Cover Page
Cover Page - shares | 3 Months Ended | |
Dec. 31, 2022 | Jan. 26, 2023 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-34033 | |
Entity Registrant Name | DIGI INTERNATIONAL INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 41-1532464 | |
Entity Address, Address Line One | 9350 Excelsior Blvd. | |
Entity Address, Address Line Two | Suite 700 | |
Entity Address, City or Town | Hopkins | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55343 | |
City Area Code | 952 | |
Local Phone Number | 912-3444 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 35,743,647 | |
Entity Central Index Key | 0000854775 | |
Current Fiscal Year End Date | --09-30 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
The Nasdaq Stock Market LLC | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $.01 per share | |
Trading Symbol | DGII | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue: | ||
Total Revenue | $ 109,306 | $ 84,257 |
Cost of sales: | ||
Amortization of intangibles | 1,103 | 1,389 |
Total cost of sales | 47,785 | 36,376 |
Gross Profit | 61,521 | 47,881 |
Operating expenses: | ||
Sales and marketing | 19,106 | 15,319 |
Research and development | 14,094 | 13,412 |
General and administrative | 16,358 | 15,351 |
Total operating expenses | 49,558 | 44,082 |
Operating income | 11,963 | 3,799 |
Other expense, net: | ||
Interest expense, net | (5,971) | (4,898) |
Other expense, net | 17 | (102) |
Total other expense, net | (5,954) | (5,000) |
Income before income taxes | 6,009 | (1,201) |
Income tax provision (benefit) | 230 | (2,388) |
Net income | $ 5,779 | $ 1,187 |
Basic net income per common share: | ||
Net income, basic (USD per share) | $ 0.16 | $ 0.03 |
Diluted net income per common share | ||
Net income , diluted (USD per share) | $ 0.16 | $ 0.03 |
Weighted average common shares: | ||
Basic (shares) | 35,608 | 34,560 |
Diluted (shares) | 36,859 | 35,767 |
Product | ||
Revenue: | ||
Revenue | $ 81,755 | $ 63,798 |
Cost of sales: | ||
Cost of sales excluding amortization | 39,612 | 29,239 |
Service | ||
Revenue: | ||
Revenue | 27,551 | 20,459 |
Cost of sales: | ||
Cost of sales excluding amortization | $ 7,070 | $ 5,748 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 5,779 | $ 1,187 |
Other comprehensive (loss) income: | ||
Foreign currency translation adjustment | 1,289 | (212) |
Other comprehensive income (loss) | 1,289 | (212) |
Comprehensive income | $ 7,068 | $ 975 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 30,949 | $ 34,900 |
Accounts receivable, net | 49,668 | 50,450 |
Inventories | 80,993 | 73,223 |
Income taxes receivable | 4,777 | 3,764 |
Other current assets | 3,854 | 3,871 |
Total current assets | 170,241 | 166,208 |
Property, equipment and improvements, net | 28,374 | 27,594 |
Intangible assets, net | 295,663 | 302,064 |
Goodwill | 341,573 | 340,477 |
Operating lease right-of-use assets | 14,897 | 15,299 |
Other non-current assets | 3,862 | 2,253 |
Assets | 854,610 | 853,895 |
Current liabilities: | ||
Current portion of long-term debt | 15,523 | 15,523 |
Accounts payable | 30,633 | 32,373 |
Accrued compensation | 11,782 | 14,576 |
Unearned revenue | 20,414 | 19,803 |
Current portion of operating lease liabilities | 3,357 | 3,196 |
Other current liabilities | 8,856 | 11,036 |
Total current liabilities | 90,565 | 96,507 |
Income taxes payable | 1,734 | 2,441 |
Deferred tax liabilities | 10,572 | 9,666 |
Long-term debt | 218,568 | 222,448 |
Operating lease liabilities | 16,334 | 16,978 |
Other non-current liabilities | 6,909 | 4,342 |
Total liabilities | 344,682 | 352,382 |
Commitments and Contingencies (see Note 13) | ||
Stockholders' equity: | ||
Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued and outstanding | 0 | 0 |
Common stock, $.01 par value; 60,000,000 shares authorized; 42,198,629 and 41,950,732 shares issued | 422 | 420 |
Additional paid-in capital | 389,390 | 385,244 |
Retained earnings | 205,854 | 200,075 |
Accumulated other comprehensive loss | (24,765) | (26,054) |
Treasury stock, at cost, 6,465,080 and 6,412,812 shares | (60,973) | (58,172) |
Total stockholders' equity | 509,928 | 501,513 |
Total liabilities and stockholders' equity | $ 854,610 | $ 853,895 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Dec. 31, 2022 | Sep. 30, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 42,198,629 | 41,950,732 |
Treasury stock, shares | 6,465,080 | 6,412,812 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating activities: | ||
Net income | $ 5,779 | $ 1,187 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation of property, equipment and improvements | 1,649 | 1,553 |
Amortization of intangible assets | 6,957 | 8,559 |
Stock-based compensation | 2,868 | 2,017 |
Deferred income tax provision | 905 | 1,732 |
Provision for bad debt and product returns | (148) | 414 |
Provision for inventory obsolescence | 3,019 | 600 |
Restructuring charge | 23 | 109 |
Other | (52) | 25 |
Changes in operating assets and liabilities (net of acquisitions) | (18,320) | (10,319) |
Net cash provided by operating activities | 2,680 | 5,877 |
Investing activities: | ||
Acquisition of business, net of cash acquired | 0 | (347,593) |
Purchase of property, equipment, improvements and certain other intangible assets | (963) | (454) |
Net cash used in investing activities | (963) | (348,047) |
Financing activities: | ||
Proceeds from long-term debt | 0 | 350,000 |
Payments of Debt Issuance Costs | 0 | (13,443) |
Payments on long-term debt | (4,375) | (98,118) |
Proceeds from stock option plan transactions | 872 | 4,227 |
Proceeds from employee stock purchase plan transactions | 594 | 321 |
Taxes paid for net share settlement of share-based payment options and awards | (2,987) | (6,025) |
Net cash provided by financing activities | (5,896) | 236,962 |
Effect of exchange rate changes on cash and cash equivalents | 228 | (36) |
Net (decrease) increase in cash and cash equivalents | (3,951) | (105,244) |
Cash and cash equivalents, beginning of period | 34,900 | 152,432 |
Cash and cash equivalents, end of period | 30,949 | 47,188 |
Supplemental schedule of non-cash investing and financing activities | ||
Interest Paid | 8,466 | 2,688 |
Income Taxes Paid, Net | 565 | 738 |
Transfer of inventory to property, equipment and improvements | (1,512) | (699) |
Accrual for purchase of property, equipment, improvements and certain other intangible assets | $ (17) | $ (16) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income |
Beginning balance (in shares) at Sep. 30, 2021 | 40,653 | 6,391 | ||||
Beginning balance at Sep. 30, 2021 | $ 472,517 | $ 407 | $ (56,535) | $ 370,699 | $ 180,692 | $ (22,746) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 1,187 | 1,187 | ||||
Other comprehensive (loss) income | (212) | (212) | ||||
Employee stock purchase plan issuances (in shares) | (18) | |||||
Employee stock purchase plan issuances | 321 | $ 161 | 160 | |||
Taxes paid for net share settlement of share-based payment awards (in shares) | 74 | |||||
Taxes paid for net share settlement of share-based payment awards | (6,025) | $ (1,726) | (4,299) | |||
Issuance of stock under stock award plans (in shares) | 760 | |||||
Issuance of stock under stock award plans | 4,227 | $ 7 | 4,220 | |||
Stock-based compensation expense | 2,017 | 2,017 | ||||
Ending balance (in shares) at Dec. 31, 2021 | 41,413 | 6,447 | ||||
Ending balance at Dec. 31, 2021 | 474,032 | $ 414 | $ (58,100) | 372,797 | 181,879 | (22,958) |
Beginning balance (in shares) at Sep. 30, 2022 | 41,950 | 6,413 | ||||
Beginning balance at Sep. 30, 2022 | 501,513 | $ 420 | $ (58,172) | 385,244 | 200,075 | (26,054) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 5,779 | 5,779 | ||||
Other comprehensive (loss) income | 1,289 | 1,289 | ||||
Employee stock purchase plan issuances (in shares) | (20) | |||||
Employee stock purchase plan issuances | 594 | $ 186 | 408 | |||
Taxes paid for net share settlement of share-based payment awards (in shares) | 72 | |||||
Taxes paid for net share settlement of share-based payment awards | (2,987) | $ (2,987) | ||||
Issuance of stock under stock award plans (in shares) | 249 | |||||
Issuance of stock under stock award plans | 872 | $ 2 | 870 | |||
Stock-based compensation expense | 2,868 | 2,868 | ||||
Ending balance (in shares) at Dec. 31, 2022 | 42,199 | 6,465 | ||||
Ending balance at Dec. 31, 2022 | $ 509,928 | $ 422 | $ (60,973) | $ 389,390 | $ 205,854 | $ (24,765) |
Basis of Presentation of Unaudi
Basis of Presentation of Unaudited Interim Condensed Consolidated Financial Statements and Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANTACCOUNTING POLICIES | BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited condensed consolidated financial statements of Digi International Inc. ("we", "us", "our", "Digi" or "the Company") have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission applicable to interim financial statements. While these financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles ("GAAP") for complete financial statements. These financial statements should be read in conjunction with the financial statement disclosures in our Annual Report on Form 10-K for the year ended September 30, 2022 (the "2022 Financial Statements"). We use the same accounting policies in preparing quarterly and annual financial statements. The quarterly results of operations are not necessarily indicative of the results to be expected for the full year. Potential Impacts of COVID-19 on our Business The impact of the coronavirus ("COVID-19") pandemic continues to unfold. While we have seen conditions improve towards pre-pandemic levels, the extent of the pandemic's effect on our operational and financial performance will depend in large part on future developments, which cannot be reasonably estimated at this time. Future developments include changes to the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact both within and outside the jurisdictions where we operate and the impact on governmental programs. Due to the inherent uncertainty of the situation, we are unable to predict the likely impact of the COVID-19 pandemic on our future operations, but continually monitor the risk it presents to our business. For a more detailed discussion see Part I, Item 1 in our Annual Report on Form 10-K for the year ended September 30, 2022. |
