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What changed in Digital Turbine, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Digital Turbine, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+413 added−498 removedSource: 10-K (2023-05-25) vs 10-K (2022-06-06)

Top changes in Digital Turbine, Inc.'s 2023 10-K

413 paragraphs added · 498 removed · 204 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

35 edited+12 added−46 removed10 unchanged
Biggest changeContent Media optimizes revenue by a combination of: • Programmatic Ad Partner Revenue - advertising within the content media that’s sold on an ad exchange at a market rate (cost-per-thousand ("CPM")); • Sponsored Content - sponsored content media from third party content providers, presented similarly to an ad, that is monetized when a recommended story is viewed (cost-per-click (“CPC”)); • Editorial Content - owned or licensed media, presented similarly to an ad, that is monetized when the media is clicked on (CPC).
Biggest changeContent Media optimizes revenue by a combination of: • Programmatic Ad Partner Revenue - advertising within the content media that’s sold on an ad exchange at a market rate (cost-per-thousand (“CPM”)); • Sponsored Content - sponsored content media from third party content providers, presented similarly to an ad, that is monetized when a recommended story is viewed (cost-per-click (“CPC”)); and • Editorial Content - owned or licensed media, presented similarly to an ad, that is monetized when the media is clicked on (CPC). • User acquisition tools including SingleTap TM and the Company’s DSP (“DT DSP”) that removes friction in the app install process, delivering apps to devices with a single touch, resulting in higher conversion rates. 6 Table of Contents App Growth Platform The Company’s AGP business consists of Advertising Solutions and Ad Monetization Solutions. • Advertising Solutions serve two key segments: (1) App Developers and (2) Brands and Agencies - enabling them to execute targeted mobile campaigns on the Company’s direct app inventory. • App Developers and other performance-focused advertisers execute mobile user acquisition campaigns for their apps and products on the Company’s direct mobile app inventory.
These laws and regulations involve matters including privacy, data use, data protection and personal information, rights of publicity, content, intellectual property, advertising, marketing, consumer protection, taxation, anti-corruption and political law compliance, and securities law compliance. In particular, we are subject to federal, state, and foreign laws regarding privacy and protection of people’s data.
These laws and regulations involve matters including privacy, data use, data protection and personal information, rights of publicity, content, intellectual property, advertising, marketing, consumer protection, taxation, anti-corruption and political law compliance, and securities law compliance. In particular, we are subject to federal, state, and foreign laws regarding the privacy and protection of people’s data.
Such advertising platform companies vary in size and include players such as Facebook, Google, Amazon, and Unity Software, as well as various private companies .
Such advertising platform companies vary in size and include Facebook, Google, Amazon, and Unity Software, as well as various private companies .
Product Development Our product development expenses consist primarily of salaries and benefits for employees working on campaign management, creating, developing, editing, programming, performing quality assurance, obtaining wireless carrier ratification, and deploying our products across various wireless carriers, OEMs, advertisers, publishers, and on our internal platforms. We devote substantial resources to the development, technology support, and quality assurance of our products.
Product Development Our product development expenses consist primarily of salaries and benefits for employees and consultants working on creating, developing, editing, programming, performing quality assurance, obtaining wireless carrier ratification, and deploying our products across various wireless carriers, OEMs, advertisers, publishers, and on our internal platforms. We devote substantial resources to the development, technology support, and quality assurance of our products.
We expect our revenue, cash flow from operations, operating results, and other key operating and financial measures to fluctuate based on seasonal factors from period-to-period and expect these measures to be generally higher in the third and fourth fiscal quarters than in prior quarters.
We expect our revenue, cash flow from operations, operating results, and other key operating and financial measures to fluctuate based on seasonal factors from period-to-period and expect these measures to be generally higher in our third and fourth fiscal quarters than in preceding quarters.
Competition We operate in a highly competitive and fragmented mobile app ecosystem that includes divisions of large, well-established companies, including public and privately-held companies. The large companies in our ecosystem may play multiple different roles given the breadth of their businesses . • Our primary competition for On Device Media comes from the Google Play application store.
Competition We operate in a highly competitive and fragmented mobile app ecosystem that includes divisions of large, well-established companies, including public and privately-held companies. The large companies in our ecosystem may play multiple different roles given the breadth of their businesses . • Our primary competition for ODS comes from the Google Play application store.
Application Media optimizes revenue by using developed technology to streamline, track, and manage app install demand from hundreds of application developers across various publishers, carriers, OEMs , and devices. • Content Media represents the portion of the business where our platform presents news, weather, sports, and other content directly within the native device experience (e.g., as the start page in the mobile browser, a widget, on unlock, etc . ) through partnerships with wireless carriers and OEMs.
Application Media optimizes revenue by using proprietary technology to streamline, track, and manage app install demand from hundreds of application developers across various publishers, carriers, OEMs , and devices. • Content Media represents the portion of the ODS business platform that presents news, weather, sports, and other content directly within the native device experience (e.g., as the start page in the mobile browser, a widget, on unlock, etc . ) through partnerships with wireless carriers and OEMs.
The Company offers end-to-end products and solutions leveraging proprietary technology to all participants in the mobile application ecosystem, enabling brand discovery and advertising, user acquisition and engagement, and operational efficiency for advertisers. In addition, our products and solutions provide monetization opportunities for OEMs, carriers, and application ("app" or "apps") publishers and developers.
The Company offers end-to-end products and solutions leveraging proprietary technology to all participants in the mobile application ecosystem, enabling brand discovery and advertising, user acquisition and engagement, and operational efficiency for advertisers. In addition, our products and solutions provide monetization opportunities for OEMs, carriers, and application (“app” or “apps”) publishers and developers.
Total product development costs incurred for the fiscal years ended March 31, 2022, 2021, and 2020, were $52,723, $20,119, and $12,018, respectively. Intellectual Property We consider our trademarks, copyrights, trade secrets, patents, and other intellectual property rights, including those in our know-how, and the software code of our proprietary technology to be, in the aggregate, material to our business.
Total product development costs incurred for the fiscal years ended March 31, 2023, 2022, and 2021, were $56,486, $52,723, and $20,119, respectively. Intellectual Property We consider our trademarks, copyrights, trade secrets, patents, and other intellectual property rights, including those in our know-how, and the software code of our proprietary technology to be, in the aggregate, material to our business.
ITEM 1. BUSINESS Overview Digital Turbine, Inc., through its subsidiaries (collectively "Digital Turbine" or the "Company"), is a leading, independent mobile growth platform that levels up the landscape for advertisers, publishers, carriers, and device original equipment manufacturers ("OEMs").
ITEM 1. BUSINESS Overview Digital Turbine, Inc., through its subsidiaries (collectively “Digital Turbine” or the “Company”), is a leading independent mobile growth platform that levels up the landscape for advertisers, publishers, carriers, and device original equipment manufacturers (“OEMs”).
Foreign data protection, privacy, and other laws and regu lations can impose different obligations or be more restrictive than those in the United States.
Foreign data protection, privacy, and other laws and regu lations can impose different obligations or be more restrictive than those in the U.S.
Available Information Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our website at http://www.digitalturbine.com generally when such reports are available on the SEC website.
Available Information Our Annual Reports, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to such reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our website at https://www.digitalturbine.com generally as soon as reasonably practicable after such reports are electronically filed or furnished with the SEC.
Examples of our key programs and initiatives that are focused to achieve these objectives include: Total Compensation and Benefits: Our guiding principles are anchored on the goals of being able to attract, incentivize, and retain talented employees. We beli eve in economic security for all employees and have adopted a Living Wage policy.
Examples of our key programs and initiatives focused on achieving these objectives include: Total Compensation and Benefits: Our guiding principles are anchored on the goals of being able to attract, incentivize, and retain talented employees. We believe in economic security for all employees and have adopted a Living Wage policy. All employees are eligible for performance bonuses.
Several of these platforms are also our partners and clients. • We compete with other demand-side platform providers, some of which are smaller, privately-held companies and others are divisions of large, well-established companies such as AT&T, Google, and Adobe. • Our competition for In App Media products and services comes from a diverse group of companies, including Pubmatic, Magnite, and The Trade Desk.
Several of these platforms are also our partners and clients. • We compete with other demand-side platform providers, some of which are smaller, privately-held companies, while others are large, well-established companies such as The Trade Desk, or divisions of large companies, such as AT&T, Google, and Adobe. • Our competition for AGP products and services comes from a diverse group of companies, including AppLovin, Unity (ironSource), and Liftoff.
Broadly, our On Device Media platform faces competition from existing operator solutions built internally, as well as companies providing application and content media products and services, such as Facebook, Snapchat, lronSource, lnMobi, Cheetah Mobile, Baidu, Magnite, Applovin, and others. These companies can be both customers for Digital Turbine products, as well as comp etitors in certain cases .
Broadly, our ODS platform faces competition from existing operator solutions built internally, as well as companies providing application and content media products and services, such as Facebook, Snapchat, Unity (ironSource), lnMobi, Magnite, Applovin, and others. These companies can be both customers for Digital Turbine products, as well as competitors in certain cases.
Refer to the Company’s risk factors disclosed in its Form 10-K for the fiscal year ended March 31, 2022, and updates to such risk factors described in subsequent periodic reports filed by the Company with the Securities and Exchange Commission under Section 13(a) of the Securities Exchange Act of 1934, as amended, for further discussion of government regulations and the associated risks.
Please refer to the Company’s risk factors disclosed below in our Annual Report, and updates to such risk factors described in subsequent periodic reports filed by the Company with the Securities and Exchange Commission under Section 13(a) of the Securities Exchange Act of 1934, as amended, for further discussion of government regulations and the associated risks.
As a result, we had process, culture, and technology in place that allowed us to seamlessly pivot to a fully remote workforce following the onset of the COVID-19 pandemic.
As a result, we had process, culture and technology in place that allowed us to seamlessly pivot to a fully remote workforce following the onset of the COVID-19 pandemic. As the COVID-19 pandemic has abated and recognizing the importance of in-person collaboration, we have instituted “return-to-office” policies.
We continue to evolve our programs to meet our employees’ health and wellness needs. Government Regulation We are subject to a variety of laws and regulations in the United States and abroad that involve matters central to our business.
Government Regulation We are subject to a variety of laws and regulations in the United States (“U.S.”) and abroad that involve matters central to our business.
We intend to pursue additional intellectual property protection to the extent we believe it would advance our business objectives and maintain our competitive position. Contracts with Customers We have both exclusive and non-exclusive wireless carrier and OEM agreements. Our agreements with advertisers and publishers are generally non-exclusive.
We intend to pursue additional intellectual property protection to the extent we believe it would advance our business objectives and maintain our competitive position. Contracts with Supply Partners and Customers We have both exclusive and non-exclusive agreements with our supply partners, which consist of wireless carriers and OEMs within our ODS business.
We also provide our employees twelve weeks of paid short-term disability at 100% of base pay, which includes parental leave. Diversity and Inclusion: We take great pride in our focus and commitment to diversity and inclusion.
In addition, substantially all employees receive a new-hire long-term incentive equity grant and an annual long-term incentive equity grant, based on performance. We also provide our employees twelve weeks of paid short-term disability at 100% of base pay, which includes parental leave. Diversity and Inclusion: We take great pride in our focus and commitment to diversity and inclusion.
Health, Safety, and Wellness: The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the health, safety, and wellness of our employees. We provide our employees and their families with access to a variety of innovative, flexible, and convenient health and wellness programs.
Accordingly, we are committed to the health, safety, and wellness of our employees. We provide our employees and their families with access to a variety of innovative, flexible, and convenient health and wellness programs. We continue to evolve our programs to meet our employees’ health and wellness needs.
As of March 31, 2022, we employed 844 full-time employees globally, including 364 employees in North America, 262 employees in Europe and the Middle East, 205 employees in Asia Pacific, and 13 employees in Latin America.
