0000854775-24-000029 | 10-Q | XBRL Viewer

Earnings Per Share

9 Months Ended

Jun. 30, 2024

The following table is a reconciliation of the numerators and denominators in the net income per common share calculations (in thousands, except per common share data):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
Numerator:


Net income	$	9,702	$	6,727	$	10,642	$	18,405

Denominator:
Denominator for basic net income per common share — weighted average shares outstanding	36,375		35,889		36,266		35,761
Effect of dilutive securities:
Stock options and restricted stock units	651		928		655		1,077
Denominator for diluted net income per common share — adjusted weighted average shares	37,026		36,817		36,921		36,838




Net income per common share, basic	$	0.27	$	0.19	$	0.29	$	0.51



Net income per common share, diluted	$	0.26	$	0.18	$	0.29	$	0.50

Digi excludes certain stock options and restricted stock unit awards that would have an anti-dilutive effect on our diluted net income per share calculation. For the three months ended June 30, 2024 and 2023, 646,564 and 599,957 shares outstanding were excluded, respectively. For the nine months ended June 30, 2024 and 2023, 710,370 and 477,521 shares outstanding were excluded, respectively.

Contingencies	9 Months Ended
Contingencies	Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES We lease certain of our buildings and equipment under non-cancelable lease agreements. Please refer to Note 10 to our condensed consolidated financial statements for additional information. As previously disclosed, Data Logger Solutions, LLC ("Data Loggers") brought suit in Delaware Superior Court against us and our subsidiary Digi SmartSense, LLC on October 23, 2020. The suit alleges that Data Loggers has not been paid certain commissions it believes it is owed and will continue to be owed under a Reseller Agreement between Data Loggers and TempAlert. SmartSense is the successor of interest of TempAlert and terminated the Reseller Agreement in 2019. Data Loggers claims it is entitled to actual, speculative and punitive damages in connection with its allegations. In March 2024, a jury found Digi liable for breach of contract and awarded Data Loggers damages of approximately $11.6 million. Delaware law also entitles Data Loggers to interest on this award pursuant to a statutory calculation. Each party has filed post-trial motions with respect to the jury’s verdict and a hearing on these motions was held on June 28, 2024. Our motions seek to have the case retried or to remit the award of damages. The plaintiffs are seeking to expand the award of damages for attorney’s fees and additional interest. While these post-trial motions are pending, each party’s right to appeal is stayed and remains in place. Pursuant to ASC 450 we have accrued a $6.3 million liability with respect to this case. The accrual reflects a reasonable estimate of probable loss based on information currently available to us. The ultimate loss, if any, to Digi could be materially different from the amount we have accrued and we cannot predict or estimate the duration or ultimate outcome of this matter. In addition to the matter discussed above, in the normal course of business, we are presently, and expect in the future to be, subject to various claims and litigation with third parties such as non-practicing intellectual property entities as well as customers, vendors and/or employees. There can be no assurance that any claims by third parties, if proven to have merit, will not materially adversely affect our business, liquidity or financial condition.

Stock-Based Compensation (Options and Common Shares Reserved for Grant) (Details) - Stock Options
$ / shares in Units, shares in Thousands, $ in Thousands

9 Months Ended

Jun. 30, 2024

USD ($)

$ / shares

Options Outstanding [Roll Forward]

Options Outstanding, Beginning Balance (in shares) | shares

1,553

Options Outstanding, Granted (in shares) | shares

Options Outstanding, Exercised (in shares) | shares

(91)

Options Outstanding, Forfeited / Canceled (in shares) | shares

(39)

Options Outstanding, Ending Balance (in shares) | shares

1,510

Options Outstanding, Exercisable (in shares) | shares

1,160

Weighted Average Exercise Price [Roll Forward]

Weighted Average Exercise Price, Beginning Balance

$ 18.52

Weighted Average Exercise Price, Granted

24.59

Weighted Average Exercise Price, Exercised

28.43

Weighted Average Exercise Price, Forfeited / Canceled

27.61

Weighted Average Exercise Price, Ending Balance

18.74

Weighted Average Exercise Price, Exercisable

$ 17.19

Weighted Average Remaining Contractual Term [Abstract]

Weighted Average Remaining Contractual Term, Outstanding

3 years 3 months 18 days

Weighted Average Remaining Contractual Term, Exercisable

2 years 10 months 24 days

Aggregate Intrinsic Value, Outstanding | $

$ 7,659

^[1]

Aggregate Intrinsic Value, Exercisable | $

$ 7,220

^[1]

Closing Stock Price

$ 22.93

[1]

The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $22.93 as of June 30, 2024, which would have been received by the option holders had all option holders exercised their options as of that date.

12. STOCK-BASED COMPENSATION (CONTINUED)

The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price.

Segment Information Depreciation and Amortization Expense By Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Segment, Reconciliation of Other Items from Segments to Consolidated [Line Items]
Total Revenue	$ 105,203	$ 112,236	$ 318,994	$ 332,686
Gross Profit	62,258	63,819	185,676	188,212
Amortization expense	8,298	8,004	24,414	23,962
IoT Products & Services Segment
Segment, Reconciliation of Other Items from Segments to Consolidated [Line Items]
Total Revenue	80,003	87,358	245,416	257,593
Gross Profit	43,501	47,229	132,421	140,367
Amortization expense	3,111	3,108	9,316	9,446
IoT Solutions Segment
Segment, Reconciliation of Other Items from Segments to Consolidated [Line Items]
Total Revenue	25,200	24,878	73,578	75,093
Gross Profit	18,757	16,590	53,255	47,845
Amortization expense	$ 5,187	$ 4,896	$ 15,098	$ 14,516

- Definition

Aggregate revenue less cost of goods and services sold or operating expenses directly attributable to the revenue generation activity.

+ References

+ Details

- Definition

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

+ References

+ Details

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue:
Total Revenue	$ 105,203	$ 112,236	$ 318,994	$ 332,686
Cost of sales:
Amortization of intangibles	952	953	2,858	3,009
Total cost of sales	42,945	48,417	133,318	144,474
Gross Profit	62,258	63,819	185,676	188,212
Operating expenses:
Sales and marketing	21,501	20,974	61,688	60,421
Research and development	15,132	14,945	44,809	44,194
General and administrative	12,717	15,424	45,987	46,983
Total operating expenses	49,350	51,343	152,484	151,598
Operating income	12,908	12,476	33,192	36,614
Other expense, net:
Interest expense, net	(3,234)	(6,603)	(12,592)	(18,967)
Debt issuance cost write off	0	0	(9,722)	0
Other (expense) income, net	(14)	15	(72)	79
Total other expense, net	(3,248)	(6,588)	(22,386)	(18,888)
Income before income taxes	9,660	5,888	10,806	17,726
Income tax provision	(42)	(839)	164	(679)
Net income	$ 9,702	$ 6,727	$ 10,642	$ 18,405
Basic net income per common share:
Basic (USD per share)	$ 0.27	$ 0.19	$ 0.29	$ 0.51
Diluted net income per common share
Diluted (USD per share)	$ 0.26	$ 0.18	$ 0.29	$ 0.50
Weighted average common shares:
Basic (shares)	36,375	35,889	36,266	35,761
Diluted (shares)	37,026	36,817	36,921	36,838
Product
Revenue:
Revenue	$ 74,618	$ 81,714	$ 230,300	$ 247,288
Cost of sales:
Cost of sales excluding amortization	35,846	40,650	111,506	120,480
Service
Revenue:
Revenue	30,585	30,522	88,694	85,398
Cost of sales:
Cost of sales excluding amortization	$ 6,147	$ 6,814	$ 18,954	$ 20,985

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure
Net income	$ 9,702	$ 6,727	$ 10,642	$ 18,405

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

Selected Balance Sheet Data

9 Months Ended

Jun. 30, 2024

Selected Balance Sheet Data [Abstract]

SELECTED BALANCE SHEET DATA

The following table shows selected balance sheet data (in thousands):


	June 30, 2024		September 30, 2023
Accounts receivable, net:
Accounts receivable	$	76,501	$	61,880
Less allowance for credit losses	1,457		1,693
Less reserve for future credit returns and pricing adjustments	3,854		4,190
Accounts receivable, net	$	71,190	$	55,997
Inventories:
Raw materials	$	21,509	$	29,974
Work in process	22		66
Finished goods	35,134		44,356
Inventories	$	56,665	$	74,396

Earnings Per Share (Tables)

9 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Schedule of Calculation of Numerator and Denominator in Earnings Per Share

The following table is a reconciliation of the numerators and denominators in the net income per common share calculations (in thousands, except per common share data):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
Numerator:


Net income	$	9,702	$	6,727	$	10,642	$	18,405

Denominator:
Denominator for basic net income per common share — weighted average shares outstanding	36,375		35,889		36,266		35,761
Effect of dilutive securities:
Stock options and restricted stock units	651		928		655		1,077
Denominator for diluted net income per common share — adjusted weighted average shares	37,026		36,817		36,921		36,838




