Digital Turbine (APPS) risk factors, FY2025 10-K

Other

1. 01Risks Specific to Our Business
2. 02Our transformation program and reduction in force may not adequately reduce our operating costs or improve our operating margins or cash flows, may lead to additional workforce attrition and may cause operational disruptions
3. 03We have a history of net losses, may incur substantial net losses in the future, and may not achieve or sustain profitability in the future
4. 04We have a limited operating history for our current portfolio of assets, which may make it difficult to evaluate our business
5. 05Our operations are global in scope, and we face added business, political, regulatory, legal, operational, financial, and economic risks as a result of our international operations and distribution, any of which could increase our costs, hinder our operations and return to growth
6. 06Our financial results could vary significantly from period-to-period and are difficult to predict
7. 07As 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
8. 08lower 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
9. 09If our goodwill becomes impaired, we may be required to record a significant charge to earnings
10. 10The effects of the current and any future general downturns in the U.S. and the global economy, including financial market disruptions, could harm the economic health of advertisers and the overall demand for advertising, which could have an adverse impact on our business, operating results, or financial condition
11. 11Our products, services, and systems rely on software that is highly technical, and if it contains errors or viruses, our business could be adversely affected
12. 12Our business may involve the use, transmission, and storage of confidential information and personally identifiable information, and the failure to properly safeguard such information could result in significant reputational harm and monetary damages
13. 13Our business and reputation are impacted by information technology system failures and network disruptions
14. 14safeguard data and respond to threats, challenges like software bugs, human errors, cyberattacks, or physical breaches may undermine our defenses. Consequently, clients and users may lose confidence in our products, leading to reputational harm and market setbacks
15. 15Our business may suffer if we are unable to hire and retain key talent who are in high demand
16. 16Our corporate culture has contributed to our success, and if we cannot maintain this culture, we could lose the innovation, creativity, passion and teamwork that we believe contribute to our success and our business may be harmed
17. 17We plan to continue to review opportunities and possibly make acquisitions, which could require significant management attention, disrupt our business, result in dilution to our stockholders, and adversely affect our financial condition and results of operations
18. 18Adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults, or non-performance by financial institutions, could adversely affect our business, financial condition, or results of operations
19. 19Entry into new lines of business, and our offering of new products and services, resulting from our investments may result in exposure to new risks
20. 20Litigation may harm our business

Risks Related to the Mobile Advertising Industry

1. 21The mobile advertising business is an intensely competitive industry, and we may not be able to compete successfully
2. 22We 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. The large companies in our ecosystem may play multiple different roles given the breadth of their businesses
3. 23Our business is dependent on the continued growth in usage of smartphones, tablets, and other mobile connected devices
4. 24Wireless communication technologies are changing rapidly, and we may not be successful in working with these new technologies
5. 25The complexity of and incompatibilities among mobile devices may require us to use additional resources for the development of our products and services
6. 26If wireless subscribers do not continue to use their mobile devices to access mobile content and other applications, our business growth and future revenue may be adversely affected
7. 27A shift of technology platform by wireless carriers and mobile device manufacturers could lengthen the development period for our offerings, increase our costs, and cause our offerings to be of lower quality or to be published later than anticipated
8. 28Actual or perceived security vulnerabilities in mobile devices or wireless networks could adversely affect our revenue
9. 29We may be subject to legal liability (including potential issues with the use of intellectual property) associated with providing mobile and online services
10. 30Public health issues, such as a major epidemic or pandemic, could adversely affect our business or financial results
11. 31Disruption to our business operations as a result of war and hostilities in Israel and other conditions in Israel that affect our operations may limit our ability to develop, produce and sell our products
12. 32Adverse changes in the geopolitical relationship between the U.S. and China or changes in China’s economic and regulatory landscape could have an adverse effect on business conditions
13. 33businesses from time to time. In August 2021, China passed a new data privacy law known as Personal Information Protection Law and Data Security Law, effective November 1, 2021, which adopts a stringent data transfer regime requiring, among other things, data subject consent for certain data transfers

Risks Related to Laws and Regulations

1. 34We are subject to rapidly changing and increasingly stringent laws, contractual obligations, and industry standards relating to data governance, privacy and data security. The restrictions and costs imposed by these legal requirements, or our actual or perceived failure to comply with them, could harm our business
2. 35Our platform relies on our ability to process the information of our customers and end users. 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
3. 36We are subject to anti-bribery, anti-corruption and similar laws and non-compliance with such laws can subject us to criminal penalties or significant fines and harm our business and reputation
4. 37We are subject to governmental economic sanctions requirements and export and import controls that could impair our ability to compete in international markets or subject us to liability if we are not in compliance with applicable laws
5. 38Our ability to use our net operating losses, credits, and certain other tax attributes to offset future taxable income or taxes may be subject to certain limitations
6. 39Government regulation of our marketing methods could restrict our ability to adequately advertise and promote our content, products, and services available in certain jurisdictions

Risks Related to Our Intellectual Property and Potential Liability

1. 40Our intellectual property is an essential element of our business. We rely on a combination of copyright, trademark, trade secret, patent, and other intellectual property rights
2. 41Third parties may sue us for intellectual property infringement, which may prevent or limit our use of the intellectual property and disrupt our business and could require us to pay significant damage awards
3. 42Our platform contains third-party, open-source software components, which may pose particular risks to our proprietary software, technologies, and solutions in a manner that could negatively affect our business
4. 43Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, damages caused by malicious software, and other losses

Risks Relating to Our Common Stock and Capital Structure

1. 44We have secured and unsecured indebtedness, which the Company will need to be refinancing and which could limit our financial flexibility
2. 45As of March 31, 2025, we had $411,000 drawn against the revolving line of credit under the Amended and Restated Credit Agreement. As of March 31, 2025, we had unrestricted cash of approximately $39,393 and restricted cash of approximately $691
3. 46To service our debt and fund our other capital requirements, we will require a significant amount of cash and our ability to generate cash will depend on many factors beyond our control
4. 47The market price of our common stock is likely to be highly volatile and subject to wide fluctuations, and you may be unable to resell your shares at or above the current price
5. 48We may choose to raise additional capital to finance the purchase price of acquisitions or to otherwise grow our business, and we may not be able to raise capital to grow our business on terms acceptable to us or at all
6. 49If securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our common stock, our stock price and trading volume could decline
7. 50We do not anticipate paying dividends
8. 51Failure to maintain effective internal control over financial reporting could result in material misstatements in our financial statements, and a failure to meet its reporting and financial obligations, each of which could adversely affect our results of operations and financial condition
9. 52Maintaining and improving our financial controls and the requirements of being a public company may strain our resources, divert management’s attention, and affect our ability to attract and retain qualified members for our Board of Directors
10. 53Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our common stock
11. 54Our bylaws designate the Court of Chancery of the State of Delaware as the exclusive forum for certain disputes between us and our stockholders