- Non-GAAP Operating EBITDA of
- Gross Profit of
- Strong Gross Margin Improvement to 62.3% -
Key Financial Highlights for the Fourth Quarter Fiscal Year 2021 (Ended
- Revenue increased by 142% to
$3.787 million compared to$1.567 million for Q4 FY2020. - Gross profit increased 170% to
$2.360 million compared to$0.875 million for Q4 FY2020. - Gross margin increased to 62.3% compared to 55.8% for Q4 FY2020.
- Non-GAAP Adjusted EBITDA income improved to
$0.525 million , excluding all non-cash items and one-time transactional expenses, compared to Adjusted EBITDA income of$0.062 million for Q4 FY2020. - Non-GAAP operating EBITDA (OPCO EBITDA) improved to income of
$0.910 million , excluding corporate expenses, compared to a non-GAAP operating EBITDA of$0.342 million for Q4 FY2020.
Fiscal Year Ended
- Closed acquisition of Nexogy. Over the years, the Nexogy team has developed a channel sales program that has proven to be effective and resulted in Nexogy’s recognition as one of the fastest growing technology companies in
South Florida and nomination by theMiami Minority Chamber of Commerce as “High Tech Company of the Year 2016”. - Closed acquisition of ActivePBX. Over the years, ActivePBX has placed a strong emphasis on integrating its cloud communication platform with Customer Relationship Management (“CRM”) systems and most recently achieved the ‘Built for NetSuite’ status with its proven ActiveCRM CTI (Computer Telephony Integration) solution. This integration, built for Oracle NetSuite’s SuiteCloud Platform, allows organizations to pass CRM data seamlessly, easily, and conveniently between ActivePBX’s cloud system and Oracle NetSuite.
- As a combined business, Nexogy, ActivePBX, and Digerati’s operating subsidiary,
T3 Communications, Inc. , serves over 2,600 business customers and approximately 28,000 users. The business model of the combined entities is supported by strong and predictable recurring revenue with high gross margins under contracts with business customers in various industries including banking, healthcare, financial services, legal, insurance, hotels, real estate, staffing, municipalities, food services, and education. - Closed a
$20 million senior secured credit facility withPost Road Group . The Facility enables continued expansion of Digerati’sU.S. operations through organic growth efforts and targeted acquisitions.Post Road Group shares in Digerati’s strategic vision of combining organic growth with accretive acquisitions in building a formidable UCaaS provider for the small and medium-sized business market. With investing expertise in the Technology, Media, and Telecommunications (“TMT”) industries and a culture that aligns with that of the Company,Post Road Group is an ideal financial partner for Digerati during this key phase of its evolution. The initial funding of$14 million from the$20 million multi-draw facility was used to close the Company’s acquisitions ofNexogy, Inc. (Nexogy.com) and ActivePBX (ActivePBX.com), and refinance existing debt. Future draws may be used to fund additional acquisitions within the Company’s robust M&A pipeline of UCaaS providers that meet key financial, technical, and operational criteria, and have excelled at customer service and satisfaction when serving regional businesses. The Facility will support a more streamlined approach to the Company’s acquisition process, accelerating its consolidation strategy in the highly-fragmented UCaaS marketplace. - Entered a strategic partnership with
Sandler Partners to expand access to America’s fastest-growing master agent and distributor of connectivity and cloud services. Nexogy’s UCaaS and CCaaS (Unified Communications as a Service and Contact Center as a Service) platform will allow Sandler to provide its partners with additional fully integrated solutions. Sandler’s more than 8,000 partners, 200 telecom, cloud, and data providers, and extensive network of expert agents will now be able to distribute Nexogy’s fully integrated suite of cloud communication services. - As a result of its acquisition of ActivePBX, the Company achieved the “Built for NetSuite” status for its operating subsidiary,
T3 Communications, Inc. The SuiteApp, built for Oracle NetSuite’s SuiteCloud Platform, allows organizations to seamlessly, easily, and conveniently pass CRM data between the company’s cloud PBX and Oracle NetSuite, thus increasing productivity, reducing data entry time, and improving information accuracy across multiple agent touchpoints. - Improved balance sheet.
- Reduced potential equity dilution.
