Digi International Reports Fourth Fiscal Quarter and Full Year Fiscal 2026 Results
DIGI INTERNATIONAL INC (DGII) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Digi International Reports Fourth Fiscal Quarter and Full Year Fiscal 2026 Results Record Quarterly Revenue of $143M, Record End of Quarter ARR of $197M Quarterly Cash Flow From Operations of $42M (Minneapolis, MN, November 11, 2026) - Digi International Inc. ("Digi"
How this was made
The 30-second read
Why it matters
The earnings release underscores successful integration of recent acquisitions and a robust growth trajectory, likely influencing investor sentiment in the IoT sector.
Market read
DGII's earnings beat and ARR growth could trigger a sector‑wide rally in IoT and industrial tech stocks.
What to watch
Integration risks from recent acquisitions (Jolt, Particle, upcoming DT deal) could temper near‑term earnings.
Record Q4 revenue of $143 million (up 25%) and record end-of-quarter ARR of $197 million; full-year revenue of $535 million (up 24%); fiscal 2027 guidance calls for revenue growth of 10-15%.
Q4 revenue rose 25% to $143,319 thousand, operating margin rose 400 basis points to 16.5%, GAAP diluted EPS rose 46% to $0.38, and ARR rose 30% to $197 million. Gross margin fell 20 basis points, and the Q4 operating cash flow increase is attributed by the company to deferred income tax timing.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q4 FY2026 RevenueGAAP | $143.3M | – | increase of 25% |
| Q4 FY2026 Cost of salesGAAP | $52.07M | – | – |
| Q4 FY2026 Gross profitGAAP | $91.25M | – | – |
| Q4 FY2026 Gross profit marginGAAP | 63.7% | – | decrease of 20 basis points |
| Q4 FY2026 Sales and marketing expenseGAAP | $30.47M | – | – |
| Q4 FY2026 Research and development expenseGAAP | $21.48M | – | – |
| Q4 FY2026 General and administrative expenseGAAP | $15.58M | – | – |
| Q4 FY2026 Total operating expensesGAAP | $67.54M | – | – |
| Q4 FY2026 Operating incomeGAAP | $23.71M | – | – |
| Q4 FY2026 Operating marginGAAP | 16.5% | – | increase of 400 basis points |
| Q4 FY2026 Other expense, netGAAP | −$1.27M | – | – |
| Q4 FY2026 Income before income taxesGAAP | $22.43M | – | – |
| Q4 FY2026 Income tax provisionGAAP | $7.50M | – | – |
| Q4 FY2026 Net incomeGAAP | $14.94M | – | increase of 50% |
| Q4 FY2026 Basic net income per common shareGAAP | $0.39 | – | – |
| Q4 FY2026 Diluted net income per shareGAAP | $0.38 | – | increase of 46% |
| Q4 FY2026 Adjusted net incomenon-GAAP | $30.49M | – | increase of 53% |
| Q4 FY2026 Adjusted net income per diluted sharenon-GAAP | $0.78 | – | increase of 47% |
| Q4 FY2026 Adjusted EBITDAnon-GAAP | $41.74M | – | increase of 43% |
| Q4 FY2026 Adjusted EBITDA marginnon-GAAP | 29.1% | – | – |
| Q4 FY2026 Cash flow from operationsother | $42M | – | – |
| Annualized Recurring Revenue (ARR) at fiscal year end 2026other | $197M | – | increase of 30% |
| FY2026 Revenue (full year)GAAP | $535.2M | – | increase of 24% |
| FY2026 Cost of sales (full year)GAAP | $194.0M | – | – |
| FY2026 Gross profit (full year)GAAP | $341.2M | – | – |
| FY2026 Gross profit margin (full year)GAAP | 63.8% | – | increase of 90 basis points |
| FY2026 Sales and marketing expense (full year)GAAP | $113.0M | – | – |
| FY2026 Research and development expense (full year)GAAP | $78.24M | – | – |
| FY2026 General and administrative expense (full year)GAAP | $69.96M | – | – |
| FY2026 Total operating expenses (full year)GAAP | $261.2M | – | – |
| FY2026 Operating income (full year)GAAP | $80.00M | – | – |
| FY2026 Operating margin (full year)GAAP | 14.9% | – | increase of 180 basis points |
| FY2026 Other expense, net (full year)GAAP | −$7.48M | – | – |
| FY2026 Income before income taxes (full year)GAAP | $72.52M | – | – |
| FY2026 Income tax provision (full year)GAAP | $18.83M | – | – |
| FY2026 Net income (full year)GAAP | $53.69M | – | increase of 32% |
| FY2026 Basic net income per common share (full year)GAAP | $1.42 | – | – |
