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What changed in Digital Turbine, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Digital Turbine, Inc.'s 2023 and 2024 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 2024 report.

+262 added−268 removedSource: 10-K (2024-05-28) vs 10-K (2023-05-25)

Top changes in Digital Turbine, Inc.'s 2024 10-K

262 paragraphs added · 268 removed · 175 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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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.
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 ® 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.
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.
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 large numbers of users; • the ability to identify and execute on strategic transactions; 7 Table of Contents • 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.
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.
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 Software, and Liftoff.
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.
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 Software, lnMobi, Magnite, AppLovin, and others. These companies can be both customers for Digital Turbine products, as well as competitors in certain cases.
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.
For the fiscal years ended March 31, 2024, 2023, and 2022, 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, 2024, 2023, and 2022.
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 Company 8 Table of Contents 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).
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.
As a result, we had process, culture and technology in place that allowed us to seamlessly pivot to a fully remote 9 Table of Contents 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.
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.
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 statements.
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.
Total product development costs incurred for the fiscal years ended March 31, 2024, 2023, and 2022, were $54,157, $56,486, and $52,723, 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.
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.
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.
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.
As of March 31, 2024, we employed 754 full-time employees globally, including 335 employees in North America, 337 employees in Europe and the Middle East, 68 employees in Asia Pacific, and 14 employees in Latin America.
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 .
Our Products and Services The Company reports its results of operations through the following two segments, each of which represents an operating and a 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.
Our website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report.
Such reports and other information we file with the SEC may also be found on the SEC’s website at https://www.sec.gov . Our website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report.
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.
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 .
Removed
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”).
Added
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 .
Removed
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”).
Added
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 6 Table of Contents 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.
Removed
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.
Added
Product Development We devote substantial resources to the development, technology support, and quality assurance of our products in order to meet the needs of our customers and our own strategic objectives.
Added
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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeBreaches 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.
Biggest changeWe handle proprietary and sensitive data related to our operations, and any breaches or accidental disclosures of this information, including due to fraud or deception, could pose significant risks. Such incidents may result in litigation, liability, damage to our brand, or harm to our business and reputation.
For example, there is a risk that our international trademark applications may be considered too generic or that the words “Digital” or “Turbine” could be separately or compositely trademarked by third parties with competitive products who may try and block our applications or sue us for trademark dilution, which could have adverse effects on our financial status.
For example, there is a risk that our international trademark applications may be considered too generic or that the words “Digital” or “Turbine” could be separately or compositely trademarked by third parties with competitive products who may try and block our applications or sue us for trademark dilution, which could have adverse effects on our financial status and operations.
Any of these developments would make it more difficult for us to sell its services and could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses, or the loss of market share. The markets for our products and services are rapidly evolving and may decline or experience limited growth.
Any of these developments would make it more difficult for us to sell our services and could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses, or the loss of market share. The markets for our products and services are rapidly evolving and may decline or experience limited growth.
Most states have enacted data breach notification laws and, in addition to federal laws that apply to certain types of information, such as financial information, federal legislation has been proposed that would establish broader federal obligations with respect to data breaches. Further, certain foreign countries have adopted laws applicable to personal identifiable information and data breaches.
Most states have enacted data breach notification laws and, in addition to federal laws that apply to certain types of information, such as financial information, federal legislation has been proposed that would establish broader federal obligations with respect to data breaches. Further, certain foreign countries have adopted laws applicable to personal data and data breaches.
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.
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; 12 Table of Contents • 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 conflicts, hostilities, 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.
We have operations in North America, Germany, Israel, India, South America, Singapore, and Turkey and sales presence, and customers all over the world. We are continuing to adapt to and develop strategies to address global markets, but we cannot assure such efforts will be successful.
We have operations in North America, Germany, Israel, India, South America, Singapore, and Turkey and a sales presence and customers all over the world. We are continuing to adapt to and develop strategies to address global markets, but we cannot assure such efforts will be successful.
Our contracts with its advertiser and publisher customers do not generally include long-term obligations requiring them to purchase our services and are cancellable upon short or no notice and without penalty. We have both exclusive and non-exclusive carrier and OEM agreements.
Our contracts with advertiser and publisher customers do not generally include long-term obligations requiring them to purchase our services and are cancellable upon short or no notice and without penalty. We have both exclusive and non-exclusive carrier and OEM agreements.
Our business will suffer to the extent that its developers and advertisers purchase and sell mobile advertising directly from each other or through other companies that are able to become intermediaries between developers and advertisers.
Our business will suffer to the extent that our developers and advertisers purchase and sell mobile advertising directly from each other or through other companies that are able to become intermediaries between developers and advertisers.
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.
If analysts cease covering 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.
In addition, if we fail to comply with the applicable portions of the Sarbanes-Oxley Act, we could be subject to a variety of civil and administrative sanctions and penalties, including ineligibility for short form resale registration, action by the SEC, and the inability of registered broker-dealers to make a market in our common stock.
In addition, if we fail to comply with the applicable portions of the Sarbanes-Oxley Act, we could be subject to a variety of civil and administrative sanctions and penalties, including ineligibility for short form resale registration, action by the SEC, shareholder litigation, and the inability of registered broker-dealers to make a market in our common stock.
Litigation may harm our business. We are and may in the future become subject to legal proceedings and claims that arise from time to time, such as claims brought by our customers in connection with commercial disputes, employment claims made by our current or former employees, or securities class action litigation suits.
We are and may in the future become subject to legal proceedings and claims that arise from time to time, such as claims brought by our customers in connection with commercial disputes, employment claims made by our current or former employees, or securities class action litigation suits.
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.
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 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 and forecasts 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 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.
We may not be able to accomplish 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 also seek to maintain certain intellectual property as trade secrets. The secrecy could be compromised by outside parties or by our employees, which could cause us to lose the competitive advantage resulting from these trade secrets.
We also seek to maintain certain intellectual property as trade secrets. The secrecy could be compromised by third parties or by our employees, which could cause us to lose the competitive advantage resulting from these trade secrets.
Further, we conduct international operations in North America, Germany, Israel, India, South America, Singapore, and Turkey, areas that, similarly to our headquarters region, have high costs of living and consequently high compensation standards and/or intense demand for qualified individuals, which may require us to incur significant costs to attract them.
Further, we conduct international operations in North America, Germany, Israel, India, South America, Singapore, and Turkey, areas that, similarly to our headquarters’ region, have high costs of living and consequently high compensation standards and/or intense demand for qualified individuals, which may require us to incur significant costs to attract and retain them.
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.
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.; 11 Table of Contents • geopolitical actions targeting or addressing international regions or countries, including China; • 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 effects of the current and any future general downturns in the U.S. and the global economy, including financial market disruptions, could have an adverse impact on our business, operating results, or financial condition . Our business depends on the overall demand for advertising and on the economic health of advertisers that benefit from our platform.
