EPS of $-0.11 decreased by 103.7% from previous year
Gross margin of -49.6%
Net income of -9.91M
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Dalrada Financial Corporation (DFCO) QQ4 2024 Results Analysis: Revenue Contraction and Margin Erosion in Industrials Consulting Services
Executive Summary
Dalrada Financial Corporation (DFCO) reported a severely loss-making QQ4 2024 quarter with material margin erosion and negative cash flow, signaling acute liquidity pressures. Revenue for the quarter was $3.78 million, down 24.7% year-over-year and 63.3% sequentially, while gross profit was negative by $1.88 million and overall operating loss reached $9.19 million. Net loss for the quarter was $9.91 million, or earnings per share of $(0.11). The company generated negative operating cash flow of $2.26 million and negative free cash flow of $2.55 million, with only modest financing activity providing net cash inflows of $2.46 million. On the balance sheet, total assets stood at $27.60 million against liabilities of $19.17 million, leaving equity of $8.53 million; liquidity metrics remained weak (current ratio 0.95, quick ratio 0.76, cash ratio 0.036). Management commentary is not included in the supplied transcript dataset, limiting direct quotes from the QQ4 call. The results underscore structural profitability challenges, substantial accumulated losses (retained earnings of $(164.74) million), and a heavy reliance on external financing to fund operating losses. The near-term investment thesis hinges on disciplined cost management, potential debt restructuring or capital inflows, and any strategic restructuring that could restore revenue growth and margin stability. Investors should monitor liquidity runway, working capital management, and any formal guidance from management on debt renewal or strategic portfolio optimization.
- Revenue: $3.78M (QoQ -63.34%, YoY -24.71%)
- Gross Profit: $(1.88)M; Gross Margin: (49.6%)
- Operating Income: $(9.19)M; Operating Margin: (2.43%)
- Net Income: $(9.91)M; Net Margin: (2.62%)
- EBITDA: $(9.26)M; EBITDA Margin: (2.45%)
- EPS: $(0.11); Diluted EPS: $(0.11)
- Cash from Operations: $(2.26)M; Free Cash Flow: $(2.55)M
- Cash and Equivalents: $0.50M; Total Debt: $11.12M; Net Debt: $10.62M
- Current Ratio: 0.95; Quick Ratio: 0.76; Cash Ratio: 0.0360
- DSO: 222 days; DIO: 42 days; DPO: 104 days; Cash Conversion Cycle: 160 days
- Total Assets: $27.60M; Total Liabilities: $19.17M; Total Stockholders’ Equity: $8.53M
- Weighted Average Shares Outstanding: 92.14M
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
3.78M
-24.71%
-63.34%
Gross Profit
-1.88M
-293.15%
-139.80%
Operating Income
-9.19M
-81.17%
-301.30%
Net Income
-9.91M
-105.70%
-243.66%
EPS
-0.11
-103.70%
-254.84%
Key Financial Ratios
currentRatio
0.95
grossProfitMargin
-49.6%
operatingProfitMargin
-243%
netProfitMargin
-262%
returnOnAssets
-35.9%
returnOnEquity
-116.1%
debtEquityRatio
1.3
operatingCashFlowPerShare
$-0.02
freeCashFlowPerShare
$-0.03
priceToBookRatio
2.05
priceEarningsRatio
-0.44
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The earnings transcript data is not provided in the dataset. As a result, no verbatim management quotes or quote-attribution are available. The synthesis below relies on the QQ4 2024 financials and ratios. Key themes for a complete view would normally include comments on: (1) strategy and revenue mix adjustments; (2) cost containment and SG&A control measures; (3) liquidity management and potential debt refinancing; (4) any roadmap for margin restoration and growth initiatives in the diversified engineering, health IT, education, and energy services portfolio.