Net income per common share, basic	$	0.27	$	0.19	$	0.29	$	0.51



Net income per common share, diluted	$	0.26	$	0.18	$	0.29	$	0.50

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Treasury Stock, Common	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive (Loss) Income
Beginning balance (in shares) at Sep. 30, 2022		41,950	6,413
Beginning balance at Sep. 30, 2022	$ 501,513	$ 420	$ (58,172)	$ 385,244	$ 200,075	$ (26,054)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	18,405				18,405
Other comprehensive (loss) income	1,358					1,358
Employee stock purchase plan issuances (in shares)			(58)
Employee stock purchase plan issuances	1,690		$ 553	1,137
Taxes paid for net share settlement of share-based payment awards (in shares)			97
Taxes paid for net share settlement of share-based payment awards	(3,851)		$ (3,851)
Issuance of stock under stock award plans (in shares)		458
Issuance of stock under stock award plans	2,616	$ 4		2,612
Stock-based compensation expense	9,852			9,852
Ending balance (in shares) at Jun. 30, 2023		42,408	6,452
Ending balance at Jun. 30, 2023	531,583	$ 424	$ (61,470)	398,845	218,480	(24,696)
Beginning balance (in shares) at Mar. 31, 2023		42,325	6,464
Beginning balance at Mar. 31, 2023	520,179	$ 423	$ (61,446)	394,036	211,753	(24,587)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	6,727				6,727
Other comprehensive (loss) income	(109)					(109)
Employee stock purchase plan issuances (in shares)			(18)
Employee stock purchase plan issuances	520		$ 173	347
Taxes paid for net share settlement of share-based payment awards (in shares)			6
Taxes paid for net share settlement of share-based payment awards	(197)		$ (197)
Issuance of stock under stock award plans (in shares)		83
Issuance of stock under stock award plans	944	$ 1		943
Stock-based compensation expense	3,519			3,519
Ending balance (in shares) at Jun. 30, 2023		42,408	6,452
Ending balance at Jun. 30, 2023	531,583	$ 424	$ (61,470)	398,845	218,480	(24,696)
Beginning balance (in shares) at Sep. 30, 2023		42,501	6,436
Beginning balance at Sep. 30, 2023	540,488	$ 425	$ (61,506)	403,735	224,845	(27,011)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	10,642				10,642
Other comprehensive (loss) income	2,283					2,283
Employee stock purchase plan issuances (in shares)			(75)
Employee stock purchase plan issuances	1,681		$ 733	948
Taxes paid for net share settlement of share-based payment awards (in shares)			113
Taxes paid for net share settlement of share-based payment awards	(3,466)		$ (2,844)	(622)
Issuance of stock under stock award plans (in shares)		381
Issuance of stock under stock award plans	1,333	$ 4		1,329
Stock-based compensation expense	10,093			10,093
Ending balance (in shares) at Jun. 30, 2024		42,882	6,474
Ending balance at Jun. 30, 2024	563,054	$ 429	$ (63,617)	415,483	235,487	(24,728)
Beginning balance (in shares) at Mar. 31, 2024		42,854	6,492
Beginning balance at Mar. 31, 2024	549,627	$ 429	$ (63,683)	411,759	225,785	(24,663)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	9,702				9,702
Other comprehensive (loss) income	(65)					(65)
Employee stock purchase plan issuances (in shares)			(25)
Employee stock purchase plan issuances	569		$ 242	327
Taxes paid for net share settlement of share-based payment awards (in shares)			7
Taxes paid for net share settlement of share-based payment awards	(681)		$ (176)	505
Issuance of stock under stock award plans (in shares)		28
Issuance of stock under stock award plans	388	$ 0		388
Stock-based compensation expense	3,514			3,514
Ending balance (in shares) at Jun. 30, 2024		42,882	6,474
Ending balance at Jun. 30, 2024	$ 563,054	$ 429	$ (63,617)	$ 415,483	$ 235,487	$ (24,728)

Leases - Maturity of Operating Lease Liability (Details) $ in Thousands	Jun. 30, 2024 USD ($)
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract]
2024 (three months)	$ 1,082
2025	3,713
2026	3,262
2027	2,058
2028	1,897
2029	1,840
Thereafter	3,865
Total future undiscounted lease payments	17,717
Less imputed interest	(2,740)
Total reported lease liability	$ 14,977

Indebtedness

9 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

INDEBTEDNESS

5. INDEBTEDNESS

On December 7, 2023, Digi entered into a credit agreement (the “Credit Agreement”) with BMO Bank N.A. (“BMO”), as administrative and collateral agent, BMO Capital Markets Corp., BofA Securities, Inc. and MUFG Bank, Ltd., as joint lead arrangers and joint bookrunners, and the several banks and other financial institutions or entities from time to time party thereto as lenders (the “Lenders”). The Credit Agreement provides Digi with a senior secured credit facility (the “Credit Facility”). The Credit Facility includes a $250 million senior secured revolving credit facility (the “Revolving Loan”), with an uncommitted accordion feature that provides for additional borrowing capacity of up to the greater of $95 million or one hundred percent of trailing twelve month adjusted earnings before interest, taxes, depreciation, and amortization ("EBITDA"). The Credit Facility also contains a $10 million letter of credit sublimit and $10 million swingline sub-facility. Digi may use the proceeds of the Credit Facility in the future for general corporate purposes.

Digi borrowed a total of $215 million under the Credit Facility to repay all obligations and to pay related fees and expenses under the Third Amended and Restated Credit Agreement dated as of December 22, 2021 (the “Prior Credit Facility”), by and among Digi, as the borrower, BMO, as administrative agent and collateral agent, BMO Capital Markets Corp., as sole lead arranger and bookrunner, and the other lenders from time-to-time party thereto. The Prior Credit Facility consisted of a $350 million term loan B secured loan and a $35 million revolving credit facility that included a $10 million letter of credit subfacility and $10 million swingline subfacility.

5. INDEBTEDNESS (CONTINUED)

Borrowings under the Credit Facility bear interest at a rate per annum equal to Term SOFR with a floor of 0.00% for an interest period of one, three, or six months as selected by Digi, reset at the end of the selected interest period (or a replacement benchmark rate if Term SOFR is no longer available) plus the applicable margin or a base rate plus the applicable margin. The base rate is determined by reference to the highest of BMO’s prime rate, the rate determined by BMO to be the average rate of Federal funds in the secondary market plus 0.50%, or one-month SOFR plus 1.00%. The applicable margin for loans under the Credit Facility is in a range of 1.75% to 2.75% for Term SOFR loans and 0.75% to 1.75% for base rate loans, depending on Digi’s total net leverage ratio. All borrowings in the period were made at Term SOFR for a one-month interest election period plus an applicable margin of 2.50%. Our weighted average interest rate for our Credit Facility was 7.93% as of June 30, 2024.

In addition to paying interest on the outstanding principal, Digi is required to pay a commitment fee on the unutilized commitments under the Credit Facility. The commitment fee is between 0.20% and 0.35% depending on Digi’s total net leverage ratio. Our weighted average Revolving Loan commitment fee was 0.25% as of June 30, 2024. The Credit Facility is secured by substantially all of the property of Digi and its domestic subsidiaries.

The debt issuance costs and remaining balance under the Prior Credit Facility totaling $9.7 million at December 7, 2023 were written off and included in other expenses upon the entry into the Credit Agreement. Digi incurred an additional $1.3 million in debt issuance costs upon entry into the Credit Agreement, with this amount amortized over the term of the Credit Agreement and reported in interest expense.

The Revolving Loan is due in a lump sum payment at maturity December 7, 2028, if any amounts are drawn. The fair value of the Revolving Loan approximated carrying value at June 30, 2024.

