Digi International Inc. (Nasdaq: DGII) lifts 2026 outlook after record Q3
Rhea-AI Filing Summary
Digi International Inc. reported record results for the third fiscal quarter of 2026 ended June 30. Revenue was $139 million, up 29% year over year, with gross margin of 64.8% and operating margin of 16.5%. Net income was $16 million, or $0.40 per diluted share, while adjusted net income reached $29 million, up 50%, and Adjusted EBITDA was $40 million, up 47%.
Recurring revenue was a major contributor. Annualized Recurring Revenue was $191 million, up 52% from a year earlier. The IoT Product & Services segment generated $100 million of revenue, up 25%, with ARR of $60 million, while IoT Solutions delivered $39 million of revenue, up 41%, and ARR of $131 million. Both segments expanded operating margins.
Cash generation remained strong, with cash flow from operations of $33 million in the quarter and $110 million year to date, supporting a net debt position of about $81 million at quarter end. Management raised full‑year fiscal 2026 guidance to revenue of $529–$533 million, Adjusted EBITDA of $146.0–$147.5 million, and ARR growth of at least 27% versus fiscal 2025, with Q4 revenue expected between $138 million and $142 million.
Positive
- Revenue grew 29% year over year in Q3 FY2026 to a record $139 million, while gross and operating margins expanded to 64.8% and 16.5%, respectively, demonstrating strong top-line and profitability momentum.
- Recurring revenue strength lifted Annualized Recurring Revenue to $191 million, up 52% year over year, with IoT Product & Services ARR doubling to $60 million and IoT Solutions ARR rising to $131 million.
- Management raised full‑year fiscal 2026 guidance, now expecting revenue of $529–$533 million, Adjusted EBITDA of $146.0–$147.5 million, and ARR growth of at least 27% versus 2025, all higher than prior targets.
- Operating cash flow reached $33 million in Q3 FY2026 and $110 million year to date, supporting a manageable net debt position of about $81 million and continued balance sheet deleveraging.
Negative
- None.
Filing Explained
The filing furnishes earnings exhibits, while adjusted earnings now include interest expense and prior periods are recast for comparison.
The August 5, 2026 Form 8-K reports Digi’s third-quarter results and furnishes the related press release and investor deck as Exhibits 99.1 and 99.2. The exhibits are not deemed filed under Section 18 or incorporated by reference except through a specific reference in another filing.
Beginning in fiscal 2026, Digi’s adjusted net income and adjusted net income per diluted share include interest expense, and prior-period figures were recast for comparability. These adjusted measures are non-GAAP measures rather than substitutes for GAAP results, so comparisons using them now use a revised basis while GAAP net income and diluted earnings per share remain separately presented.
The release also states that its adjusted EBITDA and adjusted earnings-per-share guidance is not reconciled to GAAP because future foreign-exchange, restructuring, interest, and tax-related items cannot be predicted without unreasonable effort. Reported GAAP results will provide the resolution path for that comparison as the guided periods end.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Quarterly revenue: $139 million
Net income: $16 million
Adjusted EBITDA: $40 million
+5 more
8 metrics
Quarterly revenue
$139 million
Revenue for the third fiscal quarter 2026, up 29% year over year
Net income
$16 million
Net income for the third fiscal quarter 2026, up 54% year over year
Adjusted EBITDA
$40 million
Adjusted EBITDA for the third fiscal quarter 2026, up 47% year over year
Annualized Recurring Revenue
$191 million
ARR at quarter end Q3 fiscal 2026, up 52% year over year
Cash flow from operations
$33 million
Operating cash flow in the third fiscal quarter 2026, versus $24 million a year earlier
Fiscal 2026 revenue guidance
$529 million to $533 million
Full-year fiscal 2026 revenue outlook, representing 23–24% growth versus 2025
Fiscal 2026 Adjusted EBITDA guidance
$146.0 million to $147.5 million
Full-year fiscal 2026 Adjusted EBITDA outlook, 35–36% growth versus 2025
Long-term debt
108,130 (in thousands)
Long-term debt as of June 30, 2026 on the condensed consolidated balance sheet
Key Terms
Annualized Recurring Revenue ("ARR"), Adjusted EBITDA, non-GAAP financial measures, restructuring charge, +1 more
5 terms
Annualized Recurring Revenue ("ARR") financial
"Annualized Recurring Revenue ("ARR") was $191 million at quarter end"
Annualized recurring revenue (ARR) is a snapshot of predictable, subscription-based income converted into a yearly amount, typically by taking recurring monthly or contract revenue and projecting it over 12 months. Investors use it like a company’s subscription ‘salary’ — it shows the steady cash flow a business can expect from renewals and upgrades (excluding one-time sales), helping assess growth, stability, and the value of a recurring-revenue business model.
