10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

Commission file number: 001-34033

DIGI INTERNATIONAL INC.

(Exact name of registrant as specified in its charter)

Delaware	41-1532464
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

9350 Excelsior Blvd.	Suite 700
Hopkins	Minnesota	55343
(Address of principal executive offices)		(Zip Code)

(952) 912-3444

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $.01 per share	DGII	The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

On July 29, 2022, there were 35,292,317 shares of the registrant's $.01 par value Common Stock outstanding.

INDEX

	Page
PART I. FINANCIAL INFORMATION
ITEM 1. Unaudited Financial Statements:
Condensed Consolidated Statements of Operations	1
Condensed Consolidated Statements of Comprehensive Income	2
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Cash Flows	4
Condensed Consolidated Statements of Stockholders’ Equity	5
Notes to Condensed Consolidated Financial Statements	6
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	29
ITEM 4. Controls and Procedures	30
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings	31
ITEM 1A. Risk Factors	31
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	31
ITEM 3. Defaults Upon Senior Securities	31
ITEM 4. Mine Safety Disclosures	31
ITEM 5. Other Information	31
ITEM 6. Exhibits	31

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DIGI INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
	(in thousands, except per share data)
Revenue:
Product	$	77,627	$	68,303	$	210,592	$	197,831
Service	25,890		10,776		71,895		31,695
Total revenue	103,517		79,079		282,487		229,526
Cost of sales:
Cost of product	38,435		31,477		102,157		91,747
Cost of service	6,352		3,933		19,043		10,409
Amortization	1,304		1,113		3,996		3,339
Total cost of sales	46,091		36,523		125,196		105,495
Gross profit	57,426		42,556		157,291		124,031
Operating expenses:
Sales and marketing	18,230		15,910		51,325		46,271
Research and development	13,968		12,374		41,199		34,822
General and administrative	15,149		10,153		43,216		34,701
Restructuring charge	105		101		214		995
Total operating expenses	47,452		38,538		135,954		116,789
Operating income	9,974		4,018		21,337		7,242
Other expense, net:
Interest income	1		3		8		4
Interest expense	(5,297)		(371)		(14,665)		(1,019)
Other expense, net	(96)		(114)		(59)		(229)
Total other expense, net	(5,392)		(482)		(14,716)		(1,244)
Income before income taxes	4,582		3,536		6,621		5,998
Income tax provision (benefit)	456		379		(1,539)		220
Net income	$	4,126	$	3,157	$	8,160	$	5,778
Net income per common share:
Basic	$	0.12	$	0.09	$	0.23	$	0.18
Diluted	$	0.12	$	0.09	$	0.23	$	0.18
Weighted average common shares:
Basic	35,131		34,057		34,900		31,443
Diluted	35,740		35,148		35,740		32,706

The accompanying notes are an integral part of the condensed consolidated financial statements.

1

DIGI INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
	(in thousands)
Net income	$	4,126	$	3,157	$	8,160	$	5,778
Other comprehensive (loss) income:
Foreign currency translation adjustment	(1,359)		463		(1,519)		2,068
Other comprehensive (loss) income	(1,359)		463		(1,519)		2,068
Comprehensive income	$	2,767	$	3,620	$	6,641	$	7,846

The accompanying notes are an integral part of the condensed consolidated financial statements.

2

DIGI INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30, 2022		September 30, 2021
	(in thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	41,515	$	152,432
Accounts receivable, net	52,009		43,738
Inventories	61,687		43,921
Income taxes receivable	9,784		2,698
Other current assets	4,562		3,869
Total current assets	169,557		246,658
Property, equipment and improvements, net	26,380		12,132
Operating lease right-of-use assets	14,829		15,684
Intangible assets, net	308,814		118,029
Goodwill	341,708		225,522
Deferred tax assets	—		439
Other non-current assets	2,351		1,067
Total assets	$	863,639	$	619,531
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	15,523	$	—
Accounts payable	27,949		22,586
Accrued compensation	12,899		12,934
Unearned revenue	18,172		13,589
Contingent consideration on acquired businesses	6,100		20
Current portion of operating lease liabilities	2,989		2,633
Other current liabilities	10,946		7,179
Total current liabilities	94,578		58,941
Income taxes payable	2,281		2,334
Deferred tax liabilities	15,417		13,493
Long-term debt	240,702		45,799
Operating lease liabilities	16,824		18,368
Other non-current liabilities	6,915		8,079
Total liabilities	376,717		147,014
Commitments and Contingencies (See Note 13)
Stockholders' equity:
Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued and outstanding	—		—
Common stock, $.01 par value; 60,000,000 shares authorized; 41,677,327 and 40,653,035 shares issued	417		407
Additional paid-in capital	380,083		370,699
Retained earnings	188,852		180,692
Accumulated other comprehensive loss	(24,265)		(22,746)
Treasury stock, at cost, 6,427,026 and 6,390,645 shares	(58,165)		(56,535)
Total stockholders' equity	486,922		472,517
Total liabilities and stockholders' equity	$	863,639	$	619,531

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

DIGI INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine months ended June 30,
	2022		2021
	(in thousands)
Operating activities:
Net income	$	8,160	$	5,778
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, equipment and improvements	4,993		3,211
Amortization of intangible assets	20,400		11,989
Stock-based compensation	6,402		6,331
Deferred income tax provision	2,363		1,995
Loss on sale of property and equipment	12		65
Change in fair value of contingent consideration	—		5,772
Provision for bad debt and product returns	906		1,520
Provision for inventory obsolescence	6,710		1,200
Restructuring charge	214		995
Other	(88)		84
Changes in operating assets and liabilities (net of acquisitions)	(34,618)		3,144
Net cash provided by operating activities	15,454		42,084
Investing activities:
Acquisition of businesses, net of cash acquired	(347,553)		(6,312)
Purchase of property, equipment, improvements and certain other intangible assets	(4,218)		(1,645)
Net cash used in investing activities	(351,771)		(7,957)
Financing activities:
Proceeds from long-term debt	350,000		618
Payments on long-term debt	(127,050)		(15,625)
Payments for contingent consideration	—		(4,200)
Proceeds from issuance of stock, net of offering expenses	—		73,830
Proceeds from stock option plan transactions	6,739		7,024
Proceeds from employee stock purchase plan transactions	1,100		917
Taxes paid for net share settlement of share-based payment options and awards	(6,476)		(1,985)
Net cash provided by financing activities	224,313		60,579
Effect of exchange rate changes on cash and cash equivalents	1,087		(1,893)
Net (decrease) increase in cash and cash equivalents	(110,917)		92,813
Cash and cash equivalents, beginning of period	152,432		54,129
Cash and cash equivalents, end of period	$	41,515	$	146,942
Supplemental schedule of non-cash investing and financing activities:
Transfer of inventory to property, equipment and improvements	$	(1,742)	$	(1,624)
Contingent consideration recognized related to acquisition of business	$	—	$	(5,914)
Tenant improvement allowance	$	—	$	(1,000)
Accrual for purchase of property, equipment, improvements and certain other intangible assets	$	(69)	$	(14)

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

DIGI INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(UNAUDITED)

											Accumulated
							Additional				Other		Total
	Common Stock			Treasury Stock			Paid-In		Retained		Comprehensive		Stockholders'
(in thousands)	Shares	Par Value		Shares	Value		Capital		Earnings		Income (Loss)		Equity
Balances, March 31, 2021	40,442	$	404	6,413	$	(56,595)	$	364,604	$	172,951	$	(22,212)	$	459,152
Net income	—	—		—	—		—		3,157		—		3,157
Other comprehensive income	—	—		—	—		—		—		463		463
Other	—	—		—	—		—		8		—		8
Employee stock purchase plan issuances	—	—		(18)	160		137		—		—		297
Taxes paid for net share settlement of share-based payment awards	—	—		6	(119)		—		—		—		(119)
Issuance of stock under stock award plans	70	1		—	—		402		—		—		403
Stock-based compensation expense	—	—		—	—		2,110		—		—		2,110
Balances, June 30, 2021	40,512	$	405	6,401	$	(56,554)	$	367,253	$	176,116	$	(21,749)	$	465,471
Balances, September 30, 2020	35,513	$	355	6,353	$	(55,109)	$	279,741	$	170,330	$	(23,817)	$	371,500
Net income	—	—		—	—		—		5,778		—		5,778
Other comprehensive income	—	—		—	—		—		—		2,068		2,068
Issuance of common stock, net of offering expenses	4,025	40		—	—		73,790		—		—		73,830
Other	—	—		—	—		—		8		—		8
Employee stock purchase plan issuances	—	—		(61)	540		376		—		—		916
Taxes paid for net share settlement of share-based payment awards	—	—		109	(1,985)		—		—		—		(1,985)
Issuance of stock under stock award plans	974	10		—	—		7,015		—		—		7,025
Stock-based compensation expense	—	—		—	—		6,331		—		—		6,331
Balances, June 30, 2021	40,512	$	405	6,401	$	(56,554)	$	367,253	$	176,116	$	(21,749)	$	465,471
Balances, March 31, 2022	41,525	$	415	6,447	$	(58,310)	$	376,579	$	184,726	$	(22,906)	$	480,504
Net income	—	—		—	—		—		4,126		—		4,126
Other comprehensive loss	—	—		—	—		—		—		(1,359)		(1,359)
Employee stock purchase plan issuances	—	—		(23)	213		217		—		—		430
Taxes paid for net share settlement of share-based payment options and awards	—	—		3	(68)		—		—		—		(68)
Issuance of stock under stock award plans	152	2		—	—		1,144		—		—		1,146
Stock-based compensation expense	—	—		—	—		2,143		—		—		2,143
Balances, June 30, 2022	41,677	$	417	6,427	$	(58,165)	$	380,083	$	188,852	$	(24,265)	$	486,922
Balances, September 30, 2021	40,653	$	407	6,391	$	(56,535)	$	370,699	$	180,692	$	(22,746)	$	472,517
Net income	—	—		—	—		—		8,160		—		8,160
Other comprehensive loss	—	—		—	—		—		—		(1,519)		(1,519)
Employee stock purchase plan issuances	—	—		(60)	547		554		—		—		1,101
Taxes paid for net share settlement of share-based payment awards	—	—		96	(2,177)		(4,299)		—		—		(6,476)
Issuance of stock under stock award plans	1,024	10		—	—		6,727		—		—		6,737
Stock-based compensation expense	—	—		—	—		6,402		—		—		6,402
Balances, June 30, 2022	41,677	$	417	6,427	$	(58,165)	$	380,083	$	188,852	$	(24,265)	$	486,922

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

DIGI INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. 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 United States 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 our Annual Report on Form 10-K for the year ended September 30, 2021 (the "2021 Financial Statements"). 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.

Potential Impacts of Macroeconomic Conditions on our Business

Our business is effected by present macroeconomic conditions including the ongoing pandemic, supply chain disruptions, the war in Ukraine and inflation. The impact of each of these items is volatile and continues to evolve. The extent of impact stemming from any individual factor or combination of factors on our operational and financial performance will depend in large part on future developments, which cannot be reasonably estimated at this time and could vary in scope and severity both individually and collectively based upon actions taken by governments and other entities to mitigate impacts both within and outside jurisdictions where we operate. For a more detailed discussion see Part I, Item 1 in our Annual Report on Form 10-K for the year ended September 30, 2021 and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of this Form 10-Q.

Recently Issued Accounting Pronouncements

Adopted

In October 2021, FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This update requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. We adopted this standard in the first quarter of fiscal 2022.

6

2. ACQUISITIONS

Acquisition of Ventus

On November 1, 2021, we acquired Ventus Networks, LLC ("Ventus") for approximately $350 million in cash. The acquisition was funded through a combination of cash on hand and debt financing under a $350 million credit facility committed by BMO Harris Bank N.A.

For tax purposes, this acquisition was treated as an asset acquisition. We believe this is a complementary acquisition for us as it significantly enhances our IoT Solutions segment by enhancing Digi's service portfolio and immediately extends the company's market reach with a Managed Network-as-a-Service ("MNaaS") solutions offering.

Costs directly related to the acquisition of $4.2 million incurred fiscal year to date 2022 have been charged to operations and are included in general and administrative expense in our condensed consolidated statements of operations. These acquisition costs include legal, accounting, valuation and investment banking fees.

The following table summarizes the preliminary fair values of Ventus assets acquired and liabilities assumed as of the acquisition date (in thousands):

Cash	$	350,000
Fair value of net tangible assets acquired	$	20,735
Identifiable intangible assets:
Customer relationships	179,000
Purchased and core technology	16,000
Trademarks	16,000
Goodwill	118,265
Total	$	350,000

The condensed consolidated balance sheet as of June 30, 2022 reflects the preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. This preliminary allocation was updated in the third fiscal quarter of 2022 to reflect information not available previously. The estimated fair value of the net assets acquired, liabilities assumed and identifiable intangible assets are preliminary and remain subject to change, as preliminary purchase price allocation has not yet been completed. Included in the fair value of net tangible assets acquired was $0.7 million of right-of-use asset included in other non-current assets and $0.7 million of lease liability included in other current liabilities and other non-current liabilities associated with Ventus’s operating leases.

The preliminary weighted average useful life for all the identifiable intangibles listed above is estimated to be 19.2 years. For purposes of determining fair value, the existing customer relationships identified above are assumed to have a useful life of 20.5 years, purchased and core technology is assumed to have useful life of 11 years and trademarks are assumed a useful life of 13 years. Useful lives for identifiable intangible assets are estimated at the time of acquisition based on the periods of time from which we expect to derive benefits from the identifiable intangible assets. The identifiable intangible assets are amortized using the straight-line method which reflects the pattern in which the assets are expected to be consumed.

The following consolidated pro forma information is presented as if the acquisition had occurred on October 1, 2020 (in thousands):

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Net sales	$	103,517	$	92,678	$	287,552	$	268,029
Net income (loss)	4,126		(432)		3,051		(6,157)

Pro forma net income has been adjusted to include interest expense related to debt incurred as a result of the acquisition, amortization on the fair value of the intangibles acquired and remove any costs incurred with the sale transaction. Net income for the nine months ended June 30, 2021 was adjusted to include acquisition-related costs of $3.1 million.

7

3. 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,
	2022		2021		2022		2021
Numerator:
Net income	$	4,126	$	3,157	$	8,160	$	5,778
Denominator:
Denominator for basic net income per common share — weighted average shares outstanding	35,131		34,057		34,900		31,443
Effect of dilutive securities:
Stock options and restricted stock units	609		1,091		840		1,263
Denominator for diluted net income per common share — adjusted weighted average shares	35,740		35,148		35,740		32,706
Net income per common share, basic	$	0.12	$	0.09	$	0.23	$	0.18
Net income per common share, diluted	$	0.12	$	0.09	$	0.23	$	0.18

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, 2022 and 2021, 939,101 and 994,096 shares outstanding were excluded, respectively. For the nine months ended June 30, 2022 and 2021, 778,573 and 864,744 were excluded, respectively.

4. SELECTED BALANCE SHEET DATA

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

	June 30, 2022		September 30, 2021
Accounts receivable, net:
Accounts receivable	$	61,005	$	51,828
Less allowance for credit losses	2,354		3,934
Less reserve for future credit returns and pricing adjustments	6,642		4,156
Accounts receivable, net	$	52,009	$	43,738
Inventories:
Raw materials	$	31,009	$	27,279
Finished goods	30,678		16,642
Inventories	$	61,687	$	43,921

8

5. FAIR VALUE MEASUREMENTS

Financial assets and liabilities are classified in the following fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1 (unadjusted quoted prices in active markets for identical assets or liabilities); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

The following tables provide information by level for financial liabilities that are measured at fair value on a recurring basis (in thousands):

	Total Fair Value at		Fair Value Measurements Using  Inputs Considered as
	June 30, 2022		Level 1		Level 2		Level 3
Liabilities:
Contingent consideration on acquired business	$	6,200	$	—	$	—	$	6,200
Total liabilities measured at fair value	$	6,200	$	—	$	—	$	6,200

	Total Fair Value at		Fair Value Measurements Using  Inputs Considered as
	September 30, 2021		Level 1		Level 2		Level 3
Liabilities:
Contingent consideration on acquired business	$	6,200	$	—	$	—	$	6,200
Total liabilities measured at fair value	$	6,200	$	—	$	—	$	6,200

In connection with our acquisition of Opengear, Inc. in December 2019, we agreed to make contingent payments, based upon certain revenue thresholds. We paid the final installment of $10.0 million during the second quarter of fiscal 2021.

In connection with our acquisition of Haxiot, Inc. ("Haxiot") in March 2021, we agreed to make contingent earn-out payments, based upon certain revenue thresholds. In the fiscal third quarter of fiscal 2021, the preliminary purchase price allocation was updated, including related determination of fair value and income tax implications. As a result, we reduced contingent consideration by $2.1 million in the third fiscal quarter of 2021. The fair value of the remaining liability for contingent consideration for the acquisition of Haxiot was $5.9 million at June 30, 2022.

In connection with our acquisition of Ctek, Inc. ("Ctek") in July 2021, we agreed to make contingent earn-out payments, based upon certain revenue thresholds. The fair value of the remaining liability for contingent consideration for the acquisition of Ctek was $0.3 million at June 30, 2022.

The following table presents a reconciliation of the contingent consideration liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Fair value at beginning of period	$	6,200	$	8,000	$	6,200	$	4,228
Contingent consideration recognized for acquired business	—		—		—		8,000
Contingent consideration payments	—		—		—		(10,000)
Change in fair value of contingent consideration	—		(2,100)		—		3,672
Fair value at end of period	$	6,200	$	5,900	$	6,200	$	5,900

The change in fair value of contingent consideration reflects our estimates of the probabilities of achieving the relevant targets and is discounted based on our estimated discount rate. The fair value of the contingent consideration at June 30, 2022 is based on the probability of achieving the specified revenue thresholds for Haxiot and Ctek.

