Digi International (DGII) Q4 2023 earnings summary

Executive summary

• FY23 revenue rose 15% YoY to $445M; adjusted EBITDA increased 22% to $97M and adjusted EPS rose 20% to $1.99.

• Business focus includes expanding software, services and subscription offerings to grow recurring revenue and capture higher-margin IoT opportunities.

Financial highlights

• FQ4 revenue increased 6% YoY to $112M; ARR rose 12% to $106M.

• FQ4 gross margin was 57.1%, up 130 bps YoY; adjusted EBITDA rose 14% to $25M and adjusted EPS increased 16% to $0.52.

• FY23 gross margin was 56.7%, up 100 bps YoY; adjusted EBITDA was $97M, up 22%, and adjusted EPS was $1.99, up 20%.

Outlook and guidance

• FY24 adjusted EBITDA margin target is 22%, supported by operating expense management.

• Five-year targets are $200M ARR and $200M annualized adjusted EBITDA; presentation cites respective FY23-to-FY28 CAGRs of 14% and 16%.

• Recurring revenue reached 24% of total revenue, up from 4% six years earlier; recurring revenue five-year CAGR was 52%.