Adjusted EBITDA financial
"Adjusted EBITDA was $40 million, an increase of 47%"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
non-GAAP financial measures financial
"This release includes adjusted net income, adjusted net income per diluted share and Adjusted EBITDA, each of which is a non-GAAP financial measure"
Non-GAAP financial measures are numbers companies use to show their financial performance that exclude certain expenses or income. They help investors see how the company might perform without one-time costs or other unusual items, giving a different perspective from official reports. However, since they can be adjusted, they don’t always tell the full story and should be looked at alongside standard financial figures.
restructuring charge financial
"Restructuring charge 274 ... 76 ... 772 ... 460"
A restructuring charge is a one-time accounting expense a company records when it reorganizes operations—like closing facilities, laying off staff, or writing down assets—to make the business leaner or change strategy. Think of it as the short-term cost of renovating a house to lower future bills: it reduces reported profit and may use cash now, but investors watch it to judge whether the cleanup will improve future profitability or hide ongoing problems.
One Big Beautiful Bill Act regulatory
"tax assets caused by the One Big Beautiful Bill Act"
A "one big beautiful bill act" is a single, large piece of legislation that bundles many policy changes and measures into one package instead of passing them separately. For investors, it matters because such omnibus bills can swiftly change tax rules, spending levels, industry regulations or subsidies all at once—like a single shopping cart that suddenly adds many items to a household budget—creating broad, rapid shifts in company costs, revenues and market expectations.
Earnings Snapshot
Revenue: $139 million · Guidance included
third fiscal quarter of 2026 ended June 30, 2026
Revenue
$139 million
+29% vs third fiscal quarter 2025
Net income
$16 million
+54% vs third fiscal quarter 2025
Net income per diluted share
$0.40
+48% vs third fiscal quarter 2025
Gross profit margin
64.8%
+130 basis points vs third fiscal quarter 2025
Operating margin
16.5%
+260 basis points vs third fiscal quarter 2025
Adjusted net income
$29 million
+50% vs third fiscal quarter 2025
Adjusted net income per diluted share
$0.75
+47% vs third fiscal quarter 2025
Adjusted EBITDA
$40 million
+47% vs third fiscal quarter 2025
Annualized Recurring Revenue
$191 million
+52% vs third fiscal quarter 2025
Guidance
For fiscal 2026, the company anticipates ARR growth of at least 27% versus 2025, revenue of $529–$533 million, Adjusted EBITDA of $146.0–$147.5 million, and fourth-quarter revenue of $138–$142 million with Adjusted EBITDA of $40.0–$41.5 million and adjusted net income per diluted share of $0.75–$0.78.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Digi International (DGII) perform in its third fiscal quarter 2026?
Digi International delivered strong Q3 FY2026 results, with revenue of $139 million, up 29% year over year, and net income of $16 million, up 54%. Gross margin was 64.8% and operating margin improved to 16.5%.
What were Digi International (DGII)'s key profitability metrics in Q3 FY2026?
Profitability improved significantly, with net income of $16 million and diluted EPS of $0.40. Adjusted net income was $29 million and Adjusted EBITDA was $40 million, both increasing around 50% versus the third fiscal quarter of 2025.
How fast is Digi International (DGII)'s recurring revenue and ARR growing?
Annualized Recurring Revenue reached $191 million at Q3 FY2026 quarter end, up 52% year over year. IoT Product & Services ARR was $60 million (up 100%), and IoT Solutions ARR was $131 million (up 36%), highlighting strong recurring revenue expansion.
What guidance did Digi International (DGII) provide for full-year fiscal 2026?
For fiscal 2026, Digi guides revenue of $529–$533 million, representing 23–24% growth versus 2025. Adjusted EBITDA is expected at $146.0–$147.5 million, up 35–36%, and ARR growth of at least 27% year over year.
How strong are Digi International (DGII)'s cash flow and balance sheet after Q3 FY2026?
Cash generation was robust, with Q3 FY2026 cash flow from operations of $33 million and year-to-date operating cash flow of $110 million. Quarter-end cash was $28 million, outstanding debt was $109 million, and net debt was about $81 million.