9

6. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Amortizable intangible assets were (in thousands):

	June 30, 2022						September 30, 2021
	Gross carrying amount		Accum. amort.		Net		Gross carrying amount		Accum. amort.		Net
Purchased and core technology	$	85,132	$	(54,666)	$	30,466	$	69,162	$	(50,701)	$	18,461
License agreements	112		(112)		—		112		(112)		—
Patents and trademarks	39,670		(16,972)		22,698		23,491		(14,978)		8,513
Customer relationships	309,264		(53,614)		255,650		130,278		(39,973)		90,305
Non-compete agreements	600		(600)		—		600		(600)		—
Order backlog	1,000		(1,000)		—		1,000		(250)		750
Total	$	435,778	$	(126,964)	$	308,814	$	224,643	$	(106,614)	$	118,029

Amortization expense was $7.0 million and $4.1 million for the three months ended June 30, 2022 and 2021, respectively and $20.4 million and $12.0 million for the nine months ended June 30, 2022 and 2021, 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 2022 and the five succeeding fiscal years is (in thousands):

2022 (three months)	$	6,722
2023	$	24,996
2024	$	24,282
2025	$	20,825
2026	$	20,593
2027	$	18,582

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

	Nine months ended June 30, 2022
	IoT Products and Services		IoT Solutions		Total
Balance on September 30, 2021	$	175,180	$	50,342	$	225,522
Acquisition	—		118,265		118,265
Adjustment	116		(631)		(515)
Foreign currency translation adjustment	(1,402)		(162)		(1,564)
Balance on June 30, 2022	$	173,894	$	167,814	$	341,708

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 continue to have two reportable segments, our IoT Products & Services segment and our IoT Solutions segment (see Note 8). Effective with the reorganization announcement on October 7, 2020, our IoT Products & Services business is now structured to include four reporting units under the IoT Products & Services segment, each with a reporting manager: Cellular Routers, Console Servers, OEM Solutions and Infrastructure Management. We had four reporting units along with our IoT Solutions segment that were tested individually for impairment during our third quarter fiscal 2021 annual impairment test. Following our acquisition of Ventus in November, 2021, we have two reporting units within our IoT Solutions segment in addition to the four reporting units included in IoT Products & Services.

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 negatively affect the estimated fair values. If our future operating results do not meet current forecasts or

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

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, we may be required to record future impairment charges for goodwill.

Results of our Fiscal 2022 Annual Impairment Test

As of June 30, 2022, we had a total of $32.7 million of goodwill for the Enterprise Routers reporting unit, $57.1 million of goodwill for the Console Servers reporting unit, $63.7 million of goodwill for the OEM Solutions reporting unit, $20.4 million of goodwill for the Infrastructure Management reporting unit, $49.5 million of goodwill for the SmartSense reporting unit and $118.3 million of goodwill for the Ventus. At June 30, 2022, the fair value of goodwill exceeded the carrying value for all six reporting units. SmartSense and Ventus fair values exceeded carrying values by less than 10%. Implied fair value for each reporting unit was calculated on a standalone basis using a weighted combination of the income approach and market approach. The implied fair values of each reporting unit were added together along with our unallocated assets to get an indicated value of total equity to which a range of indicated value of total equity was derived. This range was compared to the total market capitalization of $852.0 million as of June 30, 2022. This implied a range of control (deficit)/ premiums of (5.6)% to 7.9%. This range of control premiums fell below the control premiums observed in the last five years in the communications equipment industry. As a result, the market capitalization reconciliation analysis proved support for the reasonableness of the fair values estimated for each individual reporting unit.

7. INDEBTEDNESS

On November 1, 2021, we entered into a second amended and restated credit agreement with BMO Harris Bank N.A. ("BMO"). This agreement provides us with a senior secured credit facility (the "Credit Facility") consisting of a $350 million term loan B secured loan (the “Term Loan Facility”) and a $35 million revolving credit facility (the “Revolving Loan Facility”) with an uncommitted option to increase incremental loans under the Credit Facility, subject to an incremental cap. The Revolving Loan Facility includes a $10 million letter of credit subfacility and $10 million swingline subfacility. Digi may use proceeds of the Revolving Loan Facility in the future for general corporate purposes. This loan replaced our syndicated senior secured credit agreement with BMO that was entered into on March 15, 2021 and replaced the remaining balance of our revolver with this new term loan. This prior agreement provided us with committed credit facilities ("Prior Credit Facility") consisting of a $200 million revolving loan.

On December 22, 2021, Digi entered into a third amended and restated credit agreement with BMO. Digi refinanced the Term Loan Facility and Revolving Loan Facility under its existing credit agreement entered into on November 1, 2021, but did not receive any additional proceeds from nor modify the amounts of any facilities or subfacilities contained within that credit agreement.

Following the December amendment, borrowings under the Term Loan Facility bear interest at a rate per annum equal to LIBOR with a floor of 0.50% 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 LIBOR is no longer available) plus 5.00% or a base rate plus 4.00%. The base rate is determined by reference to the highest of BMO’s prime rate, the Federal Funds Effective Rate plus 0.50%, or the one-month LIBOR for U.S. dollars plus 1.00%. The applicable margin for loans under the Revolving Credit Facility is in a range of 4.00% to 3.75% for LIBOR loans and 3.00% to 2.75% for base rate loans, depending on Digi’s consolidated leverage ratio. In addition to paying interest on the outstanding balance under the Credit Facility, we are required to pay a commitment fee on the non-utilized commitments thereunder which is also reported in interest expense. Our weighted average interest rate at June 30, 2022 was 6.85%.

The debt issuance costs and remaining balance under the Prior Credit Facility totaled $2.3 million at November 1, 2021. Of this amount $1.9 million was written off and included in interest expense upon the entry into the new amendment and $0.4 million is being amortized over the term of the amended loan and reported in interest expense. Digi incurred an additional $11.7 million and $1.7 million in debt issuance costs relating to the November 1, 2021 and December 22, 2021 amendments, respectively. These amounts will be amortized over the term of the amended loan and reported in interest expense.

The Term Loan is payable in quarterly installments, with the balance remaining due at November 2, 2028. The Revolving Loan is due in a lump sum payment at maturity on November 2, 2028, if any amounts are drawn. The fair value of the Term Loan and Revolving Loan approximated carrying value at June 30, 2022.

Digi made early payments against the term loan of $50 million in December 2021, $11.3 million in March 2022 and $20 million in June 2022.

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7. INDEBTEDNESS (CONTINUED)

The following table is a summary of our long-term indebtedness at June 30, 2022 and September 30, 2021 (in thousands):

	Balance at June 30, 2022		Balance at September 30, 2021
Revolving Loan	$	—	$	48,118
Term loan	268,748		—
Total loans	268,748		48,118
Less unamortized issuance costs	(12,523)		(2,319)
Less current maturities of long-term debt	(15,523)		—
Total long-term debt, net of current portion	$	240,702	$	45,799

The following table is a summary of future maturities of our aggregate long-term debt at June 30, 2022 (in thousands):

Fiscal year	Amount
2022 (three months)	$	4,375
2023	17,500
2024	17,500
2025	17,500
2026	17,500
2027	17,500
2028	176,873
Total long-term debt	$	268,748

Covenants and Security Interest

The agreements governing the Revolving Loan Facility contains a number of covenants. Among other provisions, these covenants require us to maintain a certain financial ratio (net leverage ratio and minimum fixed charge ratio). At June 30, 2022, we had no amounts drawn on the Revolving Loan Facility. Amounts borrowed under the Credit Facility are secured by substantially all of our assets.

8. SEGMENT INFORMATION

We have two reportable segments: IoT Products & Services and IoT Solutions. Effective with the reorganization announcement on October 7, 2020, our IoT Products & Services business is now structured to include four operating segments, each with a segment manager. These four operating segments include:

•Cellular Routers - box devices (fully enclosed) that provide connectivity typically in a place where the device can be plugged in exclusively using cellular communications.

•Console Servers - similar to cellular routers except they are exclusively for edge computing installations and data center applications (also exclusively using cellular communications).

•OEM Solutions - Original Equipment Manufacturers ("OEM") will be a chip, rather than a boxed device. This can come in the form of a stand-alone module, or from a systems-on-module ("SOMs"). While cellular connectivity is used, other communication protocols can be used such as Zigbee, Bluetooth or Radio-Frequency ("RF") based on application.

•Infrastructure Management - includes battery operated, cellular enabled connect sensors as well as other types of console server applications that are more Digi Accelerated Linux ("DAL") based than Console Servers. This operating segment has some products that do not use cellular communications, but a large part of this segment does use cellular communications.

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8. SEGMENT INFORMATION (CONTINUED)

Following the acquisition of Ventus on November 1, 2021, IoT Solutions is now comprised of two operating segments:

•SmartSense - offers wireless temperature and other condition-based monitoring services for perishable goods such as food or medicine, as well as employee task management services.

•Ventus - provides MNaaS solutions that simplify the complexity of enterprise wide area network ("WAN") connectivity via wireless and fixed line solutions.

The operating segments included in each reportable segment have similar qualitative and quantitative factors which allow us to aggregate them under each reportable segment. The qualitative factors include similar nature of products and services, production process, type or class of customers and methods used to distribute the products. The quantitative factors include similar operating margins. Our CODM reviews and makes business decisions which includes a primary review of operating income but also includes gross profit. Following the October 2020 reorganization, the shared general and administrative costs began being allocated to each operating segment. As a result, our disclosed measure of segment operating income has been updated for all periods presented to conform with this change.

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

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Revenue
IoT Products & Services	$	79,758	$	66,812	$	216,872	$	194,224
IoT Solutions	23,759		12,267		65,615		35,302
Total revenue	$	103,517	$	79,079	$	282,487	$	229,526
Gross Profit
IoT Products & Services	$	42,643	$	36,806	$	116,779	$	106,942
IoT Solutions	14,783		5,750		40,512		17,089
Total gross profit	$	57,426	$	42,556	$	157,291	$	124,031
Operating Income (Loss)
IoT Products & Services	$	10,881	$	6,101	$	24,046	$	11,954
IoT Solutions	(907)		(2,083)		(2,709)		(4,712)
Total operating income (loss)	$	9,974	$	4,018	$	21,337	$	7,242
Depreciation and Amortization
IoT Products & Services	$	3,471	$	3,181	$	10,633	$	9,390
IoT Solutions	5,276		1,964		14,760		5,810
Total depreciation and amortization	$	8,747	$	5,145	$	25,393	$	15,200

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

	Nine months ended June 30,
	2022		2021
IoT Products & Services	$	1,722	$	1,645
IoT Solutions*	2,496		—
Total expended for property, plant and equipment	$	4,218	$	1,645

* Excluded from this amount is $1,742 and $1,624 of transfers of inventory to property plant and equipment for subscriber assets for the nine months ended June 30, 2022 and 2021, respectively.

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8. SEGMENT INFORMATION (CONTINUED)

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

	June 30, 2022		September 30, 2021
IoT Products & Services	$	398,129	$	386,934
IoT Solutions	423,995		80,165
Unallocated*	41,515		152,432
Total assets	$	863,639	$	619,531

*Unallocated consists of cash and cash equivalents.

9. 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,
	2022		2021		2022		2021
North America, primarily the United States	$	83,282	$	56,965	$	223,315	$	167,406
Europe, Middle East & Africa	12,265		12,543		37,139		34,769
Rest of world	7,970		9,571		22,033		27,351
Total revenue	$	103,517	$	79,079	$	282,487	$	229,526

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

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Transferred at a point in time	$	80,858	$	70,333	$	220,049	$	203,665
Transferred over time	22,659		8,746		62,438		25,861
Total revenue	$	103,517	$	79,079	$	282,487	$	229,526

Contract Balances

Contract Assets

Contract assets consist of subscriber assets.  These subscriber assets relate to fees in certain contracts that we charge our customers so they can begin using equipment. In these cases, we retain the ownership of the equipment that the customer uses. The total net book value of subscriber assets of $15.8 million and $1.9 million as of June 30, 2022 and September 30, 2021, respectively, are included in property, equipment and improvements, net. The June 30, 2022 balance includes $14.1 million acquired in the acquisition of Ventus. Depreciation expense for these subscriber assets, which is included in cost of sales, was $0.4 million and $0.5 million for the three months ended June 30, 2022 and June 30, 2021, respectively and $2.3 million and $1.4 million for the nine months ended June 30, 2022 and June 30, 2021, respectively. We depreciate the cost of this equipment over its useful life.

Contract Liabilities

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. 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.

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9. REVENUE (CONTINUED)

Our contract liabilities were $22.6 million and $14.8 million at June 30, 2022 and 2021, respectively. The June 30, 2022 balance includes $2.1 million assumed from the Ventus acquisition completed in November 2021.

Of the $24.8 million and $16.4 million balances as of March 31, 2022 and 2021, Digi recognized $5.4 million and $4.8 million in the three months ended June 30, 2022 and 2021, respectively. Of the $15.5 million and $9.3 million balances as of September 30, 2021 and 2020, Digi recognized $12.0 million and $8.3 million in the nine months ended June 30, 2022 and 2021, respectively.

Remaining Transaction Price

Transaction price allocated to the remaining performance obligations represents contracted revenue that has not been recognized. This includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods. As of June 30, 2022, approximately $22.6 million of revenue is expected to be recognized from remaining performance obligations. We expect to recognize revenue on approximately $18.2 million of remaining performance obligations over the next twelve months. Revenue from the remaining performance obligations we expect to recognize over a range of two to seven years.

10. INCOME TAXES

Our income tax benefit was $1.5 million for the nine months ended June 30, 2022. Included in this benefit was a net tax benefit discretely related to the nine months ended June 30, 2022 of $2.7 million. This benefit primarily was the result of excess tax benefits recognized on stock compensation.

Income tax expense was $0.2 million for the nine months ended June 30, 2021. Included in this expense was a net tax benefit discretely related to the nine months ended June 30, 2021 of $1.0 million. This benefit primarily was the result of excess tax benefits recognized on stock compensation.

Our effective tax rate will vary based on a variety of factors. These 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 settlements of audits. 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, 2021	$	2,908
Decreases related to:
Expiration of statute of limitations	(69)
Prior year income tax positions	(10)
Unrecognized tax benefits as of June 30, 2022	$	2,829

The total amount of unrecognized tax benefits at June 30, 2022 that, if recognized, would affect our effective tax rate was $2.7 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 $0.7 million over the next 12 months.

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11. 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 current liabilities:

	Balance at		Warranties		Settlements		Balance at
Period	April 1		issued		made		June 30
Three months ended June 30, 2022	$	690	$	100	$	(38)	$	752
Three months ended June 30, 2021	$	923	$	16	$	(146)	$	793
	Balance at		Warranties		Settlements		Balance at
Period	October 1		issued		made		June 30
Nine months ended June 30, 2022	$	707	$	295	$	(250)	$	752
Nine months ended June 30, 2021	$	942	$	205	$	(354)	$	793

12. 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 twelve 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 twelve 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 asset, 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, 2022		September 30, 2021
Assets
Operating leases	Operating lease right-of-use assets	$	14,829	$	15,684
Total lease assets		$	14,829	$	15,684
Liabilities
Operating leases	Current portion of operating lease liabilities	$	2,989	$	2,633
Operating leases	Operating lease liabilities	16,824		18,368
Total lease liabilities		$	19,813	$	21,001

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12. LEASES (CONTINUED)

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,
	2022		2021		2022		2021
Operating lease cost	$	954	$	856	$	2,836	$	2,615
Variable lease cost	287		286		828		805
Short-term lease cost	27		32		83		98
Total lease cost	$	1,268	$	1,174	$	3,747	$	3,518

The following table presents supplemental information related to operating leases (in thousands):

	Nine months ended June 30,
	2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	—	$	1,784
Right-of-use assets acquired in Ventus acquisition	699		—
Right-of-use assets obtained in exchange for new operating lease liabilities	—		3,919
Non-cash tenant improvement allowance	$	—	$	1,000

At June 30, 2022 the weighted average remaining lease term of our operating leases was 8.6 years and the weighted average discount rate for these leases was 2.8%.

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, 2022 (in thousands):

Fiscal year	Amount
2022 (three months)	$	992
2023	3,746
2024	3,241
2025	2,821
2026	2,591
2027	1,761
Thereafter	7,068
Total future undiscounted lease payments	22,220
Less imputed interest	(2,407)
Total reported lease liability	$	19,813

13. COMMITMENTS AND CONTINGENCIES

We lease certain of our buildings and equipment under noncancelable lease agreements. Please refer to Note 12 to our condensed consolidated financial statements for additional information.

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 former 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.

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14. STOCK-BASED COMPENSATION

Stock-based awards were granted under the 2021 Omnibus Incentive Plan (as amended and restated, the "2021 Plan") beginning January 29, 2021. Prior to that date, such awards made in fiscal 2021 were granted under the 2020 Omnibus Incentive Plan (the "2020 Plan"). Upon stockholder approval of the 2021 Plan on January 29, 2021, we ceased granting awards under the 2020 Plan. On January 28, 2022, the stockholders approved the amendment and restatement of the 2021 Plan. Shares subject to awards under the 2020 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.

The 2021 Plan authorizes the issuance of up to 2,400,000 common shares in connection with awards of stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based full value awards or other stock-based awards. Eligible participants include our employees, our affiliates, non-employee directors of our Company and any consultant or advisor who is a natural person and provides services to us or our affiliates. Options that have been granted under the 2021 Plan typically vest over a four-year period and will expire if unexercised after seven years from the date of grant. Restricted stock unit awards ("RSUs") that have been granted to directors typically vest in one year. RSUs that have been granted to executives and employees typically vest in January over a four-year period. Performance stock unit awards ("PSUs") that have been granted to an executive will vest based on achievement of a cumulative adjusted earnings per share metric measured over a three-year period. Share-based compensation expenses recorded for this performance award is reevaluated at each reporting period based on the probability of achievement of the goal. The 2021 Plan is scheduled to expire on January 28, 2032. Options under the 2021 Plan can be granted as either incentive stock options or non-statutory stock options. The exercise price of options and the grant date price of RSUs and PSUs is determined by our Compensation Committee but will not be less than the fair market value of our common stock based on the closing price as of the date of grant. Upon exercise of options or settlement of vested restricted stock units or performance stock units, we issue new shares of stock. As of June 30, 2022, there were approximately 1,757,566 shares available for future grants under the 2021 Plan.

Cash received from the exercise of stock options was $6.7 million and $7.0 million for the nine months ended June 30, 2022 and June 30, 2021, respectively.