As of March 31, 2023, we employed 777 full-time employees globally, including 357 employees in North America, 337 employees in Europe and the Middle East, 69 employees in Asia Pacific, and 14 employees in Latin America.
The competition in this area is significant and multifaceted, including our ability to offer technological advantages to both demand side and supply side partners, as well as maintain and expand relationships that provide access to ad inventory. 8 We believe that the principal competitive factors in the mobile app ecosystems are: • the ability to enhance and improve technologies and offerings; • knowledge, expertise, and experience in the mobile app ecosystem; • relationships with third parties in the mobile app ecosystem, including app publishers and developers; • the ability to reach and target a large number of users; • the ability to identify and execute on strategic transactions; • the ability to successfully monetize mobile apps; • the pricing and perceived value of offerings; • brand and reputation; and • ability to expand into new offerings and geographies.
We believe that the principal competitive factors in the mobile app ecosystems are: • the ability to enhance and improve technologies and offerings; 7 Table of Contents • knowledge, expertise, and experience in the mobile app ecosystem; • relationships with third parties in the mobile app ecosystem, including app publishers and developers; • the ability to reach and target large numbers of users; • the ability to identify and execute on strategic transactions; • the ability to successfully monetize mobile apps; • the pricing and perceived value of offerings; • brand and reputation; and • ability to expand into new offerings and geographies.
Our contracts with publishers are generally cancellable with short-term notification periods by either party. We have contractual relationships with numerous advertisers, agencies, and DSPs, which are not exclusive and can be terminated by them with either no notice or relatively short notice.
Our customers for ODS products are numerous advertisers, agencies, and DSPs and our contracts with them are not exclusive and can be terminated by them with either no notice or relatively short notice.
Furthermore, we distribute a significant level of advertising through a few wireless carriers in our On Device Media business . I f such advertising clients or these wireless carriers decide to materially reduce or discontinue its use of our platforms, it may cause a decline in our revenue and negatively affect our results of operations and financial condition.
If these wireless carriers decide to materially reduce or discontinue their use of our platforms, it may cause a material decline in our revenue and negatively affect our results of operations and financial condition.
The Company generally offers brand and programmatic advertising services under customer contract arrangements with third-party advertisers and agencies, generally in the form of insertion orders that specify the type of arrangement at particular set budget amounts/restraints.
The Company offers brand and programmatic advertising services under customer contract arrangements with third-party advertisers and agencies, generally in the form of insertion orders that specify the type of arrangement for a budgeted amount. These customer contracts are generally short-term in nature (less than one-year).
The Community Action Teams have helped drive meaningful advancements in on-boarding, cross-functional understanding, a mentoring program, and a Digital Turbine Gives campaign where employees volunteer in the community over a six-week period on an annual basis .
The Community Action Teams have helped drive meaningful advancements in on-boarding, cross-functional understanding, a mentoring program, and a Digital Turbine Gives campaign where employees volunteer in the community over a six-week period on an annual basis . 9 Table of Contents Workplace Flexibility: As part of our “Freedom” value, and before the COVID-19 pandemic drove a shift to remote work, we established a workplace strategy to provide more flexible work options to our employees.
For example, many advertisers (and their agencies) devote a disproportionate amount of their budgets to the fourth quarter of the calendar year to coincide with increased holiday spending.
Business Seasonality Our revenue, cash flow from operations, operating results, and other key operating and financial measures may vary from quarter-to-quarter due to the seasonal nature of advertiser spending. For example, many advertisers (and their agencies) devote a disproportionate amount of their budgets to the fourth quarter of the calendar year to coincide with increased holiday spending.
Our Products and Solutions On Device Media The Company's On Device Media ("ODM") business consists of products and services that simplify the discovery and delivery of mobile apps and content media for device end-users. • Application Media represents the portion of the business where our platform delivers apps to end users through partnerships with wireless carriers and OEMs .
Effective April 1, 2022, the Company reports its results of operations through the following two segments, each of which represents an operating and reportable segment, as follows: On Device Solutions The Company’s ODS business consists of products and services that simplify the discovery and delivery of mobile apps and content media for device end-users.ODS is comprised of the following product and service groups: • Application Media represents the portion of the ODS business platform that delivers apps to end users through partnerships with wireless carriers and OEMs .
We benchmark our demographics to our industry , both at an overall level and a professional category level (VPs and above, directors, managers, individual contributors and administrative), and note that we either are at the high end or exceed the benchmark in every diversity category. 10 Culture and Values: We have adopted our culture values of Hustle, Results, Accountability, Global, Freedom and Laugh to help create and foster a culture where every employee is empowered, engaged and trusted to be their best at work.
Culture and Values: We have adopted our culture values of Hustle, Results, Accountability, Global, Freedom and Laugh to help create and foster a culture where every employee is empowered, engaged and trusted to be their best at work.
With respect to customer revenue concentration, during the fiscal years ended March 31, 2022 and 2021, no single customer represented more than 10% of our net revenue.
For the fiscal years ended March 31, 2023, 2022, and 2021, the Company did not generate revenue from any single supply partner that was more than 10% of our net revenue. Further, no single customer was responsible for more than 10% of our net revenue during the fiscal years ended March 31, 2023, 2022, and 2021.
In addition, some wireless carrier agreements provide that the wireless carrier can terminate the agreement early and, in some instances, at any time without cause, which could give them the ability to renegotiate economic or other terms . The agreements generally do not obligate the wireless carriers to market or distribute any of our products or services.
Our wireless carrier and OEM agreements are usually multi-year agreements and in some cases, the wireless carrier can terminate the agreement early without cause. The agreements generally do not obligate the wireless carriers to market or distribute any of our products or services and we distribute a significant level of advertising through a relatively small number of carriers.
Under our contracts with wireless carriers and OEMs, the carriers and OEMs control, manage, and monetize the mobile devi ce through the marketing of application slots or advertisement space/inventory to advertisers and deliver the applications or advertisements to the mobile device.
Under the agreements with wireless carriers and OEMs, the Company manages the monetization of end user mobile devices through the marketing of application slots or advertisement space/inventory to publishers and/or advertisers by delivering apps or advertisements to the mobile device. The Company generally offers these services under a revenue share model.
The Company’s customers can offer/bid on each individual display ad and the highest bid wins the right to fill each ad impression. When the bid is won, the ad will be received and placed on the mobile device. The entire process happens almost instantaneously and on a continuous basis.
When the bid is won, the ad will be received and placed in the appropriate ad placement inside of the mobile app. The entire process happens almost instantaneously and on a continuous basis. The advertising exchanges bill and collect from the winning bidders and provide daily and monthly reports of the activity to the Company.
In App Media - Fyber The Company's In-App Media - Fyber ("IAM-F") business provides a platform that allows mobile app publishers and developers to monetize their monthly active users via display, native, and video advertising.
The advertiser segment utilizes the Company’s programmatic real-time bidding technology and creative studio to build highly engaging video creatives that are then used exclusively in campaigns targeting the Company’s direct mobile app inventory. • Ad Monetization solutions allow mobile app publishers and developers to monetize their monthly active users via display, native, and video advertising.
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Recent Acquisitions The Company recently completed the acquisitions of Appreciate, AdColony Holding AS ("AdColony"), and Fyber, N.V. ("Fyber") to execute on its expressed strategy of becoming a leading end-to-end solution for mobile brand acquisition, advertising, and monetization.
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Our Products and Services As of March 31, 2022, the Company operated through three operating segments, each of which was a reportable segment. The three segments were On Device Media (“ODM”), In-App Media - AdColony (“IAM-A”), and In-App Media-Fyber (“IAM-F”).
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The following is a summary of each of those acquisitions: Appreciate: On March 1, 2021, Digital Turbine, through its wholly-owned subsidiary Digital Turbine (EMEA) Ltd.
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Effective April 1, 2022, the Company made certain changes to its organizational and management structure that resulted in the following: (1) the renaming of the On Device Media segment to On Device Solutions (“ODS”) and (2) the integration of IAM-A and IAM-F into a single segment called App Growth Platform (“AGP”).
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("DT EMEA"), an Israeli company, entered into a Share Purchase Agreement with Triapodi Ltd., an Israeli company (d/b/a Appreciate) (“Appreciate”), the stockholder representative, and the stockholders of Appreciate, pursuant to which DT EMEA acquired, on March 2, 2021, all of the outstanding capital stock of Appreciate in exchange for total consideration of $20,003 in cash (the "Appreciate Acquisition").
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The integration of IAM-A and IAM-F was completed to drive operating efficiencies and revenue synergies. As a result of the integration of IAM-A and IAM-F, the Company reassessed its operating and reportable segments in accordance with ASC 280, Segment Reporting.
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Under the terms of the Share Purchase Agreement, DT EMEA entered into bonus arrangements to pay up to $6,000 in retention bonuses and performance bonuses to the founders and certain other employees of Appreciate. None of the goodwill recognized was deductible for tax purposes.
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This advertiser segment utilizes products such as the DT DSP and Offer Wall (“DT Offer Wall”) to configure targeting, bid prices, and creative assets used for executing the campaign. • Brands and Agencies run mobile brand-awareness campaigns on the Company’s direct mobile app inventory.
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The acquisition of Appreciate delivered valuable deep ad-tech and algorithmic expertise to help Digital Turbine execute on its broader, longer-term vision.
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Our Ad Monetization solutions are integrated directly with leading mobile apps and games, connecting their ad inventory to campaigns from Demand Side Platforms (“DSPs”), app marketers, brand advertisers, and agencies, primarily through a programmatic, real-time bidding auction, and, in some cases, through the Company’s direct campaign management products such as the DT DSP and DT Offer Wall.
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Deploying Appreciate's technology expertise across Digital Turbine’s global scale and reach should further benefit partners and advertisers that are a part of the combined Company’s platform. 5 AdColony: On April 29, 2021, the Company completed the acquisition of AdColony Holding AS, a Norway company (“AdColony”), pursuant to a Share Purchase Agreement (the "AdColony Acquisition").
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The competition in this area is significant and multifaceted, including our ability to offer technological advantages to both demand- side and supply-side partners, as well as maintain and expand relationships that provide access to ad inventory.
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The Company acquired all outstanding capital stock of AdColony in exchange for an estimated total consideration in the range of $400,000 to $425,000, including an estimated earn-out in the range of $200,000 to $225,000, to be paid in cash, based on AdColony achieving certain future target net revenue, less associated cost of goods sold (as such term is referenced in the Share Purchase Agreement), over a 12-month period ending on December 31, 2021 (the “Earn-Out Period”).
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Revenue share payments to wireless carriers and OEMs are recorded as an expense in our consolidated financial statements. Supply partners in our AGP business are primarily comprised of app publishers and are generally non-exclusive. Our contracts with publishers are generally one-year in length, renewable annually, and are cancellable with short-term notification periods by either party.
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Under the terms of the earn-out, the Company would pay the seller a certain percentage of actual net revenue (less associated cost of goods sold, as such term is referenced in the Share Purchase Agreement) of AdColony, depending on the extent to which AdColony achieves certain target net revenue (less associated cost of goods sold, as such term is referenced in the Share Purchase Agreement) over the Earn-Out Period.
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Generally, the Company compensates app publishers through a revenue share model or via direct CPM, cost-per-install (“CPI”), cost-per-placement (“CPP”), or cost-per-acquisition (“CPA”) arrangements, Such payments to app publishers are recorded as an expense in our consolidated financial 8 Table of Contents statements.
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The earn-out payment will be made following the expiration of the Earn-Out Period. On August 27, 2021, the Company entered into an Amendment to Share Purchase Agreement (the “Amendment Agreement”) with AdColony and Otello Corporation ASA, a Norway company (“Otello”) and AdColony's previous parent company.
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In addition, the Company offers programmatic and direct-sold advertising services under customer contract arrangements as part of its AGP business. The Company’s customers can offer/bid on each individual display ad and the highest bid wins the right to fill each ad impression.
