DZS Investor Presentation - June 2021
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DZS Investor Presentation
June 2021
© 2021 DZS – Proprietary and Confidential © 2021 DZS – Proprietary and Confidential
Safe Harbor and Forward-Looking Statements
This presentation contains forward-looking statements regarding future events and our future results that are subject to the safe harbors
created under the Private Securities Litigation Reform Act of 1995. These statements reflect the beliefs and assumptions of the
Company’s management as of the date hereof. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,”
“goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” variations of such words, the negative of such words, and
similar expressions are intended to identify forward-looking statements. In addition, statements that refer to projections or estimates of
earnings, revenue, operating expenses, gross profit, costs or other financial items (including non-GAAP measures) in prior or future
periods are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are
subject to risks, uncertainties and assumptions that are difficult to predict. The Company’s actual results could differ materially and
adversely from those expressed in or contemplated by the forward-looking statements. In addition to factors discussed herein, factors that
could cause actual results to differ include, but are not limited to, those risk factors contained in the Company’s SEC filings available
at www.sec.gov, including without limitation, the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q and subsequent
filings. In addition, additional or unforeseen affects from the COVID-19 pandemic and the global economic climate may give rise to or
amplify many of these risks. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as
of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking statements for any
reason.
This presentation includes financial measures that are not in accordance with generally accepted accounting principles (“GAAP”), such as
Adjusted EBITDA, which the Company believes is appropriate to provide meaningful comparison with, and to enhance an overall
understanding of the Company’s past financial performance and prospects for the future. The Company believes these non-GAAP
financial measures provide useful information to both management and investors to evaluate operations and operating performance and
are widely used in the telecommunications and manufacturing industries. Other companies in the telecommunications and manufacturing
industries may calculate these metrics differently than the Company does. The presentation of this additional information is not meant to
be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. Please see the
accompanying table at the end of this presentation for reconciliations of those measures to comparable GAAP measures.
This presentation shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there by any sale of the securities in any
jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration, qualification, or exemption under the securities
laws of any such jurisdiction.
© 2021 DZS – Proprietary and Confidential 2
Introducing DZS (DZSI:Nasdaq)
A global leader in the development of innovative packet-based Mobile Transport, Broadband
Connectivity and Cloud-Native Software Defined Networking solutions
Mobile Transport and Broadband Connectivity Pure-Play:
• ~750 active Tier I and alternate service provider customers
• Favorable secular and geo-political tailwinds
• ~$15B total addressable market in 2020 grows to $24B in 2024
(9.3% CAGR)
Business & Technology Transformation Yielding Compelling Results:
• Visionary CEO with a 30-year proven track record, delivering standard-
setting innovation, exponential growth and financial results
• New management team representing three consecutive quarters of
Record Orders, Backlog, Revenue and Margin Expansion
• Two recent technology acquisitions (mobile transport, software defined
networking/automation) – Potential for significant future upside via
amplified expansion playbook and operational streamlining
• Recent follow-on equity raise of $64M in gross proceeds
*2021 revenues reflect the midpoint of guidance as of May 3, 2021
© 2021 DZS – Proprietary and Confidential 3
Delivering Transformational Shareholder Value
Q1 2021:
24 New
Q1 2021: Customers
Record Growth
North America
Q1 2021: (138% YoY)
Record Orders EMEA
& Backlog (60% YoY)
Acquired RIFT