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, 2022 and 2021, our employees forfeited 96,860 shares and 109,516 shares, respectively, in order to satisfy respective withholding tax obligations of $2.2 million and $2.0 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 to 3,425,000 that may be purchased under the plan. ESPP contributions by employees were $1.1 million and $0.9 million for the nine months ended June 30, 2022 and June 30, 2021, respectively. Pursuant to the ESPP, 60,481 and 61,302 common shares were issued to employees during the nine months ended June 30, 2022 and June 30, 2021, respectively. Shares are issued under the ESPP from treasury stock. As of June 30, 2022, 572,592 common shares were available for future issuances under the ESPP.

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14. STOCK-BASED COMPENSATION (CONTINUED)

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,
	2022		2021		2022		2021
Cost of sales	$	125	$	98	$	342	$	269
Sales and marketing	660		614		1,828		1,762
Research and development	252		259		890		762
General and administrative	1,106		1,139		3,342		3,538
Stock-based compensation before income taxes	2,143		2,110		6,402		6,331
Income tax benefit	(460)		(463)		(1,360)		(1,369)
Stock-based compensation after income taxes	$	1,683	$	1,647	$	5,042	$	4,962

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 at September 30, 2021	2,952	$13.20
Granted	559	22.20
Exercised	(1,307)	11.49
Forfeited / Canceled	(162)	17.61
Balance on June 30, 2022	2,042	$16.35	4.7	$	11,887
Exercisable at June30, 2022	984	$13.74	3.5	$	10,320

(1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $24.22 as of June 30, 2022, which would have been received by the option holders had all option holders exercised their options as of that date. 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, 2022 was $15.6 million and during the nine months ended June 30, 2021 was $5.4 million.

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,
	2022	2021
Weighted average per option grant date fair value	$10.03	$7.45
Assumptions used for option grants:
Risk free interest rate	1.25% - 3.00%	0.51% - 1.035%
Expected term	6.00 years	6.00 years
Expected volatility	45% - 46%	44% - 46%
Weighted average volatility	46%	44%
Expected dividend yield	—	—

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14. STOCK-BASED COMPENSATION (CONTINUED)

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, 2022, the total unrecognized compensation cost related to non-vested stock options was $8.0 million and the related weighted average period over which it is expected to be recognized is approximately 1.5 years.

Non-vested Stock Units

The following table presents a summary of our non-vested restricted stock and performance stock units as of June 30, 2022 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 at September 30, 2021	812	$	15.72	18	$	25.15
Granted	377	22.21		12	19.78
Vested	(290)	15.56		(3)	25.15
Canceled	(130)	17.15		—	—
Nonvested at June 30, 2022	769	$	18.71	27	$	22.69

As of June 30, 2022, the total unrecognized compensation cost related to non-vested stock units was $11.6 million. The related weighted average period over which this cost is expected to be recognized is approximately 2.4 years.

20

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our management's discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, as well as our subsequent reports on Form 10-Q and Form 8-K and any amendments to these reports.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Form 10-Q contains certain statements that are "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995, and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Forward-Looking Statements

This discussion contains forward-looking statements that are based on management's current expectations and assumptions. These statements often can be identified by the use of forward-looking terminology such as "assume," "believe," "anticipate," "intend," "estimate," "target," "may," "will," "expect," "plan," "potential," "project," "should," or "continue," or the negative thereof or other variations thereon or similar terminology. Among other items, these statements relate to expectations of the business environment in which Digi operates, projections of future performance, perceived marketplace opportunities and statements regarding our mission and vision. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions. Among others, these include risks related to the ongoing supply chain and transportation challenges impacting businesses globally, the ongoing COVID-19 pandemic and efforts to mitigate the same, risks related to ongoing inflationary pressures as well as present concerns about a potential recession and the ability of companies like us to operate a global business in such conditions, risks arising from the present war in Ukraine, the highly competitive market in which our company operates, rapid changes in technologies that may displace products sold by us, declining prices of networking products, our reliance on distributors and other third parties to sell our products, the potential for significant purchase orders to be canceled or changed, delays in product development efforts, uncertainty in user acceptance of our products, the ability to integrate our products and services with those of other parties in a commercially accepted manner, potential liabilities that can arise if any of our products have design or manufacturing defects, our ability to integrate and realize the expected benefits of acquisitions such as our recently completed acquisition of Ventus, our ability to defend or settle satisfactorily any litigation, uncertainty in global economic conditions and economic conditions within particular regions of the world which could negatively affect product demand and the financial solvency of customers and suppliers, the impact of natural disasters and other events beyond our control that could negatively impact our supply chain and customers, potential unintended consequences associated with restructuring, reorganizations or other similar business initiatives that may impact our ability to retain important employees or otherwise impact our operations in unintended and adverse ways, the ability to achieve the anticipated benefits and synergies associated with acquisitions or divestitures and changes in our level of revenue or profitability which can fluctuate for many reasons beyond our control.

These and other risks, uncertainties and assumptions identified from time to time in our filings with the United States Securities and Exchange Commission, including without limitation, our Annual Report on Form 10-K for the year ended September 30, 2021, this filing on Form 10-Q and other filings, could cause our actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf. Many of such factors are beyond our ability to control or predict. These forward-looking statements speak only as of the date for which they are made. We disclaim any intent or obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, the disclosure of contingent assets and liabilities and the values of purchased assets and assumed liabilities in acquisitions. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

21

A description of our critical accounting policies and estimates was provided in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the fiscal year ended September 30, 2021.

GOODWILL

Results of our Fiscal 2022 Annual Impairment Test

Our goodwill impairment test as of June 30, 2022 indicated no impairment. SmartSense and Ventus fair values exceeded carrying values by less than 10%. We will continue to monitor potential impacts that could potentially affect our cash flows and market capitalization. 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 negatively affect the estimated fair values. 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, we may be required to record future impairment charges for goodwill.

OVERVIEW

We are a leading global provider of business and mission-critical IoT connectivity products, services and solutions. Our business is comprised of two reporting segments: IoT Products & Services and IoT Solutions.

Our IoT Products & Services segment offers products and services that help OEMs, enterprise and government customers create and deploy, secure IoT connectivity solutions. From embedded and wireless modules to console servers as well as enterprise and industrial routers, we provide a wide variety of communication sub-assemblies and finished products to meet our customers' IoT communication requirements. In addition, this segment provides our customers with a device management platform and other professional services to enable customers to capture and manage data from devices connected to networks. In the past this segment has benefited from significant one-time project based deployments. During the pandemic we saw a decrease in proposals for such projects. Recently we have seen some resumption of opportunities to make these project based sales, most notably in the areas mass transit and smart cities. While there is no assurance we will be chosen for any such deployments, we view this renewed activity as a positive development for this segment. Demand generally has been strong for many products in this segment during fiscal 2022 and has driven record sales bookings and backlogs that we are constrained to meet at present because of supply chain challenges.

On October 7, 2020, our Board of Directors approved a reorganization of our IoT Products & Services business segment. The restructuring plan aligned the business segment's organization around product lines, each with a segment manager. Under this plan, we recorded charges of $1.0 million for employee termination charges and eliminated 19 employment positions primarily in the U.S. during the first half of fiscal 2021. We have grouped our products under the following categories: Cellular Routers, Console Servers, OEM Solutions and Infrastructure Management. Consequently, the measure of segment operating profit used by our chief operating decision maker ("CODM") changed. As a result, our disclosed measure of segment operating income has been updated. For further detail on segment performance, see the Revenue by Segment, Cost of Goods Sold and Gross Profit by Segment and Operating Income sections of this Item 2.

Our IoT Solutions segment primarily consists of our SmartSense by Digi® and Ventus operating segments. SmartSense offers wireless temperature and other condition-based monitoring services as well as employee task management services. These solutions are focused on the following vertical markets: food service, healthcare (primarily pharmacies and hospitals) and supply chain. We initially formed, expanded and enhanced our SmartSense by Digi business through four acquisitions. Our recent acquisition of Ventus makes us a leader in the provision of MNaaS solutions that simplify the complexity of enterprise wide area network WAN connectivity for our customers and provides us with a significant base of high margin subscription based recurring revenue. Ventus’s portfolio includes cellular wireless and fixed line WAN solutions for an array of connectivity applications in banking, healthcare, retail, gaming, hospitality and other sectors. Given our belief in the potential of this segment, we are making targeted investments in this segment designed to enhance its performance over time.

We compete for customers on the basis of existing and planned product features, service and software application capabilities, company reputation, brand recognition, technical support, alliance relationships, quality and reliability, product development capabilities, price and availability.

22

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

In fiscal 2022, our key operating objectives include:

•continued growth of our SmartSense by Digi® and Ventus businesses that are the base of our IoT Solutions segment;

•delivering growth within our IoT Products & Services segment through new product introductions; and

•integration of our recently acquired Ventus business.

We utilize many financial, operational, and other metrics to evaluate our financial condition and financial performance. Below we highlight the metrics for the third quarter of fiscal 2022 that we feel are most important in these evaluations, with comparisons to the third quarter of fiscal 2021:

•Consolidated revenue was $104 million, an increase of 31%.

•Consolidated gross profit was $57.4 million, an increase of 35%.

•Consolidated operating income was $10.0 million, an increase of 148%.

•Gross profit margin was 55.5% versus 53.8%. Gross profit margin excluding amortization was 56.7% compared to 55.2%.

•Net income was $4.1 million, an increase of 31%.

•Diluted earnings per share was $0.12, compared to $0.09, an increase of 33%.

•Adjusted EBITDA was $21 million, an increase of 82%.

•Adjusted net income and adjusted net income per share was $15.9 million, or $0.45 per diluted share, compared to $8.7 million, or $0.25 per diluted share, an increase of 80%.

Recent Events Impacting Third Quarter Results

Acquisition of Ventus

On November 1, 2021, we acquired Ventus for approximately $350 million in cash. The acquisition was funded through a combination of cash on hand and debt financing under an amended and restated credit facility committed by BMO Harris Bank N.A. (see Note 7). In the first quarter of fiscal 2022, the preliminary purchase price allocation was recorded, including related determinations of fair value and income tax implications. In the third quarter of fiscal 2022, we recorded a purchase price allocation adjustment to adjust for new information. As a result, we have $118 million of goodwill and $211 million of other intangibles on our condensed consolidated balance sheets at June 30, 2022. The results of operations following the acquisition date are now included in our 2022 results within our IoT Solutions segment.

CONSOLIDATED RESULTS OF OPERATIONS

The following table sets forth selected information derived from our interim condensed consolidated statements of operations:

	Three months ended June 30,								% incr.		Nine months ended June 30,								% incr.
($ in thousands)	2022				2021				(decr.)		2022				2021				(decr.)
Revenue	$	103,517	100.0	%	$	79,079	100.0	%	30.9	%	$	282,487	100.0	%	$	229,526	100.0	%	23.1	%
Cost of sales	46,091		44.5		36,523		46.2		26.2		125,196		44.3		105,495		46.0		18.7
Gross profit	57,426		55.5		42,556		53.8		34.9		157,291		55.7		124,031		54.0		26.8
Operating expenses	47,452		45.8		38,538		48.7		23.1		135,954		48.1		116,789		50.9		16.4
Operating income	9,974		9.6		4,018		5.1		148.2		21,337		7.6		7,242		3.2		194.6
Other expense, net	(5,392)		(5.2)		(482)		(0.6)		NM		(14,716)		(5.2)		(1,244)		(0.5)		NM
Income before income taxes	4,582		4.4		3,536		4.5		29.6		6,621		2.3		5,998		2.6		10.4
Income tax expense (benefit)	456		0.4		379		0.5		20.3		(1,539)		(0.5)		220		0.1		NM
Net income	$	4,126	4.0	%	$	3,157	4.0	%	30.7		$	8,160	2.9	%	$	5,778	2.5	%	41.2

NM means not meaningful

23

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

REVENUE BY SEGMENT

	Three months ended June 30,								% incr.		Nine months ended June 30,								% incr.
($ in thousands)	2022				2021				(decr.)		2022				2021				(decr.)
Revenue
IoT Products & Services	$	79,758	77.0	%	$	66,812	84.5	%	19.4	%	$	216,872	76.8	%	$	194,224	84.6	%	11.7
IoT Solutions	23,759		23.0		12,267		15.5		93.7		65,615		23.2		35,302		15.4		85.9
Total revenue	$	103,517	100.0	%	$	79,079	100.0	%	30.9	%	$	282,487	100.0	%	$	229,526	100.0	%	23.1

IoT Products & Services

IoT Products & Services revenue increased 19.4% and 11.7% for the three and nine months ended June 30, 2022, respectively, as compared to the same periods in the prior fiscal year. This primarily was a result of:

•increased sales of console server and cellular products in both periods driven by demand for data center and edge based deployments and increased OEM sales in the third quarter.

This increase was partially offset by:

•decreased sales of infrastructure management products, driven by supply chain challenges.

IoT Solutions

IoT Solutions revenue increased 93.7% and 85.9% for the three and nine months ended June 30, 2022, respectively, as compared to the same periods in the prior fiscal year. This primarily was a result of:

•increased recurring revenue from our November 2021 acquisition of Ventus.

These increases were partially offset by:

•decreased one-time customer implementation sales, due to significant activity from a few large customers in 2021 that did not recur in 2022.

COST OF GOODS SOLD AND GROSS PROFIT BY SEGMENT

	Three months ended June 30,								Basis point	Nine months ended June 30,								Basis point
($ in thousands)	2022				2021				inc. (decr.)	2022				2021				inc. (decr.)
Cost of Goods Sold
IoT Products & Services	$	37,115	46.5	%	$	30,006	44.9	%	160	$	100,093	46.2	%	$	87,282	44.9	%	130
IoT Solutions	8,976		37.8	%	6,517		53.1	%	(1,530)	25,103		38.3	%	18,213		51.6	%	(1,330)
Total cost of goods sold	$	46,091	44.5	%	$	36,523	46.2	%	(170)	$	125,196	44.3	%	$	105,495	46.0	%	(170)

	Three months ended June 30,								Basis point	Nine months ended June 30,								Basis point
($ in thousands)	2022				2021				inc. (decr.)	2022				2021				inc. (decr.)
Gross Profit
IoT Products & Services	$	42,643	53.5	%	$	36,806	55.1	%	(160)	$	116,779	53.8	%	$	106,942	55.1	%	(130)
IoT Solutions	14,783		62.2	%	5,750		46.9	%	1,530	40,512		61.7	%	17,089		48.4	%	1,330
Total gross profit	$	57,426	55.5	%	$	42,556	53.8	%	170	$	157,291	55.7	%	$	124,031	54.0	%	170

IoT Product & Services

IoT Products & Services gross profit margin decreased 160 basis points for the three months ended June 30, 2022 as compared to the same period in the prior fiscal year. This decrease primarily was a result of:

•increased production and distribution costs due to the continuing supply chain challenges, as well as changes in product and customer mix.

24

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

IoT Products & Services gross profit margin decreased 130 basis points for the nine months ended June 30, 2022 as compared to the same period in the prior fiscal year. This decrease primarily was a result of:

•increased production and distribution costs due to the continuing supply chain challenges, as well as changes in product and customer mix.

IoT Solutions

The IoT Solutions gross profit margin increased 1,530 basis points for the three months ended June 30, 2022 as compared to the same periods in the prior fiscal year. This increase primarily was a result of:

•increased recurring subscription revenue, from the acquisition of Ventus, which typically has a high gross profit margin.

The IoT Solutions gross profit margin increased 1,330 basis points for the nine months ended June 30, 2022 as compared to the same periods in the prior fiscal year. This increase primarily was a result of:

•increased recurring subscription revenue, from the acquisition of Ventus, which typically has a high gross profit margin.

OPERATING EXPENSES

Below is our operating expenses and operating expenses as a percentage of total revenue:

	Three months ended June 30,								$		%	Nine months ended June 30,								$		%
($ in thousands)	2022				2021				incr. (decr.)		incr. (decr.)	2022				2021				incr. (decr.)		incr. (decr.)
Operating Expenses
Sales and marketing	$	18,230	17.6	%	$	15,910	20.1	%	$	2,320	14.6	$	51,325	18.2	%	$	46,271	20.2	%	$	5,054	10.9	%
Research and development	13,968		13.5		12,374		15.6		1,594		12.9	41,199		14.6		34,822		15.2		6,377		18.3
General and administrative	15,149		14.6		10,153		12.8		4,996		49.2	43,216		15.3		34,701		15.1		8,515		24.5
Restructuring charge	105		0.1		101		0.1		4		4.0	214		0.1		995		0.4		(781)		(78.5)
Total operating expenses	$	47,452	45.8	%	$	38,538	48.7	%	$	8,914	23.1	$	135,954	48.1	%	$	116,789	50.9	%	$	19,165	16.4	%

The $8.9 million increase in operating expenses in the third quarter of fiscal 2022 from the third quarter of fiscal 2021 primarily was the result of:

•incremental operating expenses, primarily from the acquisition of Ventus.

The $19.2 million increase in operating expenses in the first three quarters of fiscal 2022 from the first three quarters of fiscal 2021 primarily was the result of:

•incremental operating expenses from our acquisitions of Haxiot, Ctek and Ventus.

This increase was partially offset by:

•$5.8 million in contingent consideration expenses in prior year and a decrease in restructuring charges.

OPERATING INCOME

Operating income was $10.0 million for the three months ended June 30, 2022, compared to $4.0 million for the three months ended June 30, 2021. Operating income was $21.3 million for the nine months ended June 30, 2022, compared to $7.2 million for the nine months ended June 30, 2021.

IoT Product & Services provided operating income of $10.9 million for the three months ended June 30, 2022 compared to $6.1 million for the three months ended June 30, 2021, an increase of $4.8 million, or 78.3%. IoT Product & Services provided operating income of $24.0 million for the nine months ended June 30, 2022 compared to $12.0 million for the nine months ended June 30, 2021, an increase of $12.1 million, or 101.2%. Drivers for the changes in operating income for the both the quarter and year-to-date periods are described above in the revenue, gross profit and operating expenses details.

25

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

IoT Solutions had an operating loss of $0.9 million for the three months ended June 30, 2022 compared to an operating loss of $2.1 million for the three months ended June 30, 2021, a decrease of $1.2 million, or 56.5%. IoT Solutions incurred an operating loss of $2.7 million for the nine months ended June 30, 2022 compared to $4.7 million for the nine months ended June 30, 2021, a decrease of $2.0 million, or 42.5%. Drivers for the changes in operating loss for the both the quarter and year-to-date periods are described above in the revenue, gross profit and operating expenses details.

