Revenue of $105M, Record End of Quarter ARR of $113M
Cash Flow From Operations of $25M
(Minneapolis, MN, August 7, 2024) - Digi International® Inc. (Nasdaq: DGII), a leading global provider of business and mission critical Internet of Things ("IoT") products, services and solutions, today announced its financial results for its third fiscal quarter ended June 30, 2024.
Third Fiscal Quarter 2024 Results Compared to Third Fiscal Quarter 2023 Results
- Revenue was $105 million, a decrease of 6%.
- Gross profit margin was 59.2%, an increase of 230 basis points.
- Net income was $10 million, compared to $7 million.
- Net income per diluted share was $0.26, compared to $0.18.
- Adjusted net income per diluted share was $0.50, flat year over year.
- Adjusted EBITDA was $25 million, an increase of 2%.
- Annualized Recurring Revenue (ARR) was $113 million at quarter end, an increase of 9%.
Überleitungen von GAAP- und Non-GAAP-Kennzahlen finden Sie am Ende dieser Mitteilung.
“Digi continues to execute on its top priority, providing valuable IoT solutions. This focus propelled ARR to a record $113M which drove record gross margins. Strong operating discipline helped notch record A-EBITDA margins and strong cash generation,” stated Ron Konezny, President and CEO. “Digi is well positioned in an increasingly challenging market where cybersecurity and data protection have risen to top priorities. Our team is strengthening, pairing expert service with our solutions which offer compelling choices for our channel and end users.”
Weitere finanzielle Höhepunkte
- We made payments against our revolving credit facility, reducing our net outstanding debt to $152 million at quarter end and debt net of cash and cash equivalents to $123 million.
- We had $3.2 million of interest expense in the third quarter of fiscal 2024, compared to $6.6 million a year ago. The decrease was driven by decreased debt outstanding and a reduction of our effective interest rate.
- Cash flow from operations was $25 million in the third quarter of fiscal 2024, compared to $18 million a year ago, driven by year over year changes in inventory.
- Net inventory ended the quarter at $57 million, compared to $74 million at September 30, 2023, reflecting continued efforts to manage inventory levels.
Segmentergebnisse
IoT Produkt & Dienstleistungen
The segment's third fiscal quarter 2024 revenue of $80 million decreased $7.4 million, as compared to the same period in the prior fiscal year. This decrease consisted of a $7.9 million decrease in one-time sales, with no material impact from pricing, partially offset by $0.5 million of recurring revenue growth. ARR as of the end of the third fiscal quarter was $23 million, an increase of 5% from the prior fiscal year. This increase was driven by growth in the subscription base across extended warranty offerings and remote management platforms. Gross profit margin increased 30 basis points to 54.4% of revenue for the third fiscal quarter of 2024, driven by a reduction in inventory adjustments and reduced inflationary pressures.
IoT Lösungen
The segment's third fiscal quarter 2024 revenue of $25 million increased $0.3 million, as compared to the same period in the prior fiscal year, consisting of a $1.7 million increase in recurring revenue, partially offset by a $0.8 million decrease in hardware sales and a $0.6 million decrease in one-time services volume. ARR as of the end of the third fiscal quarter was $90 million, an increase of 10% from the prior fiscal year driven by growth in SmartSense. Gross profit margins increased 770 basis points to 74.4% in the third fiscal quarter of 2024. This increase was the result of growth in higher margin ARR subscription revenues.
Strategie der Kapitalallokation
We intend to deleverage the company while seeking optimal inventory levels as our supply chain continues to normalize, as demonstrated by the decline in our inventory balance.
Acquisitions remain a top capital priority for Digi. We will be disciplined in our approach and act when we believe an opportunity is appropriate to execute in the context of prevailing market conditions. We are evolving and monitoring our acquisition pipeline, and we intend to focus more on scale and ARR.
Fourth Fiscal Quarter 2024 Guidance
Digi remains steadfast in achieving our new long term strategic goals of doubling ARR and Adjusted EBITDA to $200 million within the next five years. Digi’s resilient execution in a large and growing Industrial Internet of Things market has stayed consistent. Our outlook on ARR growth for fiscal 2024 improves to greater than 5%. While pleased with our year-to-date results, we find our customers remain cautious on demand. For fiscal 2024, our Adjusted EBITDA is expected to be up approximately 1%, with revenue projection to be down approximately 5% year over year. This is in line with the fiscal guidance previously provided. The macroeconomic conditions have us uncertain as to when, and to what degree, sales cycles will return to more normal conditions.
