Digi International — Fourth Fiscal Quarter 2026 Earnings Summary

Financial Performance:

• Q4 2026 revenue was $143 million, a 25% increase year-over-year (YoY); full-year 2026 revenue was $535 million, a 24% increase YoY.
• Q4 2026 gross profit margin was 63.7% (down 20 basis points YoY); full-year 2026 gross profit margin was 63.8% (up 90 basis points YoY).
• Q4 2026 operating margin was 16.5% (up 400 basis points YoY); full-year 2026 operating margin was 14.9% (up 180 basis points YoY).
• Q4 2026 net income was $15 million, a 50% increase YoY; full-year 2026 net income was $54 million, a 32% increase YoY.
• Q4 2026 net income per diluted share was $0.38, a 46% increase YoY; full-year 2026 net income per diluted share was $1.38, a 28% increase YoY.
• Q4 2026 adjusted net income was $30 million, a 53% increase YoY; full-year 2026 adjusted net income was $105 million, a 41% increase YoY.
• Q4 2026 adjusted net income per diluted share was $0.78, a 47% increase YoY; full-year 2026 adjusted net income per diluted share was $2.70, a 38% increase YoY.
• Q4 2026 adjusted EBITDA was $42 million, a 43% increase YoY; full-year 2026 adjusted EBITDA was $148 million, a 37% increase YoY.
• Q4 2026 cash flow from operations was $42 million, compared to $28 million in Q4 2025.
• Annualized Recurring Revenue (ARR) ended Q4 2026 at $197 million, a 30% increase YoY.
• Outstanding debt was $69 million as of the end of Q4 2026; cash and cash equivalents were $30 million, resulting in net debt of $39 million.

Guidance and Future Outlook:

• Fiscal 2027 revenue growth is expected to be 10-15% versus fiscal 2026.
• Fiscal 2027 adjusted EBITDA growth is expected to be 12.5-17.5% versus fiscal 2026.
• Fiscal 2027 ARR growth is anticipated to be at least 15% versus fiscal 2026.
• First fiscal quarter 2027 revenue is estimated at $140 million to $144 million.
• First fiscal quarter 2027 adjusted EBITDA is estimated at $39.5 million to $41.0 million.
• First fiscal quarter 2027 adjusted net income per diluted share is anticipated at $0.71 to $0.75, assuming a weighted average diluted share count of 39.5 million.
• Management targets achieving $200 million in both ARR and Adjusted EBITDA within the targeted time horizon.

Business Segments and Product Lines:

• IoT Products & Services: Q4 2026 revenue was $105 million (up 28% YoY), driven by $15.0 million in one-time sales growth and $7.7 million in recurring revenue growth. ARR for the segment was $64 million, up 100% YoY. Operating margin increased 320 basis points to 18.4% in Q4 2026. Full-year 2026 revenue was $385 million (up 21% YoY), with operating margin increasing 120 basis points to 16.0%.
• IoT Solutions: Q4 2026 revenue was $38 million (up 20% YoY), driven primarily by the Jolt acquisition. ARR for the segment was $133 million, up 11% YoY. Operating margin increased 590 basis points to 11.5% in Q4 2026. Full-year 2026 revenue was $150 million (up 34% YoY), with operating margin increasing 380 basis points to 12.1%.
• Fiscal 2026 results include Jolt Software, Inc. for the full period and Particle Industries, Inc. following the January 2026 acquisition date.

Market and Competitive Landscape:

• Customers in industrial, infrastructure, and enterprise markets are prioritizing connectivity, intelligence at the edge, and software capabilities as essential infrastructure.
• Industrial activity is strengthening broadly with accelerating investment in automation, energy, and data infrastructure.
• The company manages evolving global trade frameworks and rising component costs, particularly memory, through disciplined pricing and supply-chain agility.

Risks and Challenges:

• Risks include the possibility that the Disruptive Technologies (DT) acquisition may not be completed on anticipated terms or at all, or that integration may not realize anticipated benefits.
• Risks related to indebtedness under the credit facility, including interest rate changes and covenant compliance.
• Macroeconomic risks include inflation, interest rates, foreign currency exchange rates, and potential changes in customer purchasing patterns.
• Supply chain risks involve the availability, cost, and delivery of components and products.
• Regulatory risks include changes in trade, tariffs, tax, sanctions, and export controls.
• Cybersecurity threats, vulnerabilities, and data privacy risks are noted.
• Risks associated with declining prices of networking products and declining demand for mature hardware products.

Management Commentary and Tone:

• Ron Konezny, President and CEO, described fiscal 2026 as a "defining year" reflecting consistent execution and double-digit growth on key financial metrics.
• Management expressed confidence in achieving $200 million in ARR and Adjusted EBITDA targets, citing the recurring revenue model's insulation of margin structure.
• Management anticipates closing the acquisition of Disruptive Technologies (DT) before November 30, 2026, pending regulatory approval.

Other Key Points:

• On September 30, 2026, Digi entered a definitive agreement to acquire Disruptive Technologies (DT), a Norway-based provider of advanced sensing technology, for $130 million in cash, to be funded via the existing revolving credit facility.
• In the first fiscal quarter of 2026, Digi modified its method of calculating adjusted net income and adjusted net income per diluted share to include the impact of interest expense.
• The increase in Q4 2026 cash flow from operations was driven primarily by the change in deferred income taxes related to accelerated utilization of tax attributes under the One Big Beautiful Bill Act.
• Fiscal 2025 results included Jolt for the period following the August 2025 acquisition date and did not include Particle.