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Pursuant to the Amendment Agreement, the Company and Otello agreed to set a fixed dollar amount of $204,500 for the earn-out payment obligation, to set January 15, 2022, as the payment due date for such payment amount, and to eliminate all of the Company’s earn-out support obligations under the Share Purchase Agreement.
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We benchmark our demographics to our industry , both at an overall level and a professional category level (VPs and above, directors, managers, individual contributors and administrative), and note that we continue to make progress each year.
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AdColony is a leading mobile advertising platform servicing advertisers and publishers. AdColony’s proprietary video technologies and rich media formats are widely viewed as a best-in-class technology delivering third-party verified viewability rates for well-known global brands. With the addition of AdColony, the Company expanded its collective experience, reach, and suite of capabilities to benefit mobile advertisers and publishers around the globe.
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Employees that are located near our office locations work in-person based on the needs of their teams. As a result, we are able to continue to offer flexibility to our employees while enhancing collaboration and effectiveness among our teams. Health, Safety, and Wellness: The success of our business is fundamentally connected to the well-being of our people.
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Performance-based spending trends by large, established brand advertisers present material upside opportunities for platforms with unique technology deployable across exclusive access to inventory. Fyber: On May 25, 2021, the Company completed the initial closing of the acquisition of at least 95.1% of the outstanding voting shares (the “Majority Fyber Shares”) of Fyber N.V.
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Our website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report.
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(“Fyber”) pursuant to a Sale and Purchase Agreement (the "Fyber Acquisition") between Tennor Holding B.V., Advert Finance B.V., and Lars Windhorst (collectively, the “Seller”), the Company, and Digital Turbine Luxembourg S.ar.l., a wholly-owned subsidiary of the Company.
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The remaining outstanding shares in Fyber (the “Minority Fyber Shares”) were (to the Company's knowledge) widely held by other shareholders of Fyber (the “Minority Fyber Shareholders”) and are presented as non-controlling interests within the Company's consolidated financial statements. Fyber is a leading mobile advertising monetization platform empowering global app developers to optimize profitability through quality advertising.
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Fyber’s proprietary technology platform and expertise in mediation, real-time bidding, advanced analytics tools, and video combine to deliver publishers and advertisers a highly valuable app monetization solution. Fyber represents an important and strategic addition for the Company in its mission to develop one of the largest full-stack, fully independent, mobile advertising solutions in the industry.
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The combined platform offering is advantageously positioned to leverage the Company’s existing on-device software presence and global distribution footprint. The Comp any acquired Fyber in exchange for an estimated aggregate consideration of up to $600,000, consisting of both cash as well as the issuance of shares of the Company's common stock.
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The aggregate consideration included an earn-out provision contingent upon Fyber’s net revenue (revenue less associated license fees and revenue share) being equal to or higher than $100,000 for the 12-month earn-out period ending on March 31, 2022, as determined in the manner set forth in the Sale and Purchase Agreement.
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If the net revenue target is achieved, the Company will issue shares of its common stock, and under certain circumstances, an amount of cash.
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The number of shares to be issued is based on the weighted average share price for the 30-days prior to the end of the earn-out period, and will not exceed $50,000 (subject to set-off against certain potential indemnification claims against the Seller).
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Based on estimates at the time of the acquisition, the Company initially determined it was unlikely Fyber would achieve the earn-out net revenue target and, as a result, no contingent liability was recognized at that time.
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On September 30, 2021, the Company entered into the Second Amendment Agreement (the “Second Amendment Agreement”) to the Sale and Purchase Agreement for the Fyber Acquisition. Pursuant to the Second Amendment Agreement, the parties agreed to settle the remaining number of shares of Company common stock to be issued to the Seller .
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As a result, the Company issued a total of 5,775,299 shares of Company common stock to the Seller in connection with the Company’s acquisition of Fyber. 6 As of March 31, 2022, the Company re-evaluated the fair value of the contingent earn-out consideration based on Fyber's net revenue through the end of the 12-month measurement period ending on March 31, 2022, resulting in an accrued fair value of the contingent earn-out consideration of $50,000.
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The Company settled the obligation through the issuance of approximately 1,200,000 shares of the Company's common stock subsequent to its fiscal year ended March 31, 2022. Pursuant to certain German law on public takeovers, following the closing, the Company launched a public tender offer to the Minority Fyber Shareholders to acquire from them the Minority Fyber Shares.
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The tender offer was approved and published in July 2021, and is subject to certain minimum price rules under German law.
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The timing and the conditions of the tender offer, including the consideration of €0.84 per share offered to the Minority Fyber Shareholders in connection with the tender offer, was determined by the Company pursuant to the applicable Dutch and German takeover laws.
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During the fiscal year ended March 31, 2022, the Company purchased additional outstanding shares of Fyber, resulting in an ownership percentage of Fyber of approximately 99.5% as of March 31, 2022. The Company expects to complete the purchase of the remaining outstanding Fyber shares during fiscal year 2023.
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The delisting of Fyber's remaining outstanding shares on the Frankfurt Stock Exchange was completed on August 6, 2021 Please refer to Note 3, "Acquisitions," in the Company's consolidated financial statements included in this From 10-K for further detailed information on the acquisitions discussed above.
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The IAM-F platform allows demand side platforms ("DSPs"), advertisers, agencies, and publishers to buy and sell digital ad impressions, primarily through programmatic, real-time bidding auctions and, in some cases, through direct-bought/sold advertiser budgets.
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Our supply side platform technologies: • store and manage anonymized data from mobile devices we reach every day, which enable better production and matching of users to relevant advertising content; • enable the interaction of DSPs and publishers through software development kits (SDKs) that also render ad media to end users; 7 • enable advertiser apps and brands to have their services discovered and downloaded by target users, thereby enhancing return on marketing spend; and • utilize advanced in-app bidding technology that optimizes the value of a developer’s advertising inventory through real-time bidding.
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Our relationships with brand advertisers, agencies, and other ad buyers offer app publishers and developers the opportunity to engage in direct-sold campaigns, providing more options for publishers and developers to monetize their apps .
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In App Media - AdColony The Company’s In App Media - AdColony ("IAM-A") business consists of products and services to enable agencies, brands, and app developers to reach large audiences while achieving key performance indicators ranging from reach to frequency, cost-per-install, and return on ad spend.
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These campaigns are filled via in-house developed technologies and platforms customized to reach a wide array of audiences globally while being compatible with industry-recognized partners around measurement, data matching, and creative services.
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IAM-A's products and services primarily fall into three categories: • IAM-A platform that allows DSPs, advertisers, agencies, and publishers to buy and sell digital ad impressions through programmatic, real-time bidding auctions; • Brand and Performance services, in which IAM-A contracts with agencies and advertisers through insertion orders that require IAM-A to manage and fulfill advertising campaigns by identifying and purchasing ad inventory to meet customer requirements; and • Reseller activities where IAM-A contracts with social media platforms and acts as a reseller of the platforms' ad inventory, primarily in international markets.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe acquisitions may fail to realize the anticipated benefits for a variety of reasons, including the following: • failure to harmonize the full vertical operations; • failure to successfully take advantage of revenue growth opportunities; 15 • failure to effectively coordinate sales and marketing efforts to communicate the capabilities of the complementary offerings; • failure to combine product offerings quickly and effectively; • potential difficulties integrating and harmonizing operations, systems, technologies, products, personnel, and other key functions, and inefficiencies and lack of control that may result if such integration is delayed or not implemented; • failure to successfully scale and grow human and system resources to meet the demands of a larger international organization; • diversion of our management’s attention in the acquisition and integration process, including oversight over acquired businesses that continue their operations under contingent consideration provisions in acquisition agreements; • the loss of key employees; • the failure to successfully implement internal control and disclosure controls, procedures, and policies appropriate for a larger, U.S.-based public company at companies that prior to acquisition may not have as robust internal control and disclosure controls, procedures, and policies, in particular, with respect to the effectiveness of internal control, cyber and data security practices and incident response plans, compliance with privacy and other regulations protecting the rights of customers and users, and compliance with U.S.-based economic policies and sanctions which may not have previously been applicable to the acquired company’s operations; • the failure to successfully implement remediation of the material weakness in our internal control over financial reporting related to the presentation of certain revenue net of license fees and revenue share expense and the classification of certain hosting costs described; • the failure to successfully integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries as well as tax risks that may arise from the acquisitions; • the increasing legal, regulatory, and compliance exposure, and the additional costs related to mitigate each of those, as a result of adding new offices, employees and other service providers, benefit plans, job types, and lines of business globally; and • liability for activities of the acquired companies before the acquisitions, including intellectual property, commercial, and other litigation claims or disputes, cyber and data security vulnerabilities, violations of laws, rules and regulations, including with respect to employee classification, tax liabilities, and other known and unknown liabilities.
Biggest changeThe acquisitions may fail to realize the anticipated benefits for a variety of reasons, including the following: • difficulties integrating and harmonizing operations, systems, technologies, products, personnel, and other key functions, and inefficiencies and lack of control that may result if such integration is delayed or not implemented; • diversion of our management’s attention in the acquisition and integration process, including oversight over acquired businesses that continue their operations under contingent consideration provisions in acquisition agreements; • difficulties in implementing internal controls and disclosure controls, procedures, and policies appropriate for a larger, U.S.-based public company at companies that prior to acquisition may not have as robust internal controls and disclosure controls, procedures, and policies, in particular, with respect to the effectiveness of internal controls, cyber and data security practices and incident response plans, compliance with privacy and other regulations protecting the rights of customers and users, and compliance with U.S.-based economic policies and sanctions which may not have previously been applicable to the acquired company’s operations; • difficulties in implementing remediation of the material weakness in our internal control over financial reporting related to the presentation of certain revenue net of license fees and revenue share expense and the classification of certain hosting costs described; • difficulties integrating operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries as well as tax risks that may arise from the acquisitions; and • the increasing legal, regulatory, and compliance exposure, and the additional costs related to mitigate each of those, as a result of adding new offices, employees and other service providers, benefit plans, job types, and lines of business globally.
Accordingly, any adverse change in our ability to service our secured debt could result in an event of default, cross default and foreclosure or forced sale. Depending on the value of the assets, there could be little if any assets available for common stockholders in any foreclosure or forced sale.
Accordingly, any adverse change in our ability to service our secured debt could result in an event of default, cross default, and foreclosure or forced sale. Depending on the value of assets, there could be little, if any, assets available for common stockholders in any foreclosure or forced sale.
We believe the acquisitions of Appreciate, AdColony, and Fyber will result in certain benefits, including providing vertical integrations essential to achieving the Company’s strategic goal of being a powerful, best-in-class, end-to-end solution for mobile brand acquisition, advertising, and monetization. To realize these anticipated benefits, however, the businesses of Appreciate, AdColony, and Fyber must continue to be successfully integrated.
We believe these acquisitions will result in certain benefits, including providing vertical integrations essential to achieving the Company’s strategic goal of being a powerful, best-in-class, end-to-end solution for mobile brand acquisition, advertising, and monetization. To realize these anticipated benefits, the businesses of Appreciate, AdColony, and Fyber must continue to be successfully integrated.
We may also be required to adapt our solutions in order to comply with changing regulations. Despite our efforts, we may not be successful in achieving compliance with these rapidly evolving requirements. We could be perceived to be in non-compliance with applicable privacy laws, especially when acquiring new companies and before we have completed our gap analysis and remediation.
We may also be required to adapt our solutions to comply with changing regulations. Despite our efforts, we may not be successful in achieving compliance with these rapidly evolving requirements. We could be perceived to be in non-compliance with applicable privacy laws, especially when acquiring new companies and before we have completed our gap analysis and remediation.
These reports may not be timely, and in the past they have contained, and in the future they may contain, errors. 46 In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we expend significant resources and provide significant management oversight.
These reports may not be timely, and in the past they have contained, and in the future they may contain, errors. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we expend significant resources and provide significant management oversight.
Although these worms have not been widely released and do not present an immediate risk to our business, we believe future threats could lead some end users to seek to reduce or delay future purchases of our products or reduce or delay the use of their mobile devices.
