- Non-GAAP Adjusted EBITDA – OPCO(1) of
Key Financial Highlights for the Three Months Ended
- Revenue decreased 5% to
$7.430 million compared to$7.837 million . - Gross profit decreased 9% to
$4.518 million compared to$4.958 million . - Gross margin decreased to 60.8% compared to 63.3%.
- Non-GAAP EBITDA from income, as adjusted (“Adjusted EBITDA – Income”)(1), decreased 42% to
$0.358 million , excluding all non-cash items and one-time transactional expenses, compared to Adjusted EBITDA - Income of$0.621 million . - Net loss attributable to Digerati’s common shareholders increased 102% to
$4.529 million , compared to a net loss attributable to Digerati’s common shareholders of$2.244 million . - Non-GAAP EBITDA from operations, as adjusted (“Adjusted EBITDA - OPCO”), decreased 22% to
$0.784 million , excluding corporate expenses, all non-cash items and one-time transactional expenses, compared to Adjusted EBITDA - OPCO of$0.999 million .
Three Months ended
Revenue for the three months ended
Gross profit for the three months ended
Selling, General and Administrative expenses (excluding legal, professional fees and stock-based compensation) for the three months ended
Operating loss for the three months ended
Adjusted EBITDA - Income for the three months ended
Adjusted EBITDA – OPCO for the three months ended
Net loss attributable to Digerati’s common shareholders for the three months ended
On
Nine Months ended
Revenue for the nine months ended
Gross profit for the nine months ended
Selling, General and Administrative expenses (excluding legal, professional fees and stock-based compensation) for the nine months ended
Operating loss for the nine months ended
Adjusted EBITDA - Income for the nine months ended
Adjusted EBITDA - OPCO for the nine months ended
Net loss attributable to Digerati’s common shareholders for the nine months ended
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
About
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
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ClearThink
bloper@clearthink.capital
(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 | Nine Months ended | ||||||||||||||||||||||||||||||||
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 | % | |||||||||||||||
Source: Digerati Technologies
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