Digital Turbine, Inc. (APPS) Q4 2021 Earnings Report, Transcript and Summary

Good day. And welcome to Digital Turbine Reports Fourth Quarter and Fiscal 2021 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Brian Bartholomew, SVP of Capital Markets. Please go ahead.

Thanks Sarah. Good afternoon. And welcome to the Digital Turbine fourth quarter and fiscal 2021 earnings conference call. Joining me on today’s call to discuss our results are CEO, Bill Stone; and CFO, Barrett Garrison. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. These forward-looking statements are based on our current assumptions, expectations and beliefs, including projected operating metrics, future products and services, anticipated market demand, and other forward-looking topics. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. Except as required by law, we undertake no obligation to update any forward-looking statements. For a discussion of the risk factors that could cause our actual results to differ materially from those contemplated by our forward-looking statements, please refer to the documents we file with the Securities and Exchange Commission. Also, during this call, we will discuss certain non-GAAP measures of our performance. Non-GAAP measures are not substitutes for GAAP measures. Please refer to today’s press release for important information about the limitations of using non-GAAP measures, as well as reconciliations of these non-GAAP financial results to the most comparable GAAP measures. Now I’ll turn the call over to Chief Executive Officer, Mr. Bill Stone.

Thanks, Brian, and thank you all for joining our call tonight. First, I want to formally welcome the Appreciate, AdColony and Fyber teams to our team. This is our first earnings call being together and while the DT team has written some great chapter’s to-date, we think with the addition of the new teams who’ve now assembled, there are many even brighter chapters we’re going to write together. I think it’s important to reiterate to investors that people make this business happen and from what I’ve seen so far, we have a great global team that fits hand in glove with our DT team. They’re also now all shareholders in what we’re building together. Digital Turbine’s going through an amazing transformation over the past 18 months, as in in the midst of an accelerating profitable growth trajectory that very few companies will ever experience. The operating leverage of our platform is clicking on all cylinders. On our earnings call last February, we talked about just having over $100 million annual revenue business with approximately 100 employees. Today, with the closing of Fyber, AdColony, Appreciate and our own Digital Turbine triple-digit organic growth, we are now a company that has over a billion dollars of annualized revenue with nearly 1,000 employees. Given our closing of the AdColony and Fyber transactions, were completed in the middle of our current quarter, Barrett will talk more about the details of our forward outlook later in his remarks. But I want to emphasize a strategic point regarding our forward outlook. For a current June quarter, we are forecasting all four businesses to deliver approximately $280 million in revenue and $40 million in EBITDA if we had owned all of them for the entire quarter. This represents nearly 90% topline growth and approximately 200% EBITDA growth on an apples-to-apples or perform a basis. These are strong businesses independently and even stronger businesses when we consider our expected synergies. And this all showcases how we are now positioned with real scale to attack the $300 billion mobile media market. I’ll talk more about the details of how, when and what we’ll be doing later in my remarks, as well as provide some commentary on how we see Digital Turbine positioned against some of the macro items on investor’s mind such as inflation, post-COVID reopening trends and the impacts of Apple’s recent privacy changes with IDFA. But suffice it to say that while our past and present results are impressive, I’m even more excited about our future. But first I want to summarize our quarterly results and provide some real time operational updates on our business. To close out fiscal 2021, we continue to build on our breakout momentum with record results across the Board. We have over $313 million in revenue, which represented over 120% annual growth on an as reported basis and over 60% pro forma basis. When we compare our March quarterly results this year to last year, higher gross margins and accelerating operating leverage enabled us to turn the strong revenue growth into more than 4 times the EBITDA, compared to the EBITDA generated ago and more than 400% growth in non-GAAP earnings per share, Barrett will provide more details on the numbers, but operationally, I was pleased with the improving global reach of our platform, our demand improvements on revenue per device or RPD and a rebounding of device sales here in the United States. During the fourth quarter, our international revenues from our supply partners such as Samsung, Xiaomi, American Movil and others grew over 200% year-over-year, driven by a 32% increase in device volumes and 142% increase in revenue per device. In the U.S., we saw double-digit increase in device sales year-over-year, driven by 5G and pent-up demand from COVID. Our U.S. RPDs continue to strengthen and exceeded 50% year-over-year growth in the fourth quarter. In our content business revenues in the March quarter pro forma increased by approximately 120% year-over-year. This result was driven by our new content platform being fully deployed and legacy platform being sunset, as well as improved advertising rates that are all driving better operating results. I also want to reiterate from our prior earnings call that we’re on track to launch with both AT&T and Verizon later this year with some of our content product offerings. As you’ve heard me say on prior calls, diversification is a major strategic priority for the company, diversification of partners, business models, products, geographies and advertisers. We continue to have success with our U.S.