DGII - Earnings call transcript Q1 2025

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Operator

Good day, and thank you for standing by. Welcome to Fiscal Quarter 1 2025 Digi International Inc. Earnings Conference Call. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Jamie Loch, CFO. ahead. go Please

James Loch

day, again, Good discuss great talk to earnings Thank thanks everyone. for you International. and of to joining to results you. Digi It's us the today

Konezny, me our Joining call today's is President CEO. on and Ron

market We today. after closed issued release our earnings the

of a afternoon, section Ron performance, a on Investor may will Financial obtain release and the at our take of provide copy You Relations your then press website the through Releases our This questions. we'll digi.com. comment

that statements forward-looking to risks reflect statements. forward-looking the publicly Some speak during considered date. of and operating make statements only of call are future today's update and or We we and revise this These financial about are significant performance undertake these our as to and no subject expectations uncertainties. obligation

the expectations be expectations such in forward-looking statements to reflected no statements will any our our will give we are of we prove While correct. believe reasonable, assurance met that or forward-looking be

to statements subsequent reports section with refer recent and of XX-K please Factors information, SEC. Form the the our Risk our additional section earnings on today the forward-looking For most and release in file

be measures, required disclosed be certain The an to release. our Investor earnings the is measures. through furnished call disclosed website. release most SEC also accessed information can GAAP to Relations the reconciliations Form Finally, as includes exhibit included of about non-GAAP this on in the the information financial filings X-K these section comparable including are to measures The of that earnings

Ron. over the call turn I'll to Now

Ronald Konezny

Thank you, everyone. Jamie. Good afternoon,

the this year first last quarter. confident both we second performance. quarter. distributors, and our quarter, $XXX of reporting ARR another over million adjusted We Strong increase few drove million, we double EBITDA each, benefit our and a highlights XX% our of segments fiscal reached the targets. of will to our questions, a remain our ARR XX% quarterly our strategic represents year to shareholders. from last fiscal $XXX record at in take ARR priority as In performance these ever, an we first customers, of $X and XXXX top is ARR record and achieve as of Before X-year million journey now higher than began employees revenues.

provider, As the some an remote industrial IoT valuable saw and challenges. most of solution Digi toughest connectivity

on award-winning Our Solutions customers. edge secure software produced faster customers complementing compelling and reliable, rely ROI our service, intelligence. our Digi best-in-class for a outcomes and our

our it grows, long-term on increasing will profitability, enabling objectives. ARR our As have impact second an

We of below our first continue to fiscal time generated further the from fourth total in $XX the our cash enhance quarter, Digi's and operations $XXX debt balance sheet inventory balances. in reduced million outstanding since for quarter with XXXX. We million

generation We calendar end year with expect strong by this free XXXX. cash expected retired of all the be to flow debt

change coming solution-oriented chain did and sheet even putting ability in that COVID the is confident improves, the our of the myriad Despite we balance environment just our first, of for pursue As in navigating of manufacturers. to as customers' better pandemic. diverse steadfast of Digi supply speed of we has a leverage challenges while policies, geographically fluidity tariff scale. positioned rapidly acquisitions global In a we are interest remain geopolitical businesses, best our outcomes evolving the to out our

for In will Operator, rely our we of Q&A. hand we come. the this back for I for adoption, history on XXXX, our and to celebrated and innovation now decades resilience, XX-year call customers deliver to

Operator

[Operator Tommy Moll question Instructions] from comes Stephens. line first the from of Our

Thomas Moll

And the if year-over-year. I the in and were here. on the items then there of we ARR, the at decline $X.X the you I was XX% conversely, we couple revenue, guess products a one-timers. up have services the at if from mean, look I trends reported hit look million

of drivers that context bit So side, there in a forward? look on each could maybe and for what going if you on particular, ARR like could the little give the just

James Loch

Jamie. it's Tommy, Yes.

a that we've the would onetime went And we door. it's example noticeable. will of is the in I that revenue kind a into swings, that of you over think but it It's massive transfer probably see units X-year enough when you have that, One period can an is seeing you recurring of talked is where past a transition about how that things an see of as out it consider And we the that not ARR is make actually that period, revenue. versus now. this indicator you're of X-year

vary that theme of is consistent revenue a ARR pretty onetime a higher that growth ARR and growth. the that where periods little over be the laid you'll plus bit is And the or could be have of this our so I to really but for some part think we've as minus, sure a to focusing period will out this where path on time will

Thomas Moll

revenue slightly your quarter. like quarter-over-quarter be in projected on the me just we're looks the down. second line, fiscal the for Second flattish guidance terms at It midpoint, is EBITDA to on question dollar from

curious something that out calling margin I'm there? there's the worth if on just is So QX side in