The effects of the current and any future general downturns in the U.S. and the global economy, including financial market disruptions, could have an adverse impact on our business, operating results, or financial condition . 13 Table of Contents Our business depends on the overall demand for advertising and on the economic health of advertisers that benefit from our platform.
Should events, including limited liquidity, defaults, non-performance or other adverse developments occur with respect to the banks or other financial institutions that hold our funds, or that affect financial institutions or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, our liquidity may be adversely affected.
Should events, including limited liquidity, 16 Table of Contents defaults, non-performance or other adverse developments occur with respect to the banks or other financial institutions that hold our funds, or that affect financial institutions or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, our liquidity may be adversely affected.
If our markets do not continue to experience growth or if the demand for our products and services decreases, then our business, financial condition, and results of operations could be materially and adversely affected. Our business is dependent on the continued growth in usage of smartphones, tablets, and other mobile connected devices.
If our markets do not continue to experience growth or if the demand for our products and services decreases, then our business, financial condition, and results of operations could be 18 Table of Contents materially and adversely affected. Our business is dependent on the continued growth in usage of smartphones, tablets, and other mobile connected devices.
Sustained uncertainty about, or worsening of, current global economic conditions and further escalation of trade tensions between the U.S. and its trading partners, especially China, could result in a global economic slowdown and long-term changes to global trade, including retaliatory trade restrictions that further restrict our ability to operate in China.
Sustained uncertainty about, or worsening of, current global economic conditions and further escalation of trade tensions between the U.S. and its trading partners, especially 21 Table of Contents China, could result in a global economic slowdown and long-term changes to global trade, including retaliatory trade restrictions that further restrict our ability to operate in China.
Our outstanding secured indebtedness of $413,134 as of March 31, 2023, and our ability to borrow additional amounts under its $600,000 revolving credit facility, could have significant negative consequences including: • increasing our vulnerability to general adverse economic and industry conditions; • increasing our exposure to interest rate risk; • limiting our ability to obtain additional financing; • violating a financial covenant, resulting in the indebtedness being due immediately and negatively impacting our liquidity; • requiring additional financial covenant measurement consents or default waivers without enhanced financial performance in the short term; • requiring the use of a substantial portion of any cash flow from operations to service indebtedness, thereby reducing the amount of cash flow available for other purposes, including capital expenditures; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which it competes; and • placing us at a possible competitive disadvantage to less leveraged competitors that are larger and may have better access to capital resources.
Our outstanding secured indebtedness of $386,000 as of March 31, 2024, and our ability to borrow additional amounts under its $600,000 revolving credit facility, could have significant negative consequences including: • increasing our vulnerability to general adverse economic and industry conditions; • increasing our exposure to interest rate risk; • limiting our ability to obtain additional financing; • violating a financial covenant, resulting in the indebtedness being due immediately and negatively impacting our liquidity; • requiring additional financial covenant measurement consents or default waivers without enhanced financial performance in the short term; • requiring the use of a substantial portion of any cash flow from operations to service indebtedness, thereby reducing the amount of cash flow available for other purposes, including capital expenditures; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which it competes; and 26 Table of Contents • placing us at a possible competitive disadvantage to less leveraged competitors that are larger and may have better access to capital resources.
The markets for our products and services could fail to grow significantly or there could be a reduction in demand for our products or services as a result of a lack of customer acceptance, technological challenges, 18 Table of Contents competing products and services, decreases in spending by current and prospective customers, weakening economic conditions, and other causes.
The markets for our products and services could fail to grow significantly or there could be a reduction in demand for our products or services as a result of a lack of customer acceptance, technological challenges, competing products and services, decreases in spending by current and prospective customers, weakening economic conditions, and other causes.
Various jurisdictions around the world continue to propose new laws that regulate the privacy and/or security of certain types of personal data. Complying with these laws, if enacted, would require significant resources, and leave us vulnerable to possible fines and penalties if we are unable to comply.
Various jurisdictions around the world continue to propose new laws that regulate the privacy, data governance and/or security of certain types of data or information. Complying with these laws, if enacted, would require significant resources, and leave us vulnerable to possible fines and penalties if we are unable to comply.
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.
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, well-established companies as well as public and privately-held companies.
Further, some countries may block data transfers as a result of businesses collecting data within a country’s borders as part of broader privacy-related 21 Table of Contents concerns, which could affect our business. For example, companies and governmental agencies could block the distribution of several applications of Chinese origin.
Further, some countries may block data transfers as a result of businesses collecting data within a country’s borders as part of broader privacy-related concerns, which could affect our business. For example, companies and governmental agencies could block the distribution of several applications of Chinese origin.
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.
Monitoring unauthorized use of our intellectual property, and enforcing our rights, 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., or where our intellectual property is not registered.
We may also fail to accurately forecast the financial impact of an acquisition transaction, including accounting charges. 16 Table of Contents We may also incur substantial costs in making acquisitions. We may pay substantial amounts of cash or incur debt to pay for acquisitions, which could adversely affect our liquidity.
We may also fail to accurately forecast the financial impact of an acquisition transaction, including accounting charges. We may also incur substantial costs in making acquisitions. We may pay substantial amounts of cash or incur debt to pay for acquisitions, which could adversely affect our liquidity.
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.
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 25 Table of Contents 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.
In the future, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our management and resources.
We may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our management and resources.
We have operations, deal with carriers, and make sales in countries known to experience corruption, particularly certain emerging countries in Eastern Europe, Latin America, and Asia. Further international expansion may involve more of these countries.
We have operations, deal with carriers, and make sales in countries known to experience corruption, particularly certain emerging countries in Eastern Europe, Latin America, and Asia. Further international expansion 23 Table of Contents may involve more of these countries.
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 may at times collect, store, process, and transmit information of, or on behalf of, our 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.
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.
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.
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.
The large companies in our ecosystem may play multiple different roles given the breadth of their businesses. 17 Table of Contents • Our primary competition for media distribution comes from the Google Play application store.
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.
We expect our business will return to growth in 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.
Apart from the requirements of privacy, data protection, and data security laws, we have obligations relating to privacy, data protection and data security under our published policies and documentation, contracts and applicable industry standards.
Apart from the requirements of privacy, data governance, and data security laws, we have obligations relating to privacy, data governance and data security under our published policies, contracts, and applicable industry standards.
Growth may place significant demands on our management and our infrastructure. Managing our growth will require significant expenditures and allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization as it grows, our business, operating results, and financial condition could be harmed.
Managing our growth will require significant expenditures and allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization as it grows, our business, operating results, and financial condition could be harmed.
Some of our senior management and other key employees have become, or will soon become, vested in a substantial amount of stock or stock options.