-based carrier partners, whom we grew revenues 74% year-over-year during the fourth quarter, while our revenues with other partners outside of this group increased by over 200% year-over-year. Turning to the forward outlook, I now want to provide some commentary on how we’re provision -- positioned for future continued growth across each of our growth levers, devices, products and media. First on devices, after many quarters of flattish to declining trends in device sales in the U.S., I’m pleased to announce that we grew devices more than 10% in the U.S. and more than 30% internationally compared to the last March quarter. We’re seeing approximately 30% of new devices sold with our larger carrier partners being 5G, which is a material increase compared to prior quarters. On the product front, our revenues from dynamic installs grew by 73% year-over-year in the fourth quarter, but now represent approximately 50% of our total revenues, compared to over 70% last year. Revenues derived from non-dynamic install products grew over 300% year-over-year as our content products, SingleTap and others showed solid growth. While the strong growth is exciting, I believe it will be even better as we drive more revenue synergies on our content products, continue to capture on the recent momentum in our SingleTap business and expand other emerging products such as notifications even faster. It’s important to note for investors, while we expect our dynamic install business to continue to grow, it’ll be less than 20% of our total revenues as we begin reporting all revenues from our acquisitions. Our recurring revenues now represent over 50% of our total revenues, compared to over just 10% when we purchased the Mobile Posse business last year. I also want to specifically call out our progress on SingleTap. It’s been a long journey on our patented product, but patience and perseverance has paid off as the results are finally beginning to match the potential. Not including our social media integration with our large carrier partner, three quarters ago, we talked about SingleTap being on a seven figure annual run rate. Two quarters ago we talked about being a seven figure quarterly business. Last quarter we talked about it being a seven figure monthly business and today I’m pleased to report it’s a seven figure per week business. The SingleTap revenue during the fourth quarter more than doubled the revenue from the third quarter and today it’s up more than 1,000% from a year ago. Specifically, we’re seeing nice growth from our demand side platform or DSP efforts from our Appreciate acquisition and we’ll look to continue to scale our ad tech stack here both in the United States, as well as internationally. The addressable market is many tens of billions of dollars for SingleTap and we’re believe we’re just getting started against this larger opportunity. The bigger picture takeaway for investors is that we have growth occurring on multiple product fronts and we will continue to make this diversification a major focus area of the business and we will continue to proactively make investments in these areas. On the media front, we’re currently very focused on scaling our international demands to meet a significantly greater supply of international devices, while continuously international application developers want to be on U.S. devices. Last year, approximately 35% of our app media revenues were from international applications like TikTok and Candy Crush. This year, we saw that numbers increased over 50% as more media spending in our application media business is coming from companies that are not based in the United States. And this was despite a 25% year-over-year growth from our U.S. media partners. We saw international media demand grew by over 200% in the fourth quarter. In achieving this global scale from a broader set of demand partners is a direct reason why we saw revenue per device grow so much and it brings the benefits of global scale, where we see partner spending on more geographies and more devices outside of their home geography, whether that is Chinese companies like Alibaba, Tencent or TikTok spending in Latin America and Europe, and European companies and U.S. companies such as Pinterest, Snap, Uber and McDonald’s, all spending outside of their home respective geographies. I now want to turn to our recent acquisitions and strategic game plan. With the completion of the Fyber acquisition last week, along with AdColony and Appreciate before it, we now have successfully assembled the key pieces for a full stack end-to-end ad tech platform. I want to spend a minute here to highlight for investors, what truly differentiates our platform approach versus other industry players. I want to start with our overriding mission statement, which is to become the largest independent mobile