Digital Ally Companies (NASDAQ: DGLY) through its subsidiaries, are engaged in video solution technology, healthcare revenue cycle management, ticket brokering and marketing and event production. Digital Ally continues to add organizations that demonstrate the common traits of positive earnings, growth potential, innovation and organizational synergies. For additional news and information please visit www.digitalally.com OVERLAND PARK, KS, June 17, 2025 (GLOBE NEWSWIRE) -- Digital Ally, Inc. (NASDAQ: DGLY) ...

Digital Ally (DGLY) Q1 2025 Earnings Call May 28, 2025 11:15 AM ET Company Participants Stanton Ross - CEOTom Heckman - CFO Operator Good morning, ladies and gentlemen, and welcome to the Digital Ally First Quarter Earnings and Corporate Update Conference Call. At this time, all lines are in listen only mode. Note that this call is being recorded on Wednesday, 05/28/2025. This conference call may contain forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 2 ...

Financial Data and Key Metrics Changes - Year-over-year revenues decreased by over $1 million or 19% in Q1 2025 compared to Q1 2024, primarily due to a significant drop in video product sales [11][12] - Despite the revenue decline, gross margin dollars improved by $78,000 to 5%, with overall gross margin percentage increasing to 36% from 28% year-over-year [14] - Operating loss improved to nearly $1 million from $3.6 million in the prior year, marking a 73% improvement [17] - Net income for Q1 2025 was $4.2 million or $1.41 per share, a turnaround of over $8 million from a loss of $3.9 million in 2024 [18][19] - Cash on the balance sheet increased to $3.8 million from $400,000 at the end of 2024, with working capital turning positive at $3.4 million [20][21] Business Line Data and Key Metrics Changes - Video product sales saw a significant decline year-over-year, but service revenue increased, indicating a positive trend in service offerings [12] - The entertainment segment's revenues decreased, but profits increased due to the refocusing of TicketSmarter to eliminate uneconomical sponsorships [13] - The Custom 440 event production group has not held any events in 2025 yet, with the first event scheduled for June 29, which is expected to positively impact second-quarter revenues [13][14] Market Data and Key Metrics Changes - The company has a backlog of over $2 million, which is expected to be fulfilled in the upcoming quarters, positively affecting future revenue figures [12][30] - Deferred revenue remains strong at over $10 million, indicating a healthy subscription model that is growing [31] Company Strategy and Development Direction - The company is focused on core businesses and aims to rebuild its legacy, particularly in video solutions and customer entertainment [5][6] - Plans to explore new products and patents are in place, with announcements expected in the coming quarters [32] - The company is working on regaining compliance with NASDAQ, having addressed previous noncompliance issues related to equity and share price [24][26] Management's Comments on Operating Environment and Future Outlook - Management views Q1 2025 as a watershed moment, indicating a significant turnaround and a focus on operational improvements [19] - There is optimism about the future, with expectations of growth in both the legal solutions and entertainment sectors [32][36] - The company is excited about upcoming events and partnerships, which are anticipated to enhance cash flow and market presence [34][36] Other Important Information - The company executed two reverse stock splits to regain compliance with NASDAQ, which was deemed necessary to avoid delisting [27][28] - The total common shares outstanding are now 1,668,735, with a market capitalization of over $7 million [29] Q&A Session Summary Question: What are the company's plans for future growth? - The company is focusing on fulfilling back orders and leveraging its deferred revenue from the subscription model, which remains attractive and is expected to grow [30][31] Question: How is the company addressing NASDAQ compliance? - The company has resolved previous noncompliance issues and is currently working on meeting the $1 minimum bid price requirement [24][26] Question: What is the outlook for the entertainment segment? - The company anticipates significant growth in the entertainment segment, with plans for multiple events in 2026 and a clear path for development [34][36]