Some of our senior management and other key employees have become, or will soon become, vested 15 Table of Contents in a substantial amount of stock or stock options.
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.
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 personal data, enforcement notices, or assessment notices for a compulsory audit.
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.
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 conflict in Israel, the Russia-Ukraine Conflict, the impact of U.S. - China relations, inflation and global supply constraints.
In addition to increasing our compliance costs and potential liability, the CCPA created restrictions on “sales” of personal information that may restrict the disclosure of personal information for advertising purposes. Our advertising business relies, in part, on such disclosure and could be materially and adversely affected by the CCPA’s restrictions.
In addition to increasing our compliance costs and potential liability, the California Consumer privacy Act (“CCPA”) created restrictions on “sales” of personal information that may restrict the disclosure of personal information for advertising purposes. Our advertising business relies, in part, on such disclosure and could be materially and adversely affected by the CCPA’s restrictions.
As a result of these and other factors, including seasonality attributable to the holiday seasons, our operating results may not meet the expectations of investors or public market analysts who choose to follow our company. Our failure to meet market expectations would likely result in decreases in the trading price of our common stock.
As a result of these and other factors, including seasonality attributable to the holiday seasons, our operating results may not meet the expectations of investors or public market analysts. Our failure to meet market expectations would likely result in a decline in the trading price of our common stock.
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.
We intend to take reasonable steps to protect the security, integrity, and confidentiality of the information we collect, process, and store, 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.
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.
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.
Use and distribution of open-source software may entail greater risks than use of third-party commercial software, as open-source licensors generally do not provide support, warranties, indemnification, or other contractual protections regarding infringement claims or the quality of the code.
While the use and distribution of open-source software is common in the industry, it may entail greater risks than use of third-party commercial software, as open-source licensors generally do not provide support, warranties, indemnification, or other contractual protections regarding infringement claims or the quality of the code.
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.
While our developed software undergoes testing, 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 may make it easier for others to compromise our platform.
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.
We rely on a combination of copyright, trademark, trade secret, patent, and other intellectual property rights. We face risks associated with our trademarks.
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.
During fiscal year 2022, we identified a material weakness in our internal control over financial reporting related to the presentation of certain revenue net of 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.
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.
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 25 Table of Contents training, but cannot guarantee that improprieties will not occur.
We adopt appropriate policies and procedures and conduct training, but cannot guarantee that improprieties will not occur.
In our On Device Solutions business, we rely on wireless carriers and OEMs to distribute our products and services. A significant portion of our On Device Solutions business is derived from a limited number of wireless 13 Table of Contents carriers.
In our ODS business, we rely on wireless carriers and OEMs to distribute our products and services. A significant portion of our ODS business is derived from a limited number of wireless carriers.
We may be unable to accomplish one or more of these objectives, which could cause our business to suffer. In addition, accomplishing many of these efforts may be very expensive and these efforts may not yield the anticipated returns, which could adversely impact our operating results and financial condition.
We may be unable to accomplish one or more of these objectives, which could cause our business to suffer. In addition, accomplishing many of these efforts may be costly and these efforts may not yield the anticipated returns, which could adversely impact our operating results and financial condition. Growth may place significant demands on our management and our infrastructure.
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.
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.
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.
The term of these indemnity provisions is generally perpetual after execution of the corresponding 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.
We are subject to the supervision of local data protection authorities in those EEA and UK jurisdictions where we are established or otherwise subject to the GDPR and the UK GDPR. Fines for certain breaches of the GDPR are significant, including fines up to the greater of €20 million or 4% of global turnover.
We are subject to the supervision of local data protection and data governance authorities in those EEA and UK jurisdictions where we are established or otherwise subject to the GDPR and the UK GDPR. Fines for certain breaches of the GDPR are significant.
Broadly, our media distribution 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, IronSource, WPP, Omnicom, Criteo, QuinStreet, InMobi, Cheetah Mobile, Baidu, Tremor International, Magnite, Brightcove, Applovin, and others. These companies can be customers for Digital Turbine products, but also competitors in certain cases.
Broadly, our media distribution 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), WPP, Omnicom, Criteo, QuinStreet, InMobi, Cheetah Mobile, Baidu, Tremor International, Magnite, Brightcove, AppLovin, and others.
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 may also be subject to litigation alleging the improper use, processing, transmission, or storage of confidential information, which could damage our reputation among our current and potential customers, require significant expenditure of capital and other resources, and cause us to lose business and revenue. Our business and reputation are impacted by information technology system failures and network disruptions.
However, the earliest our Board of Directors would likely consider a dividend is if we begin to generate excess cash flow.
However, the earliest our Board of Directors would likely consider a dividend is if we begin to generate excess cash flow. Our Board of Directors does not intend to declare dividends for the foreseeable future.
As a result, we may not be able to reduce our costs sufficiently to compensate for an unexpected shortfall in revenue, and even a small shortfall in revenue could disproportionately and adversely affect financial results for that quarter. Individual products and services, and carrier and OEM relationships, represent meaningful portions of our revenue and margins in any quarter.
As a result, we may not be able to reduce our costs sufficiently to compensate for an unexpected shortfall in revenue, and even a small shortfall in revenue could disproportionately and adversely affect financial results for that quarter.
The establishment of a link between the use of mobile phone services and health problems, or any media reports suggesting such a link, could increase government regulation of, and reduce demand for, mobile phones and, accordingly, the demand for our products and services, and this could harm our business, operating results, and financial condition.
The establishment of a link between the use of mobile phone services and health problems, or any media reports suggesting such a link, could increase government regulation of, and reduce demand for, mobile phones and, accordingly, the demand for our products and services, and this could harm our business, operating results, and financial condition. 24 Table of Contents Government regulation of our marketing methods could restrict our ability to adequately advertise and promote our content, products, and services available in certain jurisdictions.
If global economic and market conditions, or economic conditions in the United States or other key markets, remain uncertain or persist, spread, or deteriorate further, we may experience material impacts on our business, operating results, and financial condition in a number of ways including negatively affecting our profitability and causing our stock price to decline. 14 Table of Contents Our products, services, and systems rely on software that is highly technical, and if it contains errors or viruses, our business could be adversely affected.
If global economic and market conditions, or economic conditions in the United States or other key markets, remain uncertain or persist, spread, or deteriorate further, we may experience material impacts on our business, operating results, and financial condition in a number of ways including negatively affecting our profitability and causing our stock price to decline.
Our financial results could vary significantly from quarter-to-quarter and are difficult to predict. Our revenue and operating results could vary significantly from quarter-to-quarter because of a variety of 12 Table of Contents factors, many of which are outside of our control, including the seasonal nature of advertiser spending.
Our financial results could vary significantly from period-to-period and are difficult to predict. Our revenue and operating results could vary significantly from period-to-period because of a variety of factors, many of which are outside of our control, including the seasonal nature of advertiser spending. As a result, comparing our operating results on a period-to-period basis may not be meaningful.
