DGII

Investors might want to bet on Digi International (DGII), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook. The upward trend in estimate revisions for this provider of communication adapters reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight. The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008. For Digi International, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year. The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate: For the current quarter, the company is expected to earn $0.76 per share, which is a change of +35.7% from the year-ago reported number. Over the last 30 days, the Zacks Consensus Estimate for Digi International has increased 27.22% because three estimates have moved higher compared to no negative revisions. For the full year, the earnings estimate of $2.69 per share represents a change of +28.1% from the year-ago number. The revisions trend for the current year also appears quite promising for Digi International, with three estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 9.32%. The promising estimate revisions have helped Digi International earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500. Investors have been betting on Digi International because of its solid estimate revisions, as evident from the stock's 33.3% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Digi International Inc. (DGII) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 5:00 p.m. ET President and Chief Executive Officer - Ronald Konezny Chief Financial Officer - James Loch Operator: Good day, and thank you for standing by. Welcome to the Fiscal Q3 2026 Digi International Inc. Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jamie Loch, Chief Financial Officer. Please go ahead. James Loch: Thank you. Good day, everyone. It's great to talk to you again, and thanks for joining us today to discuss the earnings results of Digi International. Joining me on today's call is Ron Konezny, our President and CEO. We issued our earnings release after the market closed today. You may obtain a copy of the press release through the Financial Releases section of our Investor Relations website at digi.com. This afternoon, Ron will provide a comment on our performance, and then we'll take your questions. Some of the statements that we make during this call are considered forward-looking and are subject to significant risks and uncertainties. These statements reflect our expectations about future operating and financial performance and speak only as of today's date. We undertake no obligation to update publicly or revise these forward-looking statements. While we believe the expectations reflected in our forward-looking statements are reasonable, we give no assurance such expectations will be met or that any of our forward-looking statements will prove to be correct. For additional information, please refer to the forward-looking statements section in our earnings release today and the Risk Factors section of our most recent Form 10-K and subsequent reports on file with the SEC. Finally, certain of the financial information disclosed on this call includes non-GAAP measures. The information required to be disclosed about these measures, including reconciliations to the most comparable GAAP measures, are included in the earnings release. The earnings release is also furnished as an exhibit to Form 8-K that can be accessed through the SEC Filings sections of our Investor Relations website. Now I'll turn the call over to Ron. Ronald Konezny: Thank you, Jamie, and thanks, everyone, for joining our call today. We are so excited to share an update on our progress and what we expect in the current quarter. But before we go into that, let me just remind everybody Digi's core value proposition. We really drive ROI by establishing remote presence, whether through an industrial router connected to remote oil well, whether it's an open gear console server in a data center, SmartSense in a pharmacy, food or hospital application, dentist through point-of-sale systems or infrastructure management and manufacturing, we are enabling our customers to gain great efficiency by connecting to not just the Digi devices, but the assets that we're helping them monitor. We can help them adjust to technical regulatory changes. We can update software to comply with security protocols. We can adapt to business opportunities and challenges. We can increase asset uptime. We can reduce the number of field calls that need to be made. All of those bring tremendous value to organization on top of learning more about how your asset is performing in the field and driving that learning into the next generation of your solution. We pull our customers annually and we ask them, "What are the attributes that you're looking for in your IoT solution?" And to no surprise, reliability is the #1 priority for our customers, and it's been so for a number of years. We rank well, both in their mind and versus our competition. We've got over 40 years of experience, and it makes sense. If you're monitoring a remote device, you need that remote management system to perform all the time and for a long period of time. What's increasingly become a priority is security. With news that seems to come every day and accelerating on security breaches, whether it be the water management system in Minnesota, whether it be AI models escaping their labs, keeping your IoT system secure is of utmost importance. These systems have to scale both in numbers and across geographies. and they've got to be easy to use. We are involved in business and mission-critical applications. That combination of attributes is what Digi really excels at, and we can provide the complete solution. We're providing the edge device. We're providing connectivity. If the customer needs it, software services. And we're now adding on top of that, our newest attribute, which is AI. We recently introduced a new tool called DANI, Digi