# EDGAR Filing Document

**Accession Number:** 0001101680
**File Stem:** 0000950170-23-003057
**Filing Date:** 2023-2
**Character Count:** 68457
**Document Hash:** 1da4695c771d2bf5dc3799921430c445
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-003057.hdr.sgml**: 20230216

**ACCESSION NUMBER**: 0000950170-23-003057

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 65

**CONFORMED PERIOD OF REPORT**: 20230216

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230216

**DATE AS OF CHANGE**: 20230216

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** DZS INC.
- **CENTRAL INDEX KEY:** 0001101680
- **STANDARD INDUSTRIAL CLASSIFICATION:** TELEPHONE & TELEGRAPH APPARATUS [3661]
- **IRS NUMBER:** 223509099
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-32743
- **FILM NUMBER:** 23638719

**BUSINESS ADDRESS:**
- **STREET 1:** 5700 TENNYSON PARKWAY
- **STREET 2:** SUITE 400
- **CITY:** PLANO
- **STATE:** TX
- **ZIP:** 75024
- **BUSINESS PHONE:** 4693271531

**MAIL ADDRESS:**
- **STREET 1:** 5700 TENNYSON PARKWAY
- **STREET 2:** SUITE 400
- **CITY:** PLANO
- **STATE:** TX
- **ZIP:** 75024

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** DASAN ZHONE SOLUTIONS INC
- **DATE OF NAME CHANGE:** 20160912

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** ZHONE TECHNOLOGIES INC
- **DATE OF NAME CHANGE:** 20031114

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** TELLIUM INC
- **DATE OF NAME CHANGE:** 20000911

?xml version="1.0" encoding="ASCII"? 8-K

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM** 8-K

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934**

**Date of Report (Date of Earliest Event Reported):** February 16, 2023

DZS INC.

**(Exact Name of Registrant as Specified in its Charter)**

---

| | | |
|:---|:---|:---|
| Delaware | 000-32743 | 22-3509099 |
| **(State or Other Jurisdiction**<br>**of Incorporation)** | **(Commission**<br>**File No.)** | **(I.R.S. Employer**<br>**Identification No.)** |

---

5700 Tennyson Parkway**,** Suite 400

Plano**,** TX 75024

**(Address of Principal Executive Offices, Including Zip Code)**

(469) 327-1531

**(Registrant's Telephone Number, Including Area Code)**

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common stock, $0.001 par value | DZSI | The Nasdaq Stock Market LLC |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

------

**Item 2.02 Results of Operations and Financial Condition.**

On February 16, 2023, DZS Inc. (the "Company") announced its financial results for the quarter and fiscal year ended December 31, 2022 by issuing a press release. A copy of the Company's press release and an investor presentation are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by reference.

The information furnished on this Form 8-K, including the exhibits attached, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

**Item 9.01 Financial Statements and Exhibits.**

(d) <u>Exhibits</u>.

---

| | |
|:---|:---|
| Exhibit No. | Description |
| 99.1 | [<u>Press Release dated February 16, 2023</u>](dzsi-ex99_1.htm) |
| 99.2 | [<u>Investor Presentation dated February 16, 2023</u>](dzsi-ex99_2.htm) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

------

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | |
|:---|:---|:---|
| Date: February 16, 2023 | DZS Inc. | DZS Inc. |
|  | By: | /s/ Misty Kawecki |
|  |  | Misty Kawecki |
|  |  | Chief Financial Officer |

---

------

## Ex-99

---

| | |
|:---|:---|
| **release** | **Exhibit 99.1** |
| &nbsp;&nbsp;February 2023 | &nbsp;&nbsp;![img78445689_0.jpg](img78445689_0.jpg)  |

---

**DZS Releases Fourth Quarter 2022 Financial Results**

**DALLAS, Texas, USA, Feb. 16, 2023** – DZS (Nasdaq: DZSI), a global leader of access, optical and cloud-controlled software defined solutions, today announced financial results for its fourth quarter ended December 31, 2022.

"Despite a challenging supply chain environment and a strong US dollar in 2022, we remain encouraged and optimistic about our 2023 sales prospects and financial outlook. We recently hosted our inaugural Horizons Innovation & Technology Summit, which brought together marquee customers, prospective customers and technology luminaries validating our vision, go-to-market strategy, and technology roadmap. I am pleased to share that recently two tier 1 service providers selected DZS's next generation Access Edge OLT. Europe's largest communications service provider awarded DZS a multi-year, fiber-to-the-home project that includes the replacement of Huawei OLTs with our category-defining Velocity V6. In addition, Korea Telecom, a long-time strategic partner to DZS and South Korea's largest fixed wireline network operator, also selected our next generation Velocity OLT for their XGS-PON rollout," said Charlie Vogt, President and CEO of DZS.<br>

Mr. Vogt continued, "Despite the timing and logistical impacts incurred during the fourth quarter, we successfully transitioned 100% of our Seminole, Florida manufacturing facility to Fabrinet, which prepares us to scale in 2023 and into 2024. While our Q4 and full year 2022 financial results lagged expectations due to the impacts of a strong US dollar as well as elongated supply chain headwinds, which included Covid related manufacturing shut-downs, sub-component decommits and higher than normal expedite charges including elevated freight and logistics costs, our financial results were not indicative of the technology innovation, customer alignment and new design wins achieved, nor the company's overall execution and operational performance."<br>**Q4 2022 Financial Highlights**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Orders of $90 million compared to a record $134 million in Q4 2021

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Revenue of $100 million increased 2% compared to $98 million in Q4, 2021 and increased 10% on a constant currency basis

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Book-to-Bill ratio of 0.9

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$321 million of RPOs inclusive of backlog and deferred Software & Services at the end of Q4 2022 compared with $234 million at the end of Q4 2021

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•GAAP gross margin of 30.0% compared to 33.5% in Q4 2021

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted gross margin<sup>1</sup> of 30.6% compared to 33.6% in Q4 2021

oAdjusted gross margin was impacted on a year-over-year basis by expedite fees and logistics costs, and product mix

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•GAAP operating expenses of $45 million compared to $33 million in Q4 2021

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted operating expenses<sup>1</sup> of $34 million compared to $30 million in Q4 2021

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted EBITDA<sup>1</sup> loss of $(3) million compared to $3 million in Q4 2021

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Net income (loss): $(15) million GAAP; $(3) million adjusted<sup>1</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Diluted Net income (loss) per share of $(0.50) on a GAAP basis compared to $(0.08) in Q4 2021

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted EPS<sup>1</sup> was a loss of $(0.10) compared to $0.08 in Q4 2021

**2022 Financial Highlights**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Orders of $441 million compared to $504 million in 2021

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Revenue of $376 million increased 7% compared to the prior year period and 16% on a constant currency basis

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Book-to-Bill ratio was 1.17

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•GAAP gross margin of 31.5% compared to 34.3% in 2021