Although these worms have not been widely released and do not present an immediate risk to our business, we believe future threats could lead some end users to reduce or delay future purchases of our products or reduce or delay the use of their mobile devices.
However, keeping pace with the rapid innovation of mobile device technologies together with the continuous introduction of new, and often incompatible, mobile device models by wireless carriers requires us to make continuous investments in product development and maintenance, including talent, technologies, and equipment.
Keeping pace with the rapid innovation of mobile device technologies together with the continuous introduction of new, and often incompatible, mobile device models by wireless carriers requires us to make continuous investments in product development and maintenance, including talent, technologies, and equipment.
In addition, we are and have been and may again in the future be subject to domestic or international actions alleging that certain content we have generated or third-party content that we have made available within our services violates laws in domestic and international jurisdictions.
In addition, we have been and may again in the future be subject to domestic or international actions alleging that certain content we have generated or third-party content that we have made available within our services violates laws in domestic and international jurisdictions.
We rely on a combination of copyright, trademark, trade secret, patent, and other intellectual property laws and restrictions on disclosure to protect our intellectual property rights. 41 We face risks associated with our trademarks.
We rely on a combination of copyright, trademark, trade secret, patent, and other intellectual property laws and restrictions on disclosure to protect our intellectual property rights. We face risks associated with our trademarks.
Changes in our platform or future changes in export and import regulations may create delays in the introduction of our platform in international markets or prevent our customers with international operations from deploying our platform globally.
Changes in our platform or future changes in export and import regulations may create delays in the introduction of our platform to international markets or prevent our customers with international operations from deploying our platform globally.
In the event we are unable to maintain our corporate culture as we grow to scale, our business, financial condition and results of operations could be harmed.
In the event we are unable to maintain our corporate culture as we scale, our business, financial condition, and results of operations could be harmed.
If analysts cease coverage of the Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our common stock price or trading volume to decline. 45 We do not anticipate paying dividends. Our secured and unsecured indebtedness essentially prevents all payments of dividends to our stockholders.
If analysts cease coverage us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our common stock price or trading volume to decline. We do not anticipate paying dividends. Our secured and unsecured indebtedness essentially prevents all payments of dividends to our stockholders.
The Company may also be subject to claims of breach of contract for such disclosure, investigation and penalties by regulatory authorities and potential claims by persons whose information was disclosed. The unauthorized disclosure of information may result in the termination of one or more of its commercial relationships or a reduction in customer confidence and usage of its services.
We may also be subject to claims of breach of contract for such disclosure, investigation and penalties by regulatory authorities, and potential claims by persons whose information was disclosed. The unauthorized disclosure of information may result in the termination of one or more of its commercial relationships or a reduction in customer confidence and usage of its services.
If our cash, cash equivalents and short-term investments balances, and any cash generated from operations are not sufficient to meet our cash requirements, we may seek additional capital, potentially through debt or equity financings, to fund our growth. We may not be able to raise needed cash on terms acceptable to us or at all.
If our cash, cash equivalents, short-term investments, and cash generated from operations are not sufficient to meet our cash requirements, we may seek additional capital, potentially through debt or equity financings, to fund our growth. We may not be able to raise needed cash on terms acceptable to us or at all.
A significant portion of our revenue are currently being derived from a limited number of wireless carriers and customers. If any one of these carriers or customers were to terminate their agreement with us or if they were unable to fulfill their payment obligations, our financial condition and results of operations would suffer.
A significant portion of our revenue is currently being derived from a limited number of wireless carriers and customers. If any one of these carriers or customers were to terminate their agreement with us or if they were unable to fulfill their payment obligations, our financial condition and results of operations would suffer.
We also expect that more states may enact legislation similar to the CCPA, which provides consumers with new privacy rights and increases the privacy and security obligations of entities handling certain personal information of such consumers. The CCPA has prompted a number of proposals for a new federal and state-level privacy legislation.
We also expect that more states may enact legislation similarly to the CCPA, which provides consumers with new privacy rights and increases the privacy and security obligations of entities handling certain personal information of such consumers. The CCPA has prompted a number of proposals for new federal and state-level privacy legislation.
Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. In addition, Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires us to maintain, evaluate and report on disclosure controls and procedures and internal control over financial reporting, that meet the applicable standards.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. In addition, Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires us to maintain, evaluate and report on disclosure controls and procedures and internal control over financial reporting, that meet the applicable standards.
Some portions of our business rely extensively on marketing, advertising and promoting our products and services requiring it to have an understanding of the local laws and regulations governing our business. Additionally, we rely on the policies and procedures of wireless carriers and should those change, there could be an adverse impact on our products.
Some portions of our business rely extensively on marketing, advertising, and promoting our products and services, requiring us to have an understanding of local laws and regulations governing our business. Additionally, we rely on the policies and procedures of wireless carriers and should those change, there could be an adverse impact on our products.
Moreover, we cannot assure you that our processes for controlling our use of open source software in our platform will be effective.
Moreover, we cannot assure that our processes for controlling our use of open-source software in our platform will be effective.
From time-to-time, we expect that a limited number of the Company’s advertiser customers will account for a significant share of our advertising revenue. This customer concentration increases the risk of quarterly fluctuations in the Company’s revenue and operating results.
From time-to-time, we expect that a limited number of our advertising customers will account for a significant share of our advertising revenue. This customer concentration increases the risk of quarterly fluctuations in our revenue and operating results.
Alternatively, we may increase our product development resources in an attempt either to preserve our product launch schedule or to keep up with our competition. In either case, our business, operating results and financial condition could be materially harmed.
Alternatively, we may increase our product development resources in an attempt either to preserve our product launch schedule or to keep up with our competition. In either case, our business, operating results, and financial condition could be materially affected.
We may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations.
We may not be able to affect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations.
If we discover additional material weaknesses in our internal control or are unable to remediate our existing material weakness, the disclosure of those matters could reduce the market’s confidence in our financial statements and harm our stock price.
If we discover additional material weaknesses in our internal controls or are unable to remediate our existing material weakness, the disclosure of those matters could reduce the market’s confidence in our financial statements and harm our stock price.
Most recently, on July 16, 2020, in a case known as Schrems II, the Court of Justice of the European Union (“CJEU”) invalidated the EU-US Privacy Shield Framework (“Privacy Shield”) under which personal data could be transferred from the EEA to U.S. entities who had self-certified under the Privacy Shield scheme.
Most recently, on July 16, 2020, in a case known as Schrems II, the Court of Justice of the European Union (“CJEU”) invalidated the EU-US Privacy Shield Framework (“Privacy Shield”) under which personal data could be transferred from the EEA to U.S. entities who had self-certified under the Privacy 23 Table of Contents Shield scheme.
Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use, or grant other licenses to our intellectual property.
Some open-source software licenses contain requirements that we make available source code for modifications or derivative works we create based on the type of open-source software we use or grant other licenses to our intellectual property.
Federal Trade Commission and state attorneys general have, in recent years, increased enforcement of the Children’s Online Privacy Protection Act (“COPPA”), which requires companies to obtain parental consent before collecting personal information from children under the age of 13 for purposes not permitted by COPPA.
Federal Trade Commission and state attorneys general have, in recent years, increased enforcement of the Children’s Online Privacy Protection Act (“COPPA”), which requires companies to obtain 24 Table of Contents parental consent before collecting personal information from children under the age of 13 for purposes not permitted by COPPA.
In addition, the market price of our common stock could be subject to wide fluctuations in response to a variety of factors, including: • quarterly variations in our revenue and operating expenses; • developments in the financial markets, and the worldwide or regional economies; • announcements of innovations or new products or services by us or our competitors; • price and volume fluctuations in the overall stock market from time to time; • significant volatility in the market price and trading volume of technology companies in general and of companies in the digital advertising industry in particular; • whether our results of operations meet the expectations of securities analysts or investors; • litigation involving us, our industry, or both; • significant sales of our common stock or other securities in the open market; and • changes in accounting principles.
In addition, the market price of our common stock could be subject to wide fluctuations in response to a variety of factors, including: 29 Table of Contents • quarterly variations in our revenue and operating expenses; • developments in financial markets, and global or regional economies; • announcements of innovations or new products or services by us or our competitors; • price and volume fluctuations in the overall stock market from time-to-time; • significant volatility in the market price and trading volume of technology companies in general and of companies in the digital advertising industry in particular; • whether our results of operations meet the expectations of securities analysts or investors; • litigation involving us, our industry, or both; • significant sales of our common stock or other securities in the open market; and • changes in accounting principles.
We manage and store various proprietary information and sensitive or confidential data relating to our business.
We manage and store proprietary information and sensitive or confidential data relating to our business.
If we are unable to retain our employees, our business, operating results, and financial condition would be harmed. 40 Our corporate culture has contributed to our success and, if we are unable to maintain it as we grow, our business, financial condition, and results of operations could be harmed.
If we are unable to retain our employees, our business, operating results, and financial condition could be harmed. Our corporate culture has contributed to our success and, if we are unable to maintain it as we grow, our business, financial condition, and results of operations could be harmed.
Our ability to meet our debt service obligations and to fund working capital, capital expenditures, and investments in our business will depend upon our future performance, which will be subject to financial, business, and other factors affecting our operations, many of which are beyond our control, availability of borrowing capacity under our credit facility, and our ability to access the capital markets.
Our ability to meet our debt service obligations and to fund working capital, capital expenditures, and investments in our business will depend on our future performance, which will be subject to financial, business, and other factors affecting our operations, many of which are beyond our control, availability of borrowing capacity under our credit facility, and our ability to access capital markets.
The Company’s business may involve the use, transmission, and storage of confidential information and personally identifiable information, and the failure to properly safeguard such information could result in significant reputational harm and monetary damages.
Our business may involve the use, transmission, and storage of confidential information and personally identifiable information, and the failure to properly safeguard such information could result in significant reputational harm and monetary damages.
We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm. Similar to GDPR, in September 2020, Brazil enacted the Brazilian General Data Protection Law (LGPD).
We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm. Similar to GDPR, in September 2020, Brazil enacted the Brazilian General Data Protection Law, to which we are also subject.
If this operating system falls out of favor with mobile device manufacturers and wireless carriers and there is a rapid shift to a new technology where we do not have development experience or resources, the development period for our products and services may be lengthened, increasing our costs, and the resulting products and services may be of lower quality, and may be published later than anticipated.
If these operating systems falls out of favor with mobile device manufacturers and wireless carriers and there is a rapid shift to a new technology where we do not have development experience or resources, the development period for our products and services may be lengthened, increasing our costs, and the resulting products and services may be of lower quality and may be published later than anticipated.
The law relating to the liability of providers of these mobile and online services and products for such activities is still unsettled and constantly evolving in the U.S. and internationally.
Laws relating to the liability of providers of these mobile and online services and products for such activities is still unsettled and constantly evolving in the U.S. and internationally.
Government regulation of our marketing methods could restrict our ability to adequately advertise and promote our content, products, and services available in certain jurisdictions. The governments of some countries have sought to regulate the methods and manner in which certain of our products and services may be marketed to potential end-users.
Government regulation of our marketing methods could restrict our ability to adequately advertise and promote our content, products, and services available in certain jurisdictions. The governments of some countries have sought to regulate the methods and manner in which certain of 26 Table of Contents our products and services may be marketed to potential end-users.
While we routinely insert indemnification provisions into our contracts with these parties, such indemnities to us, when obtainable, may not cover all damages and losses suffered by us and our customers from covered products and services. In addition, recorded reserves and/or insurance coverage may be exceeded by unexpected results from such claims which directly impacts profits.
While we routinely insert indemnification provisions into our contracts with these parties, such indemnities to us, when obtainable, may not cover all damages and losses suffered by us and our customers from covered products and services. In addition, recorded reserves and/or insurance coverage may be exceeded by unexpected results from such claims.
