Digi's Fourth-Quarter Revenue Growth Cools From Third Quarter

The Tip Desk · November 12, 2026 · 3 min read

The IoT connectivity provider posted $143 million of sales, up 25%, and ended the year with $197 million of ARR.

Digi International Inc. (DGII) reported fourth fiscal quarter revenue of $143 million, up 25% from a year earlier, as year-over-year growth cooled from 29% in the third quarter.

The Minneapolis-based provider of business and mission-critical Internet of Things connectivity posted a record quarterly top line and a record year-end annualized recurring revenue of $197 million, up 30%. ARR growth had been 52% at the end of the third quarter and 50% at the end of the second.

Gross profit margin was 63.7%, down 20 basis points from a year earlier, after a 130 basis-point year-over-year increase in the third quarter and a 190 basis-point increase in the second. Operating margin was 16.5%, up 400 basis points. Net income was $15 million, or $0.38 a share, up 50% and 46%, respectively. Adjusted EBITDA was $42 million, up 43%.

IoT Products & Services, the larger of the two reportable segments, generated $105 million of fourth-quarter revenue, up 28% from a year earlier. The company said the increase consisted of a $15.0 million rise in one-time sales and $7.7 million of recurring revenue growth, with no material impact from pricing. A significant majority of the increase was driven by organic growth from increased customer demand and supported by the January 2026 acquisition of Particle Industries. Segment ARR was $64 million at quarter end, up 100% from the end of fiscal 2025. Operating margin in the segment increased 320 basis points to 18.4% of revenue.

IoT Solutions revenue was $38 million, up 20% from a year earlier. The increase consisted of a $5.4 million rise in recurring revenue and a $0.8 million rise in one-time sales, with the significant majority of both driven by the Jolt Software acquisition. Segment ARR was $133 million at quarter end, up 11% from the end of fiscal 2025, which the company said was driven by organic growth across the Solutions businesses. Operating margin in the segment increased 590 basis points to 11.5%.

Cash flow from operations was $42 million in the fourth quarter, compared with $28 million a year earlier. The company said the increase was driven primarily by a change in deferred income taxes relating to accelerated utilization of tax attributes under the One Big Beautiful Bill Act. Outstanding debt was $69 million and cash and cash equivalents were $30 million at quarter end, for debt net of cash of $39 million.

On September 30, 2026, Digi entered a definitive agreement to acquire Disruptive Technologies, a Norway-based provider of advanced sensing technology, for $130 million in cash, which the company said it expects to fund using its existing revolving credit facility. Completion remains subject to regulatory approval. President and CEO Ron Konezny said the company looks forward to securing that approval, expected before November 30, 2026.

For fiscal 2027, Digi anticipates ARR growth of at least 15% versus fiscal 2026, revenue growth of 10-15%, and Adjusted EBITDA growth of 12.5-17.5%. First-quarter fiscal 2027 revenue is estimated at $140 million to $144 million, Adjusted EBITDA at $39.5 million to $41.0 million, and adjusted net income per diluted share at $0.71 to $0.75, assuming a weighted average diluted share count of 39.5 million.

Konezny said the company is approaching $200 million in ARR, one of two five-year goals set at the start of fiscal 2024.