Core Insights - Digi International Inc. reported better-than-expected fourth-quarter financial results, with earnings of 56 cents per share, surpassing the analyst consensus estimate of 51 cents per share, and quarterly sales of $114.338 million, exceeding the estimate of $110.248 million [1] - The company anticipates first-quarter adjusted earnings between 53 cents and 58 cents per share, compared to market estimates of 52 cents per share, and expects sales in the range of $114 million to $118 million, against estimates of $114.6 million [2] - The CEO highlighted the company's commitment to delivering reliable IoT solutions amid market challenges, with annual recurring revenue (ARR) now representing approximately 35% of total revenue [3] Financial Performance - Fourth-quarter earnings: 56 cents per share, beating estimates of 51 cents [1] - Quarterly sales: $114.338 million, exceeding estimates of $110.248 million [1] - First-quarter adjusted earnings forecast: 53 to 58 cents per share, against estimates of 52 cents [2] - First-quarter sales forecast: $114 million to $118 million, compared to estimates of $114.6 million [2] Strategic Developments - The acquisition of Jolt Software in the IoT Solutions Segment is generating favorable market acceptance [3] - The company celebrated its 40th anniversary and aims to leverage its culture of resilience and adaptability for future growth [3] Analyst Ratings - Craig-Hallum analyst upgraded Digi Intl from Hold to Buy, raising the price target from $30 to $45 [6] - Piper Sandler maintained a Neutral rating, increasing the price target from $36 to $41 [6] - Roth Capital maintained a Buy rating, raising the price target from $45 to $50 [6]

Core Points - U.S. stocks experienced a decline, with the Dow Jones index dropping over 100 points on Thursday [1] - Spectrum Brands Holdings Inc reported a quarterly adjusted EPS of $2.61, significantly exceeding the analyst consensus estimate of $0.86 [1] - The company's quarterly sales were $733.500 million, which fell short of the analyst consensus estimate of $741.111 million [1] Company Performance - Spectrum Brands Holdings shares surged 13.2% to $60.28 following the earnings report [2] - Ondas Holdings Inc saw a 24.4% increase in shares to $6.86 after reporting better-than-expected third-quarter results and raising FY25 sales guidance [4] - Firefly Aerospace Inc's shares rose 21.7% to $22.29 after exceeding quarterly financial expectations and raising FY25 sales guidance [4] - Cellebrite DI Ltd shares increased by 21.7% to $19.44 after reporting strong third-quarter results and raising FY25 sales guidance [4] - Sealed Air Corp shares gained 19.9% to $43.60 [4] - Dillard's Inc reported better-than-expected quarterly results, leading to an 18.3% rise in shares to $720.00 [4] - Digi International Inc shares jumped 17.5% to $42.30 following positive quarterly results [4] - Sally Beauty Holdings Inc shares rose 17.5% to $17.27 after reporting upbeat quarterly results [4] - Tetra Tech Inc gained 11.9% to $36.31 following strong quarterly earnings [4] - On Holding AG shares increased by 7.4% to $44.58 after reporting positive third-quarter earnings and issuing FY2025 sales guidance above expectations [4] - Nice Ltd shares rose 6.3% to $132.14 following strong quarterly sales [4]

