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Why Digital Turbine Stock Jumped 44% Last Month

What happened

Shares of Digital Turbine (NASDAQ: APPS) were surging last month after the mobile communication software provider delivered blowout results in its fourth-quarter earnings report.

According to data from S&P Global Market Intelligence, the stock finished the month up 44%.

Image source: Getty Images.

As you can see from the chart below, shares jumped on its earnings report, though the stock moderated in the second half of February.

APPS data by YCharts

So what

Digital Turbine shares jumped 20% on Feb. 4 as the company reported skyrocketing growth in its third quarter. Revenue from the period jumped 146% to $88.6 million with the help of an acquisition, easily outpacing the analyst consensus at $75.9 million. Application media, its biggest segment, posted 58% growth to $56.9 million, and its February 2020 acquisition of Mobile Posse also paid off, contributing the remainder of the growth, or $31.7 million in revenue.

Bottom-line performance was also strong as adjusted earnings per share jumped from $0.05 to $0.21, ahead of estimates at $0.17.

The stock has been a huge winner over the last year, and the latest report helped show why as it's benefiting from a number of trends, including increased spending on programmatic advertising and as companies placed a premium on content discovery during the pandemic.

While those gains faded over most of the rest of the month, the stock got another boost at the end of February when it announced its acquisition of AdColony, a mobile advertising platform with 1.5 billion users, which will increase mobile advertising revenue. Digital Turbine said it will pay $350 million to $375 million in the deal, which is expected to close in the current quarter.

Now what

Looking ahead, Digital Turbine called for $80 million to $82 million in revenue for the fourth quarter, indicating a deceleration in revenue growth as it laps the acquisition of Mobile Posse. But after that deal supercharged the company's growth over the last year, investors are clearly excited about the potential contribution of AdColony.

Given the exploding market in mobile communications and advertising tech , Digital Turbine appears to have a strong future ahead of it.

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