DGII · Digi International Inc.

Digi International delivered record second fiscal quarter 2026 results, marked by strong top-line growth, significant ARR expansion, and improved profitability — all underpinned by successful execution on its acquisition-led growth strategy. Revenue rose 25% year-over-year to $131 million, with both reporting segments contributing: IoT Product & Services grew 20% to $94 million (including $10.3M in one-time sales and $5.5M recurring growth), while IoT Solutions surged 39% to $37 million, largely driven by the Jolt acquisition. Gross margin expanded 190 basis points to 64.0%, reflecting lower manufacturing costs, though operating margin remained flat at 13.1% due to offsetting amortization expenses from recent acquisitions. The most notable operational milestone was the $184 million ARR — up 50% YoY — with IoT Solutions ARR reaching $127 million (+34%) and IoT Product & Services ARR hitting $57 million (+104%), the latter heavily influenced by Particle’s contribution of ~$20 million ARR. Management attributed the outperformance to customers treating IoT infrastructure as essential — not discretionary — amid macroeconomic uncertainty, accelerating investments in connectivity and software. The company raised full-year guidance across key metrics, signaling confidence in sustained momentum: ARR growth now targeted at 25%, revenue at 20–22%, and Adjusted EBITDA at 23–26%. Q3 guidance reflects continued strength, with revenue expected between $130–$134 million and Adjusted EBITDA between $35.5–$37.0 million. Capital allocation remains disciplined, focused on deleveraging post-acquisition while maintaining capacity for strategic M&A — reinforcing Digi’s 'acquire → generate → compound' flywheel model centered on recurring revenue and capital efficiency.