DZSI - DZS slumps ~33% after FY23 outlook cut amid revenue recognition woes

2023-06-01 11:11:27 ET

DZS ( NASDAQ: DZSI ) stock fell ~33% on Thursday after the company cut its FY23 revenue outlook and withdrew its Q2 guidance.

The company added that it will restate its previously issued financial statements for Q1 ended March 31 due to timing of revenue recognition related to two customer projects.

The value of the revenue to be restated is about $15M, of which the company expects the majority to recognized in Q2 and Q3.

DZS noted that the customers have started paying the amounts due to the company.

"We are withdrawing the Q2 earnings guidance issued on May 8, 2023 and will provide updated Q2 guidance once we have clarity regarding the timing of the recognition for the restated Q1 revenue and adjusted EBITDA," said DZS' CFO Misty Kawecki.

Full Year 2023 Outlook :

The company expects net revenue of ~$370M versus prior forecast of ~$400M ( Consensus $398.54M).

"At the end of March 2023, our total RPOs were valued at $304 million. We remain encouraged and optimistic about the second half of 2023 and into 2024 aligned with a strong sales pipeline and validated by numerous Tier I/II trials around the world," Kawecki noted .

DZS anticipates adjusted EBITDA between about $15M and $22M, compared to $22M to $27M previously.

Adjusted operating expenses of ~$115M versus $115M to $120M previously. Adjusted gross margin remains in a range of 35% to 37%, according to the company.

For further details see: