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UTStarcom Reports Unaudited Financial Results for Second Half and Full Year 2024

1. UTStarcom won a significant RFP from China Telecom's Research Institute. 2. Second half 2024 revenue fell by 43.5% compared to 2023. 3. Gross profit margins decreased due to lower revenues from major customers. 4. Net loss for full year 2024 was $4.4 million, up from $3.9 million. 5. Cash balance decreased 10.9% to $53.1 million as of December 2024.

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Why Bearish?

The significant revenue drop and increased net loss indicate financial distress. Similar situations in the past have led to downward price pressure for UTSI.

How important is it?

The article highlights both new contracts and severe financial downturns, which could heavily influence stock valuation. The strategic wins may offer long-term potential, but current financial stress overshadows this.

Why Short Term?

Immediate financial concerns and recent performance will affect investor sentiment. Historically, poor quarterly results typically reflect swiftly in stock prices.

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CHTNTESVNET
March 24, 2025 06:27 ET  | Source: UTStarcom Holdings Corp. HANGZHOU, China, March 24, 2025 (GLOBE NEWSWIRE) -- UTStarcom (the Company) (NASDAQ: UTSI), a global telecommunications infrastructure provider, today reported its unaudited financial results for the six months and full year ended December 31, 2024, and provided a business update. Business Update China Telecom Research Institute RFP win. The second half of 2024 marked a major milestone for UTStarcom's 5G transport network portfolio. The Company’s commitment to the development of a next generation disaggregated 5G transport network solution and our cooperation with some of the major mobile operators in China, culminated in a significant win of a multi-million dollar China Telecom Research Institute RFP for manufacturing 5G transport network routers. The equipment is intended for use on China Telecom’s STN network – China Telecom’s metropolitan area network, which is crucial for supporting its 5G mobile network services, as well as enterprise, broadband, cloud and other services. The RFP covers the manufacturing of a substantial quantity of carrier-grade disaggregated routers hardware. The related frame agreements were signed in early 2025. Specific product quantities will be defined in purchase orders expected throughout 2025.Cooperation with a Mobile Network Operator customer in Europe. UTStarcom completed the development of a customized version of the NG-PTN product, NetRing TN704ES, specifically tailored to better support the customer's future network expansion plans. Samples of the product have been provided to the customer for testing. We anticipate receiving orders for this product in 2025.Post-sale support services to customers globally. The Company continued to provide support to its customers around the world in accordance with existing support and maintenance contracts for products such as NetRing PTN, SyncRing, IMS, SSTP, etc. Furthermore, in 2H 2024, the Company also received renewal orders for post-sale support pertaining to NG-PTN and MSAN products. UTStarcom’s Chief Executive Officer Mr. Hua Li commented, “We have made important progresses by winning RFP from one of the major telecom operators in China; and we are also enhancing our co-operations with other business partners to expand the deployment of our products. We expect these progresses will bring improvements to our business.” Second Half and Full Year 2024 Financial Results (Unaudited) Summary of 2H 2024 Key Financials (Unaudited)  2H 20242H 2023Y/Y ChangeRevenue$5.2$9.2-43.5%Gross Profit$1.2$2.6-53.8%Operating Expenses$4.9$5.4-9.3%Operating Loss($3.7)($2.8)($0.9)Net Loss($2.4)($1.8)($0.6)Basic EPS($0.26)($0.20)($0.06)Cash Balance (including Restricted Cash)$53.1$59.6-10.9% Summary of Full Year 2024 Key Financials (Unaudited)  20242023Y/Y ChangeRevenue$10.9$15.8-31.0%Gross Profit$2.9$4.4-34.1%Operating Expenses$10.2$11.2-8.9%Operating Loss($7.3)($6.8)($0.5)Net Loss($4.4)($3.9)($0.5)Basic EPS($0.48)($0.42)($0.06)Cash Balance (including Restricted Cash)$53.1$59.6-10.9% * Dollar comparisons are used where percentage comparisons are not meaningful. * All amounts are in U.S. Dollars millions except for Earnings Per Share (EPS) Total Revenues Six months ended December 31, 2024 Total revenues for the second half of 2024 were $5.2 million, compared to $9.2 million in the corresponding period in 2023. Net equipment sales for the second half of 2024 were $0.6 million, a decrease of 82.9% from $3.6 million in the corresponding period in 2023. The decrease was mainly due to decreased revenue from customers in India.Net services sales for the second half of 2024 were $4.6 million, a decrease of 19.4% from $5.6 million in the corresponding period in 2023. The decrease was mainly due to the completion of current projects and no new major projects in India. Twelve months ended December 31, 2024 2024 total revenues were $10.9 million, a decrease of 31.0% from $15.8 million in 2023. 2024 net equipment sales were $1.4 million, a decrease of 69.4% from $4.6 million in the corresponding period in 2023. The decrease was mainly due to decreased revenue from customers in India. 