—			—			—			—			—				(1,572)				—				—				—				(1,572)
Balance at September 30, 2022	Balance at September 30, 2022	98,985,435	$	10	100,000	$	100	758,125	$	(71)	$	803,276	$	(54,329)	$	(165,202)	$	1,919		$	585,703	Balance at September 30, 2022		98,985,435			$	10		100,000			$	100		758,125			$	(71)			$	803,276			$	(54,329)			$	(165,202)			$	1,919			$	585,703
Net income																			Net income				—		—				—		—				—		—				—				—				4,019				43				4,062
Foreign currency translation																			Foreign currency translation				—		—				—		—				—		—				—				10,128				—				16				10,144
Stock-based compensation expense																			Stock-based compensation expense				—		—				—		—				—		—				7,835				—				—				—				7,835
Shares issued:																			Shares issued:
Exercise of stock options																			Exercise of stock options				84,594		—				—		—				—		—				156				—				—				—				156
Issuance of restricted shares and vesting of restricted units																			Issuance of restricted shares and vesting of restricted units				73,174		—				—		—				—		—				—				—				—				—				—

Payment of withholding taxes related to the net share settlement of equity awards																			Payment of withholding taxes related to the net share settlement of equity awards				—		—				—		—				—		—				(273)				—				—				—				(273)
Balance at December 31, 2022																			Balance at December 31, 2022				99,143,203		$	10			100,000		$	100			758,125		$	(71)			$	810,994			$	(44,201)			$	(161,183)			$	1,978			$	607,627

Digital Turbine, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity1

(Unaudited)

(in thousands, except share counts)

Common Stock
Shares* Amount Preferred Stock
Shares Amount Treasury Stock Shares* Amount Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Loss Accumulated
Deficit Non-Controlling Interest Total
Balance at March 31, 2021 89,790,086 $ 10 100,000 $ 100 758,125 $ (71) $ 373,310 $ (903) $ (227,334) $ — $ 145,112
Net income — — — — — — — — 14,284 (31) 14,253
Foreign currency translation — — — — — — — (20,019) — (762) (20,781)
Stock-based compensation expense — — — — — — 3,705 — — — 3,705
Shares issued:
Exercise of stock options 178,127 — — — — — 695 — — — 695
Vesting of restricted and performance stock units 207,758 — — — — — — — — — —
Shares for acquisition of Fyber 4,716,935 — — — — — 359,233 — — — 359,233
Acquisition of non-controlling interests in Fyber — — — — — — — — — 24,558 24,558
Balance at June 30, 2021 94,892,906 $ 10 100,000 $ 100 758,125 $ (71) $ 736,943 $ (20,922) $ (213,050) $ 23,765 $ 526,775
Net loss — — — — — — — — (5,852) (35) (5,887)
Foreign currency translation — — — — — — — (15,799) — (93) (15,892)
Stock-based compensation expense — — — — — — 5,925 — — — 5,925
Shares issued:
Exercise of stock options 480,422 — — — — — 1,460 — — — 1,460
Issuance of restricted shares and vesting of restricted units 28,477 — — — — — — — — — —
Shares for acquisition of Fyber 1,058,364 — — — — — (2,547) — — — (2,547)
Acquisition of non-controlling interests in Fyber — — — — — — — — — (21,452) (21,452)
Balance at September 30, 2021 96,460,169 $ 10 100,000 $ 100 758,125 $ (71) $ 741,781 $ (36,721) $ (218,902) $ 2,185 $ 488,382

*De minimis adjustment to previously disclosed share count; no impact on quarter-to-date or year-to-date earnings per share in any period presented.


	Common Stock Shares	Amount		Preferred Stock Shares	Amount		Treasury Stock Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Non-Controlling Interest		Total
Balance at March 31, 2021	89,790,086	$	10	100,000	$	100	758,125	$	(71)	$	373,310	$	(903)	$	(227,334)	$	—	$	145,112
Net income	—	—		—	—		—	—		—		—		14,284		(31)		14,253
Foreign currency translation	—	—		—	—		—	—		—		(20,019)		—		(762)		(20,781)
Stock-based compensation expense	—	—		—	—		—	—		3,705		—		—		—		3,705
Shares issued:
Exercise of stock options	178,127	—		—	—		—	—		695		—		—		—		695
Vesting of restricted and performance stock units	207,758	—		—	—		—	—		—		—		—		—		—
Shares for acquisition of Fyber	4,716,935	—		—	—		—	—		359,233		—		—		—		359,233
Acquisition of non-controlling interests in Fyber	—	—		—	—		—	—		—		—		—		24,558		24,558



Balance at June 30, 2021	94,892,906	$	10	100,000	$	100	758,125	$	(71)	$	736,943	$	(20,922)	$	(213,050)	$	23,765	$	526,775
Net loss	—	—		—	—		—	—		—		—		(5,852)		(35)		(5,887)
Foreign currency translation	—	—		—	—		—	—		—		(15,799)		—		(93)		(15,892)
Stock-based compensation expense	—	—		—	—		—	—		5,925		—		—		—		5,925
Shares issued:
Exercise of stock options	480,422	—		—	—		—	—		1,460		—		—		—		1,460
Issuance of restricted shares and vesting of restricted units	28,477	—		—	—		—	—		—		—		—		—		—
Shares for acquisition of Fyber	1,058,364	—		—	—		—	—		(2,547)		—		—		—		(2,547)
Acquisition of non-controlling interests in Fyber	—	—		—	—		—	—		—		—		—		(21,452)		(21,452)



Balance at September 30, 2021	96,460,169	$	10	100,000	$	100	758,125	$	(71)	$	741,781	$	(36,721)	$	(218,902)	$	2,185	$	488,382
Net income	—	—		—	—		—	—		—		—		7,014		48		7,062
Foreign currency translation	—	—		—	—		—	—		—		(8,330)		—		(59)		(8,389)
Stock-based compensation expense	—	—		—	—		—	—		5,739		—		—		—		5,739
Shares issued:
Exercise of stock options	201,015	—		—	—		—	—		659		—		—		—		659
Issuance of restricted shares and vesting of restricted units	70,043	—		—	—		—	—		—		—		—		—		—




Payment of withholding taxes related to the net share settlement of equity awards	—	—		—	—		—	—		(7,587)		—		—		—		(7,587)
Balance at December 31, 2021	96,731,227	$	10	100,000	$	100	758,125	$	(71)	$	740,592	$	(45,051)	$	(211,888)	$	2,174	$	485,866

The accompanying notes are an integral part of these condensed consolidated financial statements.

Digital Turbine, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~September 30,~~December 31, 2022

(in thousands, except share and per share amounts)

1. Description of Business

Digital Turbine, Inc., through its subsidiaries (collectively “Digital Turbine” or the “Company”), is a leading, independent mobile growth platform that levels up the landscape for advertisers, publishers, carriers, and device original equipment manufacturers (“OEMs”). The Company offers end-to-end products and solutions leveraging proprietary technology to all participants in the mobile application ecosystem, enabling brand discovery and advertising, user acquisition and engagement, and operational efficiency for advertisers. In addition, ~~our~~the Company’s products and solutions provide monetization opportunities for OEMs, carriers, and application (“app” or “apps”) publishers and developers.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. The Company consolidates the financial results and reports non-controlling interests representing the economic interests held by other equity holders of subsidiaries that are not 100% owned by the Company. The calculation of non-controlling interests excludes any net income / (loss) attributable directly to the Company. All intercompany balances and transactions have been eliminated in consolidation.

These financial statements should be read in conjunction with the Company’s audited financial statements and related notes included in its Annual Report on Form 10-K for the fiscal year ended March 31, 2022.

Unaudited Interim Financial Information

These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary to present fairly the Company’s financial condition, results of operations, comprehensive income, stockholders’ equity, and cash flows for the interim periods indicated. The results of operations for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022, are not necessarily indicative of the operating results for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include revenue recognition, including the determination of gross versus net revenue reporting, allowance for credit losses, stock-based compensation, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, fair value of contingent earn-out considerations, incremental borrowing rates for right-of-use assets and lease liabilities, and tax valuation allowances. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from management’s estimates using different assumptions or under different conditions.

Management considered the impacts of ~~both~~ global inflation, conflict in Ukraine, as well as the continued effects of COVID-19 pandemic on the Company’s critical and significant accounting estimates. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates or judgments or revise the carrying value of its assets or liabilities as a result of global inflation or the COVID-19 pandemic.

Management’s estimates may change as new events occur and additional information is obtained. Actual results could differ from estimates and any such differences may be material to the Company’s condensed consolidated financial statements.

Summary of Significant Accounting Policies

There have been no significant changes to the Company’s significant accounting policies in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” of the notes to the condensed consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended March 31, 2022, other than the “Recent Accounting Pronouncements” disclosed below and changes to the Company’s segment reporting disclosed in Note 4, “Segment Information.”

Accounting Pronouncements Adopted During the Period

ASU 2020-04

In March 2020, the Financial Accounting Standards Board issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to amendments to contracts, hedging relationships, and other contractual transactions impacted by the discontinuation of the London Inter-Bank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities through December 31, 2022 and can be adopted as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020. The Company ~~has~~ adopted the update as of the quarter ended September 30, 2022 and the impact of the adoption was not material to the Company’s condensed consolidated financial statements.

3. Acquisitions

Acquisition of In App Video Services UK LTD.

On November 1, 2022, the Company completed the acquisition of all of the outstanding ownership interests of In App Video Services UK LTD. (“In App”) pursuant to a Stock Purchase Agreement (the “In App Acquisition”). Prior to the Acquisition, In App acted as a third-party representative of the Company’s App Growth Platform (“AGP”) segment’s products and services in the United Kingdom (“UK”). The acquisition of In App is part of the Company’s strategy to make investments that provide opportunities to grow market share and increase revenues in important markets and geographies like the UK.

The Company acquired In App for total, estimated consideration in the range of $2,250 to $5,500, paid as follows: (1) $2,708 paid in cash at closing, including a working capital adjustment of approximately $460, with $1,000 of that amount held in escrow for one-year and (2) potential annual earn-out payments based on meeting annual revenue targets for the calendar years ended December 31, 2022, 2023, 2024 and 2025. The annual earn out payments are up to $250 for the year ended December 31, 2022 and $1,000 for each of the calendar years ended December 31, 2023, 2024 and 2025. Also, an incremental earn-out payment will be made for each of the calendar years ended 2023, 2024 and 2025 in an amount equal to 25% of revenue that is more than 150% of that calendar year’s revenue target.

The Company recorded the preliminary fair values of the assets acquired and liabilities assumed in the In App Acquisition, which resulted in the recognition of: (1) current assets, net of cash acquired, of $836, (2) current liabilities of $401, (3) acquisition purchase price liability of $2,738, (4) and goodwill of $5,008.

The Company recognized costs related to the In App Acquisition of $162 and $207, respectively, for the three and nine months ended December 31, 2022, in operating expenses on the condensed consolidated statements of operations and comprehensive income / (loss).

Acquisition of Fyber N.V.

On May 25, 2021, the Company completed the initial closing of the acquisition of 95.1% of the outstanding voting shares (the “Majority Fyber Shares”) of Fyber N.V. (“Fyber”) pursuant to a Sale and Purchase Agreement (the ~~"Fyber Acquisition"~~“Fyber Acquisition”) between Tennor Holding B.V., Advert Finance B.V., and Lars Windhorst (collectively, the “Seller”), the Company, and Digital Turbine Luxembourg S.ar.l., a wholly-owned subsidiary of the Company. The remaining outstanding shares in Fyber (the “Minority Fyber Shares”) are (to the Company’s knowledge) held by other shareholders of Fyber (the “Minority Fyber Shareholders”) and are presented as non-controlling interests within these financial statements.

Fyber is a leading mobile advertising monetization platform empowering global app developers to optimize profitability through quality advertising. Fyber’s proprietary technology platform and expertise in mediation, real-time bidding, advanced analytics tools, and video combine to deliver publishers and advertisers a highly valuable app monetization solution. Fyber represents an important and strategic addition for the Company in its mission to develop one of the largest full-stack, fully-independent, mobile advertising solutions in the industry. The combined platform offering is advantageously positioned to leverage the Company’s existing on-device software presence and global distribution footprint.

The Company acquired Fyber in exchange for an estimated aggregate consideration of up to $600,000, consisting of:

i.Approximately $150,000 in cash, $124,336 of which was paid to the Seller at the closing of the acquisition and the remainder of which is to be paid to the Minority Fyber Shareholders for the Minority Fyber Shares pursuant to the tender offer described below;

ii.5,816,588 newly-issued shares of common stock of the Company to the Seller, which such number of shares was determined based on the volume-weighted average price of the common stock on NASDAQ during the 30-day period prior to the closing date, equal in value to $359,233 at the Company’s common stock closing price on May 25, 2021, as follows.

1.3,216,935 newly-issued shares of common stock of the Company equal in value to $198,678, issued at the closing of the acquisition;

2.1,500,000 newly-issued shares of common stock of the Company equal in value to $92,640, issued on June 17, 2021;

3.1,040,364 newly-issued shares of common stock of the Company equal in value to $64,253, issued on July 16, 2021;

4.59,289 shares of common stock equal in value to $3,662, to be newly-issued during the Company’s fiscal second quarter 2022, but subject to a true-up reduction based on increased transaction costs associated with the staggered delivery of the Majority Fyber Shares to the Company, which true-up reduction has been finalized, as described below; and

iii.Contingent upon Fyber’s net revenue (revenue less associated license fees and revenue share) being equal to or higher than $100,000 for the 12-month earn-out period ending on March 31, 2022, as determined in the manner set forth in the Sale and Purchase Agreement, a certain number of shares of the Company’s common stock, which will be newly-issued to the Seller at the end of the earn-out period, and under certain circumstances, an amount of cash, which value of such shares, based on the weighted average share price for the 30-days prior to the end of the earn-out period, and cash in aggregate, will not exceed $50,000 (subject to set-off against certain potential indemnification claims against the Seller). Based on estimates at the time of the acquisition, the Company initially determined it was unlikely Fyber would achieve the earn-out net revenue target and, as a result, no contingent liability was recognized at that time.

The Company paid the cash closing amount on the closing date with a combination of available cash-on-hand and borrowings under the Company’s senior credit facility.

On September 30, 2021, the Company entered into the Second Amendment Agreement (the “Second Amendment Agreement”) to the Sale and Purchase Agreement for the Fyber Acquisition. Pursuant to the Second Amendment Agreement, the parties agreed to settle the remaining number of shares of Company common stock to be issued to the Seller at 18,000 shares (i.e., a reduction of 41,289 shares from the 59,289 shares described in (ii)(4) above). As a result, the Company issued a total of 5,775,299 shares of Company common stock to the Seller in connection with the Company’s acquisition of Fyber.

As of March 31, 2022, the Company had recognized the acquisition purchase price liability of $50,000. The Company settled the obligation through the issuance of 1,205,982 shares of the Company’s common stock effective May 19, 2022.

