DZS Releases Q3 2024 Financial Results
DZS reported Q3 2024 financial results showing sequential quarterly revenue growth. Net revenue reached $38.1 million, up 22.8% from Q2 2024. Orders were $27.2 million, down 5.8% from Q3 2023. GAAP gross margin improved to 29.4% compared to -4.6% in Q3 2023. The company reported a net loss of $25.7 million GAAP and $11.7 million adjusted non-GAAP. Cash balance stood at $5.7 million with inventory of $79 million at quarter-end. The company aims to achieve break-even Adjusted EBITDA in 2025 through cost savings initiatives and NetComm business synergies.
DZS ha riportato i risultati finanziari del terzo trimestre 2024, evidenziando una crescita sequenziale del fatturato trimestrale. Il fatturato netto ha raggiunto 38,1 milioni di dollari, con un aumento del 22,8% rispetto al secondo trimestre 2024. Gli ordini sono stati pari a 27,2 milioni di dollari, in calo del 5,8% rispetto al terzo trimestre 2023. Il margine lordo GAAP è migliorato al 29,4% rispetto al -4,6% del terzo trimestre 2023. L'azienda ha riportato una perdita netta di 25,7 milioni di dollari secondo i principi contabili GAAP e 11,7 milioni di dollari aggiustata non-GAAP. Il saldo di cassa si attesta a 5,7 milioni di dollari con un inventario di 79 milioni di dollari alla fine del trimestre. L'azienda mira a raggiungere il pareggio dell'EBITDA aggiustato nel 2025 attraverso iniziative di risparmio sui costi e sinergie con il business NetComm.
DZS informó los resultados financieros del tercer trimestre de 2024, mostrando un crecimiento secuencial en los ingresos trimestrales. Los ingresos netos alcanzaron 38,1 millones de dólares, un aumento del 22,8% en comparación con el segundo trimestre de 2024. Los pedidos fueron de 27,2 millones de dólares, una disminución del 5,8% en comparación con el tercer trimestre de 2023. El margen bruto GAAP mejoró al 29,4% en comparación con el -4,6% del tercer trimestre de 2023. La compañía reportó una pérdida neta de 25,7 millones de dólares según GAAP y 11,7 millones de dólares ajustada no GAAP. El saldo en efectivo se situó en 5,7 millones de dólares con un inventario de 79 millones de dólares al final del trimestre. La empresa tiene como objetivo alcanzar el equilibrio del EBITDA ajustado en 2025 a través de iniciativas de ahorro de costos y sinergias en el negocio de NetComm.
DZS는 2024년 3분기 재무 결과를 보고하며 분기별 수익 성장을 보여주었습니다. 순수익은 3,810만 달러에 달해 2024년 2분기 대비 22.8% 증가했습니다. 주문은 2,720만 달러로, 2023년 3분기 대비 5.8% 감소했습니다. GAAP 총 마진은 2023년 3분기의 -4.6%에서 29.4%로 개선되었습니다. 회사는 GAAP 기준으로 2,570만 달러의 순손실과 1,170만 달러의 조정된 비GAAP 손실을 보고했습니다. 현금 잔고는 570만 달러로, 분기 말 재고는 7,900만 달러에 이릅니다. 회사는 비용 절감 조치와 NetComm 사업의 시너지를 통해 2025년까지 조정된 EBITDA 무역 수익을 달성할 계획입니다.
DZS a publié les résultats financiers du troisième trimestre 2024, montrant une croissance séquentielle des revenus trimestriels. Le chiffre d'affaires net a atteint 38,1 millions de dollars, en hausse de 22,8 % par rapport au deuxième trimestre 2024. Les commandes se sont élevées à 27,2 millions de dollars, en baisse de 5,8 % par rapport au troisième trimestre 2023. La marge brute GAAP s'est améliorée pour atteindre 29,4 % contre -4,6 % au troisième trimestre 2023. L'entreprise a annoncé une perte nette de 25,7 millions de dollars GAAP et de 11,7 millions de dollars ajustée non-GAAP. Le solde de trésorerie s'est élevé à 5,7 millions de dollars avec un inventaire de 79 millions de dollars à la fin du trimestre. L'entreprise vise à atteindre un EBITDA ajusté à l'équilibre en 2025 grâce à des initiatives d'économies de coûts et des synergies avec l'activité NetComm.