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted gross margin<sup>1</sup> of 32.0% compared to 34.6% in 2021

oAdjusted gross margin was impacted on a year-over-year basis by weakening of foreign currencies, expedite fees and logistics costs, and geographic mix

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•GAAP operating expenses of $151 million compared to $153 million in 2021

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted operating expenses<sup>1</sup> of $123 million compared to $111 million in 2021

oAdjusted operating expenses includes 7-months of acquired ASSIA employees and expenses

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted EBITDA<sup>1</sup> was a loss of $(3) million compared to $11 million in 2021

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Net income (loss) was $(37) million GAAP compared to $(4) million adjusted<sup>1</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•GAAP EPS was a loss of $(1.33) compared to a loss of $(1.30) in 2021

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted EPS<sup>1</sup> was a loss of $(0.15) compared to $0.32 in 2021

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Revenue by Product Technology ($ in millions) | Revenue by Product Technology ($ in millions) | Revenue by Product Technology ($ in millions) | Revenue by Product Technology ($ in millions) | Revenue by Product Technology ($ in millions) | Revenue by Product Technology ($ in millions) |
|  | Q4 | % of | Q4 | Q3 | Change | Change |
|  | 2022 | Revenue | 2021 | 2022 | Y/Y | Q/Q |
| Access Networking Infrastructure | $87.8 | 88% | $93.0 | $91.7 | -6% | -4% |
| Cloud Software & Services | $12.4 | 12% | $5.1 | $15.7 | 143% | -21% |
| Total | $100.2 | 100% | $98.1 | $107.4 | 2% | -7% |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Revenue Mix by Geographic Region ($ in millions) | Revenue Mix by Geographic Region ($ in millions) | Revenue Mix by Geographic Region ($ in millions) | Revenue Mix by Geographic Region ($ in millions) | Revenue Mix by Geographic Region ($ in millions) | Revenue Mix by Geographic Region ($ in millions) |
|  | Q4 | % of | Q4 | Q3 | Change | Change |
|  | 2022 | Revenue | 2021 | 2022 | Y/Y | Q/Q |
| Americas | $28.4 | 28% | $27.7 | $27.6 | 3% | 3% |
| EMEA | $21.0 | 21% | $14.6 | $26.6 | 44% | -21% |
| Asia | $50.8 | 51% | $55.8 | $53.2 | -9% | -5% |
| Total | $100.2 | 100% | $98.1 | $107.4 | 2% | -7% |

---

**Outlook**

DZS outlook for the first quarter of 2023 ending March 31, 2023 and for the full-year 2023 is as follows and assumes average foreign exchange rate from the month of December:

------

**Q1 2023**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Net revenue in the range of $90 – 100 million

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted gross margin<sup>1</sup> of 33% - 35%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted operating expenses<sup>1</sup> of $33 – 35 million

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted EBITDA<sup>1</sup> of $(3) – 0 million

**2023**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Net revenue in the range of $420 – 450 million

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted gross margin<sup>1</sup> of 36% - 38%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted operating expenses<sup>1</sup> of $125 – 135 million

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted EBITDA<sup>1</sup> of $25 – 40 million

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Item represents a non-GAAP financial measure; see discussion below, as well as a reconciliation to the comparable GAAP measure in the financial tables in this earnings press release.

**Conference Call Details:**

Date: Thursday, February 16, 2023

Time: 5:00 p.m. Eastern Time (4:00 p.m. Central Time)

Conference call participants register at the following link to receive the dial in number and unique PIN number: https://register.vevent.com/register/BIe47a3a7108414d6b9943abf5e971a57b

Webcast link: https://edge.media-server.com/mmc/p/mqyveqis

Please join the conference call at least five minutes prior to the start time to ensure you are admitted prior to management's prepared remarks.

A live broadcast and replay of the audio webcast will be available at https://investor.dzsi.com/

**About DZS**

<u>DZS Inc.</u> (Nasdaq: DZSI) is a global leader of access, optical and cloud-controlled software defined solutions.

DZS, the DZS logo, and all DZS product names are trademarks of DZS Inc. Other brand and product names are trademarks of their respective holders. Specifications, products, and/or product names are all subject to change.

**Contact**

**DZS:**

Ted Moreau

Vice President, Investor Relations

<u>IR@dzsi.com</u>

------

**Forward-Looking Statements**

Statements made in this stockholder letter and the earnings call contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Private Securities Litigation Reform Act of 1995. These statements reflect the beliefs and assumptions of the company's management as of the date hereof. Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "intend," "may," "plan," "project," "seek," "should," "target," "will," "would," variations of such words, and similar expressions are intended to identify forward-looking statements. In addition, statements that refer to projections of earnings, revenue, operating expenses, gross profit, costs or other financial items (including non-GAAP measures) in future periods are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks,

uncertainties and assumptions that are difficult to predict. The company's actual results could differ materially and adversely from those expressed in or contemplated by the forward-looking statements. In addition to the factors discussed in this stockholder letter, factors that

could cause actual results to differ include, but are not limited to, those risk factors contained in the company's SEC filings available at www.sec.gov, including without limitation, the company's annual report on Form 10-K, quarterly reports on Form 10-Q and subsequent filings. In

addition, additional or unforeseen affects from the COVID-19 pandemic and global economic climate may give rise to, or amplify, many of these risks. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update or revise any forward-looking statements for any reason.

**Non-GAAP Measures**

To supplement DZS's consolidated financial statements presented in accordance with GAAP, DZS reports Adjusted Cost of Revenue, Adjusted Gross Margin, Adjusted Operating Expenses, Adjusted Operating Income (Loss), Adjusted Net Income (including on a per share basis), EBITDA, and Adjusted EBITDA, which are non-GAAP measures DZS believes are appropriate to provide meaningful comparison with, and to enhance an overall understanding of DZS's past financial performance and prospects for the future. DZS believes these non-GAAP financial measures provide useful information to both management and investors by excluding specific items that DZS believes are not indicative of core operating results. These items share one or more of the following characteristics: they are unusual and DZS does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of the Company's control. Further, each of these non-GAAP measures of operating performance are used by management, as well as industry analysts, to evaluate operations and operating performance and are widely used in the telecommunications and manufacturing industries. Other companies in the telecommunications and manufacturing industries may calculate these metrics differently than DZS does. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP.

DZS defines Adjusted Cost of Revenue as GAAP Cost of Revenue less (i) depreciation and amortization, (ii) stock-based compensation, and (iii) the impact of material transactions or events that we believe are not indicative of our core product cost and may or may not be recurring in nature. We believe Adjusted Cost of Revenue provides the investor more accurate information regarding the actual cost of our products and services, excluding the impact of costs of revenue that are not routine components of our core product cost, for better comparability of our costs of revenue between periods and to other companies.

------

DZS defines Adjusted Gross Margin as GAAP Gross Margin less (i) depreciation and amortization, (ii) stock-based compensation, and (iii) the impact of material transactions or events that we believe are not indicative of our core operating performance and may or may not be recurring in nature. We believe Adjusted Gross Margin provides the investor more accurate information regarding our core profit margin on sales, excluding the impact of cost of revenue that are not routine components of our core product cost, for better comparability of gross margin between periods and to other companies.