Pursuant to certain German law on public takeovers, following the closing, the Company launched a public tender offer to the Minority Fyber Shareholders to acquire from them the Minority Fyber Shares. The tender offer was approved and published in July 2021, and is subject to certain minimum price rules under German law. The timing and the conditions of the tender offer, including the consideration of €0.84 per share offered to the Minority Fyber Shareholders in connection with the tender offer, was determined by the Company pursuant to the applicable Dutch and German takeover laws. During the fiscal year ended March 31, 2022, the Company purchased an additional $18,341 of Fyber's outstanding shares, resulting in an ownership percentage of Fyber of approximately 99.5% as of ~~September 30,~~December 31, 2022. The Company expects to complete the purchase of the remaining outstanding Fyber shares during fiscal year 2023.

The delisting of Fyber’s remaining outstanding shares on the Frankfurt Stock Exchange was completed on August 6, 2021.

The fair values of the assets acquired and liabilities assumed at the date of the Fyber Acquisition are presented as follows1:


	May 25, 2021		Measurement Period Adjustments		May 25, 2021 (adjusted)
Assets acquired
Cash	$	71,489	$	—	$	71,489
Accounts receivable	64,877		166		65,043
Other current assets	10,470		—		10,470
Property and equipment	1,561		—		1,561
Right-of-use asset	13,191		—		13,191
Publisher relationships	106,400		(95)		106,305
Developed technology	86,900		—		86,900
Trade names	32,100		474		32,574
Customer relationships	31,400		—		31,400
Favorable lease	1,483		—		1,483
Goodwill	303,015		(2,572)		300,443
Other non-current assets	851		—		851
Total assets acquired	$	723,737	$	(2,027)	$	721,710

Liabilities assumed
Accounts payable	$	78,090	$	(1,501)	$	76,589
Accrued license fees and revenue share	5,929		—		5,929
Accrued compensation	52,929		—		52,929
Other current liabilities	12,273		(1,739)		10,534
Current portion of debt	25,789		—		25,789
Deferred tax liability, net	25,213		3,627		28,840
Other non-current liabilities	15,386		—		15,386
Total liabilities assumed	$	215,609	$	387	$	215,996
Total purchase price	$	508,128	$	(2,414)	$	505,714

During the measurement period ended May 25, 2022, the Company recorded a cumulative net measurement period adjustment that decreased goodwill by $2,572, as presented in the table above. The Company made these measurement period adjustments to reflect facts and circumstances that existed as of the acquisition date and did not result from intervening events subsequent to such date.

The excess of cost of the Fyber Acquisition over the net amounts assigned to the fair values of the net assets acquired was recorded as goodwill and was assigned to the Company’s App Growth Platform (“AGP”) segment. The goodwill consists largely of the expected cash flows and future growth anticipated for the Company. The goodwill is not deductible for tax purposes.

1The purchase consideration was translated using the Euro-to-United States (“U.S.”) dollar exchange rate in effect on the acquisition closing date, May 25, 2021, of approximately €1.00 to $1.22.

The identifiable intangible assets consist of publisher relationships, developed technology, trade names, customer relationships, and a favorable lease. The publisher relationships, developed technology, trade names, and customer relationships intangibles were assigned useful lives of 20.0 years, 7.0 years, 7.0 years, and 3.0 years, respectively. The below-market favorable lease was derived from Fyber’s office lease in Berlin, Germany and, per ASC 842, Leases, will be combined with Fyber's right-of-use asset for that lease and will be amortized over the remaining life of that lease. The values for the identifiable intangible assets were determined using the following valuation methodologies:

•Publisher Relationships - Multi-Period Excess Earnings Method

•Developed Technology - Relief from Royalty Method

•Trade Names - Relief from Royalty Method

•Customer Relationships - With-and-Without Method

•Favorable Lease - Income Approach

1~~The purchase consideration was translated using the Euro-to-United States (“U.S.”) dollar exchange rate in effect on the acquisition closing date, May 25, 2021, of approximately €1.00 to $1.22.~~

The Company recognized costs related to the Fyber Acquisition of ~~$443~~$441 and ~~$1,003,~~$1,444, respectively, for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022, and ~~$8,116~~$5,183 and ~~$11,715,~~$16,898, respectively, for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2021, in ~~general and administrative~~operating expenses on the condensed consolidated statements of operations and comprehensive income / (loss).

Acquisition of AdColony Holding AS

On April 29, 2021, the Company completed the acquisition of AdColony Holding AS, a Norway company (“AdColony”), pursuant to a Share Purchase Agreement (the “AdColony Acquisition”). The Company acquired all outstanding capital stock of AdColony in exchange for an estimated total consideration in the range of $400,000 to $425,000, to be paid as follows: (1) $100,000 in cash paid at closing (subject to customary closing purchase price adjustments), (2) $100,000 in cash to be paid six months after closing, and (3) an estimated earn-out in the range of $200,000 to $225,000, to be paid in cash, based on AdColony achieving certain future target net revenue, less associated cost of goods sold (as such term is referenced in the Share Purchase Agreement), over a 12-month period ending on December 31, 2021 (the “Earn-Out Period”). Under the terms of the earn-out, the Company would pay the seller a certain percentage of actual net revenue (less associated cost of goods sold, as such term is referenced in the Share Purchase Agreement) of AdColony, depending on the extent to which AdColony achieves certain target net revenue (less associated cost of goods sold, as such term is referenced in the Share Purchase Agreement) over the Earn-Out Period. The earn-out payment will be made following the expiration of the Earn-Out Period.

AdColony is a leading mobile advertising platform servicing advertisers and publishers. AdColony’s proprietary video technologies and rich media formats are widely viewed as a best-in-class technology delivering third-party verified viewability rates for well-known global brands. With the addition of AdColony, the Company expanded its collective experience, reach, and suite of capabilities to benefit mobile advertisers and publishers around the globe. Performance-based spending trends by large, established brand advertisers present material upside opportunities for platforms with unique technology deployable across exclusive access to inventory.

On August 27, 2021, the Company entered into an Amendment to Share Purchase Agreement (the “Amendment Agreement”) with AdColony and Otello Corporation ASA, a Norway company and ~~AdColony's~~AdColony’s previous parent company. Pursuant to the Amendment Agreement, the Company and Otello agreed to set a fixed dollar amount of $204,500 for the earn-out payment obligation, to set January 15, 2022, as the payment due date for such payment amount, and to eliminate all of the Company’s earn-out support obligations under the Share Purchase Agreement. As a result, the Company recognized an $8,913 reduction of the earn-out payment obligation in change in fair value of contingent consideration on the condensed consolidated statement of operations and comprehensive income / (loss) for the fiscal second quarter ended September 30, 2021.

The Company paid the cash consideration amounts that were due at closing and on October 26, 2021, with a combination of available cash-on-hand and borrowings under the Company’s senior credit facility. The payment made on October 26, 2021, was reduced to $98,175 due to an adjustment for the impact of accrued and unpaid taxes to the net working capital acquired. The difference between the amount due of $100,000 and amount paid resulted in an adjustment to goodwill.

On January 15, 2022, the Company paid the AdColony Acquisition earn-out consideration of $204,500 with available cash-on-hand and an additional $179,000 of borrowings under the New Credit Agreement. See Note 9, “Debt,” for additional information regarding the New Credit Agreement.

The fair values of the assets acquired and liabilities assumed at the date of the AdColony Acquisition are presented as follows:


	April 29, 2021		Measurement Period Adjustments		April 29, 2021 (adjusted)
Assets acquired
Cash	$	24,793	$	—	$	24,793
Accounts receivable	57,285		—		57,285
Other current assets	1,845		—		1,845
Property and equipment	1,566		—		1,566
Right-of-use asset	2,460		—		2,460
Customer relationships	102,400		(600)		101,800
Developed technology	51,100		—		51,100
Trade names	36,100		(100)		36,000
Publisher relationships	4,400		—		4,400
Goodwill	202,552		(3,502)		199,050
Other non-current assets	131		—		131
Total assets acquired	$	484,632	$	(4,202)	$	480,430

Liabilities assumed
Accounts payable	$	21,140	$	—	$	21,140
Accrued license fees and revenue share	28,920		—		28,920
Accrued compensation	8,453		—		8,453
Other current liabilities	1,867		—		1,867
Deferred tax liability, net	10,520		(2,377)		8,143
Other non-current liabilities	1,770		—		1,770
Total liabilities assumed	$	72,670	$	(2,377)	$	70,293
Total purchase price	$	411,962	$	(1,825)	$	410,137

During the measurement period ended April 29, 2022, the Company recorded a cumulative net measurement period adjustment that decreased goodwill by $3,502, as presented in the table above. The Company made these measurement period adjustments to reflect facts and circumstances that existed as of the acquisition date and did not result from intervening events subsequent to such date.

The excess of cost of the AdColony Acquisition over the net amounts assigned to the fair values of the net assets acquired was recorded as goodwill and was assigned to the Company’s AGP segment. The goodwill consists largely of the expected cash flows and future growth anticipated for the Company. The goodwill is not deductible for tax purposes.

The identifiable intangible assets consist of customer relationships, developed technology, trade names, and publisher relationships and were assigned useful lives of 8.0 years to 15.0 years, 7.0 years, 7.0 years, and 10.0 years, respectively. The values for the identifiable intangible assets were determined using the following valuation methodologies:

•Customer Relationships - Multi-Period Excess Earnings Method

•Developed Technology - Relief from Royalty Method

•Trade Names - Relief from Royalty Method

•Publisher Relationships - Cost Approach

The Company recognized costs related to the AdColony Acquisition of ~~$64~~$214 for the nine months ended December 31, 2022, and ~~$214,~~$486 and $3,977, respectively, for the three and ~~six~~nine months ended ~~September 30, 2022, and $620 and $3,491, respectively, for the three and six months ended September 30,~~December 31, 2021, in ~~general and administrative~~operating expenses on the condensed consolidated statements of operations and comprehensive income / (loss). There were no such costs for the three months ended December 31, 2022.

Pro Forma Financial Information (Unaudited)

The pro forma information below gives effect to the Fyber Acquisition and the AdColony Acquisition (collectively, the “Acquisitions”) as if they had been completed on the first day of each period presented. The pro forma results of operations are presented for information purposes only. As such, they are not necessarily indicative of the Company’s results had the Acquisitions been completed on the first day of each period presented, nor do they intend to represent the Company’s future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the Acquisitions and does not reflect additional revenue opportunities following the Acquisitions. The pro forma information includes adjustments to record the assets and liabilities associated with the Acquisitions at their respective fair values, based on available information and to give effect to the financing for the Acquisitions. The prior period year-to-date pro forma information is presented below. Adjustments for the Acquisitions were not a component in prior period quarter-to-date information and therefore does not differ from amounts presented on the condensed consolidated statements of operations and comprehensive income / (loss).

~~Six~~Nine months ended ~~September 30,~~December 31,

2021

Unaudited

(in thousands, except per share amounts)

Net revenue

~~369,040~~585,858

Net ~~income / (loss)~~loss attributable to controlling interest

~~(24,269)~~(17,255)

Basic net ~~income / (loss)~~loss attributable to controlling interest per common share

~~(0.26)~~(0.18)

Diluted net ~~income / (loss)~~loss attributable to controlling interest per common share

~~(0.26)~~(0.18)

4. Segment Information

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company has determined that its Chief Executive Officer is the CODM.

As of March 31, 2022, the Company operated through three operating segments, each of which was a reportable segment. The three segments were On Device Media (“ODM”), In-App Media - AdColony (“IAM-A”), and In-App Media-Fyber (“IAM-F”). Effective April 1, 2022, the Company made certain changes to its organizational and management structure that resulted in the following: (1) the renaming of the On Device Media segment to On Device Solutions and (2) the integration of IAM-A and IAM-F into a single segment. The integration of IAM-A and IAM-F was completed to drive operating efficiencies and revenue synergies. As a result of the integration of IAM-A and IAM-F, the Company reassessed its operating and reportable segments in accordance with ASC 280, Segment Reporting. Effective April 1, 2022, the Company reports its results of operations through the following two segments, each of which represents an operating and reportable segment, as follows:

•On Device Solutions (“ODS”) - The Company re-named the ODM segment On Device Solutions to better reflect the nature of the segment's product offerings. This segment generates revenue from the delivery of mobile application media or content to end users. This segment provides focused solutions to all participants in the mobile application ecosystem that want to connect with end users and consumers who hold the device, including mobile carriers and device OEMs that participate in the app economy, app publishers and developers, and brands and advertising agencies. This segment's product offerings are enabled through relationships with mobile device carriers and OEMs.

•App Growth Platform (“AGP”) - This segment consists of the previously reported IAM-A and IAM-F segments. AGP customers are primarily advertisers and publishers and the segment provides platforms that allow mobile app publishers and developers to monetize their monthly active users via display, native, and video advertising. The AGP platforms allow demand side platforms, advertisers, agencies, and publishers to buy and sell digital ad impressions, primarily through programmatic, real-time bidding auctions and, in some cases, through direct-bought/sold advertiser budgets. The segment also provides brand and performance advertising products to advertisers and agencies.

The Company’s CODM evaluates segment performance and makes resource allocation decisions primarily based on segment net revenue and segment profit, as shown in the segment information summary table below. The Company’s CODM does not allocate other direct costs of revenue, operating expenses, interest and other income / (expense), net, or provision for income taxes to these segments for the purpose of evaluating segment performance. Additionally, the Company does not allocate assets to segments for internal reporting purposes as the CODM does not manage the Company’s segments by such metrics.

