Digi Raises Annual Revenue Growth Forecast to 23–24% Ahead of 2026 Results
Key Facts
Digi International is set to report fourth-quarter and fiscal 2026 results on November 11, after raising its annual revenue growth forecast in August to 23–24%, with expected revenue of $529 million to $533 million. That compares with a previous forecast for growth of 20% to 22%, the company said. Digi also raised the low end of its annual recurring revenue growth forecast to 27% for fiscal 2026, from a previous forecast of 25%. These figures are the company's estimates ahead of its results and do not represent a new update issued on November 9. The Zacks consensus estimate for fourth-quarter revenue is $140.4 million, according to Zacks via TradingView. Digi scheduled the results announcement for after the market closes on November 11.
For full-year profitability, the company expects adjusted EBITDA of $146.0 million to $147.5 million in fiscal 2026, equivalent to annual growth of 35% to 36%. Its previous forecast pointed to growth of 23% to 26%. In the fiscal third quarter, ended June 30, adjusted EBITDA was $40 million, up 47% year over year. Net income was $16 million, up 54% from the same period. The company also posted operating cash flow of $33 million, compared with $24 million in the third quarter of fiscal 2025. Digi said the increase in cash flow was primarily related to lower deferred income tax benefits after the accelerated use of tax assets.
Digi posted revenue of $139 million in the fiscal third quarter, up 29% from the same period a year earlier. Annual recurring revenue was $191 million at quarter-end, up 52% year over year. CEO Ron Konezny said growth in recurring revenue reflects delivering a return on investment for customers by enabling them to remotely monitor and control their critical assets. Ahead of the upcoming results, Zacks estimates fourth-quarter revenue at $140.4 million, compared with revenue of $114.3 million in the same period of fiscal 2025. It estimates earnings of $0.76 per share, versus $0.56 per share a year earlier. The company's stock, which trades under the ticker DGII, closed at $63.21 on November 6.
The company is expanding its business through a deal it announced it intended to complete on October 1, to acquire Disruptive Technologies for $130 million in cash. Digi said the deal would be funded through its existing revolving credit facility and is expected to close before the end of 2026, subject to regulatory approval. The deal aims, according to the company, to strengthen SmartSense and establish a significant commercial presence in Europe by drawing on the target's relationships and infrastructure in more than 25 countries. Disruptive Technologies has more than 250,000 sensors deployed, and Digi says its sensors have an operating life of up to 15 years. The target generated revenue of $15 million and annual recurring revenue of $4 million in 2025. Digi expects its integration with SmartSense to add about $9 million to adjusted earnings and free cash flow in fiscal 2028.
The deal represents an expansion funded by Digi using an existing credit facility, at a time when outstanding debt stood at $109 million at the end of the third quarter, compared with cash and equivalents of $28 million, for net debt of $81 million. In its third-quarter results, the company also pointed to rising component costs, particularly memory, and developments in the global trade framework as challenges it is managing. It said it is addressing them through disciplined pricing, supply-chain flexibility and growth in its recurring revenue model. The company links recurring revenue expansion to providing customers with remote monitoring and control services. The November 11 results will be the next update on fourth-quarter and full-year performance.