Software Mobile Growth
Acquired Automation (635% YoY)
Optelian Innovator
Surpassed Transport /
1.5M Mobile xHaul
$64M Equity Port Shipment Innovator
Raise Milestone
Zero Debt
Q3/Q4 2020:
Record
Consecutive
New Sales
Quarter
Team
New Revenue
Management
Team
© 2021 DZS – Proprietary and Confidential 4
Experienced and Trusted Leadership Team
Tom Cancro Jay Hilbert Bill Ko Geoff Burke Laura Larsen-
Chief Financial Officer EVP AEMEA Sales EVP Asia Sales Chief Marketing Officer Misunas
Chief People Officer
Michael Martin Justin Ferguson
Global Operations Officer Chief Legal Officer
Charlie Vogt
President & CEO
Keith Nauman Darrin Whitney
SVP Services Chief Information Officer
Andrew Bender Daniel Won Miguel Alonso Doron Paz Noel Charath
Chief Technology Officer Chief Product Officer VP of Product Line VP of Research & SVP Cloud Services
Management Development
© 2021 DZS – Proprietary and Confidential 5
Supplier to Many of World’s Leading Service Providers
Market Leader in Next Regional Leader in Software Defined
5G O-RAN Innovator
Mobile xHaul Generation 10Gig Broadband Connectivity
and 5G Mobile transport to
Networking and
Automation Disruptor
PON (XGS / 10GE)
South Korea and Japan
*Source: Omdia (Fiber and Copper Access Equipment: Revenue 4Q20 2017-Present), Results
are not an endorsement of DZS. Any reliance on these results is at the third-party’s own risk
© 2021 DZS – Proprietary and Confidential 6
~750 Active Customers Globally © 2021 DZS – Proprietary and Confidential 7
Cyclical Trends Driving DZS Growth Pillars
DSL BPON GPON
ps+
5G Next Gen
1G 2G 3G 4G Kbps Mbps Gbps
Open RAN Upgrade
B
Cycle
Open &
Software
Geo-Political
Defined
Networks
© 2021 DZS – Proprietary and Confidential 8
5G Requires Mobile Transport Solutions
Business Drivers Market Size
▪ 4G to 5G Upgrade Cycle
▪ $7.1B Revenue forecast for
▪ Rapid adoption of Open RAN Mobile Backhaul Equipment
▪ O-RAN Validation from +
(Omdia) up 28% vs. FY2020
5G
Rakuten Mobile (4M+ subs)
Wireline ▪ psforecast for
$1.1B Revenue
▪ Leadership in 5G Fronthaul, Mobile Fronthaul Equipment
Spend
Mid-haul and Backhaul (Omdia) up 116% vs. FY2020
Open RAN Cycle
Technology
▪ Fronthaul drives ~40%
increase in backhaul TAM
DZS Recent Results 5G Mobile Network
Open &
▪ 635% YoY Revenue Growth Diagram
Software
▪ 1.5M Mobile xHaul ports shipped
Defined
▪ Major Customers Include:
Networks
© 2021 DZS – Proprietary and Confidential 9
Open and Software Defined = New Age of O-RAN
Open RAN market is rapidly accelerating, growing
600%+ over next 4 years and becoming significant
part of mobile market ▪ The world’s first commercial O-RAN deployment
▪ 4M subscribers in Japan +
Wireless Wireline ps
Spend ▪ Rakuten
Spend Communications Platform (RCP) has 15
Cycle Cycle global partners
confirmed
Open &
Geo-Political Software
Influences Defined
Networks
Source: Omdia, Mobile Infrastructure Market Tracker 3Q20 Analysis, December 2020. Results
are not an endorsement of DZS. Any reliance on these results is at the third-party’s own risk.
© 2021 DZS – Proprietary and Confidential 10Broadband Undergoing Historic Upgrade Cycle
Business Drivers Market Size
▪ Symmetrical Broadband Services
▪ $12.3B Revenue forecast for
▪ 10-25Gbps Upgrade Cycle Broadband Access
▪ Equipment (Omdia) up 50%
~$120B of Broadband Initiatives
vs. FY2020 +
▪ Hybrid Work From Home
▪ Wireless
$8.7B SAM (Excluding
ps
▪ FiberLAN (Enterprise) Broadband
Spend
China), forecast up 56% vs.
Connectivity
▪ Reoccurring SDN/Automation FY2020
Software License Model Cycle
▪ Reoccurring SLA Model
DZS Results FTTx Network Diagram
Open &
▪ 30% YoY Revenue Growth in
Broadband Connectivity Segment Geo-Political Software
30%
(72% of Overall Revenue)
Influences Defined
▪ 24 New Customers
Networks
Source: Omdia, Fiber and Copper Access Equipment Forecast, February 2021. Results are
not an endorsement of DZS. Any reliance on these results is at the third-party’s own risk.
© 2021 DZS – Proprietary and Confidential 11Security Environment creating Investment Cycle
▪ Chinese suppliers represent ~63% of ▪ U.S, Japan, Australia, UK, and India are
global market, representing a generational among over a dozen countries that have
opportunity for cap & grow, replacement banned China suppliers with many other
and future expansion countries evaluating
▪ Banned countries represent nearlyWireless
50% of Wireline +
Spend
global communications equipment spend Spend ps
Cycle Cycle
Security Open &
Bans Software
Defined
Networks
Source: New Statesman (NS Tech) and DZS Analysis.
