- Digi International reported a solid QQ1 2025 with revenue of $103.87 million and a gross margin of approximately 62.0%. The quarter featured a record ARR of $120 million, up 11% year over year, representing 28% of quarterly revenues, underscoring the company’s strategic transition toward a recurring revenue model anchored by Digi’s Opengear and Digi Solutions platforms. Net income of $10.08 million and diluted EPS of $0.27 complemented healthy cash generation, with operating cash flow of $29.72 million and free cash flow of $29.14 million. These results reinforce Digi’s path toward debt reduction and a stronger balance sheet in support of growth initiatives and potential acquisitions.
- The management commentary emphasizes strategic progress on ARR expansion, margin stability, and balance-sheet improvements. Key highlights include debt below $100 million for the first time since 2021, expectations to retire all debt by the end of calendar 2025, and guidance that gross margins of 60% or better will remain a long-run theme. The company also signaled ongoing confidence in free cash flow generation and the potential for solution-oriented acquisitions of scale as the balance sheet improves.
- Looking ahead, Digi remains focused on the ARR/DIGI Solutions ecosystem with continued diversification across data centers, medical devices, remote connectivity, and utilities. Management acknowledged near-term gross-margin volatility tied to product mix and one-time revenue but reiterated that ARR growth and higher attach rates should drive durable profitability as the business models mature. The near-term guidance indicates flattish revenue in Q2 and a margin profile that remains above historical levels, subject to mix and one-time contributions.