Artificial Network Intelligence that allows you to talk to your Digi equipment and the things that's connected to a natural language. No more standard reports, no more configuring dashboards. You just ask our system and the things that's attached to, "How is my network performing today? Are there any software updates to be made available?" And you can even, over time, ask our system to perform those actions. There will always be a human at the wheel, but we can make managing your system much easier with the advent of AI. Those results are showing up this quarter and next quarter. I'm going to pass it to Jamie to review some of the highlights. James Loch: Good afternoon, everyone. Unfortunately, our video is down, so we'll speak to the results a little bit. We are very proud of our accomplishments this quarter as a company, which is really a reflection of the delivery that we've provided for our customers and that partnership and helping them enable to better meet their critical objectives. For the quarter, we're reporting record results, $139 million of revenue, which is up 29% year-over-year, 64.8% gross margins, $33 million in cash flow from operations, which is also up 38% year-over-year. From a non-GAAP perspective, our annual recurring revenue number has reached a record $191 million. Our adjusted EBITDA margins have reached a record of 29.1% with an adjusted EBITDA of $40 million. Not only is that cash flow a really great metric, but if you look at it from an annualized basis, right now, we have generated cash flow from operations in excess of our year-to-date adjusted EBITDA number. And you can see through that 29.1% adjusted EBITDA margin, we continue to see operational leverage as a company. We committed early on that we were going to see ARR and profits growing faster than revenue, and that continues to be the trend that you see here with our ARR and our adjusted EBITDA growing faster than our revenue number is on a revenue number that is actually very strong. That relates then as we roll forward into Q4. We are increasing our guidance for Q4 and subsequently, our full year guidance. For the Q4, we are expecting our revenues to be between $138 million and $142 million. We are expecting our adjusted EBITDA to be between $40 million and $41.5 million. We're expecting our adjusted EPS to be between $0.75 and $0.78 per diluted share on an expected share count of 39.1 million. The effect of Q3 and our Q4 guidance has increased our full year guidance. Right now, we are projecting our full year guidance to land between $529 million and $533 million, which is up 23.5% year-over-year. Our adjusted EBITDA on an annualized basis of $146 million to $147.5 million, which is up 35.5% for the year. Our adjusted EPS between $2.67 to $2.70 per diluted share. And right now, we are projecting our ARR to be at least 27% year-over-year. The guidance is up from our previous guidance, and you can see in that guide, ARR and profits continue to grow faster than revenue and that operating leverage down to the bottom line, you can see shining through with our profit growth. All of that really continues to lead us towards that march towards $200 million that we laid out as our long-term objective. By 2028, we had committed that we wanted to be at $200 million in ARR and $2 million in adjusted EBITDA. With this latest guide, we will see adjusted -- or sorry, annualized recurring revenues, at least at $193 million. We expect to cross over that bridge shortly. And on an adjusted EBITDA perspective, it was a 23% CAGR, ending the year right around $147 million. You can see how we're trending and expecting to deliver on those 5-year objectives as we laid out. As I mentioned earlier, we continue to see cash coming in. We are currently converting our cash in excess of 100%, and that really enables the flywheel that we talked about last call, where Digi is able to use that cash, cycle it back down to pay debt, and then start the flywheel over with looking at acquisitions as part of our inorganic strategy. Ronald Konezny: Yes. The flywheel really is first developing a healthy list of acquisition opportunities. We've got hundreds of opportunities we're monitoring now with the use of AI, it's much easier to monitor the news throughout those opportunities. At any one point in time, we're looking at 10 or 20 and really digging into a few. We then used debt to acquire those companies, and we then focus on integration. And that's where really the magic is made. As we integrate the companies quickly, we get them on common systems, common practices and really build ARR and profitability. And as we generate cash flow from that profitability, we're looking to then reduce leverage and, of course, put that money back to use. It's a strategy that we feel protects the equity investor because we're using debt. We're not diluting the shareholder. And because we generate strong cash flow, that doesn't sit on our balance sheet. We pay it down. So that provides more opportunity, especially as we increase our profitability, we get expanded dry powder to go after additional opportunities. So that's the flywheel, is acquire, integrate, generate, compound. It's -- no better example than 2 recent acquisitions we did. We acquired Jolt Software in fiscal '25. We -- Particle in fiscal '26. Both those integrations have gone very well, hitting their targets that we have committed to both internally and externally and putting us in a great position as Jamie -- we've been able to bring that debt net of cash down to $81 million. James Loch: That's right. $81 million. We're levered well below 1 at this point. And you can just see that cycling through. It's a great result. Ronald Konezny: With that said, we will now take any questions that the audience may have. Operator: And our first question comes from Tommy Moll of Stephens. Thomas Moll: A question for you on the sales funnel and the days to win, which is an important KPI I