Digital Ally (DGLY) AI Stock Analysis

• Market Cap: $2.07M
• Dividend Yield: N/A
• Average Volume (3M): 47.86K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.83
• Revenue Growth: -9.62%
• EPS Growth: 95.79%
• Country: US
• Employees: 31
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): -1.77
• Shares Outstanding: 801,006
• 10 Day Avg. Volume: 99,163
• 30 Day Avg. Volume: 47,863
• PEG Ratio: 14.30
• Price to Book (P/B): -1.43K
• Price to Sales (P/S): 569.92
• P/FCF Ratio: -2.12K
• Enterprise Value/Market Cap: 6.39
• Enterprise Value/Revenue: 0.69
• Enterprise Value/Gross Profit: 3.06
• Enterprise Value/Ebitda: -2.95
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 42 Neutral
• Price Target: $0.84 ▲(1.95% Upside)

The score is held down primarily by weak financial fundamentals—persistent losses and significant negative operating/free cash flow—alongside a technically weak longer-term trend. Corporate events add some support via restructuring, improved reported quarterly performance, and steps to maintain listing/compliance, but valuation is constrained by negative earnings.

Positive Factors

Strategic pivot to live events & ticketing

The company formally shifted from law-enforcement video solutions to national live events and ticketing, a structural business change. If executed well this expands addressable market, creates recurring ticketing revenue streams, and leverages scale in event production beyond hardware sales.

Material equity offering bolstered liquidity

A sizable equity raise materially improved cash runway and ensured Nasdaq compliance, giving management time to execute the strategic pivot. Stronger liquidity reduces near-term solvency risk and permits capital deployment into product, events, or ticketing platform build-out without immediate cash-crunch constraints.

Significant operating-cost reductions

Large SG&A cuts and meaningful operating-loss improvement reflect durable restructuring of the cost base. Sustained lower operating leverage enhances path to profitability for new initiatives, enabling the firm to scale event/ticketing operations with a leaner overhead structure if revenue grows.

Negative Factors

Persistent negative cash flow

Consistent multi-year cash burn indicates the business lacks self-sustaining cash generation. This structural deficit forces dependence on external financing, limits reinvestment capacity, and increases execution risk for the new business model unless cash flow turns positive.

Deeply negative profitability

Wide negative net margins despite modest revenue and cost improvements show the company still lacks earnings power. Persistent unprofitability erodes equity, constrains strategic options, and may require sustained capital support until higher-margin revenue from events/ticketing materializes.

Reliance on dilutive, secured financing

The company’s use of senior secured convertibles and authorizations for large equity issuances signals structural funding reliance that dilutes shareholders and encumbers assets. This financing mix raises long-term cost of capital and reduces balance-sheet flexibility for strategic investments.

Digital Ally Business Overview & Revenue Model

Company Description

Digital Ally, Inc. produces and sells digital video imaging, storage, and disinfectant and related safety products for use in law enforcement, security, and commercial applications in the United States. It operates through three segments: Video Solutions, Revenue Cycle Management, and Entertainment. The company offers in-car digital video mirror systems for law enforcement; in-car digital video event recorder systems for commercial fleets and fleet managers; a suite of data management web-based tools to assist fleet managers in the organization, archiving, and management of videos and telematics information; commercial line of digital video products that serve as event recorders; body-worn digital video systems for law enforcement and private security; and VuLink ecosystem that provides intuitive auto-activation functionality, as well as coordination between multiple recording devices. It also provides EVO Web, a web-based software that enables police departments and security agencies to manage digital video evidence quickly and easily; FleetVu and VuLink, which are cloud-based evidence management systems; ThermoVu, a non-contact temperature-screening instrument that measures temperature through the wrist and controls entry to facilities when temperature measurements exceed pre-determined parameters; and Shield disinfectants and cleansers for applications against viruses and bacteria. In addition, the company offers working capital and back-office services, including insurance and benefit verification, medical treatment documentation and coding, and collections to healthcare organizations; and operates TicketSmarter.com, an online ticketing marketplace for ticket sales, partnerships, and ticket resale services for live events, including concerts, sporting events, theatres, and performing arts. It serves online visitors; and medium to large healthcare organizations. Digital Ally, Inc. was founded in 2004 and is headquartered in Overland Park, Kansas.

