Digital Ally, Inc.

For the first quarter of 2025, revenue was down a little over $1 million, or 19%, year over year. Gross margin dollars improved by $78,000, or 5%, and gross margin percentage rose to 36% from 28% last year. SG&A fell from $3.6 million to less than $1 million, a 72% improvement, and operating loss improved to almost $1 million from $3.6 million in the prior year. Net income was $4.2 million, or $1.41 per share, versus a $3.9 million loss, or $27.48 per share, a year ago. On the balance sheet, cash was $3.8 million versus $400,000 at year-end 2024, working capital improved to $3.4 million from a $19.4 million deficit, accounts payable fell by $6.7 million to $4.8 million, debt declined by over $5.1 million to $2.7 million, and equity was $11.6 million positive versus $9 million negative at year-end. Management said it had closed a $14 million public offering in February 2025. No formal quarterly or full-year numerical revenue/EPS guidance was given, but management said over $2 million of backlog should be worked off in the second, third, and probably fourth quarters, second-quarter revenue should improve materially from the first Kustom 440 event, and it still has in excess of $10 million in deferred revenue. They also said they anticipate about eight events in 2025, with that number expected to be multiples bigger in 2026.

Stan Ross framed the quarter as part of a reset after what he called a difficult couple of years and the SPAC period, saying the company is now focused back on its core businesses. He emphasized rebuilding the company around the video solutions and custom entertainment segments, while noting the possible sale of the medical billing entity to simplify the business. His tone was upbeat and forward-looking, highlighting new products and patents, $10 million-plus in deferred revenue, and stronger momentum in both the law enforcement and commercial markets.

Tom Heckman described the quarter as a “watershed” period, driven by the $14 million offering, debt reduction, and a major cut in overhead. He cited revenue down 19%, gross margin up to 36% from 28%, SG&A down from $3.6 million to under $1 million, operating loss down to almost $1 million, and net income of $4.2 million or $1.41 per share. On the balance sheet, he pointed to $3.8 million of cash, $3.4 million of positive working capital, $4.8 million of accounts payable, $2.7 million of debt, and $11.6 million of positive equity. He also said the company paid off $6.7 million of accounts payable and used the capital raise to improve liquidity and restore NASDAQ compliance efforts.

There was no formal analyst Q&A segment in the transcript, but management addressed investor concerns that had come in by email and phone, especially around shares, reverse splits, and NASDAQ compliance. Heckman explained that the company was late on prior filings, had fallen below the $2.5 million equity threshold, and was still working to satisfy the $1 minimum bid-price requirement after two reverse splits. He said the company is trading around $4.50, is several trading days into the 10-day compliance period, and expects NASDAQ compliance to be restored if the stock stays above the threshold. Management also answered concerns about backlog and future revenue by saying there is over $2 million of backlog, more than $10 million of deferred revenue, and a stronger event pipeline ahead.