Digerati Technologies Reports Revenue of $7.430 Million for Third Quarter Fiscal Year 2024
Digerati Technologies (OTCQB: DTGI) reported its fiscal Q3 2024 earnings, revealing a 5% revenue decline to $7.43 million compared to the same period last year. Gross profit dropped 9% to $4.518 million, with a gross margin of 60.8%. Adjusted EBITDA - OPCO fell 22% to $0.784 million. Net loss attributable to shareholders increased 102% to $4.529 million, resulting in an EPS loss of ($0.03) per share. For the nine months ended April 30, 2024, revenue decreased 5% to $22.649 million, and net loss rose 74% to $12.17 million. Digerati's focus remains on expanding its customer base and recurring revenue.
- Digerati reported $7.430 million in revenue for Q3 2024.
- The company's gross margin was 60.8% for Q3 2024.
- Selling, General, and Administrative expenses decreased by 5% for Q3 2024.
- Digerati has nearly 4,500 active customers and approximately 50,000 business users.
- Revenue decreased by 5% compared to Q3 2023.
- Gross profit decreased by 9% compared to Q3 2023.
- Adjusted EBITDA - OPCO declined by 22% compared to Q3 2023.
- Net loss attributable to shareholders increased by 102%, reaching $4.529 million.
- EPS loss increased to ($0.03) per share compared to ($0.01) per share in Q3 2023.
- For the nine months ended April 30, 2024, revenue decreased by 5% compared to the same period in 2023.
- Net loss for the nine months ended April 30, 2024, increased by 74% to $12.17 million.
- Non-GAAP Adjusted EBITDA – OPCO(1) of
SAN ANTONIO, June 17, 2024 (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 nine months ended April 30, 2024, the Company’s third quarter for its Fiscal Year 2024.
Key Financial Highlights for the Three Months Ended April 30, 2024 (Compared to Three Months Ended April 30, 2023)
- Revenue decreased
5% to$7.43 0 million compared to$7.83 7 million. - Gross profit decreased
9% to$4.51 8 million compared to$4.95 8 million. - Gross margin decreased to
60.8% compared to63.3% . - Non-GAAP EBITDA from income, as adjusted (“Adjusted EBITDA – Income”)(1), decreased
42% to$0.35 8 million, excluding all non-cash items and one-time transactional expenses, compared to Adjusted EBITDA - Income of$0.62 1 million. - Net loss attributable to Digerati’s common shareholders increased
102% to$4.52 9 million, compared to a net loss attributable to Digerati’s common shareholders of$2.24 4 million. - Non-GAAP EBITDA from operations, as adjusted (“Adjusted EBITDA - OPCO”), decreased
22% to$0.78 4 million, excluding corporate expenses, all non-cash items and one-time transactional expenses, compared to Adjusted EBITDA - OPCO of$0.99 9 million.
Craig K. Clement, Executive Chairman and interim CEO of Digerati, commented, “Although it was a challenging quarter for the Company, our operations remain strong as we continue to operate a platform with a solid base of nearly 4,500 active customers and approximately 50,000 business users. Going forward, our primary focus is to increase our customer base and related recurring revenue while continuing to build the Verve brand with an emphasis on exceptional customer support.”
Three Months ended April 30, 2024, Compared to Three Months ended April 30, 2023
Revenue for the three months ended April 30, 2024, was
Gross profit for the three months ended April 30, 2024, was
Selling, General and Administrative expenses (excluding legal, professional fees and stock-based compensation) for the three months ended April 30, 2024, decreased by
Operating loss for the three months ended April 30, 2024, was
Adjusted EBITDA - Income for the three months ended April 30, 2024, was
Adjusted EBITDA – OPCO for the three months ended April 30, 2024, was
Net loss attributable to Digerati’s common shareholders for the three months ended April 30, 2024, was
On April 30, 2024, Digerati had
Nine Months ended April 30, 2024, Compared to Nine Months ended April 30, 2023
Revenue for the nine months ended April 30, 2024, was
Gross profit for the nine months ended April 30, 2024, was
Selling, General and Administrative expenses (excluding legal, professional fees and stock-based compensation) for the nine months ended April 30, 2024, decreased by
Operating loss for the nine months ended April 30, 2024, was
Adjusted EBITDA - Income for the nine months ended April 30, 2024, was
Adjusted EBITDA - OPCO for the nine months ended April 30, 2024, was
Net loss attributable to Digerati’s common shareholders for the nine months ended April 30, 2024, 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 - Income 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 – Income 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 - Income as one of several financial measures to assess its operating performance, its use is limited as it excludes certain significant operating expenses. Adjusted EBITDA - OPCO 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 - Income, and Adjusted EBITDA - OPCO 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 small to medium-sized business market. Through its operating subsidiary Verve Cloud, Inc., 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, X 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 such as ‘our primary focus is to increase our customer base and related recurring revenue’. Although the Company believes the expectations reflected in the forward-looking statements, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, our inability to source suitable acquisition targets, failure to execute growth strategies, lack of product development and related market acceptance, the impact of competitive services and pricing, general economic conditions, and other risks and uncertainties described in the Company’s periodic filings with the Securities and Exchange Commission.
