Digerati Technologies Reports 116% Revenue Growth to $8.2 Million for Fourth Quarter FY2022 Resulting in $32.8 Million Annual Revenue Run-Rate
Digerati Technologies, Inc. (OTCQB: DTGI) reported strong FY2022 results, with revenue rising 95% to $24.2 million and gross profit increasing 103% to $14.8 million. The gross margin improved to 61.3%. Non-GAAP Operating EBITDA reached $3.6 million, a 64% increase. For Q4 FY2022, revenue grew 116% to $8.2 million, but non-GAAP Adjusted EBITDA fell 40% to $0.3 million. The company successfully completed two acquisitions, boosting customer count significantly. Digerati aims for a NASDAQ listing to further accelerate its acquisition strategy.
- FY2022 revenue increased by 95% to $24.2 million.
- Gross profit rose 103% to $14.8 million, with a gross margin of 61.3%.
- Non-GAAP Operating EBITDA improved by 64% to $3.6 million.
- Customer base expanded significantly with the acquisitions of SkyNet Telecom and NextLevel Internet.
- Non-GAAP Adjusted EBITDA decreased by 40% to $0.3 million for Q4 FY2022.
- Net loss for Q4 FY2022 increased to $3.3 million, compared to $1.2 million in Q4 FY2021.
- Selling, General and Administrative expenses surged by 114% to $4.5 million for Q4 FY2022.
- FY2022 Non-GAAP Operating EBITDA of
- FY2022 Gross Profit of
- FY2022 Gross Margin Improvement to
SAN ANTONIO, Nov. 01, 2022 (GLOBE NEWSWIRE) -- Digerati Technologies, Inc. (OTCQB: DTGI) ("Digerati" or the "Company"), a provider of cloud services specializing in UCaaS (Unified Communications as a Service) solutions for the small to medium-sized business (“SMB”) market, announced today financial results for the three and twelve months ended July 31, 2022, the Company’s fourth quarter and annual year end for its Fiscal Year 2022.
Key Financial Highlights for the Fiscal Year 2022 (Ended July 31, 2022)
- Revenue increased by
95% to$24.2 million compared to$12.4 million for FY2021. - Gross profit increased
103% to$14.8 million compared to$7.3 million for FY2021. - Gross margin improved 270 basis points to
61.3% compared to58.6% for FY2021. - Non-GAAP Adjusted EBITDA income increased by
90% to$2.2 million for FY2022, excluding all non-cash items and one-time transactional expenses, compared to Adjusted EBITDA income of$1.1 million for FY2021. - Non-GAAP Operating EBITDA (OPCO EBITDA) income increased by
64% to$3.6 million , excluding corporate expenses, compared to a non-GAAP operating EBITDA of$2.2 million for FY2021.
Key Financial Highlights for the Fourth Quarter Fiscal Year 2022 (Ended July 31, 2022)
- Revenue increased by
116% to$8.2 million compared to$3.8 million for Q4 FY2021. - Gross profit increased
114% to$5.1 million compared to$2.4 million for Q4 FY2021. - Gross margin remained strong at
61.6% compared to62.3% for Q4 FY2021. - Non-GAAP Adjusted EBITDA income decreased by
40% to$0.3 million for Q4 FY2022, excluding all non-cash items and one-time transactional expenses, compared to Adjusted EBITDA income of$0.5 million for Q4 FY2021. - Non-GAAP Operating EBITDA (OPCO EBITDA) income increased by
44% to$1.3 million , excluding corporate expenses, compared to a non-GAAP operating EBITDA of$0.9 million for Q4 FY2021.
Arthur L. Smith, CEO of Digerati, commented, “Our fiscal year 2022 was highly successful as we closed two additional acquisitions, SkyNet Telecom and NextLevel Internet, and continued to execute on our acquisition playbook that improves operating efficiencies through integration while growing organically as demonstrated by our
Mr. Smith continued, “We are thrilled to have announced on September 6th our signing of a definitive business combination agreement with Minority Equality Opportunities Acquisition Inc. that will take us into the next chapter of our corporate development plan with a listing on NASDAQ. We believe that a NASDAQ listing is the final ingredient needed for the acceleration of our acquisition strategy in our highly fragmented industry. We will continue to work diligently on closing this key transaction and achieving a significant milestone for our Company.”
Antonio Estrada, CFO of Digerati, stated, “Due to our successful integration of acquisitions, we exited fiscal year end July 31, 2022 in a great financial position with annual run-rates of
Accomplishments for the Fiscal Year ended July 31, 2022 include:
- Closed acquisition of SkyNet Telecom, a leading provider of cloud communication and broadband solutions tailored for businesses. The acquisition of SkyNet expanded the Company’s footprint in Texas and increased its customer base by over
215% to 737 business customers in the Lone Star State. - Closed acquisition of NextLevel Internet, a leading provider of cloud communication and broadband solutions tailored for the SMB market. The acquisition of NextLevel expanded the Company’s growing nationwide footprint and added a strong West Coast presence with nearly 1,000 SMB clients in California.
