OAKLAND, Calif. – DASAN Zhone Solutions, Inc. (NASDAQ: DZSI or the "Company"
or “DZS”), the leading enabler of the emerging hyper-connected, hyper-broadband world, today reported
fourth quarter and fiscal year results for the period ended December 31, 2019.
Fourth Quarter 2019 Financial and Operational Highlights
Revenue $77.6 million
Selected by Rakuten Mobile to deliver the next generation of mobile cell site aggregation switches to
support 4G LTE & 5G ready services as well as Wi-Fi services
Appointed Tom Cancro as Chief Financial Officer to improve DZS’s financial, strategic, and executive
Ended the quarter with $28.7 million cash and cash equivalents, up $1.0 million from the year ago
Agreement reached on new term loan to refinance existing credit facility
“While many of the industry-wide challenges in carrier spending that affected our third quarter further
impacted our fourth quarter results, our confidence in the mid-to-long term strategic direction of the
business remains intact,” said Yung Kim, CEO of DZS. “However, in the short-term, we, like many of our
peers, have been further impacted by the global slowdown related to the coronavirus, and we are
therefore approaching the first half of 2020 vigilantly while we continue to monitor the situation. Despite a
soft start to the year, we enter 2020 with the strongest backlog of 5G projects in our company’s history, a
strong pipeline of new business opportunities, and we are well positioned for growth and profitability over
the long term.”
Tom Cancro, CFO of DZS, commented, “To further strengthen our financial position, we recently
executed an agreement with Dasan Networks, Inc., a 44% shareholder of the Company, on a new term
loan in the amount of approximately $18.5 million, which will provide us with an opportunity to completely
refinance our existing U.S. credit facility with PNC and Citi, and on more favorable terms.”
Fourth Quarter 2019 Financial Results
Net revenue for the fourth quarter of 2019 was $77.6 million, a 3.9% increase year-over-year from $74.7
million in the prior year period. The increase in revenues were primarily due to the acquisition of Keymile.
GAAP gross margin for the fourth quarter of 2019 was 32.6%, compared to 30.8% in the fourth quarter of
GAAP net loss attributable to DZS for the fourth quarter of 2019 totaled $(10.2) million, or $(0.48), per
diluted share compared to $(554,000), or $(0.03) per diluted share, in the same period last year. NonGAAP net loss attributable to DZS for the fourth quarter of 2019 totaled $(2.3) million, or $(0.11) per
diluted share, compared to $2.1 million, or $0.13 per diluted share, in the year ago quarter.
GAAP operating expenses for the fourth quarter of 2019 were $30.5 million compared to $22.2 million in
the same quarter last year. Non-GAAP adjusted operating expenses for the fourth quarter of 2019 were
$23.3 million compared to $19.8 million in the comparable year ago period.
Adjusted EBITDA for the fourth quarter of 2019 totaled $1.0 million and Adjusted EBITDA margin was
1.3%. This compares to Adjusted EBITDA of $3.2 million, or 4.2% Adjusted EBITDA margin, in the same
Fiscal Year 2019 Financial Results
Net revenue for the fiscal year 2019 was $306.9 million, an 8.7% increase from $282.3 million in fiscal
year 2018. The increase in revenues was primarily due to the acquisition of Keymile.
GAAP gross margin for the fiscal year 2019 was 32.6% which compares to 32.3% in fiscal year 2018.
GAAP net loss attributable to DZS for fiscal year 2019 totaled $(13.5) million, or $(0.69) per diluted share,
compared to $2.8 million, or $0.17 per diluted share, in fiscal year 2018. Non-GAAP net income
attributable to DZS for fiscal year 2019 totaled $2.0 million, or $0.10 per diluted share, compared to $9.0
million, or $0.53 per diluted share, for the fiscal year 2018.
GAAP operating expenses for fiscal year 2019 were $107.1 million compared to $84.2 million in fiscal
year 2018. Non-GAAP adjusted operating expenses for fiscal year 2019 were $94.3 million compared to
$79.0 million in fiscal year 2018.
Adjusted EBITDA for fiscal year 2019 totaled $9.3 million and Adjusted EBITDA margin was 3.0%. This
compares to Adjusted EBITDA of $12.2 million, or 4.3% Adjusted EBITDA margin, in the same year-ago
Total cash and cash equivalents (excluding restricted cash) as of December 31, 2019 were $28.7 million,
compared to $27.7 million as of December 31, 2018.
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