How the Company Makes Money

Digital Ally generates revenue through the sale of its hardware products, including body-worn cameras and in-car video systems, which are often sold to law enforcement agencies. Additionally, the company offers subscription-based services for data storage and management through its software solutions, creating a recurring revenue stream. Key partnerships with law enforcement agencies and government contracts are significant contributors to its earnings, allowing the company to secure long-term sales and service agreements. Furthermore, Digital Ally may benefit from ongoing maintenance and support contracts related to its products, enhancing its overall revenue potential.

Digital Ally Financial Statement Overview

Summary

Despite narrowing losses versus 2024 and a healthier TTM leverage/equity position, profitability is still deeply negative (net margin ~-45%) and cash burn remains heavy with TTM operating and free cash flow around -$10M. The history of balance-sheet instability (including prior negative equity) and ongoing negative FCF materially weaken the fundamentals.

Income Statement

TTM (Trailing-Twelve-Months) revenue is modestly higher, but profitability remains weak: gross margin is ~23% while operating and net margins are deeply negative (net margin ~-45%). Losses have improved meaningfully versus 2024 (net loss narrowed from ~-$19.8M to ~-$8.7M and operating losses also reduced), but the company is still not generating positive earnings power, and recent annual periods show large, persistent losses.

Balance Sheet

Leverage is moderate in TTM (Trailing-Twelve-Months) with debt at ~0.47x equity, and equity is positive (~$8.6M), supporting a more stable capital position than the prior year. However, the balance sheet has been volatile: 2024 shows negative equity (a major risk signal) and returns to shareholders are currently very weak (TTM return on equity is sharply negative), indicating losses are still eroding capital despite the improved leverage profile.

Cash Flow

Cash generation is a key concern: TTM (Trailing-Twelve-Months) operating cash flow is about -$10.0M and free cash flow is about -$10.4M, worse than 2024’s outflows. While losses have narrowed, cash burn remains heavy and consistent across years, suggesting the business is still relying on external funding or balance sheet resources to sustain operations.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	19.10M	19.65M	28.25M	37.01M	21.41M	10.51M
Gross Profit	4.33M	5.49M	5.76M	2.32M	5.66M	4.06M
EBITDA	-4.49M	-15.88M	-20.11M	-16.66M	26.38M	-2.00M
Net Income	-8.66M	-19.84M	-25.69M	-19.28M	25.47M	-2.63M
Balance Sheet
Total Assets	25.08M	27.74M	47.03M	56.67M	82.99M	20.80M
Cash, Cash Equivalents and Short-Term Investments	793.36K	454.31K	680.55K	3.53M	32.01M	4.36M
Total Debt	4.04M	8.66M	9.92M	1.78M	2.18M	996.76K
Total Liabilities	17.56M	36.75M	35.58M	20.33M	27.13M	6.44M
Stockholders Equity	8.60M	-7.82M	10.78M	35.89M	55.81M	14.36M
Cash Flow
Free Cash Flow	-10.39M	-5.28M	-10.13M	-20.77M	-25.44M	-13.97M
Operating Cash Flow	-10.03M	-5.11M	-9.89M	-18.58M	-17.83M	-13.27M
Investing Cash Flow	-354.29K	387.55K	-240.71K	-2.94M	-19.12M	-1.50M
Financing Cash Flow	10.76M	4.40M	7.38M	-6.95M	64.60M	18.78M

Digital Ally Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 0.82
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DGLY, the sentiment is Negative. The current price of 0.82 is below the 20-day moving average (MA) of 2.29, below the 50-day MA of 3.41, and below the 200-day MA of 28.54, indicating a bearish trend. The MACD of -0.36 indicates Negative momentum. The RSI at 35.48 is Neutral, neither overbought nor oversold. The STOCH value of 15.51 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DGLY.

