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93% GROWTH It had a run of 765%, taking the stock from $4 to $34.5 in *LESS THAN 6 MONTHS*
Mobile usage
is BOOMING 
and this company is MONETISING THIS 
Can this stock keep it up and deliver on its market cap south of$ 2.9B?
What is NEXT?Continued
Digital Turbine $APPS is a tech company from Austin, TX 
that started in 2011 and has around 210 employees 
Over 40 mobile operators
(e.g. Verizon, T-mobile, AT&T) and OEMs (Original Equipment Manufacturers such as Samsung, Xiaomi, HTC) use their services
that started in 2011 and has around 210 employees Over 40 mobile operators
(e.g. Verizon, T-mobile, AT&T) and OEMs (Original Equipment Manufacturers such as Samsung, Xiaomi, HTC) use their services
$APPS describes itself as “simplifying content discovery by delivering it directly to the device”
From a very high level
it may at first seem confusing what this company offers 
From a very high level
it may at first seem confusing what this company offers
In very simple terms
$APPS has built a software that mobile phone manufacturers (Samsung and the likes) and mobile operators can integrate to the devices they sell
This software then acts as an “app-installation / recommendation-engine” directly on the smartphone
$APPS has built a software that mobile phone manufacturers (Samsung and the likes) and mobile operators can integrate to the devices they sellThis software then acts as an “app-installation / recommendation-engine” directly on the smartphone
How does that generate sales?
DYNAMIC INSTALLS 
$APPS makes money by licensing this software to OEMs and mobile phone operators (accounting for 86% of sales in 2019)
$APPS licenses its software to OEMs and operators
DYNAMIC INSTALLS $APPS makes money by licensing this software to OEMs and mobile phone operators (accounting for 86% of sales in 2019) $APPS licenses its software to OEMs and operators
ENGAGEMENT OPPORTUNITIES 14% of its sales are derived from SingleTap Installs, Smart Folders, Notification, Media Hub 
$APPS gets paid by app makers to promote their app directly on the users’ smartphone
DYNAMIC INSTALLS 
This starts once the new user unpacks its new phone (Out of the Box Experience - OOBE)
The users sets up its account and then get directed to a “Let’s set up you apps” page where the OEM or operator can propose apps to the user 
This starts once the new user unpacks its new phone (Out of the Box Experience - OOBE) The users sets up its account and then get directed to a “Let’s set up you apps” page where the OEM or operator can propose apps to the user
This enables the user to directly and seamlessly install the apps it is interested in on its phone A win-win for the OEM or operator as they can charge the companies whom they are promoting their apps for
Also, at the time of the set up, some apps get automatically pre-installed (based on user profile and demographics) This enables to OEM or operator to install apps that its user might want
These pre-installed apps are sponsored by the app maker (Facebook, Uber, Twitter, Pandora, Starbucks, Target…) and the money goes into the OEM or operator’s pocket
DYNAMIC INSTALLS account for 86% of $APPS sales $APPS has now added products to generate sales during the LIFE / USAGE of the device
ENGAGEMENT OPPORTUNITIES
such as SingleTap Installs, Smart Folders, Notification, Media Hub
account for 86% of $APPS sales $APPS has now added products to generate sales during the LIFE / USAGE of the device ENGAGEMENT OPPORTUNITIES
such as SingleTap Installs, Smart Folders, Notification, Media Hub
ENGAGEMENT OPPORTUNITIES are paid for by app makers and promoted by $APPS through the software it installed on smartphones
The money paid by app makers goes into $APPS’ pocket
are paid for by app makers and promoted by $APPS through the software it installed on smartphones The money paid by app makers goes into $APPS’ pocket
SingleTap Installs works as a small ad that is placed in the middle of a browser This ad promotes the download of a apps When the users clicks on the ad 
it DIRECTLY downloads the app 
No need to jump over the an app store
According to $APPS, this increases conversion rates up to 10 times and it is already available on over 270m devicesNext to SingleTap Installs, $APPS also offers
Notifications, Media Hub and Smart Folder
Through its Notifications, Media Hub and Smart Folder products, $APPS proposes the download of additional apps to the users 
Users can place their gaming apps into a “Games Folder” $APPS then proposes matching games 
to the user in instant download
Third parties can send notifications to the users on special occasions (promotions, important events….) enabling these to instant download the app
Now what 
This company is all about installing apps on smartphones How is that market evolving on a global level 
?
$APPS caters to Android devices as they can add their own builds on top of the OS
This company is all about installing apps on smartphones How is that market evolving on a global level ? $APPS caters to Android devices as they can add their own builds on top of the OS
$AAPL isn’t really permissive to that extent and plans to make the life of advertisers even harder on its platform
First things first, let’s look at the ANDROID / iOS share of devices
In the U.S. around 53% of smartphones are running iOS and 47% Android
In the E.U. around 26% of smartphones are running iOS and 73% Android
In the U.S. around 53% of smartphones are running iOS and 47% Android In the E.U. around 26% of smartphones are running iOS and 73% Android
In Asia around 17% of smartphones are running iOS and 83% Android
In LATAM around 11% of smartphones are running iOS and 89% Android
In Africa around 11% of smartphones are running iOS and 87% Android These market shares have been STABLE over the last year
$APPS sales are BOOMING in its most important geographies
U.S. and Canada sales reached $ 38m up 79% YoY
EU and Africa sales reached $ 15m up 118% YoY
Asia sales reached $ 5.2m up 173% YoY
LATAM sales reached $0.2m - Flat
U.S. and Canada sales reached $ 38m up 79% YoY EU and Africa sales reached $ 15m up 118% YoY Asia sales reached $ 5.2m up 173% YoY LATAM sales reached $0.2m - Flat
These are great numbers 
But what is the smartphone and apps market telling us?