For the fourth fiscal quarter, revenues are estimated to be $102 million to $106 million. Adjusted EBITDA is estimated to be between $24.5 million and $26.0 million. Adjusted net income per share is anticipated to be between $0.48 and $0.52 per diluted share, assuming a weighted average diluted share count of 37.5 million shares.
We provide guidance or longer-term targets for Adjusted net income per share as well as Adjusted EBITDA targets on a non-GAAP basis. We do not reconcile these items to their most similar U.S. GAAP measure as it is difficult to predict without unreasonable efforts numerous items that include but are not limited to the impact of foreign exchange translation, restructuring, interest and certain tax related events. Given the uncertainty, any of these items could have a significant impact on U.S. GAAP results.
Third Fiscal Quarter 2024 Conference Call Details
As announced on July 12, 2024, Digi will discuss its third fiscal quarter results on a conference call on Wednesday, August 7, 2024 at approximately 5:00 p.m. ET (4:00 p.m. CT). The call will be hosted by Ron Konezny, President and Chief Executive Officer and Jamie Loch, Chief Financial Officer.
Participants may register for the conference call at: https://register.vevent.com/register/BIcc5261bce63c42b398b24fd89b29a861. Once registration is completed, participants will be provided a dial-in number and passcode to access the call. All participants are asked to dial-in 15 minutes prior to the start time.
Participants may access a live webcast of the conference call through the investor relations section of Digi’s website, https://digi.gcs-web.com/ or the hosting website at: https://edge.media-server.com/mmc/p/grsuwsnf/.
Eine Aufzeichnung wird innerhalb von etwa zwei Stunden nach Beendigung der Telefonkonferenz für etwa ein Jahr verfügbar sein. Sie können die Aufzeichnung per Webcast über den Investor Relations-Bereich der Digi-Website abrufen.
Eine Kopie dieser Gewinnmitteilung kann über die Seite "Financial Releases" im Bereich "Investor Relations" auf der Website von Digi unter www.digi.com abgerufen werden.
Für weitere Neuigkeiten und Informationen über uns besuchen Sie bitte www.digi.com/aboutus/investorrelations.
Über Digi International
Digi International (Nasdaq: DGII) ist ein weltweit führender Anbieter von IoT Konnektivitätsprodukten, Dienstleistungen und Lösungen. Wir helfen unseren Kunden, vernetzte Produkte der nächsten Generation zu entwickeln und kritische Kommunikationsinfrastrukturen in anspruchsvollen Umgebungen mit einem hohen Maß an Sicherheit und Zuverlässigkeit einzurichten und zu verwalten. Wir wurden 1985 gegründet und haben unseren Kunden geholfen, mehr als 100 Millionen Dinge zu vernetzen - Tendenz steigend. Weitere Informationen finden Sie auf der Website von Digi unter www.digi.com.
Zukunftsgerichtete Aussagen
This press release contains forward-looking statements that are based on management’s current expectations and assumptions. These statements often can be identified by the use of forward-looking terminology such as "assume," "believe," "continue," "estimate," "expect," "intend," "may," "plan," "potential," "project," "should," or "will" or the negative thereof or other variations thereon or similar terminology. Among other items, these statements relate to expectations of the business environment in which Digi operates, projections of future performance, inventory levels, perceived marketplace opportunities, interest expense savings and statements regarding our mission and vision. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions. Among others, these include risks related to ongoing and varying inflationary and deflationary pressures around the world and the monetary policies of governments globally as well as present and ongoing concerns about a potential recession, the ability of companies like us to operate a global business in such conditions as well as negative effects on product demand and the financial solvency of customers and suppliers in such conditions, risks related to ongoing supply chain challenges that continue to impact businesses globally, risks related to cybersecurity, risks arising from the present wars in Ukraine and the Middle East, the highly competitive market in which our company operates, rapid changes in technologies that may displace products sold by us, declining prices of networking products, our reliance on distributors and other third parties to sell our products, the potential for significant purchase orders to be canceled or changed, delays in product development efforts, uncertainty in user acceptance of our products, the ability to integrate our products and services with those of other parties in a commercially accepted manner, potential liabilities that can arise if any of our products have design or manufacturing defects, our ability to integrate and realize the expected benefits of acquisitions, our ability to defend or settle satisfactorily any litigation, the impact of natural disasters and other events beyond our control that could negatively impact our supply chain and customers, potential unintended consequences associated with restructuring, reorganizations or other similar business initiatives that may impact our ability to retain important employees or otherwise impact our operations in unintended and adverse ways, and changes in our level of revenue or profitability which can fluctuate for many reasons beyond our control. These and other risks, uncertainties and assumptions identified from time to time in our filings with the United States Securities and Exchange Commission, including without limitation, those set forth in Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended September 30, 2023, subsequent filings on Form 10-Q and other filings, could cause our actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf. Many of such factors are beyond our ability to control or predict. These forward-looking statements speak only as of the date for which they are made. We disclaim any intent or obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Darstellung von Non-GAAP-Finanzkennzahlen
Diese Mitteilung enthält den bereinigten Jahresüberschuss, den bereinigten Jahresüberschuss je verwässerter Aktie und das bereinigte EBITDA, die jeweils eine Non-GAAP-Kennzahl darstellen.