Accounting Changes and Error Co
Accounting Changes and Error Corrections | 3 Months Ended |
Dec. 31, 2022 | |
Accounting Changes and Error Corrections [Abstract] | |
Error Correction | RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS Our condensed consolidated statement of cash flows for the three months ended December 31, 2021 has been restated for errors made with regard to the cash flow classification of debt issuance costs and debt issuance cost amortization. Immaterial Correction of Prior Period Financial Statements Subsequent to the issuance of the Company's financial statements for the quarter ended December 31, 2021, the Company made certain corrections in the condensed consolidated statements of cash flows related to the debt issuance costs associated with our second and third amended and restated credit agreement entered into in November and December 2021, respectively. We corrected $13.4 million of debt issuance cost previously recorded within changes in operating assets and liabilities (net of acquisitions) within the operating activities and correctly presented the cash outflows as payments of debt issuance costs within financing activities. We also corrected $2.3 million of amortization of debt issuance costs previously included in payments on long-term debt within financing activities and changes in operating assets and liabilities (net of acquisitions) within operating activities to amortization within operating activities. There was no impact to the condensed consolidated balance sheets, condensed consolidated statements of income or condensed consolidated statements of comprehensive income as a result of these corrections. The Company determined that this restatement was not material to the condensed consolidated financial statements. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The following table is a reconciliation of the numerators and denominators in the net income per common share calculations (in thousands, except per common share data): Three months ended December 31, 2022 2021 Numerator: Net income $ 5,779 $ 1,187 Denominator: Denominator for basic net income per common share — weighted average shares outstanding 35,608 34,560 Effect of dilutive securities: Stock options and restricted stock units 1,251 1,207 Denominator for diluted net income per common share — adjusted weighted average shares 36,859 35,767 Net income per common share, basic $ 0.16 $ 0.03 Net income per common share, diluted $ 0.16 $ 0.03 Digi excludes certain stock options and restricted stock unit awards that would have an anti-dilutive effect on our diluted net income per share calculation. For the three months ended December 31, 2022 and 2021, 234,365 and 365,099 shares outstanding were excluded, respectively. |
Selected Balance Sheet Data
Selected Balance Sheet Data | 3 Months Ended |
Dec. 31, 2022 | |
Selected Balance Sheet Data [Abstract] | |
SELECTED BALANCE SHEET DATA | SELECTED BALANCE SHEET DATA The following table shows selected balance sheet data (in thousands): December 31, September 30, Accounts receivable, net: Accounts receivable $ 58,037 $ 58,967 Less allowance for credit losses 3,350 3,285 Less reserve for future credit returns and pricing adjustments 5,019 5,232 Accounts receivable, net $ 49,668 $ 50,450 Inventories: Raw materials $ 38,887 $ 39,189 Work in process 2 592 Finished goods 42,104 33,442 Inventories $ 80,993 $ 73,223 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Financial assets and liabilities are classified in the following fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1 (unadjusted quoted prices in active markets for identical assets or liabilities); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). There were no assets or liabilities that are measured at fair value on a recurring basis as of December 31, 2022 or September 30, 2022. 5. FAIR VALUE MEASUREMENTS (CONTINUED) The following table presents a reconciliation of the contingent consideration liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): Three months ended December 31, 2022 2021 Fair value at beginning of period $ — $ 6,200 Change in fair value of contingent consideration — — Fair value at end of period $ — $ 6,200 In connection with our acquisition of Haxiot, Inc. ("Haxiot") in March 2021, we agreed to make contingent earn-out payments, based upon certain revenue thresholds. The fair value of the remaining liability for contingent consideration for the acquisition of Haxiot was $0.0 million and $5.9 million at December 31, 2022 and 2021, respectively. In connection with our acquisition of Ctek, Inc. ("Ctek") in July 2021, we agreed to make contingent earn-out payments, based upon certain revenue thresholds. The fair value of the remaining liability for contingent consideration for the acquisition of Ctek was $0.0 million and $0.3 million at December 31, 2022 and 2021, respectively. The change in fair value of contingent consideration reflects our estimates of the probabilities of achieving the relevant targets and is discounted based on our estimated discount rate. The fair value of the contingent consideration at December 31, 2022 is based on the probability of achieving the specified revenue thresholds for Ctek. As of December 31, 2022, contingent consideration associated with Ctek remains subject to future performance through December 31, 2023. |
Goodwill and Other Identifiable
Goodwill and Other Identifiable Intangible Assets, Net | 3 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS, NET | GOODWILL AND OTHER INTANGIBLE ASSETS, NET Amortizable intangible assets were (in thousands): December 31, 2022 September 30, 2022 Gross Accum. Net Gross Accum. Net Purchased and core technology $ 85,034 $ (56,975) $ 28,059 $ 85,016 $ (55,854) $ 29,162 License agreements 112 (112) — 112 (112) — Patents and trademarks 39,773 (18,266) 21,507 39,711 (17,666) 22,045 Customer relationships 309,220 (63,123) 246,097 309,212 (58,355) 250,857 Non-compete agreements 600 (600) — 600 (600) — Order backlog 1,000 (1,000) — 1,000 (1,000) — Total $ 435,739 $ (140,076) $ 295,663 $ 435,651 $ (133,587) $ 302,064 Amortization expense was $6.5 million and $6.3 million for the three months ended December 31, 2022 and 2021, respectively. Amortization expense is recorded on our condensed consolidated statements of operations within cost of sales and in general and administrative expense. Estimated amortization expense related to intangible assets for the remainder of fiscal 2023 and the five succeeding fiscal years is (in thousands): 2023 (nine months) $ 19,515 2024 25,239 2025 21,783 2026 20,593 2027 20,593 2028 20,411 6. GOODWILL AND OTHER INTANGIBLE ASSETS, NET (CONTINUED) The changes in the carrying amount of goodwill by reportable segments are (in thousands): Three months ended December 31, 2022 IoT IoT Total Balance on September 30, 2022 $ 172,931 $ 167,546 $ 340,477 Foreign currency translation adjustment 998 98 1,096 Balance on December 31, 2022 $ 173,929 $ 167,644 $ 341,573 Goodwill represents the excess of cost over the fair value of net identifiable assets acquired. Goodwill is quantitatively tested for impairment on an annual basis as of June 30, or more frequently if events or circumstances occur which could indicate impairment. We continue to have two reportable segments, our IoT Products & Services segment and our IoT Solutions segment (see Note 8 ). Our IoT Products & Services business is structured to include four reporting units under the IoT Products & Services segment, each with a reporting manager: Cellular Routers, Console Servers, OEM Solutions and Infrastructure Management. Following our acquisition of Ventus in November 2021, we have two reporting units within our IoT Solutions segment. Each of these segments was tested individually for impairment during our annual impairment test completed in the third fiscal quarter of fiscal 2022. Assumptions and estimates to determine fair values under the income and market approaches are complex and often subjective. They can be affected by a variety of factors. These include external factors such as industry and economic trends. They also include internal factors such as changes in our business strategy and our internal forecasts. Changes in circumstances or a potential event could negatively affect the estimated fair values. If our future operating results do not meet current forecasts or if we experience a sustained decline in our market capitalization that is determined to be indicative of a reduction in fair value of one or more of our reporting units, we may be required to record future impairment charges for goodwill. Results of our Fiscal 2022 Annual Impairment Test As of June 30, 2022, we had a total of $32.7 million of goodwill for the Enterprise Routers reporting unit, $57.1 million of goodwill for the Console Servers reporting unit, $63.7 million of goodwill for the OEM Solutions reporting unit, $20.4 million of goodwill for the Infrastructure Management reporting unit, $49.5 million of goodwill for the SmartSense reporting unit and $118.3 million of goodwill for the Ventus reporting unit. At June 30, 2022, the fair value of goodwill exceeded the carrying value for all six reporting units. SmartSense and Ventus fair values exceeded carrying values by less than 10%. Implied fair value for each reporting unit was calculated on a standalone basis using a weighted combination of the income approach and market approach. The implied fair values of each reporting unit were added together along with our unallocated assets to get an indicated value of total equity to which a range of indicated value of total equity was derived. This range was compared to the total market capitalization of $852.0 million as of June 30, 2022. This implied a range of control (deficit)/ premiums of (5.6)% to 7.9%. This range of control premiums fell below the control premiums observed in the last five years in the communications equipment industry. As a result, the market capitalization reconciliation analysis proved support for the reasonableness of the fair values estimated for each individual reporting unit. |