advertising monetization platform, leveraging our unique on divest technology and long-term partner and advertiser relationships. A couple of words that I want to stress here, because there -- this is what differentiates a DT platform. First is having our technology on device. The software presence on underlying devices provides us distinct advantages, a critical one, which is our ability to use our patented SingleTap technology to drive materially higher conversion rates on the platform. Second is our independence, we have opted to vertically integrate by functionality, unlike many other industry players who have drifted into the content arena, thereby compromising your platform neutrality and posing potential conflicts of interest for other app publishers and advertisers on the platform. In essence, our on device technology presents and independent approach, make our platform more attractive to app publishers and advertisers trying to optimize monetization and their return on investment. It’s obviously early days, but we’ve already seen positive feedback from numerous partners and customers validating our unique approach. We’re already benefiting from the revenue synergies within specific accounts and we look forward to sharing supportive data and specific case studies with you on future earnings calls. The final but perhaps most important call out here in terms of our differentiated platform approach relates to the organizational culture. Since they’ve been public companies, you can all see the obvious recent business momentum as evidenced by the accelerating growth rates. But you can’t see is the cultural mindset of the teams at Fyber, AdColony and Appreciate, and how they are lean in, company first hustle attitude, mirrors the same here at Digital Turbine and facilitates a more seamless path towards integration towards a One DT organization. And any of us would learn in a business school case study and well we at Digital Turbine know firsthand from our prior experience with acquisitions, the number one factor that define success of mergers and acquisitions, it’s not strategy, it’s not numbers or other factors, it’s cultural integration. We’ve now fully integrated the Appreciate team into Digital Turbine and that integration has gone very well as evidenced by our significant SingleTap progress we’re now making. We’ve begun early integration with AdColony and Fyber, with an initial focus on integrating back office functions like HR and finance and we have a joint team of executives from AdColony, Fyber and Digital Turbine that meet regularly to build out the detailed plans of One DT. These plans will ultimately shape deeper synergistic integrations later this year. But I can’t overstate how optimistic I am, that we will successfully integrate the platform and begin to execute on their plan to address the $300 billion market opportunity, which is squarely in our crosshairs. And finally, before I turn it over to Barrett, I want to comment on some of the macro items I hear from investors such as the impacts the reopening the economy, inflation, and Apple’s recent privacy changes with IDFA. Regarding the reopening, we believe our company was healthy and growing before COVID was healthy and growing during COVID and will continue to profitably grow post-COVID. We do not anticipate the secular tailwinds of device sales and on device media and content consumption to slow down for our business. We’re very optimistic that the reopening of the economy benefits Digital Turbine in a material way as more devices are sold and more advertisers try to reach consumers recognizing consumer eyeballs are in the applications and content, which is where the advertisers also need to be. Regarding inflation, it’s important to note, that Digital Turbine doesn’t have any material input costs. Our cost of sales is just our revenue shares with our partners. And our people costs are nominal, given we do more than million dollars of revenue per employee. So any potential inflationary environment, we’re a company that’s insulated and benefits much more than other companies to those macro pressures to continue to profitably grow our business as we can raise prices without driving increases in input costs to support the revenues. And finally, we’ve not seen any material impact to our AdColony or Fyber business as a result of Apple’s IDFA changes. It doesn’t mean there’s not any risk to the future. But the impact to-date and our iOS advertiser rates have been mixed with some advertiser spending more and some spending less. But more strategically, I’d reference a Forbes article to investors that came out this past weekend that highlighted from the sources that advertisers spend on androids jumped double digits since IDFA has been implemented, which is a clear tailwind for our broader businesses and strategy. In closing, I want to emphasize that investors should distinguish between companies that are growing but not profitable versus the companies that are not growing but profitable, from the companies that are both growing revenues and growing profitably. We’re excited about the operating leverage of our business that grew profitably at more than 300%, while our revenues grow over 100%. Our expectations are that our acquisitions will generate even further operating leverage as scale begins for scale and winners will win disproportionally. With that, this concludes my prepared remarks and I’ll turn it over to Barrett to take you through the numbers.