DZS berichtete über die finanziellen Ergebnisse des dritten Quartals 2024, die ein sequenzielles Umsatzwachstum zeigen. Der Nettoumsatz erreichte 38,1 Millionen Dollar, was einem Anstieg von 22,8% im Vergleich zum zweiten Quartal 2024 entspricht. Die Bestellungen beliefen sich auf 27,2 Millionen Dollar, ein Rückgang um 5,8% im Vergleich zum dritten Quartal 2023. Die GAAP-Bruttomarge verbesserte sich auf 29,4% im Vergleich zu -4,6% im dritten Quartal 2023. Das Unternehmen meldete einen Nettoverlust von 25,7 Millionen Dollar gemäß GAAP und 11,7 Millionen Dollar angepasst nach Nicht-GAAP. Der Bargeldbestand belief sich am Quartalsende auf 5,7 Millionen Dollar, mit einem Inventar von 79 Millionen Dollar. Das Unternehmen hat das Ziel, bis 2025 ein ausgeglichenes Adjusted EBITDA durch Kostensenkungsinitiativen und Synergien im Geschäft mit NetComm zu erreichen.
- Net revenue increased 22.8% quarter-over-quarter to $38.1 million
- GAAP gross margin improved to 29.4% from -4.6% in Q3 2023
- Non-GAAP operating expenses decreased 17.2% year-over-year
- Adjusted EBITDA loss improved 46.8% year-over-year
- Orders decreased 5.8% year-over-year to $27.2 million
- Net loss of $25.7 million GAAP in Q3 2024
- Low cash balance of $5.7 million at quarter-end
- High inventory level of $79 million requiring conversion to cash
DALLAS, Texas, Nov. 06, 2024 (GLOBE NEWSWIRE) -- DZS (OTC: DZSI), a developer of Networking and Connectivity systems and Cloud Edge software solutions enabling broadband everywhere, today announced its Q3 2024 financial results.
“The third quarter of 2024 delivered a fourth sequential quarter of topline growth for DZS,” said Charlie Vogt, President and CEO, DZS. “With our restatement now behind us, our filings current, the sale of our in-home WiFi software and service assurance portfolio closed, and with insights into our sales pipeline and backlog, we believe a global recovery for our DZS business is underway. We also made progress on four key performance initiatives: 1) Strengthening our balance sheet, 2) optimizing our cost structure to align with market dynamics, 3) executing sales and cost synergies resulting from our recent acquisition of NetComm, and 4) monetizing our inventory which is aligned with our backlog and projects in flight. On Wednesday, Nov. 6th at 10:00 a.m. CT, we will host our earnings call that will give customers, suppliers, investors and employees insights relative to what has been accomplished over the third quarter and our outlook for the future.”
Q3 2024 Financial Highlights (All comparable periods are net of Asia business, which was divested in April 2024 and now considered discontinued operations, and includes the acquisition of NetComm in June 2024 and the ASSIA business that was divested in October 2024)
- Orders of
$27.2 million compared to$28.9 million in Q3 2023, a decrease of5.8% , and$94.2 million in the first nine months of 2024 compared to$101.0 million in the first nine months of 2023, a decrease of6.7% - Net revenue of
$38.1 million compared to$31.1 million in Q2 2024, an increase of22.8% quarter over quarter - GAAP gross margin of
29.4% compared to (4.6% ) in Q3 2023, and35.4% in the first nine months of 2024 compared to26.8% in the first nine months of 2023 - Non-GAAP gross margin1 of
36.7% compared to17.4% in Q3 2023, and38.6% in the first nine months of 2024 compared to33.3% in the first nine months of 2023 - GAAP operating expenses of
$33.2 million compared to$29.3 million in Q3 2023, and$84.3 million in the first nine months of 2024 compared to$95.0 million in the first nine months of 2023 - Non-GAAP operating expenses1 of
$23.3 million compared to$21.4 million in Q3 2023, and$57.9 million in the first nine months of 2024 compared to$69.8 million in the first nine months, a decrease of17.2% year over year - Net income:
$(25.7) million GAAP and$(11.7) million adjusted non-GAAP1 in Q3 2024 compared to$(29.4) million GAAP and$(15.3) million adjusted non-GAAP in Q3 2023, a decrease of12.6% and23.5% year-over-year - Adjusted EBITDA1 loss of
$(9.3) million compared to$(17.5) million in Q3 2023, an increase of46.8% - Diluted Net Loss per Share of
$(0.67) on a GAAP basis compared to$(0.92) in Q3 2023, an increase of27.2% - Non-GAAP EPS loss1 of
$(0.31) compared to$(0.48) in Q3 2023, an increase of35.4% - Cash balance of
$5.7 million at the end of Q3 2024 - Inventory of
$79 million at the end of Q3 2024
Year over Year Third Quarter Review
($ in 000s except for EPS)
| YTD Q3 2024 | YTD Q3 2023 | Change | |||||||
| Net revenue | $ | 96.882 | $ | 97,727 | $ | (845 | ) | ||
| GAAP Net Earnings from Continuing Operations | $ | (16,108 | ) | $ | (72,024 | ) | $ | (55,916 | ) |
| GAAP Earnings Per Basic Share (EPS) from Continuing Operations | $ | (0.43 | ) | $ | (2.29 | ) | $ | (1.86 | ) |
| Non-GAAP Earnings from Continuing Operations | $ | (20,468 | ) | $ | (37,293 | ) | $ | (16,825 | ) |
| Non-GAAP EPS from Continuing Operations | $ | (0.70 | ) | $ | (1.01 | ) | $ | (0.31 | ) |
(1) Item represents a non-GAAP financial measure; see discussion below, as well as a reconciliation to the comparable GAAP measure in the financial tables in this earnings press release.
