Digerati Technologies Reports 142% Revenue Growth to $3.787 Million for Fourth Quarter FY2021
Digerati Technologies (OTCQB: DTGI) reported strong financial results for Q4 and FY2021, achieving a 142% revenue increase to $3.787 million from $1.567 million in Q4 FY2020. Gross profit rose 170% to $2.360 million, resulting in a gross margin of 62.3%. Non-GAAP operating EBITDA improved to $0.910 million, reflecting a solid operational performance. The company completed the acquisitions of Nexogy and ActivePBX, expanding its market reach to over 2,600 customers and 28,000 users. Digerati aims for a 10% organic growth rate supported by a $20 million credit facility to pursue further acquisitions.
- Revenue increased by 142% to $3.787 million for Q4 FY2021.
- Gross profit surged 170% to $2.360 million, boosting gross margin to 62.3%.
- Non-GAAP operating EBITDA improved to $0.910 million.
- Successful acquisition of Nexogy and ActivePBX, enhancing market position.
- Future growth supported by a $20 million senior secured credit facility.
- Operating loss for Q4 FY2021 increased by 56% to $0.420 million.
- Net loss for Q4 FY2021 rose to $1.219 million, a significant increase from the previous year.
- Non-GAAP Operating EBITDA of
- Gross Profit of
- Strong Gross Margin Improvement to
SAN ANTONIO, Texas, Oct. 27, 2021 (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, 2021, the Company’s fourth quarter and annual year end for its Fiscal Year 2021.
Key Financial Highlights for the Fourth Quarter Fiscal Year 2021 (Ended July 31, 2021)
- Revenue increased by
142% to$3.78 7 million compared to$1.56 7 million for Q4 FY2020. - Gross profit increased
170% to$2.36 0 million compared to$0.87 5 million for Q4 FY2020. - Gross margin increased to
62.3% compared to55.8% for Q4 FY2020. - Non-GAAP Adjusted EBITDA income improved to
$0.52 5 million, excluding all non-cash items and one-time transactional expenses, compared to Adjusted EBITDA income of$0.06 2 million for Q4 FY2020. - Non-GAAP operating EBITDA (OPCO EBITDA) improved to income of
$0.91 0 million, excluding corporate expenses, compared to a non-GAAP operating EBITDA of$0.34 2 million for Q4 FY2020.
Arthur L. Smith, CEO of Digerati, commented, “We enjoyed a very productive and successful fiscal year 2021, highlighted by the closing of our acquisitions of Nexogy and ActivePBX. We accomplished key objectives related to these acquisitions during FY2021 and now have a strong and significant platform in Florida and Texas that serves as a foundation for continued growth. We will remain focused on targeting annual organic growth of
Antonio Estrada, CFO of Digerati, stated, “We exited our fiscal year end July 31, 2021 in a much-improved financial position with annual run-rates of
Fiscal Year Ended July 31, 2021 Accomplishments:
- Closed acquisition of Nexogy. Over the years, the Nexogy team has developed a channel sales program that has proven to be effective and resulted in Nexogy’s recognition as one of the fastest growing technology companies in South Florida and nomination by the Miami Minority Chamber of Commerce as “High Tech Company of the Year 2016”.
- Closed acquisition of ActivePBX. Over the years, ActivePBX has placed a strong emphasis on integrating its cloud communication platform with Customer Relationship Management (“CRM”) systems and most recently achieved the ‘Built for NetSuite’ status with its proven ActiveCRM CTI (Computer Telephony Integration) solution. This integration, built for Oracle NetSuite’s SuiteCloud Platform, allows organizations to pass CRM data seamlessly, easily, and conveniently between ActivePBX’s cloud system and Oracle NetSuite.
- As a combined business, Nexogy, ActivePBX, and Digerati’s operating subsidiary, T3 Communications, Inc., serves over 2,600 business customers and approximately 28,000 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, hotels, real estate, staffing, municipalities, food services, and education.
