DZS Suffers 33% Drop Following FY23 Outlook Reduction and Revenue Recognition Difficulties
June 26, 2023
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DZS ($NASDAQ:DZSI) Inc. is a publicly traded technology company based in the United States. It specializes in the design, manufacture and deployment of access network solutions for telecommunications companies. Recently, the company has been experiencing difficulties with revenue recognition and had to reduce its outlook for FY23, leading to a dramatic 33% drop in the share price. The revenue recognition issues have caused DZS Inc. to struggle to accurately record their transactions and recognize their revenue.
As a result, the company was forced to reduce its outlook for FY23 and forecasted much lower profits than originally expected. The news has left many investors feeling concerned about the future of DZS Inc., especially given the fact that it had previously been seen as a promising technology company. Investors will be hoping that the company can address its revenue recognition difficulties and return to its previous levels of performance in the near future.
Earnings
DZS Inc. recently reported its earnings for the fiscal year 2023 Q1 ending March 31 2023, with total revenue of 90.81M USD and a net income loss of 17.14M USD. Despite a 17.9% increase in total revenue from 81.03M USD in the previous year, the company’s stock suffered a 33% drop following their revised outlook and difficulties in revenue recognition. This is in stark contrast to the past three years, where total revenue has steadily increased from 81.03M USD to 90.81M USD.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Dzs Inc. More…
| Total Revenues | Net Income | Net Margin |
| 389.46 | -51.52 | -11.8% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Dzs Inc. More…
| Operations | Investing | Financing |
| -55.17 | -25.68 | 71.4 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Dzs Inc. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 360.92 | 233.04 | 4.11 |
Key Ratios Snapshot
Some of the financial key ratios for Dzs Inc are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 11.6% | – | -11.3% |
| FCF Margin | ROE | ROA |
| -15.2% | -20.4% | -7.7% |
Analysis
At GoodWhale, we have conducted a thorough analysis of DZS INC‘s financials and our Risk Rating has determined this to be a high risk investment in terms of financial and business aspects. We have also identified two risk warnings in DZS INC’s income sheet and balance sheet. If you would like to know more about these warnings, please register with us and we will be more than happy to provide you with the insights you need to make an informed decision. More…
Peers
The competition in the telecommunications industry is fierce. DZS Inc. is up against some of the biggest names in the business, including Extreme Networks Inc., ADVA Optical Networking SE, and Ciena Corp. Each company is striving to provide the best products and services to their customers. While DZS Inc. has a strong presence in the market, its competitors are not far behind.
– Extreme Networks Inc ($NASDAQ:EXTR)
With a market cap of $2.5 billion and a return on equity of 40.12%, Extreme Networks is a publicly traded networking company that provides software-driven networking solutions to enterprise customers. The company delivers high-performance switching, routing, and security solutions that enable customers to build agile, data-driven networks that connect their people, applications, and devices.
– ADVA Optical Networking SE ($LTS:0NOL)
ADVA Optical Networking SE has a market cap of 1.08B as of 2022, a Return on Equity of 4.24%. The company provides optical and Ethernet-based networking solutions.
– Ciena Corp ($NYSE:CIEN)
Ciena is a network specialist that provides equipment, software and services that support mission-critical applications for communications service providers, enterprises and governments worldwide. Its products and services enable its customers to drive revenue, reduce expenses and improve efficiency by delivering high-capacity, high-speed networking solutions. Ciena’s common stock is listed on the NASDAQ Global Select Market under the symbol CIEN and is included in the S&P 500 index.
ROE is return on equity and is a measure of how well a company uses investment funds to generate profits. A company with a higher ROE is using funds more effectively to generate profits. Ciena’s ROE of 6.6% indicates that it is using funds efficiently to generate profits.
Ciena’s market cap is 6.64B as of 2022. This means that the market value of Ciena’s outstanding shares is 6.64B. Ciena’s market cap is a good indicator of the company’s size and its position in the market.
Summary
DZS Inc. experienced a 33% drop in its stock price on the same day that its outlook for fiscal year 2023 was cut. Investors are worried about the company’s revenue recognition issues, which have caused the company to miss expectations in the past. DZS Inc.’s financial performance has been weak recently, and investors are cautious about the future of the company. It is important to carefully analyze the company’s fundamentals and financials to determine whether or not to invest in DZS Inc. Fundamental analysis should include looking at the company’s competitive position, growth prospects, balance sheet, and cash flow statement. It is also important to consider valuation metrics such as price-to-earnings (P/E) and price-to-book (P/B) ratios.
Additionally, investors should be aware of any potential risks associated with investing in DZS Inc., such as changes in the macroeconomic environment or changes in the competitive landscape.
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