How did Digi International (DGII)'s IoT segments perform in Q3 FY2026?
IoT Product & Services revenue was $100 million, up 25%, with ARR of $60 million and operating margin of 16.8%. IoT Solutions revenue reached $39 million, up 41%, with ARR of $131 million and operating margin of 15.7%.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________
FORM 8-K
________________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported)
_________________________________________
(Exact name of registrant as specified in its charter)
_________________________________________
| (State of Incorporation) | (Commission file number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
(952 ) 912-3444
(Registrant’s telephone number, including area code)
________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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. ☐
| Item 2.02 | Results of Operations and Financial Condition. | ||||
On August 5, 2026, Digi International Inc. (“Digi”) issued a press release and investor deck regarding Digi’s financial results for its third fiscal quarter ended June 30, 2026. A copy of Digi’s press release is attached hereto as Exhibit 99.1 and a copy of Digi's investor deck as Exhibit 99.2.
The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. | ||||
| No. | Exhibit | Manner of Filing | ||||||||||||
| 99.1 | Press Release dated August 5, 2026, announcing financial results for the third fiscal quarter ended June 30, 2026 | Furnished Electronically | ||||||||||||
| 99.2 | Investor Deck dated August 5, 2026, announcing financial results for the third fiscal quarter ended June 30, 2026 | Furnished Electronically | ||||||||||||
| 104 | The cover page from the Current Report on Form 8-K formatted in Inline XBRL | Filed Electronically | ||||||||||||
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized.
Date: August 5, 2026
| DIGI INTERNATIONAL INC. | |||||||||||
| By: | /s/ James J. Loch | ||||||||||
| James J. Loch | |||||||||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||||||||
Exhibit 99.1
| Digi International Reports Third Fiscal Quarter 2026 Results | ||
| Record Quarterly Revenue of $139M, Record End of Quarter ARR of $191M | ||
| Quarterly Cash Flow From Operations of $33M | ||
(Minneapolis, MN, August 5, 2026) - Digi International Inc. ("Digi" or the "Company") (Nasdaq: DGII), a leading global provider of business and mission-critical Internet of Things ("IoT") products, services and solutions, today announced its financial results for its third fiscal quarter ended June 30, 2026.
Third Fiscal Quarter 2026 Results Compared to Third Fiscal Quarter 2025 Results1
•Revenue was $139 million, an increase of 29%.
•Gross profit margin was 64.8%, an increase of 130 basis points.
•Operating margin was 16.5%, an increase of 260 basis points.
•Net income was $16 million, an increase of 54%.
•Net income per diluted share was $0.40, an increase of 48%.
•Adjusted net income was $29 million, an increase of 50%.
•Adjusted net income per diluted share was $0.75, an increase of 47%.
•Adjusted EBITDA was $40 million, an increase of 47%.
•Annualized Recurring Revenue ("ARR") was $191 million at quarter end, an increase of 52%.
(1) Fiscal 2026 results include the results of Jolt Software, Inc. ("Jolt") for the full quarter and nine-month period and Particle Industries, Inc. ("Particle") following the January 2026 acquisition date. Fiscal 2025 results include Jolt for the period following the August acquisition date and do not include Particle.
Reconciliations of non-GAAP financial measures to their closest GAAP analogs appear at the end of this release, as well as a discussion of recent changes to the method of calculating adjusted net income and adjusted net income per share.
"Digi set new records for revenue, end of quarter ARR, and profit in our fiscal third quarter," stated Ron Konezny, President and CEO. "Growth in ARR reflects achieving ROI for our customers through remote presence and control over their mission-critical and business-critical assets. Strong execution across the Company is creating operating leverage. Cash generation remained strong in the quarter, further strengthening our balance sheet and enhancing our acquisition flywheel."
| Digi International Reports Third Fiscal Quarter 2026 Results | ||||||||||||||
Additional Financial Highlights
•Our outstanding debt as of the end of the third quarter was $109 million and our cash and cash equivalents balance was $28 million, resulting in a debt net of cash and cash equivalents of $81 million.
•Cash flow from operations was $33 million in the third quarter of fiscal 2026, compared to $24 million in the third quarter of fiscal 2025. This change was driven primarily by a decrease in deferred income tax benefits, relating to accelerated utilization of tax assets caused by the One Big Beautiful Bill Act.