know you monitor. You exceeded expectations this quarter and have guided revenues up sequentially. And so I'm just curious what insight you could give us on the sales funnel and how fast deals are converting. James Loch: Yes, Tommy, it's a good question. I think there's really 2 factors that are coming into play on that. The first one is we are seeing an increase or an improvement, I should say, in our days to win metric. Customers are making decisions faster than they have in the past. I still would caution that it's not back to whatever someone would decide as a normalized level. It's not been normal for a long period of time, but we are seeing improvement. We're also seeing certain deals that are entering into the pipeline that have a level of maybe some urgency to them. And so they're cycling through a little bit faster, which I think is having an overall positive impact on our days to win metrics. We are also seeing overall pipeline growth. We continue to see growth in all levels of the pipeline, all the way from Stage 1 through to the final stages. And so it's really a combination of pipeline growth as well as some improvement in those critical measures, as you pointed out. Ronald Konezny: And I think there's a couple of factors driving it. One is, Tommy, you pay attention to this pretty closely, PMI has been relatively strong these last few reporting cycles. I think that's a positive. The AI wave here, which is obviously impacting data center builds, but also then affecting utilities and other indirect areas. And then also, I'd say there's a bit of a supply chain challenge going on right now. Memory is getting all the headlines, but that's starting to spread. And so I think customers are picking up on, "Boy, I better get my order in place to secure my deliveries and time lines." And that supply chain urgency, I think, is starting to show up in our pipeline data. Thomas Moll: Follow-up for you on the data center theme. Ron, Opengear has an existing presence in that vertical. I'm interested in any update you can give us there in general? And then specifically on the hyperscale side, I know that historically, you have not sold directly there, but have any of the tectonic plates maybe shifted in your favor? Ronald Konezny: Yes. Yes, Opengear has been a really great performer. Their performance is, I want to stress, really, really widespread. It's an edge campus as well as data center applications. We've been the solution of choice for a lot of the neo clouds that have been looking to deploy assets and maintain visibility and control. But we've also been knocking on the doors of hyperscalers to see if we can help them. And those are longer sales cycles. They're very hard to predict. There's only a few of them out there, remain optimistic, but certainly don't embed any of those expectations into our forward guidance. Operator: And our next question comes from Timothy Shubsda of Piper Sandler. Timothy Daniel Shubsda: This is Tim on for Jim Fish. ARR kind of accelerated nicely quarter-over-quarter here. I was just hoping you could talk about any areas of strength that you are seeing, anything specific to call out? Ronald Konezny: One thing we saw this quarter is what I would call really balanced contributions with contributions from product and services and solutions, and that's really what we want to see. On the product and services side, you're seeing increased volume and with that volume coming with high attach rates. And so that solution attached to existing product is really driving the results there. On the solutions side, great contribution from both Ventus and SmartSense. Enterprise deals help really move that needle, and that really generates ARR. So we're really happy to see contributions on both of our business segments. Timothy Daniel Shubsda: Great. And then just a follow-up. You had strong gross product margin this quarter. Anything to talk about there? What's driving the strength? And how should we think about this kind of heading into fiscal year '27 and maybe longer term? James Loch: Yes, I think it's a good question. I think still, fundamentally, we believe that our gross margin base camp is kind of sit in that low to mid-60s range. In any given quarter, you're going to have some variability that's going to come into that, driven a lot by product mix. I think we've had another quarter of favorable mix in that direction where if you really look down deeper into the business, almost across all product families, you're seeing right now some of the higher-margin products going. I don't think that, that's necessarily a new base camp that I would say. It's definitely in the range. There will be periods where it will be in that. There were periods where it will be a little bit lower. We really feel like the floor of that camp sits in that lower mid-60s, 62%, 63%. And then there will just be some variability that will go with that. So I don't think there's anything unusual. I think product mix works out. I think over a longer duration period of time, it's reasonable to continue to expect that 10 to 15 basis points of improvement as ARR continues to grow faster than revenue because ARR comes in and provides that positive mix. So longer term, I think you continue to see that 10 to 15 basis points. Shorter-term windows like 90-day windows, you can get some variability that could be in the 200, 300 basis point range. Ronald Konezny: Yes. And really, Jamie, I think combining that with good operating discipline because it's showing up at the operating margin line. And we're not perfect, but I think we're doing a good job of maintaining discipline, which is leading to that leverage we talked about, where our profits are growing faster than the top line. And we really want to and expect to continue that kind of performance. Operator: We have a follow-up now from Tommy Moll. Thomas Moll: Ron, you mentioned DANI, the AI agent. And I noticed in the press release, there's