“During our earnings call, we will share in more detail the results of the third quarter and the ongoing financial improvements since our last earnings call in August 2024,” said Brian Chesnut, Interim CFO, DZS. “While we made progress on key performance initiatives in the third quarter, including delivering strong revenue and gross margins quarter-over-quarter, we are not satisfied with our financial performance. As we turn the page from the restatement completed in the third quarter, we look forward to a strong finish to 2024 that will position us well for 2025. We see a path forward that will allow the company to take advantage of cost savings initiatives along with implementation of synergies from the NetComm business with the goal of achieving break-even Adjusted EBITDA in 2025. We remain committed to the conversion of
As previously announced, DZS will host an earnings call to discuss the third quarter 2024 results which will include the first full quarter of the NetComm acquisition.
Conference Call Details:
Date: Wednesday, November 6, 2024
Time: 11:00 a.m. EDT
Participant Toll-Free: (800) 715-9871
Conference ID: 5468431
Webcast: https://edge.media-server.com/mmc/p/7mk5mfpr/
About DZS
DZS Inc. (OTC: DZSI) a developer of Networking and Connectivity systems and Cloud Edge software solutions enabling broadband everywhere.
DZS, the DZS logo, and all DZS product names are trademarks of DZS Inc. Other brand and product names are trademarks of their respective holders. Specifications, products, and/or product names are all subject to change.
This press release contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Private Securities Litigation Reform Act of 1995. These statements reflect the beliefs and assumptions of the Company’s management as of the date hereof. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” variations of such words, and similar expressions are intended to identify forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. The Company’s actual results could differ materially and adversely from those expressed in or contemplated by the forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, those risk factors contained in the Company’s SEC filings available at www.sec.gov, including without limitation, the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q and subsequent filings. In addition, additional or unforeseen effects from the COVID-19 pandemic and the global economic climate may give rise to or amplify many of these risks. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. DZS undertakes no obligation to update or revise any forward-looking statements for any reason.
Non-GAAP Measures
To supplement DZS’s consolidated financial statements presented in accordance with GAAP, DZS reports Adjusted Cost of Revenue, Adjusted Gross Margin, Adjusted Operating Expenses, Adjusted Operating Income (Loss), Adjusted Net Income (including on a per share basis), EBITDA, and Adjusted EBITDA, which are non-GAAP measures DZS believes are appropriate to provide meaningful comparison with, and to enhance an overall understanding of, DZS’s past financial performance and prospects for the future. DZS believes these non-GAAP financial measures provide useful information to both management and investors by excluding specific items that DZS believes are not indicative of core operating results. These items share one or more of the following characteristics: they are unusual and DZS does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of the Company’s control. Further, each of these non-GAAP measures of operating performance are used by management, as well as industry analysts, to evaluate operations and operating performance and are widely used in the telecommunications and manufacturing industries. Other companies in the telecommunications and manufacturing industries may calculate these metrics differently than DZS. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP.
DZS defines Adjusted Cost of Revenue as GAAP Cost of Revenue less (i) depreciation and amortization, (ii) stock-based compensation, (iii) restructuring charges, including freight charges and other elevated inventory related costs directly related to the transition to a contract manufacturer, and (iv) the impact of material transactions or events that we believe are not indicative of our core product cost and are not expected to be recurring in nature, such as inventory step-up amortization. We believe Adjusted Cost of Revenue provides the investor more accurate information regarding the actual cost of our products and services, excluding the impact of costs of revenue that are not routine components of our core product cost, for better comparability of our costs of revenue between periods and to other companies.
DZS defines Adjusted Gross Margin as GAAP Gross Margin less (i) depreciation and amortization, (ii) stock-based compensation, (iii) restructuring charges, including freight charges and other elevated inventory related costs directly related to the transition to a contract manufacturer, and (iv) the impact of material transactions or events that we believe are not indicative of our core operating performance and are not expected to be recurring in nature, such as inventory step-up amortization. We believe Adjusted Gross Margin provides the investor more accurate information regarding our core profit margin on sales, excluding the impact of cost of revenue that are not routine components of our core product cost, for better comparability of gross margin between periods and to other companies.
