Cash, cash equivalents, and short-term investments totaled $900 million with no debt; $15 million spent on CapEx and $30 million on share repurchases in Q2.
GAAP net income was $7 million or $0.16 per diluted share; adjusted EPS was $0.30, above guidance range.
GAAP operating income was breakeven; adjusted EBITDA was $32 million, slightly above the top end of guidance.
Gross margin was 37.3%, flat year-over-year, with adjusted gross margin at 37.8%, at the top of guidance, driven by improved manufacturing cost absorption and lower inventory provisions.
Regional sales: North America up 31% sequentially but down 4% year-over-year; Europe stable sequentially but down 11% year-over-year excluding divestitures; Asia up 4% sequentially and 14% year-over-year.
Revenue from materials processing decreased 6% year-over-year due to divestitures and lower sales in cutting, welding, and additive manufacturing, partially offset by micromachining and cleanLASER acquisition.
Revenue from other applications increased 21%, driven by medical and advanced applications.
Second quarter revenue was $251 million, up 10% sequentially and down 3% year-over-year, excluding divestitures revenue increased 2% year-over-year, marking the first increase since 2022.
Tariff impact was 115 basis points, better than expected.
Annual recurring revenue (ARR) reached $335 million, up 16% year-over-year and $15 million sequentially, marking the highest net new ARR in 11 quarters.
Dollar-based net retention rate (NRR) increased to 104%, up 3 points sequentially.
Free cash flow was $18.2 million or 22% of revenue, up from $6.8 million or 9% of revenue in the same period last year.
General and administrative expenses were 14% of revenue, down 1 point year-over-year.
Gross margin was 75%, down 1 point year-over-year due to increased data ingestion costs, amortization, and professional services investments.
Net income per share was $0.01 based on 140.2 million diluted shares, compared to a net loss per share of $0.00 a year ago.
Non-GAAP operating loss was $1.5 million, or 1.8% of revenue.
Operating expenses totaled $64 million or 76% of revenue, down 3 points sequentially.
Q2 2025 revenue was $83.3 million, up 14% year-over-year and 4% quarter-over-quarter, exceeding the high end of guidance.
Research and development expenses were 18% of revenue, up 1 point year-over-year.
Sales and marketing expenses were 44% of revenue, down 4 points year-over-year but up sequentially in dollars.
Adjusted EBITDA margins reached a record 25.6%, driven by ARR growth and favorable product mix, partially offset by increased freight and duties costs.
Annual recurring revenue (ARR) grew double digits year-over-year for the third consecutive quarter, now representing approximately 30% of trailing 12-month revenues.
Digi International returned to year-over-year revenue growth in Q3 2025.
Free cash flow generation remained strong with a 9% free cash flow yield, supported by disciplined operations, AI productivity initiatives, and inventory optimization.
The company retired $30 million in debt this quarter, reducing net debt to $20 million and aiming to be net cash positive by the end of fiscal 2025.
Adjusted EBITDA was $51 million, slightly up year-over-year, with an adjusted EBITDA margin of 28.5%, at the high end of guidance.
Adjusted net income was $26 million or $0.41 per diluted share, up from $0.38 per diluted share a year ago, reflecting share count reduction.
Free cash flow was $42 million year-to-date, down from prior year, mainly due to increased earn-out payments related to acquisitions.
Net income was $7 million or $0.11 per diluted share, down from $11 million or $0.17 per diluted share a year ago due to changes in fair value of contingent consideration.
Operating expenses decreased 3% year-over-year to $163 million, with adjusted operating expenses down 2% to $153 million.
Q2 2025 revenue was $179 million, flat year-over-year, with 5% growth in OEM and national revenue offset by softness in dealer revenue.
Share repurchases totaled $45 million year-to-date, exceeding free cash flow by 7%, and full-year repurchase target was raised to $70-$90 million.
Dafinchi