© 2021 DZS – Proprietary and Confidential 12North America & EMEA Take-Share Opportunity
Business Drivers Market Size
▪ FTTx 10G+ Upgrade Cycle $12.3B Revenue forecast for North America
Broadband Access Equipment by
▪ Phase I $9.2B RDOF awarded
FY2024 (Omdia):
and EMEA
– orders expected during 2H’21
+ +
represent 2 of the
▪ $100B Biden Broadband
Internet Infrastructure Bill
NA/EMEA: 43% growth to $5.6B
psWireless ps fastest
world’s
$7.1B Revenue forecast for Mobile Wireline growing PON
▪ European countries undergoing Backhaul/Fronthaul Equipment markets
cycle from copper to fiber (Omdia)
Spend Spend
▪ 7-10 year 5G Upgrade Cycle,
Cycle Cycle
NA/EMEA: 25% growth to $3.2B
O-RAN creating opportunity
Source: Omdia, Fiber and Copper Access Equipment Forecast, February 2021. Results are
not an endorsement of DZS. Any reliance on these results is at the third-party’s own risk.
DZS Results AEMEA Customers
Open &
▪ Americas delivered 11%
sequential and 72% YoY Software North
revenue growth in Q1’21
Geo-Political
Defined America &
Influences
▪ Americas represented 24.9% Networks EMEA
of Q1’21 Revenue
Take-Share
▪ EMEA delivered 58% YoY
revenue growth in Q1’21
▪ EMEA represented 22.1% of
Q1’21 Revenue
© 2021 DZS – Proprietary and Confidential 13An Emerging Wireless/Wireline Technology Race
▪ 5G and Fixed ▪ 5G Densification
Fiber solutions requires Fiber-
will compete for based Mobile+
residential and Transport solutions
business users Wireless
5G Spend Wireline Spend
Broadband
to deliver competitive
broadband-speed
▪ Competition for Open RAN
Cycle Connectivity
Cycle
wireless services
subscribers
among non- ▪ Wireline equipment
traditional TAM expands as
competitors will service providers
increase North extend their fiber
infrastructure America & network for 5G
Geo-Political
EMEA
demand services
© 2021 DZS – Proprietary and Confidential 14Vision, Transformation and Execution Yielding Results
Enhanced Mobile
New Executive
Expanded Executed Equity Rationalized Transport and
Management
Customer Base Offering Product Portfolio Software Product
Team
Portfolios
▪ Upgraded 60 positions ▪ 12 of top 25 fixed & ▪ $64M follow-on offering ▪ Realigned/Accelerated R&D ▪ Acquired Optelian (Mobile
▪ New management mobile carriers ▪ Strengthened balance ▪ Launch new global portfolios Transport)
pedigree ▪ 24 new customers sheet, no debt - Q221
including:
▪ Acquired RIFT (SDN
Orchestration & Control)
© 2021 DZS – Proprietary and Confidential 15Leading with Innovation
Automation
5G Slicing
Service
Analytics
Orchestration
AI / ML
Life Cycle Mgmt
5G Mobile
Enhanced O-RAN
xHaul
100G/200G/400G
100G
Access Nodes Cloud
Switching/Routing Disaggregation
Wi-Fi 6 5G mmWave
ONT/ONU Fixed Wireless
16
© 2021 DZS – Proprietary and ConfidentialMobile Transport & Broadband Connectivity “Pure Play”
A powerful platform for end-to-end intelligence for software and network orchestration
and automation, advanced data analytics and service management that reduces OPEX
Innovative and agile 5G Transport solutions 10G - 400G ZR+ outside plant / network edge
enabling more capacity, coverage and QoS hardened optical transport system
Market first 10G PON FTTx solutions PoLAN solutions delivering security, reliability, cost
delivering ultra-high speed Internet services and space savings for Fiber-based enterprises