- Closed a
$20 million senior secured credit facility with Post Road Group. The Facility enables continued expansion of Digerati’s U.S. operations through organic growth efforts and targeted acquisitions. Post Road Group shares in Digerati’s strategic vision of combining organic growth with accretive acquisitions in building a formidable UCaaS provider for the small and medium-sized business market. With investing expertise in the Technology, Media, and Telecommunications (“TMT”) industries and a culture that aligns with that of the Company, Post Road Group is an ideal financial partner for Digerati during this key phase of its evolution. The initial funding of$14 million from the$20 million multi-draw facility was used to close the Company’s acquisitions of Nexogy, Inc. (Nexogy.com) and ActivePBX (ActivePBX.com), and refinance existing debt. Future draws may be used to fund additional acquisitions within the Company’s robust M&A pipeline of UCaaS providers that meet key financial, technical, and operational criteria, and have excelled at customer service and satisfaction when serving regional businesses. The Facility will support a more streamlined approach to the Company’s acquisition process, accelerating its consolidation strategy in the highly-fragmented UCaaS marketplace. - Entered a strategic partnership with Sandler Partners to expand access to America’s fastest-growing master agent and distributor of connectivity and cloud services. Nexogy’s UCaaS and CCaaS (Unified Communications as a Service and Contact Center as a Service) platform will allow Sandler to provide its partners with additional fully integrated solutions. Sandler’s more than 8,000 partners, 200 telecom, cloud, and data providers, and extensive network of expert agents will now be able to distribute Nexogy’s fully integrated suite of cloud communication services.
- As a result of its acquisition of ActivePBX, the Company achieved the “Built for NetSuite” status for its operating subsidiary, T3 Communications, Inc. The SuiteApp, built for Oracle NetSuite’s SuiteCloud Platform, allows organizations to seamlessly, easily, and conveniently pass CRM data between the company’s cloud PBX and Oracle NetSuite, thus increasing productivity, reducing data entry time, and improving information accuracy across multiple agent touchpoints.
- Improved balance sheet.
- Reduced potential equity dilution.
Three Months ended July 31, 2021 Compared to Three Months ended July 31, 2020
Revenue for the three months ended July 31, 2021 was
The total number of customers increased from 731 for the three months ended July 31, 2020 to 2,655 customers for the three months ended July 31, 2021.
Gross profit for the three months ended July 31, 2021 was
Selling, General and Administrative expenses (excluding legal and professional fees) for the three months ended July 31, 2021 increased by
Operating loss for the three months ended July 31, 2021, was
Adjusted EBITDA income for the three months ended July 31, 2021, was
Of note were the following non-cash expenses associated with the three months ended July 31, 2021: Company recognition of stock-based compensation and warrant expense of
Non-GAAP operating EBITDA (OPCO EBITDA) for the three months ended July 31, 2021 improved to income of
Net loss for the three months ended July 31, 2021, was
At July 31, 2021, Digerati had
Twelve Months ended July 31, 2021 Compared to Twelve Months ended July 31, 2020
Revenue for the twelve months ended July 31, 2021 was
The total number of customers increased from 731 for the three months ended July 31, 2020 to 2,655 customers for the twelve months ended July 31, 2021.
Gross profit for the twelve months ended July 31, 2021 was
Selling, General and Administrative expenses (excluding legal and professional fees) for the twelve months ended July 31, 2021 increased by
Operating loss for the twelve months ended July 31, 2021, was
Adjusted EBITDA income for the twelve months ended July 31, 2021, was
Of note were the following non-cash expenses associated with the twelve months ended July 31, 2021: Company recognition of stock-based compensation and warrant expense of
Non-GAAP operating EBITDA (OPCO EBITDA) for the twelve months ended July 31, 2021 improved to income of
Net loss for the twelve months ended July 31, 2021, 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 T3 Communications (T3com.com) and Nexogy (Nexogy.com), 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 or 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 annual run-rates of
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Investors