DZS defines Adjusted Operating Expenses as GAAP operating expenses plus or minus (as applicable) (i) depreciation and amortization, (ii) stock-based compensation, and (iii) the impact of material transactions or events that we believe are not indicative of our core operating performance, such as acquisition costs, divestiture costs, restructuring and other charges, including termination related benefits, headquarters and facilities relocation, executive transition, restatement related costs, and legal costs related to certain litigation, each of which is not expected to be recurring in nature. We believe Adjusted Operating Expenses provides the investor more accurate information regarding our core operating expenses, which include research and development costs, selling, general and administrative costs, and amortization of intangible assets, excluding the impact of charges that are not routine components of our core operating expenses, for better comparability between periods and to other companies.
DZS defines EBITDA as Net Income (Loss) plus or minus (as applicable) (i) interest expense, net, (ii) income tax provision (benefit), and (iii) depreciation and amortization expense.
DZS defines Adjusted Operating Income (Loss), or Adjusted EBITDA, as GAAP Operating Income (Loss) plus or minus (as applicable) (i) depreciation and amortization, (ii) stock-based compensation, and (iii) the impact of material transactions or events that we believe are not indicative of our core operating performance, such as inventory step-up amortization, acquisition costs, divestiture costs, restructuring and other charges, including termination related benefits, headquarters and facilities relocation, executive transition, restatement related costs, and legal costs related to certain litigation, each of which is not expected to be recurring in nature. We believe Adjusted Operating Income (Loss) provides the investor more accurate information regarding our core operating Income (Loss), excluding the impact of charges that are not routine components of our core operating expenses, for better comparability between periods and to other companies. The DZS definition of Adjusted Operating Income (Loss) equates to the DZS definition of Adjusted EBITDA.
DZS defines Non-GAAP Net Income (Loss) as GAAP Net Income plus or minus (as applicable) (i) depreciation and amortization, (ii) stock-based compensation, (iii) the impact of material transactions or events that we believe are not indicative of our core operating performance, such as inventory step-up amortization, acquisition costs, divestiture costs, restructuring and other charges, including termination related benefits, freight charges and other elevated inventory related costs directly related to the transition to a contract manufacturer, headquarters and facilities relocation, executive transition, bad debt expense, net of recoveries, primarily related to a customer in Russia, restatement related costs, and legal costs related to certain litigation, each of which is not expected to be recurring in nature, (iv) unrealized foreign exchange gains and losses, (v) a non-GAAP income tax benefit (provision) based on an estimated tax rate applied against forecasted annual non-GAAP income and (vi) the tax effect of non-GAAP adjustments to Adjusted Net Income and Adjusted EPS. DZS determines non-GAAP income taxes by computing an annual rate for the Company and applying that single rate (rather than multiple rates by jurisdiction) to its consolidated quarterly results. For 2024, the non-GAAP income tax rate was (
For further information see: www.DZSi.com
DZS on Twitter: https://twitter.com/dzs_innovation
DZS on LinkedIn: https://www.linkedin.com/company/DZSi/
Investor Inquiries:
Geoff Burke, SVP Marketing and Investor Relations
