Digital Ally Reports 30% Revenue Decline and Strategic Shift Towards Service-Based Offerings

Digital Ally, Inc. reported a significant decline in its financial performance for the fiscal year ending December 31, 2024, with total net revenues of $19.65 million, down 30% from $28.25 million in 2023. The company's three operating segments—Video Solutions, Revenue Cycle Management, and Entertainment—each experienced revenue decreases. The Video Solutions segment generated $5.76 million, a drop from $7.47 million, while the Revenue Cycle Management segment's revenue fell to $6.13 million from $6.71 million. The Entertainment segment saw the most substantial decline, with revenues decreasing from $14.06 million to $7.76 million.

Despite the overall revenue decline, Digital Ally reported improvements in gross profit, which totaled $5.49 million compared to $5.76 million in the previous year. The company attributed this to a reduction in the cost of goods sold, which decreased from 80% of revenues in 2023 to 72% in 2024. The operating loss also improved to $15.20 million from $22.24 million, reflecting a 31.6% reduction in losses year-over-year. However, the company still reported a net loss of $21.72 million, an improvement from the $25.46 million loss in 2023.

Strategically, Digital Ally has focused on transitioning its business model towards service-based offerings, particularly in the Video Solutions segment, where it aims to migrate customers from hardware sales to subscription-based services. This shift is expected to generate recurring revenues over time. The company also made significant organizational changes, including a reduction in workforce and a focus on cost-cutting measures across its segments. As of December 31, 2024, Digital Ally employed approximately 31 full-time employees, a decrease from previous years.

Operationally, the company has faced challenges in inventory management, particularly in the Video Solutions segment, where it recorded a reserve for excess and obsolete inventory of $2.04 million. The company has also been actively managing its cash flow, reporting cash and cash equivalents of $454,314 as of year-end, down from $778,149 in 2023. Digital Ally's liquidity plan includes ongoing discussions to raise additional capital to support operations and meet financial obligations.

Looking ahead, Digital Ally's management expressed cautious optimism about future performance, particularly as it continues to refine its service offerings and improve operational efficiencies. However, the company acknowledged the need for ongoing capital to sustain operations and execute its business plan, raising concerns about its ability to continue as a going concern without successful capital-raising initiatives.