UTStarcom Reports Unaudited Financial Results for Second Half and Full Year 2023
- Revenue for 2023 increased by 12.1% to $15.8 million compared to 2022.
- Gross profit rose to $4.4 million in 2023, with a gross margin of 27.9%.
- Operating expenses surged to $11.2 million in 2023, driven by higher SG&A and R&D costs.
- The operating loss for 2023 was $6.8 million, higher than the $4.4 million in 2022.
- Net loss for 2023 was $4.0 million, resulting in a basic EPS of -$0.44.
- Cash balance decreased by 10.9% to $59.6 million by the end of 2023.
- Operating losses increased from $1.6 million in 2022 to $2.8 million in the second half of 2023.
- Net loss in the second half of 2023 was $2.0 million, compared to $3.3 million in the same period in 2022.
- Cash used in operating activities in the second half of 2023 was $0.7 million.
- Net services sales for the second half of 2023 decreased by 0.9% compared to the same period in 2022.
Insights
The financial results reported by UTStarcom show a mixed performance with significant revenue growth but also increased operating losses. The year-over-year revenue increase of 39.4% in the second half and 12.1% for the full year is a positive indicator of the company's ability to grow sales, particularly driven by the Indian market. This growth is a positive signal to investors as it suggests expanding market penetration and successful sales strategies.
However, the operating expenses have risen substantially, outpacing revenue growth. The 86.2% increase in operating expenses for the second half and 57.7% for the full year could raise concerns about the company's cost management and scalability of its business model. Research and development costs have increased as part of their 5G product development, which is necessary for long-term competitiveness but puts short-term pressure on profitability.
The reduction in net loss is encouraging, but the company still operates at a loss and the decrease in cash balance by 10.9% might raise questions about the sustainability of its financial position. Investors should monitor the company's ability to control costs and improve operational efficiency to ensure long-term profitability.
UTStarcom's focus on 5G transport network solutions and its progress in lab and field trials with Chinese operators indicate the company's commitment to capitalizing on the 5G rollout. The telecommunications industry is rapidly moving towards 5G and UTStarcom's involvement in this space could position it favorably as the technology becomes increasingly adopted globally.
The company's exploration of new market segments in China, such as Smart Cities and Digital Construction, aligns with the broader industry trend towards IoT and smart infrastructure. These initiatives could open up new revenue streams for UTStarcom, but they also represent a strategic shift that requires careful execution.
While the company's expansion in the Indian broadband market is noteworthy, the reported decrease in net services sales due to the completion of current projects and no new major projects in India could be a point of concern. It is important for UTStarcom to secure new contracts to maintain its revenue stream from services, which appears to be a challenge based on the current report.
The increase in gross profit margins, both for equipment and services, suggests improved efficiency or pricing power. However, the company's operating losses are expanding, which might indicate that the increased margins are not sufficient to cover the rising operating expenses. This could be a red flag for investors concerned about the company's cost structure and ability to reach profitability.
The company's cash reserves have decreased, which could impact its ability to fund ongoing operations and invest in new opportunities without seeking additional financing. This could pose a risk to the company's growth prospects and financial stability, especially if it continues to operate at a loss.
UTStarcom's engagement in 5G and smart infrastructure projects represents a long-term investment that may not yield immediate financial returns. Investors should consider the balance between the potential for future growth against the current financial performance and the company's ability to manage cash flow effectively.
HANGZHOU, China, March 22, 2024 (GLOBE NEWSWIRE) -- UTStarcom (the Company) (NASDAQ: UTSI), a global telecommunications infrastructure provider, today reported its unaudited financial results for the six months and full year ended December 31, 2023, and provided a business update.
Business Update
- 5G transport network portfolio progress. In 2023, UTStarcom continued its cooperation with some mobile operators in China on the development of a next generation disaggregated 5G transport network solution. Following the successful lab testing with China Unicom Research Institute that the Company passed earlier in 2023, UTStarcom successfully completed field trials and interoperability tests by the end of 2023. UTStarcom continued development of Hardware platforms to support the vision of China Telecom Research Institute for the next gen 5G transport network. The Company was also actively working in 2H 2023 on the development of new access products in the SkyFlux CPT product line to address the growing demand in Chinese market for this type of products.
- Cooperation with a Mobile Network Operator customer in Europe. UTStarcom received additional orders including a mobile transport network expansion order in 2H 2023 as well as post-sale technical support service orders. The Company continued working on certain new product developments to better address the needs of the customer for its network expansion expected in 2024.
