Our management's discussion and analysis should be read in conjunction with our
Annual Report on Form 10-K for the fiscal year ended
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Form 10-Q contains certain statements that are "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995, and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-Looking Statements
This discussion contains forward-looking statements that are based on
management's current expectations and assumptions. These statements often can be
identified by the use of forward-looking terminology such as "assume,"
"believe," "anticipate," "intend," "estimate," "target," "may," "will,"
"expect," "plan," "potential," "project," "should," or "continue," or the
negative thereof or other variations thereon or similar terminology. Among other
items, these statements relate to expectations of the business environment in
which Digi operates, projections of future performance, perceived marketplace
opportunities and statements regarding our mission and vision. Such statements
are not guarantees of future performance and involve certain risks,
uncertainties and assumptions. Among others, these include risks related to the
ongoing supply chain and transportation challenges impacting businesses
globally, the ongoing COVID-19 pandemic and efforts to mitigate the same, risks
related to ongoing inflationary pressures as well as present concerns about a
potential recession and the ability of companies like us to operate a global
business in such conditions, risks arising from the present war in
These and other risks, uncertainties and assumptions identified from time to
time in our filings with the
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in
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judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
A description of our critical accounting policies and estimates was provided in
the Management's Discussion and Analysis of Financial Condition and Results of
Operations section of our Annual Report on Form 10-K for the fiscal year ended
OVERVIEW
We are a leading global provider of business and mission-critical IoT connectivity products, services and solutions. Our business is comprised of two reporting segments: IoT Products & Services and IoT Solutions.
Our IoT Products & Services segment offers products and services that help OEMs, enterprise and government customers create and deploy, secure IoT connectivity solutions. From embedded and wireless modules to console servers as well as enterprise and industrial routers, we provide a wide variety of communication sub-assemblies and finished products to meet our customers' IoT communication requirements. In addition, this segment provides our customers with a device management platform and other professional services to enable customers to capture and manage data from devices connected to networks.
Our IoT Solutions segment primarily consists of our Managed Network-as
-a-Service ("MNaaS") business acquired last year via our acquisition of
We compete for customers on the basis of existing and planned product features, service and software application capabilities, company reputation, brand recognition, technical support, alliance relationships, quality and reliability, product development capabilities, price and availability.
In fiscal 2023, our key operating objectives include:
•continuing to transition to complete solutions with software and service offerings included with our products, as this drives Annualized Recurring Revenue ("ARR"), which provides more predictable and higher margin revenues; and
•delivering a higher level of customer service across our businesses.
We utilize many financial, operational, and other metrics to evaluate our financial condition and financial performance. Below we highlight the metrics for the first quarter of fiscal 2023 that we feel are most important in these evaluations, with comparisons to the first quarter of fiscal 2022:
•Consolidated revenue was
•Consolidated gross profit was
•Gross profit margin was 56.3% versus 56.8%. Gross profit margin excluding amortization was 57.3% compared to 58.5%.
•Consolidated operating income was
•Net income was
•Diluted earnings per share was
•Adjusted net income and adjusted net income per share was
•Adjusted EBITDA was
•ARR, was
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