Chit Chat Stocks - Why Digital Turbine is a Competitively Advantaged Ad Platform With Fundasy Investor (Ticker: APPS)

Episode Date: December 1, 2022

Digital Turbine delivers a mobile growth platform for advertisers, publishers, carriers, and device original equipment manufacturers. The company offers all kinds of publishers the ability to advertise to consumers on mobile devices. Listen as Brett and Ryan ask questions about the company, its business model, and valuation. Enjoy the show! *****************************  Interested in becoming a member of 7investing? Subscribe with code “MONEY” and get $100 off your annual subscription for life: https://7investing.com/checkout/  *****************************  Want updates on future shows and projects? Follow us on Twitter: https://twitter.com/chitchatmoney  Subscribe to our Substack to receive free show notes and charts that go along with every episode: https://chitchatmoney.substack.com/ Interested to see more of Will's work? Check out their Twitter here: https://twitter.com/FundasyInvestor?s=20&t=yhLXqIW46FcApFMJGP3lgw Contact us: [e-mail]  Timestamps  Digital Turbine | (4:03)  Competition | (14:57)  Projections | (27:45)  Disclosure: Chit Chat Money hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Brett Schafer and Ryan Henderson are general partners and portfolio managers at Arch Capital. Arch Capital and its partners may hold securities discussed on this show. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Money. This is our Thursday deep dive interview where we bring on an analyst to discuss a single stock. And today we have Will. He's also known as Fundacy Investor. We'll attach his write-ups and his Twitter in the show notes, but that's how you may know him. And today we're talking about Digital Turbine, which has been a wild ride for shareholders, still up nearly a thousand percent over the last 10 years, but kind of one of the bubble stocks of last year that's gotten blown up, yet still has a pretty strong underlying business, it looks like. And Will kind of lays out the thesis for that. Did you have any highlights from the interview? Yeah, I think just to pitch for anyone interested in this company, this is

not a pitch to buy the stock. Everyone should do their own research. As you well know, we do not pitch stocks on the show. But I think the most compelling thing from this interview is one, the competitive advantage from the relationship with the phone makers. And if you don't know digital turbine. That will make sense after you listen to the interview. And two, the fact that they were one of the few, quote unquote, stocks that got caught in the bubble, at least valuation wise, that are actually profitable. They consistently generate cash flow. So using those two things, competitive advantage plus cash flow, that'll have me more interested in having it on my watch list right away. All right. Before the interview, let's talk about our sponsors,

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All right. Well, without further ado, here's our interview with Will. Welcome to Chit Chat Money. On this show, hosts Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investing. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are also general partners at Arch Capital, and Arch Capital may have positions in the securities discussed in this podcast.

Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guests is not formal advice or a recommendation. Now, please enjoy this episode. Welcome in. Today, we are joined by Will. You may know him on Twitter at Fundacy Investor. He's been vocal about Digital Turbine, which is the stock we're talking about today. And so I guess no more on the introduction. Why don't we talk about kind of how you got in to Digital Turbine as an investment, kind of maybe talk about what it is and what attracted you to it? Yeah. Thanks. Thanks for having me on first and foremost. I love y'all's podcast. It's great. It's great materials. So Digital Turbine, I ended up getting into it in June of 2020. I ended up actually finding it via Screenr, believe it or not.

So what I screened for was profitable by gap measure and greater than 25% revenue growth over the past five years, and then under 40 times free cash flow. So I ended up finding Digital Turbine. I ended up checking out their investor materials. And I ended up noticing, and this was when the story was a lot simpler before they ended up expanding across their product lines into new areas. And so what I ended up noticing, though, was really rising profit margins. It ended up going from like negative 30% a few years before to 10% profit margins.

So from there, it just took a little bit of investigative work. I'm like, why is this happening? And so that's what kind of led me on to the company. And I ended up noticing that they had a big acquisition in March of 2020 called Mobile Posse. That was a content plugin for the Android, for the Android operating system. And then I ended up noticing that was going to increase their revenues and diversify their revenues across a lot or multiple avenues. And I never looked back and that was kind of how I found it.

