DZS(US:DZSI)2022-05-02 16:00Financial Performance - Net revenue for the three months ended March 31, 2022, was $77.0 million, a decrease of 4.9% from $81.0 million in the same period in 2021[74]. - Product revenue decreased by 5.0% or $3.8 million to $72.4 million from $76.2 million year-over-year, primarily due to supply chain disruptions and lower spending from major customers in Asia[77]. - Total cost of revenue decreased by 5.1% to $50.2 million for the three months ended March 31, 2022, compared to $52.9 million in the same period in 2021[79]. - Gross profit percentage increased to 34.8% for the three months ended March 31, 2022, from 34.7% in the same period in 2021[79]. - Net loss for the three months ended March 31, 2022, was $3.0 million, an improvement of 86.9% from a net loss of $23.2 million in the same period in 2021[74]. Expenses - Research and product development expenses increased by 6.5% to $11.8 million for the three months ended March 31, 2022, compared to $11.2 million in the same period in 2021[80]. - Operating expenses decreased by 40.8% to $30.3 million for the three months ended March 31, 2022, compared to $51.2 million in the same period in 2021[74]. - Selling, marketing, general and administrative expenses decreased by 44.2% to $17.7 million for the three months ended March 31, 2022, compared to $31.8 million for the same period in 2021[81]. - Restructuring and other charges for the three months ended March 31, 2022 were approximately $0.4 million, down from $6.3 million in the same period of 2021[81]. Cash Flow and Liquidity - Net cash used in operating activities increased by $3.8 million to $10.7 million for the three months ended March 31, 2022, compared to $6.9 million for the same period in 2021[90]. - Net cash used in investing activities decreased by $4.2 million to $1.3 million for the three months ended March 31, 2022, from $5.5 million in the same period of 2021[91]. - As of March 31, 2022, the company had working capital of $121.8 million and $34.2 million in unrestricted cash and cash equivalents[89]. - The company anticipates that current cash and cash equivalents will be sufficient to meet cash requirements for at least the next 12 months[89]. - As of March 31, 2022, the company had unrestricted cash and cash equivalents of $34.2 million, down from $46.7 million at December 31, 2021[102]. - The company has no outstanding amounts under its revolving credit facility as of March 31, 2022[102]. Customer Concentration and Revenue by Region - Two customers accounted for 13% and 12% of net revenue for the three months ended March 31, 2022, compared to 18% and 10% in the same period in 2021[77]. - The Americas region saw a revenue increase of 14.4% to $23.1 million for the three months ended March 31, 2022, compared to $20.2 million in the same period in 2021[77]. - Revenue in Asia decreased by 17.7% to $35.3 million for the three months ended March 31, 2022, compared to $42.9 million in the same period in 2021[77]. Foreign Exchange Impact - A 10% appreciation or depreciation of the U.S. Dollar relative to KRW, JPY, and EUR would have resulted in an approximate $0.5 million change in operating income for the first three months of 2022[103]. - The net translation loss due to foreign exchange rate fluctuations for the three months ended March 31, 2022, was $0.3 million, impacting stockholders' equity[103]. - A 10% change in the U.S. Dollar relative to KRW, JPY, and EUR would have affected the company's net assets by approximately $2.5 million as of March 31, 2022[103]. - The company recognized approximately $0.5 million of expense related to intercompany loans denominated in foreign currencies during the three months ended March 31, 2022[103]. - A 10% change in the U.S. Dollar relative to EUR would have resulted in a potential $2.0 million change in net income for the first three months of 2022[103]. Taxation - The company recorded an income tax benefit of $1.3 million on a pre-tax loss of $4.4 million for the three months ended March 31, 2022[81]. Credit Agreement - The company entered into a Credit Agreement on February 9, 2022, providing for revolving loans of up to $30 million, with no amount outstanding as of March 31, 2022[94][96].