Digi International (NasdaqGS:DGII) Q1 2026 Earnings call February 04, 2026 05:00 PM ET Company ParticipantsJamie Loch - CFORon Konezny - President and CEOConference Call ParticipantsAnthony Stoss - Partner and Senior Equity Research AnalystJames Fish - Managing Director and Senior Equity Research AnalystJosh Nichols - Senior Research AnalystScott Searle - Managing Director and Senior Equity Research AnalystTommy Moll - Managing Director and Senior Equity Research AnalystOperatorGood day everyone, and welcom ...

Financial Data and Key Metrics Changes - Digi International reported quarterly revenues of $122 million, an 18% increase year-over-year [4] - Annualized recurring revenue (ARR) reached $157 million, up 31% year-over-year, marking the fifth consecutive quarter of double-digit growth [4] - Adjusted EBITDA for the quarter was $32 million, a 23% increase year-over-year, with an adjusted EBITDA margin of 25.8% [4] - The company generated $36 million in cash during the quarter [4] Business Line Data and Key Metrics Changes - IoT solutions segment grew by 32% year-over-year, while IoT products and services segment grew by 26% year-over-year [5] - The integration of the Jolt acquisition into the SmartSense One platform is progressing well, with positive customer responses and cross-selling opportunities [5][6] Market Data and Key Metrics Changes - The company is experiencing strong demand across various verticals, including mass transit, utilities, and retail digital signage, with some success noted in the data center segment [18] - The demand environment is improving, particularly in relation to AI infrastructure buildout [20] Company Strategy and Development Direction - The acquisition of Particle is expected to enhance Digi's edge-to-cloud capabilities and expand its addressable market in IoT device management [6][7] - The company aims to achieve $200 million in ARR and adjusted EBITDA by the end of fiscal 2028, with strategic acquisitions being a priority [8] - Digi is focusing on profitable growth rather than growth at all costs, emphasizing the importance of scaling the business sustainably [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing strength of various business segments, despite challenges such as commodity prices and memory pricing volatility [37] - The company plans to provide further updates on guidance after the second fiscal quarter, reflecting a cautious approach to annual guidance adjustments [32][38] Other Important Information - For fiscal 2026, the company anticipates ARR growth of 23%, revenue growth of 14%-18%, and adjusted EBITDA growth of 17%-21% [10] - The adjusted net income per diluted share is expected to be between $0.56 and $0.59, including an impact from interest of $0.05 to $0.06 per diluted share [11] Q&A Session Summary Question: Demand environment update and data centers - Management noted success across various verticals, including mass transit and utilities, with improving conditions in the data center segment [18][20] Question: Sales synergy opportunities with Particle - The integration of Particle is expected to enhance embedded-as-a-service offerings, allowing for deeper engagement with OEM customers [22] Question: Growth strategy for Particle and profitability management - The focus will be on profitable growth, leveraging Particle's service-oriented culture to enhance Digi's existing offerings [28][29] Question: Gross margin expectations - Management indicated that gross margins are expected to continue to improve as ARR grows, with historical trends suggesting a 10-15 basis point expansion [35] Question: Competitive landscape and growth dynamics - The company is optimistic about its cellular router and Ventus segments, with a focus on becoming a solution provider rather than just a device manufacturer [47] Question: Memory pricing impact on device customers - Management is actively managing supply allocations and exploring alternative providers to mitigate memory pricing volatility [56] Question: Update on Jolt synergies - Integration efforts for Jolt are on track, with successful collaboration between field teams and support services [59]

Digi International (NasdaqGS:DGII) Q1 2026 Earnings call February 04, 2026 05:00 PM ET Speaker4Good day everyone, and welcome to Digi International Inc. First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To participate, you will need to press *11 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press *11 again. Pleas ...