Digi International (NASDAQ:DGII) Posts Quarterly Earnings Results, Beats Estimates By $0.04 EPS

Key Points

• Digi beat Q2 expectations with $0.62 EPS (vs. $0.58 est.) and $131M revenue (up 25% YoY), while reporting record profitability metrics — a 64% gross margin, a record adjusted EBITDA margin of 26.3%, and a quarterly record operating cash flow of $41M.
• Annual recurring revenue momentum was strong, with non‑GAAP ARR at $184M (up 50% YoY); management guided to roughly 25% ARR growth for the year (year‑end ARR ~$190M) and reaffirmed long‑term goals of $200M ARR and $200M adjusted EBITDA.
• Despite the upside, the company warned of near‑term margin variability from high memory pricing, freight pressures and channel mix effects, and set Q3 2026 EPS guidance at $0.650–$0.680.

Digi International (NASDAQ:DGII - Get Free Report) issued its earnings results on Wednesday. The technology company reported $0.62 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.58 by $0.04, FiscalAI reports. Digi International had a net margin of 9.45% and a return on equity of 10.93%. The firm had revenue of $130.74 million during the quarter, compared to analysts' expectations of $125.03 million. During the same quarter last year, the company posted $0.51 earnings per share. The firm's revenue was up 25.1% compared to the same quarter last year. Digi International updated its Q3 2026 guidance to 0.650-0.680 EPS.

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

• Q2 records — Digi reported a quarterly record $131 million revenue (up 25% YoY), an all-time high gross margin of 64%, and a record adjusted EBITDA margin of 26.3%.
• ARR momentum and guidance — Non-GAAP ARR was $184 million (up 50% YoY) and management guided to ~25% ARR growth for the year, projecting year-end ARR of about $190 million while reaffirming the long-term goal of reaching $200M ARR and $200M adjusted EBITDA.
• Strong cash generation — Operating cash flow was a quarterly record of $41 million (up 58% YoY), with cash conversion exceeding adjusted EBITDA and management using cash to pay down debt and fund acquisitions.
• Supply-chain and margin uncertainty — Management cited high memory pricing, freight cost pressure from geopolitical events, low-end channel inventories and potential Q4 mix effects that could create short-term margin variability despite long-term margin expansion expectations.

Digi International Stock Performance

DGII stock traded up $0.41 during midday trading on Wednesday, hitting $58.85. 263,431 shares of the stock traded hands, compared to its average volume of 257,145. The firm has a market cap of $2.21 billion, a P/E ratio of 52.54 and a beta of 0.94. The company has a debt-to-equity ratio of 0.21, a current ratio of 1.24 and a quick ratio of 0.90. The stock's fifty day simple moving average is $51.81 and its 200-day simple moving average is $45.81. Digi International has a 1-year low of $27.71 and a 1-year high of $59.40.

Analyst Ratings Changes

Several research analysts recently issued reports on the stock. Zacks Research raised shares of Digi International from a "strong sell" rating to a "hold" rating in a report on Monday, April 6th. Wall Street Zen raised shares of Digi International from a "buy" rating to a "strong-buy" rating in a report on Saturday, January 31st. Weiss Ratings reissued a "hold (c+)" rating on shares of Digi International in a report on Monday, March 23rd. Finally, Craig Hallum reissued a "buy" rating and set a $50.00 target price on shares of Digi International in a report on Thursday, February 5th. Four equities research analysts have rated the stock with a Buy rating and three have assigned a Hold rating to the company. According to data from MarketBeat, Digi International presently has a consensus rating of "Moderate Buy" and an average target price of $49.80.

Insider Activity at Digi International

In related news, VP David H. Sampsell sold 5,000 shares of the firm's stock in a transaction on Tuesday, February 10th. The shares were sold at an average price of $45.74, for a total transaction of $228,700.00. Following the sale, the vice president owned 24,740 shares in the company, valued at approximately $1,131,607.60. This trade represents a 16.81% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, Director Satbir Khanuja sold 6,000 shares of the firm's stock in a transaction on Tuesday, February 10th. The shares were sold at an average price of $46.00, for a total transaction of $276,000.00. Following the sale, the director owned 85,298 shares in the company, valued at approximately $3,923,708. This represents a 6.57% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Over the last quarter, insiders have sold 13,455 shares of company stock worth $616,357. 3.40% of the stock is owned by company insiders.

Institutional Trading of Digi International

Several hedge funds and other institutional investors have recently added to or reduced their stakes in DGII. Lazard Asset Management LLC grew its position 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 valued at $58,000 after purchasing an additional 339 shares during the period. Russell Investments Group Ltd. grew its position in shares of Digi International by 1,530.9% in the third quarter. Russell Investments Group Ltd. now owns 3,376 shares of the technology company's stock valued at $123,000 after purchasing an additional 3,169 shares during the period. Brooklyn Investment Group grew its position in shares of Digi International by 3,880.3% in the third quarter. Brooklyn Investment Group now owns 5,652 shares of the technology company's stock valued at $206,000 after purchasing an additional 5,510 shares during the period. Millennium Management LLC acquired a new stake in shares of Digi International in the third quarter valued at about $292,000. Finally, Verity Asset Management Inc. acquired a new stake in shares of Digi International in the third quarter valued at about $464,000. Institutional investors and hedge funds own 95.90% of the company's stock.

Digi International Company Profile

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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