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Core Insights - Digi International reported quarterly earnings of $0.56 per share, exceeding the Zacks Consensus Estimate of $0.51 per share, and showing an increase from $0.52 per share a year ago, resulting in an earnings surprise of +9.80% [1] - The company achieved revenues of $114.34 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.24% and increasing from $105.05 million year-over-year [2] - Digi International's stock has increased approximately 18.1% since the beginning of the year, outperforming the S&P 500's gain of 16.4% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.52 on revenues of $112.95 million, while for the current fiscal year, the estimate is $2.20 on revenues of $462.25 million [7] - The estimate revisions trend for Digi International was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Computer - Networking industry, to which Digi International belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Data and Key Metrics Changes - Digi International reported record quarterly revenue of $114 million, a 9% year-over-year increase, marking a return to top-line growth [4] - The company generated $430 million in revenue for the full fiscal year, up 1% year-over-year, and reported $108 million in adjusted EBITDA, an 11% increase year-over-year [4] - Annual Recurring Revenue (ARR) reached a record $152 million, representing a 31% year-over-year increase, with ARR now accounting for approximately 35% of total revenue [4][5] Business Line Data and Key Metrics Changes - The integration of SmartSense and Jolt Software is being embraced by the market, with cross-selling opportunities beginning to unfold [5] - The company is focused on transitioning from transactional sales to multi-year solution subscriptions, with a goal of achieving 100% attached sales [12][14] Market Data and Key Metrics Changes - The company sees broad-based opportunities in connecting hundreds of billions of devices to the internet, particularly in the industrial IoT space [6] - The data center segment is contributing significantly to revenue, with strong demand observed in various verticals including utilities and medical devices [15][39] Company Strategy and Development Direction - Digi International aims for double-digit growth in ARR, revenue, and adjusted EBITDA for fiscal 2026, with a long-term goal of reaching $200 million in ARR and adjusted EBITDA by the end of fiscal 2028 [7][8] - The company is leveraging AI for product enhancements and exploring opportunities in edge computing and industrial automation [6][29] Management's Comments on Operating Environment and Future Outlook - Management noted that while certain verticals are accelerating decision-making, others are still experiencing delays due to macroeconomic uncertainties, including government shutdowns [23][24] - The company remains optimistic about its growth trajectory, citing a combination of increased customer confidence and ongoing investments in key verticals [54] Other Important Information - The company generated $105 million in free cash flow for a yield of 8% and has paid off all debt from the Ventus acquisition [5] - The management emphasized the importance of strategic acquisitions in the industrial IoT space as a top capital deployment priority [6][30] Q&A Session Summary Question: Insights on recurring revenue trends and go-to-market execution - Management highlighted progress in achieving higher attached rates and emphasized the importance of contract extensions and renewals in driving recurring revenue growth [12][14] Question: Revenue guidance and organic growth considerations - Management provided clarity on the integration of Jolt and its impact on revenue guidance, noting strong contributions from various verticals including data centers [14][15] Question: Customer demand and sales cycles - Management observed that while some verticals are accelerating decision-making, others are still cautious due to ongoing uncertainties in the market [23][24] Question: AI infrastructure and data center contributions - The data center segment is a key beneficiary of AI investments, particularly through the Open Gear Console Server business [39] Question: European market dynamics - Management indicated that while North America remains the primary revenue source, Europe presents meaningful opportunities on a country-by-country basis [42] Question: Margin improvement and attach rates - Management confirmed expectations for continued improvement in gross margins as ARR expands, with a goal of achieving 100% attach rates across most product lines by fiscal 2028 [44][45]

Revenue and Growth - Revenue for the fourth fiscal quarter was $114 million, an increase of 9% year-over-year[8] - Annualized Recurring Revenue (ARR) at the end of the quarter was $152 million, reflecting a 31% increase[8] - The IoT Products & Services segment reported fourth quarter revenue of $82 million, a 4% increase year-over-year[10] - The IoT Solutions segment's fourth quarter revenue was $32 million, a 23% increase year-over-year[12] - Revenue for the three months ended September 30, 2025, was $114,338 thousand, representing a 8.3% increase from $105,052 thousand in the same period of 2024[30] - For fiscal 2026, the company projects ARR growth of approximately 10% and revenue growth of 10-15%[16] Profitability - Gross profit margin improved to 63.9%, up 280 basis points compared to the previous year[8] - Net income for the fourth quarter was $10 million, a decrease of 16% year-over-year[8] - Adjusted EBITDA for the full year was $108 million, an increase of 11%[8] - Gross profit for the year ended September 30, 2025, increased to $270,677 thousand, up from $249,906 thousand in 2024, reflecting a growth of 8.3%[30] - Adjusted EBITDA for the three months ended September 30, 2025, was $29,236 thousand, accounting for 25.6% of total revenue, compared to $26,254 thousand or 25.0% in 2024[36] - Net income for the year ended September 30, 2025, was $40,804 thousand, significantly higher than $22,505 thousand in 2024, marking an 81.3% increase[30] Cash Flow and Assets - Cash flow from operations for the fourth quarter was $28 million, compared to $26 million in the same quarter last year[14] - The company reported a net cash provided by operating activities of $107,959 thousand for the year ended September 30, 2025, compared to $83,092 thousand in 2024, indicating a 30.0% increase[34] - Cash and cash equivalents decreased to $21,902 thousand as of September 30, 2025, down from $27,510 thousand in 2024[32] - Total assets increased to $922,646 thousand as of September 30, 2025, compared to $815,075 thousand in 2024, reflecting a growth of 13.2%[32] Equity and Debt - Total stockholders' equity increased to $636,077 thousand as of September 30, 2025, up from $581,035 thousand in 2024, representing a growth of 9.5%[32] - The company’s long-term debt rose to $159,152 thousand as of September 30, 2025, compared to $123,185 thousand in 2024, indicating a 29.2% increase[32] Acquisitions - The acquisition of Jolt Software was completed for $145.7 million, enhancing the IoT Solutions Segment[14] Operating Income - Operating income for the three months ended September 30, 2025, was $14,281 thousand, slightly down from $14,897 thousand in the same period of 2024[30]