| FY2026 Diluted net income per share (full year)GAAP | $1.38 | – | increase of 28% |
| FY2026 Adjusted net income (full year)non-GAAP | $104.7M | – | increase of 41% |
| FY2026 Adjusted net income per diluted share (full year)non-GAAP | $2.70 | – | increase of 38% |
| FY2026 Adjusted EBITDA (full year)non-GAAP | $148.1M | – | increase of 37% |
| FY2026 Adjusted EBITDA margin (full year)non-GAAP | 27.7% | – | – |
| FY2026 Net cash provided by operating activities (full year)GAAP | $152.9M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| IoT Products & Services, Q4 fiscal 2026Company states a $15.0 million increase in one-time sales and $7.7 million of recurring revenue growth, with no material impact from pricing. A significant majority of the increase was driven by organic growth from increased customer demand, supported by the Particle acquisition. Q4 operating margin was 18.4%, up 320 basis points, which the company attributes primarily to operating expense efficiencies as volume expanded at a rate greater than operating expenses. Segment ARR was $64 million at quarter end, an increase of 100% from the end of fiscal 2025, driven primarily by the Particle acquisition. | $105M | – | increase of 28% |
| IoT Solutions, Q4 fiscal 2026Company states a $5.4 million increase in recurring revenue and a $0.8 million increase in one-time sales, with the significant majority of both driven by the Jolt acquisition. Segment ARR was $133 million, an increase of 11% from the end of fiscal 2025, driven by organic growth across Solutions businesses. Q4 operating margin was 11.5%, up 590 basis points, which the company attributes to operating expense efficiencies as volume expanded at a greater rate than operating expenses. | $38M | – | increase of 20% |
| IoT Products & Services, fiscal 2026 (full year)Company states a $44.1 million increase in one-time sales and $22.8 million of recurring revenue growth, with no material impact from pricing. A significant majority of the increase was driven by organic growth from increased customer demand, and to a lesser degree by the Particle acquisition. Full-year operating margin was 16.0%, up 120 basis points, which the company attributes primarily to favorable mix among product lines and operating expense efficiencies. | $385M | – | increase of 21% |
| IoT Solutions, fiscal 2026 (full year)Company states a $29.8 million increase in recurring revenue and an $8.3 million increase in one-time sales, with the significant majority of both driven by the Jolt acquisition. Full-year operating margin was 12.1%, up 380 basis points, which the company attributes to operating margin efficiencies as volume expanded at a greater rate than operating expenses. | $150M | – | increase of 34% |
First fiscal quarter 2027 and full year fiscal 2027 outlook
- RevenueQ1 fiscal 2027: $140 million to $144 million. Full year fiscal 2027: growth of 10-15% versus fiscal 2026.
- NoteFull year fiscal 2027 ARR growth of at least 15% versus fiscal 2026.
- NoteQ1 fiscal 2027 Adjusted EBITDA estimated between $39.5 million and $41.0 million.
- NoteFull year fiscal 2027 Adjusted EBITDA growth of 12.5% to 17.5% versus fiscal 2026.
- NoteQ1 fiscal 2027 Adjusted net income per diluted share between $0.71 and $0.75, assuming a weighted average diluted share count of 39.5 million; includes an expected interest impact of $0.02 to $0.04 per diluted share.
- NoteCompany states it does not reconcile forward non-GAAP guidance to GAAP measures because it cannot predict items including foreign exchange translation, restructuring, interest and certain tax-related events.
Capital returns
- Definitive agreement, entered into September 30, 2026, to acquire Disruptive Technologies (DT), a Norway-based provider of advanced sensing technology, for $130 million in cash, which the company expects to fund using its existing revolving credit facility.
- Completion is subject to regulatory approval and other customary closing conditions; the company expects regulatory approval before November 30, 2026.