DZS defines Adjusted Operating Expenses as GAAP operating expenses plus or minus (as applicable) (i) depreciation and amortization, (ii) stock-based compensation, and (iii) the impact of material transactions or events that we believe are not indicative of our core operating performance, such as acquisition costs, restructuring and other charges, including termination related benefits, headquarters and facilities relocation, executive transition, and bad debt expense primarily related to a large customer in India, and legal costs related to certain litigation, any of which may or may not be recurring in nature. We believe Adjusted Operating Expenses provides the investor more accurate information regarding our core operating expenses, which include research and development costs, selling, general and administrative costs, and amortization of intangible assets, excluding the impact of charges that are not routine components of our core operating expenses, for better comparability between periods and to other companies.

DZS defines Adjusted Operating Income (Loss) as GAAP Operating Income (Loss) plus or minus (as applicable) (i) depreciation and amortization, (ii) stock-based compensation, and (iii) the impact of material transactions or events that we believe are not indicative of our core operating performance, such as acquisition costs, restructuring and other charges, including termination related benefits, headquarters and facilities relocation, executive transition, and bad debt expense primarily related to a large customer in India, and legal costs related to certain litigation, any of which may or may not be recurring in nature. We believe Adjusted Operating Income (Loss) provides the investor more accurate information regarding our core operating Income (Loss), excluding the impact of charges that are not routine components of our core operating expenses, for better comparability between periods and to other companies.

DZS defines Non-GAAP Net Income (Loss) as GAAP Net Income plus or minus (as applicable) (i) depreciation and amortization, (ii) stock-based compensation, (iii) the impact of material transactions or events that we believe are not indicative of our core operating performance, such as acquisition costs, restructuring and other charges, including termination related benefits, headquarters and facilities relocation, executive transition, and bad debt expense primarily related to a large customer in India, and legal costs related to certain litigation, any of which may or may not be recurring in nature, iv) unrealized foreign exchange gains and losses, v) adjusted for a non-GAAP income tax benefit (provision) based on an estimated tax rate applied against forecasted annual non-GAAP income and vi) including the tax effect of non-GAAP adjustments to Adjusted Net Income and Adjusted EPS. The Company determines non-GAAP income taxes by computing an annual rate for the Company and applying that single rate (rather than multiple rates by jurisdiction) to its consolidated quarterly results. For 2022, the non-GAAP income tax rate was 25.6% and for 2021 the rate was 22.3%. The Company expects that this methodology will provide a consistent rate throughout the year and allow investors to better understand the impact of income taxes on its results. Due to the methodology applied to its estimated annual tax rate, the Company's estimated tax rate on non-GAAP income will differ from its GAAP tax rate and from its actual tax liabilities. We believe Non-GAAP Net Income (Loss) provides the investor more accurate information regarding our core income, excluding the impact of charges that are not routine components of our core product cost or core operating expenses, for better comparability between periods and to other companies.

------

DZS defines EBITDA as Net Income (Loss) plus or minus (as applicable) (i) interest expense, net, (ii) income tax provision (benefit), and (iii) depreciation and amortization expense. DZS defines Adjusted EBITDA as EBITDA plus or minus (as applicable) (i) stock-based compensation, (ii) other income and expense and (iii) the impact of material transactions or events that we believe are not indicative of our core operating performance, such as acquisition costs, impairment of goodwill, intangibles, or long-lived assets, loss on debt extinguishment, restructuring and other charges, including termination related benefits, headquarters and facilities relocation, executive transition, and bad debt expense primarily related to a large customer in India, and legal costs related to certain litigation, any of which may or may not be recurring in nature. DZS believes that EBITDA and Adjusted EBITDA are useful measures because they provide supplemental information to assist investors in comparing the Company's performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance, as well as in assessing the sustainable cash-generating ability of the business. In addition, DZS believes these measures are of importance to investors and lenders in assessing the Company's overall capital structure and its ability to borrow additional funds.

Beginning in the third quarter of 2022, the Company updated its presentation of certain non-GAAP financial measures, including Adjusted EBITDA and Non-GAAP Net Income (Loss).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The Adjusted EBITDA calculation was revised to exclude the impact of other income and expense which reflects exclusion of transactions that we believe are not indicative of our core operating performance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The presentation of Non-GAAP Net Income (Loss) was revised to 1) exclude unrealized foreign exchange gains and losses, 2) apply a non-GAAP income tax benefit (provision) based on an estimated tax rate applied against forecasted annual non-GAAP income and 3) to include the tax effect of non-GAAP adjustments to Adjusted Net Income and Adjusted EPS. Unrealized foreign exchange gains and losses are a non-cash item that are not indicative of our core operating performance and are largely outside of our control. The application of a non-GAAP income tax rate methodology in the determination of Adjusted Net Income and EPS will provide a consistent rate throughout the year and allow investors to better understand the impact of income taxes on its results. The inclusion of the tax impact of the non-GAAP adjustments provides a more accurate after-tax view of Adjusted Net Income and EPS.

------

**Financial Statements**

**DZS INC. AND SUBSIDIARIES**

**Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)**

**($ in thousands, except per share data)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Quarters Ended** | **For the Quarters Ended** | **For the Quarters Ended** | **For the Twelve Months Ended** | **For the Twelve Months Ended** |
|  | **December 31,<br> 2022** | **September 30,<br> 2022** | **December 31,<br> 2021** | **December 31,<br> 2022** | **December 31,<br> 2021** |
| Net revenue | $100177 | $107394 | $98063 | $375691 | $350206 |
| Cost of revenue | 70119 | 70864 | 65167 | 257335 | 229938 |
| Gross profit | 30058 | 36530 | 32896 | 118356 | 120268 |
| Operating expenses: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and product development | 16433 | 15499 | 12264 | 56124 | 47052 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, marketing, general and administrative | 23418 | 23698 | 20622 | 85371 | 90241 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring and other charges | 3224 | 601 | 212 | 4617 | 12310 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of long-lived assets | - | 827 | - | 827 | 1735 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangible assets | 1622 | 1190 | 294 | 3570 | 1182 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 44697 | 41815 | 33392 | 150509 | 152520 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating income (loss) | (14639) | (5285) | (496) | (32153) | (32252) |
| Interest income | 53 | 47 | 26 | 173 | 107 |
| Interest expense | (842) | (446) | (19) | (1615) | (345) |
| Other income (expense), net | 1010 | (1984) | (613) | (1837) | 1020 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income (loss) before income taxes | (14418) | (7668) | (1102) | (35432) | (31470) |
| Income tax (benefit) provision | 141 | 6128 | 1181 | 1999 | 3213 |
| Net income (loss) | $(14559) | $(13796) | $(2283) | $(37431) | $(34683) |
| Earnings (loss) per share |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | $(0.50) | $(0.49) | $(0.08) | $(1.33) | $(1.30) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | $(0.50) | $(0.49) | $(0.08) | $(1.33) | $(1.30) |
| Weighted average shares outstanding: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | 29273 | 27902 | 27313 | 28085 | 26692 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | 29273 | 27902 | 27313 | 28085 | 26692 |
| Reconciliation of net income (loss) to Adjusted EBITDA: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) | $(14559) | $(13796) | $(2283) | $(37431) | $(34683) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense, net | 789 | 399 | (7) | 1442 | 238 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax (benefit) provision | 141 | 6128 | 1181 | 1999 | 3213 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 2574 | 2109 | 996 | 7125 | 4551 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EBITDA | $(11055) | $(5160) | $(113) | $(26865) | $(26681) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 5240 | 5023 | 2540 | 15802 | 8990 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition costs | 417 | 111 | (14) | 1150 | 675 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Headquarters and facilities relocation | - | 827 | 102 | 827 | 1114 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executive transition | 125 | 464 | - | 927 | 372 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Litigation | 36 | - | - | 36 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bad debt expense, net of recoveries | (123) | (120) | (249) | (1153) | 13957 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring and other charges | 3224 | 601 | 212 | 4617 | 12310 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Adjusted (Non-GAAP) Amount, previously reported** | $**(2136)** | $**1746** | $**2478** | $**(4659)** | $**10737** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other expense (income), net | (1010) | 1984 | 593 | 1837 | (132) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Adjusted EBITDA** | $**(3146)** | $**3730** | $**3071** | $**(2822)** | $**10605** |