Company Overview - Digital Ally, Inc. announced its first quarter operating results on May 21, 2025[4] - The company is listed on the Nasdaq Capital Market under the trading symbol DGLY[3] - The company has not indicated if it is an emerging growth company[3] Financial Reporting - The report includes forward-looking statements that may impact future performance[7] - The financial condition and results of operations are disclosed in Item 2.02 of the report[4] - The report does not include specific financial metrics or performance data[4] - The company has not provided guidance or outlook for future quarters in the current report[4] Product and Market Information - There are no mentions of new products, technologies, or market expansions in the current report[4] Regulatory Information - The report is not deemed "filed" under the Securities Exchange Act of 1934[5] - The press release is attached as Exhibit 99.1, detailing the financial results[8]

Group 1 - Digital Ally, Inc. will host an investor conference call on May 28, 2025, at 11:15 a.m. Eastern time to discuss its Q1 2025 operating results and future plans [1] - The company filed its Quarterly Report on Form 10-Q for Q1 2025 on May 21, 2025, and encourages participants to review it prior to the call [1] - Shareholders can join the conference call by dialing (646) 307-1865 or toll-free (800) 717-1738 with conference ID 03891 [2] Group 2 - A replay of the conference call will be available two hours after its completion, accessible until June 28, 2025, at 11:59 PM EDT [2] - Digital Ally, Inc. operates in video solution technology, healthcare revenue cycle management, ticket brokering, and marketing and event production [3] - The company continues to acquire organizations that exhibit positive earnings, growth potential, innovation, and organizational synergies [3] Group 3 - For additional inquiries, Stanton E. Ross, CEO, can be contacted at (913) 814-7774 [4]

Core Insights - Digital Ally, Inc. reported earnings per share of $1.41 for the first quarter of 2025, a significant turnaround from a net loss of ($27.48) per share in the prior year [1][5]. Financial Performance - Total revenue decreased by 19% to $4.4 million compared to $5.5 million in the first quarter of 2024 [5]. - Gross profit margin improved to 35.8% of revenue, up from 27.6% in the prior-year period [5]. - Selling, general and administrative expenses declined by 50.1% from year-earlier levels [5]. - The company reported an operating loss of $974,680, which is an improvement of $2,664,354 or 73.2% compared to the first quarter of 2024 [5]. - Non-operating gains amounted to $5,241,762, representing an improvement of $5,545,996 from the first quarter of 2024 [5]. - Net income attributable to common stockholders improved to $4,263,471, compared to a net loss of ($3,931,020) in the previous year [5]. - Total working capital improved to a positive $3,385,051 as of March 31, 2025, compared to a deficit of $(19,377,507) as of December 31, 2024 [5]. - Total stockholders' equity improved to $11,569,375 as of March 31, 2025, compared to a deficit of $(9,013,430) as of December 31, 2024 [5]. Strategic Initiatives - The company has focused on reducing overhead expenses, decreasing headcount, and emphasizing a subscription-based sales model for its video solutions segment [3]. - A successful restructuring of the law enforcement products sales organization has contributed to improved financial performance [3]. - The company completed a $14.3 million public equity offering in the first quarter of 2025, enhancing liquidity and exceeding the minimum equity threshold for Nasdaq listing [3]. Future Outlook - The company anticipates improved revenues and operating profits in its entertainment segment as it approaches the Country Stampede Music Festival scheduled for June 26-28, 2025 [3]. - Despite challenges in the law enforcement products market, the company is optimistic about its ability to respond to industry changes and maintain sustainable profitability [3].