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Core Insights - Digi International has launched a new product, the Digi Connect EZ 4 WS, designed specifically for use in medical settings [1] Product Overview - The Digi Connect EZ 4 WS is a serial server that facilitates connectivity for medical devices, enhancing communication and data transfer [1] - This product aims to improve the efficiency and reliability of medical device integration within healthcare environments [1] Market Implications - The introduction of the Digi Connect EZ 4 WS reflects the growing demand for advanced connectivity solutions in the healthcare industry [1] - By targeting medical settings, the company positions itself to capitalize on the increasing trend of digital transformation in healthcare [1]

Summary of Digi International's Acquisition of Jolt Software Conference Call Company and Industry - **Company**: Digi International (DGII) - **Acquisition Target**: Jolt Software - **Industry**: Technology, specifically focusing on operational intelligence and workflow optimization in sectors like food and beverage and healthcare Core Points and Arguments - **Acquisition Announcement**: Digi International announced the acquisition of Jolt for $145.5 million in cash, net of Jolt's cash and subject to customary adjustments, funded through existing credit lines [6][7] - **Strategic Fit**: Jolt's operational intelligence platform is expected to enhance Digi's SmartSense market leadership by optimizing workflows and adding capabilities in printing, labeling, and labor scheduling [5][6] - **Revenue Generation**: Jolt generated over $20 million in annualized recurring revenue (ARR) as of January 31, 2025, and is growing at a faster rate than Digi's IoT Solutions segment [7][36] - **Synergies**: The combined business plans to achieve $11 million in incremental annualized adjusted EBITDA by the end of 2026, driven by expected synergies from the merger [7][26] - **Customer Overlap**: There is minimal overlap between Jolt's and SmartSense's existing customer bases, allowing for cross-selling opportunities [12][13] Additional Important Content - **Market Positioning**: The acquisition is seen as a game changer, potentially changing the competitive landscape by offering a comprehensive suite of solutions in both healthcare and food and beverage sectors [55][56] - **Sales Integration**: The two sales organizations will be combined to leverage best practices, focusing on vertical markets rather than territory-based approaches [27][28] - **Financial Profile**: Jolt's financial profile is expected to mirror Digi's existing solutions business, with gross margins likely exceeding 80% [40][41] - **Retention Metrics**: While specific retention metrics were not disclosed, it was indicated that Jolt's customer success organization could benefit from SmartSense's more mature practices [43] - **Future M&A Activity**: Digi remains active in pursuing additional M&A opportunities despite the recent acquisition, indicating a strong leverage position and capability to rapidly deleverage [62] Conclusion - The acquisition of Jolt Software is positioned as a strategic move to enhance Digi International's offerings in operational intelligence and workflow optimization, with significant expected synergies and growth potential in the combined business model.

Core Insights - Digi International reported quarterly earnings of $0.53 per share, exceeding the Zacks Consensus Estimate of $0.51 per share, and showing an increase from $0.5 per share a year ago, resulting in an earnings surprise of +3.92% [1] - The company achieved revenues of $107.51 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.24% and up from $105.2 million year-over-year [2] - Digi International has outperformed consensus EPS estimates three times over the last four quarters and has topped revenue estimates two times in the same period [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.53 on revenues of $108.9 million, while for the current fiscal year, the estimate is $2.04 on revenues of $423.43 million [7] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Computer - Networking industry, to which Digi International belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]