2024 net services sales were $9.5 million, a decrease of 15.1% from $11.2 million in 2023. The decrease was mainly due to the completion of current projects and no new major projects in India. Gross Profit Six months ended December 31, 2024 Gross profit was $1.2 million, or 23.1% of net sales, for the second half of 2024, compared to $2.6 million, or 27.8% of net sales, in the corresponding period in 2023. Equipment gross profit for the second half of 2024 was $0.1 million, compared to $0.8 million in the corresponding period in 2023. Equipment gross margin for the second half of 2024 was 16.2%, compared to 21.0% for the corresponding period in 2023. The decrease in gross margin was attributed to a lower equipment revenue in 2024.Service gross profit for the second half of 2024 was $1.1 million, compared to $1.8 million in the corresponding period in 2023. Service gross margin for the second half of 2024 was 24.0%, compared to 32.2% for the corresponding period in 2023, due to decreased activity with the major customers in India and China. Twelve months ended December 31, 2024 2024 gross profit was $2.9 million, or 26.7% of net sales, compared to $4.4 million, or 27.9% of net sales, in 2023. 2024 equipment gross profit was $0.2 million, compared to $0.9 million in 2023. 2024 equipment gross margin was 13.0%, compared to 20.2% in 2023. The decrease in gross margin was attributed to a lower equipment revenue in 2024. 2024 service gross profit was $2.7 million, compared to $3.5 million in 2023. 2024 service gross margin was 28.7%, compared to 31.0% in 2023, due to decreased activity with the major customers in India and China. Operating Expenses Six months ended December 31, 2024 Operating expenses for the second half of 2024 were $4.9 million, compared to $5.4 million in the corresponding period in 2023. Selling, general and administrative (“SG&A”) expenses for the second half of 2024 were $2.4 million, compared to $2.4 million in the corresponding period in 2023. Research and development (“R&D”) expenses for the second half of 2024 were $2.5 million, compared to $3.0 million in the corresponding period in 2023. The decrease reflected the different stages of 5G product development. Twelve months ended December 31, 2024 2024 operating expenses were $10.2 million, compared to $11.2 million in 2023. 2024 SG&A expenses were $5.1 million, compared to $5.3 million in 2023. The decrease was mainly attributable to decreased personnel cost as a result of the reduction of personnel. 2024 R&D expenses were $5.1 million, compared to $5.9 million in 2023. The decrease reflected the different stages of 5G product development. Operating Loss Operating loss for the second half of 2024 was $3.7 million, compared to $2.8 million in the corresponding period in 2023. Full year 2024 operating loss was $7.3 million, compared to $6.8 million in 2023. Interest Income, Net Net interest income for the second half of 2024 was $1.5 million, compared to $1.3 million in the corresponding period in 2023. Full year 2024 net interest income was $2.8 million, compared to $2.2 million in 2023. The increase was mainly due to higher interest income in China. Other Income (Expenses), Net Net other income for the second half of 2024 was $0.1 million, compared to net other income of $0.1 million in the corresponding period in 2023. Full year 2024 net other income was $0.9 million, compared to net other income of $2.0 million in 2023. Other income for 2024 was mainly a foreign exchange gain resulting from appreciation of the U.S. dollar against the Renminbi. Net Loss Net loss attributable to shareholders for the second half of 2024 was $2.4 million, compared to $1.8 million in the corresponding period in 2023. Basic net loss per share for the second half of 2024 was $0.26, compared to $0.20 for the corresponding period in 2023. Full year 2024 net loss attributable to shareholders was $4.4 million, compared to $3.9 million in 2023. 2024 basic net loss per share was $0.48, compared to $0.42 in 2023. Cash Flow Cash used in operating activities in the second half of 2024 was $2.0 million, cash used in investing activities was $0.1 million, and cash provided by financing activities was nil. As of December 31, 2024, UTStarcom had cash, cash equivalents and restricted cash of $53.1 million. About UTStarcom Holdings Corp. UTStarcom is committed to helping network operators offer their customers the most innovative, reliable and cost-effective communication services. UTStarcom offers high performance advanced equipment optimized for the most rapidly growing network functions, such as mobile backhaul, metro aggregation and broadband access. UTStarcom has operations and customers around the world, with a special focus on Japan, India and China. UTStarcom was founded in 1991 and listed its shares on the Nasdaq Market in 2000 (symbol: UTSI). For more information about UTStarcom, please visit http://www.utstar.com. Forward-Looking Statements This press release includes forward-looking statements, including statements regarding the Company’s strategic initiatives and the Company’s business outlook. These statements are forward-looking in nature and subject to risks and uncertainties that may cause actual results to differ materially and adversely from the Company’s current expectations. These include risks and uncertainties related to, among other things, the effect of the COVID-19 pandemic on the Company’s business, changes in the financial condition and cash position of the Company, changes in the composition of the Company’s management and their effect on the