We depend on the continued contributions of our domestic and international senior management and other key talent. The loss of the services of any of our executive officers or other key employees could harm our business.
Our business and growth may suffer if we are unable to hire and retain key talent who are in high demand. We depend on the continued contributions of our domestic and international senior management and other key talent. The loss of the services of any of our executive officers or other key employees could harm our business.
Our certificate of incorporation and bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock; • specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, our chief executive officer, or our president, or holders of a majority of our outstanding common stock; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • prohibit cumulative voting in the election of directors.
Our certificate of incorporation and bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock; • specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, our chief executive officer, or our president, or holders of a majority of our outstanding common stock; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • prohibit cumulative voting in the election of directors. 29 Table of Contents In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally, subject to certain exceptions, prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
Children’s privacy has been a focus of recent enforcement activity under longstanding privacy laws as well as privacy and data protection laws enacted in recent years. EU and UK regulators focus, among other things, on the processing of personal data relating to children, with increased enforcement pending as well as additional guidance. The U.S.
Children’s online privacy has been a focus of recent enforcement activity under longstanding privacy laws as well as privacy and data protection laws enacted in recent years worldwide. With increased enforcement of children’s online privacy in the EU and the UK, the U.S.
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. From time-to-time, we expect that a limited number of our advertising customers will account for a significant share of our advertising revenue.
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.
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.
Large future indemnity payments could harm our business, operating results, and financial condition. 28 Table of Contents Risks Relating to Our Common Stock and Capital Structure We have secured and unsecured indebtedness, which could limit its financial flexibility.
Risks Relating to Our Common Stock and Capital Structure We have secured and unsecured indebtedness, which could limit its financial flexibility.
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.
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 or business partners whose information was disclosed.
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.
This customer concentration increases the risk of quarterly fluctuations in our revenue and operating results. Our advertiser customers may reduce or terminate their business with us at any time for any reason, including changing economic conditions, changes in their financial condition or other business circumstances.
Our more material competition is internally developed operator solutions and specific media distribution solutions built in-house by OEMs and wireless carriers.
These companies can be customers for Digital Turbine products, but also competitors in certain cases. Our more material competition is internally developed operator solutions and specific media distribution solutions built in-house by OEMs and wireless carriers.
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.
We may also face civil claims including representative actions and other class action type litigation, potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm. This private right of action may increase the likelihood of, and risks associated with data breach litigation.
Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations.
Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. Further, the disclosure of such an event and subsequent remediation or lack of remediation could reduce the market’s confidence in our financial statements and harm our stock price.
Our platform relies on our ability to collect, use, and share information of customers, users, and others. These activities are regulated by a variety of federal, state, local, and international privacy, data protection, and data security laws and regulations, which have become increasingly stringent in recent years.
These activities are regulated by a variety of federal, state, local, and international privacy, data governance, and data security laws and regulations, which have become increasingly stringent in recent years. Most jurisdictions in which we or our customers operate have enacted or are in the process of enacting privacy, data governance, and data security laws and regulations.
The World Health Organization declared COVID-19 a pandemic, resulting in foreign, federal, state, and local governments and private entities mandating various restrictions requiring closure of non-essential businesses and recommending people remain at home. There is significant uncertainty regarding the extent to which and how long COVID-19 will disrupt the U.S. economy.
A future major epidemic or pandemic could result in foreign, federal, state, and local governments and private entities mandating various restrictions, requiring closure of non-essential businesses and recommendations that people remain at home. Such an event may come with significant uncertainty regarding the extent to which and how long it disrupts the U.S. and/or global economy.
The software on which we rely has contained, and may now or in the future contain, undetected errors, bugs, or vulnerabilities. Some errors may only be discovered after the code has been released for external or internal use.
Some errors may only be discovered after the code has been released for external or internal use.
For additional information on the foregoing, see “Item 9A — Controls and Procedures — Management’s Report on Internal Control over Financial Reporting.” Even if we are able to conclude that our internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements.
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. 28 Table of Contents In the event management successfully remediates a future material weakness in internal control over financial reporting and consequently concludes that our internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements.
Our products, services, and systems rely on software, including software developed or maintained internally and/or by third parties, that is highly technical and complex. In addition, our products, services, and systems depend on the ability of such software to transfer, store, retrieve, process, and manage large amounts of data.
In addition, our products, services, and systems depend on the ability of such software to transfer, store, retrieve, process, and manage large amounts of data. The software on which we rely has contained, and may now or in the future contain, undetected errors, bugs, or vulnerabilities.
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.
In the event management identifies a future material weakness in internal control over financial reporting, we cannot be certain that measures we take to remediate the material weakness will be successful.
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.
Federal Trade Commission (“FTC”) and state attorneys general have also, in recent years, increased enforcement of the Children’s Online Privacy Protection Act (“COPPA”), and other US State laws that restrict the processing of children’s personal information without a parental consent.
Industry Regulatory Risks We are subject to rapidly changing and increasingly stringent laws, contractual obligations, and industry standards relating to privacy, data protection, data security, and the protection of children. The restrictions and costs imposed by these requirements, or our actual or perceived failure to comply with them, could harm our business.
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. Industry Regulatory Risks We are subject to rapidly changing and increasingly stringent laws, contractual obligations, and industry standards relating to data governance, privacy and data security.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 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.
Biggest changeITEM 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, and New York, New York, in the U.S. Internationally, the Company leases properties, primarily for office space, in Singapore, Istanbul, Turkey, Berlin, Germany, and Tel Aviv, Israel.
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Internationally, the Company leases properties, primarily for office space, in Singapore, Istanbul, Turkey, Berlin, Germany, and Tel Aviv, Israel.

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. 32 Table of Contents 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 15— Commitments and Contingencies , of the notes to the consolidated financial statements in Part II, Item 8 of this Annual Report. ITEM 4.
MINE SAFETY DISCLOSURES Not applicable. 33 Table of Contents PART II
MINE SAFETY DISCLOSURES Not applicable. 31 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 changePlease 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.
