Digi International Inc (DGII) Q2 2025 Earnings Call Highlights: Record ARR Growth and Strategic ...

GuruFocus News

Thu, May 8, 2025, 12:34 AM 4 min read

• Annual Recurring Revenue (ARR): Grew 12% twelvemonth implicit twelvemonth to a grounds $123 million.

• ARR arsenic Percentage of Revenue: Represents 29% of annualized quarterly revenues.

• Free Cash Flow: Generated $26 cardinal successful the quarter.

• Net Debt: Reduced to $45 cardinal aft paying down $25 cardinal of debt.

• Free Cash Flow Yield: Currently astatine 9%.

• Capital Expenditures: Less than 1% of full revenue.

• Warning! GuruFocus has detected 4 Warning Sign with DGII.

Release Date: May 07, 2025

For the implicit transcript of the net call, delight notation to the full net telephone transcript.

• Digi International Inc (NASDAQ:DGII) reported a 12% year-over-year maturation successful Annual Recurring Revenue (ARR), reaching a grounds $123 million.

• The company's solution-oriented attack successful the concern IoT marketplace is yielding speedy ROI for customers done distant monitoring and analytics.

• Free currency travel procreation of $26 cardinal successful the 4th allowed the institution to trim nett indebtedness to $45 million, aft paying down $25 cardinal of debt.

• Digi International Inc (NASDAQ:DGII) improved its inventory presumption significantly, approaching humanities norms, which is simply a affirmative motion for operational efficiency.

• The institution expects to beryllium nett currency affirmative by the extremity of the fiscal year, a one-quarter betterment from its archetypal goal.

• Revenue has been weaker successful the APAC region, which could interaction wide maturation if the inclination continues.

• The macroeconomic situation remains fluid, posing imaginable risks to dependable request and fiscal performance.

• The institution is experiencing immoderate brushed churn, with larger customers closing a smaller percent of their locations.

• Digi International Inc (NASDAQ:DGII) acknowledges the imaginable interaction of tariffs and the request for agility successful effect to reciprocal tariffs.

• The bundle connect rates are inactive nether 50% crossed the portfolio, indicating country for betterment successful this area.

Q: Ron, my archetypal question is connected the recurring gross trends successful P&S, up implicit 20% successful the quarter. What operational levers are you utilizing to unlock this growth? A: Ronald Konezny, President and CEO: We are emphasizing providing a implicit solution by attaching bundle and services to our products, improving connect rates. Additionally, we connection a Ventus-type exemplary to customers, allowing them to wage implicit clip alternatively than upfront, which enhances ARR.

Q: Is the transmission becoming much accustomed to driving higher connect rates, oregon is it owed to different factors? A: Ronald Konezny, President and CEO: We are precise channel-centric successful products and services, and our partners are positively reacting to this exemplary arsenic it helps them physique a recurring gross business.