Digital Ally Announces First-Quarter Results
Wednesday, May 20, 2020 | Comments

Digital Ally announced its first quarter 2020 operating results. Total revenue decreased in 2020 to $2.4 million from $2.5 million in 2019.

The primary reason for the overall revenue decrease is a decline of $153,928 (8%), in 2020 product revenues, offset by an increase in service and other revenue of $28,877,(5%), from 2019 levels.

Product sales continue to face challenges for the company’s in-car and body-worn systems because of the effects of the COVID-19 pandemic, and our competitors’ actions of releasing new products with advanced features and maintaining their product price cuts.

The COVID-19 pandemic delayed the shipment of orders late in the first quarter as police forces and governments reacted to its impact. Specifically, we were unable to ship the initial purchase orders under a substantial contract awarded by a country for the expected deployment of body cameras to its entire national police force. Upon completion, the original contract would have been the largest body camera deployment in its history and the largest contract for recurring service revenues for web-based software related to the body cameras.

The company’s overall gross margin percentage improved to 52% in the first quarter 2020 compared with 46% in the 2019 period. The improvement reflects the migration of customers to the higher-margin recurring service model compared to hardware sales and the introduction of the EVO-HD in-car system, which is generating higher margins than its legacy products.

Regarding its patent infringement lawsuit with Axon, in April a three-judge panel of the U.S. Court of Appeals denied the company’s appeal and affirmed the District Court’s previous decision to grant Axon summary judgment. The company is evaluating its alternatives, including whether to file a motion requesting a rehearing in front of the three-judge panel or the entire Court of Appeals. Future quarterly results during 2020 will continue to be impacted as this appeal is finalized.

“The disruptions caused by the COVID-19 pandemic adversely affected our first quarter 2020 operations as many of our law enforcement customers delayed purchasing decisions, and many of our commercial customers were shut down by governmental mandates,” said Stanton E. Ross, CEO of Digital Ally. “We expanded our product offerings to include a line of disinfectants to provide our customers with an eco-friendly product for use against SARS-CoV-2, the virus that causes COVID-19. In April 2020, we introduced the disinfectant line to our first-responder customers and many of our commercial customers. We also reduced our expenses by reducing staffing levels, limiting travel, and reducing many advertising and promotional activities. In addition, we will move to a new, smaller office and warehouse space that will dramatically reduce our occupancy costs for the balance of 2020 and beyond.”

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