Three Months ended
Revenue for the three months ended
The total number of customers increased from 731 for the three months ended
Gross profit for the three months ended
Selling, General and Administrative expenses (excluding legal and professional fees) for the three months ended
Operating loss for the three months ended
Adjusted EBITDA income for the three months ended
Of note were the following non-cash expenses associated with the three months ended
Non-GAAP operating EBITDA (OPCO EBITDA) for the three months ended
Net loss for the three months ended
At
Twelve Months ended
Revenue for the twelve months ended
The total number of customers increased from 731 for the three months ended
Gross profit for the twelve months ended
Selling, General and Administrative expenses (excluding legal and professional fees) for the twelve months ended
Operating loss for the twelve months ended
Adjusted EBITDA income for the twelve months ended
Of note were the following non-cash expenses associated with the twelve months ended
Non-GAAP operating EBITDA (OPCO EBITDA) for the twelve months ended
Net loss for the twelve 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 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 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 as one of several financial measures to assess its operating performance, its use is limited as it excludes certain significant operating expenses. Non-GAAP operating EBITDA (OPCO EBITDA) 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, and Non-GAAP operating EBITDA 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. Although the Company believes that the expectations reflected in the forward-looking statements such as annual run-rates of
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CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
(In thousands, except per share amounts, unaudited) | |||||||||||||||||
Three months ended | For the Years ended | ||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||
OPERATING REVENUES: | |||||||||||||||||
Cloud software and service revenue | $ | 3,787 | $ | 1,567 | $ | 12,416 | $ | 6,279 | |||||||||
Total operating revenues | 3,787 | 1,567 | 12,416 | 6,279 | |||||||||||||
OPERATING EXPENSES: | |||||||||||||||||
Cost of services (exclusive of depreciation and amortization) | 1,427 | 692 | 5,135 | 3,035 | |||||||||||||
Selling, general and administrative expense | 2,050 | 749 | 7,019 | 4,106 | |||||||||||||
Legal and professional fees | 177 | 234 | 894 | 642 | |||||||||||||
Bad debt | 8 | 14 | 17 | (5 | ) | ||||||||||||
Depreciation and amortization expense | 545 | 148 | 1,749 | 613 | |||||||||||||
Total operating expenses | 4,207 | 1,837 | 14,814 | 8,391 | |||||||||||||
OPERATING LOSS | (420 | ) | (270 | ) | (2,398 | ) | (2,112 | ) | |||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||||
Gain (loss) on derivative instruments | 925 | 194 | (9,935 | ) | 263 | ||||||||||||
Gain (loss) on settlement of debt | 213 | (5 | ) | 560 | 129 | ||||||||||||
Income tax benefit (expense) | (61 | ) | 11 | (183 | ) | 33 | |||||||||||
Other income (expense) | (294 | ) | 116 | (294 | ) | 116 | |||||||||||
Interest expense | (1,686 | ) | (340 | ) | (4,765 | ) | (1,853 | ) | |||||||||
Total other income (expense) | (903 | ) | (24 | ) | (14,617 | ) | (1,312 | ) | |||||||||
NET LOSS INCLUDING NONCONTROLLING INTEREST | (1,323 | ) | (294 | ) | (17,015 | ) | (3,424 | ) | |||||||||
Less: Net loss attributable to the noncontrolling interests | 109 | (11 | ) | 332 | 47 | ||||||||||||
NET LOSS ATTRIBUTABLE TO DIGERATI'S SHAREHOLDERS | (1,214 | ) | (305 | ) | (16,683 | ) | (3,377 | ) | |||||||||
Deemed dividend on Series A Convertible preferred stock | (5 | ) | (19 | ) | (20 | ) | (19 | ) | |||||||||
NET LOSS ATTRIBUTABLE TO DIGERATI'S COMMON SHAREHOLDERS | $ | (1,219 | ) | $ | (324 | ) | $ | (16,703 | ) | $ | (3,396 | ) | |||||
LOSS PER COMMON SHARE - BASIC | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.13 | ) | $ | (0.06 | ) | |||||
LOSS PER COMMON SHARE - DILUTED | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.13 | ) | $ | (0.06 | ) | |||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC | 137,950,308 | 90,792,574 | 129,411,947 | 53,883,966 | |||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED | 137,950,308 | 90,792,574 | 129,411,947 | 53,883,966 | |||||||||||||
See notes to consolidated unaudited financial statements | |||||||||||||||||
Reconciliation of Net Income (Loss) to Adjusted EBITDA - OPCO, Net of Non-cash expenses & Transactional Costs | |||||||||||||||||
NET LOSS ATTRIBUTABLE TO DIGERATI'S SHAREHOLDERS, as reported | $ | (1,214 | ) | $ | (305 | ) | $ | (16,683 | ) | $ | (3,377 | ) | |||||
EXCLUDING NON-CASH ITEMS TRANSACTIONAL COSTS & CORP EXP | |||||||||||||||||
ADJUSTMENTS: | |||||||||||||||||
Stock compensation & warrant expense | 66 | (5 | ) | 972 | 1,127 | ||||||||||||
Corp Expenses net of stock compensation & Transactional cost | 384 | 280 | 1,066 | 890 | |||||||||||||
Legal and professional fees - transactional costs | 326 | 175 | 815 | 370 | |||||||||||||
Depreciation and amortization expense | 545 | 148 | 1,749 | 613 | |||||||||||||
Loss on derivative instruments | (925 | ) | (194 | ) | 9,935 | (263 | ) | ||||||||||
Bad Debt | 8 | 14 | 17 | (5 | ) | ||||||||||||
OTHER ADJUSTMENTS | |||||||||||||||||
Other income (expense) | 294 | (116 | ) | 294 | (116 | ) | |||||||||||
Interest expense | 1,686 | 340 | 4,765 | 1,853 | |||||||||||||
Income tax | 61 | (11 | ) | 183 | (33 | ) | |||||||||||
Less: Net loss attributable to the noncontrolling interest | (109 | ) | 11 | (332 | ) | (47 | ) | ||||||||||
Gain (loss) on settlement of debt | (213 | ) | 5 | (560 | ) | (129 | ) | ||||||||||
ADJUSTED EBITDA - OPCO | $ | 910 | $ | 342 | $ | 2,221 | $ | 883 | |||||||||
ADD-BACKS Expenses | |||||||||||||||||
Corp Expenses net of stock compensation & Transactional cost | 384 | 280 | 1,066 | 890 | |||||||||||||
ADJUSTED EBITDA - Income (Loss) | $ | 525 | $ | 62 | $ | 1,155 | $ | (7 | ) | ||||||||
Source: Digerati Technologies
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