Digital Turbine revenue rises 27%, but stock falls 23%

By Grace Kim

Digital Turbine (NASDAQ: APPS) shares traded at $8.73, down 23% in morning trading on November 10, 2026, after fiscal second-quarter revenue rose 27% to $178.7 million. The stock remained 75% higher year to date, but the one-day decline cut a large part of that gain.

What did Digital Turbine report on November 9?

Digital Turbine released Q2 FY2027 results after the market close. Revenue beat the $166.75 million consensus estimate. Adjusted earnings were $0.18 per share, above the $0.17 estimate.

• App Growth Platform sales rose 42% to $63.5 million.
• On Device Solutions revenue increased 20% to $115.6 million.

Both gains lifted adjusted EBITDA 46% to $39.8 million.

Why did guidance fail to lift the stock?

Management raised its fiscal 2027 revenue forecast to $670 million to $690 million, up from $650 million to $670 million. The revised range exceeded the $665.29 million consensus estimate.

Adjusted EBITDA guidance remained $145 million to $155 million despite the higher sales target. CEO Bill Stone said the company was being prudent on the bottom line while scaling the top line and investing in data and AI.

The market reaction showed that Wall Street placed more weight on profit conversion than on demand. The higher revenue forecast did not translate into a larger adjusted EBITDA target.

What compressed profitability?

Adjusted gross margin fell to 43% from 47% a year earlier. Revenue share, Digital Turbine’s largest cost, rose to 49% of net revenue from 45%.

Interim finance chief Josh Kinsell tied part of the pressure to “higher revenue share from product mix.”

Digital Turbine also revised prior statements for $3.5 million of understated revenue-share expense in the June 2026 quarter. The company listed a material weakness in internal control over financial reporting among its risks.

How do peers compare?

Mobile advertising peers fell much less after their latest results. Their profitability comparisons sharpened the market focus on Digital Turbine.

• Unity Software (NYSE: U) traded at $50.59, down 2%. Its Q3 2026 report on November 5 showed an adjusted EBITDA margin of 41%, against 23% a year earlier. Unity combines a game engine with a mobile advertising network.
• AppLovin (NASDAQ: APP), the leading mobile advertising platform, traded at $404.91, down 1%. Its November 4 Q3 2026 results showed an 84% adjusted EBITDA margin.

The Trade Desk (NASDAQ: TTD) rallied after its own results, showing that weakness was not uniform across ad-tech stocks. Digital Turbine’s 23% decline was far larger than either peer’s drop.

What distinguishes Digital Turbine’s distribution model?

Digital Turbine partners with wireless carriers and device makers to place apps and content directly on smartphones. Its revenue remains concentrated among a limited number of carriers.

The company’s Ignite platform collects first-party data signals for its advertising tools and now delivers other products to device screens. Stone said Digital Turbine is “doing this today in the U.S. with an AI-first partner distributing AI agents to devices.”

Stone also said brands are moving spend from the open web toward channels such as apps as AI reduces open-web traffic.

Unity pairs its advertising network with game-development tools that studios license by subscription. AppLovin runs a pure advertising platform with far higher margins. Digital Turbine shares a large portion of its revenue with carrier partners in exchange for distribution.

Can faster growth produce larger profits?

The next test is whether added AI and data spending turns faster revenue growth into a higher adjusted EBITDA forecast. Supporters can point to growth in both segments, the raised revenue range and new European carrier launches that management expects to drive growth next fiscal year.

Risks include lower gross margin, significant indebtedness, the $3.5 million revenue-share revision and the material weakness in internal control over financial reporting. Another marker is whether gross margin steadies as product mix shifts.

Traders may keep exposure smaller until the margin outlook resolves. Competitive pressure will hinge on whether carrier distribution and first-party data can produce better margins before larger investor positions return.