COMSovereign Holding Corp. (COMS) Reports Q1 Revenues Beat

May 17, 2021 4:38 PM EDT
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COMSovereign Holding Corp. (NASDAQ: COMS) reported Q1 revenue for the quarter came in at $2.08 million versus the consensus estimate of $1.73 million.

  • For the three months ended March 31, 2021, total revenues were $2,086,452 compared to $2,485,204 for the three months ended March 31, 2020. Sales were derived primarily from mobile network backhaul products, outside customer sales from Sovereign Plastics, and the sale of rapid deployable aerostat products and accessories. The decrease was driven primarily from the lack of capital available for parts and manufacturing as the capital from two public offerings completed in January and February was deployed towards the end of the period and did not contribute to revenue in the quarter.
  • Gross profit for the three months ended March 31, 2021 was $1,012,462 representing a gross margin of 49%. This is compared to $1,424,296 and a gross margin of 57% in the three months ended March 31, 2020. Gross margins were the result of product mix including the sale of existing inventory which carried slightly lower margins.
  • For the three months ended March 31, 2021, operating expenses increased to $11,308,616 compared to $7,567,459 for the three months ended March 31, 2020, as expected, due to the expanded size of the business because of acquisitions, increases in professional services including accounting, legal, and marketing and increased staffing levels across the organization which is required to support the expected ramp up of sales. Additionally, for the three months ended March 31, 2021, other expenses were $5,910,275 compared to $882,375 for the three months ended March 31, 2020. This increase was largely due to the extinguishment of debt of $5,348,469 in connection with the exchange of debt for equity.
  • Reflecting the pay-down or elimination of debt, outstanding expenses, cash paid in connection with the purchase of the Company's manufacturing facility, refurbishment and tooling and approximately $4.0 million cash investments into inventory and pre-paid production required to fulfill pending customer orders, the Company ended the quarter with $10.9 million in cash. Debt at end of the first quarter was approximately $19.0 million, principally consisting of the $6.5 million outstanding mortgage balance on its 140,000-square-foot Tucson facility and approximately $11.1 million in convertible notes related to the purchase of Fastback which are due in 2026.

"First quarter results are in-line with expectations and reflect our pre-investment level of operations as the growth capital secured in January and February was not deployed into production until late in the quarter. These investments include more than $5.7 million into software, hardware component inventory, and securing increased production capabilities at our contract manufacturers. We believe these investments will not only bring us new revenue centers but will support accelerated production levels and allow us to meet a growing pipeline of product orders from customers. These orders will initially be filled by our contract manufacturing partners and in the near future, from our newly-renovated Tucson manufacturing facility," said Dan Hodges, Chairman and CEO of COMSovereign Holding Corp.

For earnings history and earnings-related data on COMSovereign Holding Corp. (COMS) click here.



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