Digi International Inc (DGII) 2024 Q2 法說會逐字稿

Good day and thank you for standing by, and welcome to the Q2 2024 Digi International, Inc. earnings conference call.

美好的一天，感謝您的支持，歡迎參加 Digi International, Inc. 2024 年第二季財報電話會議。

At this time, all participants are in listen only mode after the speakers' presentation, there will be a question and answer session to ask a question.

此時，所有參與者都處於只聽模式，在演講者演講後，將有一個問答環節來提問。

During the session, you'll need to press star one one on your telephone.

在會議期間，您需要在電話上一一按星號。

You will then hear an automated message advising your hand is raised.

然後您將聽到一條自動訊息，建議您舉手。

To withdraw your question, please press star one.

若要撤回您的問題，請按星號一。

Once again.

再次。

Please be advised that today's conference call is being recorded, and I would now like to hand the conference over to your first speaker today, Jamie law, Chief Financial Officer.

請注意，今天的電話會議正在錄音，我現在想將會議交給今天的第一位演講者，財務長傑米·洛 (Jamie law)。

Thank you and good day, everyone.

謝謝大家，祝大家有美好的一天。

It's great to talk to you again and thanks for joining us today to discuss the earnings results of Digi International.

很高興再次與您交談，感謝您今天加入我們討論 Digi International 的盈利結果。

Joining me on today's call is Ron Konezny, our President and CEO.

與我一起參加今天電話會議的是我們的總裁兼執行長 Ron Konezny。

We issued our earnings release after the market closed yesterday.

我們在昨天市場收盤後發布了收益報告。

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.

您可以透過我們的投資者關係網站 digi.com 的財務發布部分取得新聞稿的副本。今天早上，羅恩將對我們的表現發表評論，然後我們將回答您的問題。

Some of the statements that we make during this call are considered forward looking and are subject to significant risks and uncertainties.

我們在本次電話會議中所做的一些聲明被認為是前瞻性的，並受到重大風險和不確定性的影響。

These statements reflect our expectations about future operating and financial performance and speak only as of today's date, and we undertake no obligation to update publicly or revise these forward-looking statements, but we believe the expectations reflected in our forward-looking statements are reasonable.

這些陳述反映了我們對未來營運和財務表現的預期，並且僅反映截至今天的情況，我們不承擔公開更新或修改這些前瞻性陳述的義務，但我們相信我們的前瞻性陳述中反映的預期是合理的。

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.

我們不保證此類預期會得到滿足，也不保證我們的任何前瞻性陳述將被證明是正確的。部分10 K 及後續報告已在 SEC 存檔。

Finally, and certain financial information disclosed on this call includes non-GAAP measures.

最後，本次電話會議所揭露的某些財務資訊包括非公認會計原則措施。

The information required to be disclosed about these measures, including reconciliations to the most comparable GAAP measures are included in the earnings release.

需要披露的有關這些措施的信息，包括與最具可比性的公認會計準則措施的調節，都包含在收益發布中。

The earnings release is also furnished as an exhibit to Form eight K that can be accessed through the SEC filings section of our Investor Relations website.

收益報告也作為 8 K 表格的附件提供，您可以透過我們投資者關係網站的 SEC 備案部分存取該表格。

Now I will turn the call over to Ron.

現在我將把電話轉給羅恩。

Thank you, Gary.

謝謝你，加里。

Good morning, everyone.

大家，早安。

Before we jump into Q&A, just a few comments.

在我們開始問答之前，先發表一些評論。

Did you deliver record annualized recurring revenue record gross margins, strong cash generation, lowered inventory, decreased debt balances and strong profitability.

您是否實現了創紀錄的年化經常性收入、創紀錄的毛利率、強勁的現金產生、降低的庫存、減少的債務餘額和強勁的獲利能力。

Our IoT Solutions segment is seeing results of closing enterprise opportunities, helping grow ARR.

我們的物聯網解決方案部門正在看到關閉企業機會的結果，幫助成長 ARR。

Arr remains our top priority at Digi benefiting visibility and profitability.

Arr 仍然是 Digi 的首要任務，有助於提高可見度和盈利能力。

We welcome two new members to Digi's leadership team.

我們歡迎兩位新成員加入 Digi 的領導團隊。

Jim Friedland joined as Senior Vice President and Chief Information Officer in February.

Jim Friedland 於二月加入，擔任資深副總裁兼資訊長。

Jim joined us from a nearly 18-year career at Medtronic.

Jim 在美敦力 (Medtronic) 工作了近 18 年，加入我們。

Jim security, IoT and applications experienced our perfect fit for Digi's critical needs.

Jim 的安全、物聯網和應用程式完美地滿足了 Digi 的關鍵需求。

Secondly, as announced yesterday, we're thrilled to have Tony Robalo joined Digi as Senior Vice President and General Manager of our managed solutions business.