Biggest changePlease see Note 2— Basis of Presentation and Summary of Significant Accounting Policies for further information. 35 Table of Contents RESULTS OF OPERATIONS The following table sets forth our results of operations for the years ended March 31, 2024 and 2023 (in thousands): Year ended March 31, 2024 2023 % of Change Net revenue $ 544,482 $ 665,920 (18.2) % Costs of revenue and operating expenses Revenue share 262,226 309,247 (15.2) % Other direct costs of revenue 34,799 36,445 (4.5) % Product development 54,157 56,486 (4.1) % Sales and marketing 61,481 63,295 (2.9) % General and administrative 169,617 154,282 9.9 % Impairment of goodwill 336,640 — 100.0 % Total costs of revenue and operating expenses 918,920 619,755 48.3 % (Loss) income from operations (374,438) 46,165 (911.1) % Interest and other (expense) income, net Change in fair value of contingent consideration 372 — 100.0 % Interest expense, net (30,838) (23,352) 32.1 % Foreign exchange transaction gain (loss) 101 (1,026) (109.8) % Other (expense) income, net (328) 229 (243.2) % Total interest and other (expense) income, net (30,693) (24,149) 27.1 % (Loss) income before income taxes (405,131) 22,016 (1940.2) % Income tax provision 15,317 5,146 197.6 % Net (loss) income (420,448) 16,870 (2592.3) % Net revenue ($ in thousands) Year ended March 31, 2024 2023 % of Change Net revenue On Device Solutions $ 370,112 $ 420,328 (11.9) % App Growth Platform 178,760 252,995 (29.3) % Elimination (4,390) (7,403) 40.7 % Total net revenue $ 544,482 $ 665,920 (18.2) % Fiscal 2024 compared to fiscal 2023 During the year ended March 31, 2024, net revenue decreased by $121,438 or 18.2% compared to the prior year.
The Company controls the service because it has the ultimate discretion in purchasing ad inventory; and once an ad inventory slot is purchased, filling that ad inventory slot. As a result, the Company reports the revenue billed to advertisers and agencies on a gross basis and revenue shares paid to publishers as license fees and revenue share.
The Company controls the service because it has the ultimate discretion in purchasing ad inventory; and once an ad inventory slot is purchased, filling that ad inventory slot. As a result, the Company reports the revenue billed to advertisers and agencies on a gross basis and revenue shares paid to publishers as revenue share.
We 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.
We 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. 32 Table of Contents COMPARISON OF CUMULATIVE TOTAL RETURN ITEM 6. RESERVED ITEM 7.
ODS - Carriers and OEMs We enter into contracts with carriers and OEMs for our ODS segment to help the customer control, manage, and monetize the mobile device through the marketing of application slots or advertisement space/inventory to advertisers and delivering the applications or advertisements to the mobile device.
ODS - Application Media Supply - Carriers and OEMs We enter into contracts with carriers and OEMs for our ODS segment to help the customer control, manage, and monetize the mobile device through the marketing of application slots or advertisement space/inventory to advertisers and delivering the applications or advertisements to the mobile device.
The Company recognizes the transaction price received from application developers, advertisers, content providers, or websites gross and the carrier or OEM share of such transaction price as costs of revenue - license fees and revenue share - in the accompanying consolidated statements of operations and comprehensive income (loss).
The Company recognizes the transaction price received from application developers, advertisers, content providers, or websites gross and the carrier or OEM share of such transaction price as costs of revenue - revenue share - in the accompanying consolidated statements of operations and comprehensive (loss) income.
The transaction price is determined through a real-time auction and the Company has no pricing discretion or obligation related to the fulfillment of the advertising 45 Table of Contents delivery. Software Development Costs The Company applies the principles of FASB ASC 985-20, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed (“ASC 985-20”).
The transaction price is determined through a real-time auction and the Company has no pricing discretion or obligation related to the fulfillment of the advertising delivery. Software Development Costs The Company applies the principles of FASB ASC 985-20, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed (“ASC 985-20”).
After products and features are released, all product maintenance cost are expensed. The Company also applies the principles of FASB ASC 350-40, Accounting for the Cost of Computer Software Developed or Obtained for Internal Use (“ASC 350-40”). ASC 350-40 requires that software development costs incurred before the preliminary project stage be expensed as incurred.
After products and features are released, all product maintenance cost are expensed. 45 Table of Contents The Company also applies the principles of FASB ASC 350-40, Accounting for the Cost of Computer Software Developed or Obtained for Internal Use (“ASC 350-40”). ASC 350-40 requires that software development costs incurred before the preliminary project stage be expensed as incurred.
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.
For a discussion of the results of our operations for the year ended March 31, 2023, compared with the year ended March 31, 2022, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the fiscal year ended March 31, 2023.
ODS - Application Media The Company generally offers these services through CPI, CPP, and/or CPA arrangements with application developers and advertisers, generally in the form of insertion orders. The insertion orders specify the type of arrangement and additional terms such as advertising campaign budgets and timelines as well as any constraints on advertising types.
Demand - Developers and Advertisers The Company generally offers these services through CPI, CPP, and/or CPA arrangements with application developers and advertisers, generally in the form of insertion orders. The insertion orders specify the type of arrangement and additional terms such as advertising campaign budgets and timelines as well as any constraints on advertising types.
Performance-based restricted units (“PSUs”) are evaluated on a quarterly basis for probability of meeting performance metrics and any adjustments to share-based compensation expense are then made in the quarter of evaluation. For PSUs, we must also make assumptions regarding the likelihood of achieving performance metrics.
Performance-based restricted units (“PSUs”) are evaluated on a quarterly basis for probability of meeting 46 Table of Contents performance metrics and any adjustments to share-based compensation expense are then made in the quarter of evaluation. For PSUs, we must also make assumptions regarding the likelihood of achieving performance metrics.
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.
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, 2024. Recent Sale of Unregistered Securities None.
The Company gains access and control of application slots on wireless carrier and OEM mobile devices and markets those slots on their behalf to the Company’s customers. The Company has concluded that the performance obligation within the contract is complete upon delivery of the application to the end user mobile device.
The Company gains access and control of application slots on wireless carrier and OEM mobile devices and markets those slots on their behalf to the Company’s customers. The Company has concluded that the performance obligation within the contract is complete upon delivery 43 Table of Contents of the application to the end user mobile device.
At this time, we do not invest significant capital into the research and development phase of new products and features as the technological feasibility aspect of our platform products has either already been met or is met very quickly. The Company has adopted the “tested working model” approach to establishing technological feasibility for its products.
At this time, the Company does not invest significant capital into the research and development phase of new products and features as the technological feasibility aspect of its platform products has either already been met or is met very quickly. The Company has adopted the “tested working model” approach to establishing technological feasibility for its products.
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.
The graph set forth below compares the cumulative total stockholder return on an initial investment of $100 in our common stock between March 31, 2019, and March 31, 2024, 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.
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.
This section of our Annual Report generally discusses the results of our operations for the year ended March 31, 2024, compared with the year ended March 31, 2023.
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.
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, the recent conflict in Israel, and Russia’s invasion of Ukraine.
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.
Revenue share Revenue share includes 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.
As of March 31, 2023, we considered the developments discussed above, our current operating results, and our estimates of future operating results.
As of March 31, 2024, we considered the developments discussed above, our current operating results, and our estimates of future operating results.
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.