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Investors
ClearThink
Brian Loper
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(602) 785-4120
(1) See “Use of Non-GAAP Financial Measurements” and “Reconciliation of Net Loss to Adjusted EBITDA” below for details on the Company’s use of non-GAAP financial measures, how these measures are calculated, and the reason the Company believes this information is useful to readers.
| Reconciliation of Net Income (Loss) to Adjusted EBITDA | |||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||
| Three Months ended April 30, | Nine Months ended April 30, | ||||||||||||||||||||||||||||||||
| 2024 | 2023 | Variances | % | 2024 | 2023 | Variances | % | ||||||||||||||||||||||||||
| OPERATING REVENUES: | |||||||||||||||||||||||||||||||||
| Cloud-based hosted services | $ | 7,430 | $ | 7,837 | $ | (407 | ) | -5 | % | $ | 22,649 | $ | 23,908 | $ | (1,259 | ) | -5 | % | |||||||||||||||
| Total operating revenues | 7,430 | 7,837 | (407 | ) | -5 | % | 22,649 | 23,908 | (1,259 | ) | -5 | % | |||||||||||||||||||||
| Cost of services (exclusive of depreciation and amortization) | 2,912 | 2,879 | 33 | 1 | % | 8,123 | 8,698 | (575 | ) | -7 | % | ||||||||||||||||||||||
| Selling, general and administrative expense | 4,067 | 4,299 | (232 | ) | -5 | % | 12,415 | 12,852 | (437 | ) | -3 | % | |||||||||||||||||||||
| Stock compensation expense | - | 23 | (23 | ) | -100 | % | 16 | 69 | (53 | ) | -77 | % | |||||||||||||||||||||
| Legal and professional fees | 621 | 681 | (60 | ) | -9 | % | 2,784 | 2,311 | 473 | 20 | % | ||||||||||||||||||||||
| Bad debt | 93 | 37 | 56 | 151 | % | 208 | 106 | 102 | 96 | % | |||||||||||||||||||||||
| Depreciation and amortization expense | 908 | 993 | (85 | ) | -9 | % | 2,720 | 2,912 | (192 | ) | -7 | % | |||||||||||||||||||||
| Total operating expenses | 8,601 | 8,912 | (311 | ) | -3 | % | 26,266 | 26,948 | (682 | ) | -3 | % | |||||||||||||||||||||
| OPERATING LOSS | (1,171 | ) | (1,075 | ) | (96 | ) | 9 | % | (3,617 | ) | (3,040 | ) | (577 | ) | 19 | % | |||||||||||||||||
| OTHER INCOME (EXPENSE): | |||||||||||||||||||||||||||||||||
| Gain (loss) on derivative instruments | (467 | ) | 2,120 | (2,587 | ) | -122 | % | (1,048 | ) | 2,893 | (3,941 | ) | -136 | % | |||||||||||||||||||
| Gain (loss) on extinguishment of debt | (816 | ) | 55 | (871 | ) | -1584 | % | (915 | ) | 55 | (970 | ) | -1764 | % | |||||||||||||||||||
| Other income (expense) | 88 | (1 | ) | 89 | -8900 | % | 37 | 455 | (418 | ) | -92 | % | |||||||||||||||||||||
| Interest expense | (2,920 | ) | (3,701 | ) | 781 | -21 | % | (8,184 | ) | (8,137 | ) | (47 | ) | 1 | % | ||||||||||||||||||
| Income tax expense | (46 | ) | (51 | ) | 5 | -10 | % | (109 | ) | (128 | ) | 19 | -15 | % | |||||||||||||||||||
| Total other expense | (4,161 | ) | (1,578 | ) | (2,583 | ) | 164 | % | (10,219 | ) | (4,862 | ) | (5,357 | ) | 110 | % | |||||||||||||||||
| NET LOSS | (5,332 | ) | (2,653 | ) | (2,679 | ) | 101 | % | (13,836 | ) | (7,902 | ) | (5,934 | ) | 75 | % | |||||||||||||||||
