DIGI INTERNATIONAL INC Files 10-Q for Period Ending December 31, 2023

TL;DR

<b>DIGI INTERNATIONAL INC reported Q1 FY24 revenue of $114.6 million, with service revenue up 10.4% while product revenue saw a slight decrease.</b>

AI Summary

DIGI INTERNATIONAL INC (DGII) filed a Quarterly Report (10-Q) with the SEC on February 2, 2024. Total revenue for the three months ended December 31, 2023, was $114.6 million. Product revenue for Q1 FY24 was $83.1 million, a 1.3% decrease year-over-year. Service revenue for Q1 FY24 was $31.5 million, a 10.4% increase year-over-year. Net income for the three months ended December 31, 2023, was $13.1 million. Earnings per share (EPS) for the three months ended December 31, 2023, was $0.26.

Why It Matters

For investors and stakeholders tracking DIGI INTERNATIONAL INC, this filing contains several important signals. The increase in service revenue suggests a growing recurring revenue stream, which can lead to more predictable future earnings. The slight decline in product revenue may indicate market saturation or increased competition in hardware sales, requiring strategic adjustments.

Risk Assessment

Risk Level: medium — DIGI INTERNATIONAL INC shows moderate risk based on this filing. The company's reliance on product sales, which experienced a slight year-over-year decrease, presents a risk to consistent revenue growth if this trend continues.

Analyst Insight

Focus on leveraging the growth in service revenue to offset potential declines in product sales and explore strategies to revitalize product demand.

Financial Highlights

revenue

114.6

net Income

13.1

eps

0.26

Revenue Breakdown

Key Numbers

• 114.6 — Total Revenue (three months ended December 31, 2023)
• 83.1 — Product Revenue (three months ended December 31, 2023)
• 31.5 — Service Revenue (three months ended December 31, 2023)
• 13.1 — Net Income (three months ended December 31, 2023)
• 0.26 — EPS (three months ended December 31, 2023)
• 1.3% — Product Revenue Growth (year-over-year for Q1 FY24)
• 10.4% — Service Revenue Growth (year-over-year for Q1 FY24)

Key Players & Entities

• DIGI INTERNATIONAL INC (company) — FILER
• 20231231 (date) — CONFORMED PERIOD OF REPORT
• 20240202 (date) — FILED AS OF DATE
• 3576 (dollar_amount) — STANDARD INDUSTRIAL CLASSIFICATION
• DE (location) — STATE OF INCORPORATION
• 0930 (date) — FISCAL YEAR END
• XNAS (exchange) — exch
• USD (currency) — iso4217

FAQ

Key Dates

• 2023-12-31: End of Reporting Period — Q1 FY24 financial results
• 2024-02-02: Filing Date — 10-Q filing

Key Financial Figures

• $50 m — te up to a maximum amount not to exceed $50 million, to consolidated EBITDA for such

Filing Documents

• dgii-20231231.htm (10-Q) — 1005KB
• dgii-ex31a_20231231x10q.htm (EX-31.A) — 10KB
• dgii-ex31b_20231231x10q.htm (EX-31.B) — 8KB
• dgii-ex32_20231231x10q.htm (EX-32) — 8KB
• dgii-20231231_g1.jpg (GRAPHIC) — 58KB
• 0000854775-24-000004.txt (&nbsp;) — 6080KB
• dgii-20231231.xsd (EX-101.SCH) — 39KB
• dgii-20231231_cal.xml (EX-101.CAL) — 62KB
• dgii-20231231_def.xml (EX-101.DEF) — 237KB
• dgii-20231231_lab.xml (EX-101.LAB) — 636KB
• dgii-20231231_pre.xml (EX-101.PRE) — 415KB
• dgii-20231231_htm.xml (XML) — 710KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Unaudited Financial Statements

ITEM 1. Unaudited Financial Statements: Condensed Consolidated Statements of Operations 1 Condensed Consolidated Statements of Comprehensive (Loss) Income 2 Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Cash Flows 4 Condensed Consolidated Statements of Stockholders' Equity 5 Notes to Condensed Consolidated Financial Statements 6

Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 17

Quantitative and Qualitative Disclosures About Market Risk

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 24

Controls and Procedures

ITEM 4. Controls and Procedures 25

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

ITEM 1. Legal Proceedings 26

Risk Factors

ITEM 1A. Risk Factors 26

Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 27

Defaults Upon Senior Securities

ITEM 3. Defaults Upon Senior Securities 27

Mine Safety Disclosures

ITEM 4. Mine Safety Disclosures 27

Other Information

ITEM 5. Other Information 27

Exhibits

ITEM 6. Exhibits 28 i Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS DIGI INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three months ended December 31, 2023 2022 (in thousands, except per share data) Revenue: Product $ 77,250 $ 81,755 Service 28,839 27,551 Total revenue 106,089 109,306 Cost of sales: Cost of product 37,766 39,612 Cost of service 6,270 7,070 Amortization 953 1,103 Total cost of sales 44,989 47,785 Gross profit 61,100 61,521 Operating expenses: Sales and marketing 19,647 19,106 Research and development 14,633 14,094 General and administrative 14,687 16,358 Total operating expenses 48,967 49,558 Operating income 12,133 11,963 Other expense, net: Interest expense, net ( 5,661 ) ( 5,971 ) Debt issuance cost write off ( 9,722 ) — Other (expense) income, net ( 26 ) 17 Total other expense, net ( 15,409 ) ( 5,954 ) (Loss) income before income taxes ( 3,276 ) 6,009 Income tax (benefit) provision ( 222 ) 230 Net (loss) income $ ( 3,054 ) $ 5,779 Net (loss) income per common share: Basic $ ( 0.08 ) $ 0.16 Diluted $ ( 0.08 ) $ 0.16 Weighted average common shares: Basic 36,129 35,608 Diluted 36,129 36,859 The accompanying notes are an integral part of the condensed consolidated financial statements. 1 Table of Contents DIGI INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) Three months ended December 31, 2023 2022 (in thousands) Net (loss) income $ ( 3,054 ) $ 5,779 Other comprehensive income: Foreign currency translation adjustment 2,948 1,289 Other comprehensive income 2,948 1,289 Comprehensive (loss) income $ ( 106 ) $ 7,068 The accompanying notes are an integral part of the condensed consolidated financial statements. 2 Table of Contents DIGI INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) December 31, 2023 September 30, 2023 (in thousands, except share data) ASSETS Current assets: Cash and cash equivalents $ 31,548 $ 31,693 A

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