OTHER EXPENSE, NET

	Three months ended June 30,								$		%	Nine months ended June 30,								$		%
($ in thousands)	2022				2021				incr. (decr.)		incr. (decr.)	2022				2021				incr. (decr.)		incr. (decr.)
Other expense, net
Interest income	$	1	—	%	$	3	—	%	$	(2)	NM	$	8	—	%	$	4	—	%	$	4	NM
Interest expense	(5,297)		(5.1)	%	(371)		(0.5)	%	(4,926)		NM	(14,665)		(5.2)	%	(1,019)		(0.4)	%	(13,646)		NM
Other expense, net	(96)		(0.1)	%	(114)		(0.1)	%	18		NM	(59)		—	%	(229)		(0.1)	%	170		NM
Total other expense, net	$	(5,392)	(5.2)	%	$	(482)	(0.6)	%	$	(4,910)	NM	$	(14,716)	(5.2)	%	$	(1,244)	(0.5)	%	$	(13,472)	NM

NM means not meaningful

Other expense, net, increased $4.9 million and $13.5 million for the three and nine months ended June 30, 2022, respectively, as compared to the same period in the prior fiscal year. The increase was primarily a result of an increase to our interest expense as we refinanced our revolving loan with a new credit facility in November 2021 and wrote off a portion of the deferred financing fees associated with our prior credit facility to fund the acquisition of Ventus. (see Note 7 to the condensed consolidated financial statements).

INCOME TAXES

See Note 10 to the condensed consolidated financial statements for discussion of income taxes.

NON-GAAP FINANCIAL INFORMATION

This report includes adjusted net income, adjusted net income per diluted share and adjusted earnings before interest, taxes and amortization ("Adjusted EBITDA"), each of which is a non-GAAP financial measure.

Non-GAAP measures are not substitutes for GAAP measures for the purpose of analyzing financial performance. The disclosure of these measures does not reflect all charges and gains that were actually recognized by Digi. These non-GAAP measures are not in accordance with, or, an alternative for measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies or presented by us in prior reports. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. We believe these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. Additionally, Adjusted EBITDA does not reflect our cash expenditures, the cash requirements for the replacement of depreciated and amortized assets, or changes in or cash requirements for our working capital needs.

We believe that providing historical and adjusted net income and adjusted net income per diluted share, respectively, exclusive of such items as reversals of tax reserves, discrete tax benefits, restructuring charges and reversals, intangible amortization, stock-based compensation, other non-operating income/expense, adjustments to estimates of contingent consideration, acquisition-related expenses and interest expense related to acquisition permits investors to compare results with prior periods that did not include these items. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends and to gain an understanding of our comparative operating performance. In addition, certain of our stockholders have expressed an interest in seeing financial performance measures exclusive of the impact of these matters, which while important, are not central to the core operations of our business. Management believes that Adjusted EBITDA, defined as EBITDA adjusted for stock-based compensation expense, acquisition-related expenses, restructuring charges and reversals and changes in fair value of contingent consideration is useful to investors to evaluate our core operating results and financial performance because it excludes items that are significant non-cash or non-recurring expenses reflected in the consolidated statements of operations. We believe that the presentation of Adjusted EBITDA as a percentage of revenue is useful because it provides a reliable and consistent approach to measuring our performance from year to year and in assessing

26

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

our performance against that of other companies. We believe this information helps compare operating results and corporate performance exclusive of the impact of our capital structure and the method by which assets were acquired.

Below are reconciliations from GAAP to Non-GAAP information that we feel is important to our business:

Reconciliation of Net Income to Adjusted EBITDA

(In thousands)

	Three months ended June 30,								Nine months ended June 30,
	2022				2021				2022				2021
			% of total revenue				% of total revenue				% of total revenue				% of total revenue
Total revenue	$	103,517	100.0	%	$	79,079	100.0	%	$	282,487	100.0	%	$	229,526	100.0	%
Net income	$	4,126			$	3,157			$	8,160			$	5,778
Interest expense, net	5,296				368				14,657				1,015
Income tax expense (benefit)	456				379				(1,539)				220
Depreciation and amortization	8,747				5,148				25,393				15,200
Stock-based compensation	2,143				2,110				6,402				6,331
Changes in fair value of contingent consideration	—				—				—				5,772
Restructuring charge	105				101				214				995
Acquisition expense	175				313				4,256				937
Adjusted EBITDA	$	21,048	20.3	%	$	11,576	14.6	%	$	57,543	20.4	%	$	36,248	15.8	%

Reconciliation of Net Income and Net Income per Diluted Share to

Adjusted Net Income and Adjusted Net Income per Diluted Share

(In thousands, except per share amounts)

	Three months ended June 30,								Nine months ended June 30,
	2022				2021				2022				2021
Net income and net income per diluted share	$	4,126	$	0.12	$	3,157	$	0.09	$	8,160	$	0.23	$	5,778	$	0.18
Amortization	7,046		0.20		4,101		0.12		20,400		0.57		11,989		0.37
Stock-based compensation	2,143		0.06		2,110		0.06		6,402		0.18		6,331		0.19
Other non-operating income	96		—		114		—		59		—		229		0.01
Acquisition expense	175		—		313		0.01		4,256		0.12		937		0.03
Changes in fair value of contingent consideration	—		—		—		—		—		—		5,772		0.18
Restructuring charge	105		—		101		—		214		0.01		995		0.03
Interest expense, net	5,296		0.15		378		0.01		14,657		0.40		1,028		0.03
Tax effect from the above adjustments (1)	(2,497)		(0.07)		(1,026)		(0.03)		(8,263)		(0.23)		(4,494)		(0.14)
Discrete tax benefits (2)	(556)		(0.02)		(512)		(0.01)		(2,746)		(0.07)		(764)		(0.02)
Adjusted net income and adjusted net income per diluted share (3)	$	15,934	$	0.45	$	8,736	$	0.25	$	43,139	$	1.21	$	27,801	$	0.85
Diluted weighted average common shares			35,740				35,148				35,740				32,706

(1)The tax effect from the above adjustments assumes an estimated effective tax rate of 18.0% for fiscal 2022 and fiscal 2021 based on adjusted net income.

(2)For the three and nine months ended June 30, 2022 and June 30, 2021, discrete tax benefits primarily are a result of excess tax benefits recognized on stock compensation.

(3)Adjusted net income per diluted share may not add due to the use of rounded numbers.

27

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES

Historically we have financed our operations and capital expenditures principally with funds generated from operations. Our liquidity requirements arise from our working capital needs, and to a lesser extent, our need to fund capital expenditures to support our current operations and facilitate growth and expansion.

On November 1, 2021, we entered into a second amended and restated credit agreement consisting of a $350 million term loan B secured loan and a $35 million revolving credit facility. The $35 million revolving credit facility, which presently has no outstanding balance, includes a $10 million letter of credit subfacility and $10 million swingline subfacility. During the first quarter of fiscal 2022, we repaid all outstanding balances under the credit facility entered into on March 21, 2021. As of June 30, 2022, $35.0 million remained available under the Revolving Loan, which included $10 million available for a letter of credit subfacility and $10 million available under a swingline subfacility, the outstanding amounts of which decrease the available commitment. For additional information regarding the terms of our Credit Facility, including the Revolving Loan and its subfacilities, see Note 7 to our condensed consolidated financial statements.

We expect positive cash flows from operations for the foreseeable future. Our third fiscal quarter operating cash flows were negatively impacted by changes in operating assets and liabilities (net of acquisitions) that we do not anticipate in future periods. We believe that our current cash and cash equivalents balances, cash generated from operations and our ability to borrow under our credit facility will be sufficient to fund our business operations and capital expenditures for the next twelve months and beyond. As follows, our condensed consolidated statements of cash flows for the nine months ended June 30, 2022 and 2021 is summarized:

	Nine months ended June 30,
($ in thousands)	2022		2021
Operating activities	$	15,454	$	42,084
Investing activities	(351,771)		(7,957)
Financing activities	224,313		60,579
Effect of exchange rate changes on cash and cash equivalents	1,087		(1,893)
Net increase (decrease) in cash and cash equivalents	$	(110,917)	$	92,813

Cash flows from operating activities decreased $26.6 million primarily as a result of:

•an increase in operating assets and liabilities (net of acquisitions) during the period of $34.6 million compared to a decrease of $3.1 million in the nine months ended June 30, 2021, and

•a reduction of $5.8 million in contingent consideration fair value changes from the nine months ended June 30,2021.

These increases were partially offset by:

•increases in depreciation and amortization expenses, the provision for inventory obsolescence and net income.

Cash flows used in investing activities increased $343.8 million almost entirely as a result of:

•an increase of $341.2 million used for acquisitions, primarily related to our November 2021 acquisition of Ventus (see Note 2 to the condensed consolidated financial statements).

Cash flows from financing activities increased $163.7 million primarily as a result of:

•an increase of $350.0 million in proceeds from the Term Loan issued in November 2021.

This increase was partially offset by:

•$73.8 million in proceeds from stock issuance in Q2 2021,

•payments of $45.8 million upon the closing of the Term Loan issued in November 2021 to retire the previous credit facility, and

28

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

•early payments of $81.3 million on the new Term Loan issued in November 2021 compared to $15.6 million in debt payments in fiscal 2021 on the previous credit facility (see Note 7 to the condensed consolidated financial statements).

CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual obligations at June 30, 2022:

	Payments due by fiscal period
($ in thousands)	Total		Less than 1 year		1-3 years		3-5 years		Thereafter
Operating leases	$	22,220	$	3,802	$	7,646	$	4,153	$	6,619
Contingent consideration	6,200		6,100		100		—		—
Term Loan	268,748		17,500		35,000		35,000		181,248
Interest on long-term debt	93,503		18,012		32,640		27,293		15,558
Total	$	390,671	$	45,414	$	75,386	$	66,446	$	203,425

The operating lease agreements included above primarily relate to office space. The table above does not include possible payments for uncertain tax positions. Our reserve for uncertain tax positions, including accrued interest and penalties, was $2.8 million as of June 30, 2022. Due to the nature of the underlying liabilities and the extended time often needed to resolve income tax uncertainties, we cannot make reliable estimates of the amount or timing of future cash payments that may be required to settle these liabilities. The above table also does not include those obligations for royalties under license agreements as these royalties are calculated based on future sales of licensed products and we cannot make reliable estimates of the amount of cash payments.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

For information on new accounting pronouncements, see Note 1 to our condensed consolidated financial statements.

29

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to ongoing market risk related to changes in interest rates and foreign currency exchange rates.

INTEREST RATE RISK

We are exposed to market risks related to fluctuations in interest rates on amounts borrowed under the Credit Facility. As of June 30, 2022, we had $268.7 million outstanding under our Term Loan. Borrowings under the Term Loan Facility bear interest at a rate per annum equal to LIBOR with a floor of 0.50% 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 LIBOR is no longer available) plus 5.00% or a base rate plus 4.00%. The base rate is determined by reference to the highest of BMO’s prime rate, the Federal Funds Effective Rate plus 0.5%, or the one-month LIBOR for U.S. dollars plus 1.00%. The applicable margin for loans under the Revolving Credit Facility is in a range of 4.00-3.75% for LIBOR loans and 3.00 to 2.75% for base rate loans, depending on Digi’s consolidated leverage ratio. Based on the balance sheet position for the Revolving Loan at June 30, 2022, the annualized effect of a 25 basis point change in interest rates would increase or decrease our interest expense by $0.7 million. For additional information, see Note 7 to our condensed consolidated financial statements. For our Credit Facility, interest rate changes generally do not affect the fair value of the debt instruments, but do impact future earnings and cash flows, assuming other factors are held constant. If interest rates remain elevated, we will continue to see interest expenses that are higher than historical amounts.

FOREIGN CURRENCY RISK

We are not exposed to foreign currency transaction risk associated with sales transactions as the majority of our sales are denominated in U.S. Dollars. We are exposed to foreign currency translation risk as the financial position and operating results of our foreign subsidiaries are translated into U.S. Dollars for consolidation. We manage our net asset or net liability position for non-functional currency accounts, primarily the U.S. Dollar accounts in our foreign locations to reduce our foreign currency risk. We have not implemented a formal hedging strategy.

A 10% change in the average exchange rate for the Euro, British Pound, Japanese Yen and Canadian Dollar to the U.S. Dollar during the first nine months of fiscal 2022 would have resulted in a 0.6% increase or decrease in stockholders' equity due to foreign currency translation.

CREDIT RISK

We have exposure to credit risk related to our accounts receivable portfolio. Exposure to credit risk is controlled through regular monitoring of customer financial status, credit limits and collaboration with sales management and customer contacts to facilitate payment.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting that occurred during the nine months ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

30

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The disclosure set forth in Note 13 to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q is incorporated herein by reference.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those previously disclosed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended September 30, 2021 and in Item 1A of Part II of our Quarterly Reports on Form 10-Q filed subsequent to that Annual Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table presents the information with respect to purchases made by or on behalf of Digi International Inc. or any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of our common stock during the third quarter of fiscal 2022:

Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program
April 1, 2022 - April 30, 2022	—	$	—	—	$	—
May 1, 2022 - May 31, 2022	3,354	$	20.20	—	$	—
June 1, 2022 - June 30, 2022	—	$	—	—	$	—
	3,354	$	20.20	—	$	—

(1)    All shares reported were forfeited by employees in connection with the satisfaction of tax withholding obligations related to the vesting of restricted stock units.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

31

ITEM 6. EXHIBITS

Exhibit No.		Description	Method of Filing
3	(a)	Restated Certificate of Incorporation of the Company, as amended (1)	Incorporated by Reference
3	(b)	Amended and Restated By-Laws of the Company (2)	Incorporated by Reference
10	(a)	Purchase Agreement dated as of November 1, 2021 by and among Keith Charette, Steven Glaser, The Keith R. Charette DE Incomplete – Gift Non-Grantor Trust, Ventus Networks, LLC, Ventus Holdings, LLC, Ventus IP Holdings, LLC, Ventus Wireless Services, Inc., Ventus Wireless CA, Inc., VClipz, Inc., and Digi International Inc. (3)	Incorporated by Reference
10	(b)	Second Amended and Restated Credit Agreement dated as of November 1, 2021, by and among Digi International Inc., as the Borrower, BMO Harris Bank N.A., as administrative agent and collateral agent, BMO Capital Markets Corp., as sole lead arranger and book runner, and the other lenders from time to time party thereto. (4)	Incorporated by Reference
10	(c)	Third Amended and Restated Credit Agreement dated December 22, 2021, by and among Digi International Inc. as the Borrower, BMO Harris Bank N.A., as the administrative agent and collateral agent, BMO Capital Markets Corp, as the sole lead arranger and book runner, and other lenders from time-to-time party thereto. (5)	Incorporated by Reference
10	(d)	Digi International Inc. 2021 Omnibus Incentive Plan, as amended and restated (6)	Incorporated by Reference
31	(a)	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer	Filed Electronically
31	(b)	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer	Filed Electronically
32		Section 1350 Certification	Filed Electronically
101		The following materials from Digi International Inc.'s Quarterly Report on Form 10-Q for the fiscal period ended June 30, 2022, as filed with the Security and Exchange Commission, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; (v) Condensed Consolidated Statements of Stockholders' Equity; and (vi) the Notes to the Condensed Consolidated Financial Statements.	Filed Electronically
104		The cover page from Digi International Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2022 is formatted in iXBRL (included in Exhibit 101).

____________

* Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Digi agrees to furnish to the Commission a copy of any omitted schedule upon request.

** Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-Q.

(1)Incorporated by reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended September 30, 1993.

(2)Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on April 30, 2020.

(3)Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on November 2, 2021.

(4)Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on November 2, 2021.

(5)Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on December 23, 2021.

(6)Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 2, 2022.