Email: IR@dzsi.com
Financial Statements
| DZS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) from Continuing Operations (In thousands, except per share data) | |||||||||||
| For the Quarters Ended | |||||||||||
| 3Q24 | 2Q24 | 3Q23 | |||||||||
| Net revenue | $ | 38,149 | $ | 31,066 | $ | 22,737 | |||||
| Cost of revenue | 26,924 | 20,627 | 23,774 | ||||||||
| Gross profit | 11,225 | 10,439 | (1,037 | ) | |||||||
| Operating expenses: | |||||||||||
| Research and product development | 10,656 | 7,424 | 8,327 | ||||||||
| Selling, marketing, general and administrative | 20,386 | 19,035 | 19,562 | ||||||||
| Restructuring and other charges | 266 | (44 | ) | 135 | |||||||
| Impairment of long-lived assets | — | — | — | ||||||||
| Amortization of intangible assets | 1,919 | 1,190 | 1,321 | ||||||||
| Total operating expenses | 33,227 | 27,605 | 29,345 | ||||||||
| Operating loss | (22,002 | ) | (17,166 | ) | (30,382 | ) | |||||
| Interest expense, net | (2,175 | ) | (1,405 | ) | (751 | ) | |||||
| Loss on extinguishment of debt | — | (375 | ) | ||||||||
| Bargain purchase gain | — | 41,544 | — | ||||||||
| Other income (expense), net | 82 | (230 | ) | (103 | ) | ||||||
| Income (loss) before income taxes | (24,095 | ) | 22,743 | (31,611 | ) | ||||||
| Income tax provision (benefit) | 1,551 | (330 | ) | (2,226 | ) | ||||||
| Net income (loss) | (25,646 | ) | 23,073 | (29,385 | ) | ||||||
| Earnings (loss) per share | |||||||||||
| Basic | $ | (0.67 | ) | $ | 0.61 | $ | (0.92 | ) | |||
| Diluted | $ | (0.67 | ) | $ | 0.61 | $ | (0.92 | ) | |||
| Weighted average shares outstanding | |||||||||||
| Basic | 38,081 | 37,659 | 31,892 | ||||||||
| Diluted | 38,081 | 38,035 | 31,892 | ||||||||
| Reconciliation of net income (loss) to Adjusted EBITDA: | |||||||||||
| Net income (loss) | $ | (25,646 | ) | $ | 23,073 | $ | (29,385 | ) | |||
| Interest expense, net | 2,175 | 1,405 | 751 | ||||||||
| Income tax provision (benefit) | 1,551 | (330 | ) | (2,226 | ) | ||||||
| Depreciation and amortization | 2,389 | 1,604 | 1,743 | ||||||||
| EBITDA | $ | (19,531 | ) | $ | 25,752 | $ | (29,117 | ) | |||
| Stock-based compensation | 2,225 | 2,310 | 3,165 | ||||||||
| Acquisition costs | 23 | 858 | (256 | ) | |||||||
| Divestiture costs | 610 | — | — | ||||||||
| Inventory step up amortization | 1,999 | — | — | ||||||||
| Litigation and restatement | 3,807 | 4,750 | 3,641 | ||||||||
| Amortization of capitalized costs | 697 | 303 | 303 | ||||||||
| Bad debt expense, net of recoveries | — | — | (473 | ) | |||||||
| Bargain purchase gain | — | (41,544 | ) | — | |||||||
| Long lived assets impairment | — | — | — | ||||||||
| Restructuring and other charges | 878 | 74 | 4,808 | ||||||||
| Headquarters and facilities relocation | 51 | — | — | ||||||||
| Loss on extinguishment of debt | — | — | 375 | ||||||||
| Other expense, net | (82 | ) | 230 | 103 | |||||||
| Adjusted EBITDA | $ | (9,323 | ) | $ | (7,267 | ) | $ | (17,451 | ) | ||
Financial Statements
| DZS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Balance Sheets (In thousands) | |||||||
| September 30, 2024 | December 31, 2023 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash, cash equivalents and restricted cash | $ | 5,736 | $ | 15,102 | |||
| Accounts receivable - trade, net | 34,216 | 44,816 | |||||
| Other receivables, net | 962 | 452 | |||||
| Inventories | 79,087 | 33,113 | |||||
| Contract assets | 598 | 825 | |||||
| Prepaid expenses and other current assets | 13,625 | 7,685 | |||||
| Current assets held for sale | — | 94,375 | |||||
| Total current assets | 134,224 | 196,368 | |||||
| Property, plant and equipment, net | 2,930 | 3,108 | |||||
| Right-of-use assets from operating leases | 4,453 | 3,661 | |||||
| Intangible assets, net | 25,840 | 25,065 | |||||
