Yahoo Finance Digi International Inc. (NASDAQ:DGII) Q2 2024 Earnings Call Transcript
Digi International Inc. (NASDAQ:DGII) Q2 2024 Earnings Call Transcript May 2, 2024
Digi International Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day and thank you for standing by and welcome to the Q2 2024 Digi International Inc. Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today Jamie Loch, Chief Financial Officer.
Jamie Loch: Thank you. Good day, everyone. It's great to talk to you again and thanks for joining us today to discuss the earnings results of Digi International. Joining me on today's call is Ron Konezny our President and CEO. We issued our earnings release after the market closed yesterday. You may obtain a copy of the press release through the Financial Releases section of our Investor Relations website at digi.com. This morning Ron will provide a comment on our performance and then we'll take your questions. Some of the statements that we make during this call are considered forward looking and are subject to significant risks and uncertainties. These statements reflect our expectations about future operating and financial performance and speak only as of today's date.
We undertake no obligation to update publicly or revise these forward-looking statements. While we believe the expectations reflected in our forward-looking statements are reasonable, we give no assurance such expectations will be met or that any of our forward-looking statements will prove to be correct. For additional information, please refer to the forward-looking statements section in our earnings release and the Risk Factors section of our most recent Form 10 K and subsequent reports on file with the SEC. Finally, certain of the financial information disclosed on this call includes non-GAAP measures. The information required to be disclosed about these measures, including reconciliations to the most comparable GAAP measures are included in the earnings release.
The earnings release is also furnished as an exhibit to Form 8-K, that can be accessed through the SEC filings section of our Investor Relations website. Now I will turn the call over to Ron.
Ron Konezny: Thank you, Jamie. Good morning everyone. Before we jump into Q&A just a few comments. Digi deliver record annualized recurring revenue, record gross margins, strong cash generation, lowered inventory, decreased debt balances and strong profitability. Our IoT Solutions segment is seeing results of closing enterprise opportunities, helping grow ARR. ARR remains our top priority at Digi benefiting visibility and profitability. We welcome two new members to Digi's leadership team. Jim Freeland joined as Senior Vice President and Chief Information Officer in February. Jim joined us from a nearly 18-year career at Medtronic. Jim’s security IP and applications experience are perfect fit for Digi's critical needs. Secondly as announced yesterday, we're thrilled to have Tony Puopolo joined Digi as Senior Vice President and General Manager of our managed solutions business.
Tony joined Digi from a 13-year career at Cradlepoint where he demonstrated outstanding success in sales and product management leadership positions. Tony has the right combination of technical knowledge, product strategy and go-to-market expertise. While pleased with our first half results, we are seeing more cautious customers and second half demand. We remain confident in our ARR growth projections. However, we have softened top-line expectations. To offset top-line expectations, we have implemented tighter expense controls resulting in only slightly beating our annual profit expectations. In the second of our 20 quarter journey to reach $200 million in ARR and $200 million in adjusted EBITDA, we are confident we can reach these targets.
The industrial IoT market is positioned for long-term growth. Digi will continuously innovate and service its customers in an environment of accelerating change in security, regulation and technology requirements. Our solutions are helping our customers adapt and thrive. At this time, I'd like to turn the call back to the operator for our question-and-answer session. Thank you, operator?
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