32

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

		DIGI INTERNATIONAL INC.
Date:	August 5, 2022	By:	/s/ James J. Loch
			James J. Loch
			Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Authorized Officer)

33

EX-31.A

Exhibit No. 31(a)

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ronald E. Konezny, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Digi International Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

August 5, 2022	/s/ Ronald E. Konezny
	Ronald E. Konezny
	President and Chief Executive Officer

EX-31.B

Exhibit No. 31(b)

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James J. Loch, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Digi International Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

August 5, 2022	/s/ James J. Loch
	James J. Loch
	Senior Vice President, Chief Financial Officer and Treasurer

EX-32

Exhibit No. 32

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Digi International Inc. (the Registrant) on Form 10-Q for the fiscal quarter ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof, each of the undersigned certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Quarterly Report on Form 10-Q complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

August 5, 2022
	/s/ Ronald E. Konezny
	Ronald E. Konezny
	President and Chief Executive Officer
	/s/ James J. Loch
	James J. Loch
	Senior Vice President, Chief Financial Officer and Treasurer

XML

Cover Page - shares	9 Months Ended
	Jun. 30, 2022	Jul. 29, 2022
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
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		35,292,317
Entity Central Index Key	0000854775
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2022
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

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenue:
Total Revenue	$ 103,517	$ 79,079	$ 282,487	$ 229,526
Cost of sales:
Amortization of intangibles	1,304	1,113	3,996	3,339
Total cost of sales	46,091	36,523	125,196	105,495
Gross Profit	57,426	42,556	157,291	124,031
Operating expenses:
Sales and marketing	18,230	15,910	51,325	46,271
Research and development	13,968	12,374	41,199	34,822
General and administrative	15,149	10,153	43,216	34,701
Restructuring charge	105	101	214	995
Total operating expenses	47,452	38,538	135,954	116,789
Operating income	9,974	4,018	21,337	7,242
Other expense, net:
Interest income	1	3	8	4
Interest expense	(5,297)	(371)	(14,665)	(1,019)
Other expense, net	(96)	(114)	(59)	(229)
Total other expense, net	(5,392)	(482)	(14,716)	(1,244)
Income before income taxes	4,582	3,536	6,621	5,998
Income tax provision (benefit)	456	379	(1,539)	220
Net income	$ 4,126	$ 3,157	$ 8,160	$ 5,778
Basic net income per common share:
Net income, basic (USD per share)	$ 0.12	$ 0.09	$ 0.23	$ 0.18
Diluted net income per common share
Net income , diluted (USD per share)	$ 0.12	$ 0.09	$ 0.23	$ 0.18
Weighted average common shares:
Basic (shares)	35,131	34,057	34,900	31,443
Diluted (shares)	35,740	35,148	35,740	32,706
Product
Revenue:
Revenue	$ 77,627	$ 68,303	$ 210,592	$ 197,831
Cost of sales:
Cost of sales excluding amortization	38,435	31,477	102,157	91,747
Service
Revenue:
Revenue	25,890	10,776	71,895	31,695
Cost of sales:
Cost of sales excluding amortization	$ 6,352	$ 3,933	$ 19,043	$ 10,409

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 4,126	$ 3,157	$ 8,160	$ 5,778
Other comprehensive (loss) income:
Foreign currency translation adjustment	(1,359)	463	(1,519)	2,068
Other comprehensive (loss) income	(1,359)	463	(1,519)	2,068
Comprehensive income	$ 2,767	$ 3,620	$ 6,641	$ 7,846

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2022	Sep. 30, 2021
Current assets:
Cash and cash equivalents	$ 41,515	$ 152,432
Accounts receivable, net	52,009	43,738
Inventories	61,687	43,921
Income taxes receivable	9,784	2,698
Other current assets	4,562	3,869
Total current assets	169,557	246,658
Property, equipment and improvements, net	26,380	12,132
Operating lease right-of-use assets	14,829	15,684
Intangible assets, net	308,814	118,029
Goodwill	341,708	225,522
Deferred tax assets	0	439
Other non-current assets	2,351	1,067
Assets	863,639	619,531
Current liabilities:
Current portion of long-term debt	15,523	0
Accounts payable	27,949	22,586
Accrued compensation	12,899	12,934
Unearned revenue	18,172	13,589
Contingent consideration on acquired businesses	6,100	20
Current portion of operating lease liabilities	2,989	2,633
Other current liabilities	10,946	7,179
Total current liabilities	94,578	58,941
Income taxes payable	2,281	2,334
Deferred tax liabilities	15,417	13,493
Long-term debt	240,702	45,799
Operating lease liabilities	16,824	18,368
Other non-current liabilities	6,915	8,079
Total liabilities	376,717	147,014
Commitments and Contingencies (see Note 13)
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; 41,677,327 and 40,653,035 shares issued	417	407
Additional paid-in capital	380,083	370,699
Retained earnings	188,852	180,692
Accumulated other comprehensive loss	(24,265)	(22,746)
Treasury stock, at cost, 6,427,026 and 6,390,645 shares	(58,165)	(56,535)
Total stockholders' equity	486,922	472,517
Total liabilities and stockholders' equity	$ 863,639	$ 619,531

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2022	Sep. 30, 2021
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	40,653,035	40,653,035
Treasury stock, shares	6,427,026	6,390,645

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Operating activities:
Net income	$ 8,160	$ 5,778
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, equipment and improvements	4,993	3,211
Amortization of intangible assets	20,400	11,989
Stock-based compensation	6,402	6,331
Deferred income tax provision	2,363	1,995
Loss on sale of property and equipment	12	65
Change in fair value of contingent consideration	0	5,772
Provision for bad debt and product returns	906	1,520
Provision for inventory obsolescence	6,710	1,200
Restructuring charge	214	995
Other	(88)	84
Changes in operating assets and liabilities (net of acquisitions)	(34,618)	3,144
Net cash provided by operating activities	15,454	42,084
Investing activities:
Acquisition of business, net of cash acquired	(347,553)	(6,312)
Purchase of property, equipment, improvements and certain other intangible assets	(4,218)	(1,645)
Net cash used in investing activities	(351,771)	(7,957)
Financing activities:
Proceeds from long-term debt	350,000	618
Payments on long-term debt	(127,050)	(15,625)
Payments for contingent consideration	0	(4,200)
Proceeds from issuance of stock, net of offering expenses	0	73,830
Proceeds from stock option plan transactions	6,739	7,024
Proceeds from employee stock purchase plan transactions	1,100	917
Taxes paid for net share settlement of share-based payment options and awards	(6,476)	(1,985)
Net cash provided by financing activities	224,313	60,579
Effect of exchange rate changes on cash and cash equivalents	1,087	(1,893)
Net (decrease) increase in cash and cash equivalents	(110,917)	92,813
Cash and cash equivalents, beginning of period	152,432	54,129
Cash and cash equivalents, end of period	41,515	146,942
Supplemental schedule of non-cash investing and financing activities
Transfer of inventory to property, equipment and improvements	(1,742)	(1,624)
Contingent consideration recognized related to acquisition of business	0	(5,914)
Tenant improvement allowance	0	(1,000)
Accrual for purchase of property, equipment, improvements and certain other intangible assets	$ (69)	$ (14)

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance (in shares) at Sep. 30, 2020		35,513	6,353
Beginning balance at Sep. 30, 2020	$ 371,500	$ 355	$ (55,109)	$ 279,741	$ 170,330	$ (23,817)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	5,778				5,778
Other comprehensive (loss) income	2,068					2,068
Issuance of common stock, net of offering expenses	73,830	$ 40		73,790
Issuance of common stock, net of offering expenses (in shares)		4,025
Other	8				8
Employee stock purchase plan issuances (in shares)			(61)
Employee stock purchase plan issuances	916		$ 540	376
Taxes paid for net share settlement of share-based payment awards (in shares)			109
Taxes paid for net share settlement of share-based payment awards	(1,985)		$ (1,985)
Issuance of stock under stock award plans (in shares)		974
Issuance of stock under stock award plans	7,025	$ 10		7,015
Stock-based compensation expense	6,331			6,331
Ending balance (in shares) at Jun. 30, 2021		40,512	6,401
Ending balance at Jun. 30, 2021	465,471	$ 405	$ (56,554)	367,253	176,116	(21,749)
Beginning balance (in shares) at Mar. 31, 2021		40,442	6,413
Beginning balance at Mar. 31, 2021	459,152	$ 404	$ (56,595)	364,604	172,951	(22,212)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	3,157				3,157
Other comprehensive (loss) income	463					463
Other	8				8
Employee stock purchase plan issuances (in shares)			(18)
Employee stock purchase plan issuances	297		$ 160	137
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	(119)		$ (119)
Issuance of stock under stock award plans (in shares)		70
Issuance of stock under stock award plans	403	$ 1		402
Stock-based compensation expense	2,110			2,110
Ending balance (in shares) at Jun. 30, 2021		40,512	6,401
Ending balance at Jun. 30, 2021	465,471	$ 405	$ (56,554)	367,253	176,116	(21,749)
Beginning balance (in shares) at Sep. 30, 2021		40,653	6,391
Beginning balance at Sep. 30, 2021	472,517	$ 407	$ (56,535)	370,699	180,692	(22,746)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	8,160				8,160
Other comprehensive (loss) income	(1,519)					(1,519)
Employee stock purchase plan issuances (in shares)			(60)
Employee stock purchase plan issuances	1,101		$ 547	554
Taxes paid for net share settlement of share-based payment awards (in shares)			96
Taxes paid for net share settlement of share-based payment awards	(6,476)		$ (2,177)	(4,299)
Issuance of stock under stock award plans (in shares)		1,024
Issuance of stock under stock award plans	6,737	$ 10		6,727
Stock-based compensation expense	6,402			6,402
Ending balance (in shares) at Jun. 30, 2022		41,677	6,427
Ending balance at Jun. 30, 2022	486,922	$ 417	$ (58,165)	380,083	188,852	(24,265)
Beginning balance (in shares) at Mar. 31, 2022		41,525	6,447
Beginning balance at Mar. 31, 2022	480,504	$ 415	$ (58,310)	376,579	184,726	(22,906)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	4,126				4,126
Other comprehensive (loss) income	(1,359)					(1,359)
Employee stock purchase plan issuances (in shares)			(23)
Employee stock purchase plan issuances	430		$ 213	217
Taxes paid for net share settlement of share-based payment awards (in shares)			3
Taxes paid for net share settlement of share-based payment awards	(68)		$ (68)	0
Issuance of stock under stock award plans (in shares)		152
Issuance of stock under stock award plans	1,146	$ 2		1,144
Stock-based compensation expense	2,143			2,143
Ending balance (in shares) at Jun. 30, 2022		41,677	6,427
Ending balance at Jun. 30, 2022	$ 486,922	$ 417	$ (58,165)	$ 380,083	$ 188,852	$ (24,265)

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Basis of Presentation of Unaudited Interim Condensed Consolidated Financial Statements and Significant Accounting Policies

9 Months Ended

Jun. 30, 2022

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 United States 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 our Annual Report on Form 10-K for the year ended September 30, 2021 (the "2021 Financial Statements"). 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.

Potential Impacts of Macroeconomic Conditions on our Business

Our business is effected by present macroeconomic conditions including the ongoing pandemic, supply chain disruptions, the war in Ukraine and inflation. The impact of each of these items is volatile and continues to evolve. The extent of impact stemming from any individual factor or combination of factors on our operational and financial performance will depend in large part on future developments, which cannot be reasonably estimated at this time and could vary in scope and severity both individually and collectively based upon actions taken by governments and other entities to mitigate impacts both within and outside jurisdictions where we operate. For a more detailed discussion see Part I, Item 1 in our Annual Report on Form 10-K for the year ended September 30, 2021 and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of this Form 10-Q.

Recently Issued Accounting Pronouncements

Adopted

In October 2021, FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This update requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.

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Acquisitions

9 Months Ended

Jun. 30, 2022

Business Combinations [Abstract]

ACQUISITIONS

ACQUISITIONS

Acquisition of Ventus

On November 1, 2021, we acquired Ventus Networks, LLC ("Ventus") for approximately $350 million in cash. The acquisition was funded through a combination of cash on hand and debt financing under a $350 million credit facility committed by BMO Harris Bank N.A.

For tax purposes, this acquisition was treated as an asset acquisition. We believe this is a complementary acquisition for us as it significantly enhances our IoT Solutions segment by enhancing Digi's service portfolio and immediately extends the company's market reach with a Managed Network-as-a-Service ("MNaaS") solutions offering.

Costs directly related to the acquisition of $4.2 million incurred fiscal year to date 2022 have been charged to operations and are included in general and administrative expense in our condensed consolidated statements of operations. These acquisition costs include legal, accounting, valuation and investment banking fees.

The following table summarizes the preliminary fair values of Ventus assets acquired and liabilities assumed as of the acquisition date (in thousands):

Cash	$	350,000
Fair value of net tangible assets acquired	$	20,735
Identifiable intangible assets:
Customer relationships	179,000
Purchased and core technology	16,000
Trademarks	16,000
Goodwill	118,265
Total	$	350,000

The condensed consolidated balance sheet as of June 30, 2022 reflects the preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. This preliminary allocation was updated in the third fiscal quarter of 2022 to reflect information not available previously. The estimated fair value of the net assets acquired, liabilities assumed and identifiable intangible assets are preliminary and remain subject to change, as preliminary purchase price allocation has not yet been completed. Included in the fair value of net tangible assets acquired was $0.7 million of right-of-use asset included in other non-current assets and $0.7 million of lease liability included in other current liabilities and other non-current liabilities associated with Ventus’s operating leases.

The preliminary weighted average useful life for all the identifiable intangibles listed above is estimated to be 19.2 years. For purposes of determining fair value, the existing customer relationships identified above are assumed to have a useful life of 20.5 years, purchased and core technology is assumed to have useful life of 11 years and trademarks are assumed a useful life of 13 years. Useful lives for identifiable intangible assets are estimated at the time of acquisition based on the periods of time from which we expect to derive benefits from the identifiable intangible assets. The identifiable intangible assets are amortized using the straight-line method which reflects the pattern in which the assets are expected to be consumed.

The following consolidated pro forma information is presented as if the acquisition had occurred on October 1, 2020 (in thousands):

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Net sales	$	103,517	$	92,678	$	287,552	$	268,029
Net income (loss)	4,126		(432)		3,051		(6,157)

Pro forma net income has been adjusted to include interest expense related to debt incurred as a result of the acquisition, amortization on the fair value of the intangibles acquired and remove any costs incurred with the sale transaction. Net income for the nine months ended June 30, 2021 was adjusted to include acquisition-related costs of $3.1 million.

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Earnings Per Share

9 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

EARNINGS PER SHARE

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,
	2022		2021		2022		2021
Numerator:
Net income	$	4,126	$	3,157	$	8,160	$	5,778
Denominator:
Denominator for basic net income per common share — weighted average shares outstanding	35,131		34,057		34,900		31,443
Effect of dilutive securities:
Stock options and restricted stock units	609		1,091		840		1,263
Denominator for diluted net income per common share — adjusted weighted average shares	35,740		35,148		35,740		32,706
Net income per common share, basic	$	0.12	$	0.09	$	0.23	$	0.18
Net income per common share, diluted	$	0.12	$	0.09	$	0.23	$	0.18

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, 2022 and 2021, 939,101 and 994,096 shares outstanding were excluded, respectively. For the nine months ended June 30, 2022 and 2021, 778,573 and 864,744 were excluded, respectively.

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Selected Balance Sheet Data

9 Months Ended

Jun. 30, 2022

Selected Balance Sheet Data [Abstract]

SELECTED BALANCE SHEET DATA

SELECTED BALANCE SHEET DATA

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

	June 30, 2022		September 30, 2021
Accounts receivable, net:
Accounts receivable	$	61,005	$	51,828
Less allowance for credit losses	2,354		3,934
Less reserve for future credit returns and pricing adjustments	6,642		4,156
Accounts receivable, net	$	52,009	$	43,738
Inventories:
Raw materials	$	31,009	$	27,279
Finished goods	30,678		16,642
Inventories	$	61,687	$	43,921

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Fair Value Measurements

9 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Financial assets and liabilities are classified in the following fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1 (unadjusted quoted prices in active markets for identical assets or liabilities); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

The following tables provide information by level for financial liabilities that are measured at fair value on a recurring basis (in thousands):

	Total Fair Value at		Fair Value Measurements Using  Inputs Considered as
	June 30, 2022		Level 1		Level 2		Level 3
Liabilities:
Contingent consideration on acquired business	$	6,200	$	—	$	—	$	6,200
Total liabilities measured at fair value	$	6,200	$	—	$	—	$	6,200

	Total Fair Value at		Fair Value Measurements Using  Inputs Considered as
	September 30, 2021		Level 1		Level 2		Level 3
Liabilities:
Contingent consideration on acquired business	$	6,200	$	—	$	—	$	6,200
Total liabilities measured at fair value	$	6,200	$	—	$	—	$	6,200

In connection with our acquisition of Opengear, Inc. in December 2019, we agreed to make contingent payments, based upon certain revenue thresholds. We paid the final installment of $10.0 million during the second quarter of fiscal 2021.

In connection with our acquisition of Haxiot, Inc. ("Haxiot") in March 2021, we agreed to make contingent earn-out payments, based upon certain revenue thresholds. In the fiscal third quarter of fiscal 2021, the preliminary purchase price allocation was updated, including related determination of fair value and income tax implications. As a result, we reduced contingent consideration by $2.1 million in the third fiscal quarter of 2021. The fair value of the remaining liability for contingent consideration for the acquisition of Haxiot was $5.9 million at June 30, 2022.

In connection with our acquisition of Ctek, Inc. ("Ctek") in July 2021, we agreed to make contingent earn-out payments, based upon certain revenue thresholds. The fair value of the remaining liability for contingent consideration for the acquisition of Ctek was $0.3 million at June 30, 2022.

The following table presents a reconciliation of the contingent consideration liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Fair value at beginning of period	$	6,200	$	8,000	$	6,200	$	4,228
Contingent consideration recognized for acquired business	—		—		—		8,000
Contingent consideration payments	—		—		—		(10,000)
Change in fair value of contingent consideration	—		(2,100)		—		3,672
Fair value at end of period	$	6,200	$	5,900	$	6,200	$	5,900

The change in fair value of contingent consideration reflects our estimates of the probabilities of achieving the relevant targets and is discounted based on our estimated discount rate. The fair value of the contingent consideration at June 30, 2022 is based on the probability of achieving the specified revenue thresholds for Haxiot and Ctek.

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Goodwill and Other Identifiable Intangible Assets, Net

9 Months Ended

Jun. 30, 2022

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, 2022						September 30, 2021
	Gross carrying amount		Accum. amort.		Net		Gross carrying amount		Accum. amort.		Net
Purchased and core technology	$	85,132	$	(54,666)	$	30,466	$	69,162	$	(50,701)	$	18,461
License agreements	112		(112)		—		112		(112)		—
Patents and trademarks	39,670		(16,972)		22,698		23,491		(14,978)		8,513
Customer relationships	309,264		(53,614)		255,650		130,278		(39,973)		90,305
Non-compete agreements	600		(600)		—		600		(600)		—
Order backlog	1,000		(1,000)		—		1,000		(250)		750
Total	$	435,778	$	(126,964)	$	308,814	$	224,643	$	(106,614)	$	118,029

Amortization expense was $7.0 million and $4.1 million for the three months ended June 30, 2022 and 2021, respectively and $20.4 million and $12.0 million for the nine months ended June 30, 2022 and 2021, 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 2022 and the five succeeding fiscal years is (in thousands):

2022 (three months)	$	6,722
2023	$	24,996
2024	$	24,282
2025	$	20,825
2026	$	20,593
2027	$	18,582

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

	Nine months ended June 30, 2022
	IoT Products and Services		IoT Solutions		Total
Balance on September 30, 2021	$	175,180	$	50,342	$	225,522
Acquisition	—		118,265		118,265
Adjustment	116		(631)		(515)
Foreign currency translation adjustment	(1,402)		(162)		(1,564)
Balance on June 30, 2022	$	173,894	$	167,814	$	341,708

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 continue to have two reportable segments, our IoT Products & Services segment and our IoT Solutions segment (see Note 8). Effective with the reorganization announcement on October 7, 2020, our IoT Products & Services business is now structured to include four reporting units under the IoT Products & Services segment, each with a reporting manager: Cellular Routers, Console Servers, OEM Solutions and Infrastructure Management. We had four reporting units along with our IoT Solutions segment that were tested individually for impairment during our third quarter fiscal 2021 annual impairment test. Following our acquisition of Ventus in November, 2021, we have two reporting units within our IoT Solutions segment in addition to the four reporting units included in IoT Products & Services.

