Digerati Technologies Reports 118% Revenue Growth to $8.163 Million for Third Quarter FY2022, Highest Quarterly Revenue in Company History

EQNX::TICKER_START (Other OTC:DTGI),(OTC US:DTGI), EQNX::TICKER_END - Non-GAAP Operating EBITDA of $0.969 Million -

- Gross Profit of $5.002 Million -

- Strong Gross Margin Improvement to 61.3% -

Digerati Technologies, Inc. (OTCQB: DTGI) ("Digerati" or the "Company"), a provider of cloud services specializing in UCaaS (Unified Communications as a Service) solutions for the small to medium-sized business ("SMB") market, announced today financial results for the three months ended April 30, 2022, the Company's third quarter for its Fiscal Year 2022.

Key Financial Highlights for the Third Quarter Fiscal Year 2022 (Ended April 30, 2022)

Arthur L. Smith, CEO of Digerati, commented, "We are extremely pleased with the operating and financial results for our third quarter fiscal year 2022, which include our recent acquisitions of SkyNet Telecom and NextLevel Internet. Our cloud communications and broadband solutions have an expanded footprint in Texas and are now on the west coast in California, serving our target market of small to medium-sized businesses."

Smith continued, "As we build scale and increase our footprint through the continued implementation of our acquisition strategy, our team delivers on outstanding execution in identifying redundancies and cost savings and integrating operations to improve our efficiencies. Our 3 quarter financial results do not yet reflect most of the cost synergies from our integration playbook for our most recent acquisitions of Skynet Telecom and NextLevel Internet. We anticipate realizing these synergies in subsequent quarters that we expect will result in improved operating profitability. We continue to prove out our business model year over year and quarter over quarter."

Antonio Estrada, CFO of Digerati, stated, "All of our financial metrics continue to improve and are trending in the right direction. These are highlighted by our improved revenue, gross margin, adjusted EBITDA and operating EBITDA that have all been boosted by our acquisitions and the subsequent financial improvement due to successful integration. We continue to have our sights set on and remain on a track towards an uplisting to Nasdaq or NYSE American."

Three Months ended April 30, 2022 Compared to Three Months ended April 30, 2021

Revenue for the three months ended April 30, 2022 was $8.163 million, an increase of $4.412 million or 118% compared to $3.751 million for the three months ended April 30, 2022. The increase in revenue is primarily attributed to the increase in total customers between periods due to the acquisitions of Skynet Telecom in December 2021 and NextLevel Internet in February 2022. Our total number of customers increased from 2,612 for the three months ended April 30, 2021, to 3,963 customers for the three months ended April 30, 2022.

Gross profit for the three months ended April 30, 2022 was $5.002 million, resulting in a gross margin of 61.3%, compared to $2.225 million and 59.3% for the three months ended April 30, 2021.

Selling, General and Administrative expenses (excluding legal and professional fees) for the three months ended April 30, 2022 increased by $2.303 million, or 116%, to $4.296 million compared to $1.993 million for the three months ended April 30, 2021. The increase in SG&A is attributed to the acquisitions of Skynet Telecom in December 2021 and NextLevel Internet in February 2022. As part of the consolidations, the Company absorbed all of the employees responsible for managing the customer base, technical support, sales, customer service, and administration.

Operating loss for the three months ended April 30, 2022 was $1.626 million, an increase of $1.038 million or 177%, compared to $0.588 million for the three months ended April 30, 2021. The increase in operating loss between periods is primarily due to the increase in legal and audit fees of $589,000 associated with the acquisition of NextLevel Internet in February 2022.

Adjusted EBITDA income for the three months ended April 30, 2022 was $0.557 million, compared to an adjusted EBITDA income of $0.321 million for the three months ended April 30, 2021. In accordance with SEC Regulation G, the non-GAAP measurement of Adjusted EBITDA has been reconciled to the nearest GAAP measurement, which can be viewed under the heading "Reconciliation of Net Loss to Adjusted EBITDA" in the financial table included in this press release.

Of note were the following non-cash expenses associated with the three months ended April 30, 2022. Company recognition of stock-based compensation and warrant expense of $0.028 million and depreciation and amortization expense of $1.540 million. Gain on derivative instruments was $6.827 million for the three months ended April 30, 2022.

Non-GAAP operating EBITDA (OPCO EBITDA) for the three months ended April 30, 2022 improved to income of $0.969 million, excluding corporate expenses, and all non-cash items and one-time transactional expenses, compared to a Non-GAAP operating EBITDA (OPCO EBITDA) income of $0.619 million for the three months ended April 30, 2021.

Net income for the three months ended April 30, 2022 was $3.902 million, an improvement of $16.705 million, as compared to a net loss of $12.803 million for the three months ended April 30, 2021. The resulting EPS profit for the three months ended April 30, 2022 was $0.03, as compared to a loss of ($0.09) for the three months ended April 30, 2021. The increase in net income between periods is primarily due to the gain on derivative instruments of $6.827 million.

On April 30, 2022 Digerati had $2.384 million of cash.