Digi International Reports Q2 Fiscal 2025 Results with Revenue of $104.5 Million

Digi International Inc. reported its financial results for the second quarter of fiscal 2025, revealing a total revenue of $104.5 million, a decrease of 3% compared to $107.7 million in the same period last year. The decline was primarily attributed to a drop in product sales, particularly in the IoT Products & Services segment, which saw a revenue decrease of 6.7%. However, the company experienced growth in its IoT Solutions segment, which reported a 9.9% increase in revenue, driven by recurring revenue growth from its SmartSense and Ventus offerings. Despite the overall revenue decline, Digi's gross profit increased by 4.2% to $64.9 million, resulting in a gross profit margin of 62.1%, up from 57.9% in the prior year.

Digi's net income for the quarter was $10.5 million, significantly higher than the $4 million reported in the same quarter of the previous year. This increase in profitability was supported by a reduction in operating expenses, which fell by 5.5% to $51.2 million. The company also reported a notable decrease in other expenses, primarily due to lower interest expenses and the absence of a prior year's debt issuance cost write-off. As a result, net income per diluted share rose to $0.28, compared to $0.11 in the prior year.

In terms of strategic developments, Digi continues to focus on enhancing its subscription-based services, with Annualized Recurring Revenue (ARR) reaching $123 million, a 12% increase year-over-year. The company is actively transitioning to a model that emphasizes complete solutions, integrating software and services with its products. This shift is expected to provide more predictable revenue streams and higher margins. Additionally, Digi's total cash and cash equivalents stood at $26.3 million as of March 31, 2025, reflecting a slight decrease from the previous quarter.

Operationally, Digi's customer base remains strong, with a total of 37,066,698 shares of common stock outstanding. The company is also navigating longer sales cycles, which it attributes to macroeconomic conditions. Digi's management expressed caution regarding the potential impact of global trade policies and tariffs on its operations, indicating that these factors could affect future performance. Looking ahead, Digi anticipates continued growth in its recurring revenue streams and aims to leverage its existing customer relationships to drive further expansion.

Overall, Digi International Inc. is positioned to adapt to changing market conditions while focusing on its strategic initiatives to enhance profitability and customer engagement. The company remains committed to its growth objectives, despite the challenges posed by external economic factors.