All right. And we'll talk about the expansion stuff and the acquisitions, but can you go through the, and for any listeners, they may have listened to the other show we did on Digital Turbine in the past. But can you go through that core relationship with the phone provider product and how that got them started and got to where they are today? Of course. So Bill Stone is the one that kind of revolutionized this approach for them. He joined or he signed on as CEO in about in 2014, I believe. And then they ended up signing a contract with Verizon to do pre-downloaded apps onto their phones for an Android operating system. So to understand kind of like what that means, you have to understand the differences in between the Android operating system and the Apple operating system. Apple, it's a closed loop.

They develop all of their operating system. Nobody else is allowed to use it. And in comparison, though, the Android operating system is open source. And so Google ended up licensing the Android operating system to OEMs and carriers saying you can use this as long as Google is the default search engine and you use the Google Play Store. So those are the two requirements. And so why they did this is they wanted everyone to have an Android phone and to have it be very cheap because they make money off of the search revenues. And so that was their goal. And so then all of these carriers and all these OEMs take this Android operating system and they use their own version of it. They customize it for their devices and they make it their own. And so then what they ended up doing is they ended up downloading these apps and these other software pieces onto the Android called malware. And they tried to make money off it because they tried to monetize the operating system that they were given within the guides of what Google gave them.

And so then you ended up having a solution where users weren't very happy about the Android experience. And so what Verizon ended up doing is they ended up outsourcing that product that they needed to Digital Turbine. So Digital Turbine said, hey, what we'll do for you is we'll provide you a service. We'll plug into your version of Android, and we will pre-download apps onto the phone when the user opens up the device. and so then the user opens up the device there's netflix spotify and whatever peloton or whatever whatever apps pay for it uber is definitely a big customer yeah it's a great one lyft and so then they pay for that app to just be downloaded on the phone right off the bat and they'll pay 50 cents to a dollar for each for each smartphone which is great because then digital turbine

doesn't have to pay to acquire any users they just simply provide the technology to each operator and as they sign on more and more operators and so or so then as they started signing on more and more operators in at&t and cricket they signed in 2016 samsung they decided or they signed in like late 2018 or early 2019 one of those two and so they ended up actually scaling pretty well because they were able to like put that fixed cost across multiple operators so now they have 40 plus partners that all use the android uh operating system and they use their digital turbine as their partner so that was kind of that's kind of how they got started they had that base product and they had a few other ones like folders for games and whatnot a lot they're a lot less

important though in the grand scheme of things pre-loaded or the pre-loaded apps was the biggest one and so they ended up signing a lot of partners and ended up kind of having a little bit of a network effect where they're able to improve the product experience and then keep releasing that to new customers gotcha and they've gone through a big you know heavy acquisitions over the last or at least large relative to their size over the last couple years how has that expanded the product strategy and the services digital turbine can provide besides that core product that they started out uh that you just mentioned well yeah that's a that's a great question because yeah i remember y'all's first interview you pretty much or it was it was probably i think digital turbo

was described as convoluted ad tech which was a pretty good description at the time yeah i think that was yeah 2020 the business was a lot different than it was today exactly exactly so basically you got to think of or kind of think about where digital turbine is within that product suite, if you're providing services to multiple operators, then the best thing that you can do is add on related services. And so that was kind of where they were in 2019. So what they did was they first in March of 2020, they ended up acquiring a company called Mobile Posse for 60 million or something like that. It was a chump change. And then what they And that and T-Mobile or Mobile Posse was only on T-Mobile at that time.

And so what Digital Turbine did was they're like, we have this company, Mobile Posse, which provides content media, which is basically like a plug in for like Apple News. I think that's kind of like the equivalent on the iOS. So then it has that, but it also has advertising on it and it's running a higher, higher margin, 50% gross margin. And what we can do is we can sell that across to all of our other operators, acquire it for what their past 12 months are, just cross-sell it, and then get very high ROI on that. And so that happened in March 20 of 20. That's what drew me to the start because they had a big boost in revenue from that. And then from there, so they ended up doing pretty well.