Delivering Fiber as a Utility – High-speed internet service, always-on, service assurance and
advanced WiFi service, whole home coverage and QOS prioritization of data and video content
Enterprise ONTs GPON ONTs XGS PON ONTs Fixed Wireless
© 2021 DZS – Proprietary and Confidential 17Broadband Connectivity (FTTx)
Broadband Connected
ACCESS PREMISES
Building
Aggregation Wi-Fi 6 CPE
G.Fast / VDSL2
(>100M)
Neighborhood
Access Ring(s) xPON (1 – 10G+)
n x 10-100G Mesh Wi-Fi
XGS-PON ONT
Core CO / Remote
Internet = Addressed by DZS
Network OLT
© 2021 DZS – Proprietary and Confidential 18Mobile Transport (5G / O-RAN)
MOBILE
Transport
Software Defined / Virtual Network Functions
Physical Network Functions Connected
CPRIConverged Fixed and Mobile
Building G.Fast / VDSL2
Aggregation (>100M) Wi-Fi 6 CPE
Neighborhood
xPON (1 – 10G+)
Access Ring(s)
n x 10-100G
XGSPON ONT
CO /
Remote
nx OLT Mesh Wi-Fi
100-200G
Core Backhaul Cell Site CPRI Existing
Internet Transport Router
NetworkWhy Customers Partner with DZS
Innovation 5G Ready
Aligned ▪ Innovation / First to Market
Customer
Business ▪ Fixed & Mobile Portfolio
Relationships ▪ Global Footprint
Models
▪ Trusted Relationships
▪ Strategic Channel Partners
▪ Future ready - Software-Defined
Networking, Orchestration &
Automation
© 2021 DZS – Proprietary and Confidential 21Financial Overview
© 2021 DZS––Proprietary
2021 DZS Proprietaryand
andConfidential
ConfidentialQ1’21 Financial Overview
Revenue Adjusted EBITDA(1,2) Adjusted EPS(1,2)
$90 $5.0 $0.15
$81.0 $0.10
$4.0 $3.6
$80 $0.10
$3.0
$70 $0.05
$2.0
$60 $0.00
$1.0
$50 $47.5 Q1'20 Q1'21
$0.0 ($0.05)
$40 Q1'20 Q1'21
($1.0) ($0.10)
$30 ($2.0)
($0.15)
$20 ($3.0)
($0.20)
$10 ($4.0)
($5.0) ($0.25)
$0 ($4.8) ($0.25)
Q1'20 Q1'21 ($6.0) ($0.30)
Note: $ in millions, except per share data
(1) Refer to “Q1 2021 Shareholder Report dated May 3, 2021” as an exhibit to the 8-K filed with the SEC on May 3, 2021
(2) Refer to “GAAP to Adjusted (non-GAAP) reconciliations in the Appendix”
© 2021 DZS – Proprietary and Confidential 23Record Revenue Results © 2021 DZS – Proprietary and Confidential 24
Revenue by Customer Segment & Geography © 2021 DZS – Proprietary and Confidential 25
Margin Expansion Initiatives
47.0%
35.0%
32.9%
2020 Adj. Geographic Q1'21 Operational Services Software 2021+ Adj.
Gross Mix Synergies Expansion Gross
Margin Margin
© 2021 DZS – Proprietary and Confidential 26Balance Sheet Highlights
March 31, June 30, September 30, December 31, March 31,
($ in millions) 2020 2020 2020 2020 2021
Cash, cash equivalents and restricted cash $ 35.7 $ 47.2 $ 40.4 $ 54.4 $ 63.7
Debt $ 39.7 $ 56.8 $ 51.5 $ 43.5 $ 1.8
DSO 169 129 105 105 98
Inventory $ 39.9 $ 48.2 $ 43.9 $ 39.6 $ 41.1
Inventory Turns 3.2x 4.2x 5.6x 5.6x 5.1x
© 2021 DZS – Proprietary and Confidential 27Q2 and Full Year 2021 Guidance
Q2 2021 Full Year 2021
Low High Low High
($ in millions)
Net revenue $ 76.0 $ 81.0 $ 320.0 $ 340.0
Adjusted Gross margin %(1) 32.5% 34.0% 34.0% 35.5%
Adjusted Operating expenses(1) 26.5 25.5 104.5 100.5
(1)
Adjusted EBITDA (3.0) 2.0 2.0 20.0
*Reflects the Company’s guidance as of May 3, 2021
Source: Company filings
(1) Item represents a non-GAAP financial measure; see reconciliation to the comparable GAAP measure in the appendix section of this presentation.