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 negatively affect the estimated fair values. If our future operating results do not meet current forecasts or

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

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, we may be required to record future impairment charges for goodwill.

Results of our Fiscal 2022 Annual Impairment Test

As of June 30, 2022, we had a total of $32.7 million of goodwill for the Enterprise Routers reporting unit, $57.1 million of goodwill for the Console Servers reporting unit, $63.7 million of goodwill for the OEM Solutions reporting unit, $20.4 million of goodwill for the Infrastructure Management reporting unit, $49.5 million of goodwill for the SmartSense reporting unit and $118.3 million of goodwill for the Ventus. At June 30, 2022, the fair value of goodwill exceeded the carrying value for all six reporting units. SmartSense and Ventus fair values exceeded carrying values by less than 10%. Implied fair value for each reporting unit was calculated on a standalone basis using a weighted combination of the income approach and market approach. The implied fair values of each reporting unit were added together along with our unallocated assets to get an indicated value of total equity to which a range of indicated value of total equity was derived. This range was compared to the total market capitalization of $852.0 million as of June 30, 2022. This implied a range of control (deficit)/ premiums of (5.6)% to 7.9%. This range of control premiums fell below the control premiums observed in the last five years in the communications equipment industry. As a result, the market capitalization reconciliation analysis proved support for the reasonableness of the fair values estimated for each individual reporting unit.

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Indebtedness

9 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

INDEBTEDNESS

INDEBTEDNESS

On November 1, 2021, we entered into a second amended and restated credit agreement with BMO Harris Bank N.A. ("BMO"). This agreement provides us with a senior secured credit facility (the "Credit Facility") consisting of a $350 million term loan B secured loan (the “Term Loan Facility”) and a $35 million revolving credit facility (the “Revolving Loan Facility”) with an uncommitted option to increase incremental loans under the Credit Facility, subject to an incremental cap. The Revolving Loan Facility includes a $10 million letter of credit subfacility and $10 million swingline subfacility. Digi may use proceeds of the Revolving Loan Facility in the future for general corporate purposes. This loan replaced our syndicated senior secured credit agreement with BMO that was entered into on March 15, 2021 and replaced the remaining balance of our revolver with this new term loan. This prior agreement provided us with committed credit facilities ("Prior Credit Facility") consisting of a $200 million revolving loan.

On December 22, 2021, Digi entered into a third amended and restated credit agreement with BMO. Digi refinanced the Term Loan Facility and Revolving Loan Facility under its existing credit agreement entered into on November 1, 2021, but did not receive any additional proceeds from nor modify the amounts of any facilities or subfacilities contained within that credit agreement.

Following the December amendment, borrowings under the Term Loan Facility bear interest at a rate per annum equal to LIBOR with a floor of 0.50% 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 LIBOR is no longer available) plus 5.00% or a base rate plus 4.00%. The base rate is determined by reference to the highest of BMO’s prime rate, the Federal Funds Effective Rate plus 0.50%, or the one-month LIBOR for U.S. dollars plus 1.00%. The applicable margin for loans under the Revolving Credit Facility is in a range of 4.00% to 3.75% for LIBOR loans and 3.00% to 2.75% for base rate loans, depending on Digi’s consolidated leverage ratio. In addition to paying interest on the outstanding balance under the Credit Facility, we are required to pay a commitment fee on the non-utilized commitments thereunder which is also reported in interest expense. Our weighted average interest rate at June 30, 2022 was 6.85%.

The debt issuance costs and remaining balance under the Prior Credit Facility totaled $2.3 million at November 1, 2021. Of this amount $1.9 million was written off and included in interest expense upon the entry into the new amendment and $0.4 million is being amortized over the term of the amended loan and reported in interest expense. Digi incurred an additional $11.7 million and $1.7 million in debt issuance costs relating to the November 1, 2021 and December 22, 2021 amendments, respectively. These amounts will be amortized over the term of the amended loan and reported in interest expense.

The Term Loan is payable in quarterly installments, with the balance remaining due at November 2, 2028. The Revolving Loan is due in a lump sum payment at maturity on November 2, 2028, if any amounts are drawn. The fair value of the Term Loan and Revolving Loan approximated carrying value at June 30, 2022.

Digi made early payments against the term loan of $50 million in December 2021, $11.3 million in March 2022 and $20 million in June 2022.

7. INDEBTEDNESS (CONTINUED)

The following table is a summary of our long-term indebtedness at June 30, 2022 and September 30, 2021 (in thousands):

	Balance at June 30, 2022		Balance at September 30, 2021
Revolving Loan	$	—	$	48,118
Term loan	268,748		—
Total loans	268,748		48,118
Less unamortized issuance costs	(12,523)		(2,319)
Less current maturities of long-term debt	(15,523)		—
Total long-term debt, net of current portion	$	240,702	$	45,799

The following table is a summary of future maturities of our aggregate long-term debt at June 30, 2022 (in thousands):

Fiscal year	Amount
2022 (three months)	$	4,375
2023	17,500
2024	17,500
2025	17,500
2026	17,500
2027	17,500
2028	176,873
Total long-term debt	$	268,748

Covenants and Security Interest

The agreements governing the Revolving Loan Facility contains a number of covenants. Among other provisions, these covenants require us to maintain a certain financial ratio (net leverage ratio and minimum fixed charge ratio). At June 30, 2022, we had no amounts drawn on the Revolving Loan Facility. Amounts borrowed under the Credit Facility are secured by substantially all of our assets.

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Segment Information

9 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

We have two reportable segments: IoT Products & Services and IoT Solutions. Effective with the reorganization announcement on October 7, 2020, our IoT Products & Services business is now structured to include four operating segments, each with a segment manager. These four operating segments include:

•Cellular Routers - box devices (fully enclosed) that provide connectivity typically in a place where the device can be plugged in exclusively using cellular communications.

•Console Servers - similar to cellular routers except they are exclusively for edge computing installations and data center applications (also exclusively using cellular communications).

•OEM Solutions - Original Equipment Manufacturers ("OEM") will be a chip, rather than a boxed device. This can come in the form of a stand-alone module, or from a systems-on-module ("SOMs"). While cellular connectivity is used, other communication protocols can be used such as Zigbee, Bluetooth or Radio-Frequency ("RF") based on application.

•Infrastructure Management - includes battery operated, cellular enabled connect sensors as well as other types of console server applications that are more Digi Accelerated Linux ("DAL") based than Console Servers. This operating segment has some products that do not use cellular communications, but a large part of this segment does use cellular communications.

8. SEGMENT INFORMATION (CONTINUED)

Following the acquisition of Ventus on November 1, 2021, IoT Solutions is now comprised of two operating segments:

•SmartSense - offers wireless temperature and other condition-based monitoring services for perishable goods such as food or medicine, as well as employee task management services.

•Ventus - provides MNaaS solutions that simplify the complexity of enterprise wide area network ("WAN") connectivity via wireless and fixed line solutions.

The operating segments included in each reportable segment have similar qualitative and quantitative factors which allow us to aggregate them under each reportable segment. The qualitative factors include similar nature of products and services, production process, type or class of customers and methods used to distribute the products. The quantitative factors include similar operating margins. Our CODM reviews and makes business decisions which includes a primary review of operating income but also includes gross profit. Following the October 2020 reorganization, the shared general and administrative costs began being allocated to each operating segment. As a result, our disclosed measure of segment operating income has been updated for all periods presented to conform with this change.

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

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Revenue
IoT Products & Services	$	79,758	$	66,812	$	216,872	$	194,224
IoT Solutions	23,759		12,267		65,615		35,302
Total revenue	$	103,517	$	79,079	$	282,487	$	229,526
Gross Profit
IoT Products & Services	$	42,643	$	36,806	$	116,779	$	106,942
IoT Solutions	14,783		5,750		40,512		17,089
Total gross profit	$	57,426	$	42,556	$	157,291	$	124,031
Operating Income (Loss)
IoT Products & Services	$	10,881	$	6,101	$	24,046	$	11,954
IoT Solutions	(907)		(2,083)		(2,709)		(4,712)
Total operating income (loss)	$	9,974	$	4,018	$	21,337	$	7,242
Depreciation and Amortization
IoT Products & Services	$	3,471	$	3,181	$	10,633	$	9,390
IoT Solutions	5,276		1,964		14,760		5,810
Total depreciation and amortization	$	8,747	$	5,145	$	25,393	$	15,200

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

	Nine months ended June 30,
	2022		2021
IoT Products & Services	$	1,722	$	1,645
IoT Solutions*	2,496		—
Total expended for property, plant and equipment	$	4,218	$	1,645

* Excluded from this amount is $1,742 and $1,624 of transfers of inventory to property plant and equipment for subscriber assets for the nine months ended June 30, 2022 and 2021, respectively.

8. SEGMENT INFORMATION (CONTINUED)

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

	June 30, 2022		September 30, 2021
IoT Products & Services	$	398,129	$	386,934
IoT Solutions	423,995		80,165
Unallocated*	41,515		152,432
Total assets	$	863,639	$	619,531

*Unallocated consists of cash and cash equivalents.

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Income Taxes

9 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

Our income tax benefit was $1.5 million for the nine months ended June 30, 2022. Included in this benefit was a net tax benefit discretely related to the nine months ended June 30, 2022 of $2.7 million. This benefit primarily was the result of excess tax benefits recognized on stock compensation.

Income tax expense was $0.2 million for the nine months ended June 30, 2021. Included in this expense was a net tax benefit discretely related to the nine months ended June 30, 2021 of $1.0 million. This benefit primarily was the result of excess tax benefits recognized on stock compensation.

Our effective tax rate will vary based on a variety of factors. These 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 settlements of audits. 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, 2021	$	2,908
Decreases related to:
Expiration of statute of limitations	(69)
Prior year income tax positions	(10)
Unrecognized tax benefits as of June 30, 2022	$	2,829

The total amount of unrecognized tax benefits at June 30, 2022 that, if recognized, would affect our effective tax rate was $2.7 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 $0.7 million over the next 12 months.

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Product Warranty Obligation

9 Months Ended

Jun. 30, 2022

Product Warranties Disclosures [Abstract]

PRODUCT WARRANTY OBLIGATION

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

	Balance at		Warranties		Settlements		Balance at
Period	April 1		issued		made		June 30
Three months ended June 30, 2022	$	690	$	100	$	(38)	$	752
Three months ended June 30, 2021	$	923	$	16	$	(146)	$	793
	Balance at		Warranties		Settlements		Balance at
Period	October 1		issued		made		June 30
Nine months ended June 30, 2022	$	707	$	295	$	(250)	$	752
Nine months ended June 30, 2021	$	942	$	205	$	(354)	$	793

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Leases

9 Months Ended

Jun. 30, 2022

Leases [Abstract]

LEASES

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 twelve 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 twelve 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 asset, 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, 2022		September 30, 2021
Assets
Operating leases	Operating lease right-of-use assets	$	14,829	$	15,684
Total lease assets		$	14,829	$	15,684
Liabilities
Operating leases	Current portion of operating lease liabilities	$	2,989	$	2,633
Operating leases	Operating lease liabilities	16,824		18,368
Total lease liabilities		$	19,813	$	21,001

12. LEASES (CONTINUED)

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,
	2022		2021		2022		2021
Operating lease cost	$	954	$	856	$	2,836	$	2,615
Variable lease cost	287		286		828		805
Short-term lease cost	27		32		83		98
Total lease cost	$	1,268	$	1,174	$	3,747	$	3,518

The following table presents supplemental information related to operating leases (in thousands):

	Nine months ended June 30,
	2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	—	$	1,784
Right-of-use assets acquired in Ventus acquisition	699		—
Right-of-use assets obtained in exchange for new operating lease liabilities	—		3,919
Non-cash tenant improvement allowance	$	—	$	1,000

At June 30, 2022 the weighted average remaining lease term of our operating leases was 8.6 years and the weighted average discount rate for these leases was 2.8%.

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, 2022 (in thousands):

Fiscal year	Amount
2022 (three months)	$	992
2023	3,746
2024	3,241
2025	2,821
2026	2,591
2027	1,761
Thereafter	7,068
Total future undiscounted lease payments	22,220
Less imputed interest	(2,407)
Total reported lease liability	$	19,813

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Contingencies

9 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

We lease certain of our buildings and equipment under noncancelable lease agreements. Please refer to Note 12 to our condensed consolidated financial statements for additional information.

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 former 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.

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Stock-Based Compensation

9 Months Ended

Jun. 30, 2022

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

Stock-based awards were granted under the 2021 Omnibus Incentive Plan (as amended and restated, the "2021 Plan") beginning January 29, 2021. Prior to that date, such awards made in fiscal 2021 were granted under the 2020 Omnibus Incentive Plan (the "2020 Plan"). Upon stockholder approval of the 2021 Plan on January 29, 2021, we ceased granting awards under the 2020 Plan. On January 28, 2022, the stockholders approved the amendment and restatement of the 2021 Plan. Shares subject to awards under the 2020 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.

The 2021 Plan authorizes the issuance of up to 2,400,000 common shares in connection with awards of stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based full value awards or other stock-based awards. Eligible participants include our employees, our affiliates, non-employee directors of our Company and any consultant or advisor who is a natural person and provides services to us or our affiliates. Options that have been granted under the 2021 Plan typically vest over a four-year period and will expire if unexercised after seven years from the date of grant. Restricted stock unit awards ("RSUs") that have been granted to directors typically vest in one year. RSUs that have been granted to executives and employees typically vest in January over a four-year period. Performance stock unit awards ("PSUs") that have been granted to an executive will vest based on achievement of a cumulative adjusted earnings per share metric measured over a three-year period. Share-based compensation expenses recorded for this performance award is reevaluated at each reporting period based on the probability of achievement of the goal. The 2021 Plan is scheduled to expire on January 28, 2032. Options under the 2021 Plan can be granted as either incentive stock options or non-statutory stock options. The exercise price of options and the grant date price of RSUs and PSUs is determined by our Compensation Committee but will not be less than the fair market value of our common stock based on the closing price as of the date of grant. Upon exercise of options or settlement of vested restricted stock units or performance stock units, we issue new shares of stock. As of June 30, 2022, there were approximately 1,757,566 shares available for future grants under the 2021 Plan.

Cash received from the exercise of stock options was $6.7 million and $7.0 million for the nine months ended June 30, 2022 and June 30, 2021, respectively.

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, 2022 and 2021, our employees forfeited 96,860 shares and 109,516 shares, respectively, in order to satisfy respective withholding tax obligations of $2.2 million and $2.0 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 to 3,425,000 that may be purchased under the plan. ESPP contributions by employees were $1.1 million and $0.9 million for the nine months ended June 30, 2022 and June 30, 2021, respectively. Pursuant to the ESPP, 60,481 and 61,302 common shares were issued to employees during the nine months ended June 30, 2022 and June 30, 2021, respectively. Shares are issued under the ESPP from treasury stock. As of June 30, 2022, 572,592 common shares were available for future issuances under the ESPP.

14. STOCK-BASED COMPENSATION (CONTINUED)

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,
	2022		2021		2022		2021
Cost of sales	$	125	$	98	$	342	$	269
Sales and marketing	660		614		1,828		1,762
Research and development	252		259		890		762
General and administrative	1,106		1,139		3,342		3,538
Stock-based compensation before income taxes	2,143		2,110		6,402		6,331
Income tax benefit	(460)		(463)		(1,360)		(1,369)
Stock-based compensation after income taxes	$	1,683	$	1,647	$	5,042	$	4,962

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 at September 30, 2021	2,952	$13.20
Granted	559	22.20
Exercised	(1,307)	11.49
Forfeited / Canceled	(162)	17.61
Balance on June 30, 2022	2,042	$16.35	4.7	$	11,887
Exercisable at June30, 2022	984	$13.74	3.5	$	10,320

(1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $24.22 as of June 30, 2022, which would have been received by the option holders had all option holders exercised their options as of that date. 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, 2022 was $15.6 million and during the nine months ended June 30, 2021 was $5.4 million.

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,
	2022	2021
Weighted average per option grant date fair value	$10.03	$7.45
Assumptions used for option grants:
Risk free interest rate	1.25% - 3.00%	0.51% - 1.035%
Expected term	6.00 years	6.00 years
Expected volatility	45% - 46%	44% - 46%
Weighted average volatility	46%	44%
Expected dividend yield	—	—

14. STOCK-BASED COMPENSATION (CONTINUED)

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, 2022, the total unrecognized compensation cost related to non-vested stock options was $8.0 million and the related weighted average period over which it is expected to be recognized is approximately 1.5 years.

Non-vested Stock Units

The following table presents a summary of our non-vested restricted stock and performance stock units as of June 30, 2022 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 at September 30, 2021	812	$	15.72	18	$	25.15
Granted	377	22.21		12	19.78
Vested	(290)	15.56		(3)	25.15
Canceled	(130)	17.15		—	—
Nonvested at June 30, 2022	769	$	18.71	27	$	22.69

As of June 30, 2022, the total unrecognized compensation cost related to non-vested stock units was $11.6 million. The related weighted average period over which this cost is expected to be recognized is approximately 2.4 years.

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Basis of Presentation of Unaudited Interim Condensed Consolidated Financial Statements and Significant Accounting Policies (Policies)

9 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Adopted

In October 2021, FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This update requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. We adopted this standard in the first quarter of fiscal 2022.

