Lenexa-based Digital Ally reports third-quarter loss

Digital Ally, the Lenexa surveillance equipment company that analysts had expected to announce a third-quarter profit, instead reported a loss on Wednesday.

The company, which makes body and dash cameras for police use, said its results were hurt by a patent dispute. Digital Ally reported a third-quarter loss of $2.14 million, or 45 cents a share. After some accounting adjustments, the loss came to 32 cents a share. On that basis, analysts had expected a profit of 5 cents a share.

Revenue of $5.1 million was up from nearly $4.7 million a year ago, but analysts had expected $6.75 million.

Chief executive officer Stan Ross said in the company’s earnings release that results were hurt by “recent challenges by a competitor” to the patent for Digital Ally’s automatic trigger technology, which activates its surveillance devices without a police officer having to turn them on.

Ross said that Digital Ally believed a review by the U.S. Patent & Trademark Office would ultimately uphold patenting important aspects of its technology but that the company no longer expected to reach its original goal of $25 million in revenue for 2015.

Digital Ally stock rose 27 percent on Wednesday, or $1.61 a share, and closed at $7.51 on expectations of the firm’s first profitable quarter since early 2013. But when the earnings report was released after the close of regular trading, the shares dropped $1.91 in after-hours trading.

On Tuesday, analyst William Gibson at Roth Capital Partners had repeated his firm’s “buy” rating on the stock, saying Digital Ally’s recent orders were “looking strong and diversified.”

This story was originally published November 11, 2015 at 5:05 PM with the headline "Lenexa-based Digital Ally reports third-quarter loss."