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Forward Guidance
No explicit forward guidance is present in the provided data. Given the QQ4 2024 results, investors should scrutinize any forthcoming management commentary for: (i) debt refinancing plans or equity financing options; (ii) strategic portfolio rationalization to shore up higher-margin businesses; (iii) cost reduction programs targeting SG&A and operating expenses; (iv) potential monetization or impairment triggers for goodwill/intangibles; and (v) anticipated revenue catalysts or partnerships that could stabilize cash flow. In the near term, achieving EBITDA break-even would require substantial margin improvement or revenue acceleration beyond the current quarterly cadence, alongside disciplined cash-flow and working-capital management.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
DFCO Focus
-49.63%
-2.43%
-1.16%
-44.10%
DCAC
35.90%
-19.50%
5.31%
-92.40%
AIMH
0.00%
0.00%
0.00%
-99.60%
SAKL
37.40%
-18.50%
0.69%
-2.27%
AERS
0.00%
0.00%
4.76%
-130.79%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Given the QQ4 2024 results, Dalrada faces a high-risk, high-uncertainty investment case. The company posted a significant quarterly loss with negative gross margins and negative cash flow, alongside weak liquidity metrics. The stock and credit rating implications hinge on two levers: (1) liquidity support via debt financing, equity injections, or asset monetization; (2) a credible path to margin stabilization and revenue growth through strategic portfolio optimization and cost discipline. Without explicit forward guidance in the provided data, the near-term trajectory depends on management’s actions to address cash burn, restructure debt, and unlock value from its diversified asset base. Investors should monitor for: (a) any announced debt refinancing or equity offering terms; (b) cost-reduction initiatives and their impact on SG&A and operating expenses; (c) progress in monetizing or impairing goodwill/intangibles; and (d) early signs of revenue stabilization or growth in higher-margin segments. On a relative-basis assessment, DFCO’s QQ4 2024 metrics compare unfavorably to typical industrials consulting peers with positive EBITDA and stronger liquidity, suggesting a high hurdle to achieving peer-level profitability in the near term. A cautious stance is warranted until the company demonstrates tangible liquidity relief and a credible pathway to profitability.
Key Investment Factors
Growth Potential
Potential uplift would hinge on successful portfolio rationalization, monetization of non-core assets, and any monetization of intangible assets. A rebound would require stabilization of revenue and meaningful SG&A reductions to move EBITDA toward a positive level.
Profitability Risk
Primary risks include sustained negative operating performance, continued cash burn, stress on liquidity, and the potential need for further debt or equity financing. The elevated DSO and low liquidity ratios increase liquidity risk. The large accumulated deficit and negative retained earnings raise going-concern concerns absent a material strategic turnaround.
Financial Position
Weak liquidity (current ratio 0.95; cash ratio 0.036), negative gross margin, substantial net loss, and negative free cash flow indicate a fragile financial position. However, the balance sheet shows a tangible asset base with goodwill and intangible assets, and a relatively modest total debt load versus equity; any external capital infusion or debt restructuring could materially alter the risk profile.
SWOT Analysis
Strengths
Diversified service lines in engineering, health information technology, education, and energy solutions which can be leveraged for cross-selling.
Presence in multiple geographies (United States, United Kingdom, Malaysia, India) that may offer diversification of client base and recurring demand.
Intangible asset base (goodwill and intangible assets) that could be monetized or leveraged in strategic transactions, subject to impairment assessments.
Weaknesses
Persistent quarterly losses with negative gross margins and EBITDA.
Material cash burn and weak liquidity (cash ratio 0.036, current ratio 0.95).
High accumulated deficits and negative retained earnings, indicating long-run profitability challenges.
Reliance on external financing to sustain operations; elevated working capital requirements (DSO 222 days).
Significant impairment risk on goodwill/intangibles if operating performance does not improve.
Opportunities
Opportunity to restructure debt and optimize capital structure to extend liquidity runway.
Strategic portfolio rationalization to focus on higher-margin, scalable offerings (e.g., software-enabled solutions, engineering services with recurring revenue).
Potential for asset monetization or licensing of technology/IP to generate non-operating income.
Market demand for clean energy, healthcare technology, and test/engineering services could support selective growth initiatives if profitability can be stabilized.
Threats
Industry cyclicality in consulting and engineering services could pressure utilization and pricing.
Continued cash burn and potential liquidity shortfall without timely financing or revenue recovery.
Regulatory and compliance risks across international operations, which could impact cost structure and capital allocation.
Competitive pressure from leaner peers with higher EBITDA and stronger balance sheets; valuation risk given negative earnings.