其次，正如昨天宣布的那樣，我們很高興 Tony Robalo 加入 Digi，擔任我們託管解決方案業務的高級副總裁兼總經理。

Tony joined synergy from a 13-year career at Cradlepoint, where he demonstrated outstanding success in sales and product management leadership positions.

Tony 在 Cradlepoint 工作了 13 年，加入 Synergy 之前，他在銷售和產品管理領導職位上取得了傑出的成功。

Tony has the right combination of technical knowledge, product strategy and go-to-market expertise.

托尼擁有正確的技術知識、產品策略和進入市場專業知識的結合。

While pleased with our first half results, we are seeing more cautious customers and second half demand.

雖然我們對上半年的業績感到滿意，但我們看到客戶和下半年的需求更加謹慎。

We remain confident in our ARR growth projections.

我們對 ARR 成長預測仍然充滿信心。

However, we have softened top line expectations to offset top line expectations.

然而，我們已經軟化了營收預期，以抵銷營收預期。

We have implemented tighter expense controls, resulting in only slightly beating our annual profit expectations in the second of our 20 quarter-to-quarter journey to reach $200 million in ARR and $200 million in adjusted EBITDA.

我們實施了更嚴格的費用控制，導致我們在 20 個季度的第二個季度中僅略微超出了我們的年度利潤預期，ARR 達到 2 億美元，調整後 EBITDA 達到 2 億美元。

We are confident we can reach these targets.

我們有信心能夠實現這些目標。

The industrial IoT market is positioned for long term growth.

工業物聯網市場可望實現長期成長。

Digital will continuously innovate and service its customers in an environment of accelerating change in security, regulation and technology requirements.

Digital 將在安全、監管和技術要求加速變化的環境中不斷創新並為客戶提供服務。

Our solutions are helping our customers adapt and thrive.

我們的解決方案正在幫助我們的客戶適應並發展。

At this time, I'd like to turn the call back to the operator for our question and answer session.

此時，我想將電話轉回給接線生進行我們的問答環節。

Thank you, operator, and thank you at this time, we will conduct a question and answer session.

謝謝運營商，也謝謝您，這個時候我們會進行問答環節。

As a reminder, to ask a question, you will need to press star one one on your telephone and your name will be it and wait for your name to be announced.

提醒一下，要提問，您需要在電話上按星號一一，您的名字就會出現，然後等待您的名字被宣布。

To withdraw your question, please press star one.

若要撤回您的問題，請按星號一。

Once again, please stand by while we compile the Q&A roster.

再次請大家耐心等待，我們正在整理問答名單。

First question comes from Mike Walkley with Canaccord Genuity.

第一個問題來自 Canaccord Genuity 的 Mike Walkley。

Your line is open.

您的線路已開通。

I think state my question around last night, a Qualcomm highlighted their industrial IoT market.

我想在昨晚陳述我的問題時，高通強調了他們的工業物聯網市場。

They expect inventory to clear and business to turn exiting the September quarter, which is consistent with your cautious second half outlook.

他們預計庫存將被清理，業務將在 9 月季度結束時出現轉機，這與您謹慎的下半年前景一致。

Is it too early or you're seeing any signs of maybe September being the bottom in yield also any indication that you're either gaining or losing share, just given the softer demand outlook for the second half and a?

現在是否還為時過早，或者您是否看到任何跡象表明 9 月份可能是收益率的底部，也有任何跡象表明您正在獲得或失去份額，只是考慮到下半年和 a 的需求前景疲軟？

Hey, Mike, a couple of good questions.

嘿，麥克，有幾個好問題。

We monitor our opportunity set and our ability to convert that opportunity set and up and how long it's taking it to convert.

我們監控我們的機會集、轉換該機會集的能力以及轉換所需的時間。

And we don't have a lack of opportunities.

而且我們並不缺乏機會。

So that's the good news but we're seeing the time to close those opportunities extend.

所以這是個好消息，但我們看到關閉這些機會的時間延長了。

So short answer, I don't know whether or not September is a return to more robust growth levels.

簡短的回答是，我不知道 9 月是否會恢復到更強勁的成長水準。

But the good news is the demand is there.

但好消息是需求是存在的。

That's the bad news, is it air of caution we're seeing from customers before they before they make a decision that the caution does increase a bit Okay.

這是壞消息，在客戶做出決定之前，我們是否從客戶那裡看到了謹慎的態度，謹慎確實增加了一點，好吧。

Is it longer the bigger the deals?

是不是時間越長，交易越大？

It makes sense.

這說得通。

I guess for my follow-up question, just on the lytic litigation accrual, can you remind us what that's for and is it something that you think this covers it?

我想對於我的後續問題，只是關於溶解訴訟應計費用，您能否提醒我們這是做什麼的？

Or should we have some more litigation expenses as you head into whatever trials upcoming?