2020 happened and the craziness all ensued. Online advertising went bananas. And then their stock price went, I mean, just rocketed. I think it was up in the $90 at one point. It's over 100 times gross profits, whatever it was at that point in time. And then they ended up announcing three more acquisitions, Ad Colony, Appreciate, and Fiber. And so those were three different acquisitions and all made for different reasons. So at this point in time, Digital Turbine needed, one, a DSP, a demand-side platform.

And so they could basically source revenue in there, buy ads, and then make money on the delta. And so if Digital Turbine has a good supply of ads, then a DSP would be really valuable for them. So that was the thought process in between one of the acquisitions. The other one was Ad Colony, which ended up basically having a network of publishers that they had partnered with. And then they had the relationship with the brands. And so they helped fill the inventory for all the publishers that needed it. and then they had a lot of brand brand relationships which is good for digital turbines it kind of got them in the door for a lot of big companies mcdonald's um subway all of those all those ones are partnered with ad colony bmw i think was one of them which is a little strange um and then fiber was probably the most important acquisition they had a sell side

services ssp and then they had an exchange service so with the sell side services that's banners ad walls those are plugging into the app but then they also have an exchange where dsps can buy ads within that app so digital turbine went from being a plug-in within the android operating system having user data and then having a content app to now providing services within the apps but still having the ability to work outside of the app in the embedded within the operating system and that's kind of where that journey happened would you oh sorry go ahead no you go ahead would you still describe it as convoluted ad tech i wouldn't because i think what the or the digital turbine didn't have any services within within publishers or within apps at that time when they when they

purchase fiber so they were going to have to the next logical step was to go with they were outside the app and now the next logical step was to go into apps and provide services to publishers so i don't think it was that convoluted i think it made a lot of sense like or if you play any type of strategy board game the bet you got to expand to where you got to expand to the next green field and especially because they have the advantages of being outside the app and then And that'll be important later on when we talk about single tap and what that kind of enables them to do. But they didn't have any services there, so they were going to have to develop them one way or another. I think it made sense to acquire Fiverr.

And now they get to integrate all of their current product offerings into those publishers' apps and have a little bit of interesting synergies. Okay, let's talk a little bit about the competitive landscape. I guess kind of a two-part question here. who would their who would you describe as their primary competitors and then why would an advertiser choose to use digital turbine services instead of like a google or facebook or the trade desk something like that yeah so the the uh the advertising market is definitely pretty or it's concentrated within facebook and google being the primary players trade desk being a big one with a DSP service that is offered pretty broadly across the open internet.

The digital turbine kind of carved out their own little niche though, because if you're advertising, you got to think about what you're trying to advertise for. If you want a consumer product, Facebook is probably a place to go. Google search has site revenue and a lot of other items. So it's like you have almost different type of applications of advertising. Digital turbine is really good at downloading apps and so or apps onto phones and specifically android phones which are 75 percent of the smartphones out there in the world today so and then they with the within the app community now they're going to be really good at selling or at advertising apps within apps or within applications so i think that there's a little bit and then between or in in relation to the trade

desk the trade desk provides dsp services and so they're buying ads and they're and they're working with their advertisers to buy ads all across the internet and they take their 20 their 20 commission for doing that because it's hard to buy ads across the internet digital turbine is actually providing the technology to sell ads and so it's almost a different it's a different competing service and actually they actually talked about on the last earnings call that the trade desk by increasing their offerings the trade desk can actually purchase ads easier through digital turbines network and so they're actually in some areas they're not competing against each other and then you've also got all the ads that work on ctv and whatnot and that's um that's a whole different

beast digital turbines purely on mobile so it's kind of the uh it's kind of an issue an interesting situation where digital turbine wants to be able to provide the highest rois within a mobile system or within the mobile area, Android, and focusing on apps. Gotcha. I guess, does anyone else do what Digital Turbine does specifically with the, not the in-app part, but like the setup process? Is that kind of just their offering or is there competitors for that? There was one main competitor, IronSource.

