Digital Turbine reported third-quarter revenues of $138.5 million, up 12% year-over-year from $123.7 million, topping consensus estimates by $3.2 million. Adjusted earnings per share came in at $0.21 versus the Street at $0.18, marking the fifth consecutive quarter of upside surprises. Despite the strong top-line performance, the company’s share price fell approximately 5% on the day of the release, as investors focused on forward guidance and cash flow metrics.

The company expanded its adjusted EBITDA margin to 18.7%, a 220-basis-point improvement from 16.5% in the year-ago quarter, driven by operating leverage in its DSP and app discovery businesses. Adjusted EBITDA rose 15% to $25.9 million. However, free cash flow remained modest at $10.3 million, constrained by working capital build and higher capitalized software costs. Management reiterated its commitment to cost discipline as it invests in product enhancements for its mobile advertising suite.

Digital Turbine carries $355 million of term debt with a weighted average interest rate of 11.68%, translating to annual interest expense of roughly $41.4 million. The company raised full-year 2026 revenue guidance to a range of $553 million to $558 million, but free cash flow forecasts remain in the low-teens million range. In a discounted cash flow model, even under optimistic assumptions of mid-teens EBITDA margins, fair value per share is sensitive, with downside scenarios—such as a 100-basis-point margin contraction—pushing implied value from $8 down toward $5.