Digerati Technologies Reports 21% Revenue Growth to $4.019 Million for Second Quarter FY2022
Digerati Technologies, Inc. (OTCQB: DTGI) reported a strong second-quarter performance for FY2022, with revenues rising 21% to $4.019 million compared to $3.326 million in Q2 FY2021. Gross profit also saw a notable increase of 30%, reaching $2.466 million, while gross margin improved to 61.4% from 56.9%. The company closed the acquisition of SkyNet Telecom and NextLevel Internet, expanding its market presence. Despite a $11.047 million net loss due to increased legal fees and derivative losses, non-GAAP operating EBITDA rose to $0.591 million, indicating improved operational performance.
- Revenue up 21% to $4.019 million from $3.326 million in Q2 FY2021.
- Gross profit increased 30% to $2.466 million with margin improved to 61.4%.
- Non-GAAP Operating EBITDA rose to $0.591 million, up from $0.451 million in Q1 FY2022.
- Acquisitions of SkyNet Telecom and NextLevel Internet enhance market reach.
- Net loss increased to $11.047 million, up from $1.955 million in Q2 FY2021.
- Operating loss rose 73% to $1.319 million due to increased legal fees.
- Adjusted EBITDA declined to $0.209 million from $0.251 million year-over-year.
- Non-GAAP Operating EBITDA of
- Gross Profit of
- Strong Gross Margin Improvement to
SAN ANTONIO, March 18, 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 months ended January 31, 2022, the Company’s second quarter for its Fiscal Year 2022.
Key Financial Highlights for the Second Quarter Fiscal Year 2022 (Ended January 31, 2022)
- Revenue increased by
21% to$4.01 9 million compared to$3.32 6 million for Q2 FY2021. - Gross profit increased
30% to$2.46 6 million compared to$1.89 2 million for Q2 FY2021. - Gross margin increased to
61.4% compared to56.9% for Q2 FY2021. - Non-GAAP Adjusted EBITDA income was
$0.20 9 million, excluding all non-cash items and one-time transactional expenses, compared to Adjusted EBITDA income of$0.25 1 million for Q2 FY2021. - Non-GAAP operating EBITDA (OPCO EBITDA) improved to income of
$0.59 1 million, excluding corporate expenses, all non-cash items and one-time transactional expenses, compared to a non-GAAP operating EBITDA of$0.45 1 million for Q1 FY2022.
Arthur L. Smith, CEO of Digerati, commented, “We had a very active quarter highlighted by our closing of the SkyNet Telecom acquisition, which expands our footprint in Texas for our cloud communication and broadband solutions for businesses. During the first week of February and immediately following our second quarter, we closed our acquisition of NextLevel Internet, which expands our cloud communications and broadband solutions to the west coast, specifically California. We now serve over 4,000 business customers and approximately 45,000 users, predominantly in Florida, Texas and California.”
Smith continued, “We’d like to give a special acknowledgement and thanks to our acquisition financing partner, Post Road Group, who has shared in our vision of strategic accretive acquisitions, as we capitalize on opportunities in a very fragmented market. We have our sights set on increased profitability and enhanced shareholder value as we continue working towards our corporate goal of listing our common stock on a national securities exchange.”
Antonio Estrada, CFO of Digerati, stated, “Our team continues to execute on plan, as we integrate these acquisitions and streamline operations and costs more efficiently. This is evident with our
Estrada continued, “It is important to be clear that our acquisition strategy has in fact increased our profitability, which is demonstrated in our reporting Non-GAAP Adjusted EBITDA and Non-GAAP Operating EBITDA. Currently, our operating subsidiaries in the aggregate are expected to generate approximately
Three Months ended January 31, 2022 Compared to Three Months ended January 31, 2021
Revenue for the three months ended January 31, 2022 was
Gross profit (revenues minus cost of services excluding depreciation and amortization) for the three months ended January 31, 2022 was
Selling, General and Administrative expenses (excluding legal and professional fees) for the three months ended January 31, 2022 increased by
Operating loss for the three months ended January 31, 2022, was
Adjusted EBITDA income for the three months ended January 31, 2022, was
Of note were the following non-cash expenses associated with the three months ended January 31, 2022. Company recognition of stock-based compensation and warrant expense of
Non-GAAP operating EBITDA (OPCO EBITDA) for the three months ended January 31, 2022 improved to income of
Net loss for the three months ended January 31, 2022, was
On January 31, 2022, Digerati had
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), Nexogy (Nexogy.com), SkyNet Telecom (Skynettelecom.net) and NextLevel Internet (nextlevelinternet.com), the Company is meeting the global needs of small 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 generating annual revenue of