© 2021 DZS – Proprietary and Confidential 28DZS (NASDAQ: DZSI)
Mobile Transport and Broadband Access Pure Play: 20 million products in service globally. Incumbency with 12 of the
largest Mobile and Broadband Access Service Providers in the world; amplifying expansion playbook in Americas and EMEA
~$97B TAM: Favorably positioned for 5G and work-from-home Broadband Access trends – first to market with 5G Open-RAN
Mobile Transport (Rakuten Mobile Network) and 10 Gigabit PON (many networks around the world)
Multi Faceted Secular and Geopolitical Tailwinds: 4G/5G Mobile Transport, U.S. Rural Digital Opportunity Fund
($20.4B), Secured & Trusted Communications Networks Act ($1.9B) and China Supplier Bans ($Billions)
Revenue and Margin Expansion: Broadband Connectivity and Mobile Transport upgrade cycle combined with a near
term focus to capture market-share to drive double-digit annual revenue growth while streamlining operations to drive
margin expansion
World Class Management Team: Newly formed Management team with disruptive technology heritage and global customer
relationships. In addition, ~60 “top-graded” R&D, PLM, supply chain & sales team members and two new Board Members
© 2021 DZS – Proprietary and Confidential 29Appendix
© 2021 DZS––Proprietary
2021 DZS Proprietaryand
andConfidential
ConfidentialReconciliation of GAAP to Adjusted (Non-GAAP) Results –
Three Months Ended March 31, 2021 and 2020
Three Months Ended March 31, 2021
Net Income
Operating Operating Net Income (Loss) per
Cost of Revenue Gross Profit Expenses Income (Loss) (Loss) Diluted Share
GAAP amount $ 52,936 $ 28,095 $ 51,192 $ (23,097) $ (23,225) $ (0.92)
Adjustments to GAAP amounts:
Depreciation and amortization (209) 209 (1,056) 1,265 1,265 0.05
Stock-based compensation (42) 42 (1,310) 1,352 1,352 0.05
Loss on debt extinguishment - - - - - -
Headquarters relocation - - (1,920) 1,920 1,920 0
Executive transition - - (71) 71 71 -
Restructuring and other charges - - (6,252) 6,252 6,252 0.25
Acquisition costs - - (643) 643 643 0.03
Bad debt expense - - (14,206) 14,206 14,206 0.56
Adjusted (Non-GAAP) amount $ 52,685 $ 28,346 $ 25,734 $ 2,612 $ 2,484 $ 0.10
Three Months Ended March 31, 2020
Net Income
Operating Operating Net Income (Loss) per
Cost of Revenue Gross Profit Expenses Income (Loss) (Loss) Diluted Share
GAAP amount $ 31,485 $ 15,995 $ 23,589 $ (7,594) $ (8,771) $ (0.41)
Adjustments to GAAP amounts:
Depreciation and amortization (472) 472 (784) 1,256 1,256 0.06
Stock-based compensation (9) 9 (773) 782 782 0.04
Loss on debt extinguishment - - - - 1,369 0.06
Adjusted (Non-GAAP) amount $ 31,004 $ 16,476 $ 22,032 $ (5,556) $ (5,364) $ (0.25)
Note: $ in 000’s, except per share data
Source: Company filings
6
© 2021 DZS – Proprietary and Confidential 31Reconciliation of GAAP to Adjusted (Non-GAAP) Results –
Twelve Months Ended December 31, 2020 and 2019
Twelve Months Ended December 31, 2020
Net Income
Net Income (Loss) per
(Loss) Diluted Share
Operating Operating Attributable to Attributable to
Cost of Revenue Gross Profit Expenses Income (Loss) DZS Inc. DZS Inc.
GAAP amount $ 203,761 $ 96,879 $ 109,404 $ (12,525) $ (23,082) $ (1.07)
Adjustments to GAAP amounts:
Depreciation and amortization (1,842) 1,842 (3,301) 5,143 5,143 0.24
Stock-based compensation (86) 86 (4,527) 4,613 4,613 0.21
Loss on debt extinguishment - - - - 1,369 0.06
Headquarters relocation - - (61) 61 61 0.00
Executive transition - - (2,047) 2,047 2,047 0.09
Intangibles impairment - - (6,472) 6,472 6,472 0.30
Bad debt expenses - - (3,119) 3,119 3,119 0.14
Adjusted (Non-GAAP) amount $ 201,833 $ 98,807 $ 89,877 $ 8,930 $ (258) $ (0.01)
Twelve Months Ended December 31, 2019
Net Income
Net Income (Loss) per
(Loss) Diluted Share
Operating Operating Attributable to Attributable to
Cost of Revenue Gross Profit Expenses Income (Loss) DZS Inc. DZS Inc.
