Digi International Reports Third Fiscal Quarter 2024 Results
Intellectia.AI Updated: 2024-08-08
Digi International Reports Third Fiscal Quarter 2024 Results
Digi International® Inc. (NASDAQ: DGII), a renowned global provider of IoT products, services, and solutions, announced its financial results for the third fiscal quarter ended June 30, 2024.
Key Financial Metrics
| Metric | Q3 FY2024 | Q3 FY2023 | YoY Change | Consensus Estimates |
|---|---|---|---|---|
| Total Revenue | $105M | $111M | -6% | $105.6M |
| Earnings Per Share (EPS) | $0.26 | $0.18 | 44% | $0.49 |
| Adjusted Earnings Per Share | $0.50 | $0.50 | 0% | - |
| Gross Profit Margin | 59.2% | 56.9% | 230 BPS | - |
| Net Income | $10M | $7M | 43% | - |
| Adjusted EBITDA | $25M | $24.5M | 2% | - |
| Annualized Recurring Revenue | $113M | $104.13M | 9% | - |
Digi International reported a slight decline in total revenue by 6% year-over-year, missing Wall Street's consensus estimate of $105.6 million by a narrow margin. However, the company demonstrated solid profitability metrics, including a 44% increase in EPS and a 230 basis point improvement in gross profit margins. Adjusted earnings per share remained flat year-over-year, and adjusted EBITDA showed a modest 2% increase, reflecting the company's effective cost management and operational efficiency.
Segment Revenue Performance
| Segment | Q3 FY2024 Revenue | Q3 FY2023 Revenue | YoY Change | ARR Q3 FY2024 | ARR YoY Change |
|---|---|---|---|---|---|
| IoT Products & Services | $80M | $87.4M | -8.5% | $23M | 5% |
| IoT Solutions | $25M | $24.7M | 1.2% | $90M | 10% |
The IoT Products & Services segment experienced a decline in revenue by 8.5%, primarily due to a reduction in one-time sales. However, the segment saw a 5% growth in ARR due to increases in subscription-based sales. Gross profit margins in this segment improved slightly by 30 basis points.
Conversely, the IoT Solutions segment reported a slight revenue increase of 1.2%, driven predominantly by a rise in recurring revenue. This segment reported a substantial uplift in its gross profit margins by 770 basis points, owing to higher margin ARR subscription revenues.
Operational Data
| Metric | Q3 FY2024 | Q3 FY2023 |
|---|---|---|
| Cash Flow From Operations | $25M | $18M |
| Net Inventory Ending Balance | $57M | $74M |
| Net Outstanding Debt | $152M | - |
| Interest Expense | $3.2M | $6.6M |
Executive Commentary
"Digi continues to execute on its top priority, providing valuable IoT solutions. This focus propelled ARR to a record $113M which drove record gross margins. Strong operating discipline helped notch record A-EBITDA margins and strong cash generation," stated Ron Konezny, President and CEO. "Digi is well positioned in an increasingly challenging market where cybersecurity and data protection have risen to top priorities. Our team is strengthening, pairing expert service with our solutions which offer compelling choices for our channel and end users."
Forward Guidance
Digi International expects revenue for the forthcoming fourth quarter to be in the range of $102 million to $106 million. Adjusted EBITDA is anticipated to be between $24.5 million and $26.0 million. Adjusted net income per share is projected to fall between $0.48 and $0.52, assuming a weighted average diluted share count of 37.5 million shares.
Stock Performance Post Release
The stock witnessed a slight dip of 0.81% after the earnings release.
In summary, despite a marginal decline in revenue, Digi International exhibited solid profitability, a strong ARR, and effective operational management. With a cautious yet optimistic outlook, the company remains committed to achieving its long-term strategic goals.