Are you keeping a close watch on Digi International Inc. (DGII) and trying to gauge its financial stability? As of the first fiscal quarter of 2025, the company reported revenue of $104 million. But how does this figure stack up against their profitability, debt, and overall market position? Digi's gross profit margin increased to 62.0%, and they achieved a net income of $10 million, a stark contrast to the $3 million net loss from the same period last year. With these figures in mind, let's explore what these numbers reveal about Digi International's financial health and what it means for investors.

Digi International Inc. (DGII) Revenue Analysis

Digi International Inc. (DGII) operates through two primary reportable segments: IoT Products & Solutions and IoT Services. Understanding the revenue streams from these segments is crucial for investors.

The company's overall revenue has shown consistent growth. For example, total net sales for fiscal year 2024 reached $467.2 million, marking an increase of 12.8% compared to the $414.1 million reported in fiscal year 2023. This growth is a key indicator of Digi International's expanding market presence and effectiveness of its strategic initiatives.

Here's a more detailed breakdown of the revenue contribution from each segment:

• IoT Products & Solutions: This segment accounted for $353.1 million in net sales for fiscal year 2024, up from $313.7 million in fiscal year 2023, representing a 12.6% increase.
• IoT Services: This segment generated $114.1 million in net sales for fiscal year 2024, compared to $100.4 million in fiscal year 2023, showing a 13.6% increase.

The following table summarizes Digi International's revenue streams for fiscal year 2024 and 2023:

Analyzing the changes in revenue streams reveals that both the IoT Products & Solutions and IoT Services segments experienced robust growth. The increase in IoT Products & Solutions indicates strong demand for Digi International's hardware and software offerings. Meanwhile, the growth in IoT Services suggests an expanding adoption of their subscription-based services and solutions.

For further insights into Digi International Inc. (DGII)'s financial health, you can explore: Breaking Down Digi International Inc. (DGII) Financial Health: Key Insights for Investors

Digi International Inc. (DGII) Profitability Metrics

Assessing the profitability of Digi International Inc. (DGII) involves examining several key metrics that provide insights into the company's financial health and operational efficiency. These metrics include gross profit, operating profit, and net profit margins, each offering a different perspective on DGII's ability to generate earnings.

Gross profit is the revenue remaining after deducting the cost of goods sold (COGS). The gross profit margin, calculated as (Gross Profit / Revenue) 100, indicates the percentage of revenue available to cover operating expenses and generate profit. Monitoring trends in DGII's gross margin helps to reveal the effectiveness of its cost management and pricing strategies. For the fiscal year 2024, Digi International reported a gross profit of $213.57 million.

Operating profit, also known as earnings before interest and taxes (EBIT), is derived by subtracting operating expenses from gross profit. The operating profit margin, calculated as (Operating Profit / Revenue) 100, reflects the company's profitability from its core business operations. Analyzing DGII's operating margin trends can highlight its ability to control costs and improve operational efficiency. Digi International's operating income for the fiscal year 2024 was $60.21 million.

Net profit is the profit remaining after deducting all expenses, including interest and taxes, from revenue. The net profit margin, calculated as (Net Profit / Revenue) 100, represents the percentage of revenue that translates into profit for shareholders. Examining DGII's net margin trends provides insights into its overall financial performance and profitability. For the fiscal year 2024, Digi International reported a net income of $44.48 million, or $1.28 per diluted share.

To provide a clearer picture, here's a summary of Digi International's profitability metrics for the fiscal year 2024:

• Gross Profit: $213.57 million
• Operating Income: $60.21 million
• Net Income: $44.48 million

Comparing DGII's profitability ratios with industry averages offers valuable context. If DGII's margins are higher than the industry average, it suggests a competitive advantage in cost management or pricing. Conversely, lower margins may indicate areas for improvement. Here's a table summarizing the key profitability ratios:

Analyzing operational efficiency involves assessing how well DGII manages its costs and assets to generate revenue. Key indicators include cost of goods sold (COGS) as a percentage of revenue and trends in gross margin. Effective cost management and improving gross margins can lead to higher profitability. Digi International's gross margin for the fiscal year 2024 was 49.85%.

Explore more insights into Digi International Inc.'s financial health: Breaking Down Digi International Inc. (DGII) Financial Health: Key Insights for Investors

Digi International Inc. (DGII) Debt vs. Equity Structure

Understanding how Digi International Inc. (DGII) finances its operations and growth is crucial for investors. The balance between debt and equity reveals insights into the company's financial strategy, risk profile, and long-term stability. Let's delve into DGII's debt levels, ratios, and financing activities.

As of the second quarter of fiscal year 2024, Digi International Inc. reported the following debt situation:

• Total debt: $294.8 million
• Net Debt: $268.9 million

The company’s debt structure includes both short-term and long-term obligations. Evaluating these components helps to understand the company’s immediate and future financial commitments.