Do you remember that Unity acquired them just a little bit ago? Oh, all right. that yeah so that's kind of falling apart so exactly so what's what's interesting there is like it's iron source only their main customer i mean pardon me if i'm speaking out of mouth on this one um iron source's biggest customer is t-mobile and so unity ended up acquiring them though but and honestly it could have worked out in the same way that like digital turbine bought fiber to expand their offering because iron source i don't think had very good services for in-app But I think with Unity's just kind of culture and capital allocation policy, I don't know if that deal is going to actually end up providing good corporate or it's going to end up actually working out overall for the organization.

No, I totally agree with that. Ryan, did you have something else before we hit? I was going to say Unity managed, the CEO has a tendency to make poor acquisitions. The tracker hasn't been great so far, but yes. So let's hit the most important product, though. And you refer to that and you mentioned the in-app purchases and that's their single tap product. Management thinks that that product alone can hit $1 billion in revenue, which is, correct me if I'm wrong, larger than their entire business today. Why do you think they believe so much in this product? And do you agree that it has so much potential? so it does it does um the management it's also been really slow to roll out because single tap needs to be integrated into each of the oem or carriers version of android and all within all the customizations so the integration has been a lot slower than people realize and it's going to

be a lot slower going into the future so because what they're going to do is they're probably going start rolling out on a few million devices first before they start and then that'll take a quarter or two and then they will go to their entire supply after that and samsung's already um said that they want to roll out with single tap across their entire footprint which is hundreds of millions of devices so why single tap is a tool though more more than anything it's not just a single product. What it does is imagine clicking on an app or an advertisement and then not having to go to the Google Play Store and it just downloading on your phone directly in the background. And also you don't have to leave your app. So that provides, or there's a lot

of implications from that. First of all, your conversion is going to be a lot better with the products like that because it takes less clicks. Think about the ad process as it is right now. You click on an ad, you go to the Google play store, you confirm that you want it and then it downloads. Whereas this, imagine just simply an install now button. You click it, it downloads in the background once. And also it makes a lot of sense for publishers because then you stay in the app. If, uh, if you're watching, or if you're on your Spotify, for instance,

and an app come and an ad comes up, it's on y'all's brilliant chit chat money podcast. they download there we go that's how yeah exactly i'll plug it in uh so it downloads the app in the background right and then it doesn't make it where the person leaves to go to google play store and then they start searching twitter and then they pause your podcast to start watching a video like there's value to staying within the app and then there's also value in higher conversions so and then so that's that's the way the product works now that the next question is how are they going to make money off of it to get to $1 billion, right? So firstly, what they started off with

with their Appreciate acquisition is they started directly buying ads with devices with single tap enabled. They've already done, I think they were on $100 million run rate two quarters ago with just simply doing that. And so they've got the potential to really scale with this. And that's what they're trying to prove. It was more of a proof of concept, I think, in my mind. But what they're going to do is they're going to build that single tap enablement into the Fiverr acquisition that they did within the app. So every single app or publisher that uses Fiverr services is going to have single tap enabled. And so then it will help those apps because they will get more dollars in advertising revenue. They'll get more conversions and Digital Turbine will make more revenue from that.

And then also Digital Turbine, they're going to release the product as a subscription to other publishers like TikTok, Facebook, Twitter. And I think on their investor presentation, they said it was going to be for $1.5 million per month on average. So they've confirmed that they're in talks with Facebook and whatnot to actually release this product to them on a subscription basis when it's released at scale. So between releasing it as a service to apps, using it within your own exchanges and your own fiber services, and then doing it directly, I think it could do $1 billion in revenue. I think it's a little bit farther off, though, than investors would like to think. Gotcha. What's stopping Facebook from copying single tap? Because I know that no one can copy the OEM relationship,

or it would be very, very difficult. But what's stopping them from copying this product? So that's a great question. Remember earlier when I said it's important that Digital Turbine is embedded into the Android operating system? Yeah. By being embedded into the operating system, they're able to work in the background

behind the apps. Facebook can't do that, especially with IDFA and whatnot, limiting their tracking. They're able to track, but Facebook literally does not have the technology to be able to do something like single tap. And that's the intriguing part is the fact that Digital Turbine, because they're embedded in the operating system, has abilities to do things like this. And then they've also shown things on their investor presentation days. These are probably just hype products but they did it they showed a conversion i think it was a domino's pizza ad where you like shake your device and then with your tv and then ended up like pulling up the domino's app something along those lines yeah like it was kind of cool but like digital turbine is