The following table is a summary of our long-term indebtedness at June 30, 2024 and September 30, 2023 (in thousands):


	Balance on June 30, 2024		Balance on September 30, 2023
Revolving Loan	$	152,800	$	—
Term loan	—		213,625
Total loans	152,800		213,625
Less unamortized issuance costs	(1,182)		(10,051)
Less current maturities of long-term debt	—		(15,523)
Total long-term debt, net of current portion	$	151,618	$	188,051

Covenants and Security Interest

The Credit Agreement requires Digi to maintain a minimum interest coverage ratio of 3.00 to 1.00 and a total net leverage ratio not to exceed 3.00 to 1.00, with certain exceptions for a covenant holiday of up to 3.50 to 1.00 after certain material acquisitions. The total net leverage ratio is defined as the ratio of Digi’s consolidated total funded indebtedness minus unrestricted cash as of such date up to a maximum amount not to exceed $50 million, to consolidated EBITDA for such period. The Credit Agreement also contains other customary affirmative and negative covenants, including covenants that restrict the ability of Digi and its subsidiaries to incur additional indebtedness, dispose of significant assets, make certain investments, including any acquisitions other than permitted acquisitions, make certain restricted payments, enter into sale and leaseback transactions or grant additional liens on its assets, subject to certain limitations. Amounts borrowed under the Credit Facility are secured by substantially all of our assets.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
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-Paragraph 1
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-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

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-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

Stock-Based Compensation (Non-Vested Options) (Details) shares in Thousands	9 Months Ended
	Jun. 30, 2024 $ / shares shares
Restricted Stock Units
Nonvested Number of Restricted Stock Units [Roll Forward]
Number of Restricted Stock Units, Beginning Balance \| shares	846
Number of Restricted Stock Units, Granted \| shares	343
Number of Restricted Stock Units, Vested \| shares	(280)
Number of Restricted Stock Units, Canceled \| shares	(44)
Number of Restricted Stock Units, Ending Balance \| shares	865
Nonvested Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share [Roll Forward]
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Beginning Balance \| $ / shares	$ 30.56
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Granted \| $ / shares	24.98
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Vested \| $ / shares	25.13
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Canceled \| $ / shares	30.13
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Ending Balance \| $ / shares	$ 30.11
Performance Shares
Nonvested Number of Restricted Stock Units [Roll Forward]
Number of Restricted Stock Units, Beginning Balance \| shares	135
Number of Restricted Stock Units, Granted \| shares	135
Number of Restricted Stock Units, Vested \| shares	(30)
Number of Restricted Stock Units, Canceled \| shares	(17)
Number of Restricted Stock Units, Ending Balance \| shares	223
Nonvested Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share [Roll Forward]
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Beginning Balance \| $ / shares	$ 37.72
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Granted \| $ / shares	24.81
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Vested \| $ / shares	37.11
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Canceled \| $ / shares	28.94
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Ending Balance \| $ / shares	$ 30.65

Income Taxes (Unrecognized Tax Benefits) (Details) $ in Thousands	9 Months Ended
	Jun. 30, 2024 USD ($)
Unrecognized tax benefits that would impact effective tax rate	$ 3,000
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Unrecognized tax benefits, beginning balance	3,162
Decreases related to expiration of statute of limitations	(32)
Unrecognized tax benefits, ending balance	3,130
Maximum
Unrecognized tax benefits that would decrease next twelve months	$ 400

Revenue

9 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

REVENUE

Revenue Disaggregation

The following table summarizes our revenue by geographic location of our customers (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
North America, primarily the United States	$	72,908	$	82,953	$	225,001	$	244,227
Europe, Middle East & Africa	15,123		16,352		48,998		52,643
Rest of world	17,172		12,931		44,995		35,816
Total revenue	$	105,203	$	112,236	$	318,994	$	332,686

The following table summarizes our revenue by the timing of revenue recognition (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
Transferred at a point in time	$	77,096	$	86,393	$	237,064	$	258,967
Transferred over time	28,107		25,843		81,930		73,719
Total revenue	$	105,203	$	112,236	$	318,994	$	332,686

Contract Balances

Contract Related Assets

Our contract related assets consist of subscriber assets. Subscriber assets are equipment that we provide to customers pursuant to subscription-based contracts. In these cases, we retain the ownership of the equipment a customer uses and charge the customer subscription fees to receive our end-to-end solutions. The total net book value of subscriber assets of $18.5 million and $16.6 million as of June 30, 2024 and September 30, 2023, respectively, are included in property, equipment and improvements, net. Depreciation expense for these subscriber assets, which is included in cost of sales, was $1.4 million and $1.0 million for the three months ended June 30, 2024 and 2023, respectively. Depreciation expense for these subscriber assets, which is included in cost of sales, was $3.5 million and $2.8 million for the nine months ended June 30, 2024 and 2023, respectively. We depreciate the cost of this equipment over its useful life.

Contract Assets

Contract assets at Digi consist of products and services that have been fulfilled, but for which revenue has not yet been recognized. Our contract asset balances were immaterial as of June 30, 2024 and September 30, 2023.

Contract Liabilities

Contract liabilities consist of unearned revenue related to annual or multi-year contracts for subscription services and related implementation fees, as well as product sales that have been invoiced, but not yet fulfilled. The timing of revenue recognition may differ from the timing of invoicing to customers. Customers are invoiced for subscription services on a monthly, quarterly or annual basis.

Our contract liabilities were $37.5 million and $26.5 million at June 30, 2024 and 2023, respectively.

There were contract liability balances of $38.0 million and $25.7 million as of March 31, 2024 and 2023, respectively. Of these balances, Digi recognized $7.7 million and $6.7 million as revenue in the three months ended June 30, 2024 and 2023, respectively. There were contract liability balances of $27.9 million and $21.6 million balances as of September 30, 2023 and 2022, respectively. Digi recognized $17.6 million and $18.9 million as revenue in the nine months ended June 30, 2024 and 2023, respectively.

7. REVENUE (CONTINUED)

Remaining Performance Obligation

As of June 30, 2024, we had approximately $161.2 million of remaining performance obligations on contracts with an original duration of one year or more. We expect to recognize revenue on approximately $72.1 million of remaining performance obligations over the next 12 months. We expect to recognize revenue from the remaining performance obligations over a range of two to five years.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-9

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Topic 606
-Publisher FASB
-URI https://asc.fasb.org//606/tableOfContent

+ Details

Cover Page - shares	9 Months Ended
Cover Page - shares	Jun. 30, 2024	Aug. 02, 2024
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
Document Transition Report	false
Entity File Number	001-34033
Entity Registrant Name	DIGI INTERNATIONAL INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	41-1532464
Entity Address, Address Line One	9350 Excelsior Blvd.
Entity Address, Address Line Two	Suite 700
Entity Address, City or Town	Hopkins
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55343
City Area Code	952
Local Phone Number	912-3444
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		36,415,184
Entity Central Index Key	0000854775
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false
The Nasdaq Stock Market LLC
Entity Information [Line Items]
Title of 12(b) Security	Common Stock, par value $.01 per share
Trading Symbol	DGII
Security Exchange Name	NASDAQ

Revenue - Unearned Revenue (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Mar. 31, 2024	Sep. 30, 2023	Mar. 31, 2023	Sep. 30, 2022
Unearned Revenue (Details)
Unearned Revenue	$ 37.5	$ 26.5	$ 37.5	$ 26.5	$ 38.0	$ 27.9	$ 25.7	$ 21.6
Contract with Customer, Liability, Revenue Recognized	$ 7.7	$ 6.7	$ 17.6	$ 18.9

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Leases - Lease Cost (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Lease, Cost [Abstract]
Operating lease cost	$ 757	$ 907	$ 2,578	$ 2,678
Variable lease cost	310	361	943	1,013
Short-term Lease, Cost	30	26	85	69
Total lease cost	$ 1,097	$ 1,294	$ 3,606	$ 3,760

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2024	Sep. 30, 2023
Statement of Financial Position [Abstract]
Preferred stock, par value (USD per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized	60,000,000	60,000,000
Common stock, shares issued	42,881,585	42,501,150
Treasury Stock, Common, Shares	6,474,271	6,436,204

Segment Information (Tables)

9 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Summary operating results for each of our segments were (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
Revenue
IoT Products & Services	$	80,003	$	87,358	$	245,416	$	257,593
IoT Solutions	25,200		24,878		73,578		75,093
Total revenue	$	105,203	$	112,236	$	318,994	$	332,686
Gross Profit
IoT Products & Services Operating Segments Gross Profit	$	43,501	$	47,229	$	132,421	$	140,367
IoT Solutions Operating Segments Gross Profit	18,757		16,590		53,255		47,845
Total gross profit	$	62,258	$	63,819	$	185,676	$	188,212

Depreciation and Amortization Expense By Segment

Total depreciation and amortization expense was (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
IoT Products & Services	$	3,111	$	3,108	$	9,316	$	9,446
IoT Solutions	5,187		4,896		15,098		14,516
Total depreciation and amortization	$	8,298	$	8,004	$	24,414	$	23,962

Payments to Acquire Property, Plant and Equipment by Segment

Total expended for property, plant and equipment was (in thousands):


	Nine months ended June 30,
	2024		2023
IoT Products & Services	$	581	$	362
IoT Solutions*	475		3,291
Total expended for property, plant and equipment	$	1,056	$	3,653

* Excluded from these amounts are $8,354 and $3,175 of transfers of inventory to property plant and equipment for subscriber assets for the nine months ended June 30, 2024 and 2023, respectively.

Reconciliation of Assets from Segment to Consolidated

Total assets for each of our segments were (in thousands):


	June 30, 2024		September 30, 2023
IoT Products & Services	$	389,469	$	384,018
IoT Solutions	402,620		419,820
Unallocated*	28,337		31,693
Total assets	$	820,426	$	835,531

*Unallocated consists of cash and cash equivalents.

Stock-Based Compensation

9 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

Stock-based awards granted in the first fiscal quarter of 2024 and 2023 were granted under the Digi International Inc. 2021 Omnibus Incentive Plan (as amended and restated, the "2021 Plan"). Shares subject to awards under the 2021 Plan or any prior plans that are forfeited, canceled, returned to us for failure to satisfy vesting requirements, settled in cash or otherwise terminated without payment also will be available for grant under the 2021 Plan. The authority to grant options under the 2021 Plan and set other terms and conditions rests with the Compensation Committee of the Board of Directors.