| Other assets | 11,056 | 13,371 | |||||
| Non-current assets held for sale | — | 7,808 | |||||
| Total assets | $ | 178,503 | $ | 249,381 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable - trade | $ | 63,072 | $ | 46,003 | |||
| Contract liabilities | 12,105 | 14,945 | |||||
| Operating lease liabilities | 2,473 | 2,732 | |||||
| Accrued and other liabilities | 32,431 | 32,704 | |||||
| Current liabilities held for sale | — | 69,427 | |||||
| Total current liabilities | 110,081 | 165,811 | |||||
| Long-term debt | 16,424 | 7,308 | |||||
| Contract liabilities - non-current | 1,831 | 2,834 | |||||
| Operating lease liabilities - non-current | 3,539 | 3,994 | |||||
| Pension liabilities | 11,358 | 11,504 | |||||
| Other long-term liabilities | 2,936 | 1,797 | |||||
| Non-current liabilities held for sale | — | 33,574 | |||||
| Total liabilities | 146,169 | 226,822 | |||||
| Stockholders’ equity: | |||||||
| Common stock | 37 | 31 | |||||
| Additional paid-in capital | 317,291 | 294,863 | |||||
| Accumulated other comprehensive loss | 1,124 | (8,447 | ) | ||||
| Accumulated deficit | (286,118 | ) | (263,888 | ) | |||
| Total stockholders’ equity | $ | 32,334 | 22,559 | ||||
| Total liabilities and stockholders’ equity | $ | 178,503 | $ | 249,381 | |||
Financial Statements (GAAP to Non-GAAP Reconciliation)
| DZS INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||
| Unaudited Reconciliation of GAAP to Non-GAAP Results from Continuing Operations | |||||||||||||||||||||||||||
| ($ in thousands, except per share data) | |||||||||||||||||||||||||||
| Set forth below are reconciliations of Non-GAAP Cost of Revenue, Non-GAAP Gross Profit, Non-GAAP Operating Expenses, Non-GAAP Operating Income (Loss) (also referred to as Adjusted EBITDA), Non-GAAP Net Income (Loss), and Non-GAAP Net Income (Loss) per Diluted Share to GAAP Cost of Revenue, Gross Profit, Operating Expenses, Operating Income (Loss), Net Income (Loss), and Net Income (Loss) per Diluted Share, respectively, which the Company considers to be the most directly comparable U.S. GAAP financial measures. | |||||||||||||||||||||||||||
| Three Months Ended September 30, 2024 - Continuing Operations | |||||||||||||||||||||||||||
| Cost of Revenue | Gross Profit | Gross Margin Percentage | Operating Expenses | Operating Income (Loss) | Net Income (Loss) | Net Income (Loss) per Diluted Share | |||||||||||||||||||||
| GAAP amount | $ | 26,924 | $ | 11,225 | 29.4 | % | $ | 33,227 | $ | (22,002 | ) | $ | (25,646 | ) | $ | (0.67 | ) | ||||||||||
| Adjustments to GAAP amounts: | |||||||||||||||||||||||||||
| Depreciation and amortization | (74 | ) | 74 | 0.2 | % | (2,315 | ) | 2,389 | 2,389 | 0.06 | |||||||||||||||||
| Stock-based compensation | (51 | ) | 51 | 0.1 | % | (2,174 | ) | 2,225 | 2,225 | 0.06 | |||||||||||||||||
| Restructuring and other charges | (663 | ) | 663 | 1.7 | % | (215 | ) | 878 | 878 | 0.02 | |||||||||||||||||
| Inventory step up amortization | (1,999 | ) | 1,999 | 5.2 | % | - | 1,999 | 1,999 | 0.05 | ||||||||||||||||||
| Acquisition costs | (23 | ) | 23 | 23 | - | ||||||||||||||||||||||
| Headquarters and facilities relocation | (51 | ) | 51 | 51 | - | ||||||||||||||||||||||
| Litigation and restatement | (3,807 | ) | 3,807 | 3,807 | 0.10 | ||||||||||||||||||||||
| Amortization of capitalized costs | (697 | ) | 697 | 697 | 0.02 | ||||||||||||||||||||||
| Divestiture costs | (610 | ) | 610 | 610 | 0.02 | ||||||||||||||||||||||
| Unrealized foreign exchange (gains) losses | (52 | ) | - | ||||||||||||||||||||||||
| Non-GAAP adjustments to tax rate | 376 | 0.01 | |||||||||||||||||||||||||
| Tax effect on Non-GAAP adjustments | 917 | 0.02 | |||||||||||||||||||||||||
| Adjusted (Non-GAAP) amount | $ | 24,137 | $ | 14,012 | 36.7 | % | $ | 23,335 | $ | (9,323 | ) | $ | (11,726 | ) | $ | (0.31 | ) | ||||||||||
