Digital Turbine (APPS) Q1 2026: On-Device Revenue Jumps 18% as Device Volumes Rebound
Digital Turbine’s first quarter delivered a clear inflection in its core on-device segment, as both device volumes and revenue per device accelerated, reversing a multi-year headwind. Strategic investments in first-party data and AI are beginning to differentiate the platform, with brand advertiser diversification and regulatory tailwinds boosting the company’s positioning. Management’s guidance raise signals growing confidence in sustained momentum through fiscal 2026.
Summary
- Device Volume Turnaround: Improved device shipments and higher revenue per device reversed a persistent headwind.
- Brand Advertiser Expansion: Nearly 50% more brand campaigns signaled rising platform relevance across verticals.
- AI and Data Investments: First-party data and machine learning are now driving measurable improvements in targeting and monetization.
Performance Analysis
Digital Turbine’s Q1 2026 marked a decisive shift, with total revenue up 11% year over year, led by a robust 18% increase in its On-Device Solutions (ODS) segment. ODS, which now accounts for roughly three-quarters of total revenue, benefited from both higher device volumes and a more than 30% lift in revenue per device (RPD) in key markets. This improvement was driven by stronger advertiser demand, improved pricing, and fill rates, particularly for premium placements.
The Application Growth Platform (AGP) segment, while still down 5% year over year, showed promising signs of stabilization with 9% sequential growth. Operating leverage was evident as EBITDA surged 73% and gross margin expanded by over 100 basis points, supported by cost discipline and efficiency initiatives. Free cash flow turned positive, and debt was reduced, signaling improved financial flexibility. The company’s highest EBITDA since calendar 2023 underscored the operational turnaround underway.
- Revenue Mix Shift: ODS segment now dominates the revenue base, reflecting a strategic pivot to device-centric monetization.
- Brand Demand Diversity: Content media and brand revenue grew double digits, with vertical expansion into retail, CPG, and finance.
- Cost Efficiency: Operating expenses fell 8% year over year, delivering margin expansion even as growth investments continued.
Underlying these results was a clear improvement in execution, with management highlighting both macro tailwinds and share gains across device partners and geographies.
Executive Commentary
"We delivered $131 million of revenue and $25 million in EBITDA, reflecting 11% revenue growth and 73% EBITDA growth year over year. These results are a testament to our strategic focus and improved execution across our platform and enabling us to increase our annual outlook for the fiscal year."
Bill Stone, Chief Executive Officer
"The combination of accelerated top-line growth and improving operator efficiencies driven by the transformation initiatives we began late last year, resulted in strong EBITDA performance this quarter. Adjusted EBITDA for our fiscal first quarter was $25.1 million, up 73% year over year, marking our highest quarterly EBITDA since calendar 2023."
Steve Lasher, Chief Financial Officer
Strategic Positioning
1. On-Device Platform Scale
ODS, on-device solutions, is now the company’s growth engine, with rising device volumes in North America and international markets. The shift from device volume headwinds to tailwinds, coupled with improved RPD, positions Digital Turbine to benefit from both macro and share-driven expansion.
2. First-Party Data and AI Differentiation
Investments in DT Ignite Graph, first-party device data, and DT IQ, AI-driven decisioning, are delivering tangible improvements in targeting and advertiser ROI. These proprietary assets are being branded to signal differentiation, and are increasingly valued by advertisers seeking alternatives to closed ecosystems.
3. Brand Advertiser Diversification
Brand campaign count rose nearly 50% quarter over quarter, with new demand from a broad spectrum of verticals. This diversification reduces revenue concentration risk and enhances platform resilience as mobile ad budgets shift toward measurable, high-intent placements.
4. Regulatory and Market Tailwinds
Global regulatory momentum toward open app distribution is accelerating, with the company actively participating in industry coalitions and benefiting from rulings that weaken incumbent app store dominance. This trend expands Digital Turbine’s addressable market and creates new partnership opportunities.
5. AGP Stabilization and Future Upside
While AGP, application growth platform, remains challenged year over year, the segment’s sequential improvement and integration of AI-driven performance bidding signal a potential return to growth. Management is prioritizing first-party data and machine learning to reignite demand-side traction.
Key Considerations
This quarter’s results underscore a decisive operational turnaround and strategic repositioning, but the durability of growth will depend on execution and external market dynamics.
Key Considerations:
- Device Volume Recovery: Sustained improvement in device shipments is critical for ongoing ODS momentum, especially as upgrade cycles normalize.
- Brand Revenue Stickiness: The ability to retain and grow new brand advertisers will determine the longevity of recent diversification gains.
- AI and Data Monetization: Continued investment in proprietary data and AI is essential to defend against larger, integrated competitors.
- Regulatory Uncertainty: While regulatory shifts are currently favorable, the pace and specifics of implementation remain fluid across regions.
Risks
Execution risk remains around AGP’s return to growth, as the segment is still in recovery mode. The company’s exposure to device market cycles, potential regulatory delays, and the competitive response from entrenched app store incumbents could pressure both growth and margins. High debt levels, while improving, also limit near-term strategic flexibility until further deleveraging is achieved.
Forward Outlook
For Q2 2026, Digital Turbine guided to:
- Continued sequential growth in device volumes and RPD
- Stabilization and incremental improvement in AGP performance
For full-year 2026, management raised guidance:
- Revenue of $525 million to $535 million
- Adjusted EBITDA of $90 million to $95 million
Management highlighted several factors that support the outlook:
- Brand advertiser diversification and direct demand
- Favorable regulatory trends and device partner expansion
Takeaways
Digital Turbine’s Q1 performance confirms a structural shift in its core business, with device volume and advertiser demand tailwinds supporting a confident guidance raise. The company’s differentiated data assets and AI capabilities are beginning to yield commercial impact, though AGP’s recovery and regulatory execution warrant close monitoring.
- ODS Momentum: Device-centric monetization and improved RPD are now driving the business, with global expansion and share gains strengthening the growth narrative.
- Strategic Differentiation: First-party data and AI branding (DT Ignite Graph, DT IQ) are positioning Digital Turbine as a credible alternative to entrenched app store models.
- Watch for AGP Inflection: Investors should track AGP’s performance and the pace of AI-driven demand-side improvements in coming quarters.
Conclusion
Digital Turbine’s first quarter marks a meaningful operational and strategic inflection, as device volumes, advertiser demand, and platform differentiation converge. Sustained execution on first-party data, AI, and global partnerships will determine whether this momentum translates into durable, long-term growth.
Industry Read-Through
Mobile app distribution and monetization are entering a new phase, as regulatory shifts and advertiser demand for transparency disrupt traditional app store dominance. Digital Turbine’s results suggest that alternative distribution and data-driven targeting are gaining traction, creating opportunities for other mobile adtech players and device integrators. Industry participants should monitor regulatory developments, the rise of first-party data platforms, and the evolving balance between open and closed mobile ecosystems as secular forces shaping the next cycle.