As of June 30, 2024, there were approximately 1,920,325 shares available for future grants under the 2021 Plan.

Cash received from the exercise of stock options was $1.3 million and $2.6 million for the nine months ended June 30, 2024 and 2023, respectively.

12. STOCK-BASED COMPENSATION (CONTINUED)

Our equity plans and corresponding forms of award agreements generally have provisions allowing employees to elect to satisfy tax withholding obligations through the delivery of shares. When employees make this election, we retain a portion of shares issuable under the award. Tax withholding obligations are otherwise fulfilled by the employee paying cash to us for the withholding. During the nine months ended June 30, 2024 and 2023, our employees forfeited 112,827 shares and 97,171 shares, respectively, in order to satisfy withholding tax obligations of $2.8 million and $3.9 million, respectively.

We sponsor an Employee Stock Purchase Plan as amended and restated as of December 10, 2019, October 29, 2013, December 4, 2009 and November 27, 2006 (the "ESPP"), covering all domestic employees with at least 90 days of continuous service and who are customarily employed at least 20 hours per week. The ESPP allows eligible participants the right to purchase common stock on a quarterly basis at the lower of 85% of the market price at the beginning or end of each three-month offering period. The most recent amendments to the ESPP, ratified by our stockholders on January 29, 2020, increased the total number of shares that may be purchased under the ESPP to 3,425,000. ESPP contributions by employees were $1.7 million for the nine months ended June 30, 2024 and 2023. Pursuant to the ESPP, 74,760 and 58,081 common shares were issued to employees during the nine months ended June 30, 2024 and 2023, respectively. Shares are issued under the ESPP from treasury stock. As of June 30, 2024, 395,467 common shares were available for future issuances under the ESPP.

The following table shows stock-based compensation expense that is included in the consolidated results of operations (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
Cost of sales	$	173	$	160	$	529	$	463
Sales and marketing	1,218		1,089		3,594		3,012
Research and development	517		469		1,448		1,386
General and administrative	1,606		1,801		4,522		4,991
Stock-based compensation before income taxes	3,514		3,519		10,093		9,852
Income tax benefit	(724)		(760)		(2,138)		(2,096)
Stock-based compensation after income taxes	$	2,790	$	2,759	$	7,955	$	7,756

Stock Options

The following table summarizes our stock option activity (in thousands, except per common share amounts):


	Options Outstanding	Weighted Average Exercise Price	Weighted Average Contractual Term (in years)	Aggregate Intrinsic Value (1)
Balance on September 30, 2023	1,553	$18.52
Granted	87	24.59
Exercised	(91)	28.43
Forfeited / Canceled	(39)	27.61
Balance on June 30, 2024	1,510	$18.74	3.3	$	7,659

Exercisable on June 30, 2024	1,160	$17.19	2.9	$	7,220

(1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $22.93 as of June 30, 2024, which would have been received by the option holders had all option holders exercised their options as of that date.

12. STOCK-BASED COMPENSATION (CONTINUED)

The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. The total intrinsic value of all options exercised during the nine months ended June 30, 2024 and 2023 was $2.6 million and $4.1 million, respectively.

The following table shows the weighted average fair value, which was determined based upon the fair value of each option on the grant date utilizing the Black-Scholes option-pricing model and the related assumptions:


	Nine months ended June 30,
	2024	2023
Weighted average per option grant date fair value	$12.44	$19.88
Assumptions used for option grants:
Risk free interest rate	4.48% - 4.68%	3.50% - 3.98%
Expected term	6.00 years	6.00 years
Expected volatility	46% - 47%	46%
Weighted average volatility	46%	46%
Expected dividend yield	—	—

The fair value of each option award granted during the periods presented was estimated using the Black-Scholes option valuation model that uses the assumptions noted in the above table. Expected volatilities are based on the historical volatility of our stock. We use historical data to estimate option exercise and employee termination information within the valuation model. The expected term of options granted is derived from the vesting period and historical information and represents the period of time that options granted are expected to be outstanding. The risk-free rate used is the zero-coupon U.S. Treasury bond rate in effect at the time of the grant whose maturity equals the expected term of the option.

As of June 30, 2024, the total unrecognized compensation cost related to non-vested stock options was $3.5 million and the related weighted average period over which it is expected to be recognized is approximately 1.4 years.

Non-vested Stock Units

The following table presents a summary of our non-vested restricted stock units and performance stock units as of June 30, 2024 and changes during the nine months then ended (in thousands, except per common share amounts):


	RSUs			PSUs
	Number of Awards	Weighted Average Grant Date Fair Value		Number of Awards	Weighted Average Grant Date Fair Value
Nonvested on September 30, 2023	846	$	30.56	135	$	37.72
Granted	343	24.98		135	24.81
Vested	(280)	25.13		(30)	37.11
Canceled	(44)	30.13		(17)	28.94
Nonvested on June 30, 2024	865	$	30.11	223	$	30.65

As of June 30, 2024, the total unrecognized compensation cost related to non-vested restricted stock units and performance stock units was $20.0 million and $0.5 million, respectively. The related weighted average period over which these costs are expected to be recognized was approximately 1.9 years and 0.1 years, respectively.

Leases (Tables)

9 Months Ended

Jun. 30, 2024

Leases [Abstract]

Supplemental Balance Sheet Information

The following table shows the supplemental balance sheet information related to our leases (in thousands):


	Balance Sheet Location	June 30, 2024		September 30, 2023
Assets
Operating leases	Operating lease right-of-use assets	$	10,858	$	12,876
Total lease assets		$	10,858	$	12,876

Liabilities

Operating leases	Current portion of operating lease liabilities	$	3,032	$	3,352

Operating leases	Operating lease liabilities	11,945		13,989
Total lease liabilities		$	14,977	$	17,341

Components of Lease Cost

The following were the components of our lease cost which is recorded in both cost of goods sold and selling, general and administrative expense (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
Operating lease cost	$	757	$	907	$	2,578	$	2,678
Variable lease cost	310		361		943		1,013
Short-term lease cost	30		26		85		69
Total lease cost	$	1,097	$	1,294	$	3,606	$	3,760

Operating Lease Liability Maturity

The table below reconciles the undiscounted cash flows for each of the first five years as well as all the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet as of June 30, 2024 (in thousands):


Fiscal year	Amount
2024 (three months)	$	1,082
2025	3,713
2026	3,262
2027	2,058
2028	1,897
2029	1,840
Thereafter	3,865
Total future undiscounted lease payments	17,717
Less imputed interest	(2,740)
Total reported lease liability	$	14,977

Revenue (Tables)

9 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table summarizes our revenue by geographic location of our customers (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
North America, primarily the United States	$	72,908	$	82,953	$	225,001	$	244,227
Europe, Middle East & Africa	15,123		16,352		48,998		52,643
Rest of world	17,172		12,931		44,995		35,816
Total revenue	$	105,203	$	112,236	$	318,994	$	332,686

The following table summarizes our revenue by the timing of revenue recognition (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
Transferred at a point in time	$	77,096	$	86,393	$	237,064	$	258,967
Transferred over time	28,107		25,843		81,930		73,719
Total revenue	$	105,203	$	112,236	$	318,994	$	332,686

Goodwill and Other Identifiable Intangible Assets, Net (Goodwill Rollforward) (Details) $ in Thousands	9 Months Ended
	Jun. 30, 2024 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 341,593
Foreign currency translation adjustment	323
Ending balance	341,916
IoT Products & Services Segment
Goodwill [Roll Forward]
Beginning balance	173,957
Foreign currency translation adjustment	400
Ending balance	174,357
IoT Solutions Segment
Goodwill [Roll Forward]
Beginning balance	167,636
Foreign currency translation adjustment	(77)
Ending balance	$ 167,559

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

Indebtedness - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 07, 2023	Sep. 30, 2023	Dec. 22, 2021
Debt Instrument [Line Items]
Total loans	$ 152,800		$ 213,625
Less unamortized issuance costs	(1,182)		(10,051)
Less current maturities of long-term debt	0		(15,523)
Total long-term debt, net of current portion	151,618		188,051
Revolving loan maximum borrowing capacity				$ 215,000
December 7, 2023 Credit Agreement
Debt Instrument [Line Items]
Debt issuance costs		$ 1,300
Prior Credit Facility
Debt Instrument [Line Items]
Debt issuance costs		9,700
Revolving loan
Debt Instrument [Line Items]
Total loans	152,800
Revolving loan maximum borrowing capacity		$ 250,000		35,000
Term loan
Debt Instrument [Line Items]
Total loans	$ 0		$ 213,625
Revolving loan maximum borrowing capacity				$ 350,000