---

------

---

| | | |
|:---|:---|:---|
| **DZS INC. AND SUBSIDIARIES** | **DZS INC. AND SUBSIDIARIES** | **DZS INC. AND SUBSIDIARIES** |
| **Unaudited Condensed Consolidated Balance Sheets** | **Unaudited Condensed Consolidated Balance Sheets** | **Unaudited Condensed Consolidated Balance Sheets** |
| **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
|  | **December 31,** | **December 31,** |
| **Assets** | **2022** | **2021** |
| Current assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash, cash equivalents and restricted cash | $38316 | $53474 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable - trade, net | 153780 | 86114 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other receivables | 16144 | 10621 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | 78513 | 56893 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract assets | 576 | 2184 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 8371 | 5690 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 295700 | 214976 |
| Property, plant and equipment, net | 9478 | 9842 |
| Right-of-use assets from operating leases | 12606 | 12640 |
| Goodwill | 19952 | 6145 |
| Intangible assets, net | 31742 | 5115 |
| Other assets | 15536 | 8950 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $385014 | $257668 |
| **Liabilities and Stockholders' Equity** |  |  |
| Current liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable - trade | $121225 | $64258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term debt - bank, trade facilities and secured borrowings | 9706 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current portion of long-term debt | 24073 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract liabilities | 21777 | 6091 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | 4834 | 4097 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued and other liabilities | 27559 | 16032 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 209174 | 90478 |
| Long-term debt | - | - |
| Contract liabilities - non-current | 7864 | 3044 |
| Operating lease liabilities - non-current | 11417 | 12103 |
| Pension liabilities | 11021 | 16527 |
| Other long-term liabilities | 2806 | 3609 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 242282 | 125761 |
| Stockholders' equity |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock | 30 | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 271884 | 223336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (4351) | (4457) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | (124831) | (86999) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 142732 | 131907 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $385014 | $257668 |

---

------

**DZS INC. AND SUBSIDIARIES**

**Unaudited Reconciliation of GAAP to Non-GAAP Results** 

**($ in thousands, except per share data)**

The reconciliation of EBITDA and Adjusted EBITDA to net income is included above in the Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss). Set forth below are reconciliations of Non-GAAP Cost of Revenue, Non-GAAP Gross Profit, Non-GAAP Operating Expenses, Non-GAAP Operating Income (Loss), Non-GAAP Net Income (Loss), and Non-GAAP Net Income (Loss) per Diluted Share to GAAP Cost of Revenue, Gross Profit, Operating Expenses, Operating Income (Loss), Net Income (Loss), and Net Income (Loss) per Diluted Share, respectively, which the Company considers to be the most directly comparable U.S. GAAP financial measures.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** |
|  | **Cost of Revenue** | **Gross Profit** | **Gross Margin Percentage** | **Operating Expenses** | **Operating Income (Loss)** | **Net Income (Loss)** | **Net Income (Loss) per Diluted Share** |
| GAAP amount | $70119 | $30058 | 30.0% | $44697 | $(14639) | $(14559) | $(0.50) |
| Adjustments to GAAP amounts: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | (352) | 352 | 0.4% | (2222) | 2574 | 2574 | 0.09 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | (245) | 245 | 0.2% | (4995) | 5240 | 5240 | 0.18 |
| &nbsp;&nbsp;&nbsp;&nbsp;Headquarters and facilities relocation |  |  |  | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition costs |  |  |  | (417) | 417 | 417 | 0.01 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restructuring and other charges |  |  |  | (3224) | 3224 | 3224 | 0.11 |
| &nbsp;&nbsp;&nbsp;&nbsp;Executive transition |  |  |  | (125) | 125 | 125 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Litigation |  |  |  | (36) | 36 | 36 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Bad debt expense, net of recoveries |  |  |  | 123 | (123) | (123) | - |
| Adjusted (Non-GAAP) amount, as previously calculated | $69522 | $30655 | 30.6% | $33801 | $(3146) | $(3066) | $(0.11) |
| &nbsp;&nbsp;&nbsp;&nbsp; Unrealized foreign exchange (gains) losses |  |  |  |  |  | (839) | (0.03) |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-GAAP adjustments to tax rate |  |  |  |  |  | 3830 | 0.13 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tax effect on Non-GAAP adjustments |  |  |  |  |  | (2726) | (0.09) |
| Adjusted (Non-GAAP) amount | $69522 | $30655 | 30.6% | $33801 | $(3146) | $(2801) | $(0.10) |
|  | **Three Months Ended September 30, 2022** | **Three Months Ended September 30, 2022** | **Three Months Ended September 30, 2022** | **Three Months Ended September 30, 2022** | **Three Months Ended September 30, 2022** | **Three Months Ended September 30, 2022** | **Three Months Ended September 30, 2022** |
|  | **Cost of Revenue** | **Gross Profit** | **Gross Margin Percentage** | **Operating Expenses** | **Operating Income (Loss)** | **Net Income (Loss)** | **Net Income (Loss) per Diluted Share** |
| GAAP amount | $70864 | $36530 | 34.0% | $41815 | $(5285) | $(13796) | $(0.49) |
| Adjustments to GAAP amounts: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | (295) | 295 | 0.3% | (1814) | 2109 | 2109 | 0.08 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | (280) | 280 | 0.3% | (4743) | 5023 | 5023 | 0.17 |
| &nbsp;&nbsp;&nbsp;&nbsp;Headquarters and facilities relocation |  |  |  | (827) | 827 | 827 | 0.03 |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition costs |  |  |  | (111) | 111 | 111 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Restructuring and other charges |  |  |  | (601) | 601 | 601 | 0.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;Executive transition |  |  |  | (464) | 464 | 464 | 0.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;Litigation |  |  |  | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Bad debt expense, net of recoveries |  |  |  | 120 | (120) | (120) | - |
| Adjusted (Non-GAAP) amount, as previously calculated | $70289 | $37105 | 34.6% | $33375 | $3730 | $(4781) | $(0.17) |
| &nbsp;&nbsp;&nbsp;&nbsp; Unrealized foreign exchange (gains) losses |  |  |  |  |  | 642 | 0.02 |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-GAAP adjustments to tax rate |  |  |  |  |  | 8090 | 0.29 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tax effect on Non-GAAP adjustments |  |  |  |  |  | (2471) | (0.09) |
| Adjusted (Non-GAAP) amount | $70289 | $37105 | 34.6% | $33375 | $3730 | $1480 | $0.05 |
|  | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** |
|  | **Cost of Revenue** | **Gross Profit** | **Gross Margin Percentage** | **Operating Expenses** | **Operating Income (Loss)** | **Net Income (Loss)** | **Net Income (Loss) per Diluted Share** |
| GAAP amount | $65167 | $32896 | 33.5% | $33392 | $(496) | $(2283) | $(0.08) |
| Adjustments to GAAP amounts: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | (60) | 60 | 0.1% | (936) | 996 | 996 | 0.04 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | (33) | 33 | 0.0% | (2507) | 2540 | 2540 | 0.09 |
| &nbsp;&nbsp;&nbsp;&nbsp;Headquarters and facilities relocation |  |  |  | (82) | 82 | 102 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition costs |  |  |  | 14 | (14) | (14) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Restructuring and other charges |  |  |  | (212) | 212 | 212 | 0.01 |
| &nbsp;&nbsp;&nbsp;&nbsp;Executive transition |  |  |  | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Litigation |  |  |  | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Bad debt expense, net of recoveries |  |  |  | 249 | (249) | (249) | (0.01) |
| Adjusted (Non-GAAP) amount, previously reported | $65074 | $32989 | 33.6% | $29918 | $3071 | $1304 | $0.05 |
| &nbsp;&nbsp;&nbsp;&nbsp; Unrealized foreign exchange (gains) losses |  |  |  |  |  | 499 | 0.02 |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-GAAP adjustments to tax rate |  |  |  |  |  | 1427 | 0.05 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tax effect on Non-GAAP adjustments |  |  |  |  |  | (910) | (0.04) |
| Adjusted (Non-GAAP) amount | $65074 | $32989 | 33.6% | $29918 | $3071 | $2320 | $0.08 |