Indebtedness
Indebtedness | 3 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
INDEBTEDNESS | INDEBTEDNESSOn November 1, 2021, we entered into a second amended and restated credit agreement with BMO Harris Bank N.A. ("BMO"). This agreement provides us with a senior secured credit facility (the "Credit Facility") consisting of a $350 million term loan B secured loan (the “Term Loan Facility”) and a $35 million revolving credit facility (the “Revolving Loan Facility”) with an uncommitted option to increase incremental loans under the Credit Facility, subject to an incremental cap. The Revolving Loan Facility includes a $10 million letter of credit subfacility and $10 million swingline subfacility. Digi may use proceeds of the Revolving Loan Facility in the future for general corporate purposes. This loan replaced our syndicated senior secured credit agreement with BMO that was entered into on March 15, 2021 and replaced the remaining balance of our revolver with this new term loan. This prior agreement provided us with a committed credit facility ("Prior Credit Facility") consisting of a $200 million revolving loan. 7. INDEBTEDNESS (CONTINUED) On December 22, 2021, Digi entered into a third amended and restated credit agreement with BMO. Digi refinanced the Term Loan Facility and Revolving Loan Facility under its existing credit agreement entered into on November 1, 2021, but did not receive any additional proceeds from nor modify the amounts of any facilities or subfacilities contained within that credit agreement. Following the December amendment, borrowings under the Term Loan Facility bear interest at a rate per annum equal to LIBOR with a floor of 0.50% for an interest period of one, three or six months as selected by Digi, reset at the end of the selected interest period (or a replacement benchmark rate if LIBOR is no longer available) plus 5.00% or a base rate plus 4.00%. The base rate is determined by reference to the highest of BMO’s prime rate, the Federal Funds Effective Rate plus 0.50%, or the one-month LIBOR for U.S. dollars plus 1.00%. The applicable margin for loans under the Revolving Credit Facility is in a range of 4.00% to 3.75% for LIBOR loans and 3.00% to 2.75% for base rate loans, depending on Digi’s consolidated leverage ratio. In addition to paying interest on the outstanding balance under the Credit Facility, we are required to pay a commitment fee on the non-utilized commitments thereunder which is also reported in interest expense. Digi elected an interest period of one month for the months of December 2021 through April 2022 and a period of six months effective May 1, 2022. Following the expiration of the election on October 31, 2022, Digi elected an interest period of one month, effective on November 1, 2022 and elected the same period on December 1, 2022. Our weighted average interest rate at December 31, 2022 was 6.02%. The debt issuance costs and remaining balance under the Prior Credit Facility totaled $2.3 million at November 1, 2021. Of this amount $1.9 million was written off and included in interest expense upon the entry into the new amendment and $0.4 million is being amortized over the term of the amended loan and reported in interest expense. Digi incurred an additional $11.7 million and $1.7 million in debt issuance costs relating to the November 1, 2021 and December 22, 2021 amendments, respectively. These amounts are being amortized over the term of the amended loan and reported in interest expense. The Term Loan is payable in quarterly installments, with the balance remaining due at November 2, 2028. The Revolving Loan is due in a lump sum payment at maturity on November 2, 2028, if any amounts are drawn. The fair value of the Term Loan and Revolving Loan approximated carrying value at December 31, 2022. Digi made early payments against the term loan of $50 million in December 2021. The following table is a summary of our long-term indebtedness at December 31, 2022 and September 30, 2022 (in thousands): Balance on December 31, 2022 Balance on September 30, 2022 Term loan $ 245,625 $ 250,000 Less unamortized issuance costs (11,534) (12,029) Less current maturities of long-term debt (15,523) (15,523) Total long-term debt, net of current portion $ 218,568 $ 222,448 7. INDEBTEDNESS (CONTINUED) The following table is a summary of future maturities of our aggregate long-term debt at December 31, 2022 (in thousands): Fiscal year Amount 2023 (nine months) $ 13,125 2024 17,500 2025 17,500 2026 17,500 2027 17,500 2028 162,500 Total long-term debt $ 245,625 Covenants and Security Interest The agreements governing the Revolving Loan Facility contain a number of covenants. Among other provisions, these covenants require us to maintain a certain financial ratio (net leverage ratio and minimum fixed charge ratio). At December 31, 2022, we had no amounts drawn on the Revolving Loan Facility. Amounts borrowed under the Credit Facility are secured by substantially all of our assets. |
Segment Information
Segment Information | 3 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION We have two reportable segments: IoT Products & Services and IoT Solutions. Our IoT Products & Services business is structured to include four operating segments, each with a segment manager. These four operating segments are: • Cellular Routers - box devices (fully enclosed) that provide connectivity typically in a place where the device can be plugged in exclusively using cellular communications. • Console Servers - similar to cellular routers except they are exclusively for edge computing installations and data center applications (also exclusively using cellular communications). • OEM Solutions - Original Equipment Manufacturers ("OEM") will be a chip, rather than a boxed device. This can come in the form of a stand-alone module, or from a systems-on-module ("SOMs"). While cellular connectivity is used, other communication protocols can be used such as Zigbee, Bluetooth or Radio-Frequency ("RF") based on application. • Infrastructure Management - includes battery operated, cellular enabled connect sensors as well as other types of console server applications that are more Digi Accelerated Linux ("DAL") based than Console Servers. This operating segment has some products that do not use cellular communications, but a large part of this segment does use cellular communications. Following the acquisition of Ventus on November 1, 2021, IoT Solutions is now comprised of two operating segments: • SmartSense - offers wireless temperature and other condition-based monitoring services for perishable goods such as food or medicine, as well as employee task management services. • Ventus - provides managed network as a service ("MNaaS") solutions that simplify the complexity of enterprise wide area network ("WAN") connectivity via wireless and fixed line solutions. The operating segments included in each reportable segment have similar qualitative and quantitative factors which allow us to aggregate them under each reportable segment. The qualitative factors include similar nature of products and services, production process, type or class of customers and methods used to distribute the products. The quantitative factors include similar operating margins. Our CEO is our Chief Operating Decision Maker and reviews and makes business decisions using consolidated information including operating income and gross profit. 8. SEGMENT INFORMATION (CONTINUED) Summary operating results for each of our segments were (in thousands): Three months ended December 31, 2022 2021 Revenue IoT Products & Services $ 84,342 $ 65,744 IoT Solutions 24,964 18,513 Total revenue $ 109,306 $ 84,257 Gross Profit IoT Products & Services $ 46,021 $ 35,675 IoT Solutions 15,500 12,206 Total gross profit $ 61,521 $ 47,881 Operating Income (Loss) IoT Products & Services $ 12,683 $ 4,116 IoT Solutions (720) (317) Total operating income (loss) $ 11,963 $ 3,799 Depreciation and Amortization IoT Products & Services $ 3,292 $ 3,629 IoT Solutions 4,820 4,233 Total depreciation and amortization $ 8,112 $ 7,862 Total expended for property, plant and equipment was (in thousands): Three months ended December 31, 2022 2021 IoT Products & Services $ 637 $ 454 IoT Solutions* 326 — Total expended for property, plant and equipment $ 963 $ 454 * Excluded from this amount is $1,512 and $699 of transfers of inventory to property plant and equipment for subscriber assets for the three months ended December 31, 2022 and 2021, respectively. Total assets for each of our segments were (in thousands): December 31, September 30, IoT Products & Services $ 397,108 $ 390,128 IoT Solutions 426,553 428,867 Unallocated* 30,949 34,900 Total assets $ 854,610 $ 853,895 *Unallocated consists of cash and cash equivalents. |
Revenue