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Numerator:
Net income	$ 9,702	$ 6,727	$ 10,642	$ 18,405
Denominator:
Denominator for basic net income per common share — weighted average shares outstanding	36,375,000	35,889,000	36,266,000	35,761,000
Effect of dilutive securities:
Stock options and restricted stock units	651,000	928,000	655,000	1,077,000
Denominator for diluted net income per common share — adjusted weighted average shares	37,026,000	36,817,000	36,921,000	36,838,000
Basic net income per common share:
Earnings Per Share, Basic	$ 0.27	$ 0.19	$ 0.29	$ 0.51
Diluted net income per common share
Diluted (USD per share)	$ 0.26	$ 0.18	$ 0.29	$ 0.50
Potentially dilutive securities excluded from computation of earnings per share	646,564	599,957	710,370	477,521

Product Warranty Obligation

9 Months Ended

Jun. 30, 2024

Product Warranties Disclosures [Abstract]

PRODUCT WARRANTY OBLIGATION

The following tables summarize the activity associated with the product warranty accrual (in thousands) and is included on our condensed consolidated balance sheets within other current liabilities:


	Three months ended June 30,
	2024		2023
Balance at beginning of period	$	774	$	836
Warranties accrued	171		135
Settlement made	(141)		(117)
Balance at end of period	$	804	$	854

	Nine months ended June 30,
	2024		2023
Balance at beginning of period	$	772	$	886
Warranties accrued	341		303
Settlement made	(309)		(335)
Balance at end of period	$	804	$	854

Contingencies Contingencies (Details) $ in Millions	9 Months Ended
Contingencies Contingencies (Details) $ in Millions	Jun. 30, 2024 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Loss Contingency, Damages Awarded, Value	$ 11.6
Loss Contingency Accrual	$ 6.3

Selected Balance Sheet Data (Tables)

9 Months Ended

Jun. 30, 2024

Selected Balance Sheet Data [Abstract]

Schedule of Selected Balance Sheet Data

The following table shows selected balance sheet data (in thousands):


	June 30, 2024		September 30, 2023
Accounts receivable, net:
Accounts receivable	$	76,501	$	61,880
Less allowance for credit losses	1,457		1,693
Less reserve for future credit returns and pricing adjustments	3,854		4,190
Accounts receivable, net	$	71,190	$	55,997
Inventories:
Raw materials	$	21,509	$	29,974
Work in process	22		66
Finished goods	35,134		44,356
Inventories	$	56,665	$	74,396

Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Unearned Revenue (Details)
Total Revenue	$ 105,203	$ 112,236	$ 318,994	$ 332,686
North America, primarily the United States
Unearned Revenue (Details)
Total Revenue	72,908	82,953	225,001	244,227
Europe, Middle East & Africa
Unearned Revenue (Details)
Total Revenue	15,123	16,352	48,998	52,643
Rest of world
Unearned Revenue (Details)
Total Revenue	17,172	12,931	44,995	35,816
Transferred at a point in time
Unearned Revenue (Details)
Total Revenue	77,096	86,393	237,064	258,967
Transferred over time
Unearned Revenue (Details)
Total Revenue	$ 28,107	$ 25,843	$ 81,930	$ 73,719

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

+ References

+ Details

Goodwill and Other Identifiable Intangible Assets, Net (Tables)

9 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Amortizable Intangible Assets

Amortizable intangible assets were (in thousands):


	June 30, 2024						September 30, 2023
	Gross carrying amount		Accum. amort.		Net		Gross carrying amount		Accum. amort.		Net
Purchased and core technology	$	85,018	$	(62,678)	$	22,340	$	85,032	$	(59,833)	$	25,199
License agreements	112		(112)		—		112		(112)		—
Patents and trademarks	40,180		(21,495)		18,685		39,957		(19,888)		20,069

Customer relationships	309,213		(91,370)		217,843		309,196		(77,380)		231,816
Non-compete agreements	600		(600)		—		600		(600)		—
Order backlog	1,000		(1,000)		—		1,000		(1,000)		—
Total	$	436,123	$	(177,255)	$	258,868	$	435,897	$	(158,813)	$	277,084

Schedule of Estimated Future Amortization Expense Related to Intangible Assets

Estimated amortization expense related to intangible assets for the remainder of fiscal 2024 and the five succeeding fiscal years is (in thousands):


2024 (three months)	$	6,995
2025	21,786
2026	21,554
2027	20,593
2028	20,411
2029	18,355

Schedule of Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill by reportable segments are (in thousands):


	Nine months ended June 30, 2024
	IoT Products & Services		IoT Solutions		Total
Balance on September 30, 2023	$	173,957	$	167,636	$	341,593


Foreign currency translation adjustment	400		(77)		323
Balance on June 30, 2024	$	174,357	$	167,559	$	341,916

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 350
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-Name Accounting Standards Codification
-Section 55
-Paragraph 24
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Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 6: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
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-URI https://asc.fasb.org//1943274/2147482573/350-20-50-1

Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 11: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
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-Name Accounting Standards Codification
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482573/350-20-50-2

+ Details

Stock-Based Compensation (Details) - USD ($) $ in Thousands	9 Months Ended
Stock-Based Compensation (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jan. 29, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from Stock Options Exercised	$ 952	$ 2,616
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation	112,827	97,171
Tax withholding for share-based compensation	$ 2,800	$ 3,900
Total intrinsic value of all options exercised	2,600	4,100
Proceeds from employee stock purchase plan transactions	2,061	1,689
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from Stock Options Exercised	1,300	$ 2,600
Total unrecognized compensation cost nonvested awards	$ 3,500
Weighted average period, unrecognized compensation cost, nonvested awards	1 year 4 months 24 days
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost nonvested restricted stock units	$ 20,000
Weighted average period, unrecognized compensation cost, nonvested awards	1 year 10 months 24 days
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost nonvested restricted stock units	$ 500
Weighted average period, unrecognized compensation cost, nonvested awards	1 month 6 days
The Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized			3,425,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Continuous Days of Service	90 days
Share-based Compensation Arrangement by Share-based Payment Award, Number of Hours Per Week Employed	20 hours
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent	85.00%
Common shares issued to employees	74,760	58,081
Shares available for future issuance	395,467
Proceeds from employee stock purchase plan transactions	$ 1,700
The 2021 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for future grants	1,920,325

Indebtedness - Narrative (Details) - USD ($) $ in Millions	9 Months Ended
Indebtedness - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2024	Dec. 07, 2023	Dec. 22, 2021
Line of Credit Facility [Line Items]
Revolving loan maximum borrowing capacity			$ 215.0
Debt instrument, margin spread on LIBOR Rate	2.50%
Credit Facility [Domain] \| Line of Credit
Line of Credit Facility [Line Items]
Debt instrument, covenant, leverage ratio, minimum	3.00
Debt instrument, covenant, liquidity ratio, total net leverage ratio	3.00
Debt instrument, covenant, holiday, exception	3.50
Prior Credit Facility
Line of Credit Facility [Line Items]
Debt issuance costs		$ 9.7
December 7, 2023 Credit Agreement
Line of Credit Facility [Line Items]
Debt issuance costs		1.3
Term loan
Line of Credit Facility [Line Items]
Revolving loan maximum borrowing capacity			350.0
Weighted average interest rate on debt	7.93%
Term loan \| Base Rate \| Federal Funds Rate
Line of Credit Facility [Line Items]
Debt instrument, margin spread on LIBOR Rate	0.50%
Term loan \| Base Rate \| LIBOR
Line of Credit Facility [Line Items]
Debt instrument, margin spread on LIBOR Rate	1.00%
Revolving loan
Line of Credit Facility [Line Items]
Revolving loan maximum borrowing capacity		250.0	35.0
Line of credit facility, accordion feature, increase limit		95.0
Line of credit facility, unused capacity, commitment fee percentage	0.25%
Revolving loan \| Minimum
Line of Credit Facility [Line Items]
Line of credit facility, unused capacity, commitment fee percentage	0.20%
Revolving loan \| Maximum
Line of Credit Facility [Line Items]
Line of credit facility, unused capacity, commitment fee percentage	0.35%
Revolving loan \| Benchmark Rate \| Minimum
Line of Credit Facility [Line Items]
Debt instrument, margin spread on LIBOR Rate	1.75%
Revolving loan \| Benchmark Rate \| Maximum
Line of Credit Facility [Line Items]
Debt instrument, margin spread on LIBOR Rate	2.75%
Revolving loan \| Base Rate \| Minimum
Line of Credit Facility [Line Items]
Debt instrument, margin spread on LIBOR Rate	0.75%
Revolving loan \| Base Rate \| Maximum
Line of Credit Facility [Line Items]
Debt instrument, margin spread on LIBOR Rate	1.75%
Letter of Credit
Line of Credit Facility [Line Items]
Revolving loan maximum borrowing capacity		$ 10.0	10.0
Swingline Credit Facility
Line of Credit Facility [Line Items]
Revolving loan maximum borrowing capacity			$ 10.0

Segment Information

9 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

SEGMENT INFORMATION

In the third quarter of fiscal 2024, we restructured our management structure to appoint a single segment manager over IoT Products & Services and a single manager over IoT Solutions. As a result we have two operating segments. These two operating segments also serve as our reportable segments: IoT Products & Services and IoT Solutions. Each operating segment is now led by a single segment manager. IoT Products & Services derives revenue from the sale of products and services that help original equipment manufacturers ("OEMs"), enterprise and government customers create and deploy, secure IoT connectivity solutions. IoT Solutions derives revenue from the sale of software-based services that are enabled through the use of connected devices that utilize cellular communications.