some good insight in there, including some dollar signs that are helpful for financial analysts like us on the call here. But maybe can you help us connect some dots on the commercial opportunity here? Ronald Konezny: Yes. So DANI is in our digital wealth manager platform, which spans across our cellular router lineup, some of our embedded solutions and our industrial infrastructure management team as well. But it's also a template we're going to use across the company. We developed in a very innovative way where there's embedded artificial intelligence in the cloud-based tool. So instead of generating a standardized report or standardized dashboard, you can speak, type into your Digi Remote Manager interface, natural language questions. And it will come back with any questions you may have, whether it's how to use Digi Remote Manager, the status of ID devices, the status of things that they're connected to. And that also has a benefit of our customers bring new employees all the time and to manage their Digi equipment and things they're connected to. And that's a really good way to train somebody on how to use the system versus, "Oh, consult the help button or a user manual or get trained by your predecessor," you can really speak to the system on the information you're looking for and/or the actions you want to take. We see, really, a lot of runway. This is only the first step in this solution. We're embedding in our existing software because we want to encourage adoption and usage. Over time, there could be a chance to monetize that, but that's not the priority at the moment. It's really to help better service our customers, improve their understanding and use of our system, better train and adapt new employees, and ultimately, get more value out of your Digi solution. Operator: I show no further questions at this time. I'd like to turn it back to Ron Konezny for closing remarks. Ronald Konezny: Thank you. I apologize for the late delay here. We had some technical problems. But for those that you hung in there, we really appreciate it. We look forward to continuing the success that we've showed year-to-date. We're committed, as Jamie covered, to our $200 million objectives. We feel confident that we make promises and we keep them. And we look forward to sharing our results a quarter from now. James Loch: Say, this is Jamie. I just want to add real quick. We've talked about this. I don't think Ron or I could be more proud of our employees, our teammates, the work that we've put in, and our dedication to really customer outcomes. You can see it in the results that, that care, that passion, that consideration for customers really being first, and that's what really leads us to this. We're proud of the team that we're a part of, and we expect to be able to continue to do great things for our customers. So thanks, everyone. Ronald Konezny: Well said. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect. Before you buy stock in Digi International, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Digi International wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* Now, it’s worth noting Stock Advisor’s total average return is 958% — a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 12, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Digi International (DGII) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Cisco Systems CSCO) is set to report its fiscal fourth-quarter results after the closing bell on Wednesday, Aug. 12, putting the networking giant back in the spotlight as investors assess whether its impressive momentum can continue. CSCO has been one of the market’s stronger performers, with enthusiasm surrounding artificial intelligence (AI) infrastructure demand and an accelerating networking refresh cycle helping support investor sentiment. With Cisco’s stock soaring nearly 60% year to date and just 5% from a 52-week and all-time high of $130 a share, its upcoming earnings report could determine whether there is enough fundamental support to extend the rally. The key question for investors is whether Cisco's improving growth profile and rapidly expanding AI opportunity justify buying CSCO ahead of earnings or whether much of the optimism is already reflected in its valuation. Image Source: Zacks Investment Research As shown in the EPS surprise performance chart above, Cisco stock surged after reporting its most recent Q3 results in May and has now soared +170% over the last two years. This comes as Cisco delivered an impressive fiscal third quarter, reporting record revenues of $15.8 billion, up 12% year over year. Non-GAAP earnings increased 10% to $1.06 per share. The top and bottom line results exceeded the high end of management's guidance and comfortably topped Wall Street’s expectations by roughly 2%, respectively. Image Source: Zacks Investment Research Perhaps more encouraging was the strength of Cisco's underlying demand trends. Total product orders jumped 35% YoY and increased 19% when excluding hyperscale customers. Networking product order growth accelerated to more than 50%. Cisco's traditional networking franchise is also benefiting from what it characterized as a major multi-year campus networking refresh cycle (private networks that link buildings and infrastructure within a specific area). Campus networking orders increased by more than 25% in Q3, while data center switching orders surged by more than 40%. Those trends give Cisco an encouraging setup heading into its Q4 report. Management previously guided for fourth-quarter revenue to hit a new quarterly peak of between $16.7 billion and $16.9 billion. Cisco also projected Non-GAAP earnings to be at a new quarterly high of  $1.16-$1.18 per share, with the company expecting a non-GAAP gross margin of 65.5%-66.5% and an operating margin of 34%-35%. It’s also noteworthy that Cisco raised its full-year outlook following its Q3 results, now expecting full-year revenue at $62.8-$63 