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DZS (DZSI) investor relations material

DZS Q3 2024 earnings summary

Complete event summary combining all related documents: earnings call transcript, report, and slide presentation.
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Q3 2024 earnings summary6 Nov, 2024

Executive summary

  • Q3 2024 revenue reached $38.1M, up 22.8% sequentially and 67.8% year-over-year, driven by the NetComm acquisition and topline growth.

  • Adjusted gross margin improved to 36.7%, with GAAP gross margin at 29.4%; adjusted EBITDA loss narrowed to $9.3M from $17.5M in Q3 2023.

  • Divested network assurance, in-home WiFi management, and Asia business for $34M, reducing debt and adding cash; NetComm acquisition enhanced broadband portfolio.

  • Completed restatement, brought SEC filings current, and improved internal controls and governance.

  • Focused on strengthening balance sheet, optimizing costs, realizing acquisition synergies, and monetizing inventory.

Financial highlights

  • Q3 2024 net revenue: $38.1M, up from $31.1M in Q2 2024; YTD revenue: $96.9M.

  • Adjusted gross margin rose to 36.7% (non-GAAP), GAAP gross margin at 29.4%; adjusted operating expenses: $23.3M.

  • Adjusted EBITDA loss improved to $9.3M; GAAP net loss: $(25.7)M; non-GAAP net loss: $(11.7)M.

  • Cash and equivalents at quarter end: $5.7M, with $30M added post-quarter from divestitures; inventory: $79M.

  • DSO improved to 83 days; working capital at $24M; long-term debt: $30M.

Outlook and guidance

  • Management targets break-even adjusted EBITDA and positive cash flow in 2025, leveraging cost savings and NetComm synergies.

  • Q4 revenue and profitability expected to improve sequentially; strong finish to 2024 anticipated.

  • Inventory conversion to cash expected over 4–5 quarters, supported by $90M backlog and $79M inventory.

  • Margins expected to approach 40% as product mix stabilizes and cost initiatives complete.

  • Service provider spending and government broadband stimulus programs expected to accelerate in H2 2025.

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Frequently asked questions

DZS Inc provides network access, optical, and cloud-native software solutions to broadband service providers and enterprises. The company supports fiber broadband, 5G, and cloud-based network transformation for customers globally. The company is headquartered in Plano, Texas, and its shares are listed on the NASDAQ.

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