Our CEO is our Chief Operating Decision Maker ("CODM"). The measures the CODM uses to measure profitability within each of our reportable segments is segment gross profit.

Summary operating results for each of our segments were (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
Revenue
IoT Products & Services	$	80,003	$	87,358	$	245,416	$	257,593
IoT Solutions	25,200		24,878		73,578		75,093
Total revenue	$	105,203	$	112,236	$	318,994	$	332,686
Gross Profit
IoT Products & Services Operating Segments Gross Profit	$	43,501	$	47,229	$	132,421	$	140,367
IoT Solutions Operating Segments Gross Profit	18,757		16,590		53,255		47,845
Total gross profit	$	62,258	$	63,819	$	185,676	$	188,212

Total depreciation and amortization expense was (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
IoT Products & Services	$	3,111	$	3,108	$	9,316	$	9,446
IoT Solutions	5,187		4,896		15,098		14,516
Total depreciation and amortization	$	8,298	$	8,004	$	24,414	$	23,962

Total expended for property, plant and equipment was (in thousands):


	Nine months ended June 30,
	2024		2023
IoT Products & Services	$	581	$	362
IoT Solutions*	475		3,291
Total expended for property, plant and equipment	$	1,056	$	3,653

* Excluded from these amounts are $8,354 and $3,175 of transfers of inventory to property plant and equipment for subscriber assets for the nine months ended June 30, 2024 and 2023, respectively.

Total assets for each of our segments were (in thousands):


	June 30, 2024		September 30, 2023
IoT Products & Services	$	389,469	$	384,018
IoT Solutions	402,620		419,820
Unallocated*	28,337		31,693
Total assets	$	820,426	$	835,531

*Unallocated consists of cash and cash equivalents.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-15

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 31
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-31

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//280/tableOfContent

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 26
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-26

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 34
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-34

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-21

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-21

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

+ Details

Goodwill and Other Identifiable Intangible Assets, Net (Amortization Expense) (Details) $ in Thousands	Jun. 30, 2024 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2024 (three months)	$ 6,995
2025	21,786
2026	21,554
2027	20,593
2028	20,411
2029	$ 18,355

Goodwill and Other Identifiable Intangible Assets, Net (Additional Information) (Details) $ in Thousands	9 Months Ended
	Jun. 30, 2024 USD ($) segment	Sep. 30, 2023 USD ($)
Goodwill [Line Items]
Number of Reportable Segments \| segment	2
Goodwill	$ 341,916	$ 341,593
Enterprise Routers
Goodwill [Line Items]
Goodwill	32,700
Console Servers
Goodwill [Line Items]
Goodwill	57,100
OEM Solutions
Goodwill [Line Items]
Goodwill	64,200
Infrastructure Mgmt.
Goodwill [Line Items]
Goodwill	20,400
SmartSense
Goodwill [Line Items]
Goodwill	48,900
Ventus
Goodwill [Line Items]
Goodwill	118,600
IoT Products & Services Segment
Goodwill [Line Items]
Goodwill	174,357	173,957
IoT Solutions Segment
Goodwill [Line Items]
Goodwill	$ 167,559	$ 167,636

Revenue - Performance Obligations (Details) $ in Millions	Jun. 30, 2024 USD ($)
Revenue from Contract with Customer [Abstract]
Remaining performance obligation	$ 161.2
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation	161.2
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01
Revenue from Contract with Customer [Abstract]
Remaining performance obligation	$ 72.1
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, period	12 months
Remaining performance obligation	$ 72.1
Minimum \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, period	2 years
Maximum \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, period	5 years

Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Statement of Comprehensive Income [Abstract]
Net income	$ 9,702	$ 6,727	$ 10,642	$ 18,405
Other comprehensive (loss) income:
Foreign currency translation adjustment	(65)	(109)	2,283	1,358
Other comprehensive (loss) income	(65)	(109)	2,283	1,358
Comprehensive income	$ 9,637	$ 6,618	$ 12,925	$ 19,763

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Operating activities:
Net income	$ 10,642	$ 18,405
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, equipment and improvements	5,977	4,997
Amortization	18,925	20,449
Write-off of debt issuance costs	9,722	0
Stock-based compensation	10,093	9,852
Deferred income tax provision	(2,970)	(6,495)
Estimated Litigation Liability	6,253	0
Other	(1,817)	21
Changes in operating assets and liabilities (net of acquisitions)	(168)	(19,425)
Net cash provided by operating activities	56,657	27,804
Investing activities:
Purchase of property, equipment, improvements and certain other intangible assets	(1,282)	(3,842)
Proceeds from Sale of Intangible Assets	2,229	0
Net cash provide by (used in) investing activities	947	(3,842)
Financing activities:
Proceeds from long-term debt	214,062	0
Payments on long-term debt	(276,225)	(29,375)
Proceeds from stock option plan transactions	952	2,616
Proceeds from employee stock purchase plan transactions	2,061	1,689
Taxes paid for net share settlement of share-based payment options and awards	(3,466)	(3,850)
Net cash provided by financing activities	(62,616)	(28,920)
Effect of exchange rate changes on cash and cash equivalents	1,656	(362)
Net decrease in cash and cash equivalents	(3,356)	(5,320)
Cash and cash equivalents, beginning of period	31,693	34,900
Cash and cash equivalents, end of period	28,337	29,580
Supplemental schedule of non-cash investing and financing activities
Interest Paid	11,780	20,519
Income Taxes Paid, Net	4,559	4,666
Transfer of inventory to property, equipment and improvements	(8,354)	(3,175)
Accrual for purchase of property, equipment, improvements and certain other intangible assets	$ (128)	$ (157)

Goodwill and Other Identifiable Intangible Assets, Net

9 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS, NET

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Amortizable intangible assets were (in thousands):


	June 30, 2024						September 30, 2023
	Gross carrying amount		Accum. amort.		Net		Gross carrying amount		Accum. amort.		Net
Purchased and core technology	$	85,018	$	(62,678)	$	22,340	$	85,032	$	(59,833)	$	25,199
License agreements	112		(112)		—		112		(112)		—
Patents and trademarks	40,180		(21,495)		18,685		39,957		(19,888)		20,069

Customer relationships	309,213		(91,370)		217,843		309,196		(77,380)		231,816
Non-compete agreements	600		(600)		—		600		(600)		—
Order backlog	1,000		(1,000)		—		1,000		(1,000)		—
Total	$	436,123	$	(177,255)	$	258,868	$	435,897	$	(158,813)	$	277,084

Amortization expense for intangible assets was $6.1 million and $6.3 million for the three months ended June 30, 2024 and 2023, respectively. Amortization expense for intangible assets was $18.4 million and $19.0 million for the nine months ended June 30, 2024 and 2023, respectively. Amortization expense is recorded on our condensed consolidated statements of operations within cost of sales and in general and administrative expense.

Estimated amortization expense related to intangible assets for the remainder of fiscal 2024 and the five succeeding fiscal years is (in thousands):


2024 (three months)	$	6,995
2025	21,786
2026	21,554
2027	20,593
2028	20,411
2029	18,355

4. GOODWILL AND OTHER INTANGIBLE ASSETS, NET (CONTINUED)

The changes in the carrying amount of goodwill by reportable segments are (in thousands):


	Nine months ended June 30, 2024
	IoT Products & Services		IoT Solutions		Total
Balance on September 30, 2023	$	173,957	$	167,636	$	341,593


Foreign currency translation adjustment	400		(77)		323
Balance on June 30, 2024	$	174,357	$	167,559	$	341,916

Goodwill represents the excess of cost over the fair value of net identifiable assets acquired. Goodwill is quantitatively tested for impairment on an annual basis as of June 30, or more frequently if events or circumstances occur which could indicate impairment. We have two reportable segments, IoT Products & Services and IoT Solutions (see Note 6). Our IoT Products & Services segment is structured to include four reporting units for goodwill testing purposes: Cellular Routers, Console Servers, OEM Solutions and Infrastructure Management. Following our acquisition of Ventus in November 2021, we have two reporting units within IoT Solutions: SmartSense and Ventus. Each of these reporting units was tested individually for impairment during our annual impairment test completed as of the end of the third fiscal quarter of fiscal 2024.

