Dalrada Financial (DFCO) Q4 2023 Earnings Report

Dalrada Financial Corporation (DFCO) reported Q4 2023 revenue of $10.75 million, up 152.56% year-over-year and 114.29% quarter-over-quarter, signaling meaningful top-line momentum after a period of softer demand. Despite the revenue surge, the company posted an operating loss of $9.58 million and a net loss of $8.24 million, yielding an EPS of -$0.0929. The negative profitability was driven by a high fixed cost base and elevated general and administrative expenses totaling $11.03 million, contributing to an EBITDA of -$8.41 million and an EBITDA margin of -78.2%. Gross margin stood at 18.6% with gross profit of $1.999 million, indicating improving top-line absorption but limited leverage from cost of goods sold relative to the overall expense base.

On the cash flow front, Dalrada generated $5.46 million of operating cash flow (OCF) and $5.26 million of free cash flow, aided by working capital movements despite the net loss backdrop. Cash and cash equivalents at period-end were $0.813 million, with total debt of $8.4339 million and net debt of $7.621 million. The balance sheet shows total assets of $25.17 million and total liabilities of $20.92 million, resulting in equity of $4.11 million. Notably, retained earnings are deeply negative at approximately $141.73 million, underscoring a long-standing deficit rather than a recently material cure. The current ratio is just under 1.0 (0.98) and the quick ratio sits at 0.772, indicating tighter short-term liquidity despite positive quarterly OCF.

Looking forward, management has not provided explicit forward guidance within the data set. The near-term investment thesis hinges on achieving operating leverage from revenue scale while stabilizing cost structures, reducing debt service burdens, and converting operating cash flow gains into sustainable profitability. The key questions for investors are whether Dalrada can sustain top-line growth without proportionally higher overhead, and whether it can meaningfully deleverage to improve liquidity and interest coverage. Key catalysts to monitor include revised cost controls, efficiency improvements across segments, and any strategic actions that monetize non-core assets or reallocate capital toward higher-return opportunities.