• Short-term debt: Included within the total debt figure.
• Long-term debt: Also included within the total debt, representing obligations extending beyond one year.

The debt-to-equity ratio is a key metric for assessing financial leverage. It indicates how much debt Digi International Inc. is using to finance its assets relative to the value of shareholders' equity. As of the second quarter of fiscal year 2024, Digi International Inc. (DGII) reported a debt-to-equity ratio of 1.24.

Recent activities, such as debt issuances, credit ratings, or refinancing, can significantly impact Digi International Inc.’s financial health. These events can alter the company's cost of borrowing, debt maturity profile, and overall financial flexibility.

Digi International Inc. strategically manages its capital structure by balancing debt and equity financing. This involves decisions on when to issue debt, raise equity, or use internally generated funds to finance operations and investments. The company's approach aims to optimize financial flexibility, minimize the cost of capital, and support long-term growth objectives.

Examining Digi International Inc.'s financial statements and conducting a thorough analysis of its debt and equity components are essential steps for investors. These insights, combined with an understanding of the company's strategic direction (as detailed in Mission Statement, Vision, & Core Values of Digi International Inc. (DGII).), provide a comprehensive view of its financial health and investment potential.

Digi International Inc. (DGII) Liquidity and Solvency

Assessing the liquidity of Digi International Inc. (DGII) involves examining its ability to meet short-term obligations, manage working capital, and maintain healthy cash flow.

Here's a breakdown:

• Current Ratio: As of December 2024, Digi International's current ratio was 1.61. A current ratio of greater than 1 generally indicates good short-term financial health.
• Quick Ratio: The company's quick ratio for the quarter that ended in December 2024 was 1.06. A quick ratio of 1 or more is usually considered a sign of good short-term financial strength.

These ratios suggest that Digi International has a healthy liquidity position, meaning it has sufficient liquid assets to cover its short-term liabilities.

Here's a look at the historical data for these ratios:

The current and quick ratios are healthy, indicating good short-term financial health.

Analysis of Working Capital Trends:

• Digi International's working capital was $65.11 million as of December 31, 2024.

Cash Flow Statements Overview:

• Operating Cash Flow: For the full fiscal year 2024, Digi International generated strong cash flow from operations of $83 million. In the third quarter of fiscal year 2024, the cash flow from operations was $25 million, compared to $18 million a year ago.
• Investing Cash Flow: Not detailed in provided snippets.
• Financing Cash Flow: Not detailed in provided snippets.

Digi International is a cash-generating machine! The fact that they don't pay dividends means they're likely reinvesting that cash back into the business or using it for other strategic purposes.

Potential Liquidity Concerns or Strengths:

• Strengths: Digi International has a solid balance sheet, high-quality earnings as indicated by a strong OCF to Net Profit ratio, and consistently positive free cash flow.
• Concerns: The company had liabilities of US$90.3m due within 12 months, and liabilities of US$115.1m due beyond 12 months. Offsetting this, it had US$25.9m in cash and US$64.9m in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$114.6m.

Digi International entered into a new senior secured credit facility and expects to save approximately $4 million in interest payments over the first year of the facility.

To gain more insights into Digi International's mission, vision, and core values, visit Mission Statement, Vision, & Core Values of Digi International Inc. (DGII).

Digi International Inc. (DGII) Valuation Analysis

Assessing whether Digi International Inc. (DGII) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment. Let's delve into the specifics to provide a clearer picture for investors. For additional insights, you might find this resource helpful: Breaking Down Digi International Inc. (DGII) Financial Health: Key Insights for Investors.

To determine whether DGII is overvalued or undervalued, consider the following:

• Price-to-Earnings (P/E) Ratio: The P/E ratio compares a company's stock price to its earnings per share. A higher P/E ratio might suggest the stock is overvalued, while a lower one could indicate undervaluation, relative to its peers or historical averages.
• Price-to-Book (P/B) Ratio: This ratio compares a company's market capitalization to its book value of equity. A lower P/B ratio can suggest undervaluation, as the market price is low relative to the company's net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio compares a company's enterprise value (total market value plus debt, minus cash) to its earnings before interest, taxes, depreciation, and amortization. It provides a more comprehensive valuation measure, especially useful for comparing companies with different capital structures.

Analyzing DGII's stock price trends provides context on market sentiment and investor confidence:

• Stock Price Trends: Reviewing the stock price movement over the past 12 months, or longer, helps identify trends, volatility, and overall performance. Significant price appreciation might suggest overvaluation, while a decline could indicate undervaluation.

For DGII, insight into dividends can further clarify its valuation:

• Dividend Yield and Payout Ratios: If DGII distributes dividends, examining the dividend yield (annual dividend per share divided by stock price) and payout ratio (percentage of earnings paid out as dividends) can offer insights into its financial health and valuation. A high dividend yield might make the stock attractive, but a high payout ratio could raise concerns about sustainability.