Assumptions and estimates to determine fair values under the income and market approaches are complex and often subjective. They can be affected by a variety of factors. These include external factors such as industry and economic trends. They also include internal factors such as changes in our business strategy and our internal forecasts. Changes in circumstances or a potential event could affect the estimated fair values negatively. If our future operating results do not meet current forecasts or if we experience a sustained decline in our market capitalization that is determined to be indicative of a reduction in fair value of one or more of our reporting units within either of our segments, we may be required to record future impairment charges for goodwill.

Results of our Fiscal 2024 Annual Impairment Test

As of June 30, 2024, we had a total of $32.7 million of goodwill for the Cellular Routers reporting unit, $57.1 million of goodwill for the Console Servers reporting unit, $64.2 million of goodwill for the OEM Solutions reporting unit, $20.4 million of goodwill for the Infrastructure Management reporting unit, $48.9 million of goodwill for the SmartSense reporting unit and $118.6 million of goodwill for the Ventus reporting unit. At June 30, 2024, the fair value of goodwill exceeded the carrying value for all six reporting units and no impairment was recorded.

Debt (Tables)

9 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Schedule of Debt

The following table is a summary of our long-term indebtedness at June 30, 2024 and September 30, 2023 (in thousands):


	Balance on June 30, 2024		Balance on September 30, 2023
Revolving Loan	$	152,800	$	—
Term loan	—		213,625
Total loans	152,800		213,625
Less unamortized issuance costs	(1,182)		(10,051)
Less current maturities of long-term debt	—		(15,523)
Total long-term debt, net of current portion	$	151,618	$	188,051

Selected Balance Sheet Data (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Sep. 30, 2023
Accounts receivable, net:
Accounts receivable	$ 76,501	$ 61,880
Less allowance for credit losses	1,457	1,693
Less reserve for future credit returns and pricing adjustments	3,854	4,190
Accounts receivable, net	71,190	55,997
Inventories:
Raw materials	21,509	29,974
Work in process	22	66
Finished goods	35,134	44,356
Inventories	$ 56,665	$ 74,396

Segment Information Expended for Property, Plant and Equipment (Details) - USD ($)
$ in Thousands

9 Months Ended

Jun. 30, 2024

Jun. 30, 2023

Segment Reporting Information [Line Items]

Inventory Transfer To Property, Plant And Equipment

$ 8,354

$ 3,175

Property, Plant and Equipment, Additions

1,056

3,653

IoT Products & Services Segment

Segment Reporting Information [Line Items]

Property, Plant and Equipment, Additions

581

362

IoT Solutions Segment

Segment Reporting Information [Line Items]

Property, Plant and Equipment, Additions

^[1]

$ 475

$ 3,291

[1]	* Excluded from these amounts are $8,354 and $3,175 of transfers of inventory to property plant and equipment for subscriber assets for the nine months ended June 30, 2024 and 2023, respectively.

Income Taxes

9 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

Our income tax expense was $0.2 million for the nine months ended June 30, 2024. Included in this was a net tax benefit of $0.7 million discretely related to the nine months ended June 30, 2024. This liability was the result of book stock compensation in excess of recognized tax benefits.

Our effective tax rate will vary based on a variety of factors. These factors include our overall profitability, the geographical mix of income before taxes and related statutory tax rate in each jurisdiction, and tax items discretely related to the period, such as tax impacts of stock compensation, as there are no open audits during the period. We may record other benefits or expenses in the future that are specific to a particular quarter such as expiration of statutes of limitation, the completion of tax audits, or legislation that is enacted in both U.S. and foreign jurisdictions.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is (in thousands):


Unrecognized tax benefits as of September 30, 2023	$	3,162



Decreases related to:


Expiration of statute of limitations	(32)

Unrecognized tax benefits as of June 30, 2024	$	3,130

The total amount of unrecognized tax benefits at June 30, 2024 that, if recognized, would affect our effective tax rate was $3.0 million, after considering the impact of interest and deferred benefit items. We expect that the total amount of unrecognized tax benefits will decrease by approximately $0.4 million over the next 12 months.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
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-URI https://asc.fasb.org//740/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
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-Name Accounting Standards Codification
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147482685/740-10-50-21

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

Stock-Based Compensation (Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation before income taxes	$ 3,514	$ 3,519	$ 10,093	$ 9,852
Income tax benefit	(724)	(760)	(2,138)	(2,096)
Stock-based compensation after income taxes	2,790	2,759	7,955	7,756
Cost of Sales
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation before income taxes	173	160	529	463
Sales and Marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation before income taxes	1,218	1,089	3,594	3,012
Research and Development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation before income taxes	517	469	1,448	1,386
General and Administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation before income taxes	$ 1,606	$ 1,801	$ 4,522	$ 4,991

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Sep. 30, 2023
Assets and Liabilities, Lessee [Abstract]
Operating lease other non-current asset	$ 10,858	$ 12,876
Total lease assets	10,858	12,876
Operating lease other current liabilities	3,032	3,352
Operating lease other non-current liability	11,945	13,989
Total lease liabilities	$ 14,977	$ 17,341

Stock-Based Compensation (Tables)

9 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Stock-Based Compensation Expense

The following table shows stock-based compensation expense that is included in the consolidated results of operations (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
Cost of sales	$	173	$	160	$	529	$	463
Sales and marketing	1,218		1,089		3,594		3,012
Research and development	517		469		1,448		1,386
General and administrative	1,606		1,801		4,522		4,991
Stock-based compensation before income taxes	3,514		3,519		10,093		9,852
Income tax benefit	(724)		(760)		(2,138)		(2,096)
Stock-based compensation after income taxes	$	2,790	$	2,759	$	7,955	$	7,756

Schedule of Stock Option Activity

The following table summarizes our stock option activity (in thousands, except per common share amounts):


	Options Outstanding	Weighted Average Exercise Price	Weighted Average Contractual Term (in years)	Aggregate Intrinsic Value (1)
Balance on September 30, 2023	1,553	$18.52
Granted	87	24.59
Exercised	(91)	28.43
Forfeited / Canceled	(39)	27.61
Balance on June 30, 2024	1,510	$18.74	3.3	$	7,659

Exercisable on June 30, 2024	1,160	$17.19	2.9	$	7,220

Schedule of Valuation Assumptions


	Nine months ended June 30,
	2024	2023
Weighted average per option grant date fair value	$12.44	$19.88
Assumptions used for option grants:
Risk free interest rate	4.48% - 4.68%	3.50% - 3.98%
Expected term	6.00 years	6.00 years
Expected volatility	46% - 47%	46%
Weighted average volatility	46%	46%
Expected dividend yield	—	—

Schedule of Nonvested Restricted Stock Units


	RSUs			PSUs
	Number of Awards	Weighted Average Grant Date Fair Value		Number of Awards	Weighted Average Grant Date Fair Value
Nonvested on September 30, 2023	846	$	30.56	135	$	37.72
Granted	343	24.98		135	24.81
Vested	(280)	25.13		(30)	37.11
Canceled	(44)	30.13		(17)	28.94
Nonvested on June 30, 2024	865	$	30.11	223	$	30.65

Segment Information Total Assets (Details) - USD ($)
$ in Thousands

Jun. 30, 2024

Sep. 30, 2023

Segment Reporting, Asset Reconciling Item [Line Items]

Assets

$ 820,426

$ 835,531

IoT Products & Services Segment

Segment Reporting, Asset Reconciling Item [Line Items]

Assets

389,469

384,018

IoT Solutions Segment

Segment Reporting, Asset Reconciling Item [Line Items]

Assets

402,620

419,820

Unallocated

Segment Reporting, Asset Reconciling Item [Line Items]

Assets

^[1]

$ 28,337

$ 31,693

[1]	Unallocated consists of cash and cash equivalents.

- Definition

Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 810
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (bb)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481203/810-10-50-3

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 810
-SubTopic 10
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-Section 45
-Paragraph 25
-Subparagraph (a)
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(g)(1)(ii))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 323
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-Name Accounting Standards Codification
-Section 50
-Paragraph 3
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+ Details

Product Warranty Obligation (Tables)

9 Months Ended

Jun. 30, 2024

Product Warranties Disclosures [Abstract]

Schedule of Product Warranty Accrual

The following tables summarize the activity associated with the product warranty accrual (in thousands) and is included on our condensed consolidated balance sheets within other current liabilities:


	Three months ended June 30,
	2024		2023
Balance at beginning of period	$	774	$	836
Warranties accrued	171		135
Settlement made	(141)		(117)
Balance at end of period	$	804	$	854

	Nine months ended June 30,
	2024		2023
Balance at beginning of period	$	772	$	886
Warranties accrued	341		303
Settlement made	(309)		(335)
Balance at end of period	$	804	$	854

Basis of Presentation of Unaudited Interim Condensed Consolidated Financial Statements and Significant Accounting Policies	9 Months Ended
	Jun. 30, 2024
Accounting Policies [Abstract]
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANTACCOUNTING POLICIES	BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited condensed consolidated financial statements of Digi International Inc. ("we," "us," "our," "Digi" or "the Company") have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission applicable to interim financial statements. While these financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles ("GAAP") for complete financial statements. These financial statements should be read in conjunction with the financial statement disclosures in Part I, Item 1 of our Annual Report on Form 10-K for the year ended September 30, 2023. We use the same accounting policies in preparing quarterly and annual financial statements. The quarterly results of operations are not necessarily indicative of the results to be expected for the full year.