GAAP amount $ 206,771 $ 100,111 $ 107,140 $ (7,029) $ (13,457) $ (0.69)
Adjustments to GAAP amounts:
Depreciation and amortization (2,012) 2,012 (3,103) 5,115 5,115 0.26
Stock-based compensation (41) 41 (3,467) 3,508 3,508 0.18
Merger and acquisition costs - - (337) 337 337 0.02
Inventory step-up amortization (577) 577 - 577 577 0.03
Restructuring cost - - (4,908) 4,908 4,908 0.25
Goodwill impairment - - (1,003) 1,003 1,003 0.05
Adjusted (Non-GAAP) amount $ 204,141 $ 102,741 $ 94,322 $ 8,419 $ 1,991 $ 0.10
Note: $ in 000’s, except per share data
Source: Company filings
6
© 2021 DZS – Proprietary and Confidential 32Reconciliation of Net Income to Adjusted EBITDA
For the Quarters Ended
March 31, December 31, March 31,
2021 2020 2020
Reconciliation of net income (loss) to Adjusted EBITDA:
Net income (loss) $ (23,225) $ (14,040) $ (8,771)
Interest expense, net 207 553 573
Income tax (benefit) provision 893 1,049 (5)
Depreciation and amortization 1,265 1,208 1,256
EBITDA $ (20,860) $ (11,230) $ (6,947)
Stock-based compensation 1,352 1,303 782
Acquisition costs 643 - -
Loss on debt extinguishment - - 1,369
Headquarters relocation 1,920 26 -
Executive transition 71 664 -
Intangibles impairment - 6,472 -
Bad debt expense 14,206 3,119 -
Restructuring and other charges 6,252 - -
Adjusted EBITDA $ 3,584 $ 354 $ (4,796)
Note: $ in 000’s
Source: Company filings
6
© 2021 DZS – Proprietary and Confidential 33Reconciliation of Net Income to Adjusted EBITDA
DZS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)
($ in thousands, except per share data)
For the Quarters Ended For the Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2020 2020 2019 2020 2019
Reconciliation of net income (loss) to Adjusted EBITDA:
Net income (loss) $ (14,040) $ (115) $ (10,194) $ (23,082) $ (13,263)
Interest expense, net 553 432 810 1,958 3,525
Income tax (benefit) provision 1,049 1,619 2,487 3,501 3,585
Depreciation and amortization 1,208 1,386 1,005 5,143 5,115
EBITDA $ (11,230) $ 3,322 $ (5,892) $ (12,480) $ (1,038)
Stock-based compensation 1,303 1,660 690 4,613 3,508
Merger and acquisition costs - - - - 337
Loss on debt extinguishment - - - 1,369 -
Inventory step-up amortization - - - - 577
Bargain purchase gain on acquisition - - 334 - -
Headquarters relocation 26 35 - 61 -
Executive transition 664 1,383 - 2,047 -
Intangibles impairment 6,472 - - 6,472 -
Bad debt expense 3,119 - - 3,119 -
Restructuring and other charges - - 4,908 - 4,908
Goodwill impairment charge - - 1,003 - 1,003
Adjusted EBITDA $ 354 $ 6,400 $ 1,043 $ 5,201 $ 9,295
Note: $ in 000’s
Source: Company filings
6
© 2021 DZS – Proprietary and Confidential 34Reconciliation of Q2 and 2021 Guidance
Q2 2021 Full Year 2021
Low High Low High
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
Net income (loss) $ (5.4) $ (0.9) $ (44.7) $ (28.5)
Interest expense, net - - 0.2 0.2
Income tax expense 0.3 0.8 3.8 5.2
Depreciation and amortization 0.8 0.8 4.2 4.2
EBITDA (4.3) 0.7 (36.5) (18.9)
Stock-based compensation 1.1 1.1 4.5 4.5
Executive transition 0.2 0.2 0.6 0.6
Acquisition costs - - 0.6 0.6
Headquarters relocation - - 1.9 1.9
Transformational initiatives - - 30.9 31.3
Adjusted EBITDA $ (3.0) $ 2.0 $ 2.0 $ 20.0
Reconciliation of Gross Margin to Adjusted Gross Margin:
GAAP Gross Margin 32.0% 33.5% 33.2% 34.7%
COGS Depreciation and amortization 0.5% 0.5% 0.8% 0.8%
Adjusted Gross Margin 32.5% 34.0% 34.0% 35.5%
Reconciliation of Operating Expenses to Adjusted Operating Expenses:
Operating Expenses $ 28.5 $ 27.5 $ 145.8 $ 141.8
Depreciation and amortization 0.7 0.7 3.4 3.4
Stock-based compensation 1.0 1.0 4.3 4.3
Acquisition costs - - 0.6 0.6
Executive transition 0.3 0.3 0.6 0.6
Headquarters relocation - - 1.9 1.9
Transformational initiatives - - 30.5 30.5
Note: $ in 000’s Adjusted Operating Expenses $ 26.5 $ 25.5 $ 104.5 $ 100.5
Source: Company filings
6
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