- India broadband expansion orders. UTStarcom received orders for the expansion of its IMS (IP Multimedia Subsystem) and SSTP (Signaling Transfer Point) broadband core platforms from its key customers in India. This includes the expansion of hardware and software of the SSTP (Signaling Transfer Point) platform in 2H 2023.
- Post-sale support services to customers globally. The Company received several post-sale support orders and continued providing technical support and maintenance services to its customers around the world for various platforms in operation including NetRing PTN, SyncRing, IMS, SSTP, etc.
- China market exploration. In 2H 2023, the Company continued to explore new segment of Chinese market opportunities related to Smart Cities and Digital Construction in China, such as Smart Street Light, Smart Agriculture, etc.
UTStarcom’s Chief Executive Officer Mr. Hua Li commented, “Our results for the second half and full year 2023 were within expectation. We have made some progress with our business partners in China to implement network disaggregation solutions, and we expect to see results in the coming years.”
Second Half and Full Year 2023 Financial Results (Unaudited)
Summary of 2H 2023 Key Financials (Unaudited) | |||||
| 2H 2023 | 2H 2022 | Y/Y Change | |||
| Revenue | |||||
| Gross Profit | |||||
| Operating Expenses | |||||
| Operating Loss | ( | ( | ( | ||
| Net Loss | ( | ( | |||
| Basic EPS | ( | ( | |||
| Cash Balance (including Restricted Cash) | - | ||||
Summary of Full Year 2023 Key Financials (Unaudited) | |||
| 2023 | 2022 | Y/Y Change | |
| Revenue | |||
| Gross Profit | |||
| Operating Expenses | |||
| Operating Loss | ( | ( | ( |
| Net Loss | ( | ( | |
| Basic EPS | ( | ( | |
| Cash Balance (including Restricted Cash) | - | ||
* Dollar comparisons are used where percentage comparisons are not meaningful.
* All amounts are in U.S. Dollars millions except for Earnings Per Share (EPS)
Total Revenues
Six months ended December 31, 2023
Total revenues for the second half of 2023 were
- Net equipment sales for the second half of 2023 were
$3.6 million , an increase of314.1% from$0.9 million in the corresponding period in 2022. The increase was mainly due to increased revenue from customers in India. - Net services sales for the second half of 2023 were
$5.6 million , a decrease of0.9% from$5.7 million in the corresponding period in 2022.
Twelve months ended December 31, 2023
2023 total revenues were
- 2023 net equipment sales were
$4.6 million , an increase of101.1% from$2.3 million in the corresponding period in 2022. The increase was mainly due to increased revenue from customers in India.
- 2023 net services sales were
$11.2 million , a decrease of5.2% from$11.8 million in 2022. The decrease was mainly due to the completion of current projects and no new major projects in India.
Gross Profit
Six months ended December 31, 2023
Gross profit was
- Equipment gross profit for the second half of 2023 was
$0.8 million , compared to negative$0.3 million in the corresponding period in 2022. Equipment gross margin for the second half of 2023 was21.0% , compared to negative31.5% for the corresponding period in 2022. The improved gross margin was attributed to a higher equipment revenue in 2023. - Service gross profit for the second half of 2023 was
$1.8 million , compared to$1.6 million in the corresponding period in 2022. Service gross margin for the second half of 2023 was32.2% , compared to28.3% for the corresponding period in 2022.
Twelve months ended December 31, 2023
2023 gross profit was
- 2023 equipment gross profit was
$0.9 million , compared to negative$0.6 million in 2022. 2023 equipment gross margin was20.2% , compared to negative27.0% in 2022. The improved gross margin was attributed to a higher equipment revenue in 2023. - 2023 service gross profit was
$3.5 million , compared to$3.3 million in 2022. 2023 service gross margin was31.0% , compared to27.9% in 2022.
Operating Expenses
Six months ended December 31, 2023
Operating expenses for the second half of 2023 were
- Selling, general and administrative (“SG&A”) expenses for the second half of 2023 were
$2.4 million , compared to$0.8 million in the corresponding period in 2022. SG&A was higher in the second half of 2023 due to less reversal of allowance for credit loss associated with aged receivables from our India customer, and the one-off lease exemption recorded in 2022 that did not recur in 2023. - Research and development (“R&D”) expenses for the second half of 2023 were
$3.0 million , compared to$2.1 million in the corresponding period in 2022. The increase reflected the different stages of 5G product development.