| Less: Net loss attributable to the noncontrolling interests | 803 | 409 | 394 | 96 | % | 1,666 | 898 | 768 | 86 | % | |||||||||||||||||||||||
| NET LOSS ATTRIBUTABLE TO DIGERATI'S SHAREHOLDERS | $ | (4,529 | ) | $ | (2,244 | ) | $ | (2,285 | ) | 102 | % | $ | (12,170 | ) | $ | (7,004 | ) | $ | (5,166 | ) | 74 | % | |||||||||||
| Deemed dividend on Series A Convertible preferred stock | - | - | - | - | (8 | ) | 8 | -100 | % | ||||||||||||||||||||||||
| NET LOSS ATTRIBUTABLE TO DIGERATI'S COMMON SHAREHOLDERS | $ | (4,529 | ) | $ | (2,244 | ) | $ | (2,285 | ) | 102 | % | $ | (12,170 | ) | $ | (7,012 | ) | $ | (5,158 | ) | 74 | % | |||||||||||
| Reconciliation of Net Income (Loss) to Adjusted EBITDA - OPCO and Adjusted EBITDA - Income | |||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||
| NET LOSS ATTRIBUTABLE TO DIGERATI'S SHAREHOLDERS, as reported | $ | (4,529 | ) | $ | (2,244 | ) | $ | (2,285 | ) | 102 | % | $ | (12,170 | ) | $ | (7,004 | ) | $ | (5,166 | ) | 74 | % | |||||||||||
| EXCLUDING NON-CASH ITEMS TRANSACTIONAL COSTS & CORP EXP | |||||||||||||||||||||||||||||||||
| ADJUSTMENTS: | |||||||||||||||||||||||||||||||||
| Stock compensation & warrant expense | - | 23 | (23 | ) | -100 | % | 16 | 69 | (53 | ) | -77 | % | |||||||||||||||||||||
| Corp Expenses (Net of stock compensation, Legal fees & Transactional cost) | 426 | 378 | 48 | 13 | % | 1,488 | 1,043 | 445 | 43 | % | |||||||||||||||||||||||
| Legal, professional fees & transactional costs | 621 | 680 | (59 | ) | -9 | % | 2,649 | 2,308 | 341 | 15 | % | ||||||||||||||||||||||
| Depreciation and amortization expense | 908 | 993 | (85 | ) | -9 | % | 2,720 | 2,912 | (192 | ) | -7 | % | |||||||||||||||||||||
| OTHER ADJUSTMENTS | |||||||||||||||||||||||||||||||||
| Loss (gain) on derivative instruments | 467 | (2,120 | ) | 2,587 | -122 | % | 1,048 | (2,893 | ) | 3,941 | -136 | % | |||||||||||||||||||||
| Loss (gain) on extinguishment of debt | 816 | (55 | ) | 871 | -1584 | % | 915 | (55 | ) | 970 | -1764 | % | |||||||||||||||||||||
| Other (income) expense | (88 | ) | 1 | (89 | ) | -8900 | % | (37 | ) | (455 | ) | 418 | -92 | % | |||||||||||||||||||
| Interest expense | 2,920 | 3,701 | (781 | ) | -21 | % | 8,184 | 8,137 | 47 | 1 | % | ||||||||||||||||||||||
| Income tax expense | 46 | 51 | (5 | ) | -10 | % | 109 | 128 | (19 | ) | -15 | % | |||||||||||||||||||||
| Less: Net loss attributable to the noncontrolling interests | (803 | ) | (409 | ) | (394 | ) | 96 | % | (1,666 | ) | (898 | ) | (768 | ) | 86 | % | |||||||||||||||||
| ADJUSTED EBITDA - OPCO | $ | 784 | $ | 999 | $ | (215 | ) | -22 | % | $ | 3,256 | $ | 3,292 | $ | (36 | ) | -1 | % | |||||||||||||||
| ADD-BACKS Expenses | |||||||||||||||||||||||||||||||||
| Corp Expenses (Net of stock compensation, Legal fees & Transactional cost) | 426 | 378 | 48 | 13 | % | 1,488 | 1,043 | 445 | 43 | % | |||||||||||||||||||||||
| ADJUSTED EBITDA - INCOME (LOSS) | $ | 358 | $ | 621 | $ | (263 | ) | -42 | % | $ | 1,768 | $ | 2,249 | $ | (481 | ) | -21 | % | |||||||||||||||
FAQ
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