Direct Communication Solutions Announces Interim Financial Statements for Q1 2024

Rhea-AI Summary

Direct Communication Solutions (OTCQX: DCSX) reported its Q1 2024 financial results, highlighting a strategic shift towards high-margin recurring SaaS revenue. Despite a 41% year-over-year revenue drop to $1.88M, recurring SaaS revenues grew 13%, and gross margins increased by 5.1%. The company reduced general and administrative expenses by $1.08M compared to Q1 2023. Q1 2024 gross profit was $657k, down 31% from $951k in Q1 2023. The net loss for Q1 2024 was $501k, a significant improvement from a $1.2M loss in Q1 2023. Adjusted EBITDA for Q1 2024 was ($481k), a 46% improvement from ($901k) in Q1 2023. New strategic agreements with System Loco and CATrack Technologies are expected to boost future SaaS revenues.

Positive

• Recurring SaaS revenues increased by 13% year-over-year.
• Gross margins improved by 5.1% from the same period last year.
• General and administrative expenses decreased by $1.08M.
• Net loss reduced by 58% to $501k from $1.2M in the previous year.
• Adjusted EBITDA improved by 46%, from ($901k) to ($481k).
• New strategic agreements are expected to enhance future recurring SaaS revenues.

Negative

• Total revenue decreased by 41% year-over-year, from $3.19M to $1.88M.
• Gross profit dropped by 31%, from $951k to $657k in Q1 2024.
• The company is still operating at a net loss, with a $501k loss in Q1 2024.
• Restructuring towards SaaS may involve inherent risks and uncertainties.

San Diego, California--(Newsfile Corp. - May 30, 2024) - Direct Communication Solutions, Inc. (OTCQX: DCSX) (CSE: DCSI) (FSE: 7QU0) ("DCS" or the "Company"), a leading provider of information technology solutions for the Internet of Things (IoT) market, is pleased to announce it has posted its Interim Financial Statements for the first quarter ended March 31, 2024, and the corresponding Management Discussion & Analysis on SEDAR+.

Significant Highlights

The following highlights and developments are for the first quarter ended March 31, 2024:

• Continuing the transition to a SaaS Solutions provider focusing on high margin recurring revenue. Recurring SaaS revenues increased 13% and gross margins increased 5.1% from the same period as last year.

• Continuing aggressive cost cutting initiatives to reduce overall expenses and focus on delivering high margin recurring revenues. Reduced general and administrative expenses $1,087,655 for the three months ended March 31, 2024, compared to the same period in 2023.

• Entered into a strategic licensing and reseller agreement with System Loco Ltd for supply chain solutions and CATrack Technologies for catalytic converter theft prevention. Both strategic agreements complement the DCS IoT Solutions portfolio and expect to generate future recurring SaaS revenues.

CEO of Direct Communication Solutions, Chris Bursey, reports strong Q1 2024 increase in recurring SaaS revenues and continued growth from our SaaS subscriber base, as highlighted by the subsequent information:

Direct Communication Solutions Inc. had first-quarter 2024 revenues of $1.88 million (U.S.) versus $3.19 million (U.S.) in Q1 2023, representing a decrease of 41 percent year over year. The decrease in revenue was primarily attributed to restructuring the company to focus on high margin recurring SaaS revenue, versus lower margin, one-time hardware sales.

Q1 2024 gross profit was $657k (U.S.) versus $951k (U.S.) in Q1 2023, representing a 31-per-cent decrease. Q1 2024 gross margin was 34.9% versus 29.8% in Q1 2023, an increase of 5.1%. The Q1 2024 net loss ended March 31, 2024, was reported at $501k (U.S.) versus a net loss of $1.2 million (U.S.) in Q1 2023. Q1 2024 adjusted EBITDA was ($481k) (U.S.) versus ($901k) in Q1 2023, representing a 46-percent improvement.

"In Q1 2024, the Direct Communication team continued to focus and execute our strategy of providing IoT solutions that generate recurring revenue with higher margins. We are executing this transition, which we believe will bring maximum value to our shareholders. Management has secured some key wins, with several large customers, demonstrating our ability to execute." Chris Bursey also commented, "We have added a significant number of new SaaS subscribers in Q1 2024 and have a strong backlog of new subscribers that will add to our recurring SaaS revenues. We are significantly reducing operating costs and increasing recurring revenues by delivering unique and customizable IoT solutions that will continue our future growth."

The conversion rate is $1 (U.S.) to $1.32 (Canadian).

We seek Safe Harbor.

About Direct Communication Services Inc.

DCSI is a technology solutions integrator focusing on connecting the Internet of Things. We provide real solutions that solve real problems. Our software applications and scalable cloud services collect and assess business-critical data from all types of assets. DCSI is headquartered in San Diego, California and is publicly traded on the OTCQX ("DCSX"), Canadian Securities Exchange ("DCSI") and Frankfurt Stock Exchange ("7QU0"). For more information, visit www.dcsbusiness.com. DCSI and the DCSI logo are among the trademarks of DCSI in the United States. Any other trademarks or trade names mentioned are the property of their respective owners.

Contacts

Chris Bursey, CEO
cbursey@dcsbusiness.com
858-525-2483

Forward-Looking Statements

This release contains forward-looking statements reflecting management's current views of future events and operations. These statements are based on current expectations and assumptions, subject to risks and uncertainties that could cause results to differ materially. DCS believes that these potential risks and uncertainties include, without limitation: the ongoing COVID-19 pandemic, the Company's dependence on third-party manufacturers, suppliers, technologies, and infrastructure; risks related to intellectual property; industry risks, including competition, online security, government regulation, and global economic conditions; and the Company's financial position and need for additional funding. Statements in this release should be evaluated in light of these factors. These risk factors and other important factors that could affect our business and financial results are discussed in our Management's Discussion and Analysis, periodic reports, and other public filings available on SEDAR+ at www.sedarplus.ca and posted with the OTC Disclosure and News Service. DCS undertakes no duty to update or revise any forward-looking statements.

Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/211217

FAQ

What were Direct Communication Solutions' revenues for Q1 2024?

Direct Communication Solutions reported Q1 2024 revenues of $1.88 million.

How did Direct Communication Solutions' Q1 2024 revenue compare to Q1 2023?

Q1 2024 revenue decreased by 41% compared to Q1 2023.

What was the gross profit for Direct Communication Solutions in Q1 2024?

The gross profit for Q1 2024 was $657,000.

How did recurring SaaS revenues perform for Direct Communication Solutions in Q1 2024?

Recurring SaaS revenues increased by 13% in Q1 2024.

What was Direct Communication Solutions' net loss in Q1 2024?

The net loss for Q1 2024 was $501,000.

How much did Direct Communication Solutions reduce its general and administrative expenses in Q1 2024?

General and administrative expenses were reduced by $1.08 million in Q1 2024.

What is the gross margin of Direct Communication Solutions for Q1 2024?

The gross margin for Q1 2024 was 34.9%.

How did Direct Communication Solutions' adjusted EBITDA change in Q1 2024?

Adjusted EBITDA improved by 46%, from ($901,000) to ($481,000).

What strategic agreements did Direct Communication Solutions enter in Q1 2024?

They entered into agreements with System Loco and CATrack Technologies.