Segment Results
IoT Product & Services
The segment's third fiscal quarter 2026 revenue of $100 million increased 25% compared to the same period in the prior fiscal year. This consisted of a $12.4 million increase in one-time sales and $7.4 million of recurring revenue growth, with no material impact from pricing. A significant majority of the increase in revenue was driven by organic growth from increased customer demand and supported by the Particle acquisition. ARR as of the end of the third fiscal quarter was $60 million, an increase of 100% from the end of the third fiscal quarter of 2025. This increase was driven primarily by the acquisition of Particle and supported by growth in the subscription base across remote management platforms, extended warranty offerings and technical support. Operating margin increased 160 basis points to 16.8% of revenue for the third fiscal quarter of 2026, was primarily due to heightened inventory-related costs in the prior year that did not repeat and improved operating expense efficiencies as volume expanded at a greater rate than operating expenses.
IoT Solutions
The segment's third fiscal quarter 2026 revenue of $39 million increased 41%, as compared to the same period in the prior fiscal year. The increase consisted of an $8.9 million increase in recurring revenue and a $2.5 million increase in one-time sales, with the significant majority of both driven by the Jolt acquisition. ARR as of the end of the third fiscal quarter was $131 million, an increase of 36% from the end of the third fiscal quarter of 2025, driven by the acquisition of Jolt, as well as growth in our existing Solutions businesses. Operating margins increased 570 basis points to 15.7% in the third fiscal quarter of 2026 compared to the prior fiscal year. This increase was the result of improved operating expense efficiencies as volume expanded at a greater rate than operating expenses.
Capital Allocation Strategy
We intend to continue to deleverage the Company's balance sheet.
Acquisitions remain a top capital priority for Digi as reflected by our acquisition of Particle announced on January 27.
We will continue to be disciplined in our approach and act when we believe an opportunity is appropriate to execute in the context of prevailing market conditions.
2
| Digi International Reports Third Fiscal Quarter 2026 Results | ||||||||||||||
Fourth Fiscal Quarter & Full Year Fiscal 2026 Guidance
The shift toward software-driven connected operations continues to generate durable demand for hardware-enabled software solutions that support our customers' most critical business needs. Legacy "set it and forget it" infrastructure increasingly fails to meet the operational, regulatory, and competitive demands organizations face today. Customers across industrial, infrastructure, and enterprise markets are prioritizing connectivity, intelligence at the edge, and software capabilities as fundamental enablers of their strategic roadmaps. With industrial activity strengthening broadly and investment accelerating across automation, energy, and data infrastructure, customers are treating these capabilities as essential infrastructure rather than discretionary spending. Digi is well-positioned to capture that demand, even as we manage an evolving global trade framework and rising component costs — most notably memory — through disciplined pricing, supply-chain agility, and the resilience of our recurring revenue model.
Our focus is on solutions that generate recurring revenue streams and create compounding value for customers well beyond the initial device purchase. The performance we are reporting today, and our raised outlook for the year, reflects the benefits of this model, which insulates our margin structure in ways purely hardware-dependent businesses cannot match. ARR growth, margin expansion, and customer retention trends all reinforce our confidence in achieving $200 million in both ARR and Adjusted EBITDA within our targeted time horizon. Strategic acquisitions aligned with these objectives remain a tool to accelerate our path.
For fiscal 2026, we now anticipate ARR growth of at least 27% versus fiscal 2025, up from our prior guidance of growth of 25%. Revenue is estimated to be $529 million to $533 million for fiscal 2026, representing growth of 23-24% versus fiscal 2025, up from our prior guidance of growth of 20-22%. Adjusted EBITDA is estimated to be $146.0 million to $147.5 million, representing growth of 35-36% versus fiscal 2025, up from our prior guidance of growth of 23-26%.
For the fourth fiscal quarter, revenues are estimated to be $138 million to $142 million. Adjusted EBITDA is estimated to be between $40.0 and $41.5 million. Beginning in fiscal 2026, our adjusted net income per diluted share metric includes interest expense. Prior period figures have been recast for comparability. Adjusted net income per diluted share is anticipated to be between $0.75 and $0.78 per diluted share, assuming a weighted average diluted share count of 39.1 million. This includes an expected impact from interest between $0.02 and $0.03 per diluted share.
We provide guidance or longer-term targets for Adjusted net income per share as well as Adjusted EBITDA targets on a non-GAAP basis. We do not reconcile these items to their most comparable U.S. GAAP measure as it is not possible to predict without unreasonable efforts numerous items that include but are not limited to the impact of foreign exchange translation, restructuring, interest and certain tax-related events. Given the uncertainty, any of these items could have a significant impact on U.S. GAAP results.