A summary of segment information follows:


		Three months ended September 30, 2022									Three months ended December 31, 2022
		ODS		AGP		Eliminations		Consolidated			ODS		AGP		Eliminations		Consolidated
Net revenue	Net revenue	$	108,466	$	68,256	$	(1,863)	$	174,859	Net revenue	$	96,316	$	67,407	$	(1,413)	$	162,310
License fees and revenue share	License fees and revenue share	59,786		18,958		(1,863)		76,881		License fees and revenue share	57,555		17,228		(1,413)		73,370
Segment profit	Segment profit	$	48,680	$	49,298	$	—	$	97,978	Segment profit	$	38,761	$	50,179	$	—	$	88,940


		Three months ended September 30, 2021									Three months ended December 31, 2021
		ODS		AGP		Eliminations		Consolidated			ODS		AGP		Eliminations		Consolidated
Net revenue	Net revenue	$	129,449	$	64,177	$	(5,058)	$	188,568	Net revenue	$	133,594	$	89,113	$	(5,889)	$	216,818
License fees and revenue share	License fees and revenue share	75,587		20,979		(5,058)		91,508		License fees and revenue share	86,504		28,438		(5,889)		109,053
Segment profit	Segment profit	$	53,862	$	43,198	$	—	$	97,060	Segment profit	$	47,090	$	60,675	$	—	$	107,765


		Six months ended September 30, 2022									Nine months ended December 31, 2022
		ODS		AGP		Eliminations		Consolidated			ODS		AGP		Eliminations		Consolidated
Net revenue	Net revenue	$	227,103	$	140,622	$	(4,233)	$	363,492	Net revenue	$	323,419	$	208,029	$	(5,646)	$	525,802
License fees and revenue share	License fees and revenue share	128,236		40,245		(4,233)		164,248		License fees and revenue share	185,791		57,473		(5,646)		237,618
Segment profit	Segment profit	$	98,867	$	100,377	$	—	$	199,244	Segment profit	$	137,628	$	150,556	$	—	$	288,184


		Six months ended September 30, 2021									Nine months ended December 31, 2021
		ODS		AGP		Eliminations		Consolidated			ODS		AGP		Eliminations		Consolidated
Net revenue	Net revenue	$	249,832	$	103,651	$	(6,840)	$	346,643	Net revenue	$	383,426	$	192,764	$	(12,729)	$	563,461
License fees and revenue share	License fees and revenue share	145,618		36,538		(6,840)		175,316		License fees and revenue share	232,122		64,976		(12,729)		284,369
Segment profit	Segment profit	$	104,214	$	67,113	$	—	$	171,327	Segment profit	$	151,304	$	127,788	$	—	$	279,092

Geographic Area Information

Long-lived assets, excluding deferred tax assets and intangible assets, by region follow:


		September 30, 2022		March 31, 2022			December 31, 2022		March 31, 2022
United States and Canada	United States and Canada	$	26,049	$	25,946	United States and Canada	$	27,029	$	25,946
Europe, Middle East, and Africa	Europe, Middle East, and Africa	10,809		5,086		Europe, Middle East, and Africa	11,709		5,086
Asia Pacific and China	Asia Pacific and China	33		54		Asia Pacific and China	21		54
Mexico, Central America, and South America	Mexico, Central America, and South America	—		—		Mexico, Central America, and South America	—		—
Consolidated property and equipment, net	Consolidated property and equipment, net	$	36,891	$	31,086	Consolidated property and equipment, net	$	38,759	$	31,086

Net revenue by geography is based on the billing addresses of the Company’s customers and a reconciliation of disaggregated revenue by segment follows:


	Three months ended December 31, 2022
	ODS		AGP		Total
United States and Canada	$	38,949	$	29,911	$	68,860
Europe, Middle East, and Africa	42,321		26,449		68,770
Asia Pacific and China	12,975		10,564		23,539
Mexico, Central America, and South America	2,071		483		2,554
Elimination	—		—		(1,413)
Consolidated net revenue	$	96,316	$	67,407	$	162,310


		Three months ended September 30, 2022							Three months ended December 31, 2021
		ODS		AGP		Total			ODS		AGP		Total
United States and Canada	United States and Canada	$	50,978	$	39,808	$	90,786	United States and Canada	$	74,431	$	45,238	$	119,669
Europe, Middle East, and Africa	Europe, Middle East, and Africa	42,598		22,254		64,852		Europe, Middle East, and Africa	35,667		34,297		69,964
Asia Pacific and China	Asia Pacific and China	13,140		6,149		19,289		Asia Pacific and China	19,877		8,547		28,424
Mexico, Central America, and South America	Mexico, Central America, and South America	1,750		45		1,795		Mexico, Central America, and South America	3,619		1,031		4,650
Elimination	Elimination	—		—		(1,863)		Elimination	—		—		(5,889)
Consolidated net revenue	Consolidated net revenue	$	108,466	$	68,256	$	174,859	Consolidated net revenue	$	133,594	$	89,113	$	216,818


		Three months ended September 30, 2021							Nine months ended December 31, 2022
		ODS		AGP		Total			ODS		AGP		Total
United States and Canada	United States and Canada	$	75,100	$	30,262	$	105,362	United States and Canada	$	152,890	$	115,957	$	268,847
Europe, Middle East, and Africa	Europe, Middle East, and Africa	30,591		26,321		56,912		Europe, Middle East, and Africa	125,463		68,118		193,581
Asia Pacific and China	Asia Pacific and China	17,969		6,835		24,804		Asia Pacific and China	39,989		22,837		62,826
Mexico, Central America, and South America	Mexico, Central America, and South America	5,789		759		6,548		Mexico, Central America, and South America	5,077		1,117		6,194
Elimination	Elimination	—		—		(5,058)		Elimination	—		—		(5,646)
Consolidated net revenue	Consolidated net revenue	$	129,449	$	64,177	$	188,568	Consolidated net revenue	$	323,419	$	208,029	$	525,802

Six months ended September 30, 2022
ODS AGP Total
United States and Canada $ 113,941 $ 86,046 $ 199,987
Europe, Middle East, and Africa 83,142 41,669 124,811
Asia Pacific and China 27,014 12,273 39,287
Mexico, Central America, and South America 3,006 634 3,640
Elimination — — (4,233)
Consolidated net revenue $ 227,103 $ 140,622 $ 363,492


		Six months ended September 30, 2021							Nine months ended December 31, 2021
		ODS		AGP		Total			ODS		AGP		Total
United States and Canada	United States and Canada	$	146,231	$	50,872	$	197,103	United States and Canada	$	220,662	$	96,110	$	316,772
Europe, Middle East, and Africa	Europe, Middle East, and Africa	60,651		39,960		100,611		Europe, Middle East, and Africa	96,318		74,257		170,575
Asia Pacific and China	Asia Pacific and China	34,759		11,543		46,302		Asia Pacific and China	54,636		20,090		74,726
Mexico, Central America, and South America	Mexico, Central America, and South America	8,191		1,276		9,467		Mexico, Central America, and South America	11,810		2,307		14,117
Elimination	Elimination	—		—		(6,840)		Elimination	—		—		(12,729)
Consolidated net revenue	Consolidated net revenue	$	249,832	$	103,651	$	346,643	Consolidated net revenue	$	383,426	$	192,764	$	563,461

5. Goodwill and Intangible Assets

Goodwill

Changes in the carrying amount of goodwill, net, by segment follows:

ODS AGP Consolidated
Goodwill as of March 31, 2022 $ 80,176 $ 479,616 $ 559,792
Foreign currency translation and purchase price adjustments — (11,552) (11,552)
Goodwill as of September 30, 2022 $ 80,176 $ 468,064 $ 548,240


	ODS		AGP		Total





Goodwill as of March 31, 2022	$	80,176	$	479,616	$	559,792
Purchase of In App Video	—		5,008		5,008


Foreign currency translation and other	—		(4,460)		(4,460)
Goodwill as of December 31, 2022	$	80,176	$	480,164	$	560,340

Intangible Assets

The components of intangible assets as of ~~September 30,~~December 31, 2022, and March 31, 2022, were as follows:


		As of September 30, 2022								As of December 31, 2022

		Weighted-Average Remaining Useful Life	Cost		Accumulated Amortization		Net			Weighted-Average Remaining Useful Life	Cost		Accumulated Amortization		Net
Customer relationships	Customer relationships	12.19 years	$	168,166	$	(29,546)	$	138,620	Customer relationships	12.11 years	$	170,030	$	(34,935)	$	135,095
Developed technology	Developed technology	5.78 years	145,586		(28,654)		116,932		Developed technology	5.53 years	146,419		(33,601)		112,818
Trade names	Trade names	2.83 years	69,634		(17,841)		51,793		Trade names	2.58 years	69,922		(22,503)		47,419
Publisher relationships	Publisher relationships	18.32 years	107,812		(7,488)		100,324		Publisher relationships	18.07 years	108,821		(8,972)		99,849
Total	Total		$	491,198	$	(83,529)	$	407,669	Total		$	495,192	$	(100,011)	$	395,181


	As of March 31, 2022
	Weighted-Average Remaining Useful Life	Cost		Accumulated Amortization		Net
Customer relationships	12.01 years	$	171,060	$	(19,636)	$	151,424
Developed technology	6.26 years	144,581		(18,103)		126,478
Trade names	3.33 years	69,205		(8,523)		60,682
Publisher relationships	18.77 years	106,514		(4,509)		102,005
Total		$	491,360	$	(50,771)	$	440,589

The Company recorded amortization expense of ~~$16,185~~$16,120 and ~~$32,302,~~$48,422, respectively, during the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022, and ~~$13,999~~$13,773 and ~~$21,100,~~$34,873, respectively, during the three and ~~six~~nine months ended ~~September 30,~~December 31, 2021, in general and administrative expenses on the condensed consolidated statements of operations and comprehensive income / (loss). As of March 31, 2022, the Company changed the useful lives of all its trade names intangible assets to approximately 3.33 years due to the planned rebranding of the Company’s recent acquisitions, which began during the three months ended June 30, 2022.

Estimated amortization expense in future fiscal years is expected to be:


Fiscal year 2023	$	~~31,952~~16,090
Fiscal year 2024	~~63,904~~64,361
Fiscal year 2025	~~55,360~~55,740
Fiscal year 2026	~~41,177~~41,491
Fiscal year 2027	~~35,084~~35,372
Thereafter	~~180,192~~182,127
Total	$	~~407,669~~395,181

6. Accounts Receivable


		September 30, 2022		March 31, 2022			December 31, 2022		March 31, 2022

Billed	Billed	$	178,784	$	189,208	Billed	$	180,491	$	189,208
Unbilled	Unbilled	85,989		82,324		Unbilled	60,424		82,324
Allowance for credit losses	Allowance for credit losses	(9,107)		(8,393)		Allowance for credit losses	(9,914)		(8,393)
Accounts receivable, net	Accounts receivable, net	$	255,666	$	263,139	Accounts receivable, net	$	231,001	$	263,139

Billed accounts receivable represent amounts billed to customers for which the Company has an unconditional right to consideration. Unbilled accounts receivable represents revenue recognized but billed after period-end. All unbilled receivables as of ~~September 30,~~December 31, 2022 and March 31, 2022, are expected to be billed and collected (subject to the allowance for credit losses) within twelve months.

Allowance for Credit Losses

The Company maintains reserves for current expected credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, current economic trends, and changes in customer payment patterns to evaluate the adequacy of these reserves.

The Company recorded ~~$1,363~~$683 and ~~$2,249~~$2,932 of bad debt expense during the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022, respectively, and ~~$73~~$512 and ~~$181~~$693 of bad debt expense during the three and ~~six~~nine months ended ~~September 30,~~December 31, 2021, respectively, in general and administrative expenses on the condensed consolidated statements of operations and comprehensive income / (loss).

7. Property and Equipment


		September 30, 2022		March 31, 2022			December 31, 2022		March 31, 2022

Computer-related equipment	Computer-related equipment	$	3,045	$	2,855	Computer-related equipment	$	3,469	$	2,855
Developed software	Developed software	54,433		41,011		Developed software	59,045		41,011
Furniture and fixtures	Furniture and fixtures	1,612		1,836		Furniture and fixtures	1,947		1,836
Leasehold improvements	Leasehold improvements	3,557		3,687		Leasehold improvements	3,637		3,687
Property and equipment, gross	Property and equipment, gross	62,647		49,389		Property and equipment, gross	68,098		49,389
Accumulated depreciation	Accumulated depreciation	(25,756)		(18,303)		Accumulated depreciation	(29,339)		(18,303)
Property and equipment, net	Property and equipment, net	$	36,891	$	31,086	Property and equipment, net	$	38,759	$	31,086

Depreciation expense was ~~$3,893~~$4,014 and ~~$7,708~~$11,722 for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022, respectively, and ~~$2,329~~$2,192 and ~~$3,881~~$6,073 for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2021, respectively. Depreciation expense for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022, includes ~~$2,130~~$2,394 and ~~$4,745,~~$7,139, respectively, related to internal-use software included in general and administrative expense and ~~$1,763~~$1,620 and ~~$2,963,~~$4,583, respectively, related to internally-developed software to be sold, leased, or otherwise marketed included in other direct costs of revenue. Depreciation expense for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2021, includes ~~$961~~$1,316 and ~~$1,821,~~$3,137, respectively, related to internal-use software included in general and administrative expense and ~~$734~~$1,510 and ~~$1,426,~~$2,936, respectively, related to internally-developed software to be sold, leased, or otherwise marketed included in other direct costs of revenue.

8. Leases

The Company has entered into various non-cancellable operating lease agreements for certain offices as well as assumed various leases through its recent acquisitions. These leases currently have lease periods expiring between fiscal years 2023 and 2029. The lease agreements may include one or more options to renew. Renewals were not assumed in the Company’s determination of the lease term unless the renewals were deemed to be reasonably assured at lease commencement. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The components of lease costs, weighted-average lease term, and discount rates are detailed below.

Schedule, by fiscal year, of maturities of lease liabilities as of:


	~~September 30,~~December 31, 2022

Fiscal year 2023	$	~~2,088~~1,052
Fiscal year 2024	~~3,770~~3,958
Fiscal year 2025	~~1,986~~2,120
Fiscal year 2026	~~1,535~~1,641
Fiscal year 2027	~~1,212~~1,319
Thereafter	~~1,332~~1,519
Total undiscounted cash flows	~~11,923~~11,609
(Less imputed interest)	~~(858)~~(841)
Present value of lease liabilities	$	~~11,065~~10,768

The current portion of the Company’s lease liabilities, payable within the next 12 months, is included in other current liabilities, and the long-term portion of the Company’s lease liabilities is included in other non-current liabilities on the condensed consolidated balance sheets.

Associated with these financial liabilities, the Company has right-of-use assets of ~~$11,358~~$10,973 as of ~~September 30,~~December 31, 2022, which is calculated using the present value of lease liabilities less any lease incentives received from landlords and any deferred rent liability balances as of the date of implementation. The discount rates used to calculate the imputed interest above range from 2.00% to 6.75% and the weighted-average remaining lease term is ~~4.02~~3.99 years.

9. Debt

The following table summarizes borrowings under the Company’s debt obligations and the associated interest rates:

September 30, 2022
Balance Interest Rate Unused Line Fee
BoA Revolver (subject to variable rate) $ 450,134 4.57 % 0.20 %


	December 31, 2022
	Balance		Interest Rate		Unused Line Fee
BoA Revolver (subject to variable rate)	$	425,134	6.12	%	0.20	%

Debt obligations on the condensed consolidated balance sheets consist of the following:


		September 30, 2022		March 31, 2022			December 31, 2022		March 31, 2022

Revolver	Revolver	$	450,134	$	524,134	Revolver	$	425,134	$	524,134
Less: Debt issuance costs	Less: Debt issuance costs	(2,941)		(3,349)		Less: Debt issuance costs	(2,824)		(3,349)
Debt assumed through Fyber Acquisition	Debt assumed through Fyber Acquisition	—		12,500		Debt assumed through Fyber Acquisition	—		12,500
Total debt, net	Total debt, net	447,193		533,285		Total debt, net	422,310		533,285
Less: Current portion of debt	Less: Current portion of debt	—		(12,500)		Less: Current portion of debt	—		(12,500)
Long-term debt, net of debt issuance costs	Long-term debt, net of debt issuance costs	$	447,193	$	520,785	Long-term debt, net of debt issuance costs	$	422,310	$	520,785

Revolver

On February 3, 2021, the Company entered into a credit agreement (the “Credit Agreement”) with Bank of America, N.A. (“BoA”), which provides for a revolving line of credit (the “Revolver”) of up to $100,000 with an accordion feature enabling the Company to increase the total amount up to $200,000. Funds are to be used for acquisitions, working capital, and general corporate purposes. The Credit Agreement contains customary covenants, representations, and events of default and also requires the Company to comply with a maximum consolidated leverage ratio and minimum fixed charge coverage ratio.

