As 2022 comes to a close, one description best summarizes the work of the Digi team … Athletic Resilience. Before you send me a shrugging emoji, let me explain.
The challenges that 2022 delivered were multifold. But as you’ll see, our global teams stepped up, navigated those challenges with the agility of a startup enterprise and drove positive change. We continually innovated, repositioned ourselves, and maintained open communications with customers, suppliers and our channel teams. Throughout it all, our flexible, amazing staff prevailed over those challenges, helping us to achieve some remarkable, record-breaking results. Read on to see how the year played out, and why we love the hashtag #OneDigi.
Navigating the 2022 Gauntlet
The year 2022 was supposed to be the end of the pandemic and the return to normal. Instead, on the heels of the pandemic’s worst days, the supply chain constraints became epic and peaked about mid-year. The challenges involved in finding scarce parts, keeping in close contact with key OEMs to manage allocation — not to mention gyrating freight and duty costs, and continued COVID safety precautions — required all hands on deck.
The war in Ukraine added other challenges to the already stretched supply chain. Rising energy costs, pressure on agriculture and precious material costs, as well as restrictions and enhanced import/export screening helped contribute to modern inflation records.
Inflationary conditions prompted central banks around the world to raise interest rates to help moderate demand and weaken the grip of rising prices. In what could be the most widely anticipated potential recession, economists and companies noted the impact on world economies and buying patterns. Many companies have announced cutbacks as forecasts anticipate slower growth ahead.
The shift to hybrid work (remote and in-office) has come to feel more permanent. Flexibility in work has saved money, increased productivity, and helped to balance personal and professional goals. We have seen both ends of the spectrum, with companies going fully virtual and some demanding days in the office.
Lastly, cybersecurity threats have become a focal point for many businesses. Pushed by their consumers, suppliers, and insurance companies, many companies are conducting and issuing security audits. Digi diligently supported these increased requirements with our integrated Digi TrustFence® security framework, our dedicated security staff, and continual enhancements to Digi Remote Manager® — our secure platform for configuring, monitoring and managing devices from anywhere.
These incredible challenges evolved over the course of one year. And Digi has risen to the occasion with Athletic Resiliency.
Athletic
Digi has moved quickly, and with adaptable solutions. Our teams have been tireless in managing and adapting to change in response to the rolling waves of challenges impacting the global economy and the electronics industry.
- COVID: To serve our customers proactively, in spite of the challenges of the global pandemic, Digi obtained guidance from government bodies around the world. We then implemented evolving and geographic specific responses based on local conditions where we conduct business or maintain operations. As a global company, truly one size cannot fit all. As an example, we complied with China’s Zero COVID policy while implementing office-specific policies to ensure our team was safe. In all instances the safety of our employees was our number one consideration.
- Supply Chain: As our contract manufacturers struggled to find all necessary parts, Digi invested in our Supply Chain team and technology to help us source critical parts. In many cases, Digi absorbed the increased costs. We optimized freight and duty costs by constantly monitoring freight options and moving some production to Mexico.
- War in Ukraine: As the conflict began, Digi quickly and indefinitely suspended all shipments to Russia and Belarus. We also instructed channel partners who sell into those countries to suspend all shipments of Digi products to these nations indefinitely.
- Recession: We monitor economic and business indicators constantly to ensure Digi is prepared for various economic scenarios. We are data driven and patient, to ensure we don’t implement knee-jerk decisions. Pipeline creation, bookings, and distributor/customer sentiment weigh heavily on our forecasts and models. To date, Digi’s offerings and diverse customer base have shown strength based on cost driven ROI to Industrial IoT business cases.
- Rising Interest Rates: Many central banks and the Federal Reserve have been clear about rising interest rates. We have reacted by focusing on execution and paying down $100 million in debt to reduce our leverage and increase free cash flow.
- Inflation: Rising costs not only impact Digi’s offerings, they also impact Digi’s team. We just implemented significantly higher than average compensation increases to help our team overcome the impact of higher housing, energy, services, and food costs. We also kept our team’s health care costs flat in the United States and absorbed the majority of the increase for our employees.
- Cybersecurity: This is an area where you are never “done” and there are always opportunities to improve. The security of our offerings, complying with evolving regulatory and industry policies and best practices requires daily attention. We attracted a new CIO to the Leadership Team to further evolve Digi’s corporate security posture. Additional investments are likely in the future.
Resilience
Resilience is best summarized by innovation, agility, and raw determination to overcome serious obstacles and challenges. Digi showed remarkable resiliency, in the face of the unique and impactful challenges described earlier.
To foster and enable that resiliency, we use a multi-faceted approach with some key initiatives:
- We have shifted to become a more complete IoT Solutions provider, with the best indicator of our progress measured in Annualized Recurring Revenue (ARR). ARR has grown from zero to nearly one quarter of our total revenue. ARR indicates the trust that our customers have placed in Digi to help them implement, manage, and evolve their IoT solutions in a dynamic environment.
- Across the organization, from our sales and field techs to customer support, our Digi teams have taken our mantra on customer focus to heart, delivering service and value that builds lasting relationships and sets our customers up for success. Today, we hear more often than ever before that Digi is easy to do business with, that we are a true partner, and our solutions are easy to implement.
Quarterly and Annual Results
Our Athleticism combined with Resilience helped us to produce record results.
New Product and Solution Introductions and Alliances
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Announcements across our global organization in 2022 included new offerings, expanded product lines, and new alliances. Here are some of the key achievements by business unit:
Awards and Recognition
Additional announcements and milestones for the year included a range of awards and recognitions.
A Few Additional Highlights
We believe our company is part of the broader communities in which we operate. In turn we have a a sense of both corporate and personal responsibility to be a part of the greater good.
- We continued our Diversity, Inclusion and Equity (DI&E) path with employee engagement surveys, paired with global awareness and communication to continually strengthen our inclusion initiatives.
- At our 31st annual Wormburner golf event and fundraiser, we raised a record $55,000 for the advancement of three diverse youth and community-focused organizations.
- We celebrated IoT deployments of our customers that reduce carbon emissions and support a healthy planet in our second annual Green Tech Customer Innovation Awards.
- Meanwhile, we continued to underscore health and wellness in our employee communications, and remind our teams that family is first, and mental health and work-life balance are paramount.
Looking Ahead
Athletic Resiliency propelled Digi to new heights in 2022! We are excited about our thrilling momentum and look forward to achieving more together in 2023!
We extend a heartfelt thank you to our partners, suppliers, customers and team members, who live and breathe our #OneDigi motto!
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