Specifically, the GDPR, the UK GDPR and other European and UK data protection laws generally prohibit the transfer of personal data from the EEA, the UK and Switzerland, to the United States and most other countries unless the transfer is to an entity established in a country deemed to provide adequate protection (such as Israel) or the parties to the transfer have implemented specific safeguards to protect the transferred personal data.
Specifically, the GDPR, the UK GDPR, and other European and UK data protection laws generally prohibit the transfer of personal data from the EEA, the UK, and Switzerland to the U.S. and most other countries unless the transfer is to an entity established in a country deemed to provide adequate protection (such as Israel) or the parties to the transfer have implemented specific safeguards to protect the transferred personal data.
Risks affecting our international operations include: • challenges caused by distance, language and cultural differences; • the burdens of complying with multiple and conflicting foreign laws and regulations, including complications due to unexpected changes in these laws and regulations; • higher costs associated with doing business internationally; • difficulties in staffing and managing international operations; • greater fluctuations in sales to customers, end users and through carriers in developing countries, including longer payment cycles and greater difficulty collecting accounts receivable; • protectionist laws and business practices that favor local businesses in some countries; • foreign exchange controls that might prevent us from repatriating income earned outside the United States; • price controls; • the servicing of regions by many different carriers; • imposition of public sector controls; • political, economic and social instability, including relating to the current European sovereign debt crisis; • restrictions on the export or import of technology; • trade and tariff restrictions; • variations in tariffs, quotas, taxes and other market barriers; and • reduced protection for intellectual property rights in some countries and practical difficulties in enforcing intellectual property rights in countries other than the United States.
Risks affecting our international operations include: • challenges caused by distance, language and cultural differences; • the burdens of complying with multiple and conflicting foreign laws and regulations, including complications due to unexpected changes in these laws and regulations; • higher costs associated with doing business internationally; • difficulties in staffing and managing international operations; • greater fluctuations in sales to customers, end users, and through carriers in developing countries, including longer payment cycles and greater difficulty collecting accounts receivable; • protectionist laws and business practices that favor local businesses in certain countries; • foreign exchange controls that might prevent us from repatriating income earned outside the U.S.; • the servicing of regions by many different carriers; • imposition of public sector controls, including price controls; • political, economic, and social instability; • restrictions on the export or import of technology; • trade and tariff restrictions; • variations in tariffs, quotas, taxes, and other market barriers; and • reduced protection for intellectual property rights in some countries and practical difficulties in enforcing intellectual property rights in countries other than the U.S.
The Company may at times collect, store and transmit information of, or on behalf of, its customers that may include certain types of confidential information that may be considered personal or sensitive, and that are subject to laws that apply to data breaches.
We may at times collect, store, and transmit information of, or on behalf of, its customers that may include certain types of confidential information that may be considered personal or sensitive and that are subject to laws that apply to data breaches.
We have identified a material weakness in our internal control over financial reporting related to the presentation of certain revenue net of license fees and revenue share expense and the classification of certain hosting costs. Management concluded that our internal control over financial reporting and disclosure controls and procedures were not effective as of March 31, 2022.
We have identified material weaknesses in our internal control over financial reporting related to the presentation of certain revenue net of license fees and revenue share expense and the classification of certain hosting costs described. Management concluded that our internal controls over financial reporting and disclosure controls and procedures were not effective as of March 31, 2022.
These efforts will also involve substantial accounting-related costs. The Sarbanes-Oxley Act makes it more difficult and more expensive for us to maintain directors’ and officers’ liability insurance, and we may be required in the future to accept reduced coverage or incur substantially higher costs to maintain coverage.
These efforts will also involve substantial accounting-related costs. The Sarbanes-Oxley Act makes it more difficult and more expensive for us to maintain directors’ and officers’ liability insurance, and we may be required in the future to accept reduced coverage or incur substantially 31 Table of Contents higher costs to maintain coverage.
Risks Related to the Mobile Advertising Industry Generally The mobile advertising business is an intensely competitive industry and we may not be able to compete successfully. We operate in a highly competitive and fragmented mobile app ecosystem composed of divisions of large, well-established companies as well as public and privately-held companies.
Risks Related to the Mobile Advertising Industry The mobile advertising business is an intensely competitive industry and we may not be able to compete successfully. We operate in a highly competitive and fragmented mobile app ecosystem composed of divisions of large, 17 Table of Contents well-established companies as well as public and privately-held companies.
The privacy and data security compliance challenges we and our customers face in the EU, the UK, the United States and other jurisdictions may also limit our ability to operate, or offer certain product features, in those jurisdictions, which could reduce demand for our solutions from customers subject to their laws.
The privacy and data security compliance challenges we and our customers face in the EU, the UK, the U.S., and other jurisdictions may also limit our ability to operate, or offer certain product features, in those jurisdictions, which could reduce demand for our solutions from customers subject to their laws.
In addition to the foregoing, a breach of the GDPR could result in regulatory investigations, reputational damage, orders to cease or change our processing of data, enforcement notices or assessment notices for a compulsory audit.
In addition to the foregoing, a breach of the GDPR could result in regulatory investigations, reputational damage, 22 Table of Contents orders to cease or change our processing of data, enforcement notices, or assessment notices for a compulsory audit.
To continue to grow our business, we must do the following: • maintain our current, and develop new, wireless carrier, OEM, application developer, advertiser and marketplace exchange relationships, in both international and domestic markets; • retain or improve our current revenue-sharing arrangements; • continue to develop new high-quality products and services that achieve significant market acceptance; • continue to develop and upgrade our technology; • continue to enhance our information processing systems; • continue to expand both domestically and internationally; • increase the number of customers and users of our products and services; • execute our business and marketing strategies successfully; • respond to competitive developments; • address increasing regulatory requirements, including data protection and consumer privacy compliance; and • attract, integrate, retain and motivate qualified talent.
To continue to grow our business, we must do the following: • maintain our current, and develop new, wireless carrier, OEM, application developer, advertiser, and marketplace exchange relationships, in both international and domestic markets; • retain or improve our current revenue-sharing arrangements; • continue to develop new high-quality products and services that achieve significant market acceptance; • continue to develop and upgrade our technology; • continue to enhance our information processing systems; • execute our business and marketing strategies successfully; • respond to competitive developments; • address increasing regulatory requirements, including data protection and consumer privacy compliance; and • attract, integrate, retain, and motivate qualified talent.
The Company may also be subject to litigation alleging the improper use, transmission or storage of confidential information, which could damage its reputation among its current and potential customers, require significant expenditures of capital and other resources and cause it to lose business and revenue.
We may also be subject to litigation alleging the improper use, transmission, or storage of confidential information, which could damage its reputation among its current and potential customers, require significant expenditure of capital and other resources, and cause it to lose business and revenue.
We are actively engaged in implementing a remediation plan designed to address the material weakness. We cannot be certain that measures taken by the Company to remediate the material weakness will be successful. Also, we cannot be certain that we will be able to implement and maintain adequate controls over our financial processes and reporting in the future.
We are actively engaged in implementing a remediation plan designed to address the material weakness. We cannot be certain that measures we take to remediate the material weakness will be successful. Also, we cannot be certain that we will be able to implement and maintain adequate controls over our financial processes and reporting in the future.
Litigation may harm our business. Substantial, complex or extended litigation could cause us to incur significant costs and distract our management. For example, lawsuits by employees, stockholders, collaborators, distributors, customers, vendors, competitors, end-users or others could be very costly and substantially disrupt our business.
Substantial, complex or extended litigation could cause us to incur significant costs and distract our management. Lawsuits by employees, stockholders, collaborators, distributors, customers, vendors, competitors, end-users or others could be very costly and substantially disrupt our business.
The large companies in our ecosystem may play multiple different roles given the breadth of their businesses. • Our primary competition for On Device Media comes from the Google Play application store.
The large companies in our ecosystem may play multiple different roles given the breadth of their businesses. • Our primary competition for media distribution comes from the Google Play application store.
We expect that our global activities will continue to grow for the foreseeable future as we continue to pursue opportunities globally, which will require the dedication of management attention and financial resources. We expect international sales and growth to continue to be an important component of our revenue and operations.
We expect our business will continue to grow for the foreseeable future as we continue to pursue opportunities globally, which will require the dedication of management attention and financial resources. We expect international sales and growth to continue to be an important component of our revenue and operations.
In response to Russia’s actions, multiple countries and governing bodies, including the United States and the European Union, have put in place global sanctions and other severe restrictions or prohibitions on the activities of certain individuals and businesses connected to Russia and/or Belarus.
In response to Russia’s actions, multiple countries and governing bodies, including the U.S. and the European Union, have put in place global sanctions and other severe restrictions or prohibitions on the activities of certain individuals and businesses connected to Russia and/or Belarus.
We have previously also relied on relevant third parties’ Privacy Shield (as defined below) certifications. Recent legal developments in the EU have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States.
We have previously also relied on relevant third parties’ Privacy Shield (as defined below) certifications. Recent legal developments in the EU have created complexity and uncertainty regarding transfers of personal data from the EEA to the U.S.
Our operating results also may be affected by uncertain or changing economic conditions such as the challenges that are currently affecting economic conditions in the United States and the global economy, including the Russia-Ukraine Conflict, inflation and global supply constraints.
Our operating results also may be affected by uncertain or changing economic conditions such as the challenges that are currently affecting economic conditions in the U.S. and the global economy, including the Russia-Ukraine Conflict, inflation and global supply constraints.
The market price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control, including the risk factors described in this Form 10-K and announcements of new products or services by our competitors.
The market price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control, including the risk factors described in this Annual Report and announcements of new products or services by our competitors.
If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. While our open source policies are meant to prevent such misuse, there can be no assurance that such incidents would not occur.
If we combine our proprietary software with open-source software in a certain manner, we could, under certain open-source licenses, be required to release the source code of our proprietary software to the public. While our open-source policies are meant to prevent such misuse, there can be no assurances such incidents will not occur.
The Company’s advertiser customers may reduce or terminate their business with us at any time for any reason, including changes in their financial condition or other business circumstances.
Our advertiser customers may reduce or terminate their business with us at any time for any reason, including changes in their financial condition or other business circumstances.
Monitoring unauthorized use of our intellectual property is difficult and costly, and we cannot be certain that the steps we have taken will prevent infringement, piracy, and other unauthorized uses of our intellectual property, particularly internationally where the laws may not protect our intellectual property rights as fully as in the United States.
Monitoring unauthorized use of our intellectual property is difficult and costly, and we cannot be certain the steps we have taken will prevent infringement, piracy, and other unauthorized uses of our intellectual property, particularly internationally where the laws may not protect our intellectual property rights as fully as in the U.S.
Our business is dependent on the continued growth in usage of smartphones, tablets, and other mobile connected devices. Our business depends on the continued proliferation of mobile connected devices, such as smartphones and tablets, which can connect to the Internet over a cellular, wireless or other network, as well as the increased consumption of content through those devices.
Our business depends on the continued proliferation of mobile connected devices, such as smartphones and tablets, which can connect to the internet over a cellular, wireless, or other network, as well as the increased consumption of content through those devices.
To the extent that our platform depends upon the successful operation of open source software, any undetected errors or defects in this open source software could prevent the deployment or impair the functionality of our platform, delay introductions of new solutions, result in a failure of any of our solutions and injure our reputation.
To the extent our platform depends on the successful operation of open-source software, any undetected errors or defects in such open-source software could prevent the deployment or impair the functionality of our platform, delay introductions of new solutions, result in a failure of any of our solutions, and injure our reputation.
The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our sales or other critical functions.
The costs to us to eliminate or alleviate cyber or other security problems, viruses, worms, malicious software programs, and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service, and loss of existing or potential customers.
If such unauthorized disclosure or access does occur, the Company may be required to notify persons whose information was disclosed or accessed.
If such unauthorized disclosure or access does occur, we may be required to notify persons whose information was disclosed or accessed.
