Digi International (DGII) Q3 2023 earnings summary

Executive summary

• Q3 revenue rose 8% YoY to $112M; ARR increased 13% to $104M, with adjusted EBITDA up 16% to $24M.

• Differentiated machine-communications solutions serve demanding environments; recurring revenue and higher-margin software and services are central growth priorities.

Financial highlights

• Q3 gross margin was 56.9%, up 140 bps YoY; adjusted EPS was $0.50, up 11% YoY.

• FY2022 revenue increased 26% YoY to $388M; gross margin was 55.7%, up 170 bps, adjusted EBITDA rose 65% to $79M, and adjusted EPS increased 54% to $1.66.

Outlook and guidance

• FY2023 adjusted EBITDA margin target: 21%; gross margin improvement since 2018 reached 800 bps and was approaching 60%.

• Three $100M milestones: quarterly revenue achieved in FQ3 2022, ARR achieved in FQ3 2023, and annualized adjusted EBITDA at $24M in FQ3 2023.