Digi International Inc
NASDAQ:DGII
Digi International Inc
Digi International Inc. began its corporate journey in the heart of Minnetonka, Minnesota, transforming over the years into a beacon in the field of IoT connectivity solutions. Originally focused on networking solutions, the company expanded its horizon by diving into the Internet of Things (IoT), striving to connect the unconnected. The journey kicked off with device networking solutions and consolidated its offerings to provide a comprehensive suite of IoT products and services. This includes the development of hardware like routers and gateways, software solutions for device management, and cloud services to help businesses harness the full potential of connected devices. Through continuous innovations, Digi has tapped into multiple sectors, including industrial, medical, transportation, and energy, providing tailored solutions that ensure efficient and reliable communication between devices and systems.
Digi International’s business model revolves around delivering end-to-end IoT solutions that streamline operations for enterprises and provide a solid return on their technology investments. It accomplishes this by offering a combination of both product sales and service-based revenue streams. By selling IoT hardware and integrated software solutions, the company is able to capitalize on the initial set-up as well as ongoing service contracts for device management and cloud solutions. The company thus thrives by enhancing the connectivity and operational efficiency of their clients, making machine-to-machine communications seamless and allowing businesses to monitor, manage, and maintain their operations from afar. In essence, Digi’s core revenue flows from its ability to create an ecosystem that supports the growing and dynamic needs of the IoT landscape, ensuring data flows smoothly and securely across disparate systems.
Digi International Inc. began its corporate journey in the heart of Minnetonka, Minnesota, transforming over the years into a beacon in the field of IoT connectivity solutions. Originally focused on networking solutions, the company expanded its horizon by diving into the Internet of Things (IoT), striving to connect the unconnected. The journey kicked off with device networking solutions and consolidated its offerings to provide a comprehensive suite of IoT products and services. This includes the development of hardware like routers and gateways, software solutions for device management, and cloud services to help businesses harness the full potential of connected devices. Through continuous innovations, Digi has tapped into multiple sectors, including industrial, medical, transportation, and energy, providing tailored solutions that ensure efficient and reliable communication between devices and systems.
Digi International’s business model revolves around delivering end-to-end IoT solutions that streamline operations for enterprises and provide a solid return on their technology investments. It accomplishes this by offering a combination of both product sales and service-based revenue streams. By selling IoT hardware and integrated software solutions, the company is able to capitalize on the initial set-up as well as ongoing service contracts for device management and cloud solutions. The company thus thrives by enhancing the connectivity and operational efficiency of their clients, making machine-to-machine communications seamless and allowing businesses to monitor, manage, and maintain their operations from afar. In essence, Digi’s core revenue flows from its ability to create an ecosystem that supports the growing and dynamic needs of the IoT landscape, ensuring data flows smoothly and securely across disparate systems.
Record Quarter: Digi delivered record results in Q1 2026 with revenue of $122 million, up 18% year-over-year, and $157 million in annualized recurring revenue, up 31% year-over-year.
ARR Growth: The company saw its fifth consecutive quarter of double-digit ARR growth, driven by both IoT Solutions and IoT Products & Services segments.
Profitability: Adjusted EBITDA reached $32 million (up 23% YoY) with a record 25.8% margin. Cash generation was $36 million for the quarter.
Acquisitions: Integration of Jolt is on track, and the company announced the acquisition of Particle, expected to add $20 million to $22 million in ARR and boost IoT device management capabilities.
Strong Guidance: Fiscal 2026 guidance calls for 23% ARR growth, 14% to 18% revenue growth, and 17% to 21% adjusted EBITDA growth, factoring in Particle's contributions.
Demand Trends: Broad-based strength was noted across verticals such as mass transit, utilities, retail, and data centers, with improving demand trends.
Margin Outlook: Management expects gross margins to continue to tick up as ARR becomes a larger share of revenue.