Financial Position - The company reported a stockholders' equity deficit of ($2,448,310) as of September 30, 2024, failing to meet the Nasdaq Stockholders' Equity Requirement of $2,500,000 [201]. - The company is required to demonstrate compliance with the Minimum Bid Price Requirement by June 6, 2025, to avoid delisting from Nasdaq [205]. - The company has no off-balance sheet debt or significant contingent obligations that could materially affect its financial condition [213]. - Total identifiable assets decreased to $30,256,336 in Q1 2025 from $45,164,195 in Q1 2024, reflecting a significant reduction in asset base [221]. - The company had net positive working capital of $3,385,051 as of March 31, 2025, with accounts receivable and other receivables totaling $4,923,191 [257]. - Total operating lease obligations amounted to $680,628 as of March 31, 2025, with minimum future lease payments totaling $789,235 [260]. - The company has fully reserved all deferred tax assets, increasing the valuation allowance by $4,680,000 to a total of $46,290,000 as of March 31, 2025, due to net operating loss carryforwards [296]. - The company has no recorded liability for uncertain tax positions as of March 31, 2025, and December 31, 2024, indicating a stable tax position [297]. Revenue Performance - Total net revenues for the three months ended March 31, 2025, were $4,475,264, a decrease of $1,054,087 (19%) compared to $5,529,351 in 2024 [221]. - Product revenues decreased by $844,496 (53.9%) to $721,350 in Q1 2025 from $1,565,846 in Q1 2024, primarily due to declines in the video solutions and entertainment segments [219]. - Video solutions segment generated revenues of $54,231 in Q1 2025, down from $721,188 in Q1 2024, reflecting increased competition and inventory shortages [219]. - Service and other revenues totaled $3,753,914 in Q1 2025, a decrease of $209,591 (5%) from $3,963,505 in Q1 2024 [220]. - The entertainment segment generated service revenues of $1,535,313 in Q1 2025, a slight increase of $3,512 (0.2%) compared to $1,531,801 in Q1 2024 [222]. - Cloud revenues from the video solutions segment were $594,742 in Q1 2025, a slight decrease of $21,746 (4%) from $616,488 in Q1 2024, indicating ongoing interest in cloud solutions [222]. - The entertainment segment is expected to generate higher revenues in the second half of the calendar year compared to the first half, indicating a seasonal revenue pattern [299]. Operating Results - Operating income for the total company was a loss of $974,680 in Q1 2025, an improvement from a loss of $3,639,034 in Q1 2024 [221]. - Operating loss improved by $2,664,354 (73%) from $3,639,034 in Q1 2024 to $974,680 in Q1 2025 [233]. - Gross profit increased by $272,335 (18%) from $1,523,699 in Q1 2024 to $1,796,034 in Q1 2025 [228]. - Cost of service revenues as a percentage of service revenues decreased to 59% in Q1 2025 from 62% in Q1 2024 [225]. Expenses and Cash Flow - Selling, general and administrative expenses decreased by $2,586,554 (50%) from $5,162,733 in Q1 2024 to $2,576,179 in Q1 2025 [229]. - Research and development expenses decreased by $403,049 (83%) from $487,466 in Q1 2024 to $84,417 in Q1 2025 [230]. - Net cash used in operating activities was $5,754,761 for the three months ended March 31, 2025, a deterioration of $4,836,216 compared to $918,545 in 2024 [255]. - Net cash provided by financing activities was $9,148,502 for the three months ended March 31, 2025, significantly higher than $1,005,027 in 2024, driven by a public equity offering [255]. Inventory and Capital Management - The company intends to reduce inventory levels of $2,489,111 during 2025 to improve cash flow [257]. - Total inventories as of March 31, 2025, amounted to $2,489,111, a decrease from $2,586,066 on December 31, 2024, reflecting a reduction in finished goods and movement of excess inventory [279]. - Inventory reserves represented 40% of the gross inventory balance at March 31, 2025, down from 46% at December 31, 2024, with reserves for obsolete and excess inventories totaling $1,648,542 as of March 31, 2025 [279]. Impairment and Goodwill - The company recorded a non-cash goodwill impairment charge of $4,322,000 for the revenue cycle management segment and $307,000 for the entertainment segment as of September 30, 2024, due to performance declines and delays in recovery [290]. - The company performed an impairment test for reporting units with remaining goodwill due to a decline in demand and economic uncertainty, leading to a comprehensive evaluation of fair values [287]. - The weighted average cost of capital used in the most recent impairment test ranged from 20.9% to 32.5%, with fair values for the video solutions reporting unit substantially exceeding its carrying value [288]. Business Risks and Future Outlook - The company has faced significant business risks, including losses in recent years and the impact of the COVID-19 pandemic on its customer base [198]. - The company has a lengthy sales cycle, which may lead to significant resource expenditure without guaranteed revenue [198]. - The company expects to improve video solutions product sales in 2025 due to the ramping up of the supply chain funded by a public equity offering [223]. - The company is in discussions to raise additional capital to restore positive operating cash flows and fund operations over the next 12 months [254].