able to do things like that though because they're within the operating system and that's a that's something that a lot of their other ad tech companies can't can't say right i'm just curious how many companies will use the shake functionality but that is you know it's an interesting feature the uh let's maybe talk about the valuation right now because there's some we can kind of talk about revenue trends after after that but i think it shapes the discussion so what does the valuation look like for digital turbine today when we talk about the business it sounds like there's this massive opportunity just be sitting where they do so kind of how do you look at the valuation and maybe give some numbers for context. Yeah. So the valuation based on the last 12 months

is at seven or is that about 30 PE, I believe right now, but also some, or it depends on what you use. It's about four times gross profit, 30 PE or 14 times free cashflow. So a lot of things that's kind of causing that discrepancy in between PE and free cash flows, there's a little bit of share-based compensation but not as much as you like to think a lot of it is a amortization of in between or because of all the acquisitions that have happened recently and so it's a large large non-cash expense that has been happening in the last year that's kind of caused a large portion of that discrepancy so but i mean as you can think though a 30 pe still or or even like a normalized uh p around like 25 20 somewhere in there there's a lot of expectations built into

of that. And so investors do think that the company is going to do pretty well going into the future. So if you don't believe in the long-term prospects of like where this company is going and what they're building, then it's probably, it's probably pretty expensive to you. And they've got, uh, correct me if I'm wrong, but around 40 to 50% gross margins, right? Yep. So I think they last quarter, what they did is they caught, or they caused a little bit of issue with their using pro forma and whatnot, because they redefined how they classified revenue in gross margins within their acquired businesses. Fiber was running at around 30% gross margin when they acquired them. But that's because they counted revenue share

against gross profit. And so then that ended up making gross profit numbers look a lot worse. And so Digital Turbine, it was probably a little bit to pump the stock price to make them look good but they reclassified it uh revenue into actual direct cost of revenue and took out that and reclassified the revenue to what they actually got rather than revenue share and then now their gross margins on a pro forma basis are going up so i think it's like 48 last year versus 52 this year so slightly rising but like uh still in that mid-tier range though where it's just it's typically a software company you'd expect it to be higher but that's because of revenue sharing when not in the legacy business okay so is that their big cost of goods sold is

their they're sharing with those their partners yep if you actually look at their cost of goods sold it's more in like the 80 to 90 percent range okay what uh uh so i guess revenue did decline last quarter um this kind of begs a bigger question which is how does this how do you think Digital Turbine will perform in an overall advertising slowdown? And then do you think this revenue decline is sort of temporary or larger cause for concern? Yeah. So you got to think about, or there were a few reasons for the decline per management. So you got to believe what management says in regards to that. And then advertising is obviously a cyclical. I think we've kind of proven that all the uh all the google bulls thinking that advertising wasn't cyclical

and it was a kind of or kind of get a little bit ahead of themselves but right now digital turbine is a small player and advertising budgets aren't necessarily i don't think kind of motivated to prioritize large budgets on lower proven options like digital turbine currently. And so I think an over time over, I think a advertising slowdown isn't necessarily great for them just being a, being a small player, but a large portion of the reasons that the revenue dropped last quarter was because they eat because their mobile posse, that acquisition, they actually started flipping from prepaid devices where you pay all up front for your device to postpaid devices with Verizon. And now they're, now they're rolling that out

this quarter so a slowdown in their content media their ecpms dropped so they're caught or so their cpms within their apps for their fiber dropped a lot dropped off a lot which makes sense they've got the same supply but they're selling each ad for less and just overall i think it's probably i think digital turbine isn't immune to those issues though makes sense gotcha um anything else on that or next good to go on um i mean i or what i or i wouldn't be worried about a slowdown i think with digital turbine though because i think they're caught or their costs actually dropped year over year though comparative to a lot of other tech companies that went up 30 40 and so that's i think is kind of the main thing why i'm not worried about it is because

