The following is a summary of the DZS, Inc. (DZSI) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Reported Q3 revenue of $38.1 million, a 23% increase quarter-over-quarter.

• Non-GAAP adjusted gross margin improved to 36.7%, up by 6.5% from the previous quarter.

• Operating expenses rose due to costs from the NetComm acquisition and final restatement-related costs.

• Adjusted EBITDA was unfavorably down by $2 million compared to Q2 2024, primarily due to challenges in converting backlog shipments and realizing cost savings initiatives.

Business Progress:

• Completed the sale of the network assurance and in-home WiFi management portfolio, improving the balance sheet and reducing debt by $50 million.

• Made progress across strategic initiatives including growth, profitability improvement, and balance sheet optimization.

• Focused on executing sales synergies from the NetComm acquisition, enhancing broadband access, and connectivity portfolio.

• Set to achieve breakeven on an adjusted EBITDA basis and anticipate positive cash flows in 2025.

Opportunities:

• The global rollout of broadband equity access and deployment programs across various countries presents opportunities for increased funding in H2 2025.

• Focus on monetizing $79 million of inventory aligned with a growing sales pipeline and scheduled backlog.

Risks:

• Persistent challenges in the market such as an over rotation of inventory, higher cost of capital, and delays in government stimulus programs pose risks to timely revenue realization.

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