- The company states acquisitions remain a top capital priority.
- The release does not print any share repurchase or dividend figures.
What drove it
- Company attributes the majority of IoT Products & Services revenue growth to organic growth from increased customer demand, supported by the Particle acquisition (acquired January 2026).
- Company attributes IoT Solutions growth in Q4 and full year primarily to the Jolt acquisition, with organic ARR growth across Solutions businesses.
- Company attributes Q4 Cash flow from operations increase to deferred income tax changes from accelerated utilization of tax attributes under the One Big Beautiful Bill Act.
- Company attributes segment operating margin improvements to operating expense efficiencies as volume expanded faster than operating expenses, and for IoT Products & Services full year also to favorable product line mix.
- Company states that durable demand for hardware-enabled software and recurring revenue underpins its outlook.
Concerns
- Q4 gross profit margin was 63.7%, a decrease of 20 basis points.
- Company notes it is managing an evolving global trade framework and rising component costs, most notably memory.
- Q4 Cash flow from operations increase is attributed by the company to deferred income tax changes, a timing-related item.
- Company states the DT acquisition is expected to be funded using its existing revolving credit facility, and completion remains subject to regulatory approval.
- Fiscal 2027 revenue growth guidance of 10-15% is below the 24% full-year fiscal 2026 growth reported.
- Q4 General and administrative expense declined to $15,583 thousand from $16,700 thousand while other operating expense lines increased.
What to watch
- Regulatory approval and closing of the Disruptive Technologies acquisition, expected before November 30, 2026, and its $130 million cash price.
- Fiscal 2027 first quarter revenue of $140 million to $144 million and Adjusted EBITDA of $39.5 million to $41.0 million.
- Progress toward ARR of at least 15% growth in fiscal 2027 and the company's stated goal of approximately $200 million in ARR.
- Gross margin trend given the company's cited component cost pressures.
- Operating cash flow after the Q4 deferred tax benefit, and the level of debt following the planned revolver funding of the DT acquisition.
Balance sheet and cash flow
- Outstanding debt at end of Q4 fiscal 2026 was $69 million, cash and cash equivalents were $30 million, and debt net of cash and cash equivalents was $39 million (company-stated rounded figures).
- Balance sheet at September 30, 2026: cash and cash equivalents $29,515 thousand; long-term debt $67,198 thousand; total assets $962,464 thousand; total stockholders' equity $705,224 thousand (September 30, 2025: cash $21,902 thousand; long-term debt $159,152 thousand; total assets $922,646 thousand; stockholders' equity $636,077 thousand).
- Q4 fiscal 2026 cash flow from operations was $42 million versus $28 million in Q4 fiscal 2025. The company states this increase was driven primarily by the change in deferred income taxes, relating to accelerated utilization of tax attributes under the One Big Beautiful Bill Act.
- Full-year fiscal 2026 net cash used in investing activities was $(50,662) thousand (fiscal 2025: $(148,332) thousand); net cash used in financing activities was $(93,803) thousand (fiscal 2025: provided $34,624 thousand).
Analysis
Digi reported record fourth-quarter revenue of $143,319 thousand, up from $114,338 thousand, which the release describes as an increase of 25%. Operating income rose to $23,709 thousand from $14,281 thousand, and the release states operating margin of 16.5%, an increase of 400 basis points. GAAP net income was $14,938 thousand, up from $9,981 thousand, and diluted EPS was $0.38 against $0.26. Non-GAAP adjusted net income was $30,490 thousand and adjusted EPS $0.78, both as recast by the company to include interest expense. Adjusted EBITDA was $41,738 thousand, a 29.1% margin against 25.6% a year earlier.
The segment detail shows demand breadth and a mix of drivers. IoT Products & Services grew 28% to $105 million in the quarter, with the company citing a $15.0 million increase in one-time sales and $7.7 million of recurring revenue growth, and attributing most of the growth to organic demand supported by the Particle acquisition. IoT Solutions grew 20% to $38 million, with the significant majority of growth from the Jolt acquisition. Segment ARR was $64 million for Products & Services, up 100% from the end of fiscal 2025, and $133 million for Solutions, up 11%. Company ARR was $197 million at year end, up 30%.