或者，當您進入即將進行的任何審判時，我們是否應該有更多的訴訟費用？

Yes, this is something that we've been handed in our K's and Q's is having something we've discussed on our calls here.

是的，這是我們在 K 和 Q 中收到的內容，我們在此處的電話會議中討論過這些內容。

It's a contract dispute with a former reseller, and we're both parties or remain in litigation as we work to to to get it resolved, and it's our best estimate at the moment.

這是與前經銷商的合約糾紛，我們雙方都是當事人，或仍在訴訟中，我們正在努力解決這個問題，這是我們目前最好的估計。

Okay, great.

好的，太好了。

And I'll pass the line and jump in the queue.

我會越過隊伍並插隊。

One moment for our next question our next question comes from Cole cousins with Stephens Inc.

我們的下一個問題來自史蒂芬斯公司的科爾表兄弟。

Hey, guys, thanks for taking my questions a morning call a so just zooming in on the customer caution on is there any specific product type or end market that is being most impacted.

嘿，夥計們，感謝您在早上的電話會議上回答我的問題，因此請重點關注客戶注意是否有任何特定的產品類型或終端市場受到最大的影響。

And then also on dentists, I know last quarter we thought the regional bank overhang was largely done coming out of that quarter, but since then, things have changed a little bit. So any updates you can provide on that business would be helpful

然後還有牙醫，我知道上個季度我們認為地區銀行的過剩問題基本上已經在該季度結束，但從那時起，情況發生了一些變化。因此，您可以提供有關該業務的任何更新都會有幫助

You that the caution is a little bit more dispersed in that and to be sure there are areas of strength still will receive certain parts of the market move up with more confidence.

您認為，謹慎情緒在這方面更加分散，並且可以肯定的是，某些強勢領域仍將讓市場的某些部分更有信心上漲。

But then there are other parts and these verticals, as you know, we're pretty diverse in our exposure.

但如你所知，還有其他部分和這些垂直領域，我們的曝光度相當多樣化。

And so we have multiple product lines and service multiple verticals.

因此，我們擁有多個產品線並為多個垂直領域提供服務。

So I'd say it's more dispersed in terms of this caution that we're seeing.

所以我想說，就我們所看到的這種謹慎而言，它更加分散。

And then on the second side of things, can you repeat that question more time, please?

然後在事情的第二方面，你能再重複這個問題嗎？

Yes, it was just on the regional bank, including IBM, Inventus Yes.

是的，只是在地區銀行，包括IBM、Inventus 是的。

So we think that's largely behind us.

所以我們認為這基本上已經過去了。

There is still some wind-down of some existing ATM networks, but there hasn't been any that any new concerns that have come out for our customer base.

一些現有的 ATM 網路仍有一些縮減，但我們的客戶群並沒有出現任何新的擔憂。

Okay. Perfect. And then I think implied by the guidance, there's some margin step-up in the back half of the year.

好的。完美的。然後我認為，根據指導意見，今年下半年的利潤率會有所上升。

And if you could kind of talk through what's the driver of that sequential improvement?

如果您能談談連續改進的驅動因素是什麼？

And I think you mentioned some expense control, but any any additional color you can provide there would be helpful.

我認為您提到了一些費用控制，但是您可以提供的任何其他顏色都會有所幫助。

I call this is this Jamie, I think there's really two drivers.

我稱這是傑米，我認為確實有兩個司機。

I think the continued growth of ARR provides positive mix into that gross margin.

我認為 ARR 的持續成長為毛利率帶來了正面的影響。

And so one of the reasons why we continue to say that it's a top priority for us because you see the impact that that has it flows its way down through the P&L.

因此，我們繼續說這是我們的首要任務的原因之一，因為你可以看到它透過損益表向下流動的影響。

I think secondarily, to to your point, we continue to be focused on controlling costs.

我認為其次，就您的觀點而言，我們繼續專注於控製成本。

And that's both at an OpEx level, but it's also at a cost of goods sold level and our operations teams are doing a really nice job as we're navigating our way out of really the the semiconductor challenges that were sitting out there, they're doing a really nice job of helping us navigate through that cost side so it's kind of a two-folded, but I'd really point to the growth in air are providing positive.

這既是在營運支出層面，也是在銷售成本層面，我們的營運團隊做得非常好，因為我們正在走出真正的半導體挑戰，他們」我們在幫助我們克服成本方面做得非常好，所以它是雙重的，但我確實指出空氣的增長提供了積極的影響。

Perfect, helpful. And if I could squeeze one last one in.

完美，有幫助。如果我能把最後一顆塞進去就好了。

I thought it was a good quarter on ARR growth and solutions.

我認為這是一個在 ARR 成長和解決方案方面表現良好的季度。

And I think some of that was on or most of that was on SmartSense wins.

