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DPW Holdings Reports Third Quarter Financial Results

DPW Holdings, Inc. (NYSE:DPW) a diversified holding company (“DPW,” or the “Company“), reported financial results for its third quarter and its nine-month period ended September 30, 2020 on its Form 10‑Q filed with the Securities and Exchange Commission yesterday.

Q3-2020 highlights

  • Revenue of $5.7 million, an increase of 6.2% from the prior third fiscal quarter;
  • Gross profit of $1.9 million, an increase of 94.7% from the prior third fiscal quarter;
  • Loss from continuing operations of $1.6 million, a 78.9% decrease from the loss from continuing operations of $7.7 million during the prior third fiscal quarter; and
  • Net loss of $16.7 million for the quarter, including non-cash charges of $14.6 million.

Nine months ended September 30, 2020 highlights

  • Revenue of $16.7 million, an increase of 3.6% from the prior nine-month period;
  • Gross profit of $5.6 million, an increase of 110.8% from the prior nine-month period;
  • Loss from continuing operations of $5.3 million, a 66.2% decrease from the loss from continuing operations of $15.8 million in the prior nine-month period; and
  • Net loss of $24.6 million, including non-cash charges of $18.1 million.

Revenues

Our revenues increased by $330,735, or 6.2%, to $5,675,564 for the three months ended September 30, 2020, from $5,344,829 for the three months ended September 30, 2019. The increase from the three months ended September 30, 2019, is attributable to an increase in revenue from customized solutions for the military markets as we continue to experience the benefit of capital that was allocated to our defense business during the second half of 2019. The increase in revenue from the military markets was partially offset by a decrease in revenue from our commercial lending segment, attributed to a reduction in our loan portfolio and a decrease in revenue due to our decision to cease operations at our cryptocurrency mining operations.

Gross margins

Gross margins increased to 34.2% for the three months ended September 30, 2020 compared to 18.6% for the three months ended September 30, 2019. Our gross margins of 18.6% recognized during the three months ended September 30, 2019, were adversely impacted by the negative margins at Digital Farms. Excluding the effects of Digital Farms, our adjusted gross margins for the three months ended September 30, 2019, would have been 33.2%, consistent with our historical average.

Non-cash charges

During the three months ended September 30, 2020 and 2019, our reported net loss included non-cash charges of $14,601,675 and $6,296,889, respectively. During the nine months ended September 30, 2020 and 2019, our reported net loss included non-cash charges of $18,099,816 and $11,165,085, respectively. A summary of these non-cash charges is shown below:

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Loss on extinguishment of debt

$

12,823,039

$

155,448

$

13,297,793

$

963,232

Interest expense – debt discount

1,471,716

1,357,845

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