Thanks, Bill, and good afternoon, everyone. Before I cover our financial results, I wanted to comment on the successful acquisitions closing in the recent months, including Appreciate, which closed in March, AdColony in April and most recently Fyber, which closed at the end of May. I’d like to welcome all our new team members and thank all of our Digital Turbine teams involved in the integration. While the Appreciate business has small partial period of contributions included in our Q4 results, we will spend more time on the performance breakdown of AdColony and Fyber on future earnings calls as their results will be included beginning in the Q1 reporting period. As Bill highlighted, these strategic acquisitions are very important piece for Digital Turbine in our mission to develop one of the largest full stack fully independent mobile advertising solutions in the industry. Now turning to our results, we’re pleased with our strong fourth quarter performance, which exceeded our outlook and capped off another very strong year. As a reminder, our content business includes results from our acquisition of Mobile Posse earlier in the year. I will occasionally reference results on a pro forma basis where appropriate to provide additional insight into the underlying trends when comparing current performance against prior periods. Also, since the company has closed several significant transactions near the end of our fiscal reporting period, which is utilize many of our internal teams and in addition we have engaged in new audit firm to align with the growing scale and growing profile of the company. This has impacted the normal timing of completing our year-end audit. As a result, we will file for a 15-day extension and anticipate reporting our 10-K in the coming days. Once the final audit is completed confirming our results announced today. My comments today will refer to comparisons on a year-over-year basis unless otherwise noted. For the fiscal year 2021, we reported $316.6 million in revenue, growing 126% as reported and 64% growth on a pro forma basis, generated $75.6 million in adjusted EBITDA, an increase of 287% over the prior year and delivered $71.5 million adjusted net income or $0.74 per share, as compared to $0.20 per share in the prior year. Now let me turn to the specific financial performance in the quarter. Revenue of $95.1 million in the quarter was up 142% as reported and 101% on a pro forma basis. Adjusted EBITDA increased to $22.5 million, growing 329% year-over-year. We continue to experience accelerating growth across both our application business and content business. Our application media business delivered revenue of $67.2 million, representing 95% growth in the quarter. We saw continued strength in advertiser demand and product expansion leading to U.S. RPD growth of over 50% and more than 140% on international RPDs. Our content business generated $27.9 million in the quarter, which was up 120% year-over-year, as we experienced improve performance on our fully deployed content platform, combined with increasing advertising demands and yields. Non-GAAP gross profit grew 150% to $39.4 million, which was up 100% on a pro forma basis. Gross margin on the platform was 41% in Q4, up from 40% in the prior year. Our continued margin expansion is largely driven by the acceleration of our high margin content media business and year-over-year margin improvement on our apps business from momentum in new partner and new product revenue mix. We also experienced continued impressive expense scale on the platform, as cash expenses were $16.9 million in Q4 or 18% of revenue, down from 27% of revenue in the prior year and increased only 27% year-over-year on a pro forma basis, while revenues were up 101% in the period. Total operating expenses were $23.1 million, including approximately $3 