Core Points - Digital Ally, Inc. has received approval from the Nasdaq Hearings Panel for continued listing on Nasdaq, contingent upon meeting specific criteria [1] - The company must achieve a stockholders' equity of $2.5 million by May 20, 2025, and maintain a bid price of at least $1.00 by June 6, 2025 [1] - Compliance with all other applicable listing criteria is required through September 2, 2025 [1][2] Company Overview - Digital Ally operates in various sectors including video solution technology, health protection products, healthcare revenue cycle management, ticket brokering, marketing, event production, and jet chartering [3] - The company aims to acquire organizations that exhibit positive earnings, growth potential, innovation, and organizational synergies [3]

Company Announcement - Digital Ally, Inc. announced a 1-for-20 reverse stock split of its common stock, which will begin trading on a split-adjusted basis on May 7, 2025 [1] - The reverse stock split was approved by stockholders at the annual meeting held on December 17, 2024, with the Board of Directors determining the specific ratio [2] Stockholder Information - Securities Transfer Corporation will provide instructions to stockholders regarding the exchange of stock certificates, while those holding shares in book-entry form or brokerage accounts do not need to take any action [3] Company Overview - Digital Ally operates in various sectors including video solution technology, health protection products, healthcare revenue cycle management, ticket brokering, event production, and jet chartering, focusing on organizations with positive earnings and growth potential [4]

