Digi International Inc. (NASDAQ:DGII) Q1 2024 Earnings Call Transcript
Digi International Inc. (NASDAQ:DGII) Q1 2024 Earnings Call Transcript February 1, 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 Fiscal Q1 2024 Digi International Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there'll be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jamie Loch, CFO. Please go ahead.
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, a few comments. We have begun our next journey to double ARR and adjusted EBITDA to $200 million in the next five years. The first quarter in our journey resulted in ARR of 13% year-over-year, now exceeding our quarterly revenue for the first time in the company's history. ARR demonstrates Digi's progression from a product to a solution provider and significantly improves our visibility and profitability. ARR was the primary driver, helping Digi set a quarterly gross margin record. We've adopted stronger cost controls enabling strong profitability in the quarter. Our efforts to optimize our supply chain brought our inventory levels down, and helped us generate significant free cash flow.
We expect our debt refinancing will reduce the amount of cash needed to service our debt by at least $4 million this year. During our first fiscal quarter, we paid off approximately $0.50 a share in debt to reduce our gross debt to approximately $195 million. Digi's portfolio of Industrial Internet of Things Solutions is broad and deep, enabling us to service the most demanding applications and customers around the world. We will relentlessly innovate and service our customers in an ever-changing security, regulatory, technology, and business environment helping our customers adapt and succeed. At this time, I'd like to turn the call back to the operator for our questions-and-answer session. Thank you, operator.
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