although advertising is cyclical digital turbine has very they're not losing money right now developing, even with all the development of all their products that they're doing right now, they're not losing money. They're getting profitable. They're paying down their debt. And I think they paid $25 million down last quarter. So they've reduced it from $525 million to about $450 million or so right now. And so I'm not too worried about it being a drawdown. I think they have a lot of products on the horizon. And I'm not too worried about like the short term year to year and a half, how that's going to look because digital turbine in the grand scheme of things right now is paying down debt and doing good product

development. So that's kind of where my headspace is at on that. Yeah, they do generate cash. I want to hit on again, you kind of alluded to this on maybe your thoughts here, but does digital turbine have any competitive advantages and you describe them as a friendly middleman in your write-up. what is that and why do you think they are um a burgeoning friendly friendly middleman yeah of course so i gotta give props on the friendly middleman that was not a uh that was

not an organic thing that was a taken first from a book called quality investing by uh lawrence cunningham um yeah yeah so and then i think it was lockstock barrel um on twitter at Lock, Stock, Barrel, ended up using it a lot to describe Expel. And so then I ended up taking it, of course, and kind of writing, giving credit within the write-up. But what it is, is it's kind of a friendly middleman's a business that's B2B by nature. And they provide solutions on both sides of the equation, basically. And they try to add value to both sides. And so in my mind, Digital Turbine is a friendly middleman because they are providing monetization solutions to people with Android operating systems and are looking to sell those, like the OEMs and the carriers. And then they're providing services to advertisers on the other side.

And so they're a friendly middleman because the OEMs and carriers don't really do well with dealing with the advertisers and then the advertisers and vice versa. Because if you think about that dynamic, advertisers would have to go to each one of the OEMs or carriers, the 40 plus partners, negotiate with them, talk about contracts, how they want to manage those ads. And then the OEMs and carriers don't have the specialty, the interest, or just basically the interest overall to provide those services with the quality that's required. And so Digital Turbine, by focusing on the quality and then also being a one-stop shop for the advertisers, provides a lot of service across that value chain. And that's kind of how I consider it being a friendly middleman. And where the competitive advantage lies is in the fact that there's a lot of people out there that say the OEM or carrier can replace Digital Turbine on a whim, basically. You can read it even on Glassdoor reviews. But if you think about what that would entail,

they would have to go out, find advertisers, they would have to develop the solution themselves, and then they would be selling their solutions only on a few million devices. Whereas Digital Turbine has every major carrier and OEM signed up that uses Android already. And so an advertiser, by talking to Digital Turbine, gets to sell across hundreds and hundreds of millions of devices.

i think there's 800 million right something like that something like that something like that so yeah if an advertiser gets talked to them or gets talked digital turbine they get to sell across an entire thing a very entire hundreds of millions of devices with ease and then an oem so it would be very hard for an oem carrier to provide the quality of digital turbines products at scale basically with uh and actually make good money on it so with that's not necessarily a risk and And that's where a large portion of my holding or the reason that I hold the stock comes from is because Digital Turbine has a lock on those OEM and carriers, and it's actually providing value to them. That means that they get to be embedded in the operating system, which provides them an advantage against everyone else advertising on Android. Okay.

I think one of our last questions here, I guess, what do you think of the management team? I think management team's pretty good. I think the standout is Bill Stone, a CEO. I think if you read through his conference called Transcripts, he's a very operational-based CEO. But he also, since he was CEO through a public company where they were a nano-cap, basically, he doesn't use his shares the same way as a lot of these unicorns that came from the IPO recently do. And so I think he's very, very particular about actually improving per share metrics. And so I think he's really great in the fact that he understands all the operations that are being done throughout the business. He understands the strategy. And he's been the primary one to guide Digital Turbine through this progression. He signed the first contracts with Verizon and AT&T to get Digital Turbine to scale.