billion and adjusted earnings of $4.27-$4.29 per share, compared with its previous guidance of $61.2-$61.7 billion in revenue and $4.13-$4.17 in adjusted EPS. Notably, the Zacks Consensus calls for Cisco’s Q4 sales to increase nearly 15% to $16.85 billion, with Q4 EPS expected to rise 18% to $1.17 per share (Current Qtr below). Analyst consensus expectations call for annual revenue to be up 11% to $62.95 billion, with FY26 EPS projected to rise 12% to $4.28. Image Source: Zacks Investment Research AI remains one of the most important pieces of the Cisco investment story. Demand from hyperscale customers has accelerated substantially. Cisco booked $5.3 billion of AI infrastructure orders through the first three quarters of fiscal 2026 and subsequently raised its full-year AI order expectation to $9 billion from $5 billion. Management also increased its fiscal 2026 AI infrastructure revenue expectation to $4 billion from $3 billion. That momentum is significant because Cisco is increasingly positioned to participate in the massive infrastructure buildout needed to connect AI clusters and data centers. As AI workloads become larger and more complex, networking performance becomes increasingly critical, creating opportunities for Cisco's switching, routing, optics and related technologies. Investors will want to pay close attention to management's latest AI order numbers on Wednesday. Another increase in AI expectations could reinforce the argument that Cisco is transitioning from a mature networking company into a more meaningful beneficiary of the AI infrastructure investment cycle. Conversely, any slowdown in hyperscale orders could disappoint investors given the increasingly optimistic expectations embedded in the stock. Cisco also remains an attractive cash-return story. The company returned $2.9 billion to shareholders through dividends and share repurchases during its fiscal third quarter. That included approximately $1.7 billion in dividends and $1.3 billion in stock buybacks. It’s noteworthy that Cisco still had $9.6 billion remaining under its current share-repurchase authorization. Meanwhile, Cisco most recently had $16.6 billion in cash and equivalents. This combination of substantial cash generation, dividends and buybacks provides investors with an additional source of returns beyond potential stock-price appreciation. CSCO offers a respectable 1.38% annual dividend yield, noticeably above the benchmark S&P 500’s 1.01% average, while many of its tech peers remain primarily focused on growth and don’t pay dividends. Cisco’s 49% payout ratio also suggests there is room for future dividend hikes. Image Source: Zacks Investment Research At current levels, Cisco stock is trading at around 30X forward earnings. This is a noticeable but not overly stretched premium to the S&P 500’s 22X and its Zacks Computer-Networking Industry Average of 18X, which includes peers such as Digi International DGII) and NetScout Systems NTCT). That said, it’s also worth mentioning that CSCO is near its decade-long high of 35X forward earnings and is well above its 10-year median of 16X. Image Source: Zacks Investment Research Cisco Systems enters its fiscal fourth-quarter earnings report with several powerful catalysts working in its favor. Surging AI infrastructure demand, a major enterprise networking refresh cycle, strong product orders and substantial shareholder returns have strengthened the company's investment case. At the same time, expectations have risen alongside CSCO shares. That makes Wednesday's earnings announcement particularly important, as investors will be looking for evidence that the company can sustain its elevated growth trajectory into fiscal 2027. While it's easy to see how investors have remained enthusiastic about Cisco Systems stock, CSCO currently lands a Zacks Rank #3 (Hold). Keeping that in mind, the plausibility of higher highs will certainly depend on a strong Q4 report and guidance that helps justify what has already been an extensive rally. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report Digi International Inc. (DGII) : Free Stock Analysis Report NetScout Systems, Inc. (NTCT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Digi International Inc.? Here are five stocks we like better. Digi International delivered record fiscal Q3 2026 results: Revenue rose 29% year over year to $139 million, ARR reached $191 million, adjusted EBITDA increased to $40 million, and operating cash flow climbed 38% to $33 million. The company raised its full-year outlook to $529 million–$533 million in revenue, $146 million–$147.5 million in adjusted EBITDA, $2.67–$2.70 in adjusted EPS, and at least 27% ARR growth. Digi also reaffirmed longer-term targets of $200 million in ARR and adjusted EBITDA by 2028. Demand trends improved, with faster customer decisions and pipeline growth, although sales cycles remain uneven. Digi is embedding its new DANI AI capability into its cloud platform, while continuing acquisitions and integration efforts with net leverage below one times. Top IoT Stocks: Why Samsara and Digi Are Thriving in 2025 Digi International (NASDAQ:DGII) reported record fiscal third-quarter 2026 revenue, annual recurring revenue, adjusted EBITDA margin and operating cash flow, while raising its outlook for the fourth quarter and full fiscal year. Chief Financial Officer Jamie Loch said quarterly revenue reached $139 million, up 29% from a year earlier. Gross margin was 64.8%, while cash flow from operations totaled $33 million, an increase of 38% year over year. The company’s non-GAAP annual recurring revenue, or ARR, rose to a record $191 million, and adjusted EBITDA was $40 million, representing a record 29.1% margin. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control How Far Will Digi International Run Up After Q3 Report? Loch said Digi continued to see operating leverage, with ARR and profit growth outpacing revenue growth. He also said the company’s cash flow from operations, on an annualized basis, exceeded its year-to-date adjusted EBITDA. For fiscal fourth quarter 2026, Digi forecast revenue of $138 million to $142 million, adjusted EBITDA of $40 million to $40.15 million, and adjusted earnings per diluted share of $0.75 to $0.78. The guidance assumes a diluted share count of 39.1 million. → 3 Drone Stocks That Should Soar After the Summer Slump 3 Stocks With Market-Beating Price Performance The company increased its full-year outlook and now expects: Revenue of $529 million to $533 million, representing projected year-over-year growth of 23.5%. Adjusted EBITDA of $146 million to $147.5 million, up 35.5% year over year on an annualized basis. Adjusted diluted EPS of $2.67 to $2.70. ARR growth of at least 27% year over year. Loch said the updated forecast implies annualized recurring revenue of at least $193 million. The company has set a longer-term objective to reach $200 million in ARR and $200 million in adjusted EBITDA by 2028. He said the company was ending the year at roughly $147 million in adjusted EBITDA and was tracking toward those goals. → The Bitcoin Comeback May Already Be Underway—2 ETFs for Exposure During the question-and-answer session, Loch said customers are making decisions faster than they had in the past, improving Digi’s “days to win” metric. However, he cautioned that decision cycles have not returned to what could be considered normalized levels. He said some opportunities entering the pipeline carry a degree of urgency and are moving through the sales process more quickly. Digi also reported pipeline growth across all stages, from early-stage opportunities through later-stage deals. President and Chief Executive Officer Ron Konezny cited relatively strong purchasing managers’ index readings, AI-related infrastructure activity and emerging supply-chain concerns as factors influencing customer behavior. He said memory supply issues have received significant attention and that supply-chain urgency could be prompting customers to place orders earlier to secure delivery schedules. Konezny said Opengear continued to perform well across edge, campus and data-center applications. He said the company has been a provider to “NeoPods” deploying assets that require visibility and control, while Digi is also pursuing opportunities with hyperscale customers. He described hyperscale sales cycles as lengthy and difficult to predict, adding that such expectations are not included in the company’s guidance. Konezny said the company saw balanced contributions during the quarter across products, services and solutions. Higher product volumes and strong attachment of solutions to existing products supported results in the products and services business, he said. In the solutions segment, he cited contributions from Ventus and SmartSense, including enterprise deals that helped drive ARR. Loch said product mix supported the quarter’s strong gross margin, with higher-margin products performing well across much of the company’s product portfolio. He said Digi still views the low-to-mid-60% range as its gross-margin “base camp,” identifying roughly 62% to 63% as the floor of that range. Over a longer period, Loch said Digi expects ARR to grow faster than revenue and support approximately 10 to 15 basis points of gross-margin improvement. He noted that quarterly results can vary more substantially, potentially by 200 to 300 basis points, based on product mix. Konezny highlighted the company’s recently introduced DANI, or Digi Artificial Network Intelligence, capability. The cloud-based tool enables users of Digi Remote Manager to ask natural-language questions about the platform, connected Digi devices and associated assets. He said users can ask about network performance, available software updates and other operational issues, with potential over time to request actions through the system. The company is initially embedding the AI capability within existing software to encourage adoption and improve customer support, training and use of Digi’s platform, Konezny said. While the company may eventually monetize the offering, he said monetization is not currently the priority. Digi also described its acquisition approach as a cycle of acquiring companies with debt, integrating them, expanding ARR and profitability, generating cash flow and reducing leverage. Konezny said the company monitors hundreds of potential acquisition opportunities and is actively evaluating a smaller group at any given time. He said integrations of Jolt Software, acquired in fiscal 2025, and Particle, acquired in fiscal 2026, have progressed in line with internal and external targets. Loch said net debt had fallen to $81 million and that the company was leveraged at well below one times. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Digi International Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Digi International (DGII) came out with quarterly earnings of $0.75 per share, beating the Zacks Consensus Estimate of $0.67 per share. This compares to earnings of $0.53 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +11.94%. A quarter ago, it was expected that this provider of communication adapters would post earnings of $0.58 per share when it actually produced earnings of $0.62, delivering a surprise of +6.9%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Digi International, which belongs to the Zacks Computer - Networking industry, posted revenues of $138.67 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 4.57%. This compares to year-ago revenues of $107.51 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Digi International shares have added about 66.6% since the beginning of the year versus the S&P 500's gain of 13%. While Digi International has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Digi International was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.62 on $135.8 million in revenues for the coming quarter and $2.48 on $521.62 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Computer - Networking is currently in the bottom 14% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Cisco Systems (CSCO), has yet to report results for the quarter ended July 2026. This seller of routers, switches, software and services is expected to post quarterly earnings of $1.17 per share in its upcoming report, which represents a year-over-year change of +18.2%. The consensus EPS estimate for the quarter has been revised 0.2% higher over the last 30 days to the current level. Cisco Systems' revenues are expected to be $16.85 billion, up 14.