When Mandalay Digital Group Inc. announced last week that telecom giant Verizon Communications will carry its Digital Turbine product line, the market heard the call.
Mandalay Digital, a Hollywood mobile-software products company, expects that access to Verizon’s 100 million subscribers, combined with a push to monetize part of the Digital Turbine software, will generate substantial revenue and profit in the next year or two.
Shares of Mandalay Digital surged 40 percent for the week ended Jan. 22 to close at $3.93, making it the top gainer on the LABJ Stock Index. (See page 58.)
Chief Executive Peter Adderton referred to the relationship with New York’s Verizon as a major milestone for Mandalay Digital during a Jan. 22 conference call announcing the deal. Verizon will be the first of the major U.S. carriers to use the company’s Digital Turbine IQ and Digital Turbine Ignite products, which are supported by Google’s Android platform.
Both products give carriers more control over what their customers install on their smartphones. IQ is a search tool that allows people to find and download mobile applications and pay for them directly through their carrier without having to sign up for a third-party service. Ignite is a software package that carriers use to control subscribers’ installation of mobile applications. Mandalay Digital has owned Digital Turbine since December 2011.
Before the Verizon deal was signed, Cricket Wireless in San Diego, which sells prepaid mobile telephone plans, was the only U.S. carrier to use Digital Turbine products, Mandalay Digital’s main business. Foreign carriers such as Vodafone of Australia and Turkey’s Turkcell also use the company’s software.
Adderton called the partnership with Verizon a very big deal and anticipates that the relationship will open doors for other top-tier carriers around the world to use the Digital Turbine suite of products.
About 25 million people use Digital Turbine products, with 10 percent of them paying, said Bill Stone, chief executive of Digital Turbine. More than 20 carriers around the world have signed agreements with the company to use the company’s software.
Stone mentioned on the call that the company is preparing to monetize the Ignite product by using the software to preload third-party applications on their partners’ phones. The partners will charge customers for the apps and the money will be split. Digital Turbine expects the new revenue to “become a major top and bottom line financial driver for the business” over the next 12 to 24 months.
Shares of Mandalay Digital, which has 74 full-time employees, began trading on the Nasdaq in June. The company’s stock is up 50 percent since Jan. 1.
Mandalay Digital’s chairman is Peter Guber, who is also the chairman and chief executive of Mandalay Entertainment, a privately held film production company. The two companies operate independently.