In addition to other risk factors discussed in this section, factors that may contribute to the variability of our results include: • the number of new products and services released by us and our competitors; • the timing of release of new products and services by us and our competitors, particularly those that may represent a significant portion of revenue in a period; • the popularity of new products and services, and products and services released in prior periods; • changes in prominence of deck placement for our leading products and those of our competitors; • the timing of charges related to impairments of goodwill and intangible assets; • changes in pricing policies by us, our competitors, our vendors or our carriers and other distributors; 18 • changes in the mix of direct versus indirect advertising sales, which have varying margin profiles; • changes in the mix of CPI, CPP, CPA, and license fee sales, which have varying revenue and margin profiles; • the seasonality of our industry; • fluctuations in the size and rate of growth of overall consumer demand for mobile products and services and digital advertising; • changes in advertising budget allocations or marketing strategies; • changes to our product, media, customer or channel mix; • changes in the economic prospects of advertisers, app developers, or the economy generally, which could alter advertisers’ or developers’ spending priorities, or could increase the time or costs required to complete advertising inventory sales; • changes in the pricing and availability of advertising inventory through real-time advertising exchanges or in the cost of reaching end consumers through digital advertising; • disruptions or outages on our platform; • strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; • our success in entering new geographic markets; • decisions by one or more of our partners and/or customers to terminate our business relationship(s); • foreign exchange fluctuations; • accounting rules governing recognition of revenue; • general economic, political and market conditions and trends; • the timing of compensation expense associated with equity compensation grants; and • decisions by us to incur additional expenses for product and service development.
In addition to other risk factors discussed in this section, factors that may contribute to the variability of our results include: • the number of new products and services released by us and our competitors; • the timing of release of new products and services by us and our competitors, particularly those that may represent a significant portion of revenue in a period; • the popularity of new products and services, and products and services released in prior periods; • changes in prominence of deck placement for our leading products and those of our competitors; • the timing of charges related to impairments of goodwill and intangible assets; • changes in pricing policies by us, our competitors, our vendors or our carriers and other distributors; • changes in the mix of direct versus indirect advertising sales, which have varying margin profiles; • changes in the mix of CPI, CPP, CPA, and license fee sales, which have varying revenue and margin profiles; • the seasonality of our industry; • fluctuations in the size and rate of growth of overall consumer demand for mobile products and services and digital advertising; • changes in advertising budget allocations or marketing strategies; • changes to our product, media, customer or channel mix; • changes in the economic prospects of advertisers, app developers, or the economy generally, which could alter advertisers’ or developers’ spending priorities, or could increase the time or costs required to complete advertising inventory sales; • changes in the pricing and availability of advertising inventory through real-time advertising exchanges or in the cost of reaching end consumers through digital advertising; • disruptions or outages on our platform; • strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; • our success in entering new geographic markets; • decisions by one or more of our partners and/or customers to terminate our business relationship(s); • foreign exchange fluctuations; • accounting rules governing recognition of revenue; • charges associated with impairment of any assets on our balance sheet or changes in our expected estimated useful life of property and equipment and intangible assets; • changes in regional or global business, political, macroeconomic and market conditions, including as a result of the COVID-19 pandemic, inflation, and rising interest rates, which may impact the other factors described above. • the timing of compensation expense associated with equity compensation grants; and • decisions by us to incur additional expenses for product and service development.
These recent developments will require us to review and may require us to amend the legal mechanisms by which we make and/or receive personal data transfers to/in the United States.
These recent developments will require us to review and may require us to amend the legal mechanisms by which we make and/or receive personal data transfers to/in the U.S.
The Company intends to take reasonable steps to protect the security, integrity and confidentiality of the information it collects and stores, but there is no guarantee that inadvertent or unauthorized disclosure will not occur or that third parties will not gain unauthorized access to this information despite the Company’s efforts to protect this information.
We intend to take reasonable steps to protect the security, integrity, and confidentiality of the information it collects and stores, but there is no guarantee that inadvertent or unauthorized disclosure will not occur or that third parties will not gain unauthorized access to this information despite our efforts to protect this information.
For example, undetected errors or defects in open source software could render it vulnerable to breaches or security attacks, and, in conjunction, make our systems more vulnerable to data breaches. In addition, the public availability of such software may make it easier for others to compromise our platform.
Undetected errors or defects in open-source software could render it vulnerable to breaches or security attacks and make our systems more vulnerable to data breaches. The public availability of such software 27 Table of Contents may make it easier for others to compromise our platform.
A significant portion of our revenue is also impacted by the level of advertising spend. If advertising spend is lower than our expectations -- a factor over which we have no control as we do not determine our customers’ advertising budgets -- our revenue will be impacted negatively, and this impact may be significant.
If advertising spend is lower than our expectations -- a factor over which we have no control as we do not determine our customers’ advertising budgets -- our revenue will be impacted negatively, and this impact may be significant.
The integration may result in additional and unforeseen expenses or delays. If we are unable to successfully integrate the business and operations of our recent acquisitions, or if there are delays in integrating the businesses, the anticipated benefits of the acquisitions may not be realized or realized in full or may take longer to realize than expected.
If we are unable to 11 Table of Contents successfully integrate the business and operations of our recent acquisitions, or if there are delays in integrating the businesses, the anticipated benefits of the acquisitions may not be realized or realized in full or may take longer to realize than expected.
In addition, we are not able to accurately predict our future revenue or results of operations. We base our current and future expense levels on our internal operating plans and sales forecasts, and our operating costs are to a large extent fixed.
As a result, comparing our operating results on a period-to-period basis may not be meaningful. In addition, we are not able to accurately predict our future revenue or results of operations. We base our current and future expense levels on our internal operating plans and sales forecasts, and our operating costs are to a large extent fixed.
We adopt appropriate policies and procedures and conduct training, but cannot guarantee that improprieties will not occur.
We adopt appropriate policies and procedures and conduct 25 Table of Contents training, but cannot guarantee that improprieties will not occur.
The growth and expansion of our business places significant strain on our management and our operational and financial resources. As we expand our product and service offerings and the usage of our platform grows, we will need to devote additional resources to improving its capabilities, features and functionality, and scaling our business, IT, financial, operating and administrative systems.
As we expand our product and service offerings and the usage of our platform grows, we will need to devote additional resources to improving its capabilities, features and functionality, and scaling our business, IT, financial, operating, and administrative systems.
In addition, we may not successfully evaluate, integrate, or utilize the products, technology, services, operations, or talent we acquire. The integration of acquisitions may require significant time and resources, and we may not manage these integrations successfully. In addition, we may discover liabilities or deficiencies that we did not identify in advance associated with the companies or assets we acquire.
The integration of acquisitions may require significant time and resources, and we may not manage these integrations successfully. In addition, we may discover liabilities or deficiencies that we did not identify in advance associated with the companies or assets we acquire.
COVID-19 and efforts to control its spread have curtailed the movement of people, goods and services worldwide, including in the regions in which we and our customers and partners operate, and are significantly impacting economic activity and financial markets.
COVID-19 and efforts to control its spread have curtailed the movement of people, goods, and services worldwide, including in the regions in which we and our customers and partners operate.
In addition, although we require third parties to sign agreements not to disclose or improperly use our intellectual property, it may still be possible for third parties to obtain and improperly use our intellectual properties without our consent. This could harm our business, operating results and financial condition.
In addition, although we require third parties to sign agreements not to disclose or improperly use our intellectual property, it may still be possible for third parties to obtain and improperly use our intellectual properties without our consent.
The term of these indemnity provisions is generally perpetual after execution of the corresponding license agreement, and the maximum potential amount of future payments we could be required to make under these indemnification provisions is generally unlimited. Large future indemnity payments could harm our business, operating results and financial condition.
The term of these indemnity provisions is generally perpetual after execution of the corresponding license agreement, and the maximum potential amount of future payments we could be required to make under these indemnification provisions is generally unlimited.
In the ordinary course of our business, most of our agreements with carriers, customers and other distributors include indemnification provisions. In these provisions, we agree to indemnify them for losses suffered or incurred in connection with our products and services, including as a result of intellectual property infringement and damages caused by viruses, worms and other malicious software.
In these provisions, we agree to indemnify them for losses suffered or incurred in connection with our products and services, including as a result of intellectual property infringement and damages caused by viruses, worms, and other malicious software.
This could harm our business, operating results and financial condition. 25 Actual or perceived security vulnerabilities in mobile devices or wireless networks could adversely affect our revenue. Maintaining the security of mobile devices and wireless networks is critical for our business.
In such an event, our reputation, business, operating results, and financial condition might suffer. Actual or perceived security vulnerabilities in mobile devices or wireless networks could adversely affect our revenue. Maintaining the security of mobile devices and wireless networks is critical for our business.
Any errors, bugs, vulnerabilities, or defects discovered in the software on which we rely could result in damage to our reputation, loss of users, loss of revenue, or liability for damages, any of which could adversely affect our business and financial results. We rely upon third-party data centers and providers of cloud-based infrastructure to host our platform.
Any errors, bugs, vulnerabilities, or defects discovered in the software on which we rely could result in damage to our reputation, loss of users, loss of revenue, or liability for damages, any of which could adversely affect our business and financial results.
Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about us, our customers or customers, including the potential loss or disclosure of such information or data as a result of fraud, trickery or other forms of deception, could expose us, our customers or the individuals affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business.
Breaches of our security measures or the accidental loss, inadvertent disclosure, or unapproved dissemination of proprietary information or sensitive or confidential data about us or our customers, including the potential loss or disclosure of such information or data as a result of fraud, trickery, or other forms of deception, could expose us, our customers, or the individuals affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation, or otherwise harm our business. 15 Table of Contents Our business and growth may suffer if we are unable to hire and retain key talent who are in high demand.
In the event that we have relied on inaccurate information or advice, and engage in marketing, advertising or promotional activities that are not permitted, we may be subject to penalties, restricted from engaging in further activities or altogether prohibited from offering our products and services in a particular territory, all or any of which will adversely impact our revenue and thus our operating results and financial condition.
In the event we have relied on inaccurate information or advice, and engage in marketing, advertising, or promotional activities that are not permitted, we may be subject to penalties, restricted from engaging in further activities, or altogether prohibited from offering our products and services in a particular territory.
Growth may place significant demands on our management and our infrastructure. In recent years, we have significantly grown the scale of our business. In addition, during 2021 we consummated the acquisitions of Appreciate, AdColony, and Fyber, which have significantly grown the size and scope of our business.
In recent years, we have significantly grown the scale of our business. In addition, during 2021, we consummated the acquisitions of Appreciate, AdColony, and Fyber, which have significantly grown the size and scope of our business. The growth and expansion of our business places significant strain on our management and our operational and financial resources.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeInternationally, the Company leases properties, primarily for office space, in Singapore, Berlin, Germany, and Tel Aviv, Israel. 47
Biggest changeInternationally, the Company leases properties, primarily for office space, in Singapore, Istanbul, Turkey, Berlin, Germany, and Tel Aviv, Israel.
ITEM 2. PROPERTIES The principal offices of Digital Turbine, Inc. are located in Austin, Texas. The Company also leases properties, primarily for office space, in Durham, North Carolina, Arlington, Virginia, San Mateo, California, Los Angeles, California, and San Francisco, California in the United States.
ITEM 2. PROPERTIES The principal offices of Digital Turbine, Inc. are located in Austin, Texas. The Company also leases properties, primarily for office space, in Durham, North Carolina, Arlington, Virginia, San Mateo, California, Los Angeles, California, and San Francisco, California in the U.S.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS The information required by this Item 3 is incorporated herein by reference to the information set forth under the caption “Legal Matters” in Note 13, "Commitments and Contingencies", of the notes to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K. ITEM 4.
Biggest changeITEM 3. LEGAL PROCEEDINGS The information required by this Item 3 is incorporated herein by reference to the information set forth under the caption “Legal Matters” in Note 13— Commitments and Contingencies , of the notes to the consolidated financial statements in Part II, Item 8 of this Annual Report. 32 Table of Contents ITEM 4.