| Three Months Ended June 30, 2024 - Continuing Operations | |||||||||||||||||||||||||||
| Cost of Revenue | Gross Profit | Gross Margin Percentage | Operating Expenses | Operating Income (Loss) | Net Income (Loss) | Net Income (Loss) per Diluted Share | |||||||||||||||||||||
| GAAP amount | $ | 20,627 | $ | 10,439 | 33.6 | % | $ | 27,605 | $ | (17,166 | ) | $ | 23,073 | $ | 0.61 | ||||||||||||
| Adjustments to GAAP amounts: | |||||||||||||||||||||||||||
| Depreciation and amortization | (71 | ) | 71 | 0.2 | % | (1,533 | ) | 1,604 | 1,604 | 0.04 | |||||||||||||||||
| Stock-based compensation | (87 | ) | 87 | 0.3 | % | (2,223 | ) | 2,310 | 2,310 | 0.06 | |||||||||||||||||
| Restructuring and other charges | (118 | ) | 118 | 0.4 | % | 44 | 74 | 74 | - | ||||||||||||||||||
| Acquisition costs | (858 | ) | 858 | 858 | 0.02 | ||||||||||||||||||||||
| Litigation and restatement | (4,750 | ) | 4,750 | 4,750 | 0.12 | ||||||||||||||||||||||
| Amortization of capitalized costs | (303 | ) | 303 | 303 | 0.01 | ||||||||||||||||||||||
| Bargain purchase gain | (41,544 | ) | (1.09 | ) | |||||||||||||||||||||||
| Unrealized foreign exchange (gains) losses | 236 | 0.01 | |||||||||||||||||||||||||
| Non-GAAP adjustments to tax rate | (2,145 | ) | (0.06 | ) | |||||||||||||||||||||||
| Tax effect on Non-GAAP adjustments | (88 | ) | - | ||||||||||||||||||||||||
| Adjusted (Non-GAAP) amount | $ | 20,351 | $ | 10,715 | 34.5 | % | $ | 17,982 | $ | (7,267 | ) | $ | (10,569 | ) | $ | (0.28 | ) | ||||||||||
| Three Months Ended September 30, 2023 - Continuing Operations | |||||||||||||||||||||||||||
| Cost of Revenue | Gross Profit | Gross Margin Percentage | Operating Expenses | Operating Income (Loss) | Net Income (Loss) | Net Income (Loss) per Diluted Share | |||||||||||||||||||||
| GAAP amount | $ | 23,774 | $ | (1,037 | ) | -4.6 | % | $ | 29,345 | $ | (30,382 | ) | $ | (29,385 | ) | $ | (0.92 | ) | |||||||||
| Adjustments to GAAP amounts: | |||||||||||||||||||||||||||
| Depreciation and amortization | (60 | ) | 60 | 0.3 | % | (1,683 | ) | 1,743 | 1,743 | 0.05 | |||||||||||||||||
| Stock-based compensation | (268 | ) | 268 | 1.2 | % | (2,897 | ) | 3,165 | 3,165 | 0.10 | |||||||||||||||||
| Restructuring and other charges | (4,673 | ) | 4,673 | 20.6 | % | (135 | ) | 4,808 | 4,808 | 0.15 | |||||||||||||||||
| Acquisition costs | 256 | (256 | ) | (256 | ) | - | |||||||||||||||||||||
| Litigation and restatement | (3,641 | ) | 3,641 | 3,641 | 0.11 | ||||||||||||||||||||||
| Amortization of capitalized costs | (303 | ) | 303 | 303 | 0.01 | ||||||||||||||||||||||
| Loss on debt extinguishment | 375 | 0.01 | |||||||||||||||||||||||||
| Unrealized foreign exchange (gains) losses | 93 | - | |||||||||||||||||||||||||
| Non-GAAP adjustments to tax rate | 3,096 | 0.09 | |||||||||||||||||||||||||
| Tax effect on Non-GAAP adjustments | (2,427 | ) | (0.08 | ) | |||||||||||||||||||||||
| Adjusted (Non-GAAP) amount | $ | 18,773 | $ | 3,964 | 17.4 | % | $ | 21,415 | $ | (17,451 | ) | $ | (15,317 | ) | $ | (0.48 | ) | ||||||||||
| DZS INC. AND SUBSIDIARIES Unaudited Reconciliation of GAAP to Non-GAAP Results from Continuing Operations ($ in thousands, except per share data) | |||||||||||||||||||||||||||
| Set forth below are reconciliations of Non-GAAP Cost of Revenue, Non-GAAP Gross Profit, Non-GAAP Operating Expenses, Non-GAAP Operating Income (Loss) (also referred to as Adjusted EBITDA), Non-GAAP Net Income (Loss), and Non-GAAP Net Income (Loss) per Diluted Share to GAAP Cost of Revenue, Gross Profit, Operating Expenses, Operating Income (Loss), Net Income (Loss), and Net Income (Loss) per Diluted Share, respectively, which the Company considers to be the most directly comparable U.S. GAAP financial measures. | |||||||||||||||||||||||||||