---

------

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Twelve Months Ended December 31, 2022** | **Twelve Months Ended December 31, 2022** | **Twelve Months Ended December 31, 2022** | **Twelve Months Ended December 31, 2022** | **Twelve Months Ended December 31, 2022** | **Twelve Months Ended December 31, 2022** | **Twelve Months Ended December 31, 2022** |
|  | **Cost of Revenue** | **Gross Profit** | **Gross Margin Percentage** | **Operating Expenses** | **Operating Income (Loss)** | **Net Income (Loss)** | **Net Income (Loss) per Diluted Share** |
| GAAP amount | $257335 | $118356 | 31.5% | $150509 | $(32153) | $(37431) | $(1.33) |
| Adjustments to GAAP amounts: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | (1096) | 1096 | 0.3% | (6029) | 7125 | 7125 | 0.25 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | (801) | 801 | 0.2% | (15001) | 15802 | 15802 | 0.56 |
| &nbsp;&nbsp;&nbsp;&nbsp;Headquarters and facilities relocation |  |  |  | (827) | 827 | 827 | 0.03 |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition costs |  |  |  | (1150) | 1150 | 1150 | 0.04 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restructuring and other charges |  |  |  | (4617) | 4617 | 4617 | 0.16 |
| &nbsp;&nbsp;&nbsp;&nbsp;Executive transition |  |  |  | (927) | 927 | 927 | 0.03 |
| &nbsp;&nbsp;&nbsp;&nbsp;Litigation |  |  |  | (36) | 36 | 36 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Bad debt expense, net of recoveries |  |  |  | 1153 | (1153) | (1153) | (0.04) |
| Adjusted (Non-GAAP) amount, as previously calculated | $255438 | $120253 | 32.0% | $123075 | $(2822) | $(8100) | $(0.30) |
| &nbsp;&nbsp;&nbsp;&nbsp; Unrealized foreign exchange (gains) losses |  |  |  |  |  | 505 | 0.02 |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-GAAP adjustments to tax rate |  |  |  |  |  | 11065 | 0.39 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tax effect on Non-GAAP adjustments |  |  |  |  |  | (7634) | (0.27) |
| Adjusted (Non-GAAP) amount | $255438 | $120253 | 32.0% | $123075 | $(2822) | $(4164) | $(0.15) |
|  | **Twelve Months Ended December 31, 2021** | **Twelve Months Ended December 31, 2021** | **Twelve Months Ended December 31, 2021** | **Twelve Months Ended December 31, 2021** | **Twelve Months Ended December 31, 2021** | **Twelve Months Ended December 31, 2021** | **Twelve Months Ended December 31, 2021** |
|  | **Cost of Revenue** | **Gross Profit** | **Gross Margin Percentage** | **Operating Expenses** | **Operating Income (Loss)** | **Net Income (Loss)** | **Net Income (Loss) per Diluted Share** |
| GAAP amount | $229938 | $120268 | 34.3% | $152520 | $(32252) | $(34683) | $(1.30) |
| Adjustments to GAAP amounts: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | (668) | 668 | 0.2% | (3883) | 4551 | 4551 | 0.17 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | (276) | 276 | 0.1% | (8714) | 8990 | 8990 | 0.34 |
| &nbsp;&nbsp;&nbsp;&nbsp;Headquarters and facilities relocation |  |  |  | (2002) | 2002 | 1114 | 0.04 |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition costs |  |  |  | (675) | 675 | 675 | 0.03 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restructuring and other charges |  |  |  | (12310) | 12310 | 12310 | 0.46 |
| &nbsp;&nbsp;&nbsp;&nbsp;Executive transition |  |  |  | (372) | 372 | 372 | 0.01 |
| &nbsp;&nbsp;&nbsp;&nbsp;Litigation |  |  |  | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Bad debt expense, net of recoveries |  |  |  | (13957) | 13957 | 13957 | 0.52 |
| Adjusted (Non-GAAP) amount, previously reported | $228994 | $121212 | 34.6% | $110607 | $10605 | $7286 | $0.27 |
| &nbsp;&nbsp;&nbsp;&nbsp; Unrealized foreign exchange (gains) losses |  |  |  |  |  | 699 | 0.03 |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-GAAP adjustments to tax rate |  |  |  |  |  | 10225 | 0.38 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tax effect on Non-GAAP adjustments |  |  |  |  |  | (9507) | (0.36) |
| Adjusted (Non-GAAP) amount | $228994 | $121212 | 34.6% | $110607 | $10605 | $8703 | $0.32 |

