Digital Turbine Stock Crashes 23% After Revenue Beat Fails to Lift Profit Outlook as AI Costs Squeeze Margins

Digital Turbine shares fell roughly 23% to $8.73 on November 10, 2026, after the company reported fiscal second-quarter results the prior evening that beat revenue expectations but left investors disappointed by shrinking margins and an unchanged profit forecast. The Austin, Texas-based software maker posted Q2 revenue of $178.7 million, up 27% year-over-year, and non-GAAP adjusted EBITDA of $39.8 million, up 46%. However, non-GAAP adjusted net income per share slipped to $0.18 from $0.19 in the prior quarter, and the company held its full-year profit outlook flat despite raising its revenue guidance, signaling that heavier investment in artificial intelligence is absorbing the gains from stronger sales.

Barron's characterized the dynamic as AI investments turning earnings into a "deflated balloon," capturing the market's frustration that incremental revenue was not reaching the bottom line. The company raised its fiscal 2027 revenue forecast, citing AI-powered advertising improvements, stronger advertiser demand, and international expansion, but the decision to keep non-GAAP profit guidance unchanged drew sharp selling pressure. Shares had fallen as much as 25% in premarket trading before settling around a 23% decline by mid-morning.

The sharp selloff drew unusual options activity alongside peers Unity, which slid about 2%, and AppLovin, which dipped modestly. Law firm Block and Leviton separately announced an investigation into Digital Turbine for potential securities law violations, inviting investors who suffered losses to come forward. Meanwhile, institutional interest was not entirely absent: CenterBook Partners LP disclosed a new stake of 122,339 shares, valued at approximately $1.36 million, representing about 0.10% of the company.