Third Fiscal Quarter 2026 Video Conference Call Details
As announced on July 7, 2026, Digi will discuss its third fiscal quarter results on a video conference call on Wednesday, August 5, 2026 at approximately 5:00 p.m. ET (4:00 p.m. CT). The call will be hosted by Ron Konezny, President and Chief Executive Officer and Jamie Loch, Chief Financial Officer.
Participants may register for the video conference call at: https://register-conf.media-server.com/register/BI31bab22d020441949bd463d2db180804. Once registration is completed, participants will be provided a dial in number and passcode to access the call. All participants are asked to dial-in 15 minutes prior to the start time.
Participants may access a live webcast of the video conference call through the investor relations section of Digi’s website, https://digi.gcs-web.com/ or the hosting website at: https://edge.media-server.com/mmc/p/nmm55mxb/.
A replay will be available within approximately two hours after the completion of the call for approximately one year. You may access the replay via webcast through the investor relations section of Digi’s website.
A copy of this earnings release can be accessed through the financial releases page of the investor relations section of Digi's website at www.digi.com.
For more news and information on us, please visit www.digi.com/aboutus/investorrelations.
About Digi International
Digi International Inc. (Nasdaq: DGII) is a leading global provider of IoT connectivity products, services and solutions. We help our customers create next-generation connected products and deploy and manage critical communications
3
| Digi International Reports Third Fiscal Quarter 2026 Results | ||||||||||||||
infrastructures in demanding environments with high levels of security and reliability. Founded in 1985, we’ve helped our customers connect over 100 million things and growing. For more information, visit Digi's website at www.digi.com.
Forward-Looking Statements
This press release contains "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, 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," "continue," "estimate," "expect," "intend," "may," "remain," "plan," "potential," "project," "should," or "will" 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, including but not limited to expectations regarding the Company’s profitability and net cash position, inventory levels, perceived marketplace opportunities, debt repayments, attributions of actual or potential acquisitions 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 our ability to realize synergies and operating benefits from completed acquisitions (like our recent acquisitions of Jolt completed in August 2025, and Particle completed in January 2026), ongoing and varying inflationary and deflationary pressures around the world and the monetary, fiscal and trade policies of governments globally as well as present and ongoing concerns about a potential economic slowdown, the potential for longer than expected sales cycles, the ability of companies like us to operate a global business in such conditions as well as negative effects on product demand and the financial solvency of customers and suppliers in such conditions, risks related to ongoing supply chain challenges, regulatory risks that include, but are not limited to, the potential expansion of tariffs and potential changes to regulations impacting the functionality or compliance of our products, risks related to cybersecurity, data breaches and data privacy, risks arising from military conflicts such as those in Ukraine, the Middle East,and geopolitical tensions including those involving China and Taiwan, the highly competitive market in which we operate, 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 defend or settle satisfactorily any litigation, 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, 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, those set forth in Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended September 30, 2025, and any other subsequent 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. Except to the extent required by law, we do not undertake, and expressly disclaim, any intent or obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
4
| Digi International Reports Third Fiscal Quarter 2026 Results | ||||||||||||||
Presentation of Non-GAAP Financial Measures
This release includes adjusted net income, adjusted net income per diluted share and Adjusted EBITDA (defined below), each of which is a non-GAAP measure.
During the first fiscal quarter of 2026, Digi modified its method of calculating adjusted net income and adjusted net income per share to include the impact of interest expense. This change was primarily driven by the continued use of financing by the Company to fund cash flow needs and therefore including the recurring nature of interest presents a better metric by which management believes provides a more representative view of operating performance and cash-generating capability. Accordingly, we evaluated the impact of this change on prior-period disclosures and have recast adjusted net income and adjusted net income per share for all periods to conform to this presentation.
We understand that there are material limitations on the use of non-GAAP measures. Non-GAAP measures are not substitutes for GAAP measures, such as net income, for the purpose of analyzing financial performance. The disclosure of these measures does not reflect all charges and gains that actually were recognized by Digi. These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, generally accepted accounting principles 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 and Adjusted EBITDA Margin do 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 and acquisition-related expenses related to acquisitions 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 and restructuring charges and reversals 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 items reflected in the Condensed Consolidated Statements of Operations. We believe that presenting Adjusted EBITDA as a percentage of revenue (i.e., Adjusted EBITDA Margin) is useful because it provides a reliable and consistent approach to measuring our performance year over year and in assessing 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.