---

------

**DZS INC. AND SUBSIDIARIES**

**Unaudited Reconciliation of GAAP to Non-GAAP Guidance** 

**($ in millions)**

The reconciliation of Adjusted EBITDA, Adjusted Gross margin and Adjusted Operating expenses to Net income (loss), Gross margin and Operating expenses, respectively, which the Company considers to be the most directly comparable U.S. GAAP measures.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Q1 2023** | **Q1 2023** | **Full Year 2023** | **Full Year 2023** |
|  | **Low** | **High** | **Low** | **High** |
| **Reconciliation of Net Income (Loss) to Adjusted EBITDA:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) | $(13.4) | $(10.4) | $(23.1) | $(8.1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense, net | 0.5 | 0.5 | 1.7 | 1.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax (benefit) provision | - | - | 9.7 | 9.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 2.6 | 2.6 | 10.5 | 10.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EBITDA | (10.3) | (7.3) | (1.2) | 13.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 4.9 | 4.9 | 19.7 | 19.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition costs | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring cost | 2.4 | 2.4 | 6.5 | 6.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjusted EBITDA | $(3.0) | $- | $25.0 | $40.0 |
| **Reconciliation of Gross Margin to Adjusted Gross Margin:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GAAP Gross margin | 31.7% | 33.9% | 34.9% | 37.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;COGS Depreciation and amortization | 1.3% | 1.1% | 1.1% | 1.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjusted Gross Margin | 33.0% | 35.0% | 36.0% | 38.0% |
| **Reconciliation of Operating Expenses to Adjusted Operating Expenses:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating expenses | $42.6 | $44.6 | $160.4 | $170.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 2.3 | 2.3 | 9.1 | 9.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 4.9 | 4.9 | 19.8 | 19.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition costs | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executive transition | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Headquarters and facilities relocation | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring cost | 2.4 | 2.4 | 6.5 | 6.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjusted Operating Expenses | $33.0 | $35.0 | $125.0 | $135.0 |

---

© DZS <u>www.dzsi.com</u> info@dzsi.com

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## Ex-99

![Slide 1](dzsi-ex99_2s1.jpg)

February 2023 Q4 2022 Earnings Presentation (Nasdaq: DZSI) Exhibit 99.2

------

![Slide 2](dzsi-ex99_2s2.jpg)

This presentation contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act"). These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate, and reflect the beliefs and assumptions of our management as of the date hereof. We use words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "intend," "may," plan," "project," "seek," "should," "target," "will," "would," variations of such words, and similar expressions to identify forward-looking statements. In addition, statements that refer to projections of earnings, revenue, costs or other financial items in future periods; anticipated growth and trends in our business, industry or key markets; cost synergies, growth opportunities and other potential financial and operating benefits of our acquisitions; future growth and revenues from our products; our plans and our ability to refinance or repay our existing indebtedness prior to the applicable maturity dates; our ability to access capital to fund our future operations; future economic conditions and performance; the impact of the global outbreak of COVID-19, also known as the coronavirus; the impact of interest rate and foreign currency fluctuations; anticipated performance of products or services; competition; plans, objectives and strategies for future operations, including our pursuit or strategic acquisitions and our continued investment in research and development; other characterizations of future events or circumstances; and all other statements that are not statements of historical fact, are forward-looking statements within the meaning of the Securities Act and the Exchange Act. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include those risk factors contained in the Company's SEC filings available at www.sec.gov, including without limitation, the Company's annual report on form 10-K, quarterly reports on Form 10-Q and subsequent filings. Forward-Looking Statements

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![Slide 3](dzsi-ex99_2s3.jpg)

This presentation includes financial measures that are not in accordance with generally accepted accounting principles ("GAAP"), such as Adjusted Gross Margin, Adjusted (Non-GAAP) Net Income attributable to the Company (including on a per share basis) and Adjusted EBITDA, which the Company believes are appropriate to provide meaningful comparison with, and to enhance an overall understanding of the Company's past financial performance and prospects for the future. We believe that these non-GAAP financial measures provide useful information to both management and investors by excluding specific items that we believe are not indicative of core operating results. These items share one or more of the following characteristics: they are unusual and we do not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of the Company's control. Further, each of these are non-GAAP measures of operating performance used by management, as well as industry analysts, to evaluate operations and operating performance and is widely used in the telecommunications and manufacturing industries. Other companies in the telecommunications and manufacturing industries may calculate these metrics differently than we do. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. Note to Recipients This presentation shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there by any sale of the securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration, qualification, or exemption under the securities laws of any such jurisdiction. This presentation may contain market data and industry statistics and forecasts that are based on independent industry publications and other publicly available information. Although we believe these sources are reliable, we do not guarantee the accuracy or completeness of this information and we have not independently verified this information. In addition, the market and industry data and forecasts that may be included in this presentation may involve estimates, assumptions and other risks and uncertainties and are subject to change based on various factors. Accordingly, investors should not place undue reliance on this information. Non-GAAP Financial Information

------

![Slide 4](dzsi-ex99_2s4.jpg)

Daniel WonCustomer Officer, Asia Management Team Misty KaweckiFinancial Officer Tom CarterCustomer Officer, AEMEA Gunter ReissMarketing Officer Andrew BenderTechnology Officer Norm FoustGlobal Supply Chain Miguel AlonsoProduct Officer Charlie VogtPresident & CEO

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![Slide 5](dzsi-ex99_2s5.jpg)

A global leader in access, optical and cloud-controlled software defined solutions Giving our customers a Who We Are 400+ CUSTOMERS 70+ COUNTRIES 70+ Million CLOUD CONNECTED HOMES/ BUSINESS Customers (30 of Top 50 Telecoms) Profile Open Agile Cloud Native Visionary

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![Slide 6](dzsi-ex99_2s6.jpg)

Markets Addressed Q4 Revenue Segmentation 88% 12% Access and Optical Networking Software Services $282 $307 $301 $350 2018 2019 2020 2021 2022 Addressable Market (Global ex China) 2023 2024 $9 $9 $4 $6 $10 $10 $22 $26 16% CAGR 10% CAGR 35% CAGR 18% CAGR 2025 2026 $8 $11 $12 $31 $10 $12 $14 $36 Total Sources: DZS analysis and the following Omdia reports, (1) Fiber and Copper Access Equipment Forecast Midyear Update – 2H22, August 2022, (2) Optical Networks Forecast 2021-2027, "Metro WDM", July 2022, (3) Macrocell Mobile Backhaul Equipment Market Tracker 2H20, December 2020, (4) SPRS Quarterly Market Share & Forecast Quantitative Update – 3Q21, December 2021 (5) Carrier SDN Forecast – 2H 2021, November 2021, (6) Mobile Fronthaul Equipment Market Report – 2020, July 2020, Results not an endorsement of DZS. Any reliance on these results is at the third-party's own risk. ($ in millions) ($ in billions) $376

