Digi International Inc.

At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jamie Locke. CFO, please go ahead.

Thank you. Good day, everyone. It's great to talk to you again, and thanks for joining us today to discuss the earnings results of Digi International. Joining me on today's call is Ron Koneczny, our president and CEO. We issued our earnings release after the market closed today. You may obtain a copy of the press release through the financial releases section of our investor relations website at digi.com. This afternoon, Ron will provide a comment on our performance, and then we'll take your questions. Some of the statements that we make during this call are considered forward-looking and are subject to significant risks and uncertainties. These statements reflect our expectations about future operating and financial performance and speak only as of today's date. We undertake no obligation to update publicly or revise these forward-looking statements. While we believe the expectations reflected in our forward-looking statements are reasonable, 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 statement section in our earnings release today and the risk factor section of our most recent Form 10-K and subsequent reports on file with the SEC. Finally, certain of the financial information disclosed on this call includes non-GAAP measures. The information required to be disclosed about these measures, including reconciliations to the most comparable GAAP measures, are included in the earnings release. The earnings release is also furnished as an exhibit to form 8K that can be accessed through the SEC filing sections of our investor relations website. Now I'll turn the call over to Ron.

Thank you, Jamie. Good afternoon, everyone. Before we take questions, I'd like to reflect on our fiscal 2025 performance and share our outlook for fiscal 2026. DIGI delivered a strong finish to the year with record quarterly revenue of $114 million, up 9% year-over-year, cementing our return to top-line growth. We reported a record $152 million of ARR, with the inclusion of Jolt software acquired in August of this year, which represents a 31% year-over-year increase. This marks our fourth consecutive quarter of double-digit ARR growth. ARR now represents approximately 35% of total revenue. underscoring our continued transition from transactional sales to multi-year solution subscriptions. For the full fiscal year, we generated $430 million in revenue, up 1% year-over-year, and $108 million in adjusted EBITDA, an 11% increase year-over-year. Incredible collaboration between our product lines and supply chain teams drove inventory down, helping our cash conversion to deliver $105 million in free cash flow for a yield of 8%. We paid off all the debt from the Ventus acquisition as promised. Lastly, the integration of SmartSense and Jolt is being embraced by the marketplace with our first cross-selling opportunities unfolding. We have a clear vision of the combined platform and we have integrated the teams. JG's broad industrial Internet of Things offerings from embedded solutions to edge solutions, to turnkey vertical offerings appeal to a wide variety of industries and applications. This diversity fuels our resilience, durability, and relevance. JG's unique position in the market allows us to participate in emerging and evolving technology trends such as artificial intelligence, edge computing, and the industrial automation. We see a broad-based opportunity in connecting hundreds of billions of devices to the Internet. Our AI journey began with an internal focus, and we have seen meaningful productivity gains across the company. We are now in the process of leveraging AI for our products and solutions. Integrating AI as a search tool within our web applications and exploring the use of tiny language models at the edge are potential examples we are beginning to explore. These types of advancements can enhance our customer experience and unlock additional ROIs. Acquisitions remain our top capital deployment priority, and we are tracking a number of opportunities in the industrial IoT space. In fiscal 2026, we expect double-digit growth for all three of our key metrics, ARR, revenue, and adjusted EBITDA. We are confident in our long-term goal of reaching $200 million in ARR and $200 million in adjusted EBITDA by the end of fiscal 2028. Additional strategic acquisitions aligned with these metrics may accelerate this timeline. As we celebrate Digi's 40th anniversary, we want to recognize our team's incredible dedication and laser focus on our customers' success. I'm so incredibly proud to work with these outstanding teammates. Very few companies that went public in 1989 remain independent today. From perspective, the median lifespan for all U.S. companies is seven to eight years, For the current day S&P 500, it's about 18 years. Our team's ability to adapt and evolve is a testament to our enduring culture and commitment to continuous improvement. With that, I'll turn the call back to the operator. Thank you.