Full-year fiscal 2026 revenue was $535,194 thousand, up 24%, with gross margin of 63.8% (up 90 basis points) and operating margin of 14.9% (up 180 basis points). Full-year operating income was $80,003 thousand against $56,290 thousand. Full-year GAAP diluted EPS was $1.38, up 28%, and adjusted EPS was $2.70, up 38%. Operating expenses grew 22% in dollar terms to $261,235 thousand, with general and administrative expense as the one line in the quarter that declined year over year.
Quarterly gross margin was 63.7%, a decrease of 20 basis points, and the release does not print the prior-year quarterly gross margin level, so the size of the change beyond the stated 20 basis points is not visible from the document. Cash flow from operations in Q4 was $42 million against $28 million, which the company attributes primarily to deferred income tax changes linked to accelerated use of tax attributes under the One Big Beautiful Bill Act. Full-year operating cash flow was $152,904 thousand against $107,959 thousand. Debt at year end was $69 million and cash $30 million, against the balance sheet long-term debt of $67,198 thousand and cash of $29,515 thousand.
Capital allocation is focused on the pending $130 million cash acquisition of Disruptive Technologies, signed September 30, 2026 and expected to be funded through the revolving credit facility, with regulatory approval expected before November 30, 2026. The release prints no share repurchase or dividend figures. Fiscal 2027 guidance calls for first-quarter revenue of $140 million to $144 million, Adjusted EBITDA of $39.5 million to $41.0 million and Adjusted EPS of $0.71 to $0.75, and for full-year revenue growth of 10-15%, ARR growth of at least 15% and Adjusted EBITDA growth of 12.5% to 17.5%. The release provides no prior guidance to compare against, so no prior-outlook verdicts are given.
Management, verbatim
Fiscal 2026 was a defining year for Digi, and it reflects the consistent execution we deliver for our customers,
Ron Konezny, President and Chief Executive Officer
As we enter fiscal 2027, we are excited to be approaching $200M in ARR, one of the two five-year goals that we set at the start of fiscal 2024.
Ron Konezny, President and Chief Executive Officer
Not in the filing
stated, not guessed- Prior-year and prior-quarter gross profit margin levels (only the change in basis points is printed for Q4 and full year).
- Prior-year Q4 and full-year operating margin levels (only the change in basis points is printed).
- Prior-year ARR at September 30, 2025 in company-wide terms (only the 30% growth is printed).
- Prior-year segment revenue for Q4 fiscal 2025 in dollars (only percentage growth is printed).
- Segment ARR for IoT Products & Services and IoT Solutions in prior periods beyond the stated percentage changes.
- Prior-quarter (Q3 fiscal 2026) revenue and other sequential comparisons.
- Full-year fiscal 2026 Adjusted EBITDA and gross margin prior-year levels as stated percentages (Adjusted EBITDA margin prior is printed in the table; gross margin prior level is not).
- Share repurchase and dividend figures (not printed in the release).
- Free cash flow (not printed).
- Consensus estimates and share price reaction (not provided in the documents).
- Net debt prior-year figure in company-stated terms (only the current period figure is printed).
- Fiscal 2027 gross margin, operating expense, and tax rate guidance (not provided).
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Digi International (Nasdaq: DGII) provides IoT connectivity products and services. The company recently acquired Jolt Software and Particle Industries, and announced a pending acquisition of Disruptive Technologies.
Ticker impact
DGII disclosed Q4 FY2026 revenue of $143M (+25% YoY) and full-year FY2026 revenue of $535M (+24% YoY), with strong margin expansion and ARR growth.
likely upward pressure as investors price in higher revenue and margin expansion
The results exceed prior expectations, showing double‑digit growth and improved profitability, which typically drives buying interest.
Market effects
IoT connectivity sector may see broader rally on DGII's strong performance.
U.S. tech stocks could benefit from the positive earnings surprise.
Highlights growing demand for industrial IoT solutions worldwide.
Counterpoint
If the market has already priced in the growth, the stock may face short‑term profit taking.
Key entities
- companyDigi International Inc.
Provider of business and mission‑critical IoT connectivity solutions.
- companyDisruptive Technologies
Norway‑based sensor technology firm slated for acquisition.