5
| Digi International Reports Third Fiscal Quarter 2026 Results | ||||||||||||||
Investor Contact:
| Rob Bennett | ||||||||
| Investor Relations | ||||||||
| Digi International | ||||||||
| 952-912-3524 | ||||||||
| Email: rob.bennett@digi.com | ||||||||
6
| Digi International Reports Third Fiscal Quarter 2026 Results | ||||||||||||||
Digi International Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
| Three months ended June 30, | Nine months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | 138,670 | $ | 107,514 | $ | 391,875 | $ | 315,883 | |||||||||||||||
| Cost of sales | 48,744 | 39,246 | 141,883 | 118,284 | |||||||||||||||||||
| Gross profit | 89,926 | 68,268 | 249,992 | 197,599 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | 29,061 | 23,019 | 82,564 | 66,817 | |||||||||||||||||||
| Research and development | 20,325 | 16,227 | 56,759 | 46,579 | |||||||||||||||||||
| General and administrative | 17,645 | 14,099 | 54,375 | 42,194 | |||||||||||||||||||
| Operating expenses | 67,031 | 53,345 | 193,698 | 155,590 | |||||||||||||||||||
| Operating income | 22,895 | 14,923 | 56,294 | 42,009 | |||||||||||||||||||
| Other expense, net | (1,637) | (963) | (6,208) | (4,605) | |||||||||||||||||||
| Income before income taxes | 21,258 | 13,960 | 50,086 | 37,404 | |||||||||||||||||||
| Income tax provision | 5,518 | 3,717 | 11,332 | 6,581 | |||||||||||||||||||
| Net income | $ | 15,740 | $ | 10,243 | $ | 38,754 | $ | 30,823 | |||||||||||||||
| Net income per common share: | |||||||||||||||||||||||
| Basic | $ | 0.42 | $ | 0.28 | $ | 1.03 | $ | 0.84 | |||||||||||||||
| Diluted | $ | 0.40 | $ | 0.27 | $ | 1.00 | $ | 0.82 | |||||||||||||||
| Weighted average common shares: | |||||||||||||||||||||||
| Basic | 37,776 | 37,073 | 37,588 | 36,902 | |||||||||||||||||||
| Diluted | 38,919 | 37,653 | 38,646 | 37,623 | |||||||||||||||||||
7
| Digi International Reports Third Fiscal Quarter 2026 Results | ||||||||||||||
Digi International Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| June 30, 2026 | September 30, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 27,972 | $ | 21,902 | |||||||
| Accounts receivable, net | 62,787 | 63,453 | |||||||||
| Inventories | 45,010 | 38,911 | |||||||||
| Income taxes receivable | 3,824 | 1,875 | |||||||||
| Prepaid expenses and other current assets | 5,669 | 4,558 | |||||||||
| Total current assets | 145,262 | 130,699 | |||||||||
| Non-current assets | 819,089 | 791,947 | |||||||||
| Total assets | $ | 964,351 | $ | 922,646 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | 35,099 | 35,871 | |||||||||
| Other current liabilities | 93,592 | 71,939 | |||||||||
| Total current liabilities | 128,691 | 107,810 | |||||||||
| Long-term debt | 108,130 | 159,152 | |||||||||
| Other non-current liabilities | 42,377 | 19,607 | |||||||||
| Non-current liabilities | 150,507 | 178,759 | |||||||||
| Total liabilities | 279,198 | 286,569 | |||||||||
| Total stockholders’ equity | 685,153 | 636,077 | |||||||||
| Total liabilities and stockholders’ equity | $ | 964,351 | $ | 922,646 | |||||||
Digi International Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Nine months ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net cash provided by operating activities | $ | 110,419 | $ | 79,958 | |||||||
| Net cash used in investing activities | (50,568) | (2,148) | |||||||||
| Net cash used in financing activities | (53,553) | (85,291) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (228) | 75 | |||||||||
| Net increase (decrease) in cash and cash equivalents | 6,070 | (7,406) | |||||||||
| Cash and cash equivalents, beginning of period | 21,902 | 27,510 | |||||||||
| Cash and cash equivalents, end of period | $ | 27,972 | $ | 20,104 | |||||||
8
| Digi International Reports Third Fiscal Quarter 2026 Results | ||||||||||||||
Non-GAAP Financial Measures
TABLE 1
Reconciliation of Net Income to Adjusted EBITDA
(In thousands)