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Investors
The Eversull Group
Jack Eversull
jack@theeversullgroup.com
(972) 571-1624
ClearThink
Brian Loper
bloper@clearthink.capital
(347) 413-4234
| Reconciliation of Net Loss to Adjusted EBITDA | |||||||||||||||||||
| DIGERATI TECHNOLOGIES, INC. AND SUBSIDIARIES | |||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
| (In thousands, except per share amounts, unaudited) | |||||||||||||||||||
| Three months ended January 31, | Six months ended January 31, | ||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
| OPERATING REVENUES: | |||||||||||||||||||
| Cloud software and service revenue | $ | 4,019 | $ | 3,326 | $ | 7,796 | $ | 4,878 | |||||||||||
| Total operating revenues | 4,019 | 3,326 | 7,796 | 4,878 | |||||||||||||||
| OPERATING EXPENSES: | |||||||||||||||||||
| Cost of services (exclusive of depreciation and amortization) | 1,553 | 1,434 | 3,042 | 2,182 | |||||||||||||||
| Selling, general and administrative expense | 2,127 | 1,965 | 3,915 | 2,976 | |||||||||||||||
| Legal and professional fees | 1,175 | 255 | 1,749 | 513 | |||||||||||||||
| Bad debt | 2 | 4 | 15 | 4 | |||||||||||||||
| Depreciation and amortization expense | 481 | 432 | 974 | 593 | |||||||||||||||
| Total operating expenses | 5,338 | 4,090 | 9,695 | 6,268 | |||||||||||||||
| OPERATING LOSS | (1,319 | ) | (764 | ) | (1,899 | ) | (1,390 | ) | |||||||||||
| OTHER INCOME (EXPENSE): | |||||||||||||||||||
| Gain (loss) on derivative instruments | (3,425 | ) | (160 | ) | 1,009 | 18 | |||||||||||||
| Loss on extinguishment of debt | (5,480 | ) | - | (5,480 | ) | - | |||||||||||||
| Gain (loss) on settlement of debt | - | 197 | - | 197 | |||||||||||||||
| Income tax benefit (expense) | (41 | ) | (51 | ) | (119 | ) | (59 | ) | |||||||||||
| Other income (expense) | 1 | - | (2 | ) | - | ||||||||||||||
| Interest expense | (1,380 | ) | (1,202 | ) | (2,887 | ) | (1,502 | ) | |||||||||||
| Total other income (expense) | (10,325 | ) | (1,216 | ) | (7,479 | ) | (1,346 | ) | |||||||||||
| NET LOSS INCLUDING NONCONTROLLING INTEREST | (11,644 | ) | (1,980 | ) | (9,378 | ) | (2,736 | ) | |||||||||||
| Less: Net loss attributable to the noncontrolling interests | 602 | 30 | 760 | 65 | |||||||||||||||
| NET LOSS ATTRIBUTABLE TO DIGERATI'S SHAREHOLDERS | (11,042 | ) | (1,950 | ) | (8,618 | ) | (2,671 | ) | |||||||||||
| Deemed dividend on Series A Convertible preferred stock | (5 | ) | (5 | ) | (10 | ) | (10 | ) | |||||||||||
| NET LOSS ATTRIBUTABLE TO DIGERATI'S COMMON SHAREHOLDERS | $ | (11,047 | ) | $ | (1,955 | ) | $ | (8,628 | ) | $ | (2,681 | ) | |||||||
| LOSS PER COMMON SHARE - BASIC | $ | (0.08 | ) | $ | (0.02 | ) | $ | (0.06 | ) | $ | (0.02 | ) | |||||||
| LOSS PER COMMON SHARE - DILUTED | $ | (0.08 | ) | $ | (0.02 | ) | $ | (0.06 | ) | $ | (0.02 | ) | |||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC | 139,203,973 | 122,706,601 | 138,963,449 | 121,578,716 | |||||||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED | 139,203,973 | 122,706,601 | 138,963,449 | 121,578,716 | |||||||||||||||
| 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 | $ | (11,042 | ) | $ | (1,950 | ) | $ | (8,618 | ) | $ | (2,671 | ) | |||||||
| EXCLUDING NON-CASH ITEMS TRANSACTIONAL COSTS & CORP EXP | |||||||||||||||||||
| ADJUSTMENTS: | |||||||||||||||||||
| Stock compensation & warrant expense | 23 | 381 | 47 | 724 | |||||||||||||||
| Corp Expenses (Net of stock compensation & Transactional cost) | 382 | 200 | 757 | 384 | |||||||||||||||
| Legal and professional fees - transactional costs | 1,022 | 198 | 1,389 | 378 | |||||||||||||||
| Depreciation and amortization expense | 481 | 432 | 974 | 593 | |||||||||||||||
| Bad Debt | 2 | 4 | 15 | 4 | |||||||||||||||
| OTHER ADJUSTMENTS | |||||||||||||||||||
| Loss on derivative instruments | 3,425 | 160 | (1,009 | ) | (18 | ) | |||||||||||||
| Loss on extinguishment of debt | 5,480 | - | 5,480 | - | |||||||||||||||
| Gain (loss) on settlement of debt | - | (197 | ) | - | (197 | ) | |||||||||||||
| Other income (expense) | (1 | ) | - | 2 | - | ||||||||||||||
| Interest expense | 1,380 | 1,202 | 2,887 | 1,502 | |||||||||||||||
| Income tax | 41 | 51 | 119 | 59 | |||||||||||||||
| Less: Net loss attributable to the noncontrolling interest | (602 | ) | (30 | ) | (760 | ) | (65 | ) | |||||||||||
| ADJUSTED EBITDA - OPCO | $ | 591 | $ | 451 | $ | 1,283 | $ | 693 | |||||||||||
| ADD-BACKS Expenses | |||||||||||||||||||
| Corp Expenses net of stock compensation & Transactional cost | 382 | 200 | 757 | 384 | |||||||||||||||
| ADJUSTED EBITDA - INCOME | $ | 209 | $ | 251 | $ | 526 | $ | 309 | |||||||||||
FAQ
What were the Q2 FY2022 financial results for DTGI?
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What is the non-GAAP operating EBITDA for Digerati in Q2 FY2022?
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