On May 17, 2022, Digital Turbine, Inc. announced that it will restate its financial statements for the interim periods ended June 30, 2021, September 30, 2021, and December 31, 2021, following a review of the presentation of revenue net of license fees and revenue share for the Company’s recently acquired businesses.
On this news, shares of Digital Turbine fell more than 7% in intraday trading on May 18, 2022.
Then on May 31, 2022, after the market closed, Digital Turbine released financial results for the quarter ending March 31, 2022, in which the company delayed filing its annual report, due to the identification of a material weakness in its internal controls over financial reporting.
Shares of Digital Turbine stock dropped more than 20% in intraday trading on June 1, 2022.
The complaint in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that:
- the Company’s recent acquisitions, AdColony and Fyber, act as agents in certain of their respective product lines;
- as a result, revenues for those product lines must be reported net of license fees and revenue share, rather than on a gross basis;
- the Company’s internal control over financial reporting as to revenue recognition was deficient;
- as a result of the foregoing, the Company’s net revenues was overstated throughout fiscal 2022; and
- as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.