Digi International(US:DGII)2023-08-03 16:00Financial Performance - Consolidated revenue for Q3 2023 was $112 million, an increase of 8% compared to Q3 2022[83] - Gross profit margin was 56.9%, an increase of 140 basis points year-over-year[83] - Net income per diluted share increased by 50% to $0.18, compared to $0.12 in the prior year[83] - Annualized Recurring Revenue (ARR) reached $104 million, up 13% from $92 million in the previous year[88] - Operating income for Q3 2023 was $12.5 million, a 25.1% increase from the previous year[84] - Adjusted EBITDA was $24 million, reflecting a 16% increase year-over-year[83] - Operating income for IoT Products & Services increased by 11.2% to $12,096 for the three months ended June 30, 2023, compared to $10,881 in the same period in 2022[95] - Adjusted EBITDA for the three months ended June 30, 2023, was $24,332, representing 21.7% of total revenue, compared to $21,048 or 20.3% in the same period in 2022[105] - Net income for the three months ended June 30, 2023, was $6,727, an increase from $4,126 in the same period in 2022[108] - Adjusted net income for the three months ended June 30, 2023, was $18,503, or $0.50 per diluted share, compared to $15,934, or $0.45 per diluted share in the same period in 2022[108] Revenue Growth - IoT Products & Services revenue increased by 9.5% for Q3 2023, driven by growth in OEM & IM product lines[86] - IoT Solutions revenue grew by 4.7% for Q3 2023, primarily due to growth in SmartSense offerings[87] - Total revenue for the three months ended June 30, 2023, was $112,236, a 8.3% increase from $103,517 in the same period in 2022[105] Cost Management - Cost of goods sold as a percentage of total revenue decreased to 43.1% in Q3 2023 from 44.5% in Q3 2022[90] - Operating expenses for the three months ended June 30, 2023, were $51,343, an increase of $3.9 million from the same period in 2022, primarily due to investments in Opengear and SmartSense[94] - The company experienced a $15.6 million increase in operating expenses for the nine months ended June 30, 2023, primarily due to the acquisition of Ventus and increased stock-based compensation[94] Cash Flow and Debt - Cash flows from operating activities for the nine months ended June 30, 2023, were $27.8 million, a decrease of $3.4 million compared to $31.2 million in the same period of 2022[114] - Cash flows used in investing activities decreased by $347.9 million, primarily due to no amounts used for acquisitions in the nine months ended June 30, 2023, compared to $347.6 million in the same period of 2022[116] - The company had a net decrease in cash and cash equivalents of $5.3 million for the nine months ended June 30, 2023, compared to a decrease of $110.9 million in the same period of 2022[114] - Debt payments for the nine months ended June 30, 2023, were $29.4 million, a decrease from $129.4 million in the same period of 2022[116] - As of June 30, 2023, the company had $220.6 million outstanding under its Term Loan, with borrowings bearing interest at LIBOR plus 5.00% or a base rate plus 4.00%[120] Future Outlook - The company expects positive cash flows from operations for the foreseeable future, supported by current cash balances and the ability to borrow under its credit facility[112] - The annualized recurring revenue (ARR) is used to assess the growth of the subscription revenue business, indicating the scale of the subscription business[100] Foreign Currency and Hedging - A 10% change in the average exchange rate for major currencies would have resulted in a 1.0% increase or decrease in stockholders' equity due to foreign currency translation[122] - The company has not implemented a formal hedging strategy to manage foreign currency translation risk, although it monitors its net asset or liability position[121] Credit Facilities - The company has $35.0 million available under its Revolving Loan, which includes $10 million for a letter of credit subfacility and $10 million for a swingline subfacility[111]