| Three months ended June 30, | Nine months ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| % of total revenue | % of total revenue | % of total revenue | % of total revenue | ||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 138,670 | 100.0 | % | $ | 107,514 | 100.0 | % | $ | 391,875 | 100.0 | % | $ | 315,883 | 100.0 | % | |||||||||||||||||||||||||||||||
| Net income | $ | 15,740 | $ | 10,243 | $ | 38,754 | $ | 30,823 | |||||||||||||||||||||||||||||||||||||||
| Interest expense, net | 1,606 | 932 | 6,129 | 4,562 | |||||||||||||||||||||||||||||||||||||||||||
| Income tax provision | 5,518 | 3,717 | 11,332 | 6,581 | |||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 11,470 | 8,301 | 32,997 | 24,963 | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 4,917 | 3,874 | 13,411 | 11,378 | |||||||||||||||||||||||||||||||||||||||||||
| Loss (gain) on asset sale | 50 | (181) | (150) | (181) | |||||||||||||||||||||||||||||||||||||||||||
| Restructuring charge | 274 | 76 | 772 | 460 | |||||||||||||||||||||||||||||||||||||||||||
| Acquisition expense, net | 813 | 597 | 3,119 | 597 | |||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 40,388 | 29.1 | % | $ | 27,559 | 25.6 | % | $ | 106,364 | 27.1 | % | $ | 79,183 | 25.1 | % | |||||||||||||||||||||||||||||||
TABLE 2
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, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Net income and net income per diluted share | $ | 15,740 | $ | 0.40 | $ | 10,243 | $ | 0.27 | $ | 38,754 | $ | 1.00 | $ | 30,823 | $ | 0.82 | |||||||||||||||||||||||||||||||
| Amortization | 8,166 | 0.21 | 5,241 | 0.14 | 23,243 | 0.60 | 16,241 | 0.43 | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 4,917 | 0.13 | 3,874 | 0.10 | 13,411 | 0.35 | 11,378 | 0.30 | |||||||||||||||||||||||||||||||||||||||
| Other non-operating income | 31 | — | 31 | — | 79 | — | 43 | — | |||||||||||||||||||||||||||||||||||||||
| Acquisition expense, net | 813 | 0.02 | 597 | 0.02 | 3,119 | 0.08 | 597 | 0.02 | |||||||||||||||||||||||||||||||||||||||
| Loss (gain) on asset sale | 50 | — | (181) | — | (150) | — | (181) | — | |||||||||||||||||||||||||||||||||||||||
| Restructuring charge | 274 | 0.01 | 76 | — | 772 | 0.02 | 460 | 0.01 | |||||||||||||||||||||||||||||||||||||||
Tax effect from the above adjustments (1) | (853) | (0.02) | (1,339) | (0.04) | (3,930) | (0.10) | (5,585) | (0.15) | |||||||||||||||||||||||||||||||||||||||
Discrete tax benefits (2) | (22) | — | 809 | 0.02 | (1,040) | (0.03) | 298 | 0.01 | |||||||||||||||||||||||||||||||||||||||
Adjusted net income and adjusted net income per diluted share (3) | $ | 29,116 | $ | 0.75 | $ | 19,351 | $ | 0.51 | $ | 74,258 | $ | 1.92 | $ | 54,074 | $ | 1.44 | |||||||||||||||||||||||||||||||
| Diluted weighted average common shares | 38,919 | 37,653 | 38,646 | 37,623 | |||||||||||||||||||||||||||||||||||||||||||
(1)The tax effect from the above adjustments assumes an estimated effective tax rate of 18.0% for fiscal 2026 and 2025 based on adjusted net income.
(2)For the three and nine months ended June 30, 2026 and 2025 discrete tax benefits are a result of changes in excess tax benefits recognized on stock compensation.
(3)Adjusted net income per diluted share may not add due to the use of rounded numbers.
9
Earnings Presentation Fiscal Third Quarter 2026 August 5, 2026 Nasdaq: DGII
Safe Harbor This presentation includes forward looking statements. These statements reflect our expectations about future operating and financial performance and speak only as of the date of this presentation. Actual results, performance, or developments could differ materially from those expressed or implied by the forward looking statements contained in this presentation as a result of known and unknown risks, uncertainties, and other factors including those identified in the Company’s most recent Form 10‐K and other subsequent periodic filings with the Securities and Exchange Commission.
