Digi International (NASDAQ:DGII) Announces Quarterly Earnings Results, Beats Estimates By $0.09 EPS

Key Points

• Digi International beat quarterly expectations: EPS was $0.75 versus the $0.66 consensus, while revenue reached $138.67 million, up 29% year over year and above estimates of $132.57 million.
• Management raised fiscal 2026 guidance to $529 million-$533 million in revenue, $2.67-$2.70 in adjusted EPS and at least 27% ARR growth; Q4 EPS guidance was updated to $0.75-$0.78.
• Recurring revenue and financial strength improved: ARR reached a record $191 million, adjusted EBITDA rose to $40 million with a 29.1% margin, operating cash flow increased 38% to $33 million, and net debt fell to $81 million.

Digi International (NASDAQ:DGII - Get Free Report) released its quarterly earnings results on Wednesday. The technology company reported $0.75 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.66 by $0.09, FiscalAI reports. The business had revenue of $138.67 million during the quarter, compared to analyst estimates of $132.57 million. Digi International had a return on equity of 11.28% and a net margin of 9.10%.Digi International's revenue for the quarter was up 29.0% on a year-over-year basis. During the same quarter in the previous year, the company posted $0.53 earnings per share. Digi International updated its Q4 2026 guidance to 0.750-0.780 EPS.

Here are the key takeaways from Digi International's conference call:

• Record Q3 results: Revenue reached $139 million, up 29% year over year, while adjusted EBITDA rose to $40 million with a record 29.1% margin. Cash flow from operations increased 38% to $33 million.
• Full-year guidance was raised: Digi now expects fiscal 2026 revenue of $529 million to $533 million, adjusted EBITDA of $146 million to $147.5 million, adjusted EPS of $2.67 to $2.70, and ARR growth of at least 27%.
• Recurring revenue and balance-sheet trends remain strong: ARR reached a record $191 million, with management expecting to approach $193 million, while net debt declined to $81 million and leverage fell below one times.
• Management cited improving sales-cycle times, pipeline growth, AI-related infrastructure demand, and supply-chain urgency as business drivers, but said hyperscaler opportunities for Opengear remain difficult to predict and were excluded from guidance. Digi is also introducing its DANI AI tool within Digi Remote Manager, initially to improve customer adoption and support rather than generate separate revenue.

Digi International Price Performance

Shares of Digi International stock traded up $0.61 on Wednesday, hitting $72.75. 335,909 shares of the company traded hands, compared to its average volume of 358,850. The stock has a market capitalization of $2.74 billion, a P/E ratio of 64.38 and a beta of 0.97. The company has a debt-to-equity ratio of 0.21, a quick ratio of 0.77 and a current ratio of 1.11. Digi International has a 52 week low of $30.69 and a 52 week high of $76.41. The business has a 50-day simple moving average of $68.60 and a 200 day simple moving average of $57.86.

Insider Activity at Digi International

In related news, VP Terrence G. Schneider sold 14,182 shares of the company's stock in a transaction on Monday, May 11th. The shares were sold at an average price of $65.61, for a total transaction of $930,481.02. Following the completion of the transaction, the vice president owned 26,759 shares in the company, valued at approximately $1,755,657.99. This represents a 34.64% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, VP James E. Freeland sold 450 shares of the firm's stock in a transaction on Tuesday, May 26th. The shares were sold at an average price of $68.00, for a total transaction of $30,600.00. Following the transaction, the vice president directly owned 19,219 shares of the company's stock, valued at $1,306,892. The trade was a 2.29% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Insiders have sold a total of 121,008 shares of company stock worth $8,320,222 in the last three months. Insiders own 3.40% of the company's stock.

Institutional Inflows and Outflows

Institutional investors have recently made changes to their positions in the company. Lazard Asset Management LLC increased its holdings in shares of Digi International by 25.1% in the second quarter. Lazard Asset Management LLC now owns 1,690 shares of the technology company's stock worth $58,000 after purchasing an additional 339 shares during the last quarter. Russell Investments Group Ltd. boosted its stake in Digi International by 1,530.9% during the third quarter. Russell Investments Group Ltd. now owns 3,376 shares of the technology company's stock valued at $123,000 after buying an additional 3,169 shares during the last quarter. Brooklyn Investment Group grew its holdings in Digi International by 3,880.3% during the 3rd quarter. Brooklyn Investment Group now owns 5,652 shares of the technology company's stock valued at $206,000 after buying an additional 5,510 shares in the last quarter. Millennium Management LLC bought a new stake in Digi International in the 3rd quarter worth approximately $292,000. Finally, Verity Asset Management Inc. bought a new stake in Digi International in the 3rd quarter worth approximately $464,000. Hedge funds and other institutional investors own 95.90% of the company's stock.

Analyst Upgrades and Downgrades

Several equities analysts have weighed in on DGII shares. Piper Sandler lifted their price target on shares of Digi International from $46.00 to $63.00 and gave the company a "neutral" rating in a report on Thursday, May 7th. Roth Capital restated a "buy" rating and set a $70.00 price objective on shares of Digi International in a research report on Thursday, May 7th. Craig Hallum lifted their target price on shares of Digi International from $50.00 to $75.00 and gave the company a "buy" rating in a research note on Thursday, May 7th. Weiss Ratings raised shares of Digi International from a "hold (c)" rating to a "hold (c+)" rating in a report on Monday. Finally, Zacks Research lowered Digi International from a "strong-buy" rating to a "hold" rating in a research note on Monday. Four analysts have rated the stock with a Buy rating and three have given a Hold rating to the company's stock. According to MarketBeat.com, Digi International has an average rating of "Moderate Buy" and an average price target of $66.20.

About Digi International

Digi International Inc is a provider of Internet of Things (IoT) connectivity products and services designed to link devices to networks and applications securely. The company develops a broad range of networking hardware, including cellular and Ethernet routers, gateways, embedded modules and adaptors, as well as accessories and antennas. Digi's solutions enable businesses to deploy remote monitoring, control and automation systems across diverse industries such as transportation, utilities, healthcare, retail and industrial manufacturing.

In addition to its physical devices, Digi offers cloud-based management software and professional services that simplify device configuration, monitoring and over-the-air updates.

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