Revenue Performance - Total net revenues for the year ended December 31, 2024, were $19,650,802, a decrease of 30.4% compared to $28,248,344 in 2023[126]. - Video Solutions segment revenue decreased to $5,755,391 in 2024 from $7,471,285 in 2023, while Revenue Cycle Management segment revenue fell to $6,131,650 from $6,713,678[126]. - Entertainment segment revenue dropped significantly to $7,763,761 in 2024 from $14,063,381 in 2023[126]. - Total product revenues for the years ended December 31, 2024, and 2023 were $5,404,317 and $9,347,945, respectively, a decrease of $3,943,628 (42.2%) due to reduced ticket sales and increased competition in video solutions[136]. - The entertainment operating segment generated product revenues of $3,406,928 in 2024, down from $5,044,576 in 2023, attributed to a focus on higher margin events[136]. - Video solutions operating segment revenues decreased from $4,303,369 in 2023 to $1,997,389 in 2024, impacted by increased competition and inventory shortages[136]. - Total service and other revenues for 2024 were $14,246,485, down from $18,900,399 in 2023, a decrease of $4,653,914 (25%) due to declines in entertainment and revenue cycle management segments[137]. Profitability and Loss - Gross profit for the total company was $5,489,332 in 2024, slightly down from $5,762,484 in 2023, with a gross profit margin increase to 28% from 20%[126][130]. - Operating loss for the total company was $(15,201,540) in 2024, an improvement from $(22,240,553) in 2023[126]. - Operating loss improved by $7,039,013 (31.6%) to $15,201,540 for the year ended December 31, 2024, compared to $22,240,553 in 2023, with operating loss as a percentage of revenues improving to 77%[156]. - The company reported a net loss before income tax benefit of $21,715,725 for the year ended December 31, 2024, an improvement of $3,748,224 (15%) from $25,463,949 in 2023[173]. - The basic and diluted loss per share improved to ($5.58) for the year ended December 31, 2024, from ($9.22) in 2023[180]. Expenses and Cost Management - Selling, general and administrative expenses decreased by $7,312,165 (26%) to $20,690,872 in 2024, primarily due to reduced advertising expenses[148]. - Research and development expenses fell by $1,279,073 (49%) to $1,339,673 in 2024, reflecting a strategic cutback in engineering staff and activities[149]. - Selling, advertising, and promotional expenses decreased by $4,993,035 (70%) to $2,144,494 for the year ended December 31, 2024, compared to $7,137,529 in 2023[150]. - General and administrative expenses decreased by $5,870,057 (32%) to $12,376,705 for the year ended December 31, 2024, from $18,246,762 in 2023[151]. - Cost of service revenues as a percentage of service revenues improved to 58% in 2024 from 66% in 2023, indicating better cost management[143]. Inventory and Goodwill - The company recorded a reserve for excess and obsolete inventory in the Video Solutions segment of $2,037,252 in 2024 compared to $4,355,666 in 2023[126]. - Total inventories decreased to $2,586,066 as of December 31, 2024, from $3,845,281 in 2023, with reserves for obsolete and excess inventories at $2,169,655[209]. - Reserves for obsolete and excess inventories represented 46% of the gross inventory balance at December 31, 2024, down from 54% in 2023[209]. - The company recorded a non-cash goodwill impairment charge of $4,322,000 for the revenue cycle management segment and $307,000 for the entertainment segment due to a decline in demand and economic uncertainty[153]. - The company performed an impairment test due to a decline in demand for services and a decrease in stock price, indicating a triggering event[218]. - The company recorded a non-cash impairment charge of $201,000 for a trade name/trademark in the entertainment segment, driven by economic uncertainty and performance decline[223]. - As of December 31, 2024, the company held goodwill of $5,480,966 for the revenue cycle management segment and $6,112,507 for the entertainment segment[221]. Cash Flow and Financing - Cash and cash equivalents decreased to $454,314 as of December 31, 2024, from $778,149 at the end of 2023, reflecting a net decrease of $323,835[182]. - Net cash used in operating activities improved by $4,779,120 to $5,114,718 for the year ended December 31, 2024, compared to $9,893,838 in 2023[182]. - Net cash provided by financing activities was $4,403,334 for the year ended December 31, 2024, down from $7,380,494 in 2023[183]. - The company had $454,314 in cash and cash equivalents and net negative working capital of $19,377,507 as of December 31, 2024[184]. - The company made matching contributions totaling $144,589 for its 401(k) plan for the year ended December 31, 2024, compared to $207,463 in 2023[191]. Other Financial Metrics - Interest income decreased to $69,509 for the year ended December 31, 2024, down from $95,717 in 2023, reflecting a decline in cash and cash equivalents[157]. - The company recorded a gain on the extinguishment of liabilities of $917,935 for the year ended December 31, 2024, compared to $550,867 in 2023[167][168]. - Total lease expense under the company's operating leases was approximately $627,212 during the year ended December 31, 2024[185]. - Total operating lease liabilities amounted to $718,509 as of December 31, 2024[186]. - Outstanding debt obligations totaled $5,102,526 as of December 31, 2024, with current maturities of $4,961,443 due in 2025[188]. - The company has fully reserved all deferred tax assets, increasing the valuation allowance by $4,680,000 to a total of $46,290,000 as of December 31, 2024[229]. - The fair value of the video solutions reporting unit was substantially in excess of its carrying value, while the revenue cycle management and entertainment segments were determined to be impaired[220]. - The weighted average cost of capital used in the most recent impairment test ranged from 18.3% to 21.3%[219]. - Inflation has not materially affected the company, and the entertainment segment is expected to generate higher revenues in the second half of the calendar year[233].