Foreign exchange transaction gain (loss) For the years ended March 31, 2024 and 2023, the Company recorded foreign exchange transaction gain and loss of $101 and $1,026, 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.
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.
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 $2,510, on our consolidated balance sheets as of March 31, 2024.
The Company generally offers 43 Table of Contents these services under a revenue share model. These agreements typically include the following services: the access to a SaaS platform, hosting, solution features, and general support and maintenance.
The Company generally offers these services under a revenue share model. These agreements typically include the following services: the access to a SaaS platform, hosting, solution features, and general support and maintenance.
We capitalize development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the functions intended.
The Company capitalizes development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the functions intended.
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.
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 23, 2024, there were 89 holders of record of our common stock.
Our future cash flows from operating activities will be diminished if we cannot increase our revenue levels and manage costs appropriately. Cash provided by operating activities was $113,376 for the year ended March 31, 2023, compared to $84,738 for the year ended March 31, 2022.
Our future cash flows from operating activities will be diminished if we cannot increase our revenue levels and manage costs appropriately. Cash provided by operating activities was $28,677 for the year ended March 31, 2024, compared to $113,376 for the year ended March 31, 2023.
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.
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.
For the year ended March 31, 2023, net cash used in financing activities was approximately $128,288, which was comprised of the repayment of debt obligations of $149,000, payment of payroll withholding taxes for net share settlement of equity awards of $6,709, and payment of debt issuance costs of $99, partially offset by proceeds from borrowings of $25,500 and stock option and warrant exercises of $2,020.
For the year ended March 31, 2023, net cash used in financing activities was $128,288, which was comprised of repayment of debt obligations of $149,000, payment of payroll withholding taxes for net share 42 Table of Contents settlement of equity awards of $6,709, partially offset by cash inflows from proceeds from borrowings of $25,500 and stock option exercises of $2,020.
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.
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. Outstanding Secured Indebtedness Our outstanding secured indebtedness under the New Credit Agreement is $386,000 as of March 31, 2024.
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.
As of March 31, 2024, we had $386,000 drawn against the revolving line of credit under the New Credit Agreement. The proceeds from the borrowings were primarily used to finance past acquisitions.
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.
In light of these risks, uncertainties, and assumptions, the forward-looking statements discussed may not occur. 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.
If the applications or advertisements are not delivered to the mobile device or the Company doesn’t comply with certain policies of the advertiser, the Company would be responsible and have to indemnify the customer for these issues.
The Company also may manage application or ad campaigns of advertisers associated with these services. If the applications or advertisements are not delivered to the mobile device or the Company doesn’t comply with certain policies of the advertiser, the Company would be responsible and have to indemnify the customer for these issues.
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.
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. 37 Table of Contents Other direct costs of revenue decreased by $1,646 or 4.5% to $34,799 for the year ended March 31, 2024, and was 6.4% as a percentage of total net revenue compared to $36,445, or 5.5% of total net revenue, for the year ended March 31, 2023.
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.
In some cases, government agencies have banned certain apps from mobile devices. 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.
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.
These factors include general and regional economic, financial, competitive, legislative, regulatory, and other factors such as health epidemics, 40 Table of Contents economic and macro-economic factors like labor shortages, supply chain disruptions, and inflation, and geopolitical developments, including the conflict in Ukraine, the political climate related to China, and the conflict in Israel.
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.
See the segment discussion below for further details regarding net revenue. On Device Solutions ODS revenue for the year ended March 31, 2024, decreased by $50,216 or 11.9% compared to the year ended March 31, 2023.
The Company bills the DSPs based on the total number of impressions and the bid price. It then remits the payment to the publishers, net of a revenue share agreed with the publisher that is generally a percentage of the DSPs’ total spending with the publisher through the platform.
It then remits the payment to the publishers, net of a revenue share agreed with the publisher that is generally a percentage of the DSPs’ total spending with the publisher through the platform.
As a result, the financial statements include amounts that are based on our best estimates and judgments for the expenses recognized for stock-based compensation. The compensation expense is recognized on a straight-line basis over the requisite service or performance period. Forfeitures are recognized as occurred.
As a result, the financial statements include amounts that are based on our best estimates and judgments for the expenses recognized for stock-based compensation. The compensation expense is recognized on a straight-line basis over the requisite service or performance period. The Company may issue either new shares or treasury shares upon exercise of these awards.
Tax positions that meet the more-likely-than-not recognition threshold 46 Table of Contents should be measured as the largest amount of the tax benefits, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement in the financial statements.
Tax positions that meet the more-likely-than-not recognition threshold should be measured as the largest amount of the tax benefits, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement in the financial statements. We recognize interest and penalties related to income tax matters as a component of the provision for income taxes.
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.
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. As of March 31, 2024, we were in compliance with all covenants under the New Credit Agreement.
As of March 31, 2023, 2022 and 2021, no impairment of goodwill has been identified. Recently Issued Accounting Pronouncements 47 Table of Contents Recent accounting pronouncements are detailed in Note 2— Basis of Presentation and Summary of Significant Accounting Policies , to our consolidated financial statements included in Part II, Item 8 of this Annual Report.
Recently Issued Accounting Pronouncements Recent accounting pronouncements are detailed in Note 2— Basis of Presentation and Summary of Significant Accounting Policies , to our consolidated financial statements included in Part II, Item 8 of this Annual Report.
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.
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, 2024, we had unrestricted cash of approximately $32,916 and $139,000 available to draw under the New Credit Agreement with BoA, excluding the accordion feature, subject to the required covenants.
It also separately contracts with publishers through an 44 Table of Contents advertising insertion order or service order to provide access to its auction platform and the ad inventory available through the platform. The auction is held when ad inventory becomes available.
It also separately contracts with publishers through an advertising insertion order or service order to provide access to its auction platform and the ad inventory available through the platform. The auction is held when ad inventory becomes available. The Company will send bid requests to various DSPs, which may choose to bid on the available ad inventory.
When we are the principal in a transaction, revenue is reported on a gross basis, which is the amount billed to DSPs, advertisers and agencies. When we are an agent in a transaction, revenue is reported net of license fees and revenue share paid to app publishers or developers.
When we are the principal in a transaction, revenue is reported on a gross basis, which is the amount billed to DSPs, advertisers and agencies.
Stock-Based Compensation We measure and recognize compensation expense for all stock-based awards made to employees and non-employee directors based on estimated fair values on the date of grant.
The provision for income taxes includes the impact of uncertain tax liabilities and changes in liabilities that are considered appropriate. Stock-Based Compensation We measure and recognize compensation expense for all stock-based awards made to employees and non-employee directors based on estimated fair values on the date of grant.
The Company will send bid requests to various DSPs, which may choose to bid on the available ad inventory. Once a DSP wins an auction, it must deliver an ad, which is generally served through the Company’s software development kits (“SDK”). The entire auction process is nearly instantaneous.