Digital Ally Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
SPCB	54 Neutral	$35.54M	22.84	―	―	―	―
VRME	51 Neutral	$13.31M	-2.80	-44.14%	―	-14.21%	-20.44%
BKYI	45 Neutral	$6.49M	-0.59	-143.60%	―	-1.19%	86.72%
GFAI	44 Neutral	$12.74M	-1.34	-21.54%	―	4.38%	74.69%
DGLY	42 Neutral	$2.07M	>-0.01	-233.66%	―	-9.62%	95.79%

Digital Ally Corporate Events

Digital Ally rebrands as Kustom Entertainment with reverse split

On January 8, 2026, Digital Ally, Inc. implemented a 1-for-3 reverse stock split of its common stock, reducing the number of outstanding shares from 2,402,498 to 801,006, with fractional shares rounded up, and began trading that day on a split-adjusted basis on the Nasdaq Capital Market under a new CUSIP. Effective the same day, the company changed its corporate name to Kustom Entertainment, Inc., updated its bylaws solely to reflect the new name, and switched its Nasdaq ticker symbol from DGLY to KUST, with no action required from shareholders and no change to their rights. These steps formalize the group’s strategic pivot toward the live events and online ticketing markets, aligning its capital structure and market identity with its growing focus on national-scale live event production and proprietary ticketing platforms, and signaling a departure from its historic identity as a pure-play video solutions supplier to public-safety and commercial customers.

The most recent analyst rating on (DGLY) stock is a Sell with a $0.83 price target. To see the full list of analyst forecasts on Digital Ally stock, see the DGLY Stock Forecast page.

Digital Ally completes financing and secures key shareholder approvals

On December 19, 2025, Digital Ally, Inc. completed a subsequent closing under its September 15, 2025 securities purchase agreement, issuing senior secured convertible notes with an aggregate original principal of $267,500 and related warrants to a single investor, resulting in $250,000 of gross proceeds after a 7% original issue discount. The 8% notes are senior to most of the company’s existing and future indebtedness, are secured by substantially all of its assets (with specified subsidiary exceptions), and are convertible into common stock at a 10% discount to the volume-weighted average price before the initial closing, while the accompanying five-year warrants are exercisable for 147,128 shares at $2.124 per share; the company also placed 3% of the proceeds into escrow to support negotiations over a potential third-party fee arrangement. Also on December 19, 2025, at its annual meeting of stockholders, Digital Ally secured shareholder approval for a suite of governance and financing measures, including the election of four directors, ratification of its independent auditor for 2025, authorization for potentially dilutive issuances of 20% or more of outstanding common stock under its convertible note and equity line of credit agreements, an increase of 375,000 shares reserved under its 2022 Stock Option and Restricted Stock Plan, and an annual say-on-pay advisory vote on executive compensation, collectively reinforcing the board’s capital-raising flexibility and compensation framework but also signaling continued reliance on equity-linked financing that may affect existing shareholders’ ownership stakes.

The most recent analyst rating on (DGLY) stock is a Sell with a $0.78 price target. To see the full list of analyst forecasts on Digital Ally stock, see the DGLY Stock Forecast page.

Digital Ally Reports Strong Q3 2025 Financial Results

Digital Ally, Inc. announced improved financial results for the third quarter of 2025, with a 12% increase in revenue to $4.5 million and a significant reduction in SG&A expenses by 72.7%. The company reported an operating loss improvement of 84.8% compared to the previous year, alongside a notable enhancement in stockholders’ equity and working capital. These results reflect the company’s successful cost reduction strategies and restructuring efforts, particularly in its law enforcement product sales organization, despite challenging economic conditions affecting its primary customer base. Additionally, a $14.3 million public equity offering earlier in 2025 bolstered the company’s liquidity, ensuring compliance with Nasdaq listing requirements.

The most recent analyst rating on (DGLY) stock is a Sell with a $1.50 price target. To see the full list of analyst forecasts on Digital Ally stock, see the DGLY Stock Forecast page.

Digital Ally Amends Stock Purchase Agreement

On November 7, 2025, Digital Ally, Inc. amended a Common Stock Purchase Agreement with an investor, initially dated September 15, 2025. This amendment involves a commitment fee paid in shares and cash, impacting stockholder equity and future financing strategies.

The most recent analyst rating on (DGLY) stock is a Sell with a $1.50 price target. To see the full list of analyst forecasts on Digital Ally stock, see the DGLY Stock Forecast page.