Here's how analysts view DGII's stock:

• Analyst Consensus: Analyst ratings (buy, hold, or sell) and price targets reflect professional opinions on the stock's valuation and potential future performance. A consensus of 'buy' ratings with price targets above the current market price suggests undervaluation, while 'sell' ratings indicate potential overvaluation.

To illustrate, let's consider a hypothetical, simplified valuation snapshot for Digi International Inc. (DGII) as of the fiscal year 2024. Please note that this data is purely illustrative and should not be taken as actual financial advice.

Based on this illustrative data, a balanced view suggests that DGII's valuation is neither significantly overvalued nor undervalued. The P/E and EV/EBITDA ratios indicate fair valuation, while the P/B ratio raises some concerns. The positive stock price trend is encouraging, but the 'Hold' analyst consensus suggests a need for cautious optimism. Always conduct thorough due diligence and consider multiple factors before making investment decisions.

Digi International Inc. (DGII) Risk Factors

Several factors could potentially impact Digi International Inc.'s financial health. These risks span both internal and external elements, including industry competition, regulatory changes, and overall market conditions.

Here's a breakdown of key risk areas:

• Industry Competition: The technology sector is intensely competitive. Digi International Inc. faces pressure from established players and new entrants, which could impact market share and profitability.
• Regulatory Changes: Changes in regulations, particularly those related to data privacy, cybersecurity, or international trade, could increase compliance costs and affect the company's ability to operate in certain markets.
• Market Conditions: Economic downturns or fluctuations in specific geographic regions could reduce demand for Digi International Inc.'s products and services, impacting revenue and earnings.

Digi International Inc.'s financial performance is subject to a variety of risks, as detailed in their filings with the Securities and Exchange Commission (SEC). These risks include, but are not limited to:

• Supply Chain Disruptions: The company's reliance on global supply chains makes it vulnerable to disruptions caused by geopolitical events, natural disasters, or other unforeseen circumstances.
• Technological Obsolescence: Rapid technological advancements could render Digi International Inc.'s products and services obsolete, requiring significant investments in research and development to remain competitive.
• Cybersecurity Threats: The increasing prevalence of cyberattacks poses a risk to the company's data, systems, and reputation.

To mitigate these risks, Digi International Inc. may implement various strategies, such as:

• Diversifying its product and service offerings.
• Expanding into new geographic markets.
• Investing in cybersecurity and data protection measures.
• Strengthening its supply chain relationships.

For instance, in the Q1 2024 earnings call, management emphasized a focus on operational efficiency and strategic investments to navigate market uncertainties. They also highlighted efforts to diversify their customer base and expand their solutions portfolio to mitigate risks associated with economic fluctuations and industry-specific challenges.

Here's an overview of potential risks and mitigation strategies:

Understanding these risks and the company's strategies to address them is crucial for investors. For a deeper dive into Digi International Inc.'s investor profile, check out Exploring Digi International Inc. (DGII) Investor Profile: Who’s Buying and Why?

Digi International Inc. (DGII) Growth Opportunities

Digi International Inc. (DGII) demonstrates promising future growth prospects, driven by several key factors. These include strategic product innovations, successful market expansions, well-executed acquisitions, and key strategic initiatives. These elements collectively enhance Digi's competitive positioning and potential for sustained financial growth.

Key growth drivers for Digi International Inc. (DGII) include:

• Product Innovations: Digi is focused on developing cutting-edge IoT solutions.
• Market Expansions: Expanding into new geographical markets and industry verticals.
• Acquisitions: Strategic acquisitions to enhance product offerings and market presence.

Analysts predict positive revenue growth for Digi International Inc. (DGII). Projections estimate revenue could reach $500 million by the end of fiscal year 2024, with potential for further increases in subsequent years based on current growth trajectories and market conditions.

Earnings estimates also show a favorable outlook. The company's earnings per share (EPS) are projected to increase by 10-15% annually over the next three years, supported by revenue growth and improved operational efficiencies. These projections are based on current market trends and the company's strategic initiatives.

Strategic initiatives and partnerships that may drive future growth:

• Strategic Partnerships: Collaborations with key technology providers.
• IoT Solutions: Expansion of IoT solutions across various sectors.
• New Technologies: Investments in emerging technologies to enhance product offerings.

Digi International Inc. (DGII) possesses several competitive advantages that position it for sustained growth:

• Strong Market Position: Digi holds a strong position in the IoT connectivity market.
• Diverse Product Portfolio: A broad range of products and services caters to various customer needs.
• Customer Relationships: Digi has established long-term relationships with key clients.

The table below summarizes Digi International Inc. (DGII)'s projected financial performance:

For more insights into Digi International Inc. (DGII) and its investors, check out this profile: Exploring Digi International Inc. (DGII) Investor Profile: Who’s Buying and Why?