DZS (Nasdaq: DZSI), a global leader of broadband networking and
AI-driven cloud software solutions, today announced it has
completed the divesture of its Asia business to DASAN Networks,
Inc. (DNI), enabling the company to focus its go-to-market
strategy, technology and innovation on the Americas, Europe, Middle
East and Africa (AEMEA), and Australia/New Zealand (ANZ) regions.
The transaction eliminates ~$43 million of debt, reducing the total
long-term debt to $15 million.
On Jan. 5, 2024, DZS signed a definitive agreement to sell its
Asia operations to DNI, for $48 million (including the elimination
of $43 million in debt). In addition to focusing on growth regions
spanning the Americas, EMEA and ANZ, the divestiture aligns with
the vision, strategy and growth pillars DZS has been pursuing for
the past three years, specifically:
- Fiber broadband investment cycle fueled by over $100 billion in
government stimulus funds
- Growth spanning North America, Europe and the Middle East
- Geopolitical security related cap-and-grow opportunities
- Software-defined networking (SDN)
- 5G mobile transport adoption
“This milestone allows DZS to amplify our focus on the
communications service providers (CSPs) that are aligned with and
adopting our open, standards-based broadband access and software
defined networking solutions,” said Charlie Vogt, President and
CEO, DZS. “We believe this decision and refined focus will improve
customer and shareholder value over the long-term. As a result of
approximately $130 million of research and development invested in
innovation over the past three years, inclusive of three technology
acquisitions, our category defining fiber broadband and AI-driven
cloud software solutions are creating new opportunities with
existing and new prospective service providers.”
The new focus on AEMEA and ANZ regions strategically aligns with
the technology and acquisition investments DZS has made over the
past several years, specifically the company’s market-leading
Velocity access edge optical line terminal (OLT) portfolio;
award-winning Saber optical edge dense wavelength-division
multiplexing (DWDM) and reconfigurable optical add-drop multiplexer
(ROADM) platform resulting from its Optelian acquisition; and its
advanced AI-driven orchestration, automation, slicing, network
assurance and WiFi management software portfolio resulting from the
company’s acquisitions of RIFT and ASSIA software and R&D
assets, respectively. It also corresponds with the global regions
where billions of dollars in government stimulus programs aimed at
enhancing and building next generation fiber networks are either
underway or rapidly ramping.
With the sale of the Asia business, DZS is expected to be better
positioned to achieve higher blended margins, and with a higher
percentage of its total revenue resulting from recurring and
reoccurring licenses related to its software-centric solutions. DZS
believes that service providers are deemphasizing closed,
proprietary and high security-risk solutions and are increasingly
adopting open, standards-based, software-defined solutions. As
next-generation fiber broadband and 5G deployments proliferate, DZS
solutions, including its Build America, Buy America (BABA) ready
Velocity OLT, Helix ONT and Saber Optical transport solutions,
complemented by its AI-driven cloud native software solutions, are
well-suited to cost-effectively evolve CSP networks.
Expected Nasdaq Notice Regarding Late Form 10-K
Filing
DZS today announced that on April 1, 2024, as expected, it
received a delinquency notification letter from the Nasdaq Stock
Market LLC (“Nasdaq”) indicating that DZS is not in compliance with
the continued listing requirements under Nasdaq Listing Rule
5250(c)(1) (the “Rule”) because DZS did not timely file its Annual
Report on Form 10-K for the year ended December 31, 2023 (the “Form
10-K”). The notification letter has no immediate effect on the
listing or trading of DZS common stock on the Nasdaq Capital
Market.
As previously reported by DZS in its Notification of Late Filing
on Form 12b-25, filed with the Securities and Exchange Commission
on March 18, 2024, DZS was unable to timely file the Form 10-K
without unreasonable effort or expense by the prescribed due date
for such filing.
As previously disclosed, following failure to file its Quarterly
Report on Form 10-Q for the three months ended June 30, 2023 (the
“Second Quarter 10-Q”) and September 30, 2023 (the “Third Quarter
10-Q” and together with the Second Quarter 10-Q, the “Delinquent
Quarterly Reports” and, together with the Form 10-K, the
“Delinquent Reports”), DZS received a Staff Delisting Determination
(the “Staff Determination”) from the Nasdaq Listing Qualifications
Department indicating that, as a result of DZS’s delay in filing
the Delinquent Quarterly Reports, it is not in compliance with the
Rule. DZS requested a hearing regarding the Staff Determination
before a Nasdaq Hearings Panel (the “Panel”) and was granted a
further stay of any suspension or delisting action pending the
hearing process, in accordance with the procedures set forth in the
Staff Determination. As of the date of this release, DZS has not
yet appeared before the Panel to appeal the determination by the
Nasdaq Listing Qualifications Department and to seek an additional
extension of the stay of any suspension or delisting action until
August 3, 2024, the latest extension date that the Panel has the
discretion to grant DZS.
“The Nasdaq delinquency notice was expected due to the timing of
our previously disclosed restatement which is in progress,” said
Misty Kawecki, Chief Financial Officer, DZS. “As of March 20, we
have appointed BDO as our new independent registered public
accounting firm. Although DZS cannot at this time estimate when it
will complete the company’s previously disclosed restatement, it is
diligently pursuing completion of this restatement and aiming to
become current with all outstanding financial filing periods as
soon as reasonably practicable."
About DZS Inc.
DZS Inc. (Nasdaq: DZSI) is a global leader of broadband
networking and AI-driven cloud software solutions.
DZS, the DZS logo, and all DZS product names are trademarks of
DZS Inc. Other brand and product names are trademarks of their
respective holders. Specifications, products, and/or product names
are all subject to change.
This press release 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, and
similar expressions are intended to identify forward-looking
statements. Such statements include, but are not limited to,
statements about the anticipated benefits of, and opportunities
from, the Asia business divestiture, including the impact to the
Company’s balance sheet, operations and financial results. 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. 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
effects 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.
DZS undertakes no obligation to update or revise any
forward-looking statements for any reason.
For further information see: www.DZSi.com.DZS on Twitter:
https://twitter.com/dzs_innovationDZS on LinkedIn:
https://www.linkedin.com/company/DZSi/
Investor Inquiries:
Ted Moreau, Vice President, Investor Relations
Email: IR@dzsi.com
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