我認為其中一部分或大部分是 SmartSense 的勝利。

But is there any drivers that you're or any changes you're seeing in that business, it's kind of in that business that's kind of driving some of those wins? Any color there would be helpful. Thanks.

但是，您在該業務中是否有任何驅動因素或您看到的任何變化，在該業務中是否推動了其中一些勝利？任何顏色都會有幫助。謝謝。

Yes, we on previous calls, we talked about this.

是的，我們在之前的電話中討論過這一點。

We again had a nice opportunity set there, and we've been just struggling to get the customers to have the confidence to move forward.

我們再次獲得了一個很好的機會，我們一直在努力讓客戶有信心繼續前進。

And and we're seeing that finally start to occur.

我們看到這終於開始發生。

You saw that in last quarter results.

您在上季度的業績中看到了這一點。

We anticipate continued success there.

我們預計那裡將繼續取得成功。

And somebody would call is these opportunities have been really well vetted by the customer in a very extensive POCs, very extensive ROI mapping implementation discussions, and we're starting to see the fruits of that patience and that and that dedication to helping good perfect I'll turn it back.

有人會說，這些機會已經由客戶在非常廣泛的 POC、非常廣泛的 ROI 映射實施討論中進行了很好的審查，我們開始看到耐心、以及幫助完善我的奉獻精神的成果。回來。

Thanks, guys.

多謝你們。

One moment for our next question. And our next question comes from Josh Nichols with B. Riley.

請稍等一下我們的下一個問題。我們的下一個問題來自 Josh Nichols 和 B. Riley。

Certainly yes, thanks for taking my question and great to see the AR and the margin flow through to the cash flow generation for that QUARTER.

當然是的，感謝您提出我的問題，很高興看到 AR 和利潤流向該季度的現金流產生。

Just touching on that from a working capital perspective, your inventory has been rightsized as you mentioned maybe there's some more work to do.

只是從營運資金的角度來看，您的庫存已經調整，正如您所提到的，也許還有更多的工作要做。

I'm just kind of curious, based on the outlook you have here for the second half, what do you consider a fair amount of inventory or rightsized inventory level that the company is looking to work to over the next couple of quarters?

我只是有點好奇，根據您對下半年的展望，您認為公司在接下來的幾季中希望達到的合理庫存量或合理庫存水準是多少？

If you look historically, I'd say that $40 million to $50 million range is probably where we'd be on a more normalized basis.

如果你回顧歷史，我會說 4000 萬美元到 5000 萬美元的範圍可能是我們在更正常化的基礎上的範圍。

The difference between that and our net inventory position is mainly components.

這與我們的淨庫存部位之間的差異主要在於零件。

So what we're seeing those components be consumed and winding down and that'll happen over the next several quarters.

因此，我們看到這些組件被消耗並逐漸減少，這將在接下來的幾個季度發生。

So over time, I think you'll see us get out of that, let's say $40 million to 50 million range would be saved in more normal times.

因此，隨著時間的推移，我認為您會看到我們擺脫這種困境，假設在正常情況下將節省 4000 萬至 5000 萬美元。

Great. And then just as a follow-up question, good to see that there's probably some healthy cash flow generation from those working capital levers over the coming quarters.

偉大的。作為一個後續問題，很高興看到未來幾季這些營運資本槓桿可能會產生一些健康的現金流。

And I think previously, when when you talked about a little softness, you were speaking specifically that you saw on some console servers.

我認為以前，當您談到一點軟性時，您具體是在談論您在某些控制台伺服器上看到的情況。

It appears that was a little bit of a headwind in this quarter.

看來本季有點不利。

I'm just curious any update on that specifically if the demand is there, what's causing that?

我只是好奇這方面的任何更新，特別是如果有需求，是什麼原因造成的？

And I know you said it's a little bit broad based, but I'm curious where we stand on terms of the console server side.

我知道你說它的基礎有點廣泛，但我很好奇我們在控制台伺服器端的立場。

Yes, Josh, just to kind of rewind the tape a little bit as we entered FY 24, we clearly signaled that the first half was going to be in our best estimate, not as strong as the second half than it was maybe driven by some delays on the strategic side so certainly obviously that as that has played out as we expected, we are seeing some of our strategics data center now starting to come back as we enter the second half but I'd say it's much more deliberate, our pace at which they're coming back.

是的，喬什，當我們進入 24 財年時，我們明確表示上半年將達到我們的最佳估計，但不會像下半年那樣強勁，可能是由某些因素推動的戰略方面的延遲很明顯，正如我們預期的那樣，我們看到我們的一些戰略資料中心現在開始在我們進入下半年時恢復，但我想說這是更加深思熟慮的，我們的步伐他們回來的時候。

So what we are seeing, which is positive.

所以我們所看到的是積極的。

Thanks. I'll hop back in the queue.

