Q4 2021 Financial Highlights 

• Record orders of $134 million increased 47% year-over-year

• Record revenue of $98 million increased 11% year-over-year

• Book to bill in the fourth quarter was 1.4x.

• Adjusted gross margin of 33.6% increased from 33.1% year-overyear reflecting margin expansion progress, despite increased semiconductor component, freight, and logistic costs

• Adjusted operating expenses increased to $30 million, which included sales commissions associated with record orders and revenue, and a $1 million, one-time software license fee

• Adjusted EBITDA of $2 million

• Non-GAAP EPS was $0.05

2021 Financial Highlights

• Record orders of $504 million increased 62% year-over-year

• Record revenue of $350 million increased 16% year-over-year

• Record backlog of $225 million increased 217% year-over-year

• Adjusted gross margin of 34.6% increased from 32.9% year-overyear reflecting initial operational efficiency progress and favorable geographic mix, despite increased supply chain, freight, and logistics costs

• Adjusted EBITDA more than doubled to $11 million compared with $5 million in 2020

• Non-GAAP EPS was $0.27

Charlie Vogt President & CEO:

"The communications industry is in the early phase of a long-term infrastructure upgrade cycle where sub gigabit-class and legacy copper infrastructures for the connected home and enterprise are being rapidly replaced by 10 gigabit technologies for symmetric optical broadband services. The proliferation of 5G networks is simultaneously creating demand for fiber-connected densification and packet-based network transport.

This physical reshaping of the global communications landscape is also fueling a wave of experience-driven innovation in high-speed fixed and mobile broadband services for homes, buildings and cities. DZS is a key enabler of this transformation, providing the next generation platforms, software and services that empower communications service providers to upgrade their infrastructure and launch the new services that are redefining broadband connectivity. In fact, our customers, ranging from tier I service providers in the world’s most advanced broadband markets (including 16 of the world’s top 30 service providers) to agile alternative providers, are leading the way in shaping the future of the communications industry and creating a hyper-connected world. Our innovative and differentiated broadband solutions for both fixed and mobile service providers have enabled DZS to become a change-agent for our customers.

Just as we drove change for our customers, we transformed our company in 2021.

Our new branding, upgraded leadership team, disciplined rationalization, accelerated systems and software innovation, and strong execution in 2021 enabled us to capitalize on this unprecedented market opportunity created by the evolution taking place in our industry. It empowered us to deliver consistent results and establish a strategic foundation for the future.

Our fourth quarter results achieved a number of company milestones as we delivered record setting orders, record revenue and record backlog. Additionally, with 29 new products launched in 2021, our Broadband Connectivity, Connected Home & Business, Mobile & Optical Edge and Cloud Software solutions are resonating with customers, prospects and partners around the world. Demand has never been stronger, and we continue to expand the footprint of our platforms with 105 new customers secured in 2021.

Building upon our strong historical foundation in Asia, we captured market share in 2021 that included 86 new customers across North America and Europe, Middle East and Africa (EMEA) – balancing our geographic mix. DZS is Enabling a Hyper-Connected World, transforming Technology Providers into Experience Providers and unleashing the next generation of Broadband Connectivity, Mobile & Optical Edge and Cloud Software solutions.

As DZS enables the deployment of hyper-fast broadband across an expanding customer base, we are creating new opportunities in the communities our customers reach and enhancing value-added solutions in the homes and businesses they serve. Providing next-level connectivity within these communities is just the beginning. Our next generation fiber broadband platforms enable customers to expand their services, upgrade their technology and leverage software to improve their efficiency, insights and customer experience.

We continue to expand and differentiate our portfolio through investments in network orchestration, automation and slicing, a unified operating system and a subscriber experience software-as-a-service (SaaS) platform. Our software expansion and vision are designed to improve our long-term margin profile while differentiating DZS in the marketplace. We also plan to introduce several new Mobile & Optical Edge solutions, extending our innovative leadership at the network edge.

We begin 2022 with a strong foundation that we believe will enable us to capture market share spanning our four growth pillars: the multi-gigabit broadband upgrade cycle fueled by ~$100 billion of global government stimulus, 5G and Open RAN adoption, North America and EMEA share capture and Chinese vendor cap-and-replacement."