- As a combined business, Digerati’s operating subsidiaries serve over 4,000 business customers and 45,000 users. The business model of the combined entities is supported by strong and predictable recurring revenue with high gross margins under contracts with business customers in various industries including banking, healthcare, financial services, legal, insurance, hotel, real estate, staffing, restaurant, education and municipalities.
Three Months ended July 31, 2022, Compared to Three Months ended July 31, 2021
Revenue for the three months ended July 31, 2022 was
Gross profit for the three months ended July 31, 2022 was
Selling, General and Administrative expenses (excluding legal and professional fees) for the three months ended July 31, 2022 increased by
Operating loss for the three months ended July 31, 2022 was
Adjusted EBITDA income for the three months ended July 31, 2022 was
Of note were the following non-cash expenses associated with the three months ended July 31, 2022:
Company recognition of stock-based compensation and warrant expense of
Non-GAAP operating EBITDA (OPCO EBITDA) for the three months ended July 31, 2022 improved to income of
Net loss for the three months ended July 31, 2022 was
At July 31, 2022, Digerati had
Twelve Months ended July 31, 2022, Compared to Twelve Months ended July 31, 2021
Revenue for the twelve months ended July 31, 2022 was
Gross profit for the twelve months ended July 31, 2022 was
Selling, General and Administrative expenses (excluding legal and professional fees) for the twelve months ended July 31, 2022 increased by
Operating loss for the twelve months ended July 31, 2022 was
Adjusted EBITDA income for the twelve months ended July 31, 2022 was
Of note were the following non-cash expenses associated with the twelve months ended July 31, 2022:
Company gain of
Non-GAAP operating EBITDA (OPCO EBITDA) for the twelve months ended July 31, 2022 improved to income of
Net loss for the twelve months ended July 31, 2022 was
Use of Non-GAAP Financial Measurements
The Company believes that EBITDA (earnings before interest, taxes, depreciation and amortization) is useful to investors because it is commonly used in the cloud communications industry to evaluate companies on the basis of operating performance and leverage. Adjusted EBITDA provides an adjusted view of EBITDA that takes into account certain significant non-recurring transactions, if any, such as impairment losses and expenses associated with pending acquisitions, which vary significantly between periods and are not recurring in nature, as well as certain recurring non-cash charges such as changes in fair value of the Company’s derivative liabilities and stock-based compensation. The Company also believes that Adjusted EBITDA provides investors with a measure of the Company’s operational and financial progress that corresponds with the measurements used by management as a basis for allocating resources and making other operating decisions. Although the Company uses Adjusted EBITDA as one of several financial measures to assess its operating performance, its use is limited as it excludes certain significant operating expenses. Non-GAAP operating EBITDA (OPCO EBITDA) is useful to investors because it reflects EBITDA for the core operation of the business excluding corporate expenses, non-cash expenses and transactional expenses. EBITDA, Adjusted EBITDA, and Non-GAAP operating EBITDA are not intended to represent cash flows for the periods presented, nor have they been presented as an alternative to operating income or as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In accordance with SEC Regulation G, the non-GAAP measurements in this press release have been reconciled to the nearest GAAP measurement, which can be viewed under the heading “Reconciliation of Net Loss to Adjusted EBITDA” in the financial table included in this press release.
About Digerati Technologies, Inc.
Digerati Technologies, Inc. (OTCQB: DTGI) is a provider of cloud services specializing in UCaaS (Unified Communications as a Service) solutions for the business market. Through its operating subsidiaries NextLevel Internet (NextLevelinternet.com), T3 Communications (T3com.com), Nexogy (Nexogy.com), and SkyNet Telecom (Skynettelecom.net), the Company is meeting the global needs of businesses seeking simple, flexible, reliable, and cost-effective communication and network solutions including, cloud PBX, cloud telephony, cloud WAN, cloud call center, cloud mobile, and the delivery of digital oxygen on its broadband network. The Company has developed a robust integration platform to fuel mergers and acquisitions in a highly fragmented market as it delivers business solutions on its carrier-grade network and Only in the Cloud™. For more information, please visit www.digerati-inc.com and follow DTGI on LinkedIn, Twitter and Facebook.