Revenue | 3 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Revenue Disaggregation The following table summarizes our revenue by geographic location of our customers (in thousands): Three months ended December 31, 2022 2021 North America, primarily the United States $ 83,465 $ 66,243 Europe, Middle East & Africa 15,877 10,159 Rest of world 9,964 7,855 Total revenue $ 109,306 $ 84,257 The following table summarizes our revenue by the timing of revenue recognition (in thousands): Three months ended December 31, 2022 2021 Transferred at a point in time $ 85,486 $ 66,535 Transferred over time 23,820 17,722 Total revenue $ 109,306 $ 84,257 Contract Balances Contract Related Assets Our contract related assets consist of subscriber assets that are equipment that we provide to customers pursuant to subscription-based contracts. In these cases, we retain the ownership of the equipment that the customer uses and charge them subscription fees to receive our end-to end solutions. The total net book value of subscriber assets of $17.1 million and $16.5 million as of December 31, 2022 and September 30, 2022, respectively, are included in property, equipment and improvements, net. Depreciation expense for these subscriber assets, which is included in cost of sales, was $0.9 million and $0.8 million for the three months ended December 31, 2022 and 2021, respectively. We depreciate the cost of this equipment over its useful life. Contract Assets Contract assets at Digi consist of products and services that have been fulfilled, but for which revenue has not yet been recognized. Our contract asset balances were immaterial as of December 31, 2022 and 2021. Contract Liabilities The timing of revenue recognition may differ from the timing of invoicing to customers. Customers are invoiced for subscription services on a monthly, quarterly or annual basis. Contract liabilities consist of unearned revenue related to annual or multi-year contracts for subscription services and related implementation fees, as well as product sales that have been invoiced, but not yet fulfilled. Our contract liabilities were $23.0 million and $24.3 million at December 31, 2022 and 2021, respectively. Of the $21.6 million and $15.5 million balances as of September 30, 2022 and 2021, Digi recognized $6.1 million and $4.9 million as revenue in the three months ended December 31, 2022 and 2021, respectively. Remaining Transaction Price Transaction price allocated to the remaining performance obligations represents contracted revenue that has not been recognized. This includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods so long as we perform our obligations. As of December 31, 2022, approximately $23.0 million of revenue is expected to be recognized from remaining performance obligations. We expect to recognize revenue on approximately $20.4 million of remaining performance obligations over the next twelve months. Revenue from the remaining performance obligations we expect to recognize over a range of two |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | INCOME TAXES Our income tax expense was $0.2 million for the three months ended December 31, 2022. Included in this expense was a net tax benefit discretely related to the three months ended December 31, 2022 of $1.2 million. This benefit primarily was the result of excess tax benefits recognized on stock compensation. Our effective tax rate will vary based on a variety of factors. These include our overall profitability, the geographical mix of income before taxes and related statutory tax rate in each jurisdiction, and tax items discretely related to the period, such as settlements of audits. We may record other benefits or expenses in the future that are specific to a particular quarter such as expiration of statutes of limitation, the completion of tax audits, or legislation that is enacted in both U.S. and foreign jurisdictions. A reconciliation of the beginning and ending amount of unrecognized tax benefits is (in thousands): Unrecognized tax benefits as of September 30, 2022 $ 3,316 Decreases related to: Expiration of statute of limitations (649) Unrecognized tax benefits as of December 31, 2022 $ 2,667 The total amount of unrecognized tax benefits at December 31, 2022 that, if recognized, would affect our effective tax rate was $2.6 million, after considering the impact of interest and deferred benefit items. We expect that the total amount of unrecognized tax benefits will decrease by approximately $0.3 million over the next 12 months. |
Product Warranty Obligation
Product Warranty Obligation | 3 Months Ended |
Dec. 31, 2022 | |
Product Warranties Disclosures [Abstract] | |
PRODUCT WARRANTY OBLIGATION | PRODUCT WARRANTY OBLIGATION The following tables summarize the activity associated with the product warranty accrual (in thousands) and is included on our condensed consolidated balance sheets within other current liabilities: Balance at Warranties Settlements Balance at Period September 30 issued made December 31 Three months ended December 31, 2022 $ 886 $ 90 $ (54) $ 922 Three months ended December 31, 2021 $ 707 $ 71 $ (120) $ 658 |
Leases
Leases | 3 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
LEASES | LEASES All of our leases are operating leases and primarily consist of leases for office space. For any lease with an initial term in excess of twelve months, the related lease assets and lease liabilities are recognized on the condensed consolidated balance sheets as either operating or financing leases at the inception of an agreement where it is determined that a lease exists. We have lease agreements that contain both lease and non-lease components. We have elected to combine lease and non-lease components for all classes of assets. Leases with an expected term of twelve months or less are not recorded on the condensed consolidated balance sheets. Instead we recognize lease expense for these leases on a straight-line basis over the lease term. Operating lease assets represent the right to use an underlying asset for the lease term and operating lease liabilities represent the obligation to make lease payments. These assets and liabilities are recognized based on the present value of future payments over the lease term at the commencement date. We generally use a collateralized incremental borrowing rate based on information available at the commencement date, including the lease term, in determining the present value of future payments. When determining our right-of-use assets, we generally do not include options to extend or terminate the lease unless it is reasonably certain that the option will be exercised. Our leases typically require payment of real estate taxes and common area maintenance and insurance. These components comprise the majority of our variable lease cost and are excluded from the present value of our lease obligations. Fixed payments may contain predetermined fixed rent escalations. We recognize the related rent expense on a straight-line basis from the commencement date to the end of the lease term. 12. LEASES (CONTINUED) The following table shows the supplemental balance sheet information related to our leases (in thousands): Balance Sheet Location December 31, 2022 September 30, 2022 Assets Operating leases Operating lease right-of-use assets $ 14,897 $ 15,299 Total lease assets $ 14,897 $ 15,299 Liabilities Operating leases Current portion of operating lease liabilities $ 3,357 $ 3,196 Operating leases Operating lease liabilities 16,334 16,978 Total lease liabilities $ 19,691 $ 20,174 The following were the components of our lease cost which is recorded in both cost of goods sold and selling, general and administrative expense (in thousands): Three months ended December 31, 2022 2021 Operating lease cost $ 904 $ 937 Variable lease cost 309 28 Short-term lease cost 25 273 Total lease cost $ 1,238 $ 1,238 In November 2021, Digi acquired $0.9 million in right of-use assets and assumed $0.9 million in lease liabilities from the acquisition of Ventus that are included in the balances at December 31, 2021. At December 31, 2022 the weighted average remaining lease term of our operating leases was 6.8 years and the weighted average discount rate for these leases was 3.4%. The table below reconciles the undiscounted cash flows for each of the first five years as well as all the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet as of December 31, 2022 (in thousands): Fiscal year Amount 2023 (nine months) $ 2,833 2024 3,689 2025 3,339 2026 3,122 2027 2,042 2028 1,956 Thereafter 5,269 Total future undiscounted lease payments 22,250 Less imputed interest (2,559) Total reported lease liability $ 19,691 |
Contingencies
Contingencies | 3 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES We lease certain of our buildings and equipment under non-cancelable lease agreements. Please refer to Note 12 to our condensed consolidated financial statements for additional information. In the normal course of business, we presently are, and expect in the future to be, subject to various claims and litigation with third parties such as non-practicing intellectual property entities as well as customers, vendors and/or former employees. There can be no assurance that any claims by third parties, if proven to have merit, will not materially adversely affect our business, liquidity or financial condition. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based awards granted in the first fiscal quarter of 2023 were granted under the amended and restated 2021 Omnibus Incentive Plan (the "2021 Plan"). Such awards made in the first quarter of fiscal 2022 were granted under the 2021 Plan before it was amended and restated at our annual meeting in January, 2022. Shares subject to awards under the 2021 Plan or any prior plans that are forfeited, canceled, returned to us for failure to satisfy vesting requirements, settled in cash or otherwise terminated without payment also will be available for grant under the 2021 Plan. The authority to grant options under the 2021 Plan and set other terms and conditions rests with the Compensation Committee of the Board of Directors. As of December 31, 2022, there were approximately 1,209,045 shares available for future grants under the 2021 Plan. Cash received from the exercise of stock options was $0.9 million and $4.2 million for the three months ended December 31, 2022 and 2021, respectively. Our equity plans and corresponding forms of award agreements generally have provisions allowing employees to elect to satisfy tax withholding obligations through the delivery of shares. When employees make this election, we retain a portion of shares issuable under the award. Tax withholding obligations are otherwise fulfilled by the employee paying cash to us for the withholding. During the three months ended December 31, 2022 and 2021, our employees forfeited 71,951 shares and 611,415 shares, respectively, in order to satisfy respective withholding tax obligations of $3.0 million and $6.0 million, respectively. We sponsor an Employee Stock Purchase Plan as amended and restated as of December 10, 2019, October 29, 2013, December 4, 2009 and November 27, 2006 (the "ESPP"), covering all domestic employees with at least 90 days of continuous service and who are customarily employed