Smartphone sales are plateauing at around 1.5B units sold a year
Users kept their smartphone on average 20 to 24 months in 2014 but this number has risen to 33 months in 2019
But what is the smartphone and apps market telling us? Smartphone sales are plateauing at around 1.5B units sold a yearUsers kept their smartphone on average 20 to 24 months in 2014 but this number has risen to 33 months in 2019
Sales of smartphone hardware are stagnating what about smartphone usage?
55% of internet consumption is now done through a mobile device Up from 27% in 2016
Consumers spent 3 hours and 40 minutes a day on mobile devices in 2019 - up 35% since 2017
55% of internet consumption is now done through a mobile device Up from 27% in 2016 Consumers spent 3 hours and 40 minutes a day on mobile devices in 2019 - up 35% since 2017
Spend across all app stores on games in set to reach $ 100B in 2020 Mobile ad spend is set to reach $ 240B in 2020 - up 26M from 2019App downloads reached 204B in 2019 - up 45% from 2016
It should be clear now, consumers are not buying as many smartphones 
But smartphone usage, app downloads and mobile ad spent are BOOMING
$APPS still has a large runaway for growth 
It’s software is currently installed on only 13% of Android devices
With its ENGAGEMENT OPPORTUNITIES $APPS is playing right into the increased smartphone usage and monetising this
Here are some key figures
It’s software is currently installed on only 13% of Android devices With its ENGAGEMENT OPPORTUNITIES $APPS is playing right into the increased smartphone usage and monetising this Here are some key figures
It has delivered over 3.9B app pre-loads since launch Their Application Media software was installed on 43m devices during Q1 ’20 for a total of 450m devices to date
Growth is fuelled by news deals with Samsung (13 out 43m new devices), LG, Xiaomi and major telcos
How does that translate in sales?
YoY growth has reached 93% (historical avg. at +35%) with revenues of $59m (vs $39m in prev. Q)
Gross margin of 44% (lower than most #SaaS stocks such as $AYX $FSLY)
Op margin 18% with an EBT of $10.32m (better than most #SaaS Stocks)
YoY growth has reached 93% (historical avg. at +35%) with revenues of $59m (vs $39m in prev. Q) Gross margin of 44% (lower than most #SaaS stocks such as $AYX $FSLY) Op margin 18% with an EBT of $10.32m (better than most #SaaS Stocks)
What about their balance sheet?
Company has $65m current assets (27% of that is cash) vs $ 79 m in current liabilities
Out $191m in assets, $ 69m are made of goodwill and $ 43m of intangible assets (representing “developed technology” and “customer relationships”)
Company has $65m current assets (27% of that is cash) vs $ 79 m in current liabilities Out $191m in assets, $ 69m are made of goodwill and $ 43m of intangible assets (representing “developed technology” and “customer relationships”)
Net debt stand at ($ 0.7m) and the company is CF positive at around $ 6m
Looking forward The Good Side
Huge runaway for international expansion Most non-iPhone users are outside the US and revenue base outside US is still SMALL
The Good Side Huge runaway for international expansion Most non-iPhone users are outside the US and revenue base outside US is still SMALL
Telcos and OEMs need these additional revenue streams $APPS is the only company that can offer this service on a global scale and in a robust manner
Expanding its revenue streams over the smartphone market $APPS has hinted entering the TV market where OEM would load the software directly into their products
Apps are not going away anytime soon and ASO (App Store Optimisation) becoming the new SEO Even better than ASO, just have your app pre-installed or recommended!
Here are the risks one should not forget
In the same spirit as $AAPL, $GOOG starts restricting the access to its software
OEM and operators start building up this software on their own and negotiate terms with sponsors on their own
In the same spirit as $AAPL, $GOOG starts restricting the access to its software OEM and operators start building up this software on their own and negotiate terms with sponsors on their own
$DDOG is on our watchlist To Be Reviewed SOON 
Please note that this is not a recommendation to buy - You are responsible for conducting your own research
Here is a review for $APPS - would love to hear your take on the matter
@kghufran
@MorettiPd
@eshrum40
@takorinn371
@kghufran
@MorettiPd
@eshrum40
@takorinn371
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Disclaimer - This is not investment advice in any form and investors are responsible for conducting their own research before investing.
Sources
✑ Investor presentation
✑ Company website
✑ IMF
✑ StatCounter
✑ KoreaTimes
✑ AppAnnie
✑ eMarketer
✑ MindSea
Sources
✑ Investor presentation
✑ Company website
✑ IMF
✑ StatCounter
✑ KoreaTimes
✑ AppAnnie
✑ eMarketer
✑ MindSea
