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what it is
Digi sells the gear, software, and managed networks that keep industrial devices connected when failure is expensive.
how it gets paid
Last year Digi made $430M in revenue (TTM / annual pace on this page).
why it's growing
Revenue grew 1.5% last year. Revenue for the trailing 12 months was $430 million.
what just happened
Digi's latest quarter printed $0.26 EPS, well below the $0.51 consensus estimate.
At a glance
B+ balance sheet — decent shape, but not bulletproof
45/100 earnings predictability — expect surprises
41.6x trailing p/e — you're paying up for this one
12.0% return on capital — nothing to write home about
xvary composite: 64/100 — average
What they do
Digi sells the gear, software, and managed networks that keep industrial devices connected when failure is expensive.
Digi sells into places where a dropped connection is not a minor glitch. It is a truck, utility, or factory problem. That makes switching costs (changing vendors after your network is built) high in plain English, because replacing installed hardware and software is painful. The proof is recurring revenue: annualized recurring revenue reached $157 million, up 31%, while the company delivered five straight quarters of double-digit growth.
How they make money
$430M
annual revenue · their business grew +1.5% last year
total revenue
$430M
+1.5%
The products that matter
connectivity software and services
IoT Solutions
32% growth from last year
this is one of the faster-moving pieces of the story, growing 32% vs. prior year as Digi leans harder into higher-value recurring revenue.
growth engine
hardware and support revenue
IoT Products & Services
26% growth from last year
this segment grew 26% from last year, showing the company isn't relying on one narrow pocket of demand.
broader demand
recurring software base
annual recurring revenue
$157M ARR · +31%
the $157M ARR base grew 31%. That's the part investors care about most because recurring revenue usually deserves a better multiple than one-off hardware sales.
margin lever
Key numbers
41.6x
trailing p/e
Trailing P/E → price divided by past earnings → you are paying a rich price for a company with recent estimate risk.
$157M
annual recurring revenue
ARR → subscription-like contracted revenue → it makes the business steadier and usually more valuable.
20.0%
operating margin
Operating margin → profit after running the business → Digi keeps $0.20 from each revenue dollar before interest and taxes.
12.0%
return on capital
Return on capital → profit from the money tied up in the business → decent, but not elite for a stock at this valuation.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 30 / 100
- long-term debt $135M (7% of capital)
- net profit margin 17.5% — keeps about 18¢ of every dollar in revenue
- return on equity 14% — $0.14 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in DGII 3 years ago → it's now worth $13,260.
The index would have given you $13,880.
source: institutional data · total return
What just happened
missed estimates
Digi's latest quarter printed $0.26 EPS, well below the $0.51 consensus estimate.
Revenue for the trailing 12 months was $430M, up 1.5% vs. prior year. The earnings KPI uses the same $0.26 EPS figure as the headline (well below the $0.51 consensus) — the old $0.31 line conflicted with that miss narrative.
$430M
TTM revenue
$0.26
EPS (miss print)
62.4%
gross margin
the number that mattered
The number that mattered was the 49.0% EPS miss versus consensus, because premium-multiple stocks usually get punished harder for estimate misses than for slow growth.
-
digi international got off to a strong start in fiscal 2026. (year ends september 30th.) the wireless networking company reported revenue of $122.5 million, an 18% increase compared to the year-ago quarter.
-
this growth was accompanied by a 31% rise in annualized recurring revenue (arr), which reached $157 million.
-
what’s more, this marked digi’s fifth consecutive quarter of double-digit growth, underscoring its ability to sustain an upward trajectory.on top of these achievements, digi generated $36 million in cash during the period, further solidifying its financial position. the results were supported by strong contributions across all product lines and a diverse range of industries, including mass transit, utilities, retail, and data centers. both of digi’s reporting segments (iot solutions and iot products & services) played a key role in driving arr growth.
-
iot solutions grew by 32%, while iot products & services expanded by 26% from a year ago.
-
the successful integration of jolt software should support further growth this year.
source: company earnings report, 2026
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What could go wrong
the #1 risk is the reacceleration story fading back into a 1.5% growth business.
high
growth relapse
Last year, total revenue grew only 1.5%. The latest quarter was much better at $122.5M revenue, up 18% from a year ago. If that improvement fades, the market will stop paying a growth multiple for this stock.
41.6x trailing earnings leaves little room for a return to low-single-digit growth.
med
arr momentum stalls
The bull case leans heavily on $157M of ARR growing 31%. If recurring revenue stops compounding, DGII goes back to looking like a hardware-and-connectivity vendor with a good quarter, not a business mix shift.
about 37% of revenue is now represented by ARR. That's material enough to move the whole narrative.
med
integration execution
Management says the Jolt software integration should support growth this year. Maybe it does. But acquisitions are easy to announce and harder to fold into one operating rhythm.
If integration slips, the hoped-for support to ARR and revenue becomes a story instead of a result.
med
earnings volatility
Earnings predictability is only 45/100 and price stability is 30/100. Translation: this stock can be right fundamentally and still feel messy in the short term.
You are not getting megacap smoothness here. You're getting a mid-cap industrial name with real operating swings.
DGII is priced at 41.6x trailing earnings even though annual revenue only grew 1.5% last year. If the recent $122.5M quarter and $157M ARR base do not keep improving, the valuation is the risk.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
arr growth holding above the full-company pace
$157M ARR grew 31% while annual revenue only grew 1.5%. That gap is the whole rerating story.
earnings
next quarterly revenue print
After a $122.5M quarter, you want to see whether growth stays in double digits or slips back toward last year's pace.
risk
jolt integration showing up in the numbers
Management says the acquisition should help this year. You want evidence in ARR, revenue, and cash generation, not just commentary.
trend
margin durability
A 17.5% net margin (health row) is still strong for a $430M company. If growth improves and margins hold, the case gets cleaner fast.
Analyst rankings
short-term outlook
top 20%
momentum score 2 — analysts expect above-average price performance in the year ahead. in human-speak: they think the tape still looks constructive.
risk profile
average
stability score 3 — typical balance-sheet risk, but the 30/100 price stability score says the ride can still be bumpy.
chart momentum
top 20%
technical score 2 — recent price action has been better than most stocks, which helps until fundamentals say otherwise.
earnings predictability
45 / 100
earnings are harder to model here than in steadier businesses. Translation: expect some headline volatility.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 103 buyers vs. 100 sellers in 3q2025. total institutional holdings: 37.5M shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$31
$75
$45
current price
$53
target midpoint · +18% from current · 3-5yr high: $80 (+80% · 15% ann'l return)
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The full deep dive: dcf model, scenario analysis, competitive moat breakdown, and quarterly tracking — everything on this page, taken further.
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