On April 29, 2021, the Company amended and restated the Credit Agreement (the “New Credit Agreement”) with BoA, as a lender and administrative agent, and a syndicate of other lenders, which provided for a revolving line of credit of up to $400,000. The revolving line of credit matures on April 29, 2026, and contains an accordion feature enabling the Company to increase the total amount of the ~~revolver~~Revolver by $75,000 plus an amount that would enable the Company to remain in compliance with its consolidated secured net leverage ratio, on such terms as agreed to by the parties. The New Credit Agreement contains customary covenants, representations, and events of default and also requires the Company to comply with a maximum consolidated secured net leverage ratio and minimum consolidated interest coverage ratio.

On December 29, 2021, the Company amended the New Credit Agreement (the “First Amendment”), which provides for an increase in the revolving line of credit by $125,000, which increased the maximum aggregate principal amount of the revolving line of credit to $600,000, including the accordion feature mentioned above. The First Amendment made no other changes to the terms or interest rates of the New Credit Agreement.

On October 26, 2022, the Company amended the New Credit Agreement (the “Second Amendment”) to replace LIBOR with the Term Secured Overnight Financing Rate (“SOFR”). As a result, ~~amounts outstanding~~borrowings under the New Credit Agreement where the applicable rate was LIBOR will accrue interest at an annual rate equal to SOFR plus between 1.50% and 2.25%. beginning on October 26, 2022. The Second Amendment made no other changes in the terms of the New Credit Agreement. As of December 31, 2022, of the total amount outstanding, $239,000 remains subject to LIBOR-based interest rates.

The Company incurred debt issuance costs of $4,064 for the New Credit Agreement, inclusive of costs incurred for the First Amendment. The Company had ~~$450,134~~$425,134 drawn against the New Credit Agreement, classified as long-term debt on the condensed consolidated balance sheet, with remaining unamortized debt issuance costs of ~~$2,941~~$2,824 as of ~~September 30,~~December 31, 2022. Deferred debt issuance costs associated with the New Credit Agreement and First Amendment are recorded as a reduction of the carrying value of the debt on the condensed consolidated balance sheets. All deferred debt issuance costs are amortized on a straight-line basis over the term of the loan to interest expense.

As of ~~September 30,~~December 31, 2022, amounts outstanding under the New Credit Agreement accrue interest at an annual rate equal to, at the Company’s election, (i) ~~LIBOR~~SOFR plus between 1.50% and 2.25%, based on the Company’s consolidated leverage ratio, or (ii) a base rate based upon the highest of (a) the federal funds rate plus 0.50%, (b) ~~BoA's~~BoA’s prime rate, or (c) ~~LIBOR~~SOFR plus 1.00% plus between 0.50% and 1.25%, based on the Company’s consolidated leverage ratio. Additionally, the New Credit Agreement is subject to an unused line of credit fee between 0.15% and 0.35% per annum, based on the Company’s consolidated leverage ratio. As of ~~September 30,~~December 31, 2022, the interest rate was ~~4.57%~~6.12% and the unused line of credit fee was 0.20%.

The Company’s payment and performance obligations under the New Credit Agreement and related loan documents are secured by its grant of a security interest in substantially all of its personal property assets, whether now existing or hereafter acquired, subject to certain exclusions. If the Company acquires any real property assets with a fair market value in excess of $5,000, it is required to grant a security interest in such real property as well. All such security interests are required to be first priority security interests, subject to certain permitted liens.

As of ~~September 30,~~December 31, 2022, the Company had ~~$149,866~~$174,866 available to draw on the revolving line of credit under the New Credit Agreement and was in compliance with all covenants. The fair value of the Company’s outstanding debt approximates its carrying value.

Interest income / (expense), net

Interest income / (expense), net, amortization of debt issuance costs, and unused line of credit fees were recorded in interest and other income / (expense), net, on the condensed consolidated statements of operations and comprehensive income / (loss), as follows:


		Three months ended September 30,				Six months ended September 30,				Three months ended December 31,				Nine months ended December 31,
		2022		2021		2022		2021				2022		2021		2022		2021
Interest income / (expense), net	Interest income / (expense), net	$	(5,005)	$	(1,706)	$	(8,867)	$	(2,625)		Interest income / (expense), net	$	(6,671)	$	(1,940)	$	(15,538)	$	(4,565)
Amortization of debt issuance costs	Amortization of debt issuance costs	(198)		(178)		(408)		(310)			Amortization of debt issuance costs	(211)		(190)		(619)		(500)
Unused line of credit fees and other	Unused line of credit fees and other	(26)		(71)		(36)		(177)			Unused line of credit fees and other	(31)		(65)		(67)		(242)
Total interest income / (expense), net	Total interest income / (expense), net	$	(5,229)	$	(1,955)	$	(9,311)	$	(3,112)		Total interest income / (expense), net	$	(6,913)	$	(2,195)	$	(16,224)	$	(5,307)

10. Stock-Based Compensation

Stock-Based Award Plans

On September 15, 2020, the Company’s stockholders approved the 2020 Equity Incentive Plan of Digital Turbine, Inc. (the “2020 Plan”), pursuant to which the Company may grant equity incentive awards to directors, employees and other eligible participants. A total of 12,000,000 shares of common stock were reserved for grant under the 2020 Plan. The types of awards that may be granted under the 2020 Plan include incentive and non-qualified stock options, stock appreciation rights, restricted stock, and restricted stock units. The 2020 Plan became effective on September 15, 2020, and has a term of ten years. Stock options may be either incentive stock options, as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or non-qualified stock options. As of ~~September 30,~~December 31, 2022, ~~9,843,911~~8,857,557 shares of common stock were available for issuance as future awards under the Company’s 2020 Plan.

The following table summarizes stock option activity:


		Number of Shares	Weighted-Average Exercise Price (per share)		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)			Number of Shares	Weighted-Average Exercise Price (per share)		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)

Options outstanding as of March 31, 2022	Options outstanding as of March 31, 2022	7,123,300	$	9.33	6.11	$	262,419	Options outstanding as of March 31, 2022	7,123,300	$	9.33	6.11	$	262,419
Granted	Granted	1,052,746	34.15					Granted	1,323,986	29.98
Exercised	Exercised	(753,781)	2.02					Exercised	(895,450)	2.19
Forfeited / Expired	Forfeited / Expired	(212,595)	47.19					Forfeited / Expired	(322,512)	47.21
Options outstanding as of September 30, 2022		7,209,670	$	12.61	6.26	$	62,841
Options outstanding as of December 31, 2022								Options outstanding as of December 31, 2022	7,229,324	$	12.50	6.20	$	64,889

Exercisable as of September 30, 2022		5,558,001	$	6.74	5.48	$	59,227
Exercisable as of December 31, 2022								Exercisable as of December 31, 2022	5,659,738	$	7.34	5.44	$	62,310

At ~~September 30,~~December 31, 2022, total unrecognized stock-based compensation expense related to unvested stock options, net of estimated forfeitures, was ~~$28,627,~~$26,721, with an expected remaining weighted-average recognition period of ~~2.27~~2.16 years.

Restricted Stock

Awards of restricted stock units (“RSUs”) may be either grants of time-based restricted units or performance-based restricted units that are issued at no cost to the recipient. The cost of these awards is determined using the fair market value of the Company’s common stock on the date of the grant. No capital transaction occurs until the units vest, at which time they are converted to restricted or unrestricted stock. Compensation expense for RSUs with a time condition is recognized on a straight-line basis over the requisite service period. Compensation expense for RSUs with a performance condition are recognized on a straight-line basis based on the most likely attainment scenario, which is re-evaluated each period.

From time-to-time, the Company enters into restricted stock agreements (“RSAs”) with certain employees and consultants. The RSAs have performance conditions, market conditions, time conditions, or a combination thereof. In some cases, once the stock vests, the individual is restricted from selling the shares of stock for a certain defined period, from three months to one year, depending on the terms of the RSA. As reported in ~~our~~the Company’s Current Reports on Forms 8-K filed with the SEC on February 19, 2014, and June 25, 2014, the Company adopted a Board Member Equity Ownership and Retention Policy that supersedes any post-vesting lock-up in RSAs that are applicable to people covered by the policy, which includes the Company’s Board of Directors and Chief Executive Officer.

The following table summarizes RSU and RSA activity:


		Number of Shares	Weighted-Average Grant Date Fair Value			Number of Shares	Weighted-Average Grant Date Fair Value

Unvested restricted shares outstanding as of March 31, 2022	Unvested restricted shares outstanding as of March 31, 2022	373,301	$	35.82	Unvested restricted shares outstanding as of March 31, 2022	373,301	$	35.82
Granted	Granted	758,546	30.33		Granted	1,604,925	23.08
Vested	Vested	(189,264)	27.77		Vested	(214,789)	27.51
Forfeited	Forfeited	(38,681)	41.00		Forfeited	(41,463)	40.73
Unvested restricted shares outstanding as of September 30, 2022		903,902	$	32.67
Unvested restricted shares outstanding as of December 31, 2022					Unvested restricted shares outstanding as of December 31, 2022	1,721,974	$	24.87

At ~~September 30,~~December 31, 2022, total unrecognized stock-based compensation expense related to RSUs and RSAs was ~~$25,667,~~$34,390, with an expected remaining weighted-average recognition period of ~~2.57~~2.32 years.

Stock-Based Compensation Expense

Stock-based compensation expense for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022, was $~~5,779~~7,620 and $~~12,023~~19,643, respectively, and was recorded within general and administrative expenses on the condensed consolidated statements of operations and comprehensive income / (loss). Stock-based compensation expense for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2021, was ~~$5,925~~$5,739 and ~~$9,630,~~$15,369, respectively, and was recorded within general and administrative expenses on the condensed consolidated statements of operations and comprehensive income / (loss).

11. Earnings per Share

Basic net income per common share is calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the period.

Diluted net income per common share is calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the period and including the dilutive effects of employee stock-based awards outstanding during the period.

Stock options totaling ~~1,526,531~~1,477,381 and ~~1,445,951~~1,462,517 for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022, respectively, and ~~497,881~~296,254 and ~~463,650~~448,121 for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2021, respectively, were outstanding but not included in the calculation of diluted earnings per share because inclusion of the options in the calculation would be antidilutive due to their exercise prices exceeding the average market price of the common shares during the periods.

The following table sets forth the computation of basic and diluted net income / (loss) per share of common stock (in thousands, except per share amounts):

Three months ended September 30, Six months ended September 30,
2022 2021 2022 2021
Net income / (loss) 11,703 (5,887) 26,661 8,366
Less: net income / (loss) attributable to non-controlling interest 39 (35) 75 (66)
Net income / (loss) attributable to Digital Turbine, Inc. $ 11,664 $ (5,852) $ 26,586 $ 8,432
Weighted-average common shares outstanding, basic 98,887 96,157 98,324 93,807
Basic net income / (loss) per common share attributable to Digital Turbine, Inc. $ 0.12 $ (0.06) $ 0.27 $ 0.09
Weighted-average common shares outstanding, diluted 102,898 96,157 102,777 100,457
Diluted net income / (loss) per common share attributable to Digital Turbine, Inc. $ 0.11 $ (0.06) $ 0.26 $ 0.08
Common stock equivalents excluded from net loss per diluted share because their effect would have been anti-dilutive — 6,563 — —


	Three months ended December 31,				Nine months ended December 31,
	2022		2021		2022		2021
Net income	4,062		7,062		30,723		15,428
Less: net income / (loss) attributable to non-controlling interest	43		48		118		(18)
Net income attributable to Digital Turbine, Inc.	$	4,019	$	7,014	$	30,605	$	15,446
Weighted-average common shares outstanding, basic	99,108		96,548		98,623		94,620
Basic net income per common share attributable to Digital Turbine, Inc.	$	0.04	$	0.07	$	0.31	$	0.16
Weighted-average common shares outstanding, diluted	103,348		103,287		103,674		101,346
Diluted net income per common share attributable to Digital Turbine, Inc.	$	0.04	$	0.07	$	0.30	$	0.15

12. Income Taxes

The Company’s provision for income taxes as a percentage of pre-tax earnings (“effective tax rate”) is based on a current estimate of the annual effective income tax rate, adjusted to reflect the impact of discrete items. In accordance with ASC 740, Accounting for Income Taxes, jurisdictions forecasting losses that are not benefited due to valuation allowances are not included in ~~our~~the Company’s forecasted effective tax rate.

During the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022, a tax benefit and provision of ~~$4,181~~$1,153 and ~~$9,317,~~$8,164, respectively, resulted in an effective tax rate of ~~26.3%~~(39.6)% and ~~25.9%~~21.0%, respectively. Differences between the effective tax rate and

the statutory tax rate primarily relate to ~~state income taxes and foreign income inclusions.~~return to provision true-ups filed in the current period.

During the three and ~~six~~nine months ended ~~September 30,~~December 31, 2021, a tax ~~benefit and~~ provision of ~~$2,349~~$3,718 and ~~$1,081~~$4,799 resulted in an effective tax rate of ~~28.5%~~34.5% and ~~11.4%~~23.7%, respectively. Differences between the effective tax rate and the statutory tax rate primarily relate to state income taxes, nontaxable adjustments to the AdColony and Fyber earn-outs, and tax deductions for stock compensation that exceed the book expense.

13. Commitments and Contingencies

Hosting Agreements

The Company enters into hosting agreements with service providers and in some cases, those agreements include minimum commitments that require the Company to purchase a minimum amount of service over a specified time period (“the minimum commitment period”). The minimum commitment period is generally one-year in duration and the hosting agreements include multiple minimum commitment periods. ~~Our~~The Company’s minimum purchase commitments under these hosting agreements total approximately ~~$194,288~~$181,603 over the next ~~4.25~~4.00 years.

Legal Matters

The Company may be involved in various claims, suits, assessments, investigations, and legal proceedings that arise from time to time in the ordinary course of its business. The Company accrues a liability when it is both probable a liability has been incurred and the amount of the loss can be reasonably estimated. The Company reviews these accruals at least quarterly and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. To the extent new information is obtained and the Company’s views on the probable outcomes of claims, suits, assessments, investigations, or legal proceedings change, changes in the Company’s accrued liabilities would be recorded in the period such determination is made. For some matters, the amount of liability is not probable or the amount cannot be reasonably estimated and, therefore, accruals have not been made.

