DZS Inc.

Today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ted Moreau, Head of Investor Relations. Please go ahead.

Thank you, Catherine, and welcome to the DZS Fourth Quarter 2021 Earnings Conference Call. Joining us today are DZS President and CEO, Charlie Vogt, and CFO, Misty Kowecki. Yesterday, after market close, we published to the Investor Relations section of the DZS website our shareholder report for the fourth quarter of 2021 to provide shareholders prospective shareholders, and analysts with market insights, product, business, and financial updates, as well as forward-looking information. On this call, we will provide projections and other forward-looking statements regarding future events or the future financial performance of the company. The company cautions you that such statements are only current expectations and actual events or results may differ materially. Please refer to documents that the company files with the SEC and including its most recent 10Q and 10K reports in the forward-looking statements section of the shareholder report that was filed on a form 8K, as well as being available on the investor relations section of our website. These documents identify important risk factors that could cause actual results to differ materially from those contained in the company's projections or forward-looking statements. Please note that unless otherwise indicated, the financial metrics being provided to you on this call are determined on a non-GAAP basis. These items, together with corresponding GAAP numbers and the reconciliation to GAAP, are contained in the shareholder report referenced earlier. Within the fourth quarter shareholder report, we announced that we will host our Horizons 22 Investor and Analyst Day on May 12th at our headquarters in Plano, Texas. That will simultaneously be webcast. I now have the pleasure to turn the call over to Charlie.

Thank you, Ted, and welcome investors, analysts, and guests. As Ted shared yesterday after the market closed, we posted our quarterly shareholder report, which provides a comprehensive update on our business, financial results, market trends, and our 2022 outlook. The communications industry is in the early phase of a dual infrastructure upgrade cycle, where legacy copper and sub-gigabit class infrastructures for the connected home and business are being rapidly replaced by 10-gigabit technologies for symmetrical optical broadband services. In addition, the proliferation of 5G networks is simultaneously creating demand for fiber-connected densification in packet-based networks. This reshaping of the global communications landscape is fueling a wave of experience-driven innovation for high-speed fixed and mobile broadband services for homes, buildings, and cities. CZS is becoming a key enabler of this transformation, providing next-generation broadband connectivity and cloud software platforms that power communication service providers to upgrade their infrastructure and launch new services. Our customers range from the world's most sophisticated advanced fiber and 5G service providers, including 16 of the top 30 global telecom service providers to agile fiber overbuilders, internet, utility, and municipalities providers. 2021 was a transformational year for DZS. As we achieved record-setting orders, revenue, and backlog, We began 2021 with a bold vision, a new go-to-market playbook, and $71 million in backlog. In January of 2021, we executed a $64 million follow-on equity raise, strengthening our balance sheet and eliminating our debt. Throughout 2021, we upgraded our leadership and sales team and accelerated innovation across our five centers of excellence, aligned with our broadband connectivity, connected home and business, mobile and optical edge, and cloud software portfolio, which resulted in the introduction of 29 new products. Strong global demand for fiber connectivity, 5G, and optical edge solutions continued during the fourth quarter. Despite continued supply chain freight and logistics constraints, our fourth quarter performance delivered record-setting orders of $134 million, an increase of 47% year-over-year. Record revenue of $98 million, an increase of 11% year-over-year, a book-to-bill ratio of 1.4, and 47 new customers. For full year 2021, we delivered $504 million in orders, representing a 62% year-over-year increase, record revenue of $350 million, an increase of 16% year-over-year, and representing $279 million of new orders that were converted to revenue during the year. We closed 2021 with record year-end backlog of $225 million, a 217% increase year over year, and a record 105 new customers, including 86 new customers spanning North America, Europe, Middle East, and Africa. As we enable deployment of hyper-fast broadband across an expanding customer base, we are creating new opportunities in the communities our customers reach and enhancing the value-added solutions in the homes and businesses they serve. We continue to expand and differentiate our fixed and mobile broadband solutions with incremental investments with our cloud software portfolio, specifically our network orchestration, automation, service assurance, and consumer experience solutions. In addition to our network and consumer software portfolio released in 2021, we will unveil SD-NOS, our unified software-defined network operating system in 2022. Our converged edge and cloud software solutions are designed to improve long-term margins and increase our reoccurring revenue while differentiating our fixed and mobile access networking solutions. Shifting my opening remarks to people, I am pleased to announce the appointment of several industry leaders to new roles at DZS. Each brings a deep history of experience in broadband mobile, optics, and cloud software. Jennifer Yowie joins DZS as our Chief Operations Officer, leading supply chain manufacturing, logistics, and compliance. Jennifer brings three decades of industry experience from Ericsson, Mediakind, Comcast, and Time Warner Cable. Norm Foss joins DZS as our Vice President of Strategic Operations, adding to our talented operations team focused on continued improvement in sourcing, procurement, and manufacturing. Norm has been in the access networking industry his entire career, having led operations at AFC, Calix, and Scion, which is now part of Calix. Sorry, which is now part of Scion. Jeff Burke, who has served as our chief marketing officer for the past two years, transitions to a newly created chief strategy officer role, where he will be responsible for business development, our growing fixed and mobile partner ecosystem, and mergers and acquisitions. Gunter Rice has joined DZS as our chief marketing officer. Most recently, Gunter led global marketing at A10 Networks. Prior to A10, Gunter spent two decades with Ericsson, bringing to DZS experience in the areas of cloud software, artificial intelligence, cybersecurity, and mobile networks. Finally, Bernd Hesse joins DZS as vice president of business development. Most recently, Bernd was the senior director of standards marketing and thought leadership at Calix. and is currently on the Board of Directors at Broadband Forum. We begin 2022 with a strong foundation resulting from the strategic investments in people, product, and systems. While we anticipate sourcing, supply chain, and logistics challenges to persist throughout the year, we expect to deliver continued growth capitalizing on the innovation and customer momentum we created in 2021. We are better prepared than ever to execute on our four growth pillars, specifically the multi-gigabit broadband upgrade cycle, which we expect the last 7 to 10 years, the evolution of 4G mobile to 5G and eventually 6G, our relentless expansion into North America and Europe, and the numerous Chinese vendor cap and grow opportunities spanning North America, Europe, Middle East, Australia, India, and the rest of Pan-Asia. In closing, Our industry has never experienced such a simultaneous push from service providers and pull from consumers as we're experiencing today. Adding to the numerous business and technology drivers, broadband is becoming an essential service with an estimated $100 billion of government broadband stimulus. With that, I'd now like to turn the call over to Misty to walk through our Q4 and full year 2021 financial highlights, as well as our 2022 outlook. Misty?