← Valuations

Digital Turbine Inc (APPS)

Mobile adtech / app growth (Austin, TX) · FCFF / DCF (Damodaran) · Sep 4, 2026
OVERVALUED
Base value $-0.64 vs price $10.54
DCF equity value ≈ $0 — the price is not supported by normalized FCFF
Current Price
$10.54
Base Intrinsic Value
$-0.64
Value Range (Bear–Bull)
$-1 – $-0

The Take

The FCFF template is the wrong tool for this business — and that itself is the finding. Even capitalizing R&D (which lifts EBIT), the R&D-adjusted DCF puts equity at roughly zero — actually slightly negative — vs a $10.54 price. The R&D add-back nets to ~zero here because R&D is small (~$40M) and declining, so trailing amortization cancels it.

What kills the DCF is structure: tiny NOPAT (~$25M) against $323M net debt at an 11.7% WACC — nearly all operating value accrues to creditors, not equity. The market's $1.3B cap is priced on adjusted EBITDA ($122M, +69%) and turnaround/squeeze momentum, not cash flow to shareholders. This is a leveraged call option on the turnaround, tradeable but not supported by normalized FCFF.

Normalized EBIT — 5-year history ($M)
Avg $17MFY22: $92M92FY22FY23: $46M46FY23FY24: $-38M-38FY24FY25: $-48M-48FY25FY26: $35M35FY26
Scenario values vs. market price
Bear: $-1.09$-1BearBase: $-0.64$-1BaseBull: $-0.15$-0BullPrice $10.54

Scenarios

ScenarioGrowthValue/shvs px
Bearstalls$-1.09-110%
Baseg 8→3%$-0.64-106%
Bullstrong$-0.15-101%

Key Inputs

FY26 Adj EBIT (R&D-cap'd)$32.0M
5yr avg reported EBIT$17.4M
FY26 Revenue$565.3M
R&D (product dev)$40.5M
R&D amort (3yr life)$43.2M
Research asset added$84.5M
Adj EBITDA (mgmt)$122.5M

Cost of Capital

Beta (microcap, levered)1.60
Risk-free4.25%
Equity risk premium5.5%
Cost of equity13.05%
Pre-tax cost of debt9.0%
After-tax Kd7.11%
Debt ratio (market)22.1%
WACC11.74%

Balance Sheet & Bridge

Total debt$361M
Cash$38M
Net debt$323M
Minority interest$0
Shares out121.0M
P/E-35x (loss)
EV / Adj-EBITDA~13x
52-wk range$2.74 – $15.34
R&D series FY22–25 estimated; only FY26 ($40.5M) confirmed — but the add-back nets to ~zero regardless. The entire bull case rests on whether adjusted EBITDA ($122M) is 'real' free cash flow — it adds back $71M of largely-acquired-intangible D&A plus stock comp, so it is not. Negative per-share values mean the debt exceeds operating enterprise value in these scenarios. Not investment advice.