On June 6, 2022 and July 21, 2022, shareholders of the Company filed class action complaints against the Company and certain of ~~our~~the Company’s officers in the Western District of Texas related to Digital ~~Turbine’s~~Turbine, Inc.’s announcement in May 2022 that it would restate some of its financial ~~results~~.results. The claims allege violations of certain federal securities laws. In addition, in September and October of 2022, shareholders of the Company filed derivative complaints against the Company and ~~our~~the Company’s directors in the Western District of Texas, Delaware state courts, and ~~Delaware and~~ Texas state courts alleging breaches of fiduciary duties relating to the allegations made in the class action ~~complaints~~.complaints. The federal derivative cases are consolidated, and the Texas derivative case has been dismissed and re-filed in Delaware federal court and the Delaware derivative cases are now consolidated, and all such derivative cases are stayed under a court order, pending a ruling on any motion to dismiss the federal class action that is later ~~filed~~.filed. The Company and individual defendants deny any allegations of wrongdoing and ~~we plan~~the Company plans to vigorously defend against the claims asserted in these complaints. Due to the early stages of these cases,, management is unable to assess a likely outcome or potential liability at this time.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with, and is qualified in its entirety by, the condensed consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q (the “Report”). The following discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements involve substantial risks and uncertainties. When used in this Report, the words “anticipate,” “believe,” “estimate,” “expect,” “will,” “seeks,” “should,” “could,” “would,” “may,” and similar expressions, as they relate to our management or us, are intended to identify such forward-looking statements. Our actual results, performance, or achievements could differ materially from those expressed in or implied by these forward-looking statements as a result of a variety of factors, including those set forth under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, as well as those described elsewhere in this Report and in our other public filings. The risks included are not exhaustive and additional factors could adversely affect our business and financial performance. We operate in a very competitive and rapidly changing environment. New risk factors emerge from time-to-time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Historical operating results are not necessarily indicative of the trends in operating results for any future period. We do not undertake any obligation to update any forward-looking statements made in this Report. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on known results and trends at the time they are made, to anticipate future results or trends. This Report and all subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

All numbers are in thousands, except share and per share amounts.

Company Overview

~~Digital Turbine, Inc., through its subsidiaries (collectively “Digital Turbine” or the “Company”), is~~We are a leading, independent mobile growth platform that levels up the landscape for advertisers, publishers, carriers, and device original equipment manufacturers (“OEMs”). ~~The Company offers~~We offer end-to-end products and solutions leveraging proprietary technology to all participants in the mobile application ecosystem, enabling brand discovery and advertising, user acquisition and engagement, and operational efficiency for advertisers. In addition, our products and solutions provide monetization opportunities for OEMs, carriers, and application (“app” or “apps”) publishers and developers.

Recent Developments

Credit Agreement

On April 29, 2021, the Company amended and restated the Credit Agreement (the “New Credit Agreement”) with BoA, as a lender and administrative agent, and a syndicate of other lenders, which provided for a revolving line of credit of up to $400,000. The revolving line of credit matures on April 29, 2026, and contains an accordion feature enabling the Company to increase the total amount of the revolver by $75,000 plus an amount that would enable the Company to remain in compliance with its consolidated secured net leverage ratio, on such terms as agreed to by the parties. The New Credit Agreement contains customary covenants, representations, and events of default and also requires the Company to comply with a maximum consolidated secured net leverage ratio and minimum consolidated interest coverage ratio.

On December 29, 2021, the Company amended the New Credit Agreement (the “First Amendment”), which provides for an increase in the revolving line of credit by $125,000, which increased the maximum aggregate principal amount of the revolving line of credit to $600,000, including the accordion feature. The First Amendment made no other changes to the term or interest rates of the New Credit Agreement.

On October 26, 2022, ~~the Company~~we amended the New Credit Agreement (the “Second Amendment”) to replace the

London Interbank Offered Rate (“LIBOR”) with the Term Secured Overnight Financing Rate (“SOFR”). As a result, amounts outstanding under the New Credit Agreement where the applicable rate was LIBOR will accrue interest at an annual rate equal to SOFR plus between 1.50% and 2.25%. The Second Amendment made no other changes in the terms of the New Credit Agreement. As of December 31, 2022, of the total amount outstanding, $239,000 remains subject to LIBOR based interest rates.

As of ~~September 30,~~December 31, 2022, we had ~~$450,134~~$425,134 drawn against the revolving line of credit under the New Credit Agreement. The proceeds from the borrowings were used to finance the ~~acquisitions detailed below.~~purchases of various acquisitions. As of ~~September 30,~~December 31, 2022, the interest rate was ~~4.57%~~6.12% and the unused line of credit fee was 0.20%, and we were in compliance with the consolidated leverage ratio, interest coverage ratio, and other covenants under the New Credit Agreement.

~~Acquisitions~~

~~AdColony Holding AS.~~ On April 29, 2021, the Company completed the acquisition of AdColony Holding AS, a Norway company (“AdColony”), pursuant to a Share Purchase Agreement (the “AdColony Acquisition”). The Company acquired all outstanding capital stock of AdColony in exchange for an estimated total consideration in the range of $400,000 to $425,000, to be paid as follows: (1) $100,000 in cash paid at closing (subject to customary closing purchase price adjustments), (2) $100,000 in cash to be paid six months after closing, and (3) an estimated earn-out in the range of $200,000 to $225,000, to be paid in cash, based on AdColony achieving certain future target net revenue, less associated cost of goods sold (as such term is referenced in the Share Purchase Agreement), over a 12-month period ending on December 31, 2021 (the “Earn-Out Period”). Under the terms of the earn-out, the Company would pay the seller a certain percentage of actual net revenue (less associated cost of goods sold, as such term is referenced in the Share Purchase Agreement) of AdColony, depending on the extent to which AdColony achieves certain target net revenue (less associated cost of goods sold, as such term is referenced in the Share Purchase Agreement) over the Earn-Out Period. The earn-out payment will be made following the expiration of the Earn-Out Period.

On August 27, 2021, the Company entered into an Amendment to Share Purchase Agreement (the “Amendment Agreement”) with AdColony and Otello Corporation ASA, a Norway company and AdColony’s previous parent company. Pursuant to the Amendment Agreement, the Company and Otello agreed to set a fixed dollar amount of $204,500 for the earn-out payment obligation, to set January 15, 2022, as the payment due date for such payment amount, and to eliminate all of the Company’s earn-out support obligations under the Share Purchase Agreement. As a result, the Company recognized an $8,913 reduction of the earn-out payment obligation in change in fair value of contingent consideration on the condensed consolidated statement of operations and comprehensive income / (loss) for the fiscal second quarter ended September 30, 2021.

~~On January 15, 2022, the Company paid the AdColony Acquisition earn-out consideration of $204,500 with available cash-on-hand and an additional $179,000 of borrowings under the New Credit Agreement.~~

The Company recognized costs related to the AdColony Acquisition in general and administrative expenses on the condensed consolidated statements of operations and comprehensive income / (loss) of $64 and $214, respectively, for the three and six months ended September 30, 2022, and $620 and $3,491, respectively, for the three and six months ended September 30, 2021.

~~Fyber N.V.~~ On May 25, 2021, the Company completed the initial closing of the acquisition of 95.1% of the outstanding voting shares (the “Majority Fyber Shares”) of Fyber N.V. (“Fyber”) pursuant to a Sale and Purchase Agreement (the “Fyber Acquisition”) between Tennor Holding B.V., Advert Finance B.V., and Lars Windhorst (collectively, the “Seller”), the Company, and Digital Turbine Luxembourg S.ar.l., a wholly-owned subsidiary of the Company. The remaining outstanding shares in Fyber (the “Minority Fyber Shares”) are (to the Company’s knowledge) held by other shareholders of Fyber (the “Minority Fyber Shareholders”) and are presented as non-controlling interests within these financial statements.

2524

~~The Company acquired Fyber in exchange for an estimated aggregate consideration of up to $600,000, consisting of:~~

~~ii.5,816,588 newly-issued shares of common stock of the Company to the Seller, which such number of shares was determined~~ ~~based on the volume-weighted average price of the common stock on NASDAQ during the 30-day period prior to the closing date, equal in value to~~ ~~$359,233 at the Company’s common stock closing price on~~ ~~May 25, 2021, as follows.~~

1.~~3,216,935 newly-issued shares of common stock of the Company equal in value to $198,678, issued at the closing of the acquisition;~~

2.~~1,500,000 newly-issued shares of common stock of the Company equal in value to $92,640, issued on June 17, 2021;~~

3.~~1,040,364 newly-issued shares of common stock of the Company equal in value to $64,253, issued on July 16, 2021;~~

~~iii.~~Contingent upon Fyber’s net revenue (revenue less associated license fees and revenue share) being equal to or higher than $100,000 for the 12-month earn-out period ending on March 31, 2022, as determined in the manner set forth in the Sale and Purchase Agreement, a certain number of shares of the Company’s common stock, which will be newly-issued to the Seller at the end of the earn-out period, and under certain circumstances, an amount of cash, which value of such shares, based on the weighted average share price for the 30-days prior to the end of the earn-out period, and cash in aggregate, will not exceed $50,000 (subject to set-off against certain potential indemnification claims against the Seller). Based on estimates at the time of the acquisition, the Company initially determined it was unlikely Fyber would achieve the earn-out net revenue target and, as a result, no contingent liability was recognized at that time.

~~The Company paid the cash closing amount on the closing date with a combination of available cash-on-hand and borrowings under the Company’s senior credit facility.~~

~~ownership percentage of Fyber of approximately 99.5% as of September 30, 2022. The Company expects to complete the purchase of the remaining outstanding Fyber shares during fiscal year 2023.~~

~~The delisting of Fyber's remaining outstanding shares on the Frankfurt Stock Exchange was completed on August 6, 2021.~~

The Company recognized costs related to the Fyber Acquisition in general and administrative expenses on the condensed consolidated statements of operations and comprehensive income / (loss) of $443 and $1,003, respectively, for the three and six months ended September 30, 2022, and $8,116 and $11,715, respectively, for the three and six months ended September 30, 2021.

Segment Reporting

As of March 31, 2022, ~~the Company~~we operated through three segments, each of which was a reportable segment. The three segments were On Device Media (“ODM”), In-App Media - AdColony (“IAM-A”), and In-App Media-Fyber (“IAM-F”). Effective April 1, 2022, ~~the Company~~we made certain changes to ~~its~~our organizational and management structure that resulted in the following: (1) the renaming of the On Device Media segment to On Device Solutions and (2) the integration of IAM-A and IAM-F into a single segment. The integration of IAM-A and IAM-F was completed to drive operating efficiencies and revenue synergies. As a result of the integration of IAM-A and IAM-F, ~~the Company~~we reassessed ~~its~~our operating and reportable segments in accordance with ASC 280, Segment Reporting. Effective April 1, 2022, ~~the Company reports its~~we report our results of operations through the following two segments, each of which represents an operating and reportable segment, as follows:

•On Device Solutions (“ODS”) - ~~The Company~~We re-named the ODM segment On Device Solutions to better reflect the nature of the ~~segment's~~segment’s product offerings. This segment generates revenue from the delivery of mobile application media or content to end users. This segment provides focused solutions to all participants in the mobile application ecosystem that want to connect with end users and consumers who hold the device, including mobile carriers and device OEMs that participate in the app economy, app publishers and developers, and brands and advertising agencies. This ~~segment's~~segment’s product offerings are enabled through relationships with mobile device carriers and OEMs.

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. ~~The Company has~~We have determined that ~~its~~our Chief Executive Officer is the CODM.

Impact of ~~COVID-19, Global~~ Economic ~~and~~Conditions, Geopolitical Developments,

and COVID-19

Our results of operations are affected by ~~economic~~macroeconomic conditions and geopolitical developments, including ~~macroeconomic conditions,~~but not limited to levels of business ~~confidence,~~ and consumer ~~confidence. The worldwide spread~~confidence, actions taken by governments to counter inflation, Russia’s invasion of Ukraine, and the COVID-19 ~~including the emergence of variants, as well as economic and macro-economic factors like labor shortages,~~pandemic.

Inflation, rising interest rates, supply chain disruptions, and ~~inflation,~~reduced business and ~~geopolitical developments, including the conflict in Ukraine,~~consumer confidence have ~~resulted,~~caused and may continue to ~~result, in~~cause a global slowdown of economic activity, which has caused and may continue to cause a decrease in demand for a broad variety of goods and services, including those provided by our ~~clients, while also disrupting supply channels, sales channels~~clients.

Like other advertising technology companies, we have seen a slowdown in digital advertising spending, which we believe is driven by the impact of inflation and ~~advertising~~recession fears and ~~marketing activities for an unknown period of time until economic activity normalizes. In addition, fears of a recession or economic downturn~~their potential impacts on consumers. These negative macroeconomic trends have resulted, and may continue to result in, ~~decreasing~~a decrease or ~~delaying~~delay of advertising ~~budgets. With~~budgets and spending. While the slowdown in digital advertising spending is varied and depends on the geography, advertising type, operating system, and business vertical, the current ~~uncertainty in~~ economic ~~activity, the impact on our revenue and our results of operations~~environment is likely to continue to impact our business, financial condition, and results of operations, the ~~size and duration~~full impact of which ~~we are currently unable to accurately predict.~~ remains uncertain at this time.

The extent of the impact of these ~~macro-economic~~macroeconomic factors on our operational and financial performance ~~will depend~~is also dependent on ~~the~~their impact toon carriers and OEMs in relation to their sales of smartphones, tablets, and other devices, ~~and on~~as well as the impact toon application developers and in-app advertisers. If ~~these,~~negative macroeconomic factors or ~~other, macro-economic factors and~~ geopolitical developments continue to ~~have a significant negative~~materially impact ~~on global economic conditions~~our partners over a prolonged period, ~~of time,~~ our results of operations and financial condition could also be adversely ~~impacted. Presently,~~impacted, the size and duration of which we ~~are conducting business as usual.~~ cannot accurately predict at this time.

We ~~will~~ continue to actively monitor ~~the situation~~these factors and we may take further actions that alter our business operations, as required, or that we determine are in the best interests of our employees, customers, partners, suppliers, and stockholders.In addition to monitoring the developments described above, the Company also considers the impact such factors may have on our accounting estimates and potential impairments of our non-current assets, which primarily consist of goodwill and finite-lived intangible assets.

2725

~~Impact~~The process of ~~Inflation~~evaluating the potential impairment of goodwill is subjective and requires significant judgment, including qualitative and quantitative factors such as the identification of reporting units, identification and allocation of assets and liabilities to reporting units, and determinations of fair value. In estimating the fair value of our reporting units when performing our annual impairment test, or when an indicator of impairment is present, we make estimates and significant judgments about the future cash flows of those reporting units and other estimates including appropriate discount rates. Discount rates can fluctuate based on various economic conditions including our capital allocation and interest rates, including the interest rates on U.S. treasury bonds. Changes in judgments on these assumptions and estimates could result in goodwill impairment charges.

