DZS Inc. reported its financial results for the second quarter and first half of 2024, highlighting a mixed performance amid strategic shifts and market challenges. For the three months ended June 30, 2024, net revenue increased to $31.1 million, a 1.4% rise from $30.6 million in the same period of 2023. However, for the six months ended June 30, 2024, revenue decreased by 21.7% to $58.7 million, down from $75.0 million in the prior year. The decline was attributed to reduced sales in the Access Networking Infrastructure and Cloud Software & Services segments.

Gross profit for the second quarter rose to $10.4 million, representing 34% of net revenue, compared to $10.0 million (33% of revenue) in the prior year. Operating expenses decreased significantly, leading to an improved operating loss of $17.2 million for the quarter, down from $21.1 million in 2023. The company recognized a bargain purchase gain of approximately $41.5 million from its acquisition of NetComm Wireless Pty Ltd, which contributed to a substantial turnaround in profitability. Income from continuing operations before income taxes was $22.7 million, a significant improvement from a loss of $22.1 million in the same quarter of 2023.

DZS reported net income from continuing operations of $23.1 million for the second quarter, compared to a loss of $22.6 million in the same period last year. For the first half of 2024, net income was $3.4 million, a notable recovery from a loss of $48.7 million in the previous year. The company’s total stockholders' equity increased to $56.6 million as of June 30, 2024, up from $22.6 million at the end of 2023.

Strategically, DZS completed the divestiture of its Asian subsidiaries on April 5, 2024, to focus on markets in the Americas, EMEA, and ANZ regions. This move was part of a broader strategy to streamline operations and improve financial performance. The company also acquired NetComm Wireless for approximately $8.1 million, with contingent consideration based on future revenue performance.

As of June 30, 2024, DZS had cash and cash equivalents of $6.9 million, down from $13.8 million at the end of 2023. The company’s long-term debt increased to $15.7 million, reflecting new borrowings to support its acquisition strategy. Despite facing macroeconomic pressures, including inflation and geopolitical issues, DZS is positioning itself for future growth through strategic acquisitions and operational efficiencies.