謝謝。我會跳回到隊列中。

One moment for our next question. And our next question comes from Scott Searle with ROTH MKM.

請稍等一下我們的下一個問題。我們的下一個問題來自 ROTH MKM 的 Scott Searle。

Good morning. Thanks for taking the questions.

早安.感謝您提出問題。

Ron, just to clarify, in terms of some of the demand outlook.

羅恩，只是澄清一些需求前景。

It sounds like customers are certainly turning a bit more cautious, but is inventory excess channel inventory playing at all into that current buying pattern?

聽起來客戶肯定會變得更加謹慎，但庫存過剩的通路庫存是否會影響當前的購買模式？

And then had a follow-up on a couple of the earlier questions on open gear.

然後對之前關於開式齒輪的幾個問題進行了跟進。

It sounds like things are starting to move in the right direction.

聽起來事情開始朝著正確的方向發展。

I think last quarter though, you indicated that there were some larger customers that were expected to return, have they returned?

我認為上個季度，您表示預計會有一些較大的客戶回歸，他們回來了嗎？

Or are they still kind of kicking out your decision making process?

或者他們仍然在某種程度上踢出你的決策過程？

Hey, good morning, Scott.

嘿，早上好，史考特。

Yes, on the channel inventory side, it's higher than than I would say, normal times, it's exclusively driven by a few customers with allocated inventory.

是的，在渠道庫存方面，它比我所說的要高，正常情況下，它完全是由少數擁有分配庫存的客戶驅動的。

So yes, if they didn't have as much inventory, that probably would help on the sales side, but I want to emphasize a few select customers.

所以，是的，如果他們沒有那麼多庫存，這可能會對銷售方面有所幫助，但我想強調一些精選的客戶。

It's not broad-based.

它的基礎並不廣泛。

And in terms of the console server side, yes, we had indicated the first half of our fiscal year that we've got to be slow on that data center side, which is one of the reasons we thought that the first half may not be as strong as the second half.

就控制台伺服器端而言，是的，我們已經在本財年上半年表示，我們在資料中心方面必須放慢速度，這就是我們認為上半年可能不會成長的原因之一。 。

We are starting to see that return here in this current quarter.

我們開始在本季看到這種回報。

It's more a month into it, but we are seeing seem some buying time.

已經過去一個月多了，但我們看到似乎還有一些買入時間。

They are being very deliberate, not getting a larger PO for the quarter for the next six months, and it's more much more granular in terms of how they're coming back.

他們非常深思熟慮，沒有在接下來的六個月內獲得更大的季度採購訂單，而且在他們如何回來方面更加細緻。

Got you. So Ron, just to clarify.

明白你了。羅恩，我只是想澄清一下。

So we should be thinking about Opengear increasing sequentially into June and then into the back half of the calendar year.

因此，我們應該考慮 Opengear 會在 6 月依次增加，然後在日曆年的後半段增加。

And then maybe switching over to the server gateway side that's been weak as well on share shifts or particular verticals or any other color that you could provide in terms of what's going on with the demand profile there yes.

然後可能會切換到伺服器網關端，該端在份額轉移或特定垂直領域或您可以根據需求概況提供的任何其他顏色方面也很弱。

So the way that your assumption is correct on the Opengear console server business on the router side, I think there's a couple of interesting dynamics going on.

因此，您對路由器端 Opengear 控制台伺服器業務的假設是正確的，我認為存在一些有趣的動態。

I think industrial IoT.

我認為工業物聯網。

Iot is still a strong market.

物聯網仍然是一個強勁的市場。

It's the carriers have turned their attention.

運營商已經轉移了注意力。

As you probably know to FWA.

正如您可能對 FWA 所了解的那樣。

There's a little bit more energy that they have on FWA replacing wired Internet connections with wireless interconnections.

他們在 FWA 上投入了更多的精力，用無線互連取代有線網路連線。

We think we're in a good spot from a competitive side with some of the things going on with some of our major competitors in North America, we are bringing Tony and with his experience at Cradlepoint, we think is going to be a real strong for us as well as we look to build on and some of our competitive positioning.

我們認為，從競爭的角度來看，我們在北美的一些主要競爭對手所發生的一些事情上處於有利位置，我們帶來了托尼，憑藉他在Cradlepoint 的經驗，我們認為這將是一個真正強大的團隊對我們來說，我們也希望鞏固我們的一些競爭地位。

Great.

偉大的。

And lastly, if I could, just from a high level, there's certainly a focus on ARR growing that from $100 million to $200 million over the next several years.

最後，如果可以的話，從高水準來看，我們肯定會關注 ARR 在未來幾年從 1 億美元成長到 2 億美元。

But when you think about the product or hardware based side of the equation, a lot of transitions ongoing, what gets us back into growth mode and what does that growth mode look like as we look into F25? Thanks.