Once a DSP wins an auction, it must deliver an ad, which is generally served through the Company’s software development kits (“SDK”). The entire auction process is nearly instantaneous. The Company bills the DSPs based on the total number of impressions and the bid price.
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.
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.
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.
Revenue share decreased by $47,021 to $262,226 for the year ended March 31, 2024, and was 48.2% as a percentage of total net revenue compared to $309,247, or 46.4% of total net revenue, for the year ended March 31, 2023.
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.
Interest expense, net For the years ended March 31, 2024 and 2023, the Company recorded net interest expense of $30,838 and $23,352, respectively, an increase of $7,486 or 32.1%. The increase was primarily due to an increase in interest rates of 262 basis points and lower average outstanding borrowings of $65,500 over the comparative period.
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.
As of March 31, 2024, the interest rate was 7.71% and the unused line of credit fee was 0.35%, and we were in compliance with the consolidated leverage ratio, interest coverage ratio, and other covenants under the New Credit Agreement.
We generated $113,376 in cash flows from operating activities for the year ended March 31, 2023.
We generated $28,677 in cash flows from operating activities for the twelve months ended March 31, 2024.
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.
The decrease in other direct costs of revenue for the year ended March 31, 2024, compared to the prior year, was primarily due to slightly lower amortization of developed technology intangible assets and lower hosting costs.
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.
Revenue from content media declined by approximately $30,812 primarily due to the end of a carrier partnership that resulted in lower daily active users on prepaid devices. Revenue from application media declined by approximately $19,403 primarily due to lower new device volume in the U.S. and internationally and weakness in mobile advertising and user acquisition spending.
We recognize interest and penalties related to income tax matters as a component of the provision for income taxes. The Company’s income is subject to taxation in both the U.S. and foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes.
The Company’s income is subject to taxation in both the U.S. and foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. The Company establishes reserves for income tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due.
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.
In addition, there was a decline of approximately $10,997, primarily due to the end of a reseller partnership in the Nordic region.
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.
Product development expenses included severance costs and acquisition-related costs of $858 and business transformation costs of $2,716 for the year ended March 31, 2024. Product development expenses included severance costs and acquisition-related costs of $2,233 for the year ended March 31, 2023.
The Company adjusts uncertain tax liabilities in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of limitations. The provision for income taxes includes the impact of uncertain tax liabilities and changes in liabilities that are considered appropriate.
These reserves for tax contingencies are established when the Company believes that positions do not meet the more-likely-than-not recognition threshold. The Company adjusts uncertain tax liabilities in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of limitations.
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 $41,087.
Change in fair value of contingent consideration For the year ended March 31, 2023, the Company did not record a charge for changes in fair value of contingent consideration in connection with earn-outs associated with its recent acquisitions.
Cash Flow Summary ($ in thousands) Year ended March 31, 2023 2022 % of Change Consolidated statements of cash flows data: Net cash provided by operating activities $ 113,376 $ 84,738 33.8 % Equity investments (8,499) — (100.0) % Business acquisitions, net of cash acquired (2,708) (148,722) 98.2 % Capital expenditures (23,858) (23,280) (2.5) % Net cash used in investing activities $ (35,065) $ (172,002) 79.6 % Proceeds from borrowings 25,500 549,060 (95.4) % Payment of debt issuance costs (99) (4,064) 97.6 % Payment of deferred business acquisition consideration — (302,676) 100.0 % Options and warrants exercised 2,020 4,300 (53.0) % Payment of withholding taxes for net share settlement of equity awards (6,709) (8,605) (22.0) % Repayment of debt obligations (149,000) (52,772) (182.3) % Net cash provided by (used in) financing activities $ (128,288) $ 185,243 169.3 % Operating Activities Our cash flows from operating activities are primarily driven by revenue generated from advertising activity, offset by the cash costs of operations, and are significantly influenced by the timing of and fluctuations in receipts from buyers and related payments to sellers.
Our minimum purchase commitments under these hosting agreements total approximately $269,315 over the next six fiscal years. 41 Table of Contents Cash Flow Summary ($ in thousands) Year ended March 31, 2024 2023 % of Change Consolidated statements of cash flows data: Net cash provided by operating activities $ 28,677 $ 113,376 (74.7) % Equity investments (19,634) (8,499) 131.0 % Purchase price adjustment related to business acquisition 65 (2,708) (102.4) % Capital expenditures (24,279) (23,858) 1.8 % Net cash used in investing activities $ (43,848) $ (35,065) 25.0 % Proceeds from borrowings 50,000 25,500 96.1 % Payment of debt issuance costs — (99) (100.0) % Repayment of debt obligations (77,134) (149,000) (48.2) % Acquisition of non-controlling interest in consolidated subsidiaries (3,751) — 100.0 % Payment of withholding taxes for net share settlement of equity awards (1,286) (6,709) (80.8) % Options exercised 2,871 2,020 42.1 % Net cash provided by (used in) financing activities $ (29,300) $ (128,288) (77.2) % Operating Activities Our cash flows from operating activities are primarily driven by revenue generated from user acquisition and advertising activity, offset by the cash costs of operations, and are significantly influenced by the timing of and fluctuations in receipts from customers and payments to our carrier and publisher partners as well as other vendors.
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 $35,600 compared to the year ended March 31, 2022.
Costs of revenue and operating expenses ($ in thousands) Year ended March 31, 2024 2023 % of Change Costs of revenue and operating expenses Revenue share $ 262,226 $ 309,247 (15.2) % Other direct costs of revenue 34,799 36,445 (4.5) % Product development 54,157 56,486 (4.1) % Sales and marketing 61,481 63,295 (2.9) % General and administrative 169,617 154,282 9.9 % Impairment of goodwill 336,640 — 100.0 % Total costs of revenue and operating expenses $ 918,920 $ 619,755 48.3 % Fiscal 2024 compared to fiscal 2023 For the year ended March 31, 2024, total costs of revenue and operating expenses increased by $299,165 compared to the year ended March 31, 2023.
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.
The increase in revenue share as a percentage of total net revenue for the year ended March 31, 2024, compared to the prior year, was primarily due to revenue mix changes, specifically net revenue from AGP, which has a higher margin profile, representing a lower portion of total revenue.
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.
Continued weakness in the sale of new mobile devices is likely to continue to impact our business, financial condition, and results of operations, the full impact of which remains uncertain at this time. 34 Table of Contents 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.
For the year ended March 31, 2022, net cash used in investing activities was approximately $172,002, comprised of cash expenditures for business acquisitions, net of cash acquired, of $148,722 related to our acquisitions of AdColony and Fyber and capital expenditures related mostly to internally-developed software of $23,280.
Our cash used in investing activities for the twelve months ended March 31, 2024 and March 31, 2023, was primarily comprised of capital expenditures related to internally-developed software and equity investments in strategic businesses.