Company, the Company’s ability to realize anticipated results of operational improvements and benefits of the divestiture transaction, the ability to successfully identify and acquire appropriate technologies and businesses for inorganic growth and to integrate such acquisitions, the ability to internally innovate and develop new products, assumptions the Company makes regarding the growth of the market and the success of the Company’s offerings in the market and the Company’s ability to execute its business plan and manage regulatory matters. The risks and uncertainties also include the risk factors identified in the Company’s latest annual report on Form 20-F and current reports on Form 6-K as filed with the Securities and Exchange Commission. The Company is in a period of strategic transition and the conduct of its business is exposed to additional risks as a result. All forward-looking statements included in this press release are based upon information available to the Company as of the date of this press release, which may change and the Company assumes no obligation to update any such forward-looking statements. For investor and media inquiries, please contact: UTStarcom Holdings Corp. Tel: +86 571 8192 8888 Ms. Shelley Jiang, Investor Relations Email: utsi-ir@utstar.com/ Shelleyjiang@utstar.com / UTStarcom Holdings Corp. Unaudited Condensed Consolidated Balance Sheets    December 31,  December 31,   2024  2023   (In thousands) ASSETS      Current assets:      Cash and cash equivalents $43,913  $49,968 Notes receivable, net  659   490 Short-term investments  165   — Accounts receivable, net  4,849   8,380 Inventories and deferred costs  2,156   886 Short-term restricted cash  6,824   7,117 Prepaid and other current assets  4,454   3,755 Total current assets  63,020   70,596 Long-term assets:      Property, plant and equipment, net  476   610 Operating lease right-of-use assets, net  1,399   2,649 Long-term restricted cash  2,406   2,562 Other long-term assets  848   1,063 Total long-term assets  5,129   6,884 Total assets $68,149  $77,480        LIABILITIES AND EQUITY      Current liabilities:      Accounts payable $6,957  $7,959 Customer advances  769   226 Deferred revenue  62   72 Income tax payable  8,163   8,509 Operating lease liabilities, current  1,084   1,184 Other current liabilities  4,342   5,438 Total current liabilities  21,377   23,388 Long-term liabilities:      Operating lease liabilities, non-current  504   1,660 Long-term deferred revenue and other liabilities  1,042   1,049 Total liabilities  22,923   26,097        Total equity  45,226   51,383 Total liabilities and equity $68,149  $77,480  UTStarcom Holdings Corp. Unaudited Condensed Consolidated Statements of Operations        Six months ended December 31,  Twelve months ended December 31,  2024  2023  2024  2023   (In thousands, except per share data)Net sales $5,159  $9,239  $10,878  $15,753 Cost of net sales  3,968   6,670   7,972   11,363 Gross profit  1,191   2,569   2,906   4,390    23.1%  27.8%  26.7%  27.9%Operating expenses:            Selling, general and administrative  2,412   2,426   5,152   5,318 Research and development  2,510   3,007   5,085   5,881 Total operating expenses  4,922   5,433   10,237   11,199              Operating loss  (3,731)  (2,864)  (7,331)  (6,809)             Interest income, net  1,459   1,342   2,791   2,208 Other income (expense), net  49   112   855   2,024 Loss before income taxes  (2,223)  (1,410)  (3,685)  (2,577)Income tax expense  (129)  (430)  (683)  (1,274)Net loss attributable to UTStarcom Holdings Corp. $(2,352) $(1,840) $(4,368) $(3,851)             Net loss per share attributable to UTStarcom Holdings Corp.—Basic $(0.26) $(0.20) $(0.48) $(0.42)Weighted average shares outstanding—Basic  9,179   9,116   9,150   9,113  UTStarcom Holdings Corp. Unaudited Condensed Consolidated Statements of Cash Flows        Six months ended December 31,  Twelve months ended December 31,  2024  2023  2024  2023   (In thousands)CASH FLOWS FROM OPERATING ACTIVITIES:            Net loss $(2,352) $(1,840) $(4,368) $(3,851)Depreciation  138   114   275   230 Recovery of credit losses  (37)  (317)  (39)  (1,315)Stock-based compensation expense  56   110   117   293 Net gain on disposal of assets  —   —   —   (25)Gain on release of tax liability due to expiration of the statute of limitations  (10)  (10)  (21)  (21)Lease amortization  544   584   1,123   1,200 Deferred income taxes  154   275   154   275 Changes in fair value for trading securities investment  204   —   (165)  — Changes in operating assets and liabilities  (667)  423   (1,533)  (1,264)Net cash used in operating activities  (1,970)  (661)  (4,457)  (4,478)             CASH FLOWS FROM INVESTING ACTIVITIES:            Additions to property, plant and equipment  (86)  (73)  (192)  (255)Net cash used in investing activities  (86)  (73)  (192)  (255)             CASH FLOWS FROM FINANCING ACTIVITIES:            Proceeds from exercise of stock options  —   —   —   4 Net cash provided by financing activities  —   —   —   4 Effect of exchange rate changes on cash and cash equivalents  (839)  (180)  (1,855)  (2,483)Net decrease in cash and cash equivalents  (2,895)  (914)  (6,504)  (7,212)Cash, cash equivalents and restricted cash at beginning of period  56,038   60,561   59,647   66,859 Cash, cash equivalents and restricted cash at end of period $53,143  $59,647  $53,143  $59,647 

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