Digi International Inc. EBITDA surged on 44.7% and Revenue increased on 9.9%
11/12/2020 • About Digi International Inc. (
$DGII) • By InTwits
Digi International Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Digi International Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's a lot of higher than industry average of 14.0%.
- CAPEX is quite volatile: $1m in FY2020, $9m in FY2019, $2m in FY2018, $2m in FY2017, $3m in FY2016
- The company has potentially unprofitable business model: ROIC is 3.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Digi International Inc.'s Revenue increased on 9.9%. Revenue growth showed acceleration in FY20Q4 - it increased 12.6% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 6.4 pp from 6.3% to -0.061% in FY2020. During the last 5 years EBITDA Margin bottomed in FY2018 at 6.4% and was growing since that time.
Gross Margin increased on 4.7 pp from 46.8% to 51.6% in FY2020. During FY2016-FY2020 Gross Margin bottomed in FY2019 at 46.8%. SG&A as a % of Revenue increased on 3.7 pp from 28.1% to 31.8% in FY2020.
Net Income margin decreased slightly on 0.91 pp from 3.9% to 3.0% in FY2020.
Investments (CAPEX, working capital and M&A)
Digi International Inc.'s CAPEX/Revenue was 0.32% in FY2020. Digi International Inc.'s CAPEX/Revenue decreased slightly on 0.65 pp from 0.98% in FY2017 to 0.32% in FY2020. Average CAPEX/Revenue for the last three years was 1.6%.
Return on investment
The company operates at low ROIC (3.2%) and ROE (2.3%). ROIC showed almost no change in FY2020. ROE decreased slightly on 0.60 pp from 2.9% to 2.3% in FY2020. During FY2016-FY2020 ROIC bottomed in FY2018 at 0.73% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.0x and Debt / EBITDA is 0.6x. Debt surged while cash dropped on 41.7%.
Digi International Inc. has no short term refinancing risk: cash is higher than short term debt (1,203.1%).
Valuation and dividends
The company's trades at EV/EBITDA 13.5x and P/E 58.3x.
Management team
Digi International Inc.'s CEO Ronald E Konezny "Ron" has spent 6 years with the company. The company's CFO James J Loch "Jamie" has spent 1 year with the company.
Financial and operational results
FY ended 09/30/2020
Digi International Inc. ($DGII) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 203.0 | 181.6 | 228.4 | 254.2 | 279.3 | 9.9% |
| Gross Profit | 99.7 | 87.2 | 108.9 | 119.0 | 144.0 | 20.9% |
| SG&A | 50.9 | 47.3 | 73.1 | 71.5 | 88.8 | 24.2% |
| EBITDA | 21.7 | 14.3 | 14.6 | 23.5 | 34.0 | 44.7% |
| Net Income | 16.7 | 9.4 | 1.3 | 10.0 | 8.4 | -15.5% |
Balance Sheet
|
|---|
| Cash | 75.7 | 78.2 | 58.0 | 92.8 | 54.1 | -41.7% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 4.5 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 16.2 | |
Cash flow
|
|---|
| Capex | 2.7 | 1.8 | 1.8 | 9.3 | 0.9 | -90.4% |
Ratios
|
|---|
| Revenue growth | -0.4% | -10.5% | 25.7% | 11.3% | 9.9% | |
| EBITDA growth | 29.7% | -34.1% | 2.0% | 60.8% | 44.7% | |
|
|---|
| Gross Margin | 49.1% | 48.0% | 47.7% | 46.8% | 51.6% | 4.7% |
| EBITDA Margin | 10.7% | 7.9% | 6.4% | 9.2% | 12.2% | 2.9% |
| SG&A, % of revenue | 25.1% | 26.0% | 32.0% | 28.1% | 31.8% | 3.7% |
| Net Income Margin | 8.2% | 5.2% | 0.6% | 3.9% | 3.0% | -0.9% |
| CAPEX, % of revenue | 1.3% | 1.0% | 0.8% | 3.7% | 0.3% | -3.4% |
|
|---|
| ROIC | 6.1% | 2.9% | 0.7% | 3.0% | 3.2% | 0.2% |
| ROE | 5.8% | 3.0% | 0.4% | 2.9% | 2.3% | -0.6% |
| Net Debt/EBITDA | -3.5x | -5.5x | -4.0x | -4.0x | -1.0x | 3.0x |
Digi International Inc. ($DGII) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 62 | 73 | 70 | 73 | | 0.0% | 11.7% | 15.0% | 12.6% |
| EBITDA | 4 | 10 | 8 | 11 | | -56.8% | 148.6% | 69.8% | 102.4% |
| Net Income | 0 | 2 | 2 | 4 | | -95.6% | 49.3% | 7.2% | 93.9% |
Balance Sheet
|
|---|
| Cash | 49 | 58 | 55 | 54 | | -32.1% | -16.5% | -34.5% | -41.7% |
| Short Term Debt | 4 | 5 | 5 | 4 | | - | - | - | - |
| Long Term Debt | 123 | 122 | 74 | 16 | | - | - | - | - |
Ratios
|
|---|
| Gross Margin | 48.9% | 52.6% | 53.1% | 51.3% | | 1.1% | 6.5% | 6.8% | 4.2% |
| EBITDA Margin | 6.4% | 13.3% | 11.6% | 15.2% | | -8.4% | 7.3% | 3.7% | 6.7% |
| Net Income Margin | 0.3% | 2.7% | 2.5% | 6.1% | | -7.2% | 0.7% | -0.2% | 2.5% |
Peers in Communications Equipment
Below you can find Digi International Inc. benchmarking vs. other companies in Communications Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.6% | 2.8% | 3.7% | 2.1% |
|---|
| Digi International Inc. ($DGII) | - | -10.5% | 25.7% | 11.3% | 9.9% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.7% | 41.0% | 40.5% | 43.2% | 44.9% |
|---|
| Digi International Inc. ($DGII) | 49.1% | 48.0% | 47.7% | 46.8% | 51.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.5% | 6.0% | 4.6% | 3.1% | 8.8% |
|---|
| Digi International Inc. ($DGII) | 10.7% | 7.9% | 6.4% | 9.2% | 12.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 2.0% | 1.9% | 1.7% | 2.4% | 2.2% |
|---|
| Digi International Inc. ($DGII) | 1.3% | 1.0% | 0.8% | 3.7% | 0.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.2% | 2.1% | 0.3% | -1.6% | 1.9% |
|---|
| Digi International Inc. ($DGII) | 6.1% | 2.9% | 0.7% | 3.0% | 3.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (24 companies) | -0.8x | -0.6x | 0.2x | -0.1x | -0.3x |
|---|
| Digi International Inc. ($DGII) | -3.5x | -5.5x | -4.0x | -4.0x | -1.0x |