million in transaction related costs and compared to total operating expenses of $12.4 million in the prior year. I will note that while the key rationale of our new acquisitions is based on driving new revenue growth and platform capabilities, and not a cost reduction play, we do expect to realize favorable expense synergies over time that will further compliment the operating leverage and scale on the platform. We anticipate these cost benefits to be realized over the coming quarters as integration efforts are successfully implemented and primarily generated from corporate overlap and other purchasing power cost efficiencies. I will note that our operating leverage is being achieved even as we continue to make a number of focused investments, primarily within our international sales force and technology teams to support new partners and products to drive future incremental revenues on the platform. I continue to be pleased with the profitability and free cash flow delivered by our business. In the quarter we achieved non-GAAP adjusted net income of $24.5 million or $0.25 per share during the quarter, as compared to a $4.2 million or $0.05 per share in the fourth quarter of last year. Adjusted EBITDA was $22.5 million in the quarter, up 329% over prior year and margins continue to expand to 24% this quarter from 13% in the prior year quarter. Our non-GAAP free cash flow totaled $21.9 million, an increase of $10 million as compared to the prior year quarter, enabling us to execute for the cash balance of $30.8 million. Within the quarter, our ending cash position reflects both the final earn out payment of the $10.3 million payment related to Mobile Posse acquisition and the $20.3 million net payment on the Appreciate transaction. Our GAAP net income was $30.1 million or $0.31 per share, based on 97.6 million diluted shares outstanding, compared to a fourth quarter of 2020 net income of $13.8 million or $0.15 per share. I would also highlight with respect to the recent acquisitions, each of these new businesses are high revenue growth companies and profitable on a standalone basis, and are expected to be accretive to both our earnings and free cash flows, further improving the profile of the Digital Turbine enterprise. Lastly, to provide additional liquidity and capital for our recent acquisition purchases and for future growth opportunities in our business, we amended our credit facility led by Bank of America to increase a revolving line of credit from $100 million to $400 million with an accordion feature enabling upsizing the facility to $475 million. We currently have drawn $237 million on this revolving line at the end of May and the interest rate currently less than 3%. With our expanded credit facility, a healthy balance sheet and strong free cash flow generation, combined with the transformative new acquisition data added to the platform, we’ve exited fiscal 2021 poised to execute our growth plans for fiscal 2022 and beyond. Now, let me turn to our outlook. The momentum leading into the New Year and progress underway in the quarter has positioned us for a strong fiscal 2022. In that context, we currently expect revenue for Q1 to grow to between $188 million and $192 million, expected adjusted EBITDA to grow to between $32 million and $34 million and adjusted net income per diluted share to be $0.31 based on approximately 100 million diluted shares outstanding. Within our outlook, we have raised our guidance for both the improved performance in our core business, as well as now incorporated the results from our recent closed acquisitions. As a reminder, our guidance reflects partial period results for the recent acquisitions for the time in which the company owns these new businesses within the quarter. With that, let me hand it back to the operator to open the call for questions. Operator?

