APPS Stock Eyes Worst Day In Two Years — CEO Says AI-Driven Open Web Traffic Declines Shifting Ads To Apps

• Q2 revenue of $178.7 million topped the $166.8 million consensus, led by 42% App Growth Platform growth.
• The management plans additional investments in AI and data to support future growth.
• Stone expects the Epic-Google case and EU rulings on Google to open more alternative app distribution opportunities.

Digital Turbine (APPS) stock plunged over 26% in Tuesday's premarket trading, putting it on track for its worst daily decline in two years, despite the mobile advertising company reporting stronger-than-expected fiscal second quarter (Q2) revenue and raising its annual sales outlook.

During the earnings call, CEO Bill Stone highlighted a shift in advertising spending toward mobile apps as AI disrupts traditional web traffic.

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Stone said the company is seeing “brands migrate their spend away from the open web to other channels like apps,” citing traffic declines caused by AI and growing mobile app usage.

AI-Driven Advertising Demand Lifts Revenue

Digital Turbine's Q2 revenue rose 27% year over year to $178.7 million, exceeding analysts' estimates of $166.8 million. Adjusted earnings per share (EPS) of $0.18 narrowly topped expectations, according to FiscalAI data.

The company’s App Growth Platform (AGP) revenue climbed 42% to $63.5 million, while On Device Solutions (ODS) revenue increased 20% to $115.6 million.

Stone said AI-powered targeting and first-party data were improving advertisers' returns, driving stronger demand and higher pricing.

Nearly 40% of advertising spending on DT Exchange came from non-gaming partners, while international ODS revenue grew approximately 50%.

Digital Turbine Keeps EBITDA Guidance Unchanged

The company raised its fiscal 2027 revenue outlook to between $670 million and $690 million, from $650 million to $670 million, but maintained its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) guidance of $145 million to $155 million.

Management plans additional investments in AI and data to support future growth. Stone said it was important to be “prudent in our approach on the bottom line while we're scaling the top line right now.”

Non-GAAP gross margin declined to 43% from 47% a year earlier, as revenue-sharing expenses increased to 49% of revenue from 45%, driven by product mix changes and revenue-share obligations.

However, adjusted EBITDA rose 46% to $39.8 million.

Digital Turbine Expands Into AI Agent Distribution

Stone said Digital Turbine is expanding its Ignite platform beyond traditional app distribution to deliver other products and services directly to mobile devices. “We're doing this today in the U.S. with an AI-first partner distributing AI agents to devices,” Stone said.

The company is also seeing growing interest from AI and agentic AI app publishers seeking to use its software development kit (SDK) network for distribution and monetization.

Stone said recent outcomes of the Epic-Google case and European Union rulings are expected to create further opportunities for alternative app distribution, as publishers seek greater control over how they reach users.

What Retail Thinks About APPS Stock

On Stocktwits, retail investors’ sentiment around APPS stock flipped to ‘extremely bullish’ amid extremely high message volume.

o far this year, APPS stock has more than doubled, surging over 136%. By comparison, the Vanguard Information Technology ETF (VGT), which holds the stock, has risen over 18% over the same period.

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