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![Slide 7](dzsi-ex99_2s7.jpg)

Market Inflections and Disruption Secular Trends Technology Regulatory / Political XGS-PON Challenging and Disrupting the Network Edge 7nm Process

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![Slide 8](dzsi-ex99_2s8.jpg)

Trends Driving an Inflection Point in Network Design Rural Environments Urban Environments $120 billion of governments stimulus to close digital gap Next-Gen PON expected to grow at a 35% CAGR to $12B by 2027 High speed internet & 5G growth amplifying demand for optical edge Mobile data traffic expected to grow 55%/yr by 2030 AI software revenue expected to double over next 3 years driven by operations/experience IoT connected devices expected to grow to 75B by 2025 Emerging apps to require 10-500 Gbps per instance/stream Projected bandwidth per home exceeds multi-gig by 2028 Source: Statista Source: Cisco Source: Cisco Source: Infopulse Source: Omdia Source: RVA LLC Source: DZS Analysis Source: Omdia

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Fiber Access Upgrade Cycle xPON Next Gen OLT Forecast (without China) xPON Next Gen ONT Forecast (without China) Source: Omdia, Fiber & Copper Access Equipment Forecast Report 2021-2027 Update August 2022, Results not an endorsement of DZS. Any reliance on these results is at the third-party's own risk. 48% CAGR Revenue ($m) Revenue ($m) 20% CAGR

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Edge 400G DWDM Proven O-RAN / 5G xHaul OpticalEDGE Next Gen PON/AE Multi-Terabit Performance WiFi 6 + Mesh Multi-Gig Home/Office SubscriberEDGE AccessEDGE Environmentally Hardened Open RAN / Open ROADM Edge-Friendly Form Factors Long Reach 100km+ Introducing the DZS EDGE DZS xtreme \| Expresse \| CloudCheck Service Orchestration Assurance & Slicing Automation Experience Management Intelligence Self-Help 2.5G / 10G / 100G+ Flexibility & Modularity Leader Open, SDN Controlled Virtualization Ready Fiber Termination Points (ONT) Wi-Fi Residential Gateways Wi-Fi 6 Access Points Enterprise ONTs

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Our Products Software Abstract the network to create and deliver any service over an always optimized converged network Networking Build networks with the Capacity, Flexibility and Architectural Headroom to support any service

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Access, Optical and Cloud Connected Platforms 60,000+ OLT Ports 20,000,000+ ONT / WiFi Devices 70,000,000+ Cloud Subscribers

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The Network EDGE Software Service Agility & Convergence Network Convergence Performance Optimization Network Open & Standard Scalable Distributed Intelligence Subscriber Devices Network EDGE Core Network

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Velocity Platform designed for current and future service delivery needs System-on-a-Card enables non-blocking designs to 50 and 100 Gbps PON Access Edge: Fixed, Modular & Terabit Chassis XGSPON COMBO G.HSP 50G GPON Line Cards

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V6 Ultra-Performance G.hsp \| 50G Ready Non-Blocking \| 200G/400G/800G per slot Supports: XGS-PON \| GPON \| AE Hardened \| Fully Redundant Up to 24,576 Subscribers on 96 Ports Access EDGE REIMAGINED 15

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Deployment Flexibility PON \| AE \| Density \| Network Location \| Service Model System on a Card Architecture Common across form factors Next Gen PON ready Modular Containerized OS Open Virtualized Network Functions Service Flexibility On Board Switching and Routing Non-Blocking Traffic Egress Non-Blocking Backplane Interface Multi-purpose Access Interfaces BEST FOR TODAY and the FUTURE 16

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Extensive Home/Business Portfolio CloudCheck Inside  WOW Experience WiFi 6/6e for Whole Home Coverage Superior Mobile/Customer Apps Multi-Vendor E2E Visibility/Security Subscriber EDGE REVAMPED 17

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Optical Platforms for the New Network EDGE 4400

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Global Plugfest 2022 Innovation in Action M4000 C1216RO The Evolution of Open RAN

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EDGE-to-EDGE Visibility & Experience Management Access 4000 EDGE Transport System V6 Access EDGE 4400 Optical EDGE M4000 Ethernet EDGE 6 6 6 6

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Multi-Vendor Network Intelligence & Control Single Pane of Glass Permanent streamlining of operator staff Reduce new vendor app provisioning from 90 to 3 days Leverage slicing for new revenue Internet Access Ring(s)n x 10-400G Transport Aggregation (DZS & 3rd Party) Core Network ONT ONT RG ONU NETWORK ORCHESTRATION  MULTI-VENDOR ANALYTICS  WiFi EXPERIENCE SDN DEVICE CONTROL  AGILE / OPEN VISUALIZATION  ASSURANCE N x 100-200G NeighborhoodxPON (1-10G+) CO OLT (DZS & 3rd Party) Enterprises Residential 5G Mobile RemoteOLT (DZS & 3rd Party)

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Groundbreaking Cloud EDGE Innovation Orchestration & Automation Software WiFi Experience Management Network & Service Assurance

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Service Assurance and In-Home WiFi Management

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Orchestration and Automation

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E2E Cloud Connected Management DZS CloudCheck WiFi Optimization & Management DZS ExpresseNetwork Assurance Core Network Access Ring(s) Remote Terminal CO / Remote OLT VDSL2, Gfast VDSL2, Gfast GPON / XGS-PON / AE / 10GE Fiber Termination w/WiFi Fiber Termination Point

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Managing Experience for 70M Subscribers

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Owning the Subscriber Experience Path to increase ARPU with new services Outbound field-tech dispatches Remote Issue Resolution Improved Customer Retention Subscribers Experiencing Interference Incoming calls to call-center 35% 16% 2-4x 20% >50% 80% 27

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North America and EMEA Growth Opportunity North America and EMEA Performance New Customers: 224 since Q3 2020 Mix: Increase to 50% of FY 2022 revenue Large Customers: Mid-Sized Customers: Small Customers: Significant Partners:

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Chinese Vendor Replacement Growth Opportunity Q2 2022 Global OLT Market Share (ex-China) Huawei Banned Ban Likely Under Review Others Source: Omdia, Fiber & Copper Access Equipment: Units – 2Q2022, September 2022 and industry research, Results not an endorsement of DZS. Any reliance on these results is at the third-party's own risk.

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5G Open RAN Growth Opportunity 5G O-RAN is Accelerating 12% of RAN market by 2026 outside of China 61% of mobile SPs will deploy in the next 3 years DZS has been a key player in recent O-RAN Alliance Plugfests 5G O-RAN Trials and Deployments (Telecom Infra Project, Oct. 2022) Source: Omdia, Mobile Infrastructure Market Tracker 2Q22, September 2022, Results not an endorsement of DZS. Any reliance on these results is at the third-party's own risk.