Thank you. [Operator Instructions] Our first question comes from Anthony Stoss with Craig-Hallum. Please go ahead.

Hi, guys. Congrats on the acquisition and a special congrats on SingleTap, just phenomenal growth. And to that end, Bill, can you -- I know it’s still early days with the acquisitions, but how much are they able to benefit from SingleTap already do you -- can you tell if they’re already taking share from their current customers? And then maybe for Barrett, with a full quarter under your belt with acquisitions looks like you’re running at about a 15% adjusted EBITDA margin, where do you think that might go over the next year or so it’d be helpful? Thanks.

Yeah. Thanks, Tony. And -- yeah, as regards to SingleTap and acquisitions, yeah, we’re absolutely already leveraging the SingleTap capability for not just Appreciate who’s buying on it right now, but also with Fyber and AdColony. So there’s absolutely synergies there to be had and they’re already happening today. So we’re excited that we think that technology can really help pull through a lot of synergies for the business and we’re seeing it show up today. So great progress, it’s been a long journey as you’re well aware for us on SingleTap, but great to start seeing the results match it and also great timing in terms of the synergies coming together with the acquisitions. And I will let Barrett take the financial one.

Yeah. Tony, the question on EBITDA margins, just to remind us, just four quarters ago, before Mobile Posse’s acquisition, we were in the low teens as far as EBITDA margins, 13%, 14% and growing up to 24% margins in the last reported quarter. I think we have guidance in the high teens, as far as EBITDA margins and we would expect those to continue to expand and down the road, I think, we’ll be certainly back in the low 20%s again soon.

Okay. Looks like a further one for Bill, any progress on additional diversity [ph] baking start onboarding additional devices?

Sorry, Tony, you are cutting out there a little bit, I just didn’t catch it.

Can you comment on any progress you’re making with additional device placement?

Yeah. Yeah. Sure. So, yeah, so we’re making some nice progress on devices around the globe. Specifically, companies like Telefonica, Telecom Italia continue to grow some awesome relationships in Latin America, which we’ve got nice beachheads with American Movil and Samsung with. So we’re feeling pretty good about that. And then, I say, kind of stay tuned for some other announcements. But in particular, we’re really continuing to focus on not just smartphones but other things -- other device types in terms of tablets and televisions and other device types as well to expand the market opportunity.

Perfect. Best of luck guys. Thank you.

Our next question comes from Tim Horan with Oppenheimer. Please go ahead.

Hi, guys. Can you give us maybe the sequential revenue growth performer? I know you -- well, you may or may not have it and the 90% year-over-year revenue growth, obviously, performance pretty phenomenal. Any sense of what that could be for on a full year basis? I know you’re not giving exact guidance now. But was there anything exceptional or out of the ordinary there?

Yeah. I’ll start. Hi, Tim. Yeah. There’s nothing exceptional out of the ordinary on the growth in the quarter both, as reported our businesses that we just acquired on a pro forma basis. What we think there’s a lot of strength in those businesses, each one of them growing very nicely and while we’re not calling out annual guidance, we do think those growth rates are independent. And in the medium-term we think some of the synergies that Bill highlighted can help even to accrete those growth rates. But for now we think we’re going to be focused on integration and there’s not -- these businesses are doing very nicely. So we want to continue that momentum.

And any sense on the sequential growth there, just to see, the base getting when you’re, obviously, growing 90%, it’s pretty hard to keep that up with the base growing. Yeah, so any color on the sequential? And then, maybe also on the IDFA, while the Apple impact here, sorry? Is that a net positive for the new pro forma combined company or net negative or how are you thinking about it?

Yeah. So let me take -- I’ll take the IDFA one and I’ll let Barrett take the sequential one. On the on the IDFA one, I think that it’s still to be seen. I think there’s a lot of unknowns out there in terms of what’s going to happen over the long-term here. But I would say that, we think we’re really well positioned here, obviously, given the lean towards Android, given our unique on device positioning, even if some were to change in Android, we still have identifiers on the device for that, which we think is a strategic competitive advantage. And some of the changes that were made in IDFA, in terms of things like, view through attribution, I think, heart some of the real big players and those dollars are still there and benefits companies like Digital Turbine. So I think there’s a lot of tailwinds here for us against the broader market and I referenced in my prepared remarks, there is an article written this past weekend in Forbes talking about Android seeing double-digit spend increases since IDFA’s launched, which is -- which obviously benefits our business being heavily in the Android. So, I think, all in all, we’re going to be cautiously optimistic in a very short-term, because on base what we have seen, but we’re feeling pretty good about the long-term.

Yeah. And then, Tim, while we will be out with more details on the pro forma information, certainly, the AdColony and Fyber have published their results as public companies. We will be out with more details on the pro forma soon on those pro forma results, but sequentially, the revenues are growing within our guidance in this current quarter.

Thank you.

Our next question comes from Darren Aftahi with ROTH Capital Partners. Please go ahead.

Hey, guys. Good afternoon. Thanks to my questions. A couple if I may. Bill, could you just talk about with SingleTap, it seems like the dominant was finally fallen? Is that because of just something structurally did Appreciate help accelerate that, just its moved pretty quickly and I’m just kind of curious trying to understand what it is that kind of moved the needle of stuff you did?