Forward-Looking Statements
The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements related to the future financial performance of the Company. Although the Company believes that the expectations reflected in the forward-looking statements such as a Nasdaq listing being the final ingredient needed for the acceleration of our acquisition strategy, annualized revenues of
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| Reconciliation of Net Income (Loss) to Adjusted EBITDA | |||||||||||||||||
| DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES | |||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||
| Three months ended July 31, | For the Years ended July 31, | ||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||
| OPERATING REVENUES: | |||||||||||||||||
| Cloud software and service revenue | $ | 8,195 | $ | 3,787 | $ | 24,154 | $ | 12,416 | |||||||||
| Total operating revenues | 8,195 | 3,787 | 24,154 | 12,416 | |||||||||||||
| OPERATING EXPENSES: | |||||||||||||||||
| Cost of services (exclusive of depreciation and amortization) | 3,143 | 1,427 | 9,346 | 5,135 | |||||||||||||
| Selling, general and administrative expense | 4,448 | 2,050 | 12,434 | 7,019 | |||||||||||||
| Legal and professional fees | 306 | 177 | 3,036 | 894 | |||||||||||||
| Bad debt | 47 | 8 | 98 | 17 | |||||||||||||
| Depreciation and amortization expense | 402 | 545 | 2,916 | 1,749 | |||||||||||||
| Total operating expenses | 8,346 | 4,207 | 27,830 | 14,814 | |||||||||||||
| OPERATING LOSS | (151 | ) | (420 | ) | (3,676 | ) | (2,398 | ) | |||||||||
| OTHER INCOME (EXPENSE): | |||||||||||||||||
| Gain (loss) on derivative instruments | (1,649 | ) | 925 | 6,186 | (9,935 | ) | |||||||||||
| Gain (loss) on settlement of debt | (1 | ) | 213 | (5,481 | ) | 560 | |||||||||||
| Income tax benefit (expense) | (134 | ) | (61 | ) | (419 | ) | (183 | ) | |||||||||
| Other income (expense) | 26 | (294 | ) | 26 | (294 | ) | |||||||||||
| Interest expense | (1,427 | ) | (1,686 | ) | (5,990 | ) | (4,765 | ) | |||||||||
| Total other income (expense) | (3,185 | ) | (903 | ) | (5,678 | ) | (14,617 | ) | |||||||||
| NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST | (3,336 | ) | (1,323 | ) | (9,354 | ) | (17,015 | ) | |||||||||
| Less: Net loss attributable to the noncontrolling interests | 35 | 109 | 1,341 | 332 | |||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO DIGERATI'S SHAREHOLDERS | (3,301 | ) | (1,214 | ) | (8,013 | ) | (16,683 | ) | |||||||||
| Deemed dividend on Series A Convertible preferred stock | (5 | ) | (5 | ) | (19 | ) | (20 | ) | |||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO DIGERATI'S COMMON SHAREHOLDERS | $ | (3,306 | ) | $ | (1,219 | ) | $ | (8,032 | ) | $ | (16,703 | ) | |||||
| INCOME (LOSS) PER COMMON SHARE - BASIC | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.13 | ) | |||||
| LOSS PER COMMON SHARE - DILUTED | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.13 | ) | |||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC | 140,512,215 | 137,950,308 | 139,594,358 | 129,411,947 | |||||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED | 140,512,215 | 137,950,308 | 139,594,358 | 129,411,947 | |||||||||||||
| See notes to consolidated unaudited financial statements | |||||||||||||||||
| Reconciliation of Net Income (Loss) to Adjusted EBITDA - OPCO, Net of Non-cash expenses & Transactional Costs. | |||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO DIGERATI'S SHAREHOLDERS, as reported | $ | (3,301 | ) | $ | (1,214 | ) | $ | (8,013 | ) | $ | (16,683 | ) | |||||
| EXCLUDING NON-CASH ITEMS TRANSACTIONAL COSTS & CORP EXP | |||||||||||||||||
| ADJUSTMENTS: | |||||||||||||||||
| Stock compensation & warrant expense | 148 | 66 | 224 | 972 | |||||||||||||
| Corp Expenses (Net of stock compensation, Legal fees & Transactional cost) | 1,052 | 384 | 1,385 | 1,066 | |||||||||||||
| Legal and professional fees & transactional costs | (115 | ) | 326 | 2,703 | 815 | ||||||||||||
| Depreciation and amortization expense | 402 | 545 | 2,916 | 1,749 | |||||||||||||
| OTHER ADJUSTMENTS | |||||||||||||||||
| Gain (loss) on derivative instruments | 1,649 | (925 | ) | (6,186 | ) | 9,935 | |||||||||||
| Gain (loss) on settlement of debt | 1 | (213 | ) | 5,481 | (560 | ) | |||||||||||
| Other income (expense) | (26 | ) | 294 | (26 | ) | 294 | |||||||||||
| Interest expense | 1,427 | 1,686 | 5,990 | 4,765 | |||||||||||||
| Income tax | 134 | 61 | 419 | 183 | |||||||||||||
| Less: Net loss attributable to the noncontrolling interest | (35 | ) | (109 | ) | (1,341 | ) | (332 | ) | |||||||||
| ADJUSTED EBITDA - OPCO | $ | 1,336 | $ | 902 | $ | 3,552 | $ | 2,204 | |||||||||
| ADD-BACKS Expenses | |||||||||||||||||
| Corp Expenses (Net of stock compensation, Legal fees & Transactional cost) | 1,052 | 384 | 1,385 | 1,066 | |||||||||||||
| ADJUSTED EBITDA - INCOME | $ | 284 | $ | 517 | $ | 2,167 | $ | 1,138 | |||||||||
FAQ
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