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Cloud Software Growth Opportunity

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DZS Cross-Selling Opportunity 400+ Active Customers Spanning 70+ Countries 32

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Find Your EDGE with DZS The DZS Advantage Vendor-agnostic E2E NetworkAutomation Performanceat Scale FlexibleForm Factors and Pricing TechnicalSupport Easy Integration Lower CAPEXand OPEX Future Proof Better BusinessResults Trusted Advice

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Q4 2022 Financial Results

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Q4 2022 Key Pillar Highlights Early innings of an anticipated resilient industry GPON, XGS-PON, 25 and 50 Gig PON support from same system Customers returning to normal order patterns 2022 revenue led by 13% growth from EMEA and 6% growth from North America North America and EMEA revenue growth expected to exceed overall revenue growth in 2023 Ongoing traction Velocity V6 OLT supports XGS-PON and up to 800 Gig per slot Software & Services 11% of total revenue in 2022 Over 70 million subscribers on DZS Expresse and DZS CloudCheck Announced Xtreme Access and Xperience Cloud Fiber Upgrade Cycle N. America and EMEA Chinese Replacement Cloud Software Expansion Middle Mile and Open RAN Saber 4400 is a category defining product for the Middle Mile and is under evaluation by many service providers Brightspeed and Bonfire Fiber deploying DZS Saber for Middle Mile Transport Access

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Q4 2022 Comparisons Non-GAAP EPS Q4'22 Q4'21 $(0.10) $0.08 Adj. EBITDA Q4'22 Q4'21 $(3)M $3M Adj. GM% Q4'22 Q4'21 30.6% 33.6% Revenue Q4'22 Q4'21 $100M $98M RPO Q4'22 Q4'21 $321M $234M (1) Item represents a non-GAAP financial measure; see reconciliation to the comparable GAAP measure in the financial tables in the appendix. 1 1 1

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2022 Comparisons Non-GAAP EPS 2022 2021 $(0.15) $0.32 Adj. EBITDA 2022 2021 $(3)M $11M Adj. GM% 2022 2021 32.0% 34.6% Revenue 2022 2021 $376M $350M RPO 2022 2021 $321M $234M (1) Item represents a non-GAAP financial measure; see reconciliation to the comparable GAAP measure in the financial tables in the appendix. 1 1 1

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Gross Margin Bridge 2021 2022 2023E FX Supply Chain Product Mix Software New Products Software Fabrinet 34.6% 32.0% Guidance: 36.0% - 38.0%

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Revenue by Product Type New product introductions such as the Velocity V6 OLT, Saber 4400 Metro & Optical EDGE transport and M4000 Routing/Switching platforms are anticipated to recognize an improved margin profile Software & Services expected to increase as a percentage of revenue in 2023 Technology Comments 1 2

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Revenue by Geographic Region Americas: Revenue near record levels – Opportunity expanding for Middle Mile EMEA: Significant service provider engagement for Huawei replacement opportunities Asia deliveries influenced by Covid lockdowns Geographic Comments 2 3 1

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Balance Sheet

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Q1 2023 and Full Year 2023 Outlook (1) Item represents a non-GAAP financial measure; see reconciliation to the comparable GAAP measure in the financial tables in the appendix.

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Appendix: Financial

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Reconciliation of GAAP to Adjusted (Non-GAAP) Results

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Reconciliation of EBITDA

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Reconciliation of Guidance

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Non-GAAP Definition Adjusted Gross Margin DZS defines Adjusted Gross Margin as GAAP Gross Margin less (i) depreciation and amortization, (ii) stock-based compensation, and (iii) the impact of material transactions or events that we believe are not indicative of our core operating performance and may or may not be recurring in nature. We believe Adjusted Gross Margin provides the investor more accurate information regarding our core profit margin on sales, excluding the impact of cost of revenue that are not routine components of our core product cost, for better comparability of gross margin between periods and to other companies. Non-GAAP Net Income (Loss) DZS defines Non-GAAP Net Income (Loss) as GAAP Net Income plus or minus (as applicable) (i) depreciation and amortization, (ii) stock-based compensation, (iii) the impact of material transactions or events that we believe are not indicative of our core operating performance, such as acquisition costs, restructuring and other charges, including termination related benefits, headquarters and facilities relocation, executive transition, and bad debt expense primarily related to a large customer in India, and legal costs related to certain litigation, any of which may or may not be recurring in nature, iv) unrealized foreign exchange gains and losses, v) adjusted for a non-GAAP income tax benefit (provision) based on an estimated tax rate applied against forecasted annual non-GAAP income and vi) including the tax effect of non-GAAP adjustments to Adjusted Net Income and Adjusted EPS. The Company determines non-GAAP income taxes by computing an annual rate for the Company and applying that single rate (rather than multiple rates by jurisdiction) to its consolidated quarterly results. For 2022, the non-GAAP income tax rate was 25.6% and for 2021 the rate was 22.3%. The Company expects that this methodology will provide a consistent rate throughout the year and allow investors to better understand the impact of income taxes on its results. Due to the methodology applied to its estimated annual tax rate, the Company's estimated tax rate on non-GAAP income will differ from its GAAP tax rate and from its actual tax liabilities. We believe Non-GAAP Net Income (Loss) provides the investor more accurate information regarding our core income, excluding the impact of charges that are not routine components of our core product cost or core operating expenses, for better comparability between periods and to other companies.

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Non-GAAP Definition (cont'd) EBITDA and Adjusted EBITDA DZS defines EBITDA as Net Income (Loss) plus or minus (as applicable) (i) interest expense, net, (ii) income tax provision (benefit), and (iii) depreciation and amortization expense. DZS defines Adjusted EBITDA as EBITDA plus or minus (as applicable) (i) stock-based compensation, (ii) other income and expense and (iii) the impact of material transactions or events that we believe are not indicative of our core operating performance, such as acquisition costs, impairment of goodwill, intangibles, or long-lived assets, loss on debt extinguishment, restructuring and other charges, including termination related benefits, headquarters and facilities relocation, executive transition, bad debt expense primarily related to a large customer in India, and legal costs related to litigation, any of which may or may not be recurring in nature. DZS believes that EBITDA and Adjusted EBITDA are useful measures because they provide supplemental information to assist investors in comparing the Company's performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance, as well as in assessing the sustainable cash-generating ability of the business. In addition, DZS believes these measures are of importance to investors and lenders in assessing the Company's overall capital structure and its ability to borrow additional funds.

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Date May 10, 2023 (Noon-5pm CT) Location DZS HQ (Plano, TX) Live Stream Option Available Agenda Strategy / Portfolio / Financial Overview & Outlook Technology & Experience Lab Tour Special Event (Live Event Attendees) Tour/Dinner – Cowboys Club Mark Your Calendars for DZS Investor Day 2023

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