Wir sind uns bewusst, dass es wesentliche Einschränkungen bei der Verwendung von Non-GAAP-Kennzahlen gibt. Non-GAAP-Kennzahlen sind kein Ersatz für GAAP-Kennzahlen, wie z. B. den Jahresüberschuss, zum Zweck der Analyse der finanziellen Leistungsfähigkeit. Die Offenlegung dieser Kennzahlen spiegelt nicht alle Kosten und Gewinne wider, die von Digi tatsächlich verbucht wurden. Diese Non-GAAP-Kennzahlen stehen nicht im Einklang mit oder sind keine Alternative zu Kennzahlen, die nach allgemein anerkannten Rechnungslegungsgrundsätzen erstellt wurden, und können sich von Non-GAAP-Kennzahlen unterscheiden, die von anderen Unternehmen verwendet oder von uns in früheren Berichten dargestellt wurden. Darüber hinaus basieren diese Non-GAAP-Kennzahlen nicht auf einem umfassenden Satz von Rechnungslegungsvorschriften oder -prinzipien. Wir sind der Ansicht, dass Non-GAAP-Kennzahlen insofern Einschränkungen aufweisen, als sie nicht alle Beträge widerspiegeln, die mit unseren gemäß GAAP ermittelten Betriebsergebnissen verbunden sind. Wir sind der Meinung, dass diese Kennzahlen nur in Verbindung mit den entsprechenden GAAP-Kennzahlen zur Bewertung unserer Betriebsergebnisse verwendet werden sollten. Darüber hinaus spiegelt das bereinigte EBITDA nicht unsere Barausgaben, den Bedarf an liquiden Mitteln für den Ersatz abgeschriebener und abgeschriebener Vermögenswerte oder Änderungen oder den Bedarf an liquiden Mitteln für unseren Betriebskapitalbedarf wider.
We believe that providing historical and adjusted net income and adjusted net income per diluted share, respectively, exclusive of such items as reversals of tax reserves, discrete tax benefits, restructuring charges and reversals, intangible amortization, stock-based compensation, other non-operating income/expense, changes in fair value of contingent consideration, acquisition-related expenses and interest expense related to acquisitions permits investors to compare results with prior periods that did not include these items. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends and to gain an understanding of our comparative operating performance. In addition, certain of our stockholders have expressed an interest in seeing financial performance measures exclusive of the impact of these matters, which while important, are not central to the core operations of our business. Management believes that Adjusted EBITDA, defined as EBITDA adjusted for stock-based compensation expense, acquisition-related expenses, restructuring charges and reversals, and changes in fair value of contingent consideration, is useful to investors to evaluate our core operating results and financial performance because it excludes items that are significant non-cash or non-recurring items reflected in the Condensed Consolidated Statements of Operations. We believe that the presentation of Adjusted EBITDA as a percentage of revenue is useful because it provides a reliable and consistent approach to measuring our performance from year to year and in assessing our performance against that of other companies. We believe this information helps compare operating results and corporate performance exclusive of the impact of our capital structure and the method by which assets were acquired.
Kontakt für Investoren:
Rob Bennett
Investor Relations
Digi International
952-912-3524
E-Mail: rob.bennett@digi.com