但是，當您考慮基於產品或硬體的等式時，很多轉變正在進行，是什麼讓我們回到成長模式？謝謝。

Yes, but the good news is ARR has been a real bright spot for us, and we're up double digits year over year, again, this current quarter, and we expect AR to continue to grow well, while private services is going to be a big contributor to that, quite frankly, landing these enterprise deals on the solution side of our business is going to have as much, if not more of an impact.

是的，但好消息是 ARR 對我們來說是一個真正的亮點，本季度我們再次實現了兩位數的同比增長，我們預計 AR 將繼續良好增長，而私人服務也將繼續增長。 ，在我們業務的解決方案方面達成這些企業交易將產生同樣大的影響，甚至更大的影響。

So we're really encouraged by our solutions and SmartSense in particular, are starting to contribute to the ARR growth we do expect, and we'll continue to see some success there and help propel that ARR moving forward.

因此，我們的解決方案，特別是 SmartSense，讓我們深受鼓舞，它們開始為我們預期的 ARR 成長做出貢獻，我們將繼續看到一些成功，並幫助推動 ARR 向前發展。

One more for our next question. And our next question comes from Harsh Kumar with Piper Sandler.

我們的下一個問題還有一個。我們的下一個問題來自 Harsh Kumar 和 Piper Sandler。

Yes, hey, guys.

是的，嘿，夥計們。

Just a couple of quick questions.

只是幾個簡單的問題。

Sharon, I wanted to circle up on your comment about second half pickup in console servers.

莎倫，我想談談你對控制台伺服器下半年拾取的評論。

We're seeing tremendous activity in the semiconductor side with the compute, particularly in data centers.

我們看到半導體方面的計算活動非常活躍，特別是在資料中心。

And there's talk of kind of not just large or mega data centers building.

人們談論的不僅是大型或超大型資料中心的建設。

So I was curious, A., you're saying that you're starting to see some some opening up of wallets in the console server side.

所以我很好奇，A.，你是說你開始看到控制台伺服器端的一些錢包被打開了。

But as you talk to the customers and particularly on the data center side, I guess I'd be curious to hear what their outlook is or what they say or what they think they're going to be spending on things like console servers as we look out.

但當你與客戶交談時，特別是在資料中心方面，我想我很想聽聽他們的前景是什麼，他們說什麼，或者他們認為他們將在控制台伺服器等方面花費什麼，因為我們小心。

And then also, I'd love to get a quick update on console servers that retail environment, places like Home Depot and bank branches.

此外，我還希望獲得零售環境、家得寶和銀行分行等場所的控制台伺服器的快速更新。

And things like that, where there's a pretty good application for those as well.

諸如此類的事情，也有一個非常好的應用程式。

Hey, good morning, virtually.

嘿，早上好，實際上。

It's a question that yes, when we started working with open gear and they became a part of the Digi team back in 2019.

這是一個問題，是的，當我們開始使用 open gear 時，他們早在 2019 年就成為了 Digi 團隊的一員。

Data center is actually over 50% of their revenue and Edge was under that.

資料中心實際上佔其收入的 50% 以上，而 Edge 則低於這一比例。

And that has slipped edge is now that the actually the leading application with data centers will be very strong, but not the majority of our telecom sales.

現在，情況已經下滑，實際上資料中心的領先應用程式將非常強大，但不是我們電信銷售的大部分。

It was back then and course, there's a lot of energy around No pun intended around AI. data center buildout.

那是在那時，當然，有很多能量圍繞著人工智慧，沒有雙關語。數據中心建設。

And one of the biggest constraints is access to power, in particular, affordable power.

最大的限制之一是獲得電力，特別是負擔得起的電力。

In this current generation, they had ships it does require quite a bit of energy people who are working on improving that situation.

在這一代中，他們擁有船隻，這確實需要相當多的能源，人們正在努力改善這種情況。

But as they expand into new locations, access to affordable power is one of the biggest constraints.

但當他們擴展到新的地點時，獲得負擔得起的電力是最大的限制之一。

And so there's great excitement.

所以大家都很興奮。

I think that the our ability as we get into the physical world, building these things out is more paced.

我認為，當我們進入物理世界時，我們建構這些東西的能力會更加快速。

Now you can have an existing data center, which has traditional compute and add AI capabilities in that you've got space there, but building out new data centers, it's hitting some road.

現在你可以擁有一個現有的資料中心，它具有傳統的運算功能並添加人工智慧功能，因為你在那裡有空間，但建立新的資料中心，它正在走上一些道路。

Okay. Okay.

好的。好的。

Got it on.

穿上了。

And then as you look at your business, Ron, maybe give us an idea of what segments or subsegments you are most excited about, not just the rest of the year, but maybe next year, two years out just kind of a little bit longer term oriented picture?

