DZS Releases Q3 2024 Financial Results
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 of 5.8%, 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 of 6.7%
Net revenue of $38.1 million compared to $31.1 million in Q2 2024, an increase of 22.8% quarter over quarter
GAAP gross margin of 29.4% compared to (4.6%) in Q3 2023, and 35.4% in the first nine months of 2024 compared to 26.8% in the first nine months of 2023
Non-GAAP gross margin1 of 36.7% compared to 17.4% in Q3 2023, and 38.6% in the first nine months of 2024 compared to 33.3% 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 of 17.2% 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 of 12.6% and 23.5% year-over-year
Adjusted EBITDA1 loss of $(9.3) million compared to $(17.5) million in Q3 2023, an increase of 46.8%
Diluted Net Loss per Share of $(0.67) on a GAAP basis compared to $(0.92) in Q3 2023, an increase of 27.2%
Non-GAAP EPS loss1 of $(0.31) compared to $(0.48) in Q3 2023, an increase of 35.4%
Cash balance of $5.7 million at the end of Q3 2024
Inventory of $79 million at the end of Q3 2024
(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 $79 million of inventory to cash, delivery to our customers, and the success of ongoing active trials.”
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.