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Digi International Inc. (DGII) : Free Stock Analysis Report Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Revenue: Record $139 million, up 29% year-over-year. Gross Margin: 64.8%. Cash Flow from Operations: $33 million, up 38% year-over-year. Annual Recurring Revenue (ARR): Record $191 million. Adjusted EBITDA: Record $40 million, with a record margin of 29.1%. Q4 Revenue Guidance: Expected between $138 million and $142 million. Q4 Adjusted EBITDA Guidance: Expected between $40 million and $41.5 million. Q4 Adjusted EPS Guidance: Expected between $0.75 and $0.78 per diluted share. Full-Year Revenue Guidance: Projected between $529 million and $533 million, up 23.5% year-over-year. Full-Year Adjusted EBITDA Guidance: Projected between $146 million and $147.5 million, up 35.5% year-over-year. Full-Year Adjusted EPS Guidance: Projected between $2.67 and $2.70 per diluted share. Full-Year ARR Growth Guidance: Projected to be at least 27% year-over-year. Net Debt: Reduced to $81 million, with leverage below 1x. Warning! GuruFocus has detected 7 Warning Sign with DGII. Is DGII fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record revenue of $139 million, up 29% year-over-year, with record ARR of $191 million and adjusted EBITDA margin of 29.1%. Strong cash flow from operations of $33 million, up 38% year-over-year, with cash conversion exceeding 100%. Improved sales funnel with faster days-to-win and pipeline growth across all stages, driven by strong PMI and AI-related demand. Successful integration of recent acquisitions (Jolt Software and Particle) hitting targets, reducing net debt to $81 million and leverage below 1x. Introduction of DANI, an AI-powered natural language tool, enhancing customer value and adoption, with potential future monetization. Supply chain challenges, particularly memory shortages, creating urgency but also potential disruption risks. Hyperscaler sales cycles remain long and unpredictable, with no expectations embedded in guidance. Gross margin variability expected, with potential 200-300 basis point swings in short-term windows. Days-to-win metric, while improving, has not returned to normalized levels, indicating lingering customer caution. Technical difficulties during the earnings call (video down, delays) may have impacted communication effectiveness. Q: Can you provide insight into the sales funnel and days-to-win metric, given the revenue beat and sequential guidance increase? A: CFO James Loch noted two key factors: an improvement in days-to-win as customers make decisions faster (though not yet at normalized levels), and overall pipeline growth across all stages. CEO Ron Konezny added that strong PMI readings, the AI wave impacting data center builds and utilities, and emerging supply chain challenges (particularly memory) are creating urgency among customers to secure orders, positively impacting pipeline data. Q: Can you update us on the data center theme, specifically Opengear's presence and any progress with hyperscale customers? A: CEO Ron Konezny stated Opengear has been a "really great performer" with widespread performance across edge campus and data center applications. Digi has been the solution of choice for many "neo clouds" deploying assets. While they are "knocking on the doors of hyperscalers," these are longer sales cycles and hard to predict. The company remains optimistic but does not embed any hyperscale expectations into forward guidance. Q: ARR accelerated nicely quarter-over-quarter. Can you discuss areas of strength? A: CEO Ron Konezny highlighted "balanced contributions" from both product/services and solutions segments. On the product side, increased volume came with high attach rates for solutions. On the solutions side, both Ventus and SmartSense contributed strongly, with enterprise deals significantly moving the needle and generating ARR. Q: What drove the strong gross product margin this quarter, and how should we think about it heading into fiscal '27 and longer term? A: CFO James Loch explained that the gross margin base camp remains in the low-to-mid 60s range, with quarterly variability driven by product mix. This quarter saw favorable mix with higher-margin products performing well across almost all product families. Longer term, they expect 10-15 basis points of annual improvement as ARR grows faster than revenue, though 90-day windows can see 200-300 basis point variability. Q: Can you connect the dots on the commercial opportunity for DANI, the new AI agent? A: CEO Ron Konezny explained DANI is embedded in the Digi Remote Manager platform, allowing customers to ask natural language questions about their equipment and connected assets. It spans cellular routers, embedded solutions, and industrial infrastructure management. The current priority is driving adoption and usage to improve customer service and training, not immediate monetization. However, they see "a lot of runway" and there could be a chance to monetize over time. Q: What drove the record financial results in Q3, and what is the outlook for Q4 and the full year? A: CFO James Loch reported record revenue of $139 million (up 29% YoY), 64.8% gross margins, $33 million in operating cash flow (up 38% YoY), record ARR of $191 million, and