The Company has determined that it is a principal for its advertiser services for application media and content media when it controls the application slots or ad space/inventory. This is because it has been allocated such slots or space from the carrier or OEM and is responsible for marketing or monetizing the slots or space.
This is because it has been allocated such slots or space from the carrier or OEM and is responsible for marketing or monetizing the slots or space. The advertisers look to the Company to acquire such slots or space, and the Company’s software is used to deliver the applications, ads or content to the mobile device.
This impact was partially offset by accelerated amortization of trade name intangible assets amidst rebranding and a larger employee base receiving stock-based compensation for the year ended March 31, 2023. Investing Activities Our primary investing activities have consisted of acquisitions of businesses, purchases of property and equipment, and capital expenditures in support of creating and enhancing our technology infrastructure.
Investing Activities Our primary investing activities have consisted of acquisitions of businesses, purchases of property and equipment, and capital expenditures in support of creating and enhancing our technology infrastructure. For the year ended March 31, 2024, net cash used in investing activities increased by $8,783 to $43,848.
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.
The increase in other direct costs as a percentage of total net revenue was due to the decline in total net revenue for the year ended March 31, 2024. Product development Product development expenses include the development and maintenance of the Company’s product suite and are primarily a function of personnel.
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.
The increase in total costs of revenue and operating expenses is primarily due to the impairment of goodwill charges in 2024 of $336,640 partially offset by lower revenue share, which is the result of lower revenue over the same comparative periods.
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.
General and administrative expenses included acquisition-related costs of $424, business transformation costs of $6,639 and severance costs of $226 for the year ended March 31, 2024. General and administrative expenses included acquisition-related costs of $2,496 and severance costs of $350 for the year ended March 31, 2023.
The increase of $28,638 was due to the following: • $54,989 increase due to changes in operating assets and liabilities, primarily due to lower net working capital, driven by collection of account receivables for the year ended March 31, 2023; • $18,699 decrease in net income; and 42 Table of Contents • $7,652 decrease due to lower non-cash charges during the year ended March 31, 2023, including the impact of the change in fair value of contingent consideration during the year ended March 31, 2022.
The decrease of $84,699 was due to the following: • $437,318 decrease in net income, which includes the goodwill impairment charge of $336,640. • $1,955 increase due to changes in operating assets and liabilities, driven primarily by working capital changes. • $350,664 increase in non-cash charges during the year ended March 31, 2024 primarily related to goodwill impairment, increased deferred income taxes and increased stock-based compensation, partially offset by lower right-of-use assets for the year ended March 31, 2024.
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 $24,120.
Interest and other income (expense), net ($ in thousands) Year ended March 31, 2024 2023 % of Change Interest and other (expense) income, net Change in fair value of contingent consideration $ 372 $ — 100.0 % Interest expense, net (30,838) (23,352) (32.1) % Foreign exchange transaction gain (loss) 101 (1,026) 109.8 % Other (expense) income, net (328) 229 243.2 % Total interest and other (expense) income, net $ (30,693) $ (24,149) (27.1) % Fiscal 2024 compared to fiscal 2023 Total interest and other income (expense), net, for the years ended March 31, 2024 and 2023, was approximately $30,693 and $24,149, respectively, an increase in net expenses of $6,544.
For the year ended March 31, 2022, net cash provided by financing activities was approximately $185,243, which was comprised of proceeds from borrowings of $549,060 and stock option exercises of $4,300, partially offset by the payment of deferred business acquisition consideration of $302,676, repayment of debt obligations of $52,772, payment of payroll withholding taxes for net share settlement of equity awards of $8,605, and payment of debt issuance costs of $4,064.
Financing Activities For the year ended March 31, 2024, net cash used in financing activities was $29,300, which was comprised of: (1) the repayment of debt obligations of $77,134, (2) payment of $3,751 for the acquisition of the remaining minority interest shareholders’ outstanding shares in one of our subsidiaries, and (3) payment of payroll withholding taxes for net share settlement of equity awards of $1,286.
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.
Sales and marketing expenses decreased by $1,814 to $61,481 for the year ended March 31, 2024 compared to $63,295 for the year ended March 31, 2023. Sales and marketing expenses included business transformation costs, acquisition-related costs and severance costs of $1,688 for the year ended March 31, 2024.
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.
The decrease in sales and marketing expense after excluding business transformation costs, acquisition-related costs and severance costs was primarily due to lower costs for sales events and sales related travel of $863, reduced recruiting and relocation of sales personnel of $405, a reduction in the use of professional services of $410, and lower facilities and other related costs of $398, partially offset by an increase of personnel related costs of $411.
Removed
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”).
Added
In addition, our products and solutions provide monetization opportunities for OEMs, carriers, and application (“app” or “apps”) publishers and developers. 33 Table of Contents Recent Developments Credit Agreement The Company entered into a Third Amendment to the New Credit Agreement (as defined under the caption “Revolver” in Note 11—Debt of the notes to the consolidated financial statements in Part II, Item 8 of this Annual Report) on February 5, 2024 to provide further financing flexibility to fund strategic growth initiatives and meet general corporate obligations.
Removed
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.
Added
The Third Amendment to the New Credit Agreement amended the maximum consolidated secured net leverage covenant and the minimum consolidated net interest coverage covenant.
Removed
The three segments were On Device Media, In-App Media - AdColony, and In-App Media-Fyber.
Added
In addition, it increased the limit of permitted, other investments, including equity investments and joint ventures from $20,000 in the aggregate in any fiscal year of the Company to $75,000 and increased the annual interest rate, which will be SOFR plus between 1.50% and 2.75%, based on the Company’s consolidated secured net leverage ratio.
Removed
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.
Added
Business Transformation Initiative Beginning in fiscal year 2023, the Company entered into a business transformation project that includes the implementation of a new, global cloud-based enterprise resource planning (“ERP”) system to upgrade our existing enterprise-wide operating systems. Additionally, a new human resource system was also implemented to streamline employee management processes and enhance organizational effectiveness.
Removed
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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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIn 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.
Biggest changeIn certain of the Company’s foreign operations, the Company transacts primarily in the U.S. dollar, including for net revenue, revenue share, and employee-related compensation costs, which reduces the Company’s exposure to foreign currency exchange risk. In addition, gains (losses) related to translating certain cash balances, trade accounts receivable and payable balances, and intercompany balances also impact net income.
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.
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.
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.
The Company has not used any derivative financial instruments to manage its interest rate risk exposure. 47 Table of Contents 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.
The Company has not used any derivative financial instruments to manage its foreign currency exchange risk exposure. 48 Table of Contents
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. The Company has not used any derivative financial instruments to manage its foreign currency exchange risk exposure. 48 Table of Contents
Removed
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.

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