MINE SAFETY DISCLOSURES Not applicable. 48 PART II
MINE SAFETY DISCLOSURES Not applicable. 33 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock. 49 COMPARISON OF CUMULATIVE TOTAL RETURN ITEM 6. RESERVED
Biggest changeWe caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock. 34 Table of Contents COMPARISON OF CUMULATIVE TOTAL RETURN ITEM 6. RESERVED ITEM 7.
Purchases of Equity Securities by the Issuer and Affiliated Purchaser There were no purchases of equity securities by us during the fiscal year ended March 31, 2022. Recent Sale of Unregistered Securities None.
Purchases of Equity Securities by the Issuer and Affiliated Purchaser There were no purchases of equity securities by us during the fiscal year ended March 31, 2023. Recent Sale of Unregistered Securities None.
The graph set forth below compares the cumulative total stockholder return on an initial investment of $100 in our common stock between March 31, 2017 and March 31, 2022, with the comparative cumulative total return of such amount on (i) the NASDAQ Composite Index (IXIC) and (ii) the Russell 2000 Index (RUT) over the same period.
The graph set forth below compares the cumulative total stockholder return on an initial investment of $100 in our common stock between March 31, 2018, and March 31, 2023, with the comparative cumulative total return of such amount on (i) the NASDAQ Composite Index (IXIC) and (ii) the Russell 2000 Index (RUT) over the same period.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the NASDAQ Capital Market under the symbol “APPS.” Holders As of May 24, 2022, there were 99 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the NASDAQ Capital Market under the symbol “APPS.” Holders As of May 16, 2023, there were 98 holders of record of our common stock.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our consolidated financial statements and the notes appearing in Item 8. Financial Statements and Supplementary Data .
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This section of our Annual Report generally discusses the results of our operations for the year ended March 31, 2023. compared with the year ended March 31, 2022.
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For a discussion of the results of our operations for the year ended March 31, 2022, compared with the year ended March 31, 2021, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the fiscal year ended March 31, 2022.
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The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs, and expected performance. The forward-looking statements are dependent upon events, risks, and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements.
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Factors that could cause or contribute to such differences include, but are not limited to, those factors discussed below and elsewhere in this Annual Report, particularly in Item 1A—Risk Factors and the Cautionary Note Regarding Forward-Looking Statements , all of which are difficult to predict. In light of these risks, uncertainties, and assumptions, the forward-looking statements discussed may not occur.
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We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law. All U.S. dollar amounts, except share and per share amounts, in this Annual Report are in thousands.
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Company Overview Digital Turbine, Inc., through its subsidiaries (collectively “Digital Turbine” or the “Company”), is a leading independent mobile growth platform that levels up the landscape for advertisers, publishers, carriers, and device “OEMs”.
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We offer end-to-end products and solutions leveraging proprietary technology to all participants in the mobile application ecosystem, enabling brand discovery and advertising, user acquisition and engagement, and operational efficiency for advertisers.
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In addition, our products and solutions provide monetization opportunities for OEMs, carriers, and application (“app” or “apps”) publishers and developers. 35 Table of Contents Recent Developments Credit Agreement On October 26, 2022, we amended the New Credit Agreement (the “Second Amendment”) to replace the London Interbank Offered Rate (“LIBOR”) with the Term Secured Overnight Financing Rate (“SOFR”).
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As a result, amounts outstanding under the New Credit Agreement where the applicable rate was LIBOR will accrue interest at an annual rate equal to SOFR plus between 1.50% and 2.25%. The Second Amendment made no other changes in the terms of the New Credit Agreement.
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As of March 31, 2023, we had $413,134 drawn against the revolving line of credit under the New Credit Agreement. The proceeds from the borrowings were primarily used to finance past acquisitions.
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As of March 31, 2023, the interest rate was 6.54% and the unused line of credit fee was 0.20%, and we were in compliance with the consolidated leverage ratio, interest coverage ratio, and other covenants under the New Credit Agreement. Segment Reporting As of March 31, 2022, we operated through three segments, each of which was a reportable segment.
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The three segments were On Device Media, In-App Media - AdColony, and In-App Media-Fyber.
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Effective April 1, 2022, we made certain changes to our organizational and management structure that resulted in the following: (1) the renaming of the On Device Media segment to On Device Solutions and (2) the integration of IAM-A and IAM-F into a single segment called App Growth Platform.
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The integration of IAM-A and IAM-F was completed to drive operating efficiencies and revenue synergies. As a result of the integration of IAM-A and IAM-F, we reassessed our operating and reportable segments in accordance with ASC 280, Segment Reporting.
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Effective April 1, 2022, we report our results of operations through the following two segments, each of which represents an operating and reportable segment, as follows: • ODS - We re-named the ODM segment ODS to better reflect the nature of the segment’s product offerings.
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This segment generates revenue from the delivery of mobile application media or content to end users.
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This segment provides focused solutions to all participants in the mobile application (“app”) ecosystem that want to connect with end users and consumers who hold the device, including mobile carriers and device OEMs that participate in the app economy, app publishers and developers, and brands and advertising agencies.
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This segment’s product offerings are enabled through relationships with mobile device carriers and OEMs. • AGP - This segment consists of the previously reported IAM-A and IAM-F segments. AGP customers are primarily advertisers and publishers and the segment provides platforms that allow mobile app publishers and developers to monetize their monthly active users via display, native, and video advertising.
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The AGP platforms allow demand side platforms, advertisers, agencies, and publishers to buy and sell digital ad impressions, primarily through programmatic, real-time bidding auctions and, in some cases, through direct-bought/sold advertiser budgets. The segment also provides brand and performance advertising products to advertisers and agencies.
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Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. We have determined that our Chief Executive Officer is the CODM.
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Impact of Economic Conditions and Geopolitical Developments Our results of operations are affected by macroeconomic conditions and geopolitical developments, including but not limited to levels of business and consumer confidence, actions taken by governments to counter inflation, potential trade disputes, including but not limited to any U.S. government actions against China based app developers and publishers, and Russia’s invasion of Ukraine.
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Inflation, rising interest rates, supply chain disruptions, and reduced business and consumer confidence have caused and may continue to cause a global slowdown of economic activity, which has caused and may continue to cause a decrease in demand for a broad variety of goods and services, including those provided by our clients. 36 Table of Contents Like other advertising technology companies, we have seen a slowdown in digital advertising spending, which we believe is driven by the impact of inflation and recession fears and their potential impacts on consumers.
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These negative macroeconomic trends have resulted, and may continue to result in a decrease or delay of advertising budgets and spending.
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While the slowdown in digital advertising spending is varied and depends on the geography, advertising type, operating system, and business vertical, the current economic environment is likely to continue to impact our business, financial condition, and results of operations, the full impact of which remains uncertain at this time.
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Further, various U.S. federal and state governmental agencies continue to examine the distribution and use of apps developed and/or published by China based companies. In some cases, government agencies have banned certain apps from mobile devices.
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Further actions by U.S. federal or state governmental agencies or other countries to restrict or ban the distribution of China based apps could negatively impact our business, financial condition, and results of operations.
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While the financial impact of Russia’s invasion of Ukraine has not had a direct, material impact on our business, any European conflict, if expanded to include other countries would likely have a material, negative impact on general economic conditions and would impact our business directly.
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The extent of the impact of these macroeconomic factors on our operational and financial performance is also dependent on their impact on carriers and OEMs in relation to their sales of smartphones, tablets, and other devices, as well as the impact on application developers and in-app advertisers.
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If negative macroeconomic factors or geopolitical developments continue to materially impact our partners over a prolonged period, our results of operations and financial condition could also be adversely impacted, the size and duration of which we cannot accurately predict at this time.
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We continue to actively monitor these factors and we may take further actions that alter our business operations, as required, or that we determine are in the best interests of our employees, customers, partners, suppliers, and stockholders.
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In addition to monitoring the developments described above, the Company also considers the impact such factors may have on our accounting estimates and potential impairments of our non-current assets, which primarily consist of goodwill and finite-lived intangible assets.
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The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment, including qualitative and quantitative factors such as the identification of reporting units, identification and allocation of assets and liabilities to reporting units, and determinations of fair value.
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In estimating the fair value of our reporting units when performing our annual impairment test, or when an indicator of impairment is present, we make estimates and significant judgments about the future cash flows of those reporting units and other estimates including appropriate discount rates.
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Discount rates can fluctuate based on various economic conditions including our capital allocation and interest rates, including the interest rates on U.S. treasury bonds. Changes in judgments on these assumptions and estimates could result in goodwill impairment charges. Finite-lived intangible assets and property, plant, and equipment are amortized or depreciated over their estimated useful lives on a straight-line basis.
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We monitor conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization or depreciation period or an impairment. We test these assets for potential impairment whenever we conclude events or changes in circumstances indicate carrying amounts may not be recoverable.
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As of March 31, 2023, we considered the developments discussed above, our current operating results, and our estimates of future operating results.
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Please see Note 2—Basis of Presentation and Summary of Significant Accounting Policies for further information. 37 Table of Contents RESULTS OF OPERATIONS The following table sets forth our results of operations for the years ended March 31, 2023 and 2022 ($ in thousands): Year ended March 31, 2023 2022 % of Change Net revenue $ 665,920 $ 747,596 (10.9) % Costs of revenue and operating expenses License fees and revenue share 309,247 370,648 (16.6) % Other direct costs of revenue 36,445 29,838 22.1 % Product development 56,486 52,723 7.1 % Sales and marketing 63,295 63,309 — % General and administrative 154,282 138,837 11.1 % Total costs of revenue and operating expenses 619,755 655,355 (5.4) % Income from operations 46,165 92,241 (50.0) % Interest and other income (expense), net Change in fair value of contingent consideration — (41,087) (100.0) % Interest expense, net (23,352) (8,495) 174.9 % Foreign exchange transaction gain (loss) (1,026) 2,062 (149.8) % Other income (expense), net 229 (749) (130.6) % Total interest and other income (expense), net (24,149) (48,269) (50.0) % Income before income taxes 22,016 43,972 (49.9) % Income tax provision 5,146 8,403 (38.8) % Net income 16,870 35,569 (52.6) % Net revenue ($ in thousands) Due to the reorganization and consolidation of our segments effective April 1, 2022, prior-year segment information has been retrospectively adjusted to conform to the current-year presentation.
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For further information on our segment reorganization and a full description of our businesses, please see Part I, Item 1, ‘Business–Our Products and Services’ in this Annual Report.
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Year ended March 31, 2023 2022 % of Change Net revenue On Device Solutions $ 420,328 $ 502,636 (16.4) % App Growth Platform 252,995 262,336 (3.6) % Elimination (7,403) (17,376) 57.4 % Total net revenue $ 665,920 $ 747,596 (10.9) % Fiscal 2023 compared to fiscal 2022 During the year ended March 31, 2023, net revenue decreased by $81,676 or 10.9% compared to the prior year.
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See the segment discussion below for further details regarding net revenue. On Device Solutions ODS revenue for the year ended March 31, 2023, decreased by $82,308 or 16.4% compared to the year ended March 31, 2022.
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Revenue from content media declined by approximately $77,207 primarily due to the end of a carrier partnership that resulted in lower daily active users on prepaid devices.
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Revenue from application media declined by approximately $5,101 due to lower new device volume in the U.S. and weakness in mobile advertising and user acquisition spending in the second half of the year ended March 31, 2023, partially offset by contract amendments with three strategic demand customers that resulted in an increase in revenue of $16,900. 38 Table of Contents App Growth Platform AGP revenue for the year ended March 31, 2023, decreased by $9,341 or 3.6% compared to the year ended March 31, 2022.
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The decrease was primarily due to a decline in brand and performance advertising of approximately $5,782 due to broader weakness in mobile advertising markets. In addition, there was a decline of approximately $3,559 due to the end of a reseller partnership in the Nordic region.