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| DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES | |||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (In thousands, except per share amounts, unaudited) | |||||||||||||||||
| Three months ended July 31, | For the Years ended July 31, | ||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||
| OPERATING REVENUES: | |||||||||||||||||
| Cloud software and service revenue | $ | 3,787 | $ | 1,567 | $ | 12,416 | $ | 6,279 | |||||||||
| Total operating revenues | 3,787 | 1,567 | 12,416 | 6,279 | |||||||||||||
| OPERATING EXPENSES: | |||||||||||||||||
| Cost of services (exclusive of depreciation and amortization) | 1,427 | 692 | 5,135 | 3,035 | |||||||||||||
| Selling, general and administrative expense | 2,050 | 749 | 7,019 | 4,106 | |||||||||||||
| Legal and professional fees | 177 | 234 | 894 | 642 | |||||||||||||
| Bad debt | 8 | 14 | 17 | (5 | ) | ||||||||||||
| Depreciation and amortization expense | 545 | 148 | 1,749 | 613 | |||||||||||||
| Total operating expenses | 4,207 | 1,837 | 14,814 | 8,391 | |||||||||||||
| OPERATING LOSS | (420 | ) | (270 | ) | (2,398 | ) | (2,112 | ) | |||||||||
| OTHER INCOME (EXPENSE): | |||||||||||||||||
| Gain (loss) on derivative instruments | 925 | 194 | (9,935 | ) | 263 | ||||||||||||
| Gain (loss) on settlement of debt | 213 | (5 | ) | 560 | 129 | ||||||||||||
| Income tax benefit (expense) | (61 | ) | 11 | (183 | ) | 33 | |||||||||||
| Other income (expense) | (294 | ) | 116 | (294 | ) | 116 | |||||||||||
| Interest expense | (1,686 | ) | (340 | ) | (4,765 | ) | (1,853 | ) | |||||||||
| Total other income (expense) | (903 | ) | (24 | ) | (14,617 | ) | (1,312 | ) | |||||||||
| NET LOSS INCLUDING NONCONTROLLING INTEREST | (1,323 | ) | (294 | ) | (17,015 | ) | (3,424 | ) | |||||||||
| Less: Net loss attributable to the noncontrolling interests | 109 | (11 | ) | 332 | 47 | ||||||||||||
| NET LOSS ATTRIBUTABLE TO DIGERATI'S SHAREHOLDERS | (1,214 | ) | (305 | ) | (16,683 | ) | (3,377 | ) | |||||||||
| Deemed dividend on Series A Convertible preferred stock | (5 | ) | (19 | ) | (20 | ) | (19 | ) | |||||||||
| NET LOSS ATTRIBUTABLE TO DIGERATI'S COMMON SHAREHOLDERS | $ | (1,219 | ) | $ | (324 | ) | $ | (16,703 | ) | $ | (3,396 | ) | |||||
| LOSS PER COMMON SHARE - BASIC | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.13 | ) | $ | (0.06 | ) | |||||
| LOSS PER COMMON SHARE - DILUTED | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.13 | ) | $ | (0.06 | ) | |||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC | 137,950,308 | 90,792,574 | 129,411,947 | 53,883,966 | |||||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED | 137,950,308 | 90,792,574 | 129,411,947 | 53,883,966 | |||||||||||||
| See notes to consolidated unaudited financial statements | |||||||||||||||||
| Reconciliation of Net Income (Loss) to Adjusted EBITDA - OPCO, Net of Non-cash expenses & Transactional Costs | |||||||||||||||||
| NET LOSS ATTRIBUTABLE TO DIGERATI'S SHAREHOLDERS, as reported | $ | (1,214 | ) | $ | (305 | ) | $ | (16,683 | ) | $ | (3,377 | ) | |||||
| EXCLUDING NON-CASH ITEMS TRANSACTIONAL COSTS & CORP EXP | |||||||||||||||||
| ADJUSTMENTS: | |||||||||||||||||
| Stock compensation & warrant expense | 66 | (5 | ) | 972 | 1,127 | ||||||||||||
| Corp Expenses net of stock compensation & Transactional cost | 384 | 280 | 1,066 | 890 | |||||||||||||
| Legal and professional fees - transactional costs | 326 | 175 | 815 | 370 | |||||||||||||
| Depreciation and amortization expense | 545 | 148 | 1,749 | 613 | |||||||||||||
| Loss on derivative instruments | (925 | ) | (194 | ) | 9,935 | (263 | ) | ||||||||||
| Bad Debt | 8 | 14 | 17 | (5 | ) | ||||||||||||
| OTHER ADJUSTMENTS | |||||||||||||||||
| Other income (expense) | 294 | (116 | ) | 294 | (116 | ) | |||||||||||
| Interest expense | 1,686 | 340 | 4,765 | 1,853 | |||||||||||||
| Income tax | 61 | (11 | ) | 183 | (33 | ) | |||||||||||
| Less: Net loss attributable to the noncontrolling interest | (109 | ) | 11 | (332 | ) | (47 | ) | ||||||||||
| Gain (loss) on settlement of debt | (213 | ) | 5 | (560 | ) | (129 | ) | ||||||||||
| ADJUSTED EBITDA - OPCO | $ | 910 | $ | 342 | $ | 2,221 | $ | 883 | |||||||||
| ADD-BACKS Expenses | |||||||||||||||||
| Corp Expenses net of stock compensation & Transactional cost | 384 | 280 | 1,066 | 890 | |||||||||||||
| ADJUSTED EBITDA - Income (Loss) | $ | 525 | $ | 62 | $ | 1,155 | $ | (7 | ) | ||||||||
FAQ
What were Digerati Technologies' Q4 FY2021 revenue figures?
How did Digerati's gross profit change in Q4 FY2021?
What is the significance of the $20 million credit facility for Digerati?
What were Digerati's operating and net loss figures for Q4 FY2021?
How many customers does Digerati serve after recent acquisitions?