Goodwill and Other Identifiable Intangible Assets, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Sep. 30, 2023
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	$ 436,123		$ 436,123		$ 435,897
Accumulated amortization	(177,255)		(177,255)		(158,813)
Net	258,868		258,868		277,084
Goodwill	341,916		341,916		341,593
Purchased and Core Technology
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	85,018		85,018		85,032
Accumulated amortization	(62,678)		(62,678)		(59,833)
Net	22,340		22,340		25,199
License Agreements
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	112		112		112
Accumulated amortization	(112)		(112)		(112)
Net	0		0		0
Patents and Trademarks
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	40,180		40,180		39,957
Accumulated amortization	(21,495)		(21,495)		(19,888)
Net	18,685		18,685		20,069
Customer Relationships
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	309,213		309,213		309,196
Accumulated amortization	(91,370)		(91,370)		(77,380)
Net	217,843		217,843		231,816
Non-compete Agreements
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	600		600		600
Accumulated amortization	(600)		(600)		(600)
Net	0		0		0
Order backlog
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	1,000		1,000		1,000
Accumulated amortization	(1,000)		(1,000)		(1,000)
Net	0		0		$ 0
Cost of Sales and General and Administrative Expense
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 6,100	$ 6,300	$ 18,400	$ 19,000

Leases

9 Months Ended

Jun. 30, 2024

Leases [Abstract]

LEASES

All of our leases are operating leases and primarily consist of leases for office space. For any lease with an initial term in excess of 12 months, the related lease assets and lease liabilities are recognized on the condensed consolidated balance sheets as either operating or financing leases at the inception of an agreement where it is determined that a lease exists. We have lease agreements that contain both lease and non-lease components. We have elected to combine lease and non-lease components for all classes of assets. Leases with an expected term of 12 months or less are not recorded on the condensed consolidated balance sheets. Instead we recognize lease expense for these leases on a straight-line basis over the lease term.

Operating lease assets represent the right to use an underlying asset for the lease term and operating lease liabilities represent the obligation to make lease payments. These assets and liabilities are recognized based on the present value of future payments over the lease term at the commencement date. We generally use a collateralized incremental borrowing rate based on information available at the commencement date, including the lease term, in determining the present value of future payments. When determining our right-of-use assets, we generally do not include options to extend or terminate the lease unless it is reasonably certain that the option will be exercised.

Our leases typically require payment of real estate taxes and common area maintenance and insurance. These components comprise the majority of our variable lease cost and are excluded from the present value of our lease obligations. Fixed payments may contain predetermined fixed rent escalations. We recognize the related rent expense on a straight-line basis from the commencement date to the end of the lease term.

The following table shows the supplemental balance sheet information related to our leases (in thousands):


	Balance Sheet Location	June 30, 2024		September 30, 2023
Assets
Operating leases	Operating lease right-of-use assets	$	10,858	$	12,876
Total lease assets		$	10,858	$	12,876

Liabilities

Operating leases	Current portion of operating lease liabilities	$	3,032	$	3,352

Operating leases	Operating lease liabilities	11,945		13,989
Total lease liabilities		$	14,977	$	17,341

The following were the components of our lease cost which is recorded in both cost of goods sold and selling, general and administrative expense (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
Operating lease cost	$	757	$	907	$	2,578	$	2,678
Variable lease cost	310		361		943		1,013
Short-term lease cost	30		26		85		69
Total lease cost	$	1,097	$	1,294	$	3,606	$	3,760

At June 30, 2024, the weighted average remaining lease term of our operating leases was 6.0 years and the weighted average discount rate for these leases was 4.9%.

10. LEASES (CONTINUED)


Fiscal year	Amount
2024 (three months)	$	1,082
2025	3,713
2026	3,262
2027	2,058
2028	1,897
2029	1,840
Thereafter	3,865
Total future undiscounted lease payments	17,717
Less imputed interest	(2,740)
Total reported lease liability	$	14,977

Stock-Based Compensation (Fair Value Assumptions) (Details) - Stock Options - $ / shares	9 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average per option grant date fair value	$ 12.44	$ 19.88
Assumptions Used For Options Grants [Abstract]
Risk free interest rate, minimum	4.48%	3.50%
Risk free interest rate, maximum	4.68%	3.98%
Expected term	6 years	6 years
Expected volatility rate		46.00%
Weighted average volatility	46.00%	46.00%
Expected dividend yield	0.00%	0.00%
Minimum
Assumptions Used For Options Grants [Abstract]
Expected volatility rate	46.00%
Maximum
Assumptions Used For Options Grants [Abstract]
Expected volatility rate	47.00%

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Income tax benefit	$ (42)	$ (839)	$ 164	$ (679)
Income tax provision specific to the period			$ 700

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Segment Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
Segment Information (Details) $ in Thousands	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) segment numberOfOperatingSegments	Jun. 30, 2023 USD ($)
Segment Reporting Information [Line Items]
Number of Reportable Segments \| segment			2
Number of Operating Segments \| numberOfOperatingSegments			2
Total Revenue	$ 105,203	$ 112,236	$ 318,994	$ 332,686
Gross Profit	62,258	63,819	185,676	188,212
Operating income (loss)	12,908	12,476	33,192	36,614
IoT Products & Services Segment
Segment Reporting Information [Line Items]
Total Revenue	80,003	87,358	245,416	257,593
Gross Profit	43,501	47,229	132,421	140,367
IoT Solutions Segment
Segment Reporting Information [Line Items]
Total Revenue	25,200	24,878	73,578	75,093
Gross Profit	$ 18,757	$ 16,590	$ 53,255	$ 47,845

- Definition

Aggregate revenue less cost of goods and services sold or operating expenses directly attributable to the revenue generation activity.

Income Taxes (Tables)

9 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending amount of unrecognized tax benefits is (in thousands):


Unrecognized tax benefits as of September 30, 2023	$	3,162



Decreases related to:


Expiration of statute of limitations	(32)

Unrecognized tax benefits as of June 30, 2024	$	3,130

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2024	Sep. 30, 2023
Current assets:
Cash and cash equivalents	$ 28,337	$ 31,693
Accounts receivable, net	71,190	55,997
Inventories	56,665	74,396
Other current assets	8,327	4,112
Total current assets	164,519	166,198
Property, equipment and improvements, net	32,714	29,108
Intangible assets, net	258,868	277,084
Goodwill	341,916	341,593
Operating lease right-of-use assets	10,858	12,876
Deferred tax assets	7,857	4,884
Other non-current assets	3,694	3,788
Assets	820,426	835,531
Current liabilities:
Current portion of long-term debt	0	15,523
Accounts payable	20,856	17,148
Accrued compensation	12,643	16,427
Unearned revenue	30,468	25,274
Current portion of operating lease liabilities	3,032	3,352
Income Taxes Payable	1,334	1,116
Other current liabilities	14,020	7,138
Total current liabilities	82,353	85,978
Income taxes payable	2,343	2,308
Deferred tax liabilities	1,815	1,812
Long-term debt	151,618	188,051
Operating lease liabilities	11,945	13,989
Other non-current liabilities	7,298	2,905
Total liabilities	257,372	295,043
Commitments and Contingencies (see Note 11)
Preferred Stock, Shares Outstanding	0	0
Stockholders' equity:
Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued and outstanding	$ 0	$ 0
Common stock, $.01 par value; 60,000,000 shares authorized; 42,881,585 and 42,501,150 shares issued	429	425
Additional paid-in capital	415,483	403,735
Retained earnings	235,487	224,845
Accumulated other comprehensive loss	(24,728)	(27,011)
Treasury stock, at cost, 6,474,271 and 6,436,204 shares	(63,617)	(61,506)
Total stockholders' equity	563,054	540,488
Total liabilities and stockholders' equity	$ 820,426	$ 835,531

Revenue - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Sep. 30, 2023
Unearned Revenue (Details)
Amortization	$ 1.4	$ 1.0	$ 3.5	$ 2.8
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01
Unearned Revenue (Details)
Remaining performance obligation, period	12 months		12 months
Equipment
Unearned Revenue (Details)
Contract assets	$ 18.5		$ 18.5		$ 16.6

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

Leases - Other Information (Details)	Jun. 30, 2024
Weighted average remaining lease term [Abstract]
Weighted average remaining lease term- operating leases	6 years
Weighted Average Discount Rate Leases [Abstract]
Weighted average discount rate - operating leases	4.90%

Product Warranty Obligation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Standard Product Warranty Accrual [Roll Forward]
Beginning balance	$ 774	$ 836	$ 772	$ 886
Warranties accrued	171	135	341	303
Settlements made	(141)	(117)	(309)	(335)
Ending balance	$ 804	$ 854	$ 804	$ 854