Twelve months ended December 31, 2023
2023 operating expenses were
- 2023 SG&A expenses were
$5.3 million , compared to$2.3 million in 2022. The increase was mainly attributable to less reversal of allowance for credit loss associated with aged receivables from our India customer, and the one-off lease exemption recorded in 2022 that did not recur in 2023. - 2023 research and development expenses were
$5.9 million , compared to$4.8 million in 2022. The increase reflected the different stages of 5G product development.
Operating Loss
Operating loss for the second half of 2023 was
Full year 2023 operating loss was
Interest Income, Net
Net interest income for the second half of 2023 was
Full year 2023 net interest income was
Other Income (Expenses), Net
Net other income for the second half of 2023 was
Full year 2023 net other income was
Net Loss
Net loss attributable to shareholders for the second half of 2023 was
Full year 2023 net loss attributable to shareholders was
Cash Flow
Cash used in operating activities in the second half of 2023 was
About UTStarcom Holdings Corp.
UTStarcom is committed to helping network operators offer their customers the most innovative, reliable and cost-effective communication services. UTStarcom offers high performance advanced equipment optimized for the most rapidly growing network functions, such as mobile backhaul, metro aggregation and broadband access. UTStarcom has operations and customers around the world, with a special focus on Japan, India and China. UTStarcom was founded in 1991 and listed its shares on the Nasdaq Market in 2000 (symbol: UTSI). For more information about UTStarcom, please visit http://www.utstar.com.
Forward-Looking Statements
This press release includes forward-looking statements, including statements regarding the Company’s strategic initiatives and the Company’s business outlook. These statements are forward-looking in nature and subject to risks and uncertainties that may cause actual results to differ materially and adversely from the Company’s current expectations. These include risks and uncertainties related to, among other things, the effect of the COVID-19 pandemic on the Company’s business, changes in the financial condition and cash position of the Company, changes in the composition of the Company’s management and their effect on the Company, the Company’s ability to realize anticipated results of operational improvements and benefits of the divestiture transaction, the ability to successfully identify and acquire appropriate technologies and businesses for inorganic growth and to integrate such acquisitions, the ability to internally innovate and develop new products, assumptions the Company makes regarding the growth of the market and the success of the Company’s offerings in the market and the Company’s ability to execute its business plan and manage regulatory matters. The risks and uncertainties also include the risk factors identified in the Company’s latest annual report on Form 20-F and current reports on Form 6-K as filed with the Securities and Exchange Commission. The Company is in a period of strategic transition and the conduct of its business is exposed to additional risks as a result. All forward-looking statements included in this press release are based upon information available to the Company as of the date of this press release, which may change and the Company assumes no obligation to update any such forward-looking statements.
For investor and media inquiries, please contact:
UTStarcom Holdings Corp.
Tel: +86 571 8192 8888
Ms. Shelley Jiang, Investor Relations
Email: utsi-ir@utstar.com/ Shelleyjiang@utstar.com /
| UTStarcom Holdings Corp. Unaudited Condensed Consolidated Balance Sheets | |||||
| December 31, | December 31, | ||||
| 2023 | 2022 | ||||
| (In thousands) | |||||
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | $ | 49,966 | $ | 54,517 | |
| Notes receivable, net | 490 | 138 | |||
| Accounts receivable, net | 8,380 | 11,867 | |||
| Inventories and deferred costs | 886 | 1,322 | |||
| Short-term restricted cash | 7,117 | 9,862 | |||
| Prepaid and other current assets | 3,712 | 4,095 | |||
| Total current assets | 70,551 | 81,801 | |||
| Long-term assets: | |||||
| Property, plant and equipment, net | 575 | 604 | |||
| Operating lease right-of-use assets, net | 2,649 | 2,969 | |||
| Long-term restricted cash | 2,562 | 2,480 | |||
| Other long-term assets | 1,349 | 1,376 | |||