He then led the company to buying Mobile Posse, which is another good cross-selling opportunity. And then he ended up leading the company into the apps. And so I think he's got great strategy, great vision, but he also is able to handle the financials very well, along with his CFO, Garrett. And so I think overall, they're a great team. I think they've managed to have a lot of cost efficiency with the growth that they've had. And yeah, if you look at, just for instance, if you look at the Trade Desk versus Digital Turbine on a gross profit per share, I think over the last five years, the Trade Desk has increased their gross profit per share about 5x, which is great. Digital Turbine has increased theirs about 15x. and so yeah like it's there's a or 18x sorry and so yeah there's value in a c or there's value in

being able to do operationally and uh have a good grasp of the financials yeah 18x that's uh you know the proof's in the pudding there it was a pretty small bit i'm just looking at right now I don't have the exact numbers, but the market cap around like 2017, it grew more than 10,000% over like five years. So it looks like it was quite the small business when Bill Stone took over. Oh, yeah. I guess last question, we try to ask this for all of these, what could kind of go wrong here? Yeah. Yeah. So that's a fair... I appreciate you giving me that question because honestly,

it's a good one for all of us investors to consider, I feel like. I think poor ROI on their products. I think that's probably the best thing that can take down Digital Turbine is if advertisers just for whatever reason don't want to use Digital Turbine, whether it be they're not getting return on their ad spend or it's too convoluted of a strategy. I think that's probably the biggest reason honestly everybody talked about google there for a little bit because that would be the main concern if you're if you're an add-in into the operating system if the operating system provider owner with in this case google didn't like you they could shut you down but digital turbine actually mitigated that by signing a a long-term agreement with them

partnership last year and google google's actually selling single tap on their google cloud product page. No. So that's mitigated a little bit. But yeah, I think it's either poor ROIs for advertising where advertisers just don't want to use them and take them out of their budget, or it's going to be like an antiquation of digital turbine services. Say they end up growing into this app business a lot, and then their preload business ends up dropping off a lot, and then they end up losing a major product that was very profitable for them just because of a lack of focus on one key area. I think that's a possibility. So I think those are kind of the main things, just poor ROI or poor execution on their tech stack. All right. Any other questions, Brett?

Okay. Well, I think that's all we got. Anything that we didn't cover that you think is important for digital turbine um yeah i think just the profitable growth in the grand scheme of things there's a lot of tech there's a lot of tech companies that uh don't have good margins and or good actual net profit margins after using their shares as a resource and i think digital turbine has shown that they're able to increase their net profit margins over time so if you you got to zoom out though you got to look over the last five ten years and you'll just see a diagonal shape up. And so return on capital is probably going to end up looking pretty good in the next few years as their content product rolls out and single tap rolls out. And so I think if

you're to look at Digital Turbine, you have to look at where the company is going and their track record, being able to show that they're able to execute on those goals with profitable products. And that's kind of my final thought. All right. All right. Well, that is going to do it. Thank you, everyone, for tuning in. We want to remind listeners that Brett and I are not financial advisors, so anything

we say or discuss here on Chitchat Money is not formal advice or recommendation. We are, however, general partners at Arch Capital, so clients may have positions in the securities discussed in this podcast. Thank you all again for tuning in. Thank you, Will, for joining us and see you guys next time. Hey, Simon, we wanted to ask you a few questions about 7investing so listeners could get an idea of what they're getting. What inspired you to start the company? And what exactly is 7investing? Well, hey, Ryan, thanks again for having me. From years of working in the investing industry,

it was inspired by conversations with people that would just always have kind of the same negative perception of the stock market, right? It's too hard, or I don't have time for this, for this to stack against me. And those conversations kind of led me to say, hey, we need to create a site that actually does inspire people to say, you can take control of your financial future. You can invest in stocks. You can find good stocks to buy and hold for long periods of time. And at the end of the day, too, we know that everybody is different. We don't believe that there is one stock that fits for everyone, right? Maybe you're a dividend-loving, paycheck-cashing income investor that might want an option

that's going to be a lower-risk dividend-paying stock, especially right now with the economy being what it is. And then other people might say, hey, I'm ready to hold on for 20 or 30 years. I want to take some swings for the fences. Let's go after those high-growth opportunities. And so I said, this could be something that would be even more fun rather than just doing educational and by myself, I said, what if I brought together a team of seven advisors, all with a diverse background and a diverse perspective of the stock market so we could