at least 20 hours per week. The ESPP allows eligible participants the right to purchase common stock on a quarterly basis at the lower of 85% of the market price at the beginning or end of each three-month offering period. The most recent amendments to the ESPP, ratified by our stockholders on January 29, 2020, increased the total number of shares to 3,425,000 that may be purchased under the ESPP. ESPP contributions by employees were $0.6 million and $0.3 million for the three months ended December 31, 2022 and 2021, respectively. Pursuant to the ESPP, 19,683 and 17,936 common shares were issued to employees during the three months ended December 31, 2022 and 2021, respectively. Shares are issued under the ESPP from treasury stock. As of December 31, 2022, 533,165 common shares were available for future issuances under the ESPP. The following table shows stock-based compensation expense that is included in the consolidated results of operations (in thousands): Three months ended December 31, 2022 2021 Cost of sales $ 142 $ 86 Sales and marketing 851 490 Research and development 448 322 General and administrative 1,427 1,119 Stock-based compensation before income taxes 2,868 2,017 Income tax benefit (599) (430) Stock-based compensation after income taxes $ 2,269 $ 1,587 14. STOCK-BASED COMPENSATION (CONTINUED) Stock Options The following table summarizes our stock option activity (in thousands, except per common share amounts): Options Outstanding Weighted Average Exercise Price Weighted Average Contractual Term (in years) Aggregate Intrinsic Value (1) Balance on September 30, 2022 1,790 $17.29 Granted 64 40.80 Exercised (64) 14.62 Forfeited / Canceled (2) 14.31 Balance on December 31, 2022 1,788 $18.23 4.6 $ 15,900 Exercisable on December 31, 2022 965 $15.30 3.7 $ 10,851 (1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $36.55 as of December 31, 2022, which would have been received by the option holders had all option holders exercised their options as of that date. The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. The total intrinsic value of all options exercised during the three months ended December 31, 2022 and 2021 was $1.7 million and $13.3 million, respectively. The following table shows the weighted average fair value, which was determined based upon the fair value of each option on the grant date utilizing the Black-Scholes option-pricing model and the related assumptions: Three months ended December 31, 2022 2021 Weighted average per option grant date fair value $19.98 $10.23 Assumptions used for option grants: Risk free interest rate 3.89% - 3.98% 1.25% - 1.46% Expected term 6.00 years 6.00 years Expected volatility 46% 46% Weighted average volatility 46% 46% Expected dividend yield — — The fair value of each option award granted during the periods presented was estimated using the Black-Scholes option valuation model that uses the assumptions noted in the above table. Expected volatilities are based on the historical volatility of our stock. We use historical data to estimate option exercise and employee termination information within the valuation model. The expected term of options granted is derived from the vesting period and historical information and represents the period of time that options granted are expected to be outstanding. The risk-free rate used is the zero-coupon U.S. Treasury bond rate in effect at the time of the grant whose maturity equals the expected term of the option. As of December 31, 2022, the total unrecognized compensation cost related to non-vested stock options was $7.6 million and the related weighted average period over which it is expected to be recognized is approximately 2.1 years. 14. STOCK-BASED COMPENSATION (CONTINUED) Non-vested Stock Units The following table presents a summary of our non-vested restricted stock units and performance stock units as of December 31, 2022 and changes during the three months then ended (in thousands, except per common share amounts): RSUs PSUs Number of Awards Weighted Average Grant Date Fair Value Number of Awards Weighted Average Grant Date Fair Value Nonvested on September 30, 2022 742 $ 19.14 27 $ 22.69 Granted 415 40.68 113 40.66 Vested (182) 17.76 (5) 22.93 Canceled (6) 24.55 — — Nonvested on December 31, 2022 969 $ 28.60 135 $ 37.72 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENTSOn January 27, 2023, our shareholders approved an amended and restated 2021 Omnibus Incentive Plan. This amended plan became effective on January 28, 2023 and authorized the issuance of an additional 1,100,000 shares. This plan is now scheduled to expire on January 27, 2033. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Calculation of Numerator and Denominator in Earnings Per Share | The following table is a reconciliation of the numerators and denominators in the net income per common share calculations (in thousands, except per common share data): Three months ended December 31, 2022 2021 Numerator: Net income $ 5,779 $ 1,187 Denominator: Denominator for basic net income per common share — weighted average shares outstanding 35,608 34,560 Effect of dilutive securities: Stock options and restricted stock units 1,251 1,207 Denominator for diluted net income per common share — adjusted weighted average shares 36,859 35,767 Net income per common share, basic $ 0.16 $ 0.03 Net income per common share, diluted $ 0.16 $ 0.03 |
Selected Balance Sheet Data (Ta
Selected Balance Sheet Data (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Selected Balance Sheet Data [Abstract] | |
Schedule of Selected Balance Sheet Data | The following table shows selected balance sheet data (in thousands): December 31, September 30, Accounts receivable, net: Accounts receivable $ 58,037 $ 58,967 Less allowance for credit losses 3,350 3,285 Less reserve for future credit returns and pricing adjustments 5,019 5,232 Accounts receivable, net $ 49,668 $ 50,450 Inventories: Raw materials $ 38,887 $ 39,189 Work in process 2 592 Finished goods 42,104 33,442 Inventories $ 80,993 $ 73,223 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table presents a reconciliation of the contingent consideration liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): Three months ended December 31, 2022 2021 Fair value at beginning of period $ — $ 6,200 Change in fair value of contingent consideration — — Fair value at end of period $ — $ 6,200 |
Goodwill and Other Identifiab_2
Goodwill and Other Identifiable Intangible Assets, Net (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Amortizable Intangible Assets | Amortizable intangible assets were (in thousands): December 31, 2022 September 30, 2022 Gross Accum. Net Gross Accum. Net Purchased and core technology $ 85,034 $ (56,975) $ 28,059 $ 85,016 $ (55,854) $ 29,162 License agreements 112 (112) — 112 (112) — Patents and trademarks 39,773 (18,266) 21,507 39,711 (17,666) 22,045 Customer relationships 309,220 (63,123) 246,097 309,212 (58,355) 250,857 Non-compete agreements 600 (600) — 600 (600) — Order backlog 1,000 (1,000) — 1,000 (1,000) — Total $ 435,739 $ (140,076) $ 295,663 $ 435,651 $ (133,587) $ 302,064 |
Schedule of Estimated Future Amortization Expense Related to Intangible Assets | Estimated amortization expense related to intangible assets for the remainder of fiscal 2023 and the five succeeding fiscal years is (in thousands): 2023 (nine months) $ 19,515 2024 25,239 2025 21,783 2026 20,593 2027 20,593 2028 20,411 |
Schedule of Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill by reportable segments are (in thousands): Three months ended December 31, 2022 IoT IoT Total Balance on September 30, 2022 $ 172,931 $ 167,546 $ 340,477 Foreign currency translation adjustment 998 98 1,096 Balance on December 31, 2022 $ 173,929 $ 167,644 $ 341,573 |
Indebtedness (Tables)
Indebtedness (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Debt [Table Text Block] | The following table is a summary of our long-term indebtedness at December 31, 2022 and September 30, 2022 (in thousands): Balance on December 31, 2022 Balance on September 30, 2022 Term loan $ 245,625 $ 250,000 Less unamortized issuance costs (11,534) (12,029) Less current maturities of long-term debt (15,523) (15,523) Total long-term debt, net of current portion $ 218,568 $ 222,448 |
Schedule of Maturities of Long-term Debt [Table Text Block] | The following table is a summary of future maturities of our aggregate long-term debt at December 31, 2022 (in thousands): Fiscal year Amount 2023 (nine months) $ 13,125 2024 17,500 2025 17,500 2026 17,500 2027 17,500 2028 162,500 Total long-term debt $ 245,625 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Summary operating results for each of our segments were (in thousands): Three months ended December 31, 2022 2021 Revenue IoT Products & Services $ 84,342 $ 65,744 IoT Solutions 24,964 18,513 Total revenue $ 109,306 $ 84,257 Gross Profit IoT Products & Services $ 46,021 $ 35,675 IoT Solutions 15,500 12,206 Total gross profit $ 61,521 $ 47,881 Operating Income (Loss) IoT Products & Services $ 12,683 $ 4,116 IoT Solutions (720) (317) Total operating income (loss) $ 11,963 $ 3,799 Depreciation and Amortization IoT Products & Services $ 3,292 $ 3,629 IoT Solutions 4,820 4,233 Total depreciation and amortization $ 8,112 $ 7,862 |
Payments to Acquire Property, Plant and Equipment by Segment | Total expended for property, plant and equipment was (in thousands): Three months ended December 31, 2022 2021 IoT Products & Services $ 637 $ 454 IoT Solutions* 326 — Total expended for property, plant and equipment $ 963 $ 454 * Excluded from this amount is $1,512 and $699 of transfers of inventory to property plant and equipment for subscriber assets for the three months ended December 31, 2022 and 2021, respectively. |