| Total long-term assets | 7,135 | 7,429 | |||
| Total assets | $ | 77,686 | $ | 89,230 | |
| LIABILITIES AND EQUITY | |||||
| Current liabilities: | |||||
| Accounts payable | $ | 7,959 | $ | 12,974 | |
| Customer advances | 226 | 123 | |||
| Deferred revenue | 72 | 79 | |||
| Income tax payable | 8,876 | 8,349 | |||
| Operating lease liabilities, current | 1,184 | 1,228 | |||
| Other current liabilities | 5,436 | 6,098 | |||
| Total current liabilities | 23,753 | 28,851 | |||
| Long-term liabilities: | |||||
| Operating lease liabilities, non-current | 1,660 | 1,894 | |||
| Long-term deferred revenue and other liabilities | 1,049 | 1,021 | |||
| Total liabilities | 26,462 | 31,766 | |||
| Total equity | 51,224 | 57,464 | |||
| Total liabilities and equity | $ | 77,686 | $ | 89,230 | |
| UTStarcom Holdings Corp. Unaudited Condensed Consolidated Statements of Operations | ||||||||||||||||
| Six months ended December 31, | Twelve months ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Net sales | $ | 9,239 | $ | 6,560 | $ | 15,753 | $ | 14,052 | ||||||||
| Cost of net sales | 6,669 | 5,220 | 11,362 | 11,385 | ||||||||||||
| Gross profit | 2,570 | 1,340 | 4,391 | 2,667 | ||||||||||||
| 27.8 | % | 20.4 | % | 27.9 | % | 19.0 | % | |||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 2,424 | 773 | 5,316 | 2,292 | ||||||||||||
| Research and development | 3,007 | 2,148 | 5,881 | 4,762 | ||||||||||||
| Total operating expenses | 5,431 | 2,921 | 11,197 | 7,054 | ||||||||||||
| Operating loss | (2,861 | ) | (1,581 | ) | (6,806 | ) | (4,387 | ) | ||||||||
| Interest income, net | 1,264 | 1,342 | 2,130 | 2,154 | ||||||||||||
| Other income (expense), net | 112 | (2,303 | ) | 2,023 | (706 | ) | ||||||||||
| Loss before income taxes | (1,485 | ) | (2,542 | ) | (2,653 | ) | (2,939 | ) | ||||||||
| Income tax expense | (518 | ) | (780 | ) | (1,362 | ) | (2,063 | ) | ||||||||
| Net loss attributable to UTStarcom Holdings Corp. | $ | (2,003 | ) | $ | (3,322 | ) | $ | (4,015 | ) | $ | (5,002 | ) | ||||
| Net loss per share attributable to UTStarcom Holdings Corp.—Basic | $ | (0.22 | ) | $ | (0.37 | ) | $ | (0.44 | ) | $ | (0.55 | ) | ||||
| Weighted average shares outstanding—Basic | 9,116 | 9,093 | 9,113 | 9,056 | ||||||||||||
| UTStarcom Holdings Corp. Unaudited Condensed Consolidated Statements of Cash Flows | ||||||||||||||||
| Six months ended December 31, | Twelve months ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (In thousands) | ||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
| Net loss | $ | (2,003 | ) | $ | (3,322 | ) | $ | (4,015 | ) | $ | (5,002 | ) | ||||
| Depreciation | 113 | 100 | 229 | 206 | ||||||||||||
| Recovery of credit losses | (317 | ) | (1,667 | ) | (1,315 | ) | (3,465 | ) | ||||||||
| Stock-based compensation expense | 110 | 264 | 293 | 603 | ||||||||||||
| Net loss on disposal of assets | - | (2 | ) | (25 | ) | (2 | ) | |||||||||
| Gain on release of tax liability due to expiration of the statute of limitations | (10 | ) | (10 | ) | (21 | ) | (21 | ) | ||||||||
| Lease amortization | 584 | 249 | 1,200 | 994 | ||||||||||||
| Deferred income taxes | - | 1,135 | — | 1,135 | ||||||||||||
| Changes in operating assets and liabilities | 820 | 6,681 | (866 | ) | 12,829 | |||||||||||
| Net cash provided by (used in) operating activities | (703 | ) | 3,428 | (4,520 | ) | 7,277 | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
| Additions to property, plant and equipment | — | (174 | ) | (182 | ) | (250 | ) | |||||||||
| Net cash used in investing activities | — | (174 | ) | (182 | ) | (250 | ) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
| Proceeds from exercise of stock options | — | 20 | 4 | 20 | ||||||||||||
| Repurchase of ordinary shares | — | — | — | (13 | ) | |||||||||||
| Net cash provided by financing activities | — | 20 | 4 | 7 | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (213 | ) | (872 | ) | (2,516 | ) | (6,451 | ) | ||||||||
| Net increase (decrease) in cash and cash equivalents | (916 | ) | 2,402 | (7,214 | ) | 583 | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 60,561 | 64,457 | 66,859 | 66,276 | ||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 59,645 | $ | 66,859 | $ | 59,645 | $ | 66,859 | ||||||||
FAQ
What was UTStarcom's revenue for 2023?
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How did UTStarcom's cash balance change in 2023?
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