Yeah. Sure, Darren. If we look back a few quarters ago, we made a decision to go out and start buying our own advertising to really control the data, because as you’re well aware, we had a lot of operational issues for a long time to try to get the last mile for this to scale. Although, it was great results on an individual basis, we just couldn’t do it at scale. So we made a decision to really go out and start leasing some capacity and -- as a DSP and we saw some nice success with that, and as a result of success, we saw with it we decided to acquire an Appreciate and now having the Appreciate team really fully focused on this, it was really helped kind of kick it up to another gear. So the ability for us now to do this at real scale and target, audiences that now can be tens and hundreds of millions of people with SingleTap capabilities enable on their device really allows us to go after a really broad market right now. And so our view is we’re just getting started against the opportunity, but it’s really nice to see the progress here in terms of taking something that we always thought was a great idea and we always been excited about it, but really now take it to something it’s generating great results for all of us.

Great. And then on your apps guidance, I think, Barrett, you spoke to that being partially acquisition related and partially just stronger core business. I know Fyber put out their own updated guide for the year and I know you’re not commenting on that. But it seems like the marginal profit flow through on the change in the guide is a lot higher than kind of what Fyber did. So I am just kind of curious if you could maybe de-duplicate, maybe what is Fyber impact, what is kind of seeing stronger traction with your core business and then how much better operating leverage can you guys extract out of these, the AdColony and the Fyber acquisition?

Yeah. Let me take a guidance portion and then I will invite Bill to talk about the -- some of the synergies. The -- so, yeah, just for our reference on a U.S. dollar basis, Fyber reported about $100 million in revenue for their March quarter. So -- and we just closed that transaction, so we own them at the end of May, so largely one-third of that quarter. So you can kind of take that as far as the lift in our guidance from that portion. And then as we heard about our results on our DT core business growing really quite nicely. That’s been reflected as we outpaced our own internal expectations. So, Darren, I hope that helps, but a bit of both here with nice growth on the core plus layering in the expectations of Fyber now that they’re owned by Digital Turbine.

Yeah. And Darren on the synergy side, this is why we’re really excited, because the business has been performing so well independently. But we’re already getting feedback from the marketplace, both on the demand side and the supply side, that’s encouraging. And so, on the demand side, you can think of companies like McDonald’s and Starbucks and BP, they’re already now -- even AdColony clients and customers that we’re now able to bring on to the Digital Turbine platform, which kind of expands a much broader moat for us, which is fantastic. And then on the supply side, if you think about the app publishers and our ability to give them reach on device to the Verizon’s and Samsung’s, et cetera of the world and the ability now to basically have some of the Fyber and AdColony and Appreciate technology now part of their monetization, now we can pull those dollars through, which we have historically not participated in. And it’s been difficult for those companies that do it, because they haven’t had the unique advantage that we have with our device. So those things all working together, is something that gets us pretty excited in terms of be able to not just monetize the app, in terms of getting paid to get it to a customer’s device, but now that many hundreds of billions of dollars you get to spend all that advertising over the life of the device that we can now tap into as a result of being able to do this on an end-to-end basis.

Great. Just one last one for me, Barrett, we sort of think about and maybe not the June quarter, because it’s started [ph], but we think about sort of cash OpEx for the entire company and kind of blended gross margins, I appreciate that things kind of move around. But could you just maybe hold our hand a little bit and help us understand kind of what that might look like, even if it’s a pro forma as you round everything from April 1st?

Yeah. So, we’re -- our guidance would imply, if you looked at kind of similar levels. We’re in the kind of mid-teens as far as OpEx -- cash OpEx as a percent of revenue. So, call it, 16% to 17%. And we think that will have a throughout the year, and over time, that will continue to scale. And we’ll continue to see that percent of revenue declined steadily over the next few quarters and then beyond, so going from high-teens to hopefully mid-teens towards over time as the acquisitions are implemented.