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Costs of revenue and operating expenses ($ in thousands) Year ended March 31, 2023 2022 % of Change Costs of revenue and operating expenses License fees and revenue share $ 309,247 $ 370,648 (16.6) % Other direct costs of revenue 36,445 29,838 22.1 % Product development 56,486 52,723 7.1 % Sales and marketing 63,295 63,309 — % General and administrative 154,282 138,837 11.1 % Total costs of revenue and operating expenses $ 619,755 $ 655,355 (5.4) % Fiscal 2023 compared to fiscal 2022 For the year ended March 31, 2023, total costs of revenue and operating expenses decreased by $35,600 compared to the year ended March 31, 2022.
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The decrease in total costs of revenue and operating expenses is primarily due to lower license fees and revenue share, which is the result of lower revenue over the same comparative periods. Costs of revenue and operating expenses included transaction costs of $4,739 for the year ended March 31, 2023, compared to $26,237 for the year ended March 31, 2022.
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License fees and revenue share License fees and revenue share include amounts paid to our carrier and OEM partners, as well as app publishers and developers through revenue sharing arrangements or via direct cost-per-thousand (“CPM”), cost-per-install (“CPI”), cost-per-placement (“CPP”), or cost-per-acquisition (“CPA”) arrangements, and are recorded as a cost of revenue.
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In addition, when indirect arrangements exist through advertising aggregators (ad networks) and revenue is shared with our carrier and app development partners, the shared revenue is also recorded as a cost of revenue.
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License fees and revenue share decreased by $61,401 to $309,247 for the year ended March 31, 2023, and was 46.4% as a percentage of total net revenue compared to $370,648, or 49.6% of total net revenue, for the year ended March 31, 2022.
Added
The decrease in license fees and revenue share as a percentage of total net revenue for the year ended March 31, 2023, compared to the prior year, was primarily due to revenue mix changes and the strategic demand customer contract amendments discussed above.
Added
Other direct costs of revenue Other direct costs of revenue are comprised primarily of hosting expenses directly related to the generation of revenue and depreciation expense associated with capitalized software costs and amortization of developed technology intangible assets Other direct costs of revenue increased by $6,607 or 22.1% to $36,445 for the year ended March 31, 2023, and was 5.5% as a percentage of total net revenue compared to $29,838, or 4.0% of total net revenue, for the year ended March 31, 2022.
Added
The increase in other direct costs of revenue for the year ended March 31, 2023, compared to the prior year, was due to higher hosting costs of approximately $3,392 and higher depreciation expense for developed technology assets of approximately $3,215.
Added
The increase as a percentage of total net revenue compared to the 39 Table of Contents prior year was due to both higher costs as well as the decrease in total net revenue for the year ended March 31, 2023.
Added
Product development Product development expenses include the development and maintenance of the Company’s product suite and are primarily a function of personnel. Product development expenses increased by $3,763 to $56,486 for the year ended March 31, 2023 compared to $52,723 for the year ended March 31, 2022.
Added
Product development expenses included acquisition-related costs of $1,604 and severance costs of $629 for the year ended March 31, 2023 and acquisition-related costs of $2,699 for the year ended March 31, 2022. Excluding acquisition-related costs and severance costs, product development expenses increased by $4,229 for the year ended March 31, 2023.
Added
The increase in product development expenses was primarily due to incremental investments in the Company’s technology platforms for both legacy and acquired platforms, including approximately $7,585 of higher third-party development costs and approximately $2,490 of other operating costs, mostly for software and travel.
Added
These increases were partially offset by approximately $5,846 due to the capitalization of employee-related costs for development activities. Sales and marketing Sales and marketing expenses represent the costs of sales and marketing personnel, advertising and marketing campaigns, and campaign management.
Added
Sales and marketing expenses were relatively unchanged for the year ended March 31, 2023, decreasing by $14 to $63,295 compared to $63,309 for the year ended March 31, 2022. The decrease in sales and marketing expense was primarily due to lower employee-related costs of approximately $2,576 driven by lower headcount and incentive compensation.
Added
This decrease was partially offset by higher travel and sales-related events costs of approximately $1,393 and severance costs of approximately $1,197, primarily for Nordic region employees due to the termination of a reseller partnership in the region.
Added
General and administrative General and administrative expenses represent management, finance, and support personnel costs in both the parent and subsidiary companies, which include professional services and consulting costs, in addition to other costs such as rent, stock-based compensation, and depreciation and amortization expense.
Added
General and administrative expenses increased by $15,445 to $154,282 for the year ended March 31, 2023 compared to $138,837 for the year ended March 31, 2022. For the years ended March 31, 2023 and 2022, general and administrative expenses included acquisition-related costs of $2,496 and $23,026, respectively.
Added
General and administrative expenses, after excluding acquisition-related costs, increased by $35,975 and was primarily due to: (1) higher depreciation expense of approximately $20,925 for developed technology assets and amortization of acquired intangible assets, (2) an increase of approximately $7,338 for employee-related costs due to higher wages and stock-based compensation costs, partially offset by lower incentive compensation, (3) an increase in bad debt expense of approximately $1,437, and (4) an increase in other categories, primarily professional services, software, and facilities of $6,275. 40 Table of Contents Interest and other income (expense), net ($ in thousands) Year ended March 31, 2023 2022 % of Change Interest and other income (expense), net Change in fair value of contingent consideration $ — $ (41,087) 100.0 % Interest expense, net (23,352) (8,495) (174.9) % Foreign exchange transaction gain (loss) (1,026) 2,062 149.8 % Other income (expense), net 229 (749) 130.6 % Total interest and other income (expense), net $ (24,149) $ (48,269) 50.0 % Fiscal 2023 compared to fiscal 2022 Total interest and other income (expense), net, for the years ended March 31, 2023 and 2022, was approximately $24,149 and $48,269, respectively, an decrease in net expenses of $24,120.
Added
Change in fair value of contingent consideration For the year March 31, 2022, the Company recorded charges for changes in fair value of contingent consideration in connection with earn-outs associated with the AdColony Acquisition and Fyber Acquisition of $41,087.
Added
There were no such charges recorded for the year ended March 31, 2023, and all earn-outs related to the acquisitions of AdColony and Fyber were fully paid as of March 31, 2023.
Added
Interest expense, net For the years ended March 31, 2023 and 2022, the Company recorded net interest expense of $23,352 and $8,495, respectively, an increase of $14,857 or 174.9%. The increase was primarily due to an increase in interest rates of 280 basis points and higher average outstanding borrowings of $155,922 over the comparative period.
Added
Foreign exchange transaction gain (loss) For the years ended March 31, 2023 and 2022, the Company recorded foreign exchange transaction loss and gain of $1,026 and $2,062, respectively, and was primarily attributable to fluctuations in foreign exchange rates for trade accounts receivables and payables denominated in currencies other than the functional currency of foreign entities.
Added
Liquidity and Capital Resources Our primary sources of liquidity are our cash and cash equivalents, cash from operations, and borrowings under our New Credit Agreement. As of March 31, 2023, we had unrestricted cash of approximately $75,058 and $186,866 available to draw under the New Credit Agreement with BoA.
Added
We generated $113,376 in cash flows from operating activities for the year ended March 31, 2023.
Added
Our ability to meet our debt service obligations and to fund working capital, capital expenditures, and investments in our business will depend upon our future performance, which will be subject to availability of borrowing capacity under our credit facility and our ability to access capital markets as well as financial, business, and other factors affecting our operations, many of which are beyond our control.
Added
These factors include general and regional economic, financial, competitive, legislative, regulatory, and other factors such as health epidemics including COVID-19, economic and macro-economic factors like labor shortages, supply chain disruptions, and inflation, and geopolitical developments, including the conflict in Ukraine.
Added
We cannot guarantee we will generate sufficient cash flow from operations, or that future borrowings or capital markets will be available, in an amount sufficient to enable us to pay our debt or to fund our other liquidity needs.
Added
We believe we will generate sufficient cash flow from operations and have the liquidity and capital resources to meet our business requirements for at least 12 months from the filing date of this Annual Report. 41 Table of Contents Outstanding Secured Indebtedness Our outstanding secured indebtedness under the New Credit Agreement is $413,134 as of March 31, 2023.
Added
The maturity date of the New Credit Agreement is April 29, 2026, and the outstanding balance is classified as long-term debt, net of debt issuance costs of $2,612, on our consolidated balance sheets as of March 31, 2023.
Added
The collateral pledged to secure our secured debt, consisting of substantially all of our U.S. subsidiaries’ assets, would be available to the secured creditor in a foreclosure, in addition to many other remedies. Accordingly, any adverse change in our ability to service our secured debt could result in an event of default, cross default, and foreclosure or forced sale.
Added
Depending on the value of the assets, there could be little, if any, assets available for common stockholders in any foreclosure or forced sale. Our credit facility also contains a maximum consolidated secured net leverage ratio and minimum consolidated interest coverage ratio.
Added
If we fail to satisfy these covenants, the lender may declare a default, which could lead to acceleration of the debt maturity. Any such default would have a material adverse effect on us.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+5 added−2 removed0 unchanged
Biggest changeOur cash and cash equivalents consist of cash and deposits, which are sensitive to interest rate changes. Our borrowings under our credit facility are subject to variable interest rates and thus expose us to interest rate fluctuations, depending on the extent to which we utilize the credit facility.
Biggest changeThe Company’s borrowings under its credit facility are subject to variable interest rates and thus expose the Company to interest rate fluctuations, depending on the extent to which the Company utilizes its credit facility. If market interest rates materially increase, the Company’s results of operations could be adversely affected.
In addition, gains / (losses) related to translating certain cash balances, trade accounts receivable and payable balances, and intercompany balances impact our net income. As our foreign operations expand, our results may be more impacted by fluctuations in the exchange rates of the currencies in which we do business. 66
In addition, gains (losses) related to translating certain cash balances, trade accounts receivable and payable balances, and intercompany balances also impact net income. As the Company’s foreign operations expand, results may be impacted further by fluctuations in the exchange rates of the currencies in which the Company does business.
If market interest rates materially increase, our results of operations could be adversely affected. A hypothetical increase in market interest rates of 100 basis points would result in an increase in our interest expense of $1,000 per year for every $100,000 of outstanding debt under the credit facility.
A hypothetical increase in market interest rates of 100 basis points would result in an increase in interest expense of $10 per year for every $1,000 of outstanding debt under the Company’s credit facility. The Company has not used any derivative financial instruments to manage its interest rate risk exposure.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We have operations both within the United States and internationally and we are exposed to market risks in the ordinary course of our business - primarily interest rate and foreign currency exchange risks. 65 Interest Rate Fluctuation Risk The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company has operations both within the U.S. and internationally and is exposed to market risks in the ordinary course of business - primarily interest rate and foreign currency exchange risks.
Removed
Foreign Currency Exchange Risk We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar.
Added
Interest Rate Fluctuation Risk The primary objective of the Company’s investment activities is to preserve principal while maximizing income without significantly increasing risk. The Company’s cash and cash equivalents consist of cash and deposits, which are sensitive to interest rate changes.
Removed
While a portion of our sales are denominated in foreign currencies and then translated into U.S. dollars, the vast majority of our license fees and revenue share and operating expenses are billed in U.S. dollars, causing both our revenue and our income from operations and net income to be impacted by fluctuations in exchange rates.
Added
Foreign Currency Exchange Risk Foreign currency exchange risk is the risk that the Company’s results of operations and/or financial condition could be affected by changes in exchange rates.
Added
The Company has transactions denominated in currencies other than the U.S. dollar, principally the euro, Turkish lira, and British pound, that expose the Company’s operations to risk from the effects of exchange rate movements. Such movements may impact future revenues, expenses, and cash flows.
Added
In certain of the Company’s foreign operations, the Company transacts primarily in the U.S. dollar, including for net revenue, license fees and revenue share, and employee-related compensation costs, which reduces the Company’s exposure to foreign currency exchange risk.
Added
The Company has not used any derivative financial instruments to manage its foreign currency exchange risk exposure. 48 Table of Contents

Other APPS 10-K year-over-year comparisons