Reconciliation of Assets from Segment to Consolidated | Total assets for each of our segments were (in thousands): December 31, September 30, IoT Products & Services $ 397,108 $ 390,128 IoT Solutions 426,553 428,867 Unallocated* 30,949 34,900 Total assets $ 854,610 $ 853,895 *Unallocated consists of cash and cash equivalents. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table summarizes our revenue by geographic location of our customers (in thousands): Three months ended December 31, 2022 2021 North America, primarily the United States $ 83,465 $ 66,243 Europe, Middle East & Africa 15,877 10,159 Rest of world 9,964 7,855 Total revenue $ 109,306 $ 84,257 The following table summarizes our revenue by the timing of revenue recognition (in thousands): Three months ended December 31, 2022 2021 Transferred at a point in time $ 85,486 $ 66,535 Transferred over time 23,820 17,722 Total revenue $ 109,306 $ 84,257 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is (in thousands): Unrecognized tax benefits as of September 30, 2022 $ 3,316 Decreases related to: Expiration of statute of limitations (649) Unrecognized tax benefits as of December 31, 2022 $ 2,667 |
Product Warranty Obligation (Ta
Product Warranty Obligation (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Product Warranties Disclosures [Abstract] | |
Schedule of Product Warranty Accrual | The following tables summarize the activity associated with the product warranty accrual (in thousands) and is included on our condensed consolidated balance sheets within other current liabilities: Balance at Warranties Settlements Balance at Period September 30 issued made December 31 Three months ended December 31, 2022 $ 886 $ 90 $ (54) $ 922 Three months ended December 31, 2021 $ 707 $ 71 $ (120) $ 658 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Supplemental Balance Sheet Information | The following table shows the supplemental balance sheet information related to our leases (in thousands): Balance Sheet Location December 31, 2022 September 30, 2022 Assets Operating leases Operating lease right-of-use assets $ 14,897 $ 15,299 Total lease assets $ 14,897 $ 15,299 Liabilities Operating leases Current portion of operating lease liabilities $ 3,357 $ 3,196 Operating leases Operating lease liabilities 16,334 16,978 Total lease liabilities $ 19,691 $ 20,174 |
Components of Lease Cost | The following were the components of our lease cost which is recorded in both cost of goods sold and selling, general and administrative expense (in thousands): Three months ended December 31, 2022 2021 Operating lease cost $ 904 $ 937 Variable lease cost 309 28 Short-term lease cost 25 273 Total lease cost $ 1,238 $ 1,238 |
Supplemental Disclosures Leases | In November 2021, Digi acquired $0.9 million in right of-use assets and assumed $0.9 million in lease liabilities from the acquisition of Ventus that are included in the balances at December 31, 2021.At December 31, 2022 the weighted average remaining lease term of our operating leases was 6.8 years and the weighted average discount rate for these leases was 3.4%. |
Operating Lease Liability Maturity | The table below reconciles the undiscounted cash flows for each of the first five years as well as all the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet as of December 31, 2022 (in thousands): Fiscal year Amount 2023 (nine months) $ 2,833 2024 3,689 2025 3,339 2026 3,122 2027 2,042 2028 1,956 Thereafter 5,269 Total future undiscounted lease payments 22,250 Less imputed interest (2,559) Total reported lease liability $ 19,691 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock-Based Compensation Expense | The following table shows stock-based compensation expense that is included in the consolidated results of operations (in thousands): Three months ended December 31, 2022 2021 Cost of sales $ 142 $ 86 Sales and marketing 851 490 Research and development 448 322 General and administrative 1,427 1,119 Stock-based compensation before income taxes 2,868 2,017 Income tax benefit (599) (430) Stock-based compensation after income taxes $ 2,269 $ 1,587 |
Schedule of Stock Option Activity | The following table summarizes our stock option activity (in thousands, except per common share amounts): Options Outstanding Weighted Average Exercise Price Weighted Average Contractual Term (in years) Aggregate Intrinsic Value (1) Balance on September 30, 2022 1,790 $17.29 Granted 64 40.80 Exercised (64) 14.62 Forfeited / Canceled (2) 14.31 Balance on December 31, 2022 1,788 $18.23 4.6 $ 15,900 Exercisable on December 31, 2022 965 $15.30 3.7 $ 10,851 (1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $36.55 as of December 31, 2022, which would have been received by the option holders had all option holders exercised their options as of that date. The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. The total intrinsic value of all options exercised during the three months ended December 31, 2022 and 2021 was $1.7 million and $13.3 million, respectively. |
Schedule of Valuation Assumptions | The following table shows the weighted average fair value, which was determined based upon the fair value of each option on the grant date utilizing the Black-Scholes option-pricing model and the related assumptions: Three months ended December 31, 2022 2021 Weighted average per option grant date fair value $19.98 $10.23 Assumptions used for option grants: Risk free interest rate 3.89% - 3.98% 1.25% - 1.46% Expected term 6.00 years 6.00 years Expected volatility 46% 46% Weighted average volatility 46% 46% Expected dividend yield — — |
Schedule of Nonvested Restricted Stock Units | The following table presents a summary of our non-vested restricted stock units and performance stock units as of December 31, 2022 and changes during the three months then ended (in thousands, except per common share amounts): RSUs PSUs Number of Awards Weighted Average Grant Date Fair Value Number of Awards Weighted Average Grant Date Fair Value Nonvested on September 30, 2022 742 $ 19.14 27 $ 22.69 Granted 415 40.68 113 40.66 Vested (182) 17.76 (5) 22.93 Canceled (6) 24.55 — — Nonvested on December 31, 2022 969 $ 28.60 135 $ 37.72 |
Accounting Changes and Error _2
Accounting Changes and Error Corrections (Details) - Revision of Prior Period, Error Correction, Adjustment $ in Thousands | 3 Months Ended |
Dec. 31, 2021 USD ($) | |
Reclassification [Line Items] | |
Debt Issuance Costs | $ 13,400 |
Amortization of Debt Issuance Costs | $ 2,300 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Numerator: | ||
Net income | $ 5,779 | $ 1,187 |
Denominator: | ||
Denominator for basic net income per common share — weighted average shares outstanding | 35,608,000 | 34,560,000 |
Effect of dilutive securities: | ||
Stock options and restricted stock units | 1,251,000 | 1,207,000 |
Denominator for diluted net income per common share — adjusted weighted average shares | 36,859,000 | 35,767,000 |
Basic net income per common share: | ||
Net income, basic (USD per share) | $ 0.16 | $ 0.03 |
Diluted net income per common share | ||
Net income , diluted (USD per share) | $ 0.16 | $ 0.03 |
Potentially dilutive securities excluded from computation of earnings per share | 234,365 | 365,099 |
Selected Balance Sheet Data (De
Selected Balance Sheet Data (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 |
Accounts receivable, net: | ||
Accounts receivable | $ 58,037 | $ 58,967 |
Less allowance for credit losses | 3,350 | 3,285 |
Less reserve for future credit returns and pricing adjustments | 5,019 | 5,232 |
Accounts receivable, net | 49,668 | 50,450 |
Inventories: | ||
Raw materials | 38,887 | 39,189 |
Work in process | 2 | 592 |
Finished goods | 42,104 | 33,442 |
Inventories | $ 80,993 | $ 73,223 |
Fair Value Measurements (Financ
Fair Value Measurements (Financial Assets and Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Total liabilities measured at fair value | $ 0 | $ 0 | ||
Fair Value, Inputs, Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Contingent consideration fair value | $ 0 | $ 0 | $ 6,200 | $ 6,200 |
Fair Value Measurements (Reconc
Fair Value Measurements (Reconciliation of Liability) (Details) - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Fair value at beginning of period | $ 0 | $ 6,200 |
Change in fair value of contingent consideration | 0 | 0 |
Fair value at end of period | 0 | 6,200 |
Contingent Consideration | Estimate of Fair Value Measurement | Fair Value, Measurements, Recurring | Ctek, Inc. ("Ctek") | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Fair value at end of period | 0 | 300 |
Contingent Consideration | Estimate of Fair Value Measurement | Fair Value, Measurements, Recurring | Haxiot | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Fair value at end of period | $ 0 | $ 5,900 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||||
Goodwill | $ 341,573 | $ 340,477 | ||
Total liabilities measured at fair value | 0 | $ 0 | ||
Fair Value, Inputs, Level 3 | ||||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||||
Contingent consideration fair value | 0 | $ 0 | 6,200 | $ 6,200 |
Estimate of Fair Value Measurement | Haxiot | Contingent Consideration | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ||||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||||
Contingent consideration fair value | 0 | 5,900 | ||
Estimate of Fair Value Measurement | Ctek, Inc. ("Ctek") | Contingent Consideration | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ||||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||||
Contingent consideration fair value | $ 0 | $ 300 |
Goodwill and Other Identifiab_3
Goodwill and Other Identifiable Intangible Assets, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2022 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | $ 435,739 | $ 435,651 | |
Accumulated amortization | (140,076) | (133,587) | |
Net | 295,663 | 302,064 | |
Amortization expense | 6,957 | $ 8,559 | |
Goodwill | 341,573 | 340,477 | |
Purchased and Core Technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 85,034 | 85,016 | |
Accumulated amortization | (56,975) | (55,854) | |
Net | 28,059 | 29,162 | |
License Agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 112 | 112 | |
Accumulated amortization | (112) | (112) | |
Net | 0 | 0 | |
Patents and Trademarks | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 39,773 | 39,711 | |
Accumulated amortization | (18,266) | (17,666) | |
Net | 21,507 | 22,045 | |