Got it. Thank you.

Our next question comes from Austin Moldow with Canaccord. Please go ahead.

Hi. Thanks for taking my questions. You mentioned gross margin was improving within the application segment itself. So do you anticipate those improvements to be sustainable and what’s the current willingness of your customers to pay those incrementally higher revenue shares to Digital Turbine on the new products?

Yeah. So, Austin, I will take it and Barrett can provide some color on it. I think we see a couple things that are favorable for us over time here. The first one is, is that, as we do newer agreements, they tend to have more favorable terms in the earlier agreements and as the mix begins to shift and become more and more sorts of new versus old that that benefits us. And the second factor is, it allow these devices to get recycled and put out into the open market, so they don’t necessarily have a carrier tied to them anymore. That -- as that base gets bigger and bigger that also helps us create margins over time for us as well. And I think that, now as we think about look even more strategically going forward, as we start bringing on now the AdColony and Fyber solutions, we now have much more visibility to the broader ad tech stack for rather than just saying it’s $1 out to the carrier to get an app on a phone, but now there’s $5 of economics that go with a particular app to have all that advertising. That may allow us opportunities to do things to actually encourage the carriers to do more because there’s more dollars at play here, which would hopefully have the opportunity to create margin. So I think we’re feeling pretty optimistic on the app media side that we’ve got a pretty strong business here just as evidenced by the results we’ve been able to put up consistently showing progress here.

Got you. Okay. Can you speak about what’s required on the technology side of things in order to integrate AdColony and Fyber?

Yeah. One of the great things about the acquisitions is, in many cases the pipes are already connected, in terms of AdColony and Fyber already working together. I AdColony and Appreciate, Appreciate and Fyber. They are already working together on a commercial basis. Since -- so since a lot of those things are already there in place, in the very short-term, a lot of is just business development work, working with the app publishers or with the advertisers to pull it together. So that’s something that is really encouraging. Longer term we’re going to have to look at how we want to manage to -- how we want to manage multiple DSPs and exchanges and SDKs and all those kinds of things that are on device, and obviously, make sense over time to harmonize those. But in the very short-term, a lot of it to get to what the customer wants is encouraging because a lot of the pipes are already connected.

Great. Thanks very much.

Our next question comes from Allen Klee with Maxim Group. Please go ahead.

Yes. Hi. I know you guys are in the early days of attractive international expansion. Can you talk a little as your -- these customers are starting to be with you a little more in terms of your ability to add more to them to increase the RPDs and what the opportunity might be?

Yeah. Sure, Allen. One of the things that we always see here in the United States, obviously, much like to use the shopping mall analogies, if you have Macy’s and Nordstrom as anchor tenants, it’s easier to kind of pull-through the more revenue with the shops in between those two. And I kind of feel like that in our U.S. partner business, we’re able to do that with like a Verizon and AT&T is anchor tendency, pull through a lot of other partners, where you get a rising tide lifts all boats, in terms of the revenue opportunity versus those things being on the road. And for a long time, internationally, we didn’t have that. And now I look at a market, like, I’ll look at Brazil, as an example for us where we have American Movil, we have Samsung and that’s pulled through other relationships with whether it be other Latin American carriers or other Latin American OEMs, that help accrete RPD and then you bring on more supply of devices or brings on more demand, which allows you to increase your revenue per device. And so, just that kind of scale to get scale is really important to what we’re doing here. You get the flywheel going and so I feel like that our progress has evidence over by the last year, international is -- you’re starting to see that effect. And that’s quite encouraging for us and something that we’re always going to look to continue to build upon.

Great. Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Bill Stone for any closing remarks.

Yeah. Thanks, everyone, for joining our call tonight. We’ll look forward to reporting on our progress against all the points we made on today’s call and we’ll look to talk to you again on our fiscal 2022 first quarter call in a few months. Thanks and have a great night.

This concludes our conference call. Thank you for attending today’s presentation. You may now disconnect.