record adjusted EBITDA margins of 29.1% ($40 million). For Q4, they guide revenue of $138-$142 million, adjusted EBITDA of $40-$41.5 million, and adjusted EPS of $0.75-$0.78. Full-year guidance is now $529-$533 million revenue (up 23.5%), $146-$147.5 million adjusted EBITDA (up 35.5%), and adjusted EPS of $2.67-$2.70. Q: How is the company progressing toward its long-term $200 million ARR and $200 million adjusted EBITDA objectives? A: CFO James Loch noted that with the latest guidance, annualized recurring revenue will be at least $193 million, expecting to cross the $200 million bridge shortly. On adjusted EBITDA, they are trending toward a 23% CAGR, ending the year around $147 million, demonstrating they are on track to deliver on their 5-year objectives laid out for 2028. Q: Can you elaborate on the acquisition flywheel strategy and how recent acquisitions like Jolt and Particle are performing? A: CEO Ron Konezny described the flywheel as "acquire, integrate, generate, compound." They monitor hundreds of opportunities using AI, focus on 10-20, and dig into a few. Using debt (not equity dilution) protects shareholders. Both Jolt Software (acquired in fiscal '25) and Particle (fiscal '26) integrations have gone very well, hitting committed targets. Net debt has been reduced to $81 million, with leverage well below 1x. Q: What is driving the strong cash flow conversion, and how is it being utilized? A: CFO James Loch stated they are converting cash in excess of 100% of adjusted EBITDA. This cash generation enables the flywheel strategy: paying down debt, which expands dry powder for future acquisitions as profitability increases. The strong cash flow doesn't sit on the balance sheet but is cycled back into the business to fund inorganic growth opportunities. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Record Quarterly Revenue of $139M, Record End of Quarter ARR of $191M Quarterly Cash Flow From Operations of $33M MINNEAPOLIS, August 05, 2026--(BUSINESS WIRE)--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." 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. 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 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. 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20260805256602/en/ Contacts Investor Contact: Rob BennettInvestor RelationsDigi International952-912-3524Email: [email protected]

Digi International (DGII) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company. The upward trend in estimate revisions for this provider of communication adapters reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight. The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008. For Digi International, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year. The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate: The earnings estimate of $0.67 per share for the current quarter represents a change of +26.4% from the number reported a year ago. Over the last 30 days, the Zacks Consensus Estimate for Digi International has increased 23.74% because three estimates have moved higher compared to no negative revisions. For the full year, the company is expected to earn $2.48 per share, representing a year-over-year change of +18.1%. The revisions trend for the current year also appears quite promising for Digi International, with three estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 12.63%. The promising estimate revisions have helped Digi International earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500. Digi International shares have added 12.8% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Digi International Inc. (DGII) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Investors signalled that they were pleased with Digi International Inc.'s (NASDAQ:DGII) most recent earnings report. This reaction by the market reaction is understandable when looking at headline profits and we have found some further encouraging factors. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. Many investors haven't heard of the accrual ratio from cashflow, but it is actually a useful measure of how well a company's profit is backed up by free cash flow (FCF) during a given period. To get the accrual ratio we first subtract FCF from profit for a period, and then divide that number by the average operating assets for the period. This ratio tells us how much of a company's profit is not backed by free cashflow. Therefore, it's actually considered a good thing when a company has a negative accrual ratio, but a bad thing if its accrual ratio is positive. While having an accrual ratio above zero is of little concern, we do think it's worth noting when a company has a relatively high accrual ratio. To quote a 2014 paper by Lewellen and Resutek, "firms with higher accruals tend to be less profitable in the future". Digi International has an accrual ratio of -0.12 for the year to March 2026. Therefore, its statutory earnings were quite a lot less than its free cashflow. Indeed, in the last twelve months it reported free cash flow of US$126m, well over the US$43.2m it reported in profit. Digi International's free cash flow improved over the last year, which is generally good to see. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates. As we discussed above, Digi International has perfectly satisfactory free cash flow relative to profit. Because of this, we think Digi International's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at 52% per year over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. Ultimately, this article has formed an opinion based on historical data. However, it can also be great to think about what analysts are forecasting for the future. At Simply Wall St, we have analyst estimates which you can view by clicking here. This note has only looked at a single factor that sheds light on the nature of Digi International's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.