~~Global inflation has increased significantly~~Finite-lived intangible assets and property, plant, and equipment are amortized or depreciated over the past year. In the United States (“U.S.”), the Consumer Price Index for All Urban Consumers increased 8.2% over the twelve months ended September 30, 2022, as reported by the U.S. Bureau of Labor Statistics. Eurostat reported that consumer prices in the 19 countries sharing the Euro (the “Eurozone”) rose 9.9% year-over-year in September 2022. Energy prices contributed significantlytheir estimated useful lives on a straight-line basis. We monitor conditions related to these assets to determine whether events and circumstances warrant a revision to the ~~increases~~remaining amortization or depreciation period or an impairment. We test these assets for potential impairment whenever we conclude events or changes in ~~both~~circumstances indicate carrying amounts may not be recoverable.

As of December 31, 2022, we considered the ~~U.S.~~developments discussed above, our current operating results, and our estimates of future operating results. We concluded there were no triggering events that indicated it was more likely than not that the ~~Eurozone. The Company does not have physical supply chain~~fair values of our reporting units were less than their respective carrying values or input costs and, as a result, we have been largely insulated from the inflationary cost pressures experienced globally in the past year. The Company has experienced limited inflationary cost impacts in two areas; however, those have not materially affectedthat our ~~financial results to date: (1) modest wage pressures when hiring certain positions, primarily in technology and product development and (2) carrier and OEM supply chain challenges.~~

In addition, like other advertising technology companies, we have seen a slowdown in digital advertising spending, which we believe is driven in part by the impact of inflation and fears of a recession and its potential impact on consumers. The slowdown in digital advertising spending is varied and depends on the geography, advertising type, operating system and business vertical.

finite-lived intangible assets were impaired. We will continue to ~~actively~~closely monitor ~~the impact of inflation~~macroeconomic conditions and ~~the broader economic outlook~~their impacts on our ~~operations~~business, financial condition, and ~~financial~~ results ~~and will take actions as deemed necessary.~~of operations.

RESULTS OF OPERATIONS

(Unaudited)

Net revenue


		Three months ended September 30,						Six months ended September 30,							Three months ended December 31,						Nine months ended December 31,
		2022		2021		% of Change		2022		2021		% of Change			2022		2021		% of Change		2022		2021		% of Change
Net revenue	Net revenue													Net revenue
On Device Solutions	On Device Solutions	$	108,466	$	129,449	(16.2)	%	$	227,103	$	249,832	(9.1)	%	On Device Solutions	$	96,316	$	133,594	(27.9)	%	$	323,419	$	383,426	(15.7)	%
App Growth Platform	App Growth Platform	68,256		64,177		6.4	%	140,622		103,651		35.7	%	App Growth Platform	67,407		89,113		(24.4)	%	208,029		192,764		7.9	%
Elimination	Elimination	(1,863)		(5,058)		(63.2)	%	(4,233)		(6,840)		(38.1)	%	Elimination	(1,413)		(5,889)		(76.0)	%	(5,646)		(12,729)		(55.6)	%
Total net revenue	Total net revenue	$	174,859	$	188,568	(7.3)	%	$	363,492	$	346,643	4.9	%	Total net revenue	$	162,310	$	216,818	(25.1)	%	$	525,802	$	563,461	(6.7)	%

Comparison of the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022 and 2021

Over the ~~three month~~three-month comparative periods, net revenue decreased by ~~$13,709~~$54,508 or ~~7.3%~~25.1%, and over the ~~six-month~~nine-month comparative periods, net revenue ~~increased~~decreased by ~~$16,849~~$37,659 or ~~4.9%~~6.7%. See the segment discussion below for further details regarding net revenue.

On Device Solutions

ODS revenue for the three months ended ~~September 30,~~December 31, 2022, decreased by ~~$20,983~~$37,278 or ~~16.2%~~27.9% compared to the three months ended ~~September 30,~~December 31, 2021. ~~The decrease was~~Revenue from content media declined by approximately $23,840 million, primarily ~~attributable~~due to the ending of a carrier partnership that resulted in lower daily active users (“DAU”) ~~for content media, which~~on prepaid devices. In addition, weak demand, due in part to lower new device volume in the United States and overall advertising spending reductions, resulted in a ~~$20,700 reduction in revenue. The majority of the~~ decline in ~~DAU was due to a decline in prepaid phone users. The decline in content media was partially offset by an increase for application media. Revenue for~~ application media ~~included~~revenue of approximately ~~$8,700 due to a contract amendment during the three months ended September 30, 2022.~~$13,466.

ODS revenue for the ~~six~~nine months ended ~~September 30,~~December 31, 2022, decreased by ~~$22,729~~$60,007 or ~~9.1%,~~15.7% compared to the ~~six~~nine months ended ~~September 30,~~December 31, 2021. ~~The~~Revenue from content media declined by approximately $57,140 for the same reason as noted above for the three months ended December 31, 2022. In addition, application media revenue declined by approximately $2,866 for the nine months ended December 31, 2022. This decrease was primarily ~~attributable~~due to ~~lower DAU for content media, which resulted in a $33,300 reduction in revenue for~~ the same reason as noted for the three months ended ~~September 30, 2022. The decline in content media was~~December 31, 2022, partially offset by ~~an increase~~revenue of ~~approximately $10,600~~$13,700 for ~~application media, including approximately $13,700 as a result of~~ two contract amendments during the ~~six~~nine months ended ~~September 30,~~December 31, 2022.

App Growth Platform

~~App Growth Platform~~AGP revenue for the three months ended ~~September 30,~~December 31, 2022, ~~increased~~decreased by ~~$4,079~~$21,706 or ~~6.4%~~24.4% compared to the three months ended ~~September 30,~~December 31, 2021. The ~~increase~~decrease was primarily due to ~~strong~~weak demand ~~and customer~~during the three months ended December 31, 2022, as compared to the prior year comparative period. The fiscal third quarter historically sees an uptick in advertising spending ondue to the

~~Company’s exchange platform for banner advertising. This increase was partially offset by~~ holiday shopping season, which did not occur in the current fiscal year. In addition, we experienced a decline in performance advertising, largely due to broader weakness in the advertising markets.

~~App Growth Platform~~AGP revenue for the ~~six~~nine months ended ~~September 30,~~December 31, 2022, increased by ~~$36,971~~$15,265 or ~~35.7%,~~7.9% compared to the ~~six~~nine months ended ~~September 30,~~December 31, 2021. The increase was primarily due to the impact of a full ~~six~~nine months of operations resulting from the AdColony Acquisition and Fyber Acquisition. ~~Please see~~See Note 3, “Acquisitions,” for further ~~information regarding the acquisitions.~~information.

Costs of revenue and operating expenses


		Three months ended September 30,						Six months ended September 30,							Three months ended December 31,						Nine months ended December 31,
		2022		2021		% of Change		2022		2021		% of Change			2022		2021		% of Change		2022		2021		% of Change
Costs of revenue and operating expenses	Costs of revenue and operating expenses													Costs of revenue and operating expenses
License fees and revenue share	License fees and revenue share	$	76,881	$	91,508	(16.0)	%	$	164,248	$	175,316	(6.3)	%	License fees and revenue share	$	73,370	$	109,053	(32.7)	%	$	237,618	$	284,369	(16.4)	%
Other direct costs of revenue	Other direct costs of revenue	9,199		7,827		17.5	%	18,114		12,295		47.3	%	Other direct costs of revenue	9,324		9,090		2.6	%	27,438		21,385		28.3	%
Product development	Product development	14,736		13,915		5.9	%	28,869		26,839		7.6	%	Product development	14,218		13,755		3.4	%	43,087		40,594		6.1	%
Sales and marketing	Sales and marketing	15,490		17,479		(11.4)	%	31,548		31,215		1.1	%	Sales and marketing	16,469		15,857		3.9	%	48,017		47,072		2.0	%
General and administrative	General and administrative	37,471		41,307		(9.3)	%	75,196		65,301		15.2	%	General and administrative	39,132		39,924		(2.0)	%	114,328		105,225		8.7	%
Total costs of revenue and operating expenses	Total costs of revenue and operating expenses	$	153,777	$	172,036	(10.6)	%	$	317,975	$	310,966	2.3	%	Total costs of revenue and operating expenses	$	152,513	$	187,679	(18.7)	%	$	470,488	$	498,645	(5.6)	%

Comparison of the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022 and 2021

Over the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022, total costs of revenue and operating expenses decreased by ~~$18,259,~~$35,166 or ~~10.6%~~18.7% and ~~increased $7,009,~~$28,157 or ~~2.3%~~5.6%, respectively, compared to the three and ~~six~~nine months ended ~~September 30,~~December 31, 2021. The decrease in total costs of revenue and operating expenses over the three and nine month comparative ~~period~~periods is primarily due to lower license fees and revenue share, which is the result of lower ~~revenue. The increase in total costs of~~ revenue ~~and operating expenses~~ over the ~~six month~~same comparative ~~period is a primarily due to the impact of a full six months of operations resulting from the AdColony Acquisition and Fyber Acquisition.~~periods. Costs of revenue and operating expenses included transaction costs of ~~$1,284~~$1,297 and ~~$2,584,~~$3,880, respectively, for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022, compared to ~~$9,159~~$6,167 and ~~$17,503,~~$23,671, respectively, for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2021.

License fees and revenue share

License fees and revenue share are reflective of amounts paid to our carrier and OEM partners, as well as app publishers and developers, and are recorded as a cost of revenue.

License fees and revenue share decreased by ~~$14,627,~~$35,683 or ~~16.0%~~32.7% to ~~$76,881~~$73,370 for the three months ended ~~September 30, 2022, and was 44.0% as a percentage of total net revenue compared to $91,508, or 48.5% of total net revenue, for the three months ended September 30, 2021.~~

~~License fees and revenue share decreased by $11,068, or 6.3% to $164,248 for the six months ended September 30,~~December 31, 2022, and was 45.2% as a percentage of total net revenue compared to ~~$175,316,~~$109,053, or ~~50.6%~~50.3% of total net revenue, for the ~~six~~three months ended ~~September 30,~~December 31, 2021.

~~The decrease in license~~License fees and revenue share decreased by $46,751 or 16.4% to $237,618 for the nine months ended December 31, 2022, and was ~~attributable to the decrease in total net revenue over the same periods as these costs are typically paid~~45.2% as a percentage of ~~our revenue.~~ total net revenue compared to $284,369, or 50.5% of total net revenue, for the nine months ended December 31, 2021.

The decrease in license fees and revenue share as a percentage of total net revenue for the three ~~and six~~ months ended ~~September 30,~~December 31, 2022, compared to the prior year comparative ~~periods,~~period, was primarily due to revenue mix changes. The decrease in license fees and revenue share as a percentage of total net revenue for the nine months ended December 31, 2022, compared to the prior year comparative period, was primarily due to revenue mix changes ~~as well as~~partially offset by the two contract amendments discussed above.

Other direct costs of revenue

Other direct costs of revenue are comprised primarily of hosting expenses directly related to the generation of revenue and depreciation expense accounted for under ASC 985-20, Costs of Software to be Sold, Leased, or Otherwise Marketed.

Other direct costs of revenue was relatively unchanged, increasing $234 or 2.6% to $9,324 for the three months ended December 31, 2022, and was 5.7% as a percentage of total net revenue compared to $9,090, or 4.2% of total net revenue, for the three months ended December 31, 2021. The increase as a percentage of total net revenue was due to the decrease in total net revenue for the three months ended December 31, 2022.

Other direct costs of revenue increased by ~~$1,372,~~$6,053 or ~~17.5%~~28.3% to ~~$9,199~~$27,438 for the ~~three~~nine months ended ~~September 30,~~December 31, 2022, and was ~~5.3%~~5.2% as a percentage of total net revenue compared to ~~$7,827,~~$21,385, or ~~4.2%~~3.8% of total net revenue, for the ~~three~~nine months ended ~~September 30,~~December 31, 2021.

~~Other~~ The increase in other direct costs of revenue ~~increased by $5,819, or 47.3% to $18,114~~ for the ~~six~~nine months ended ~~September 30,~~December 31, 2022, compared to the prior year comparative period, was due to higher hosting costs of approximately $4,406 and ~~was 5.0%~~higher depreciation expense for developed technology assets of approximately $1,647 due in part to the impact of a full nine months of operations resulting from the AdColony Acquisition and Fyber Acquisition. Please see Note 3, “Acquisitions,” for further information. The increase as a percentage of total net revenue compared to ~~$12,295, or 3.5% of~~the prior year comparative period was due to both higher costs as well as the decrease in total net revenue for the ~~six~~nine months ended ~~September 30, 2021.~~

The increase in other direct costs of revenue in both the three and six months ended September 30, 2022, compared to the prior year comparative periods, as well as as a percentage of revenue was primarily driven by an increase in hosting expense and higher depreciation of developed technology assets.December 31, 2022.

Product development

Product development expenses include the development and maintenance of the Company’s product suite. Expenses in this area are primarily a function of personnel.

Product development expenses increased by ~~$821,~~$463 or ~~5.9%~~3.4% to ~~$14,736~~$14,218 for the three months ended ~~September 30,~~December 31, 2022, compared to ~~$13,915~~$13,755 for the three months ended ~~September 30,~~December 31, 2021. Product development expenses included acquisition-related costs of ~~$543~~$542 and ~~$455~~severance costs of $323 for the three months ended ~~September 30,~~December 31, 2022. Product development expenses included acquisition-related costs of $454 for the three months ended December 31, 2021. Excluding acquisition-related costs and severance costs, product development expenses were relatively unchanged for the three months ended December 31, 2022. Lower employee-related costs, primarily due to reduced incentive compensation, was mostly offset by third-party development costs to support increased development activities.

Product development expenses increased by $2,493 or 6.1% to $43,087 for the nine months ended December 31, 2022, compared to $40,594 for the nine months ended December 31, 2021. Product development expenses included acquisition-related costs of $1,627 and severance costs of $323 for the nine months ended December 31, 2022. Product development expenses included acquisition-related costs of $2,364 for the nine months ended December 31, 2021. Excluding acquisition-related and severance costs, product development expenses increased by $2,930 for the nine months ended December 31, 2022. The increase in product development expenses, after excluding acquisition-related costs and severance costs, was primarily due to higher third-party development costs to support increased development activities of $6,628, partially offset by lower employee-related costs of approximately $3,698, primarily due to the capitalization of employee-related costs for development activities and lower incentive compensation. The increases were due in part to the impact of a full nine months of operations resulting from the AdColony Acquisition and Fyber Acquisition. Please see Note 3, “Acquisitions,” for further information.

Product development expenses, excluding acquisition-related costs and severance costs, increased to 8.2% and 7.8% of total net revenue for the three and nine months ended December 31, 2022, respectively, compared to 6.1% and 6.8% of total net revenue for the three and nine months ended December 31, 2021, respectively. The increase in product development expenses as a percentage of total net revenue was ~~primarily~~ due to higher ~~employee related~~ costs ~~driven by higher wages~~ and ~~stock compensation reflective of market conditions for product development employees.~~

Product development expenses increased by $2,030, or 7.6% to $28,869 for the six months ended September 30, 2022, compared to $26,839, for the six months ended September 30, 2021. Product development expenses included acquisition related costs of $1,085 and $1,910 for the six months ended September 30, 2022 and 2021, respectively. The increase in product development expenses for was primarily due to a full six months of operations from the AdColony Acquisition and Fyber Acquisition.lower revenues.