Digi Drives Value through Remote Presence
Digi's IIoT Solution Value Proposition A Complete, Business and Mission-Critical Industrial IoT Stack Security • Zero-trust device authentication • Products with end-to- end encrypted communications • Products with automated vulnerability management • Products with FIPS 140-2 certified hardware Reliability • 5-nines uptime SLAs • Failover & redundant connectivity • 40-year heritage of rugged design • Carrier-grade hardware platforms Scalability • Manage millions of edge devices • Cloud-native, multi- tenant platform • API-first architecture • Supports SMB to Fortune 50 Ease of Use • Zero-touch provisioning (ZTP) • Intuitive cloud dashboards • Plug-and-play hardware • Responsive 24/7 expert support Digi delivers complete IIoT solutions — hardware + connectivity + software + services
DANI – AI Assistant Inside Digi Remote Manager
New Records* Set With Q3 FY2026 Results Fiscal 2026 results include the results of Jolt for the full nine-month period and Particle following the January 2026 acquisition date GAAP Results $139M* Revenue +29% YoY 64.8%* Gross Margin +130 basis points YoY $33M Cash Flow from Operations +38% YoY Non-GAAP Results $191M* Annualized Recurring Revenue (ARR) +52% YoY 29.1%* A-EBITDA Margin Quarterly Record $40M* Adjusted EBITDA (A-EBITDA) +47% YoY For a reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin to their closest GAAP measures see the Company’s FQ3 2026 Earnings Release. Annualized Recurring Revenue (ARR) is a non-GAAP operational metric for which there is no comparable GAAP measure; a description of how the Company calculates ARR can be found in the Company’s filings under the Securities Exchange Act of 1934.
Raising Guidance FQ4 & Full Year 2026 | YoY growth at midpoint | All figures in $M except Adjusted EPS FQ4 2026 Guidance vs FQ4 2025 Actuals Full Year 2026 Guidance vs Full Year 2025 Actuals Metric Low High Prior Year YoY (mid) Metric Low High Prior Year YoY (mid) Revenue $138 LOW $142 HIGH $114.3M prior year +22.5% Adj. EBITDA $40 LOW $41.5 HIGH $29.2M prior year +39.6% Adj. EPS $0.75 LOW $0.78 HIGH $0.56 prior year +36.6% ARR At Least 27% YoY growth FY25 base: $152M Revenue $529 LOW $533 HIGH $430.2M prior year +23.5% Adj. EBITDA $146 LOW $147.5 HIGH $108.4M prior year +35.5% Adj. EPS (implied) $2.67 LOW $2.70 HIGH $2.10 prior year +27.9% YoY growth calculated at midpoint of guidance range vs prior year actuals. | All figures in $M except Adjusted EPS | Source: Digi International FQ3 2026 Earnings Release
Five-Year Goals: Marching to $200M ARR | $200M A-EBITDA Goals set at the beginning of Fiscal 2024: $200M ARR and $200M Adjusted EBITDA within 5 years 116 152 193+ FY24 FY25 FY26E Annualized Recurring Revenue (ARR) 97 108 147 FY24 FY25 FY26E Adjusted EBITDA (A-EBITDA) FY26E based on company guidance of at least 27% ARR growth and the midpoint of A-EBITDA guidance including Particle and Jolt acquisitions. For a reconciliation of Adjusted EBITDA to its closest GAAP measure see the Company’s FQ3 2026 Earnings Release. ARR is a non-GAAP operational metric for which there is no comparable GAAP measure; a description of how the Company calculates ARR can be found in the Company’s filings under the Securities Exchange Act of 1934. 23% CAGR29% CAGR $ m ill io ns $ m ill io ns
Digi's Flywheel: Acquire → Generate → Compound DIGI FLYWHEEL 1. ACQUIRE Accretive M&A Using Debt Identify IIoT companies with strong ARR and A-EBITDA potential. Use debt financing to fund acquisitions. 2. INTEGRATE Build ARR & A-EBITDA Cross-sell solutions, expand attach rates, drive subscription growth across new customer base. 3. CASH FLOW Strong Free Cash Flow $33M operating cash flow in Q3 FY26 . Capital-light model, <1% of total revenue, with high recurring gross margins. 4. PAY DOWN DEBT Reduce Leverage, Repeat Cycle Deploy cash flow to retire acquisition debt, restoring capacity for the next acquisition. Recent Acquisitions: Jolt Software (FY25) · Particle (FY26) | FY26 YTD Operating Cash Flow: $110M | Debt Net of Cash: ~$81M
