– Sequential Quarterly Improvements in Revenue and Adjusted EBITDA –
SAN ANTONIO, TX – October 29, 2019 – GlobeNewswire – Digerati Technologies, Inc.
(OTCQB: DTGI) (“Digerati” or the “Company”), a provider of cloud services specializing in UCaaS (Unified Communications as a Service) solutions for the small to medium-sized business (“SMB”) market, today announced financial results for its fiscal year ended July 31, 2019. The Company’s FY2019 is the first full fiscal year report that reflects consolidated results for the acquisitions of both Synergy Telecom (“Synergy”) and T3 Communications, Inc. (“T3”).
Financial Highlights For The Fiscal Year 2019 Ended July 31, 2019
- – Consolidated total revenue for the year ended July 31, 2019 increased 202% to $6.040 million, compared to $2.001 million for the year ended July 31, 2018.
- – Gross profit for the year ended July 31, 2019 increased to $2.91 million compared to $948,000 for the year ended July 31, 2018, resulting in a gross margin of 48%.
- – Including non-cash items and one-time transactional expenses, SG&A expenses for the year ended July 31, 2019 increased by $1.015 million to $4.604 million, compared to $3.589 million for the year ended July 31, 2018.
- – The Company incurred $1.192 million in SG&A expense for non-cash items and onetime transactional expenses for the year ended July 31, 2019 that includes stock compensation and warrant expense and one-time costs associated with its acquisition of Florida-based T3.
- – Excluding all non-cash items and one-time transactional expenses, non-GAAP Adjusted EBITDA was $(500,000) for the year ended July 31, 2019, compared to $(992,000) for the year ended July 31, 2018.
- – The Company’s operating activities consumed $529,000 of its available cash during the year ending July 31, 2019 compared to cash used for operating activities of $985,000 for the year ended July 31, 2018. Cash used by investing activities for the year ending July 31, 2019 was $136,000, compared to $1.54 Million for the year ended July 31, 2018.
- Cash provided by financing activities for the year ending July 31, 2019 was $682,000 compared to $2.23 million for the year ended July 31, 2018.
- – Average monthly revenue per customer (ARPU) was $743 at year end July 31, 2019.
As anticipated, the Company’s Adjusted EBITDA, that excludes non-cash items and one-time transactional expenses, continued to improve into the 4th quarter of FY2019. Management expects this trend to continue in FY2020 with acceleration of the same through the execution of its M&A strategy.
Digerati participates in high-growth segments of the telecommunication industry that are driven by demand from enterprise customers, specifically small to medium-sized businesses. The Company continues to emphasize its UCaaS/cloud communication business that is experiencing significant growth as businesses migrate from legacy phone systems to cloudbased telephony systems. Other services offered to its business market include leading-edge network and business continuity solutions like SD WAN and an LTE mobile broadband service that guarantees up-time during network outages. Approximately 95% of Digerati’s revenue is contracted monthly recurring revenue.
In addition to executing on its organic growth strategy, the Company is continuing its disciplined approach to acquiring cloud communication service providers that have excelled at serving regional markets in the U.S. With a solid operational base in Texas and Florida, Digerati is well positioned to execute on this key strategic initiative and increase its market share in the 2nd and 4th largest state economies in the U.S.
“We are extremely pleased with our FY2019 financial results and continued progress of delivering on the Company’s stated strategic initiatives. We kicked off the fiscal year with a foundation consisting of two acquisitions that positioned us for continued organic growth and for stacking additional profitable revenue from future acquisitions. Our recently announced acquisition of Nexogy, Inc. will add approximately $6.6 million in annual revenue and is also expected to make a significant contribution to EBITDA now that we have reached a scale that allows us to maximize cost synergies. In FY2020, we will stay the course and not deviate from our disciplined plan of adding profitable recurring revenue with high gross margins from targeted acquisitions and organic growth,” said Arthur L. Smith, Digerati’s CEO.
Antonio Estrada, Jr., Digerati’s Chief Financial Officer, stated, “We are eager to continue delivering on our strategic plan during FY2020 and leverage our greater scale when integrating the next series of acquisitions. We will continue to adopt best practices from our future acquisitions and invest in our sales channels, service delivery and customer care as we grow our business user base.”
Further details about the Company’s financial results are available in its annual report on Form 10K, which will be available in the Investor Section of the Company’s website at digeratiinc.com.
Use of Non-GAAP Financial Measurements
EBITDA (defined as earnings before interest, taxes, depreciation and amortization) is useful to investors as 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 noncash charges such as changes in fair value of the Company’s derivative liabilities and stockbased compensation. 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. The Company uses Adjusted EBITDA as one of several financial measures to assess its operating performance. EBITDA and Adjusted 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 the United States of America (“GAAP”).
About Digerati Technologies, Inc.
Digerati Technologies, Inc. (OTCQB: DTGI) is a provider of cloud services specializing in UCaaS (Unified Communications as a Service) solutions for the business market. Through its subsidiary T3 Communications (T3com.com), the Company is meeting the global needs of businesses seeking simple, flexible, reliable, and cost-effective communication and network solutions, including cloud PBX, cloud mobile, Internet broadband, SD-WAN, SIP trunking, and customized VoIP services, all delivered on its carrier-grade network and Only in the Cloud™.
For more information about Digerati Technologies, please visit digerati-inc.com.
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 are reasonable, 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, successful execution of growth strategies, product development and 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 Securities and Exchange Commission.
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