Overall Financial Performance Third Quarter Fiscal 2025 Financial Highlights Digi reported Q3 FY2025 revenue of $108 million, with Adjusted EBITDA up 11% to $28 million and ARR growing 12% to $126 million Q3 FY2025 Key Financial Metrics (vs. Q3 FY2024) | Metric | Q3 FY2025 | Change (YoY) | | :--- | :--- | :--- | | Revenue | $108 million | +2% | | Gross Profit Margin | 63.5% | +430 bps | | Net Income | $10 million | +6% | | Net Income per Diluted Share | $0.27 | +4% | | Adjusted Net Income per Diluted Share | $0.53 | +6% ($0.50 in Q3'24) | | Adjusted EBITDA | $28 million | +11% | | Annualized Recurring Revenue (ARR) | $126 million | +12% | - CEO Ron Konezny highlighted strong execution, double-digit ARR growth, and improved profitability despite a dynamic geopolitical environment. The company's strong cash flow enabled a $30 million debt paydown5 Segment Performance Segment performance showed flat IoT Product & Services revenue with strong ARR growth, while IoT Solutions revenue increased with a gross margin decline IoT Product & Services IoT Product & Services revenue was flat at $80 million, but ARR grew 30% to $30 million with a 620 basis point gross margin improvement IoT Product & Services Q3 FY2025 Performance | Metric | Q3 FY2025 | Change (YoY) | | :--- | :--- | :--- | | Revenue | $80.0 million | Flat | | ARR | $30 million | +30% | | Gross Profit Margin | 60.6% | +620 bps | - The growth in ARR was attributed to an expanding subscription base for remote management platforms and extended warranty offerings8 IoT Solutions IoT Solutions revenue increased to $27.5 million with 7% ARR growth, though gross margin declined by 240 basis points IoT Solutions Q3 FY2025 Performance | Metric | Q3 FY2025 | Change (YoY) | | :--- | :--- | :--- | | Revenue | $27.5 million | +9.1% | | ARR | $96 million | +7% | | Gross Profit Margin | 72.0% | -240 bps | - ARR growth was driven by both SmartSense and Ventus product lines9 Financial Condition and Capital Allocation Digi prioritized deleveraging, reducing debt to $40.1 million and inventory to $35 million, while focusing on strategic acquisitions - The company's capital allocation priorities are deleveraging the balance sheet and pursuing disciplined acquisitions focused on scale and ARR10 Key Balance Sheet & Cash Flow Items (Q3 FY2025) | Metric | Q3 FY2025 End | Change from FY2024 YE | | :--- | :--- | :--- | | Outstanding Debt | $40.1 million | Decreased | | Cash and Cash Equivalents | $20.1 million | - | | Debt, Net of Cash | $20.0 million | - | | Inventory | $35 million | Down from $53 million | | Cash Flow from Operations | $24 million | - | Business Outlook and Guidance Fiscal Year 2025 Guidance Digi raised its FY2025 Adjusted EBITDA growth outlook to 7-8% while maintaining flat revenue and 10% ARR growth projections Updated Full-Year FY2025 Guidance | Metric | FY2025 Projection (YoY) | | :--- | :--- | | ARR Growth | 10% (Unchanged) | | Revenue | Flat (Unchanged) | | Adjusted EBITDA Growth | 7-8% (Raised from ~5%) | - The company is committed to achieving a net cash positive position by the end of the fiscal year16 Fourth Quarter Fiscal 2025 Guidance Q4 FY2025 guidance projects revenue between $106 million and $110 million, with Adjusted EBITDA from $25.5 million to $27.0 million Q4 FY2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenue | $106M - $110M | | Adjusted EBITDA | $25.5M - $27.0M | | Adjusted Net Income per Diluted Share | $0.47 - $0.51 | Long-Term Goals Digi aims to achieve $200 million in both ARR and Adjusted EBITDA by the end of fiscal 2028, with potential acceleration via acquisitions - The company's long-term goal is to achieve $200 million in ARR and $200 million in Adjusted EBITDA by the end of fiscal 202812 - ARR growth is stated as the company's top strategic priority13 Consolidated Financial Statements Condensed Consolidated Statements of Operations Q3 FY2025 revenue increased to $107.5 million, with gross profit at $68.3 million and net income at $10.2 million, or $0.27 per diluted share Q3 FY2025 Statement of Operations (in thousands) | Line Item | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Revenue | $107,514 | $105,203 | | Gross Profit | $68,268 | $62,258 | | Operating Income | $14,923 | $12,908 | | Net Income | $10,243 | $9,702 | | Diluted EPS | $0.27 | $0.26 | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets were $770.3 million, with inventories at $35.4 million and long-term debt significantly reduced to $40.1 million Balance Sheet Highlights (in thousands) | Line Item | June 30, 2025 | Sept 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $20,104 | $27,510 | | Inventories | $35,439 | $53,357 | | Total Assets | $770,341 | $815,075 | | Long-term debt | $40,085 | $123,185 | | Total Liabilities | $148,834 | $234,040 | | Total Stockholders' Equity | $621,507 | $581,035 | Condensed Consolidated Statements of Cash Flows Nine-month operating cash flow was $80.0 million, with $85.3 million used in financing activities, ending with $20.1 million in cash Nine-Month Cash Flow Summary (in thousands) | Line Item | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $79,958 | $56,657 | | Net cash used in financing activities | $(85,291) | $(62,616) | | Cash and cash equivalents, end of period | $20,104 | $28,337 | Non-GAAP Financial Measures Reconciliation of Net Income to Adjusted EBITDA Q3 FY2025 Adjusted EBITDA increased to $27.6 million (25.6% of revenue), reflecting adjustments for depreciation and stock-based compensation Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Net Income | $10,243 | $9,702 | | Adjustments (Depreciation, Stock Comp, etc.) | $13,594 | $15,023 | | Adjusted EBITDA | $27,559 | $24,725 | | Adjusted EBITDA Margin | 25.6% | 23.5% | Reconciliation of Net Income to Adjusted Net Income Q3 FY2025 Adjusted Net Income was $20.1 million, or $0.53 per diluted share, after adjustments for intangibles and stock-based compensation Adjusted Net Income Reconciliation (in thousands, except per share) | Line Item | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Net Income | $10,243 | $9,702 | | Adjusted Net Income | $20,115 | $18,486 | | Net Income per Diluted Share | $0.27 | $0.26 | | Adjusted Net Income per Diluted Share | $0.53 | $0.50 | Other Information Conference Call Information Digi will host a conference call on August 6, 2025, at 5:00 p.m. ET to discuss Q3 FY2025 results, with webcast access available - The earnings conference call is scheduled for August 6, 2025, at 5:00 p.m. ET17 - A live webcast and a replay will be available through the investor relations section of Digi's website1819 Forward-Looking Statements This section cautions that forward-looking statements are subject to risks including inflation, supply chain issues, and geopolitical factors - The press release includes forward-looking statements concerning business performance, profitability, and market conditions22 - Key risks cited include inflationary pressures, supply chain challenges, regulatory changes, cybersecurity, and military conflicts22
Digi International(DGII) - 2025 Q3 - Quarterly Results