uncover more stones and look at a bunch of different stocks with a bunch of different investing styles and a whole bunch of different industries. And so seven investing is kind of the genesis of all of those that we started in March of 2020. And we said, let's look at a whole bunch of different stocks. Let's do the legwork of the analysis and let's present our seven favorite actionable ideas every month for investors to choose from. And let's start the conversation about which of these stocks is right for you and which one might be the right fit for your portfolio. Knowing that investing is a very personal thing. All right. If you are a subscriber of Seven Investing, what do you get? Can you give an

overview of what subscribers get? On the very first of every month, brett we release our seven new recommendations so we are uh coming up on october 1st here at least in the recording of this and you know on october 1st we'll release seven recommendation reports some of them will be low risk some of them will be high risk some of them will be biotech some of them will be financial services we run the full gamut and as a member you get immediate access to all of the new reports but you also get access to all of our old recommendations as well we track all of them in real time on our scorecard at 7investing.com recommendations and we also provide company updates on all of those previous recommendations as well we check in on how things

are going and sometimes we even see red flags that we think people should be aware of there's risks for any opportunity at the time that you recommend it and sometimes it's really willing it's really it's really needed for investors to kind of understand the risk and reward relationship And then the last part of it is, in addition to issuing new recommendations and providing updates on them, is we know that this is a long-term journey. We know that investing is something that we want to take years, if not decades, to accomplish whatever we want to get to as the end goal. And so we always, every month, make it a point to be very available for our subscribers to ask us questions. We have a members-only call right in the middle of every single month. We have a community discussion forum that we have available 24-7 to not only talk to our advisors, but also other investors.

I think that's one of the key differentiators for 7investing is that we know this is a long-term journey. We know it's a very personal thing. We know they're going to have questions along the way. We don't want to just broadcast stock picks and disappear. We want to be here with you throughout this entire journey. And you mentioned seven recommendations each month. sometimes those might be repeats, but obviously there's a lot of companies now in the 7investing universe. So how do members get a grasp on the advisor's conviction around certain ideas? Like

which ones do they, do they have a way of knowing which, whether advisors like certain ones more? That's the most common question we've gotten actually, since we started is what's your favorite ideas right now. We've done the diligence on almost 200 unique companies now and put them on the scorecard and people would say, hey, this is too much to keep up with. How do I even know where to start? And so we've kind of evolved as a company. One thing that we've started doing is best buys every month. Each advisor gets to pick any of their or another advisor's previous recommendations and put the flag on it that says, this is my best buy for October. And we publish shows for subscribers. The other thing that we've started doing is issuing conviction ratings on

companies that are also right there on the scorecard. So if you see a previous recommendation, we go everything from potential sell, which is the most negative flag we can put on a stock, to strong buy, which is the most positive bullish flag that we can mark things with. You can filter through all of those to really quickly see here's some of our favorite opportunities. And we've taken this even one step further now, Ryan, which is we've created a strong buy portfolio where every quarter now we've gone ahead and self-selected as a team through a pretty methodical process our 20 favorite ideas our 20 highest scoring companies that we've collectively come up with our favorites of the entire scorecard we put these into what

we're calling a strong buy portfolio that we publish each quarter also available as an added benefit for no extra charge for seven investing members all right last question here what does it cost to become a seven investing subscriber uh and as a you know we'll talk about or we have talked about before if you're a listener use code money to get a hundred dollars off your annual subscription that's right yeah we do have a monthly option you know you can come in and check out the entire scorecard for a month just to see what you're looking at for 49 a month but our most popular plan is actually the annual option because it's at a discount to that in fact we've got a discount on the discount like you mentioned brett uh 399 for the year is our is our annual option

price but if you use money the chit chat money promo code it's down to 300. so you're basically getting the the subscription for half price if you sign up for the annual offer with that promo code that does not expire after the first year as long as you remain an active subscriber get to lock in that hundred dollars off a year benefit all right well as he mentioned use that code money. Thanks for joining us, Simon. Thanks very much for having me.