Sales and marketing

Sales and marketing expenses represent the costs of sales and marketing personnel, advertising and marketing campaigns, and campaign management.

Sales and marketing expenses ~~decreased~~increased by ~~$1,989,~~$612 or ~~11.4%~~3.9% to ~~$15,490~~$16,469 for the three months ended ~~September 30,~~December 31, 2022, and was ~~8.9%~~10.1% as a percentage of total net revenue compared to ~~$17,479,~~$15,857, or ~~9.3%~~7.3% of total net revenue, for the three months ended ~~September 30,~~December 31, 2021. ~~This decrease~~The increase in sales and marketing expenses was primarily due to an increase in travel and sales-related events of approximately $1,388 due to the easing of COVID restrictions and severance costs of approximately $652, primarily for Nordic region employees due to the termination of a reseller partnership in the region. These increases were offset by a decrease of approximately $1,428 for employee-related costs, primarily due to lower ~~sales~~headcount and ~~account management headcount through attrition as well as the result of the integration of the AdColony Acquisition and Fyber Acquisition.~~incentive compensation.

Sales and marketing expenses ~~was~~were relatively unchanged, increasing by ~~$333,~~$945 or ~~1.1%~~2.0% to ~~$31,548~~$48,017 for the ~~six~~nine months ended ~~September 30,~~December 31, 2022, and was ~~8.7%~~9.1% as a percentage of total net revenue compared to ~~$31,215,~~$47,072, or ~~9.0%~~8.4% of total net revenue, for the ~~six~~nine months ended ~~September 30,~~December 31, 2021. The increase in sales and marketing expenses was primarily due to an increase in travel and sales-related events of approximately $2,468 due to the easing of COVID restrictions and severance costs of approximately $652, primarily for Nordic region employees due to the termination of a reseller partnership in the region. These increases were offset by a decrease of approximately $2,175, primarily for employee-related costs due to lower headcount and incentive compensation.

General and administrative

General and administrative expenses represent management, finance, and support personnel costs in both the parent and subsidiary companies, which include professional services and consulting costs, in addition to other costs such as rent, stock-based compensation, and depreciation and amortization expense.

General and administrative expenses decreased by ~~$3,836,~~$792 or ~~9.3%~~2.0% to ~~$37,471~~$39,132 for the three months ended ~~September 30,~~December 31, 2022, ~~and was 21.4% as a percentage of total net revenue~~ compared to ~~$41,307, or 21.9% of total net revenue,~~$39,924 for the three months ended ~~September 30,~~December 31, 2021. The three months ended ~~September 30,~~December 31, 2022, included acquisition-related costs and severance costs of $700 and $135, respectively. The three months ended December 31, 2021 included acquisition-related costs of ~~$686~~$5,676. Excluding acquisition-related costs and ~~$8,587, respectively. Excluding acquisition-related~~severance costs, general and administrative expenses increased ~~$4,065.~~ $4,048.

The increase in general and administrative expenses after excluding acquisition-related costs and severance costs was primarily due ~~to bad debt~~to: (1) higher depreciation expense of approximately $2,549 for developed technology assets and ~~the~~ amortization of ~~trade names intangibles.~~acquired intangible assets, (2) an increase in professional fees, primarily for legal, tax, and auditing services, and software costs of approximately $837, and (3) an increase of approximately $661 for employee related costs due to higher wages and stock-based compensation, partially offset by lower incentive compensation.

General and administrative expenses increased by ~~$9,895,~~$9,103 or ~~15.2%~~8.7% to ~~$75,196~~$114,328 for the ~~six~~nine months ended ~~September 30,~~December 31, 2022, ~~and was 20.7% as a percentage of total net revenue~~ compared to ~~$65,301, or 18.8% of total net revenue,~~$105,225 for the ~~six~~

nine months ended ~~September 30,~~December 31, 2021. The ~~six~~nine months ended ~~September 30,~~December 31, 2022, included acquisition-related costs and severance costs of $2,091 and $135, respectively. The nine months ended December 31, 2021, included acquisition-related costs ~~of $1,391~~$20,866. Excluding acquisition-related costs and ~~$15,191, respectively. Excluding acquisition-related~~severance costs, general and administrative expenses increased ~~$23,695.~~ $27,744.

The increase in general and administrative expenses after excluding acquisition-related costs and severance costs was primarily due to: (1) higher depreciation expense of approximately $17,870 for developed technology assets and amortization of acquired intangible assets, (2) an increase of approximately $4,435 for employee-related costs due to higher wages and stock-based compensation costs, partially offset by lower incentive compensation, (3) an increase in bad debt expense of approximately $2,149, and ~~amortization~~(4) an increase in other categories, primarily professional services, software, and facilities of ~~trade names intangibles. In addition, the increase was~~$3,289. The increases were due in part to the impact of a full ~~six~~nine months of operations resulting from the AdColony Acquisition and Fyber Acquisition. Please see Note 3, “Acquisitions,” for further information.

Interest and other income / (expense), net


		Three months ended September 30,						Six months ended September 30,							Three months ended December 31,						Nine months ended December 31,
		2022		2021		% of Change		2022		2021		% of Change			2022		2021		% of Change		2022		2021		% of Change
Interest and other income / (expense), net	Interest and other income / (expense), net													Interest and other income / (expense), net
Change in fair value of contingent consideration	Change in fair value of contingent consideration	$	—	$	(22,087)	100.0	%	$	—	$	(22,087)	100.0	%	Change in fair value of contingent consideration	$	—	$	(18,200)	100.0	%	$	—	$	(40,287)	100.0	%
Interest expense, net	Interest expense, net	(5,229)		(1,955)		167.5	%	(9,311)		(3,112)		199.2	%	Interest expense, net	(6,913)		(2,195)		214.9	%	(16,224)		(5,307)		205.7	%
Foreign exchange transaction loss		(281)		(249)		12.9	%	(612)		(519)		17.9	%
Foreign exchange transaction gain / (loss)														Foreign exchange transaction gain / (loss)	17		2,122		(99.2)	%	(595)		1,603		(137.1)	%
Other income / (expense), net	Other income / (expense), net	312		(477)		165.4	%	384		(512)		175.0	%	Other income / (expense), net	8		(86)		109.3	%	392		(598)		165.6	%
Total interest and other income / (expense), net	Total interest and other income / (expense), net	$	(5,198)	$	(24,768)	(79.0)	%	$	(9,539)	$	(26,230)	(63.6)	%	Total interest and other income / (expense), net	$	(6,888)	$	(18,359)	(62.5)	%	$	(16,427)	$	(44,589)	(63.2)	%

Comparison of the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022 and 2021

Change in fair value of contingent consideration

For the three and ~~six~~nine months ended ~~September 30,~~December 31, 2021, the Company recorded charges for changes in fair value of contingent consideration in connection with the AdColony Acquisition and Fyber Acquisition of ~~$22,087.~~$18,200 and $40,287, respectively. There were no such charges recorded for the three and ~~six~~nine months ended ~~September~~ December 31, 2022.

30 ~~2022.~~

Interest expense, net

~~Over~~For the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022, interest expense, net, increased by ~~$3,274,~~$4,718 or ~~167.5%~~214.9% and ~~$6,199,~~$10,917 or ~~199.2%~~205.7%, respectively, compared to the three and ~~six~~nine months ended ~~September 30, 2021. The increases were~~December 31, 2021, primarily due to an increase in interest rates of 371 basis points and 228 basis points, respectively, and higher average outstanding borrowings ~~under~~of $129,167 and $229,952, respectively, over the ~~New Credit Agreement.~~comparative periods.

Liquidity and Capital Resources

Our primary sources of liquidity are our ~~existing~~ cash and cash equivalents, cash from operations, and borrowings under our New Credit Agreement. As of ~~September 30,~~December 31, 2022, we had unrestricted cash of approximately ~~$82,653~~$79,307 and ~~$149,866~~$174,866 available to draw under the New Credit Agreement with BoA. The maturity date of the New Credit Agreement is April 29, 2026, and the outstanding balance of ~~$450,134~~$425,134 is classified as long-term debt, net of debt issuance costs of ~~$2,941,~~$2,824, on our condensed consolidated balance sheet as of ~~September 30,~~December 31, 2022. We generated ~~$64,309~~$97,514 in cash flows from operating activities for the ~~six~~nine months ended ~~September 30,~~December 31, 2022.

Our ability to meet our debt service obligations and to fund working capital, capital expenditures, and investments in our business will depend upon our future performance, which will be subject to ~~financial, business, and other factors affecting our operations, many of which are beyond our control,~~ availability of borrowing capacity under our credit facility and our ability to access the capital ~~markets.~~markets as well as financial, business, and other factors affecting our operations, many of which are beyond our control. For example, these factors ~~could~~ include general and regional economic, financial, competitive, legislative, regulatory, and other factors such as health epidemics ~~such as~~including COVID-19, economic and macro-economic factors like labor shortages, supply chain disruptions, and inflation, and geopolitical developments, including the conflict in Ukraine. We cannot guarantee that we will generate sufficient cash flow from operations, or that future borrowings or the capital markets will be available, in an amount sufficient to enable us to pay our debt or to fund our other liquidity needs. We could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional indebtedness or equity capital, or restructure or refinance our indebtedness. We may not be able to affect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations.

~~The Company believes it~~We believe we will generate sufficient cash flow from operations and has the liquidity and capital resources

to meet ~~its~~our business requirements for at least twelve months from the filing date of this Quarterly Report on Form 10-Q.

Hosting Agreements

~~The Company enters~~We enter into hosting agreements with service providers and in some cases, those agreements include minimum commitments that require ~~the Company~~us to purchase a minimum amount of service over a specified time period (“the minimum commitment period”). The minimum commitment period is generally one-year in duration and the hosting agreements include multiple minimum commitment periods. Our minimum purchase commitments under these hosting agreements total approximately ~~$194,288~~$181,603 over the next ~~4.25~~4 years.

Outstanding Secured Indebtedness

~~The Company’s~~Our outstanding secured indebtedness under the New Credit Agreement is ~~$450,134~~$425,134 as of ~~September 30,~~December 31, 2022. See “Recent Developments - Credit Agreement” for additional information on the New Credit Agreement. ~~The Company's~~Our ability to borrow additional amounts under ~~its~~the New Credit Agreement could have significant negative consequences, including:

•increasing ~~the Company’s~~our vulnerability to general adverse economic and industry conditions;

•limiting ~~the Company’s~~our ability to obtain additional financing;

•violating a financial covenant, potentially resulting in the indebtedness to be paid back immediately and thus negatively impacting our liquidity;

•requiring additional financial covenant measurement consents or default waivers without enhanced financial performance in the short term;

•requiring the use of a substantial portion of any cash flow from operations to service indebtedness, thereby reducing the amount of cash flow available for other purposes, including capital expenditures;

•limiting ~~the Company’s~~our flexibility in planning for, or reacting to, changes in ~~the Company’s~~our business and the industry in which it competes, including by virtue of the requirement that ~~the Company~~we remain in compliance with certain negative operating covenants included in the credit arrangements under which ~~the Company~~we will be obligated as well as meeting certain reporting requirements; and

•placing ~~the Company~~us at a possible competitive disadvantage to less leveraged competitors that are larger and may have better access to capital resources.

Our credit facility also contains a maximum consolidated secured net leverage ratio and minimum consolidated interest coverage ratio. There can be no assurance we will continue to satisfy these ratio covenants. If we fail to satisfy these covenants, the lender may declare a default, which could lead to acceleration of the debt maturity. Any such default would have a material adverse effect on ~~the Company.~~us.

The collateral pledged to secure our secured debt, consisting of substantially all of our and our U.S. subsidiaries’ assets, would be available to the secured creditor in a foreclosure, in addition to many other remedies. Accordingly, any adverse change in our ability to service our secured debt could result in an event of default, cross default, and foreclosure or forced sale. Depending on the value of the assets, there could be little, if any, assets available for common stockholders in any foreclosure or forced sale.

Cash Flow Summary


		Six months ended September 30,						Nine months ended December 31,
		2022		2021		% of Change				2022		2021		% of Change
		(in thousands)						(in thousands)
Consolidated statements of cash flows data:	Consolidated statements of cash flows data:								Consolidated statements of cash flows data:
Net cash provided by operating activities	Net cash provided by operating activities	$	64,309	$	7,754	729.4	%		Net cash provided by operating activities	$	97,514	$	43,462	124.4	%
Equity investments									Equity investments	(4,000)		—		(100.0)	%
Business acquisitions, net of cash acquired	Business acquisitions, net of cash acquired	—		(148,056)		100.0	%		Business acquisitions, net of cash acquired	(2,708)		(148,192)		98.2	%
Capital expenditures	Capital expenditures	(12,930)		(10,411)		(24.2)	%		Capital expenditures	(18,598)		(15,692)		(18.5)	%
Net cash used in investing activities	Net cash used in investing activities	$	(12,930)	$	(158,467)	91.8	%		Net cash used in investing activities	$	(25,306)	$	(163,884)	84.6	%

Proceeds from borrowings	Proceeds from borrowings	—		267,134		(100.0)	%		Proceeds from borrowings	18,000		369,913		(95.1)	%
Payment of debt issuance costs	Payment of debt issuance costs	—		(2,988)		100.0	%		Payment of debt issuance costs	(94)		(4,044)		97.7	%

Payment of deferred business acquisition consideration									Payment of deferred business acquisition consideration	—		(98,175)		100.0	%
Options and warrants exercised	Options and warrants exercised	939		2,155		(56.4)	%		Options and warrants exercised	1,095		2,814		(61.1)	%
Payment of withholding taxes for net share settlement of equity awards	Payment of withholding taxes for net share settlement of equity awards	(5,929)		—		(100.0)	%		Payment of withholding taxes for net share settlement of equity awards	(6,202)		(7,587)		(18.3)	%
Repayment of debt obligations	Repayment of debt obligations	(86,500)		(46,256)		(87.0)	%		Repayment of debt obligations	(129,500)		(52,623)		(146.1)	%
Net cash provided by / (used in) financing activities	Net cash provided by / (used in) financing activities	$	(91,490)	$	220,045	141.6	%		Net cash provided by / (used in) financing activities	$	(116,701)	$	210,298	155.5	%

Operating Activities

Our cash flows from operating activities are primarily driven by revenues generated from advertising activity, offset by the cash costs of operations, and are significantly influenced by the timing of and fluctuations in receipts from buyers and related payments to sellers. Our future cash flows will be diminished if we cannot increase our revenue levels and manage costs appropriately. Cash provided by operating activities was ~~$64,309~~$97,514 for the ~~six~~nine months ended ~~September 30,~~December 31, 2022, compared to ~~$7,754~~$43,462 for the ~~six~~nine months ended ~~September 30,~~December 31, 2021. The increase of ~~$56,555~~$54,052 was due to the following:

•$~~3,221 decrease~~58,961 increase due to lower non-cash charges as the six months ended September 30, 2021 included the impact of changes in the fair value of contingent consideration. This was partially offset by accelerated amortization of trade name assets amidst rebranding and a larger employee base receiving share based compensation for the six months ended September 30, 2022 ;

•~~$41,481 increase for~~ changes in operating assets and liabilities, primarily due to lower net working capital for the ~~six~~nine months ended ~~September 30,~~December 31, 2022;

•$15,295 increase in net income; and

•$~~18,295 increase~~20,204 decrease due to lower non-cash charges during the nine months ended December 31, 2022, including the impact of the change in ~~net income.~~fair value of contingent consideration during the nine months ended December 31, 2021. This impact was partially offset by accelerated amortization of trade name intangible assets amidst rebranding and a larger employee base receiving stock-based compensation for the nine months ended December 31, 2022.