Customer Relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 309,220 | 309,212 | |
Accumulated amortization | (63,123) | (58,355) | |
Net | 246,097 | 250,857 | |
Non-compete Agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 600 | 600 | |
Accumulated amortization | (600) | (600) | |
Net | 0 | 0 | |
Order backlog | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 1,000 | 1,000 | |
Accumulated amortization | (1,000) | (1,000) | |
Net | 0 | $ 0 | |
Cost of Sales and General and Administrative Expense | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 6,500 | $ 6,300 |
Goodwill and Other Identifiab_4
Goodwill and Other Identifiable Intangible Assets, Net (Additional Information) (Details) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2022 USD ($) segment | Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | |
Goodwill [Line Items] | |||
Number of Reportable Segments | segment | 2 | ||
Goodwill | $ 341,573 | $ 340,477 | |
Market Capitalization | $ 852,000 | ||
Enterprise Routers | |||
Goodwill [Line Items] | |||
Goodwill | 32,700 | ||
Console Servers | |||
Goodwill [Line Items] | |||
Goodwill | 57,100 | ||
OEM Solutions | |||
Goodwill [Line Items] | |||
Goodwill | 63,700 | ||
Infrastructure Mgmt. | |||
Goodwill [Line Items] | |||
Goodwill | 20,400 | ||
SmartSense | |||
Goodwill [Line Items] | |||
Goodwill | 49,500 | ||
Ventus | |||
Goodwill [Line Items] | |||
Goodwill | $ 118,300 | ||
IoT Products & Services Segment | |||
Goodwill [Line Items] | |||
Goodwill | 173,929 | 172,931 | |
IoT Solutions Segment | |||
Goodwill [Line Items] | |||
Goodwill | $ 167,644 | $ 167,546 | |
Control Premium | Minimum | |||
Goodwill [Line Items] | |||
Goodwill Valuation Implied Control Premium | (5.60%) | ||
Control Premium | Maximum | |||
Goodwill [Line Items] | |||
Goodwill Valuation Implied Control Premium | 7.90% |
Goodwill and Other Identifiab_5
Goodwill and Other Identifiable Intangible Assets, Net (Amortization Expense) (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2023 (nine months) | $ 19,515 |
2024 | 25,239 |
2025 | 21,783 |
2026 | 20,593 |
2027 | 20,593 |
2028 | $ 20,411 |
Goodwill and Other Identifiab_6
Goodwill and Other Identifiable Intangible Assets, Net (Goodwill Rollforward) (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2022 USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 340,477 |
Foreign currency translation adjustment | 1,096 |
Ending balance | 341,573 |
IoT Products & Services Segment | |
Goodwill [Roll Forward] | |
Beginning balance | 172,931 |
Foreign currency translation adjustment | 998 |
Ending balance | 173,929 |
IoT Solutions Segment | |
Goodwill [Roll Forward] | |
Beginning balance | 167,546 |
Foreign currency translation adjustment | 98 |
Ending balance | $ 167,644 |
Indebtedness - Narrative (Detai
Indebtedness - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Nov. 01, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | Nov. 02, 2021 | Mar. 15, 2021 | |
Line of Credit Facility [Line Items] | |||||
Weighted average interest rate on debt | 6.02% | ||||
Prior Credit Facility | |||||
Line of Credit Facility [Line Items] | |||||
Debt issuance costs | $ 2,300 | $ 400 | |||
Amortization of Debt Issuance Costs | 1,900 | ||||
November 1, 2021 Credit Agreement | |||||
Line of Credit Facility [Line Items] | |||||
Debt issuance costs | 11,700 | ||||
December 22, 2021 Credit Agreement | |||||
Line of Credit Facility [Line Items] | |||||
Debt issuance costs | 1,700 | ||||
Term loan | |||||
Line of Credit Facility [Line Items] | |||||
Revolving loan maximum borrowing capacity | 350,000 | ||||
Payment for Debt Extinguishment or Debt Prepayment Cost | $ 50,000 | ||||
Term loan | LIBOR | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, margin spread on LIBOR Rate | 5% | ||||
Term loan | Base Rate | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, margin spread on LIBOR Rate | 4% | ||||
Term loan | Base Rate | Federal Funds Rate | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, margin spread on LIBOR Rate | 0.50% | ||||
Term loan | Base Rate | LIBOR | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, margin spread on LIBOR Rate | 1% | ||||
Term loan | Base Rate | Minimum | |||||
Line of Credit Facility [Line Items] | |||||
Debt Instrument, Interest Rate, Basis for Effective Rate | 0.50 | ||||
Revolving loan | |||||
Line of Credit Facility [Line Items] | |||||
Revolving loan maximum borrowing capacity | 35,000 | $ 200,000 | |||
Revolving loan | LIBOR | Minimum | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, margin spread on LIBOR Rate | 3.75% | ||||
Revolving loan | LIBOR | Maximum | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, margin spread on LIBOR Rate | 4% | ||||
Revolving loan | Base Rate | Minimum | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, margin spread on LIBOR Rate | 2.75% | ||||
Revolving loan | Base Rate | Maximum | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, margin spread on LIBOR Rate | 3% | ||||
Letter of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Revolving loan maximum borrowing capacity | 10,000 | ||||
Swingline Credit Facility | |||||
Line of Credit Facility [Line Items] | |||||
Revolving loan maximum borrowing capacity | $ 10,000 |
Indebtedness - Schedule of Long
Indebtedness - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 | Nov. 01, 2021 | Mar. 15, 2021 |
Debt Instrument [Line Items] | ||||
Total loans | $ 245,625 | |||
Less unamortized issuance costs | (11,534) | $ (12,029) | ||
Less current maturities of long-term debt | (15,523) | (15,523) | ||
Total long-term debt, net of current portion | 218,568 | 222,448 | ||
Revolving loan | ||||
Debt Instrument [Line Items] | ||||
Revolving loan maximum borrowing capacity | $ 35,000 | $ 200,000 | ||
Term loan | ||||
Debt Instrument [Line Items] | ||||
Total loans | $ 245,625 | $ 250,000 | ||
Revolving loan maximum borrowing capacity | $ 350,000 |
Indebtedness - Schedule of Matu
Indebtedness - Schedule of Maturities of Long-term Debt (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Debt Disclosure [Abstract] | |
2023 (nine months) | $ 13,125 |
2024 | 17,500 |
2025 | 17,500 |
2026 | 17,500 |
2027 | 17,500 |
2028 | 162,500 |
Total long-term debt | $ 245,625 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 USD ($) segment numberOfOperatingSegments | Dec. 31, 2021 USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of Reportable Segments | segment | 2 | |
Total Revenue | $ 109,306 | $ 84,257 |
Gross Profit | 61,521 | 47,881 |
Operating income (loss) | 11,963 | 3,799 |
Depreciation and amortization | $ 8,112 | 7,862 |
IoT Products & Services Segment | ||
Segment Reporting Information [Line Items] | ||
Number of Operating Segments | numberOfOperatingSegments | 4 | |
Total Revenue | $ 84,342 | 65,744 |
Gross Profit | 46,021 | 35,675 |
Operating income (loss) | 12,683 | 4,116 |
Depreciation and amortization | $ 3,292 | 3,629 |
IoT Solutions Segment | ||
Segment Reporting Information [Line Items] | ||
Number of Operating Segments | numberOfOperatingSegments | 2 | |
Total Revenue | $ 24,964 | 18,513 |
Gross Profit | 15,500 | 12,206 |
Operating income (loss) | (720) | (317) |
Depreciation and amortization | $ 4,820 | $ 4,233 |
Segment Information Expended fo
Segment Information Expended for Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | ||
Segment Reporting Information [Line Items] | |||
Expended of property, equipment, improvements and certain other intangible assets | $ 963 | $ 454 | |
Inventory Transfer To Property, Plant And Equipment | 1,512 | 699 | |
IoT Products & Services Segment | |||
Segment Reporting Information [Line Items] | |||
Expended of property, equipment, improvements and certain other intangible assets | 637 | 454 | |
IoT Solutions Segment | |||
Segment Reporting Information [Line Items] | |||
Expended of property, equipment, improvements and certain other intangible assets | [1] | $ 326 | $ 0 |
[1]* Excluded from this amount is $1,512 and $699 of transfers of inventory to property plant and equipment for subscriber assets for the three months ended December 31, 2022 and 2021, respectively. |
Segment Information Total Asset
Segment Information Total Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 | |
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Assets | $ 854,610 | $ 853,895 | |
IoT Products & Services Segment | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Assets | 397,108 | 390,128 | |
IoT Solutions Segment | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Assets | 426,553 | 428,867 | |
Unallocated | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Assets | [1] | $ 30,949 | $ 34,900 |
[1]Unallocated consists of cash and cash equivalents. |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Unearned Revenue (Details) | ||
Total Revenue | $ 109,306 | $ 84,257 |
North America, primarily the United States | ||
Unearned Revenue (Details) | ||
Total Revenue | 83,465 | 66,243 |
Europe, Middle East & Africa | ||
Unearned Revenue (Details) | ||
Total Revenue | 15,877 | 10,159 |
Rest of world | ||
Unearned Revenue (Details) | ||
Total Revenue | 9,964 | 7,855 |
Transferred at a point in time | ||
Unearned Revenue (Details) | ||
Total Revenue | 85,486 | 66,535 |
Transferred over time | ||
Unearned Revenue (Details) | ||
Total Revenue | $ 23,820 | $ 17,722 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2022 | |
Unearned Revenue (Details) | |||
Amortization | $ 0.9 | $ 0.8 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01 | |||
Unearned Revenue (Details) | |||
Remaining performance obligation, period | 12 months | ||
Equipment | |||
Unearned Revenue (Details) | |||
Contract assets | $ 17.1 | $ 16.5 |
Revenue - Unearned Revenue (Det
Revenue - Unearned Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Unearned Revenue (Details) | ||||
Unearned Revenue | $ 23 | $ 24.3 | $ 21.6 | $ 15.5 |
Contract with Customer, Liability, Revenue Recognized | $ 6.1 | $ 4.9 |
Revenue - Performance Obligatio
Revenue - Performance Obligations (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 23 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 20.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, period | 12 months |
Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, period | 2 years |
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, period | 5 years |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Income tax provision (benefit) | $ 230 | $ (2,388) |
Income tax benefit specific to the period | $ 1,200 |
Income Taxes (Unrecognized Tax
Income Taxes (Unrecognized Tax Benefits) (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2022 USD ($) | |
Unrecognized tax benefits that would impact effective tax rate | $ 2,600 |
Income tax benefit specific to the period | 1,200 |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |
Unrecognized tax benefits, beginning balance | 3,316 |
Decreases related to expiration of statute of limitations | (649) |
Unrecognized tax benefits, ending balance | 2,667 |
Maximum | |
Unrecognized tax benefits that would decrease next twelve months | $ 300 |
Product Warranty Obligation (De
Product Warranty Obligation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | $ 886 | $ 707 |
Warranties issued | 90 | 71 |
Settlements made | (54) | (120) |
Ending balance | $ 922 | $ 658 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 |
Assets and Liabilities, Lessee [Abstract] | ||
Operating lease other non-current asset | $ 14,897 | $ 15,299 |
Total lease assets | 14,897 | 15,299 |
Operating lease other current liabilities | 3,357 | 3,196 |
Operating lease other non-current liability | 16,334 | 16,978 |
Total lease liabilities | $ 19,691 | $ 20,174 |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Lease, Cost [Abstract] | ||
Operating lease cost | $ 904 | $ 937 |
Variable lease cost | 309 | 28 |
Short-term Lease, Cost | 25 | 273 |
Total lease cost | $ 1,238 | $ 1,238 |
Leases - Other Information (Det
Leases - Other Information (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Right Of Use Asset Obtained In Exchange for Lease Liability [Abstract] | ||
Business Combination, Recognized Identifiable Asset Acquired and Liability Assumed, Lease Obligation | $ 900 | |
Weighted average remaining lease term [Abstract] | ||
Weighted average remaining lease term- operating leases | 6 years 9 months 18 days | |
Weighted Average Discount Rate Leases [Abstract] | ||
Weighted average discount rate - operating leases | 3.40% |
Leases - Maturity of Operating
Leases - Maturity of Operating Lease Liability (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Lessee, Operating Lease, Liability, to be Paid [Abstract] | |
2023 (nine months) | $ 2,833 |
2024 | 3,689 |
2025 | 3,339 |
2026 | 3,122 |
2027 | 2,042 |
2028 | 1,956 |
Thereafter | 5,269 |
Total future undiscounted lease payments | 22,250 |
Less imputed interest | (2,559) |
Total reported lease liability | $ 19,691 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Jan. 29, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Proceeds from Stock Options Exercised | $ 872 | $ 4,227 | |
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation | 71,951 | 611,415 | |
Tax withholding for share-based compensation | $ 3,000 | $ 6,000 | |
Total intrinsic value of all options exercised | 1,700 | 13,300 | |
Proceeds from employee stock purchase plan transactions | 594 | 321 | |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Proceeds from Stock Options Exercised | 900 | $ 4,200 | |
Total unrecognized compensation cost nonvested awards | $ 7,600 | ||
Weighted average period, unrecognized compensation cost, nonvested awards | 2 years 1 month 6 days | ||
Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total unrecognized compensation cost nonvested restricted stock units | $ 30,200 | ||
Weighted average period, unrecognized compensation cost, nonvested awards | 2 years 6 months | ||
The Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares authorized | 3,425,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Continuous Days of Service | 90 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Hours Per Week Employed | 20 hours | ||
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent | 85% | ||
Share-based Compensation Arrangement by Share-based Payment Award, Offering Period | 3 months | ||
Common shares issued to employees | 19,683 | 17,936 | |
Shares available for future issuance | 533,165 | ||
Proceeds from employee stock purchase plan transactions | $ 600 | $ 300 | |
The 2021 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares available for future grants | 1,209,045 |
Stock-Based Compensation (Stock
Stock-Based Compensation (Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation before income taxes | $ 2,868 | $ 2,017 |
Income tax benefit | (599) | (430) |
Stock-based compensation after income taxes | 2,269 | 1,587 |
Cost of Sales | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation before income taxes | 142 | 86 |
Sales and Marketing | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation before income taxes | 851 | 490 |
Research and Development | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation before income taxes | 448 | 322 |
General and Administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation before income taxes | $ 1,427 | $ 1,119 |
Stock-Based Compensation (Optio
Stock-Based Compensation (Options and Common Shares Reserved for Grant) (Details) - Stock Options $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 USD ($) $ / shares shares | ||
Options Outstanding [Roll Forward] | ||
Options Outstanding, Beginning Balance (in shares) | shares | 1,790 | |
Options Outstanding, Granted (in shares) | shares | 64 | |
Options Outstanding, Exercised (in shares) | shares | (64) | |
Options Outstanding, Forfeited / Canceled (in shares) | shares | (2) | |
Options Outstanding, Ending Balance (in shares) | shares | 1,788 | |
Options Outstanding, Exercisable (in shares) | shares | 965 | |
Weighted Average Exercise Price [Roll Forward] | ||
Weighted Average Exercise Price, Beginning Balance | $ 17.29 | |
Weighted Average Exercise Price, Granted | 40.80 | |
Weighted Average Exercise Price, Exercised | 14.62 | |
Weighted Average Exercise Price, Forfeited / Canceled | 14.31 | |
Weighted Average Exercise Price, Ending Balance | 18.23 | |
Weighted Average Exercise Price, Exercisable | $ 15.30 | |
Weighted Average Remaining Contractual Term [Abstract] | ||
Weighted Average Remaining Contractual Term, Outstanding | 4 years 7 months 6 days | |
Weighted Average Remaining Contractual Term, Exercisable | 3 years 8 months 12 days | |
Aggregate Intrinsic Value, Outstanding | $ | $ 15,900 | [1] |
Aggregate Intrinsic Value, Exercisable | $ | $ 10,851 | [1] |
Closing Stock Price | $ 36.55 | |
[1]The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $36.55 as of December 31, 2022, which would have been received by the option holders had all option holders exercised their options as of that date. The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. |
Stock-Based Compensation (Fair
Stock-Based Compensation (Fair Value Assumptions) (Details) - Stock Options - $ / shares | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average per option grant date fair value | $ 19.98 | $ 10.23 |
Assumptions Used For Options Grants [Abstract] | ||
Risk free interest rate, minimum | 3.89% | 1.25% |
Risk free interest rate, maximum | 3.98% | 1.46% |
Expected term | 6 years | 6 years |
Expected volatility rate | 46% | 46% |
Weighted average volatility | 46% | 46% |
Expected dividend yield | 0% | 0% |
Stock-Based Compensation (Non-V
Stock-Based Compensation (Non-Vested Options) (Details) shares in Thousands | 3 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Restricted Stock Units | |
Nonvested Number of Restricted Stock Units [Roll Forward] | |
Number of Restricted Stock Units, Beginning Balance | shares | 742 |
Number of Restricted Stock Units, Granted | shares | 415 |
Number of Restricted Stock Units, Vested | shares | (182) |
Number of Restricted Stock Units, Canceled | shares | (6) |
Number of Restricted Stock Units, Ending Balance | shares | 969 |
Nonvested Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share [Roll Forward] | |
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Beginning Balance | $ / shares | $ 19.14 |
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Granted | $ / shares | 40.68 |
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Vested | $ / shares | 17.76 |
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Canceled | $ / shares | 24.55 |
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Ending Balance | $ / shares | $ 28.60 |
Performance Shares | |
Nonvested Number of Restricted Stock Units [Roll Forward] | |
Number of Restricted Stock Units, Beginning Balance | shares | 27 |
Number of Restricted Stock Units, Granted | shares | 113 |
Number of Restricted Stock Units, Vested | shares | (5) |
Number of Restricted Stock Units, Canceled | shares | 0 |
Number of Restricted Stock Units, Ending Balance | shares | 135 |
Nonvested Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share [Roll Forward] | |
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Beginning Balance | $ / shares | $ 22.69 |
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Granted | $ / shares | 40.66 |
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Vested | $ / shares | 22.93 |
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Canceled | $ / shares | 0 |
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Ending Balance | $ / shares | $ 37.72 |
Subsequent Events (Details)
Subsequent Events (Details) shares in Thousands | Jan. 27, 2023 shares |
Subsequent Event [Line Items] | |
Subsequent Event, Description | On January 27, 2023, our shareholders approved an amended and restated 2021 Omnibus Incentive Plan. This amended plan became effective on January 28, 2023 and authorized the issuance of an additional 1,100,000 shares. This plan is now scheduled to expire on January 27, 2033. |
Subsequent Event | |
Subsequent Event [Line Items] | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Date | Jan. 27, 2033 |
Subsequent Event, Date | Jan. 27, 2023 |
Subsequent Event | The 2021 Plan | |
Subsequent Event [Line Items] | |
Number of shares authorized | 1,100 |