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Acquisitions (Tables)

3 Months Ended

Jun. 30, 2022

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary fair values of Ventus assets acquired and liabilities assumed as of the acquisition date (in thousands):

Cash	$	350,000
Fair value of net tangible assets acquired	$	20,735
Identifiable intangible assets:
Customer relationships	179,000
Purchased and core technology	16,000
Trademarks	16,000
Goodwill	118,265
Total	$	350,000

Business Acquisition, Pro Forma Information [Table Text Block]

The following consolidated pro forma information is presented as if the acquisition had occurred on October 1, 2020 (in thousands):

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Net sales	$	103,517	$	92,678	$	287,552	$	268,029
Net income (loss)	4,126		(432)		3,051		(6,157)

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Earnings Per Share (Tables)

9 Months Ended

Jun. 30, 2022

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,
	2022		2021		2022		2021
Numerator:
Net income	$	4,126	$	3,157	$	8,160	$	5,778
Denominator:
Denominator for basic net income per common share — weighted average shares outstanding	35,131		34,057		34,900		31,443
Effect of dilutive securities:
Stock options and restricted stock units	609		1,091		840		1,263
Denominator for diluted net income per common share — adjusted weighted average shares	35,740		35,148		35,740		32,706
Net income per common share, basic	$	0.12	$	0.09	$	0.23	$	0.18
Net income per common share, diluted	$	0.12	$	0.09	$	0.23	$	0.18

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Selected Balance Sheet Data (Tables)

9 Months Ended

Jun. 30, 2022

Selected Balance Sheet Data [Abstract]

Schedule of Selected Balance Sheet Data

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

	June 30, 2022		September 30, 2021
Accounts receivable, net:
Accounts receivable	$	61,005	$	51,828
Less allowance for credit losses	2,354		3,934
Less reserve for future credit returns and pricing adjustments	6,642		4,156
Accounts receivable, net	$	52,009	$	43,738
Inventories:
Raw materials	$	31,009	$	27,279
Finished goods	30,678		16,642
Inventories	$	61,687	$	43,921

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Fair Value Measurements (Tables)

9 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value of Assets Measured on Recurring Basis

The following tables provide information by level for financial liabilities that are measured at fair value on a recurring basis (in thousands):

	Total Fair Value at		Fair Value Measurements Using  Inputs Considered as
	June 30, 2022		Level 1		Level 2		Level 3
Liabilities:
Contingent consideration on acquired business	$	6,200	$	—	$	—	$	6,200
Total liabilities measured at fair value	$	6,200	$	—	$	—	$	6,200

	Total Fair Value at		Fair Value Measurements Using  Inputs Considered as
	September 30, 2021		Level 1		Level 2		Level 3
Liabilities:
Contingent consideration on acquired business	$	6,200	$	—	$	—	$	6,200
Total liabilities measured at fair value	$	6,200	$	—	$	—	$	6,200

Fair Value of Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

The following table presents a reconciliation of the contingent consideration liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Fair value at beginning of period	$	6,200	$	8,000	$	6,200	$	4,228
Contingent consideration recognized for acquired business	—		—		—		8,000
Contingent consideration payments	—		—		—		(10,000)
Change in fair value of contingent consideration	—		(2,100)		—		3,672
Fair value at end of period	$	6,200	$	5,900	$	6,200	$	5,900

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Goodwill and Other Identifiable Intangible Assets, Net (Tables)

9 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Amortizable Intangible Assets

Amortizable intangible assets were (in thousands):

	June 30, 2022						September 30, 2021
	Gross carrying amount		Accum. amort.		Net		Gross carrying amount		Accum. amort.		Net
Purchased and core technology	$	85,132	$	(54,666)	$	30,466	$	69,162	$	(50,701)	$	18,461
License agreements	112		(112)		—		112		(112)		—
Patents and trademarks	39,670		(16,972)		22,698		23,491		(14,978)		8,513
Customer relationships	309,264		(53,614)		255,650		130,278		(39,973)		90,305
Non-compete agreements	600		(600)		—		600		(600)		—
Order backlog	1,000		(1,000)		—		1,000		(250)		750
Total	$	435,778	$	(126,964)	$	308,814	$	224,643	$	(106,614)	$	118,029

Schedule of Estimated Future Amortization Expense Related to Intangible Assets

Estimated amortization expense related to intangible assets for the remainder of fiscal 2022 and the five succeeding fiscal years is (in thousands):

2022 (three months)	$	6,722
2023	$	24,996
2024	$	24,282
2025	$	20,825
2026	$	20,593
2027	$	18,582

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, 2022
	IoT Products and Services		IoT Solutions		Total
Balance on September 30, 2021	$	175,180	$	50,342	$	225,522
Acquisition	—		118,265		118,265
Adjustment	116		(631)		(515)
Foreign currency translation adjustment	(1,402)		(162)		(1,564)
Balance on June 30, 2022	$	173,894	$	167,814	$	341,708

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Indebtedness (Tables)

9 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of Debt [Table Text Block]

The following table is a summary of our long-term indebtedness at June 30, 2022 and September 30, 2021 (in thousands):

	Balance at June 30, 2022		Balance at September 30, 2021
Revolving Loan	$	—	$	48,118
Term loan	268,748		—
Total loans	268,748		48,118
Less unamortized issuance costs	(12,523)		(2,319)
Less current maturities of long-term debt	(15,523)		—
Total long-term debt, net of current portion	$	240,702	$	45,799

Schedule of Maturities of Long-term Debt [Table Text Block]

The following table is a summary of future maturities of our aggregate long-term debt at June 30, 2022 (in thousands):

Fiscal year	Amount
2022 (three months)	$	4,375
2023	17,500
2024	17,500
2025	17,500
2026	17,500
2027	17,500
2028	176,873
Total long-term debt	$	268,748

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Segment Information (Tables)

9 Months Ended

Jun. 30, 2022

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,
	2022		2021		2022		2021
Revenue
IoT Products & Services	$	79,758	$	66,812	$	216,872	$	194,224
IoT Solutions	23,759		12,267		65,615		35,302
Total revenue	$	103,517	$	79,079	$	282,487	$	229,526
Gross Profit
IoT Products & Services	$	42,643	$	36,806	$	116,779	$	106,942
IoT Solutions	14,783		5,750		40,512		17,089
Total gross profit	$	57,426	$	42,556	$	157,291	$	124,031
Operating Income (Loss)
IoT Products & Services	$	10,881	$	6,101	$	24,046	$	11,954
IoT Solutions	(907)		(2,083)		(2,709)		(4,712)
Total operating income (loss)	$	9,974	$	4,018	$	21,337	$	7,242
Depreciation and Amortization
IoT Products & Services	$	3,471	$	3,181	$	10,633	$	9,390
IoT Solutions	5,276		1,964		14,760		5,810
Total depreciation and amortization	$	8,747	$	5,145	$	25,393	$	15,200

Payments to Acquire Property, Plant and Equipment by Segment

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

	Nine months ended June 30,
	2022		2021
IoT Products & Services	$	1,722	$	1,645
IoT Solutions*	2,496		—
Total expended for property, plant and equipment	$	4,218	$	1,645

* Excluded from this amount is $1,742 and $1,624 of transfers of inventory to property plant and equipment for subscriber assets for the nine months ended June 30, 2022 and 2021, respectively.

Reconciliation of Assets from Segment to Consolidated

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

	June 30, 2022		September 30, 2021
IoT Products & Services	$	398,129	$	386,934
IoT Solutions	423,995		80,165
Unallocated*	41,515		152,432
Total assets	$	863,639	$	619,531

*Unallocated consists of cash and cash equivalents.

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Revenue (Tables)

9 Months Ended

Jun. 30, 2022

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,
	2022		2021		2022		2021
North America, primarily the United States	$	83,282	$	56,965	$	223,315	$	167,406
Europe, Middle East & Africa	12,265		12,543		37,139		34,769
Rest of world	7,970		9,571		22,033		27,351
Total revenue	$	103,517	$	79,079	$	282,487	$	229,526

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

	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Transferred at a point in time	$	80,858	$	70,333	$	220,049	$	203,665
Transferred over time	22,659		8,746		62,438		25,861
Total revenue	$	103,517	$	79,079	$	282,487	$	229,526

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Income Taxes (Tables)

9 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Schedule of Unrecognized Tax Benefits

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

Unrecognized tax benefits as of September 30, 2021	$	2,908
Decreases related to:
Expiration of statute of limitations	(69)
Prior year income tax positions	(10)
Unrecognized tax benefits as of June 30, 2022	$	2,829

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Product Warranty Obligation (Tables)

9 Months Ended

Jun. 30, 2022

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 current liabilities:

	Balance at		Warranties		Settlements		Balance at
Period	April 1		issued		made		June 30
Three months ended June 30, 2022	$	690	$	100	$	(38)	$	752
Three months ended June 30, 2021	$	923	$	16	$	(146)	$	793
	Balance at		Warranties		Settlements		Balance at
Period	October 1		issued		made		June 30
Nine months ended June 30, 2022	$	707	$	295	$	(250)	$	752
Nine months ended June 30, 2021	$	942	$	205	$	(354)	$	793

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Leases (Tables)

9 Months Ended

Jun. 30, 2022

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, 2022		September 30, 2021
Assets
Operating leases	Operating lease right-of-use assets	$	14,829	$	15,684
Total lease assets		$	14,829	$	15,684
Liabilities
Operating leases	Current portion of operating lease liabilities	$	2,989	$	2,633
Operating leases	Operating lease liabilities	16,824		18,368
Total lease liabilities		$	19,813	$	21,001

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,
	2022		2021		2022		2021
Operating lease cost	$	954	$	856	$	2,836	$	2,615
Variable lease cost	287		286		828		805
Short-term lease cost	27		32		83		98
Total lease cost	$	1,268	$	1,174	$	3,747	$	3,518

Supplemental Disclosures Leases

The following table presents supplemental information related to operating leases (in thousands):

	Nine months ended June 30,
	2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	—	$	1,784
Right-of-use assets acquired in Ventus acquisition	699		—
Right-of-use assets obtained in exchange for new operating lease liabilities	—		3,919
Non-cash tenant improvement allowance	$	—	$	1,000

At June 30, 2022 the weighted average remaining lease term of our operating leases was 8.6 years and the weighted average discount rate for these leases was 2.8%.

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, 2022 (in thousands):

Fiscal year	Amount
2022 (three months)	$	992
2023	3,746
2024	3,241
2025	2,821
2026	2,591
2027	1,761
Thereafter	7,068
Total future undiscounted lease payments	22,220
Less imputed interest	(2,407)
Total reported lease liability	$	19,813

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Stock-Based Compensation (Tables)

9 Months Ended

Jun. 30, 2022

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,
	2022		2021		2022		2021
Cost of sales	$	125	$	98	$	342	$	269
Sales and marketing	660		614		1,828		1,762
Research and development	252		259		890		762
General and administrative	1,106		1,139		3,342		3,538
Stock-based compensation before income taxes	2,143		2,110		6,402		6,331
Income tax benefit	(460)		(463)		(1,360)		(1,369)
Stock-based compensation after income taxes	$	1,683	$	1,647	$	5,042	$	4,962

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 at September 30, 2021	2,952	$13.20
Granted	559	22.20
Exercised	(1,307)	11.49
Forfeited / Canceled	(162)	17.61
Balance on June 30, 2022	2,042	$16.35	4.7	$	11,887
Exercisable at June30, 2022	984	$13.74	3.5	$	10,320

(1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $24.22 as of June 30, 2022, which would have been received by the option holders had all option holders exercised their options as of that date. The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price.

Schedule of Valuation Assumptions

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,
	2022	2021
Weighted average per option grant date fair value	$10.03	$7.45
Assumptions used for option grants:
Risk free interest rate	1.25% - 3.00%	0.51% - 1.035%
Expected term	6.00 years	6.00 years
Expected volatility	45% - 46%	44% - 46%
Weighted average volatility	46%	44%
Expected dividend yield	—	—

Schedule of Nonvested Restricted Stock Units

The following table presents a summary of our non-vested restricted stock and performance stock units as of June 30, 2022 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 at September 30, 2021	812	$	15.72	18	$	25.15
Granted	377	22.21		12	19.78
Vested	(290)	15.56		(3)	25.15
Canceled	(130)	17.15		—	—
Nonvested at June 30, 2022	769	$	18.71	27	$	22.69

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Acquisitions Details (Details) - USD ($) $ in Thousands		9 Months Ended
	Nov. 01, 2021	Jun. 30, 2022	Jun. 30, 2021	Sep. 30, 2021
Business Acquisition [Line Items]
Goodwill		$ 341,708		$ 225,522
Operating lease right-of-use assets		14,829		15,684
Operating lease liabilities		16,824		$ 18,368
Ventus
Business Acquisition [Line Items]
Cash paid at closing	$ 350,000
Goodwill	$ 118,265
Weighted average useful life identifiable intangibles	19 years 2 months 12 days
Ventus | Customer Relationships
Business Acquisition [Line Items]
Weighted average useful life identifiable intangibles	20 years 6 months
Ventus | Trademarks
Business Acquisition [Line Items]
Weighted average useful life identifiable intangibles	13 years
Ventus | Purchased and Core Technology
Business Acquisition [Line Items]
Weighted average useful life identifiable intangibles	11 years
Ventus | General and Administrative
Business Acquisition [Line Items]
Acquisition costs		$ 4,200	$ 3,100
Other non-current assets | Ventus
Business Acquisition [Line Items]
Operating lease right-of-use assets	$ 700
Other current liabilities and other noncurrent liabilities | Ventus
Business Acquisition [Line Items]
Operating lease liabilities	$ 700

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Acquisitions (Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands	Nov. 01, 2021	Jun. 30, 2022	Sep. 30, 2021
Business Acquisition [Line Items]
Goodwill		$ 341,708	$ 225,522
Ventus
Business Acquisition [Line Items]
Cash	$ 350,000
Fair value of net tangible assets acquired	20,735
Goodwill	118,265
Total assets acquired and liabilities assumed	350,000
Customer Relationships | Ventus
Business Acquisition [Line Items]
Identifiable intangible assets	179,000
Trademarks | Ventus
Business Acquisition [Line Items]
Identifiable intangible assets	16,000
Technology-Based Intangible Assets | Ventus
Business Acquisition [Line Items]
Identifiable intangible assets	$ 16,000

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Acquisitions Supplemental Pro Forma Information (Details) - Ventus - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Net sales	$ 103,517	$ 92,678	$ 287,552	$ 268,029
Net income (loss)	$ 4,126	$ (432)	$ 3,051	$ (6,157)

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Numerator:
Net income	$ 4,126	$ 3,157	$ 8,160	$ 5,778
Denominator:
Denominator for basic net income per common share — weighted average shares outstanding	35,131,000	34,057,000	34,900,000	31,443,000
Effect of dilutive securities:
Stock options and restricted stock units	609,000	1,091,000	840,000	1,263,000
Denominator for diluted net income per common share — adjusted weighted average shares	35,740,000	35,148,000	35,740,000	32,706,000
Basic net income per common share:
Net income, basic (USD per share)	$ 0.12	$ 0.09	$ 0.23	$ 0.18
Diluted net income per common share
Net income , diluted (USD per share)	$ 0.12	$ 0.09	$ 0.23	$ 0.18
Potentially dilutive securities excluded from computation of earnings per share	939,101	994,096	778,573	864,744

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Selected Balance Sheet Data (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Sep. 30, 2021
Accounts receivable, net:
Accounts receivable	$ 61,005	$ 51,828
Less allowance for credit losses	2,354	3,934
Less reserve for future credit returns and pricing adjustments	6,642	4,156
Accounts receivable, net	52,009	43,738
Inventories:
Raw materials	31,009	27,279
Finished goods	30,678	16,642
Inventories	$ 61,687	$ 43,921

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Fair Value Measurements (Financial Assets and Liabilities) (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Mar. 31, 2022	Sep. 30, 2021	Mar. 31, 2021	Sep. 30, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in fair value of contingent consideration	$ 0	$ 5,772
Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities measured at fair value	0			$ 0
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities measured at fair value	0			0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration fair value	6,200	$ 5,900	$ 6,200	6,200	$ 8,000	$ 4,228
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities measured at fair value	6,200			6,200
Contingent Consideration | Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration fair value	6,200			6,200
Estimate of Fair Value Measurement | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities measured at fair value	6,200			6,200
Estimate of Fair Value Measurement | Contingent Consideration | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration fair value	$ 6,200			$ 6,200

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Fair Value Measurements (Reconciliation of Liability) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Contingent Consideration | Estimate of Fair Value Measurement | Fair Value, Measurements, Recurring
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value at beginning of period			$ 6,200
Fair value at end of period	$ 6,200		6,200
Fair Value, Inputs, Level 3
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value at beginning of period	6,200	$ 8,000	6,200	$ 4,228
Contingent consideration recognized for acquired business	0	0	0	8,000
Contingent consideration payments	0	0	0	(10,000)
Change in fair value of contingent consideration	0	(2,100)	0	3,672
Fair value at end of period	6,200	$ 5,900	6,200	$ 5,900
Fair Value, Inputs, Level 3 | Contingent Consideration | Fair Value, Measurements, Recurring
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value at beginning of period			6,200
Fair value at end of period	6,200		6,200
Fair Value, Inputs, Level 3 | Contingent Consideration | Estimate of Fair Value Measurement | Fair Value, Measurements, Recurring | Ctek, Inc. ("Ctek")
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value at end of period	$ 300		$ 300

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Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Sep. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Mar. 31, 2022	Mar. 31, 2021	Sep. 30, 2020
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Payment for contingent consideration			$ 0	$ 5,772
Goodwill	$ 341,708	$ 225,522	341,708
Fair Value, Inputs, Level 3
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Contingent consideration fair value	6,200	6,200	6,200	$ 5,900	$ 6,200	$ 8,000	$ 4,228
Contingent Consideration | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Contingent consideration fair value	6,200	6,200	6,200
Opengear | Contingent Consideration
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Payment for contingent consideration	10,000
Estimate of Fair Value Measurement | Contingent Consideration | Fair Value, Measurements, Recurring
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Contingent consideration fair value	6,200	6,200	6,200
Estimate of Fair Value Measurement | Haxiot | Contingent Consideration | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Payment for contingent consideration		$ 2,100
Contingent consideration fair value	5,900		5,900
Estimate of Fair Value Measurement | Ctek, Inc. ("Ctek") | Contingent Consideration | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Contingent consideration fair value	$ 300		$ 300

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Goodwill and Other Identifiable Intangible Assets, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Sep. 30, 2021
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	$ 435,778		$ 435,778		$ 224,643
Accumulated amortization	(126,964)		(126,964)		(106,614)
Net	308,814		308,814		118,029
Amortization expense			20,400	$ 11,989
Goodwill	341,708		341,708		225,522
Purchased and Core Technology
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	85,132		85,132		69,162
Accumulated amortization	(54,666)		(54,666)		(50,701)
Net	30,466		30,466		18,461
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	39,670		39,670		23,491
Accumulated amortization	(16,972)		(16,972)		(14,978)
Net	22,698		22,698		8,513
Customer Relationships
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	309,264		309,264		130,278
Accumulated amortization	(53,614)		(53,614)		(39,973)
Net	255,650		255,650		90,305
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)		(250)
Net	0		0		$ 750
Cost of Sales and General and Administrative Expense
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 7,000	$ 4,100	$ 20,400	$ 12,000