然後，羅恩，當您審視您的業務時，也許可以讓我們了解一下您最感興趣的細分市場或子細分市場，不僅僅是今年剩餘的時間，而且也許是明年，兩年後的時間稍微長一點術語導向的圖片？

Yes.

是的。

And harsh, if you recall, we have a very diverse set of customers and we service a number of different verticals.

如果您還記得的話，那麼嚴酷的是，我們擁有非常多樣化的客戶群，並且我們為許多不同的垂直行業提供服務。

And so we enjoy that diversification.

因此，我們享受這種多元化。

And I think that shows some of the strength of our performance over time.

我認為這顯示了我們隨著時間的推移而表現的一些優勢。

So some of our goals that are doing well right now that we anticipate continuing to do well is more of a utility grade solar, for example, which is doing well or residential solar Young is not as robust as it was, EV charging remains very strong.

因此，我們現在做得很好的一些目標，我們預計會繼續做得很好，例如，公用事業級太陽能做得很好，或者住宅太陽能年輕並不像以前那麼強勁，電動車充電仍然非常強勁。

We've always been strong in medical device.

我們在醫療器材方面一直很強大。

You mentioned data center, retail, point-of-sale type applications.

您提到了資料中心、零售、銷售點類型的應用程式。

So so we've got a number of applications that we feel we feel pretty good about with one of the others that's been a traditional strength of ours that obviously got really wallets during COVID is the mass transit and smart C segment, and we're seeing that come back, which is nice.

因此，我們有很多應用程序，我們覺得我們對其中一個應用程式感覺非常好，其中一個是我們的傳統優勢，顯然在新冠疫情期間真正受到青睞的是公共交通和智能 C 細分市場，我們正在看到它回來了，這很好。

And those applications now are considering moving from from 4G to 5G.

這些應用現在正在考慮從 4G 轉向 5G。

So we've got some nice existing customers that we are going to help them transition and add new opportunities there.

因此，我們有一些很好的現有客戶，我們將幫助他們轉型並在那裡增加新的機會。

Got it. And then the last one, I wanted to get back to your comment in the press release and then earlier about wireless scanner getting a little tight in the IT spend.

知道了。最後一個，我想回到您在新聞稿中的評論，以及之前關於無線掃描器的 IT 支出有點緊張的評論。

And so the question really is, are they are they taking longer to close or are they I'm kind of not wanting to initiate new projects.

所以問題確實是，他們是否需要更長的時間才能結束，或者他們是否不想啟動新專案。

And then when they look, let's just say, past the election, maybe towards the end of the year, what kind of outlook are your customers providing when you talk to them?

然後，當他們看到，讓我們說，在選舉之後，也許在年底，當你與你的客戶交談時，他們會提供什麼樣的前景？

Yes.

是的。

So when we look at the data, the opportunity set is as robust as it's ever been.

因此，當我們查看數據時，機會集與以往一樣強勁。

So the demand is there.

所以需求就在那裡。

The conversion time line is taking longer.

轉換時間軸需要更長的時間。

So it's taking longer for customers make decisions.

因此，客戶做出決定需要更長的時間。

And if you look at our average order size, that's actually down by about 5% as well.

如果您查看我們的平均訂單規模，您會發現實際上也下降了約 5%。

So you've got customers that are being more cautious, issuing smaller POs.

因此，您的客戶會更加謹慎，發出較小的採購訂單。

And you've seen this with a number of public companies, profitability and cost cutting right now is very trendy, right?

您已經在許多上市公司中看到了這一點，盈利能力和成本削減現在非常流行，對嗎？

Obviously, it starts with the huge companies, but how many companies are you seeing nowadays where revenue may not be exactly where they want, but you're seeing profitability really strong.

顯然，這是從大公司開始的，但現在你看到有多少公司的收入可能不完全符合他們的預期，但你看到獲利能力非常強勁。

And that's I think some of that exposure that I'm I I'm talking to, which is customers being very cautious.

這就是我認為我正在交談的一些曝光，即客戶非常謹慎。

They know they need the stuff.

他們知道他們需要這些東西。

Are there being more exacting on what they're looking for?

他們所尋找的東西是否有更嚴格的要求？

And the terms of that arrangement, which is elongating sales cycles very well, Ron, thank you so much.

這種安排的條款很好地延長了銷售週期，羅恩，非常感謝你。

Again, as a reminder, if you want to ask a question, please press star one one on your telephone to get into the queue.

再次提醒您，如果您想提問，請在電話上按星號一一進入隊列。

Our next question comes from Mike Walkley with Canaccord Genuity.

我們的下一個問題來自 Canaccord Genuity 的 Mike Walkley。

I think just a quick follow-up question for Jamie.

我想向傑米提出一個快速的後續問題。

Just if you take kind of the midpoints of your full year guidance in Q3, it kind of speaks to flattish Q4, but an uptick in adjusted EBITDA.