Investing Activities

Our primary investing activities have consisted of acquisitions of businesses, purchases of property and equipment, and capital expenditures in support of creating and enhancing our technology infrastructure. For the ~~six~~nine months ended ~~September 30,~~December 31, 2022, net cash used in investing activities decreased by ~~$145,537~~$138,578 to approximately ~~$12,930.~~$25,306. Current period cash used in investing activities iswas comprised ~~entirely~~ of capital expenditures related mostly to internally-developed software of ~~$12,930.~~$18,598, an equity investment of $4,000 in one of the largest independent Android app stores, and cash expenditures for business acquisitions, net of cash acquired, of $2,708 related to our acquisition of In App Video Services UK LTD. For the ~~six~~nine months ended ~~September 30,~~December 31, 2021, net cash used in investing activities was approximately ~~$158,467,~~$163,884, comprised of cash expenditures for business acquisitions, net of cash acquired, of ~~$148,056~~$148,192 related to our acquisitions of AdColony and Fyber and capital expenditures related mostly to internally-developed software of ~~$10,411.~~$15,692. The ~~$2,519~~$2,906 increase in capital expenditures was due to incremental investments in product development efforts and is also reflective of ~~the~~a larger product portfolio due to the acquisitions of AdColony and Fyber.

Financing Activities

Our financing activities consisted of borrowings and repayment of amounts borrowed under our New Credit Agreement and transactions related to our equity plans. For the ~~six~~nine months ended ~~September 30,~~December 31, 2022, net cash used in financing activities was approximately ~~$91,490,~~$116,701, which was comprised of the repayment of debt obligations of ~~$86,500,~~$129,500 and payment of withholding taxes for net share settlement of equity awards of ~~$5,929,~~$6,202, partially offset by proceeds from borrowings of $18,000 and ~~options exercised~~stock option exercises of ~~$939.~~$1,095. For the ~~six~~nine months ended ~~September 30,~~December 31, 2021, net cash provided by financing activities was approximately ~~$220,045,~~$210,298, which was comprised of proceeds from borrowings of ~~$267,134 primarily used for~~$369,913 and stock option exercises of $2,814, partially offset by the ~~acquisitions~~payment of ~~AdColony and Fyber and proceeds from the exercise~~deferred business acquisition consideration of ~~stock options of $2,155, offset by~~$98,175, repayment of debt obligations of ~~$46,256~~$52,623, payment of withholding taxes for net share settlement of equity awards of $7,587, and payment of debt issuance costs of ~~$2,988.~~$4,044.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of our financial condition and results of operations is based on our unaudited financial statements. The preparation of these financial statements is based on management’s selection and application of accounting policies, some of which require management to make judgments, estimates, and assumptions that affect the amounts

reported in the financial statements and notes. For more information regarding our critical accounting policies and estimates, please see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies,” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, and Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” of this Quarterly Report on Form 10-Q for our fiscal ~~second~~third quarter ended ~~September 30,~~December 31, 2022.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~We have~~The Company has operations both within the United States and internationally and ~~we are~~is exposed to market risks in the ordinary course of ~~our~~ business - primarily interest rate and foreign currency exchange risks.

Interest Rate Fluctuation Risk

The primary objective of ~~our~~the Company’s investment activities is to preserve principal while maximizing income without significantly increasing risk. ~~Our~~The Company’s cash and cash equivalents consist of cash and deposits, which are sensitive to interest rate changes.

~~Our~~The Company’s borrowings under ~~our~~its credit facility are subject to variable interest rates and thus expose usthe Company to interest rate fluctuations, depending on the extent to which ~~we utilize~~ the Company utilizes its credit facility. If market interest rates materially increase, ~~our~~the Company’s results of operations could be adversely affected. A hypothetical increase in market interest rates of 100 basis points would result in an increase in ~~our~~ interest expense of $10 per year for every $1,000 of outstanding debt under the credit facility. The Company has not used any derivative financial instruments to manage its interest rate risk exposure.

Foreign Currency Exchange Risk

~~We have foreign~~Foreign currency exchange risk is the risk that the Company’s results of operations and/or financial condition could be affected by changes in exchange rates. The Company has transactions denominated in currencies other than the U.S. dollar, principally the euro, Turkish lira, and British pound, that expose usthe Company’s operations to risk from the effects of exchange rate movements. Such movements ~~of respective foreign currencies, which~~ may ~~affect~~impact future ~~revenue, costs~~revenues, expenses, and cash flows. ~~Foreign currency exchange risk is the risk that our results of operations or financial position could be affected by changes in exchange rates.~~ In certain of ~~our~~the Company’s foreign operations, ~~we transact~~the Company transacts primarily in the U.S. ~~Dollar,~~dollar, including ~~our~~for net revenue, license fees and revenue share, and ~~employee related~~employee-related compensation costs, which reduces ~~our~~the Company’s exposure to foreign currency exchange risk. In addition, gains / (losses) related to translating certain cash balances, trade accounts receivable and payable balances, and intercompany balances also impact ~~our~~ net income. As ~~our~~the Company’s foreign operations expand, ~~our~~ results may be ~~more~~ impacted further by fluctuations in the exchange rates of the currencies in which ~~we do~~the Company’s does business. The Company has not used any derivative financial instruments to manage its foreign currency exchange risk exposure.

ITEM 4. CONTROLS AND PROCEDURES

This Report includes the certifications of ~~our~~the Company’s Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). See Exhibits 31.1 and 31.2 to this Quarterly Report on Form 10-Q. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are controls and other procedures designed to ensure information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer, who is the principal executive officer, and the Company’s Chief Financial Officer, who is the principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As previously disclosed in Item ~~9A.~~9A, Disclosure Controls and Procedures, of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022, management, with the participation of ~~its~~the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of March 31, 2022. Based on this evaluation, management concluded as of such date, the Company’s disclosure controls and procedures were not effective due to the existence of the material weakness in its internal control over financial reporting therein described.

Management concluded the Company’s internal control for business combinations did not include a control adequately designed to ensure acquiree accounting policies, as they relate to presentation and classification, were conformed to those of the Company and GAAP.

~~Our management, with~~With the participation of ~~our~~the Company’s Chief Executive Officer and Chief Financial Officer, management evaluated the effectiveness of the design and operation of ~~its~~the Company’s disclosure controls and procedures as of ~~September 30,~~December 31, 2022. Based on this evaluation and as a result of the identification of the material weakness described above, management concluded ~~that~~ the Company’s disclosure controls and procedures were not effective as of ~~September 30,~~December 31, 2022.

Remediation Plans for Material Weakness in Internal Control over Financial Reporting

Prior to the identification of the material weakness, management, with oversight from ~~our audit committee,~~the Company’s Audit Committee, completed a review of the recently acquired business’ product lines with the ~~assistance~~consultation of a large, third-party accounting firm as part of the financial close and reporting process. This included a review, at the acquired businesses, of representative customer contracts and agreements, supply/publisher agreements, and each product line’s business model and operations with key operations personnel. Further, management ~~had taken~~took several other actions to strengthen the Company’s control environment, including ~~the~~ hiring of a new Chief Accounting Officer and ~~the creation of~~creating and hiring for other key positions including a Senior Manager of Internal Audit/ICFR and Director of Global Tax.

The Company is continuing to make progress in implementing improvements to its policies and procedures by:

•Strengthening the Company’s procedures for reviewing the accounting policies of material acquired companies, ~~inclusive of the~~including their accounting for revenue, through initial reviews during the due diligence period and ensuring alignment of accounting policies prior to the first post-acquisition interim reporting date;

•Standardizing customer and publisher contract review processes to ensure consistent accounting and reporting of revenue transactions; and

•Formalizing the approval process for making changes to the global chart of accounts and accounting systems to ensure the accurate classification of financial statement amounts, including changes resulting from material acquisitions.

Management believes these additional steps will be effective in remediating the material weakness described above and may take additional measures to address the material weakness or modify the remediation plan described above, if deemed necessary. Management continues to make progress implementing the remediation steps discussed ~~above.~~above and will continue to test the enhanced control environment in the Company’s fiscal fourth quarter. If the results of remaining controls testing progress as planned, management expects sufficient evidence will be available to conclude the material weakness described above no longer exists as of March 31, 2023.

Changes in Internal Control Over Financial Reporting

Other than the revenue recognition review process and ongoing remediation steps described above, there were no changes in ~~our~~the Company’s internal control over financial reporting ~~that occurred~~ during the three months ended ~~September 30,~~December 31, 2022, that materially affected, or are reasonably likely to materially affect, ~~our~~the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company may be involved in various claims, suits, assessments, investigations, and legal proceedings that arise from time to time in the ordinary course of its business.

On June 6, 2022 and July 21, 2022, shareholders of the Company filed class action complaints against the Company and certain of ~~our~~its officers in the Western District of Texas related to Digital ~~Turbine’s~~Turbine, Inc.’s announcement in May 2022 that itthe Company would restate some of its financial results. The claims allege violations of certain federal securities laws. In addition, in September and October of 2022, shareholders of the Company filed derivative complaints against the Company and ~~our~~its directors in the Western District of Texas, ~~and~~ Delaware state courts, and Texas state courts alleging breaches of fiduciary duties relating to the allegations made in the class action complaints. The federal derivative cases are consolidated, and the Texas derivative case has been dismissed and re-filed in Delaware federal court and the Delaware derivative cases are now consolidated, and all such derivative cases are stayed under a court order, pending a ruling on any motion to dismiss the federal class action that is later filed. The Company and individual defendants deny any allegations of wrongdoing and we plan to vigorously defend against the claims asserted in these complaints. Due to the early stages of these cases, management is unable to assess a likely outcome or potential liability at this time.

ITEM 1A. RISK FACTORS

The Company is not aware of any material changes ~~from~~to the risk factors set forth under Part I, Item 1A, “Risk Factors,” in its Annual Report on Form 10-K for the fiscal year ended March 31, 2022, filed with the Securities and Exchange Commission on June 6, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS


Exhibit No.						Description















































~~3.1~~						~~Fifth Amendment to Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 21, 2022).~~
10.1*						Second Amendment, dated as of October 26, 2022, by and among Digital Turbine, Inc., Digital Turbine Media, Inc., Digital Turbine USA, Inc., Mobile Posse, Inc., AdColony, Inc., AdColony Holdings US, Inc., and Bank of America, N.A., as administrative agent and a lender, and the other lenders party thereto.
31.1						Certification of William Stone, Principal Executive Officer. *
31.2						Certification of Barrett Garrison, Principal Financial Officer. *
32.1						Certification of William Stone, Principal Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. +
32.2						Certification of Barrett Garrison, Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. +
101						INS XBRL Instance Document. *
101						SCH XBRL Schema Document. *
101						CAL XBRL Taxonomy Extension Calculation Linkbase Document. *
101						DEF XBRL Taxonomy Extension Definition Linkbase Document. *
101						LAB XBRL Taxonomy Extension Label Linkbase Document. *
101						PRE XBRL Taxonomy Extension Presentation Linkbase Document. *

* Filed herewith.

+ In accordance with SEC Release No. 33-8212, these exhibits are being furnished, and are not being filed, as part of this Quarterly Report on Form 10-Q or as a separate disclosure document, and are not being incorporated by reference into any Securities Act registration statement.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Digital Turbine, Inc.

Dated: ~~November 9, 2022~~February 8, 2023

By:

/s/ William Gordon Stone III

William Gordon Stone III

Chief Executive Officer

(Principal Executive Officer)

Digital Turbine, Inc.

Dated: ~~November 9, 2022~~February 8, 2023

By:

/s/ James Barrett Garrison

James Barrett Garrison

Chief Financial Officer

(Principal Financial Officer)






























PART I	FINANCIAL INFORMATION	3
ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS	3
	CONDENSED CONSOLIDATED BALANCE SHEETS	3
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / (LOSS)	4
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	5
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY	6
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3433
ITEM 4.	CONTROLS AND PROCEDURES	34
PART II	OTHER INFORMATION	36
ITEM 1.	LEGAL PROCEEDINGS	36
ITEM 1A.	RISK FACTORS	36
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	36
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	36
ITEM 4.	MINE SAFETY DISCLOSURES	36
ITEM 5.	OTHER INFORMATION	36
ITEM 6.	EXHIBITS	37
	SIGNATURES	37


	Common Stock Shares*	Amount		Preferred Stock Shares	Amount		Treasury Stock Shares*	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Non-Controlling Interest		Total
Balance at March 31, 2021	89,790,086	$	10	100,000	$	100	758,125	$	(71)	$	373,310	$	(903)	$	(227,334)	$	—	$	145,112
Net income	—	—		—	—		—	—		—		—		14,284		(31)		14,253
Foreign currency translation	—	—		—	—		—	—		—		(20,019)		—		(762)		(20,781)
Stock-based compensation expense	—	—		—	—		—	—		3,705		—		—		—		3,705
Shares issued:
Exercise of stock options	178,127	—		—	—		—	—		695		—		—		—		695
Vesting of restricted and performance stock units	207,758	—		—	—		—	—		—		—		—		—		—
Shares for acquisition of Fyber	4,716,935	—		—	—		—	—		359,233		—		—		—		359,233
Acquisition of non-controlling interests in Fyber	—	—		—	—		—	—		—		—		—		24,558		24,558



Balance at June 30, 2021	94,892,906	$	10	100,000	$	100	758,125	$	(71)	$	736,943	$	(20,922)	$	(213,050)	$	23,765	$	526,775
Net loss	—	—		—	—		—	—		—		—		(5,852)		(35)		(5,887)
Foreign currency translation	—	—		—	—		—	—		—		(15,799)		—		(93)		(15,892)
Stock-based compensation expense	—	—		—	—		—	—		5,925		—		—		—		5,925
Shares issued:
Exercise of stock options	480,422	—		—	—		—	—		1,460		—		—		—		1,460
Issuance of restricted shares and vesting of restricted units	28,477	—		—	—		—	—		—		—		—		—		—
Shares for acquisition of Fyber	1,058,364	—		—	—		—	—		(2,547)		—		—		—		(2,547)
Acquisition of non-controlling interests in Fyber	—	—		—	—		—	—		—		—		—		(21,452)		(21,452)



Balance at September 30, 2021	96,460,169	$	10	100,000	$	100	758,125	$	(71)	$	741,781	$	(36,721)	$	(218,902)	$	2,185	$	488,382