Digi International(US:DGII)2022-05-08 10:41Financial Data and Key Metrics Changes - The company achieved record revenue of nearly $95 million for the quarter, representing a 23% increase year-over-year [9][20] - Annualized recurring revenue reached an all-time high of nearly $90 million, up approximately 165% year-over-year [20] - Gross margins were reported at 54.9%, with adjusted EBITDA of $19.5 million, equating to 20.6% of revenue [21][22] Business Segment Data and Key Metrics Changes - IoT products and services revenue increased by 9% year-over-year to $71.4 million, with gross margins rising by 140 basis points to 53.9% [26] - IoT solutions revenue doubled year-over-year to $23.3 million, with gross margins increasing nearly 650 basis points to 57.9% [28] Market Data and Key Metrics Changes - Demand for industrial IoT remains strong, with record bookings leading to a record backlog, although specific backlog figures were not disclosed [14][41] - The company noted that millions of dollars in potential revenue were left unrecognized due to supply chain constraints [39] Company Strategy and Development Direction - The company is focused on enhancing customer value through hardware-enabled software services and subscription offerings [9] - There is a targeted investment strategy in the IoT solutions segment to accelerate growth, particularly following the acquisition of Ventus [13][18] - The company aims to achieve $100 million in quarterly revenue, annualized recurring revenue, and adjusted EBITDA [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from the ongoing COVID pandemic, inflation, and supply chain issues but expressed optimism about future growth [8][39] - The company expects revenue growth of 19% to 24% for the next quarter, with annual recurring revenues projected to exceed $90 million by the fiscal year-end [30][31] Other Important Information - The company returned to generating positive cash flow from operations, with $5.9 million generated in the quarter [24] - Operating expenses increased by approximately 20% year-over-year, largely due to the Ventus acquisition and strategic investments [42][44] Q&A Session Summary Question: How is the integration with Ventus going? - The integration is progressing well, with strong collaboration and growth synergies anticipated, particularly in the Cellular Solutions business [35] Question: What does organic growth look like excluding Ventus and Ctek? - The company cannot back out Ventus for SEC reporting but reports year-over-year growth in the product and services segment [36] Question: What is the current state of the supply chain? - The supply chain remains challenging, with some easing expected but still significant difficulties due to geopolitical issues and COVID lockdowns [38] Question: What potential growth exists as the supply chain improves? - There is a backlog of $10 million to $20 million in revenue that could be recognized as supply chain issues are resolved [40] Question: What areas is the company investing in regarding OpEx? - The increase in OpEx is driven by the acquisition and strategic investments in personnel and sales activities [42][44]