如果您採用第三季全年指引的中點，則可以看出第四季度持平，但調整後 EBITDA 有所上升。

Is that just better mix of console server so more of a gross margin uptick?

這是否只是控制台伺服器的更好組合，從而使毛利率上升更多？

Or is there something else like increased cost controls expected in the September quarter?

或者是否還有其他措施，例如預計在九月季度加強成本控制？

Walk by again, I think the biggest driver that we see that's ticking that up is that continued mix of ARRGO.s.

再次走過，我認為我們看到的最大推動因素是 ARRGO.s 的持續混合。

We project ARR to continue to hold.

我們預計 ARR 將繼續持有。

I think we continue to see that up there.

我認為我們會繼續看到這一點。

There are and cost controls that we're looking at that, you know, we some we put into place some get put into play in the quarter and then you'll get a full quarter effect of that in Q4 versus a partial in Q three.

我們正在考慮一些成本控制，你知道，我們實施了一些控制措施，一些措施在本季度發揮作用，然後你將在第四季度獲得完整的季度效果，而在第三季度則獲得部分效果。

So it's a little bit of a combination, but I would say the biggest driver is going to end up being more positive mix and and the impact on gross margin largely led by air are continuing to grow.

因此，這是一個綜合因素，但我想說，最大的推動因素最終將是更積極的組合，並且主要由航空主導的對毛利率的影響將繼續增長。

I think just a follow-up question here on in the script, again on the press release, you talked about your focus on M&A to grow the business over time, and you guys have done a good job deleveraging with the strong cash flows.

我認為這只是劇本中的一個後續問題，在新聞稿中，您談到了您對併購的關注，以隨著時間的推移發展業務，而且您在利用強勁的現金流去槓桿化方面做得很好。

Can you just maybe update us on what you're seeing in the M&A market and opportunities?

您能否向我們介紹一下您在併購市場和機會中看到的最新情況？

Yes, there still is a really good set out there.

是的，那裡仍然有一個非常好的設置。

As you know, interest rates have climbed a little bit of broader land.

如您所知，利率在更廣泛的領域有所上升。

They're not that high in the last 20 years.

近20年來，它們並沒有那麼高。

They're high and that's helped fuel.

它們很高，這有助於補充能量。

A lot of financial buyers who are seeing financial buyers maybe be more disciplined or less participatory, but strategics are still are still pretty active and up the good news on industrial IoT, it's a massive market.

許多金融買家看到金融買家可能更加自律或較少參與，但策略仍然相當活躍，工業物聯網的好消息是，這是一個巨大的市場。

There are thousands tens of thousands of IoT privately held companies out there.

那裡有成千上萬的物聯網私人公司。

And so we think we have a good opportunity set.

所以我們認為我們有一個很好的機會。

As you mentioned, we are very patient and disciplined.

正如您所提到的，我們非常有耐心且遵守紀律。

We want to find companies of scale that have good ARR attributes.

我們希望找到具有良好 ARR 屬性的規模公司。

We have a right to work with and alongside them, and we want them to be growing and profitable.

我們有權與他們合作並肩作戰，我們希望他們不斷成長並獲利。

And so in the meantime, where we're trending towards fewer larger opportunities and deleveraging up an important part of that, we do our best to trying to really prevent dilution.

因此，同時，當我們傾向於減少更大的機會並去槓桿化其中的一個重要部分時，我們會盡最大努力真正防止稀釋。

So we use that as a way of helping clients the acquisitions and so delevering is very important for us to improve our ability to chase larger opportunities should should it become available.

因此，我們以此作為幫助客戶進行收購的一種方式，因此去槓桿化對於我們提高我們追逐更大機會（如果有機會）的能力非常重要。

Makes sense. Thank you.

說得通。謝謝。

I'm showing no further questions at this time.

我目前沒有提出任何進一步的問題。

I would now like to turn it back to Ron for closing remarks.

現在我想請 Ron 發表結束語。

Thank you, and really appreciate everybody joining our earnings discussion today and for your continued support of Digi will be in attendance at the B. Riley Conference this quarter as well as Craig Hallum.

謝謝你們，非常感謝今天加入我們收益討論的每個人，以及你們對 Digi 的持續支持，我們將出席本季度的 B. Riley 會議以及 Craig Hallum。

So if you are an investor, please contact those authorizations for meetings a giant.

因此，如果您是投資者，請聯絡那些會見巨頭的授權機構。

Thank you.

謝謝。

To our customers, our distributors, suppliers and our incredible Digi team and have a great day.

祝福我們的客戶、經銷商、供應商和我們出色的 Digi 團隊度過美好的一天。

And thank you for your participation in today's conference.

感謝您參加今天的會議。

This does conclude the program.

這確實結束了該程式。

You may now disconnect.

您現在可以斷開連線。