OAKLAND, Calif. -- DASAN Zhone Solutions (DZS), a global provider of ultra-broadband network access solutions and communications platforms deployed by advanced Tier 1, 2 and 3 service providers and enterprise customers, today reported first-quarter results for the period ended March 31, 2019. The company also provided its outlook for the three months ending June 30, 2019 and reaffirmed its guidance for the full year ending December 31, 2019.
First Quarter 2019 Financial Performance:
Net revenue for the first quarter of 2019 was $74.1 million, which was above the Company’s guidance of $70 million to $74 million and reflected an increase of 24.5% year-over-year.
GAAP gross margin for the first quarter of 2019 was 33.6%, which was above the Company’s gross margin guidance of 31% to 33% and reflected the immediate and accretive contribution of KEYMILE, an acquisition which closed on January 3, 2019.
GAAP net income attributable to DZSI for the first quarter of 2019 totaled a loss of $(1.6) million, or $(0.10) per diluted share. Non-GAAP net income attributable to DZSI for the first quarter of 2019 totaled $0.8 million, or $0.05 per diluted share.
GAAP operating expenses for the first quarter of 2019 were $25.7 million. Non-GAAP adjusted operating expenses for the first quarter of 2019 were $23.6 million, which was better than the Company’s guidance of $25.5 million to $27.0 million.
Non-GAAP adjusted EBITDA for the first quarter of 2019 totaled $1.8 million and non-GAAP adjusted EBITDA margin was 2.5%, which exceeded the Company’s guidance of $(3.8) million to $(2.6) million. On a year-over-year basis, non-GAAP adjusted EBITDA for the first quarter of 2019 increased 28.9% from $1.4 million, or 2.4% non-GAAP adjusted EBITDA margin, in the same year-ago period.
Total cash and cash equivalents (excluding restricted cash) as of March 31, 2019 were $20.9 million, compared to $27.7 million as of December 31, 2018.
"We are encouraged by our first quarter 2019 results, and our out-performance against guidance," said Yung Kim, CEO of DZS. "Our strong results for the period demonstrate that we are capitalizing on broad-based growth opportunities across multiple markets, product lines, technologies and customer groups. In Broadband Access, we are benefiting from emerging markets investing directly into fiber as well as the start of the next generation fiber-based upgrade cycle in fiber-rich countries. We are also strategically focused in other growth areas, including around 5G, where we have a robust product portfolio and the distinguished reputation of being one of the very first to market with a 5G mobile backhaul solution, as well as fiber in the enterprise, both of which represent significant growth opportunities for DZS to execute on going forward."
Added Michael Golomb, CFO of DZS: "We delivered better than expected results in the first quarter, with revenue growing 24.5% year-over-year, reflecting continued strength in Asia Pacific and EMEA regions with KeyMile contributing to the outperformance. Strong gross margins, which saw an accretive contribution from KeyMile -- as well as tight cost controls -- drove a significant outperformance in adjusted EBITDA. In the quarter, we also made progress in addressing our capital structure by closing on a new long term debt facility, with the proceeds used to strengthen our cash position to support continued growth in our business."
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