| Nine Months Ended September 30, 2024 - Continuing Operations | |||||||||||||||||||||||||||
| Cost of Revenue | Gross Profit | Gross Margin Percentage | Operating Expenses | Operating Income (Loss) | Net Income (Loss) | Net Income (Loss) per Diluted Share | |||||||||||||||||||||
| GAAP amount | $ | 62,605 | $ | 34,277 | 35.4 | % | $ | 84,337 | $ | (50,060 | ) | $ | (16,108 | ) | $ | (0.43 | ) | ||||||||||
| Adjustments to GAAP amounts: | |||||||||||||||||||||||||||
| Depreciation and amortization | (216 | ) | 216 | 0.2 | % | (5,350 | ) | 5,566 | 5,566 | 0.15 | |||||||||||||||||
| Stock-based compensation | (127 | ) | 127 | 0.1 | % | (6,540 | ) | 6,667 | 6,667 | 0.18 | |||||||||||||||||
| Restructuring and other charges | (781 | ) | 781 | 0.8 | % | (459 | ) | 1,240 | 1,240 | 0.03 | |||||||||||||||||
| Inventory step up amortization | (1,999 | ) | 1,999 | 2.1 | % | - | 1,999 | 1,999 | 0.05 | ||||||||||||||||||
| Acquisition costs | (933 | ) | 933 | 933 | 0.02 | ||||||||||||||||||||||
| Litigation and restatement | (11,223 | ) | 11,223 | 11,223 | 0.30 | ||||||||||||||||||||||
| Amortization of capitalized costs | (1,303 | ) | 1,303 | 1,303 | 0.03 | ||||||||||||||||||||||
| Headquarters and facilities relocation | (51 | ) | 51 | 51 | - | ||||||||||||||||||||||
| Divestiture costs | (610 | ) | 610 | 610 | 0.02 | ||||||||||||||||||||||
| Bargain purchase gain | - | - | (41,544 | ) | (1.10 | ) | |||||||||||||||||||||
| Unrealized foreign exchange (gains) losses | 509 | 0.01 | |||||||||||||||||||||||||
| Non-GAAP adjustments to tax rate | 1,750 | 0.05 | |||||||||||||||||||||||||
| Tax effect on Non-GAAP adjustments | (479 | ) | (0.01 | ) | |||||||||||||||||||||||
| Adjusted (Non-GAAP) amount | $ | 59,482 | $ | 37,400 | 38.6 | % | $ | 57,868 | $ | (20,468 | ) | $ | (26,280 | ) | $ | (0.70 | ) | ||||||||||
| Nine Months Ended September 30, 2023 - Continuing Operations | |||||||||||||||||||||||||||
| Cost of Revenue | Gross Profit | Gross Margin Percentage | Operating Expenses | Operating Income (Loss) | Net Income (Loss) | Net Income (Loss) per Diluted Share | |||||||||||||||||||||
| GAAP amount | $ | 71,579 | $ | 26,148 | 26.8 | % | $ | 95,040 | $ | (68,892 | ) | $ | (72,024 | ) | $ | (2.29 | ) | ||||||||||
| Adjustments to GAAP amounts: | |||||||||||||||||||||||||||
| Depreciation and amortization | (247 | ) | 247 | 0.3 | % | (4,997 | ) | 5,244 | 5,244 | 0.17 | |||||||||||||||||
| Stock-based compensation | (894 | ) | 894 | 0.9 | % | (10,040 | ) | 10,934 | 10,934 | 0.35 | |||||||||||||||||
| Restructuring and other charges | (5,230 | ) | 5,230 | 5.4 | % | (4,881 | ) | 10,111 | 10,111 | 0.32 | |||||||||||||||||
| Acquisition costs | (79 | ) | 79 | 79 | - | ||||||||||||||||||||||
| Executive transition | 2 | (2 | ) | (2 | ) | - | |||||||||||||||||||||
| Litigation and restatement | (4,117 | ) | 4,117 | 4,117 | 0.13 | ||||||||||||||||||||||
| Amortization of capitalized costs | (830 | ) | 830 | 830 | 0.03 | ||||||||||||||||||||||
| Bad debt expense, net of recoveries | 213 | (213 | ) | (213 | ) | (0.01 | ) | ||||||||||||||||||||
| Long lived assets impairment | (499 | ) | 499 | 499 | 0.02 | ||||||||||||||||||||||
| Loss on debt extinguishment | 375 | 0.01 | |||||||||||||||||||||||||
| Unrealized foreign exchange (gains) losses | 282 | 0.01 | |||||||||||||||||||||||||
| Non-GAAP adjustments to tax rate | 13,774 | 0.44 | |||||||||||||||||||||||||
| Tax effect on Non-GAAP adjustments | (5,842 | ) | (0.19 | ) | |||||||||||||||||||||||
| Adjusted (Non-GAAP) amount | $ | 65,208 | $ | 32,519 | 33.3 | % | $ | 69,812 | $ | (37,293 | ) | $ | (31,836 | ) | $ | (1.01 | ) | ||||||||||
FAQ
What was DZS (DZSI) revenue in Q3 2024?
What was DZS (DZSI) gross margin in Q3 2024?
What was DZS (DZSI) net loss in Q3 2024?
When does DZS (DZSI) expect to achieve break-even Adjusted EBITDA?