James Loch

it's again. Jamie Tommy, Yes,

also very quarter margins. if think you that change we took ARR probably moved between to significant And you are that's had favorable that has attributable had the while plateaus change that a said to really onetime we a look this in the that mix in say revenue. And I sequential some that I have in new you QX, reasonable. at above see is part level place probably would considered mix it product performance can onetime, seen and changing gross of would

likely that scale going had favorable are QX. in QX that mix in to we And not repeat so some to we

that's place, driver probably revenue. onetime so around mix And the taking that's the biggest on all

up to spikes a one the past. to to But higher XX% ARR little better a still, or gross been level, bit for what Digi-wide margins in be sure, attributable seen But And will you'll continue mix the growth. see than theme. at that's at the continue this we've

Operator

the Jim Piper Sandler. of comes from Fish next from line Our question

James Fish

you, North little to a supply are Can pull-in see chain business more result a across bit we for a see to tariff your threat and you of demand we here. the this could as or think guys you Ron, as the And alluded as in a sort prepared potential stretch the for the does upfront of your Maybe you America thinking could impact of increased do start, given more bit elaborate to CapEx just of of what little you about remarks. onetime side prices? how of

Ronald Konezny

particular, XX% part dominant North a that. of coming Yes, are of revenues Jim, America, of question. a it's out our Over U.S. good in the is

customers. interest their our with emphasized going We're have put to We first.

very a have presence about product U.S., we manufacturing in of don't diverse geographically We set partners, our haphazardly. with We're move lines it. deliberate including the

that We that that increase. is generally customers of of there. have of near-term longer hey, view to with any We're now it way and valuable get uncertainty to out of our that been communicating policy, price that, or a solution fluid very taking you're lot tariff a more not implication. some kind Combine face relationship going there's I kind than think

James Fish

look, X, some ATMs, and you other cases year potentially we be to tailwinds data IT point-of-sale sensors, we've should refreshes, relative And guys of then, for budgets of or around it. around like thinking dynamics whatnot? the these discussions how gaming increasing, the other Got got over center next use

Ronald Konezny

Yes.

favorable a be could there backdrop there, think Jim. I

investing. weak in in first know, continued all trying invest saw as emphasis The foreign course, a a crack time that I some of time local in companies companies some the think for of to XX there's interest lot of lot for PMI opportunity. on infrastructure has creates And a been have positive indication. and the economy time. We and here, that's U.S. industrial you

solutions. to of an Western goods uplift Western for companies here. And them And increasingly with the providers economy their to and so real there have technology our the is are potential help favoring hard part IoT those

So there backdrop. be favorable a could real

Operator

next the from question of line Riley. from [Operator Instructions] Our Josh comes Nichols B.

Josh Nichols

Great or customer you're margins the ordering kind then gave the Previously, you're little you to bit what healthy any more curious strength weakness particular overall seeing And on see call, the end about I'm markets particular seeing and record in today? context. patterns? of a where just terms of ARR. gross sometimes

Ronald Konezny

Yes.

and I the the of weaknesses. you yesterday our print marketplace. automotive do NXP and stabilized, comps key in increased equipment improved. some closely ordering suppliers, dramatically watch I Silicon we'll confidence say And industrial We Labs improved, patterns sense some a and have they're but look So maybe and still citing modestly think relatively also communications wouldn't Juniper favorable. had at others, that and was

shorter some be continued amounts sales extended to could that us. help cycles, order volumes there momentum of climb out could So and there

but the a in heard a lot of answer, of are I very we diverse. verticals, bit you've terms little know of terms [indiscernible], In as it's times,

favorable. sectors have we maybe time, in well point sectors as are any that aren't and at So that doing

of more good demand which Ventus Opengear. We utilities market strong good data renewable really segment, centers. fossil continue well remote a in devices. and for We're solutions But out both traditional to are seeing in see connectivity medical machines, cellular. key That's good a helps seeing Utilities we're demand demand also for fuels. as as

good been segment to that's So modernize they've a as been infrastructure. their looking

Josh Nichols

been changed kind seeing in I'm just -- be onetime kind you today that both curious of context? just one for used if growth where Any rates, how the And you've segments to what that's now. for terms year are then compare follow-up good curious, you're to overall? X, of ARR over the or looking just last me. attach of I'm and they for what across revenue? were And

Ronald Konezny

customer strategy trending side work, rates having as and seeing the a in router we're the on for back example. attach certain see within both our hard after key on cellular the years to our XX% products. mean of quite uptick nice higher much segments I the We're we're product-facing side, starting playing I We're office over out. lot group, that and of a towards frankly, on than the, Yes. beginnings much think, of

going that increase optimistic a continued very we're rates. to attach see we're in So

of new a the solution that packages on well in that solutions. think there that There's business increase a have worked being leader will We that we as of rates inside set Opengear. are take of

optimistic this we momentum. very we're can So continue

Operator

I you. Ron over the for this Konezny to Thank back like would time, closing to now At turn conference remarks.

Ronald Konezny

customers, continued attending Point, suppliers great a our XX. appreciate day. our We Digi's you plan ROTH's March to distributors, your exceptional Thank and Annual California and you for Dana conference in Growth Digi joining on call earnings We to Have team. Companies on XXth support. for

Operator

conference participating. This concludes you call. Thank for today's

You may now disconnect.

Digi International (DGII) 5 Feb 252025 Q1 Earnings call transcript