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Goodwill and Other Identifiable Intangible Assets, Net (Additional Information) (Details) $ in Thousands	9 Months Ended
	Jun. 30, 2022 USD ($) segment	Sep. 30, 2021 USD ($)
Goodwill [Line Items]
Number of Reportable Segments | segment	2
Goodwill	$ 341,708	$ 225,522
Market Capitalization	852,000
Enterprise Routers
Goodwill [Line Items]
Goodwill	32,700
Console Servers
Goodwill [Line Items]
Goodwill	57,100
OEM Solutions
Goodwill [Line Items]
Goodwill	63,700
Infrastructure Mgmt.
Goodwill [Line Items]
Goodwill	20,400
SmartSense
Goodwill [Line Items]
Goodwill	49,500
Ventus
Goodwill [Line Items]
Goodwill	118,300
IoT Products & Services Segment
Goodwill [Line Items]
Goodwill	173,894	175,180
IoT Solutions Segment
Goodwill [Line Items]
Goodwill	$ 167,814	$ 50,342
Control Premium | Minimum
Goodwill [Line Items]
Goodwill Valuation Implied Control Premium	(5.60%)
Control Premium | Maximum
Goodwill [Line Items]
Goodwill Valuation Implied Control Premium	7.90%

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Goodwill and Other Identifiable Intangible Assets, Net (Amortization Expense) (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2022 (three months)	$ 6,722
2023	24,996
2024	24,282
2025	20,825
2026	20,593
2027	$ 18,582

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Goodwill and Other Identifiable Intangible Assets, Net (Goodwill Rollforward) (Details) $ in Thousands	9 Months Ended
	Jun. 30, 2022 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 225,522
Acquisition	118,265
Adjustment	(515)
Foreign currency translation adjustment	(1,564)
Ending balance	341,708
IoT Products & Services Segment
Goodwill [Roll Forward]
Beginning balance	175,180
Acquisition	0
Adjustment	116
Foreign currency translation adjustment	(1,402)
Ending balance	173,894
IoT Solutions Segment
Goodwill [Roll Forward]
Beginning balance	50,342
Acquisition	118,265
Adjustment	(631)
Foreign currency translation adjustment	(162)
Ending balance	$ 167,814

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Indebtedness - Narrative (Details) - USD ($)		1 Months Ended			9 Months Ended
	Nov. 01, 2021	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Jun. 30, 2022	Nov. 02, 2021	Mar. 15, 2021
Line of Credit Facility [Line Items]
Weighted average interest rate on debt		6.85%			6.85%
Prior Credit Facility
Line of Credit Facility [Line Items]
Debt issuance costs	$ 2,300,000					$ 400,000
Amortization of Debt Issuance Costs	1,900,000
November 1, 2021 Credit Agreement
Line of Credit Facility [Line Items]
Debt issuance costs	11,700,000
December 22, 2021 Credit Agreement
Line of Credit Facility [Line Items]
Debt issuance costs	1,700,000
Term loan
Line of Credit Facility [Line Items]
Revolving loan maximum borrowing capacity	350,000,000
Payment for Debt Extinguishment or Debt Prepayment Cost		$ 20,000,000	$ 11,300,000	$ 50,000,000
Term loan | LIBOR
Line of Credit Facility [Line Items]
Debt instrument, margin spread on LIBOR Rate					5.00%
Term loan | Base Rate
Line of Credit Facility [Line Items]
Debt instrument, margin spread on LIBOR Rate					4.00%
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%
Term loan | Base Rate | Minimum
Line of Credit Facility [Line Items]
Debt Instrument, Interest Rate, Basis for Effective Rate					0.50
Term Loan B
Line of Credit Facility [Line Items]
Revolving loan maximum borrowing capacity	350,000,000
Revolving loan
Line of Credit Facility [Line Items]
Revolving loan maximum borrowing capacity	35,000,000						$ 200,000,000
Revolving loan | LIBOR | Minimum
Line of Credit Facility [Line Items]
Debt instrument, margin spread on LIBOR Rate					3.75%
Revolving loan | LIBOR | Maximum
Line of Credit Facility [Line Items]
Debt instrument, margin spread on LIBOR Rate					4.00%
Revolving loan | Base Rate | Minimum
Line of Credit Facility [Line Items]
Debt instrument, margin spread on LIBOR Rate					2.75%
Revolving loan | Base Rate | Maximum
Line of Credit Facility [Line Items]
Debt instrument, margin spread on LIBOR Rate					3.00%
Letter of Credit
Line of Credit Facility [Line Items]
Revolving loan maximum borrowing capacity	10,000,000
Swingline Credit Facility
Line of Credit Facility [Line Items]
Revolving loan maximum borrowing capacity	$ 10,000,000

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Indebtedness - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Nov. 01, 2021	Sep. 30, 2021	Mar. 15, 2021
Debt Instrument [Line Items]
Total loans	$ 268,748		$ 48,118
Less unamortized issuance costs	(12,523)		(2,319)
Less current maturities of long-term debt	(15,523)		0
Total long-term debt, net of current portion	240,702		45,799
Revolving loan
Debt Instrument [Line Items]
Total loans	0		48,118
Revolving loan maximum borrowing capacity		$ 35,000		$ 200,000
Term loan
Debt Instrument [Line Items]
Total loans	$ 268,748		$ 0
Revolving loan maximum borrowing capacity		$ 350,000

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Indebtedness - Schedule of Maturities of Long-term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Sep. 30, 2021
Debt Disclosure [Abstract]
2022 (three months)	$ 4,375
2023	17,500
2024	17,500
2025	17,500
2026	17,500
2027	17,500
2028	176,873
Total long-term debt	$ 268,748	$ 48,118

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Segment Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) numberOfOperatingSegments segment	Jun. 30, 2021 USD ($)
Segment Reporting Information [Line Items]
Number of Reportable Segments | segment			2
Total Revenue	$ 103,517	$ 79,079	$ 282,487	$ 229,526
Gross Profit	57,426	42,556	157,291	124,031
Operating income (loss)	9,974	4,018	21,337	7,242
Depreciation and amortization	8,747	5,145	$ 25,393	15,200
IoT Products & Services Segment
Segment Reporting Information [Line Items]
Number of Operating Segments | numberOfOperatingSegments			4
Total Revenue	79,758	66,812	$ 216,872	194,224
Gross Profit	42,643	36,806	116,779	106,942
Operating income (loss)	10,881	6,101	24,046	11,954
Depreciation and amortization	3,471	3,181	$ 10,633	9,390
IoT Solutions Segment
Segment Reporting Information [Line Items]
Number of Operating Segments | numberOfOperatingSegments			2
Total Revenue	23,759	12,267	$ 65,615	35,302
Gross Profit	14,783	5,750	40,512	17,089
Operating income (loss)	(907)	(2,083)	(2,709)	(4,712)
Depreciation and amortization	$ 5,276	$ 1,964	$ 14,760	$ 5,810

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Segment Information Expended for Property, Plant and Equipment (Details) - USD ($) $ in Thousands		9 Months Ended
		Jun. 30, 2022	Jun. 30, 2021
Segment Reporting Information [Line Items]
Expended of property, equipment, improvements and certain other intangible assets		$ 4,218	$ 1,645
Inventory Transfer To Property, Plant And Equipment		1,742	1,624
IoT Products & Services Segment
Segment Reporting Information [Line Items]
Expended of property, equipment, improvements and certain other intangible assets		1,722	1,645
IoT Solutions Segment
Segment Reporting Information [Line Items]
Expended of property, equipment, improvements and certain other intangible assets	[1]	$ 2,496	$ 0

[1] * Excluded from this amount is $1,742 and $1,624 of transfers of inventory to property plant and equipment for subscriber assets for the nine months ended June 30, 2022 and 2021, respectively.

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Segment Information Total Assets (Details) - USD ($) $ in Thousands		Jun. 30, 2022	Sep. 30, 2021
Segment Reporting, Asset Reconciling Item [Line Items]
Assets		$ 863,639	$ 619,531
IoT Products & Services Segment
Segment Reporting, Asset Reconciling Item [Line Items]
Assets		398,129	386,934
IoT Solutions Segment
Segment Reporting, Asset Reconciling Item [Line Items]
Assets		423,995	80,165
Unallocated
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	[1]	$ 41,515	$ 152,432

[1] Unallocated consists of cash and cash equivalents.

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Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Unearned Revenue (Details)
Total Revenue	$ 103,517	$ 79,079	$ 282,487	$ 229,526
North America, primarily the United States
Unearned Revenue (Details)
Total Revenue	83,282	56,965	223,315	167,406
Europe, Middle East & Africa
Unearned Revenue (Details)
Total Revenue	12,265	12,543	37,139	34,769
Rest of world
Unearned Revenue (Details)
Total Revenue	7,970	9,571	22,033	27,351
Transferred at a point in time
Unearned Revenue (Details)
Total Revenue	80,858	70,333	220,049	203,665
Transferred over time
Unearned Revenue (Details)
Total Revenue	$ 22,659	$ 8,746	$ 62,438	$ 25,861

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Revenue - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Sep. 30, 2021
Unearned Revenue (Details)
Amortization	$ 0.4	$ 0.5	$ 2.3	$ 1.4
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01
Unearned Revenue (Details)
Remaining performance obligation, period	12 months		12 months
Equipment
Unearned Revenue (Details)
Contract assets	$ 15.8		$ 15.8		$ 1.9
Equipment | Ventus
Unearned Revenue (Details)
Contract assets	$ 14.1		$ 14.1

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Revenue - Unearned Revenue (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Mar. 31, 2022	Sep. 30, 2021	Mar. 31, 2021	Sep. 30, 2020
Unearned Revenue (Details)
Unearned Revenue	$ 22.6	$ 14.8	$ 22.6	$ 14.8	$ 24.8	$ 15.5	$ 16.4	$ 9.3
Contract with Customer, Liability, Revenue Recognized	5.4	$ 4.8	12.0	$ 8.3
Ventus
Unearned Revenue (Details)
Unearned Revenue	$ 2.1		$ 2.1

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Revenue - Performance Obligations (Details) $ in Millions	Jun. 30, 2022 USD ($)
Revenue from Contract with Customer [Abstract]
Remaining performance obligation	$ 22.6
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01
Revenue from Contract with Customer [Abstract]
Remaining performance obligation	$ 18.2
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, period	12 months
Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01
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]: 2023-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, period	7 years

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Tax Disclosure [Abstract]
Income tax provision (benefit)	$ 456	$ 379	$ (1,539)	$ 220
Income tax benefit specific to the period			$ (2,700)	$ 1,000

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Income Taxes (Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Unrecognized tax benefits that would impact effective tax rate	$ 2,700
Income tax benefit specific to the period	(2,700)	$ 1,000
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Unrecognized tax benefits, beginning balance	2,908
Decreases related to expiration of statute of limitations	(69)
Decreases related to prior year income tax positions	10
Unrecognized tax benefits, ending balance	2,829
Maximum
Unrecognized tax benefits that would decrease next twelve months	$ 700

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Product Warranty Obligation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Standard Product Warranty Accrual [Roll Forward]
Beginning balance	$ 690	$ 923	$ 707	$ 942
Warranties issued	100	16	295	205
Settlements made	(38)	(146)	(250)	(354)
Ending balance	$ 752	$ 793	$ 752	$ 793

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Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Sep. 30, 2021
Assets and Liabilities, Lessee [Abstract]
Operating lease other non-current asset	$ 14,829	$ 15,684
Total lease assets	14,829	15,684
Operating lease other current liabilities	2,989	2,633
Operating lease other non-current liability	16,824	18,368
Total lease liabilities	$ 19,813	$ 21,001

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Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Lease, Cost [Abstract]
Operating lease cost	$ 954	$ 856	$ 2,836	$ 2,615
Variable lease cost	287	286	828	805
Short-term Lease, Cost	27	32	83	98
Total lease cost	$ 1,268	$ 1,174	$ 3,747	$ 3,518

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Leases - Other Information (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Right Of Use Asset Obtained In Exchange for Lease Liability [Abstract]
Cash paid for amounts included in the measurement of operating lease liabilities		$ 0	$ 1,784
Business Combination, Recognized Identifiable Asset Acquired and Liability Assumed, Lease Obligation	$ 0	699	0
Cash paid for leases [Abstract]
Right-of-use assets obtained in exchange for new operating lease liability		0	3,919
Tenant improvement allowance	$ 1,000	$ 0	$ 1,000
Weighted average remaining lease term [Abstract]
Weighted average remaining lease term- operating leases		8 years 7 months 6 days
Weighted Average Discount Rate Leases [Abstract]
Weighted average discount rate - operating leases		2.80%

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Leases - Maturity of Operating Lease Liability (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
Remainder of 2022	$ 992
2023	3,746
2024	3,241
2025	2,821
2026	2,591
2027	1,761
Thereafter	7,068
Total future undiscounted lease payments	22,220
Less imputed interest	(2,407)
Total reported lease liability	$ 19,813

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Stock-Based Compensation (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jan. 29, 2021	Jan. 29, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from Stock Options Exercised	$ 6,739	$ 7,024
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation	96,860	109,516
Tax withholding for share-based compensation	$ 2,200	$ 2,000
Total intrinsic value of all options exercised	15,600	5,400
Proceeds from employee stock purchase plan transactions	1,100	917
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from Stock Options Exercised	6,700	$ 7,000
Total unrecognized compensation cost nonvested awards	$ 8,000
Weighted average period, unrecognized compensation cost, nonvested awards	1 year 6 months
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost nonvested restricted stock units	$ 11,600
Weighted average period, unrecognized compensation cost, nonvested awards	2 years 4 months 24 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%
Share-based Compensation Arrangement by Share-based Payment Award, Offering Period	3 months
Common shares issued to employees	60,481	61,302
Shares available for future issuance	572,592
Proceeds from employee stock purchase plan transactions	$ 1,100	$ 900
The 2021 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized			2,400,000
Number of shares available for future grants	1,757,566
The 2021 Plan | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Expiration period	7 years
Director | The 2021 Plan | Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Executives and Employees | The 2021 Plan | Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Executives | The 2021 Plan | Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years

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Stock-Based Compensation (Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation before income taxes	$ 2,143	$ 2,110	$ 6,402	$ 6,331
Income tax benefit	(460)	(463)	(1,360)	(1,369)
Stock-based compensation after income taxes	1,683	1,647	5,042	4,962
Cost of Sales
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation before income taxes	125	98	342	269
Sales and Marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation before income taxes	660	614	1,828	1,762
Research and Development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation before income taxes	252	259	890	762
General and Administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation before income taxes	$ 1,106	$ 1,139	$ 3,342	$ 3,538

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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, 2022 USD ($) $ / shares shares
Options Outstanding [Roll Forward]
Options Outstanding, Beginning Balance (in shares) | shares	2,952
Options Outstanding, Granted (in shares) | shares	559
Options Outstanding, Exercised (in shares) | shares	(1,307)
Options Outstanding, Forfeited / Canceled (in shares) | shares	(162)
Options Outstanding, Ending Balance (in shares) | shares	2,042
Options Outstanding, Exercisable (in shares) | shares	984
Weighted Average Exercise Price [Roll Forward]
Weighted Average Exercise Price, Beginning Balance	$ 13.20
Weighted Average Exercise Price, Granted	22.20
Weighted Average Exercise Price, Exercised	11.49
Weighted Average Exercise Price, Forfeited / Canceled	17.61
Weighted Average Exercise Price, Ending Balance	16.35
Weighted Average Exercise Price, Exercisable	$ 13.74
Weighted Average Remaining Contractual Term [Abstract]
Weighted Average Remaining Contractual Term, Outstanding	4 years 8 months 12 days
Weighted Average Remaining Contractual Term, Exercisable	3 years 6 months
Aggregate Intrinsic Value, Outstanding | $	$ 11,887	[1]
Aggregate Intrinsic Value, Exercisable | $	$ 10,320	[1]
Closing Stock Price	$ 24.22

[1] The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $24.22 as of June 30, 2022, which would have been received by the option holders had all option holders exercised their options as of that date. The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price.

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Stock-Based Compensation (Fair Value Assumptions) (Details) - Stock Options - $ / shares	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average per option grant date fair value	$ 10.03	$ 7.45
Assumptions Used For Options Grants [Abstract]
Risk free interest rate, minimum	1.25%	0.51%
Risk free interest rate, maximum	3.00%	1.035%
Expected term	6 years	6 years
Weighted average volatility	46.00%	44.00%
Expected dividend yield	0.00%	0.00%
Minimum
Assumptions Used For Options Grants [Abstract]
Expected volatility rate	45.00%	44.00%
Maximum
Assumptions Used For Options Grants [Abstract]
Expected volatility rate	46.00%	46.00%

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Stock-Based Compensation (Non-Vested Options) (Details) shares in Thousands	9 Months Ended
	Jun. 30, 2022 $ / shares shares
Restricted Stock Units
Nonvested Number of Restricted Stock Units [Roll Forward]
Number of Restricted Stock Units, Beginning Balance | shares	812
Number of Restricted Stock Units, Granted | shares	377
Number of Restricted Stock Units, Vested | shares	(290)
Number of Restricted Stock Units, Canceled | shares	(130)
Number of Restricted Stock Units, Ending Balance | shares	769
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	$ 15.72
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Granted | $ / shares	22.21
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Vested | $ / shares	15.56
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Canceled | $ / shares	17.15
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Ending Balance | $ / shares	$ 18.71
Performance Shares
Nonvested Number of Restricted Stock Units [Roll Forward]
Number of Restricted Stock Units, Beginning Balance | shares	18
Number of Restricted Stock Units, Granted | shares	12
Number of Restricted Stock Units, Vested | shares	(3)
Number of Restricted Stock Units, Canceled | shares	0
Number of Restricted Stock Units, Ending Balance | shares	27
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	$ 25.15
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Granted | $ / shares	19.78
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Vested | $ / shares	25.15
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Canceled | $ / shares	0
Restricted Stock Units, Weighted Average Grant Date Fair Value per Common Share, Ending Balance | $ / shares	$ 22.69