--- title: "Digi International Lifts Outlook After Record Quarter" type: "News" locale: "en" url: "https://longbridge.com/en/news/295311783.md" description: "Digi International raised its Q4 and full-year outlook following a record third quarter with $139 million in revenue, up 29% year-over-year. The company reported strong profitability, with adjusted EBITDA margins hitting a record 29.1%, and annual recurring revenue reaching $191 million. Management highlighted improved cash flow, deleveraging, and successful M&A integration, while noting ongoing supply chain pressures and margin variability as key risks." datetime: "2026-08-09T00:25:02.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/295311783.md) - [en](https://longbridge.com/en/news/295311783.md) - [zh-HK](https://longbridge.com/zh-HK/news/295311783.md) --- # Digi International Lifts Outlook After Record Quarter Digi International ((DGII)) has held its Q3 earnings call. Read on for the main highlights of the call. ### Claim 55% Off TipRanks - Unlock powerful investing tools with TipRanks Premium to make smarter, more confident investment decisions - Subscribe to TipRanks Smart Investor Newsletter, and discover new investing opportunities with data-backed stock picks Digi International’s latest earnings call struck a notably upbeat tone, underscoring record revenue, expanding profitability and accelerating recurring revenues. Management acknowledged some lingering operational headwinds, but emphasized that strong cash generation, deleveraging and successful M&A integration are positioning the company for sustained growth, with raised guidance reinforcing confidence in the trajectory. ## Record Quarterly Revenue Digi delivered record third-quarter revenue of $139 million, representing a 29% year-over-year increase and underscoring broad-based demand across its portfolio. Executives framed the quarter as a milestone that validates their strategy of blending hardware, software and solutions, while noting that growth was not overly dependent on any single product line or vertical. ## Strong Profitability and Margins Profitability moved sharply higher as gross margin reached 64.8% and adjusted EBITDA margin hit a record 29.1%, or $40 million in absolute terms. Management highlighted clear operating leverage, with profit growth outpacing revenue, and pointed to disciplined cost control and richer software and solutions mix as key drivers of the improved margin profile. ## Cash Flow Strength Cash generation was another highlight, with cash flow from operations rising 38% year-over-year to $33 million in the quarter. Digi reported cash conversion in excess of 100%, meaning operating cash flow exceeded year-to-date adjusted EBITDA on an annualized basis, reinforcing the quality of earnings and providing flexibility for investment and balance sheet repair. ## Recurring Revenue Momentum (ARR) Annual recurring revenue climbed to a record $191 million and is expected to grow at least 27% year-over-year for the full year, as the company advances toward its $200 million ARR target. Management noted that annualized recurring revenues are already trending to at least $193 million, underscoring rising software and services penetration that should help stabilize revenue and margins over time. ## Raised Guidance and Full-Year Upside After the Q3 beat, Digi raised its outlook, now guiding fourth-quarter revenue to $138–$142 million, with adjusted EBITDA of $40–$41.5 million and adjusted EPS of $0.75–$0.78. For the full year, the company now expects revenue of $529–$533 million, up 23.5% year-over-year, adjusted EBITDA of $146–$147.5 million and adjusted EPS of $2.67–$2.70, signaling confidence in sustained momentum. ## Balance Sheet and M&A Progress The balance sheet continues to strengthen, with net debt reduced to $81 million and leverage well below 1x, giving Digi more room for strategic moves. Management reported that recent acquisitions, including Jolt and Particle, have met integration targets and are already contributing to ARR and profitability, validating the company’s M&A playbook. ## Product and Commercial Execution Growth remained balanced across products, services and solutions such as Ventus and SmartSense, with higher attach rates and a healthier pipeline at all stages. Executives highlighted improving “days to win” metrics and cited rising customer urgency, particularly around AI and data center demand, as evidence that sales execution is gaining traction even in a cautious macro backdrop. ## AI Product Launch — DANI Digi unveiled DANI, an embedded natural-language AI agent within Digi Remote Manager designed to streamline customer operations, training and adoption. Management sees significant runway for DANI usage as customers increasingly rely on AI for network management, with the potential to monetize the capability more directly as adoption scales. ## Supply Chain Risks and Volatility Despite the strong quarter, management cautioned that supply chain pressures remain, with memory constraints and broader component issues still in play. These dynamics are prompting customers to place orders earlier, which can pull demand forward, but also introduce uncertainty around delivery timing and could affect near-term revenue cadence. ## Gross Margin Variability While gross margins were particularly strong this quarter, management urged investors to anchor expectations around a “base camp” in the low-to-mid 60% range. They warned that quarterly gross margins could swing by 200–300 basis points depending on product and solutions mix, even as the long-term trend benefits from rising recurring revenue. ## Longer, Uncertain Hyperscaler Opportunity Opengear continues to perform well in edge and data center markets, but direct hyperscaler engagements remain a long and unpredictable sales cycle. Digi stressed that any potential hyperscaler wins are excluded from current guidance, positioning them more as upside optionality than a core plank of the near-term growth plan. ## Days-to-Win Not Fully Normalized Although sales “days to win” improved this quarter and the pipeline is expanding, management noted that decision timelines have not fully normalized to pre-disruption levels. This suggests that some deals may still take longer to close, adding an element of timing risk even as underlying demand and customer interest remain robust. ## Guidance and Forward Outlook Looking ahead, Digi’s raised guidance signals confidence that operating leverage and cash discipline will continue to drive profits faster than revenue. The company is targeting full-year ARR growth of at least 27%, maintaining net debt around $81 million with leverage well under 1x, and emphasizes that strong cash conversion and disciplined execution should help offset lingering supply chain and sales-cycle uncertainties. Digi International’s earnings call painted a picture of a company executing well on multiple fronts, combining record revenue, robust margins and growing recurring revenue with a stronger balance sheet. While management acknowledged risks from supply chains, margin variability and hyperscaler timing, the overall message was one of controlled optimism, with raised guidance and new AI capabilities underpinning a constructive outlook for investors. ### Related Stocks - [DGII.US](https://longbridge.com/en/quote/DGII.US.md) ## Related News & Research - [Digi International Q3 revenue beats estimates on increased demand, acquisition contributions](https://longbridge.com/en/news/295014096.md) - [Apple Encryption Fight Has Investors Eyeing These Cybersecurity Stocks](https://longbridge.com/en/news/294729331.md) - [Why Legora's CEO is betting that every software company ends up ditching the seat](https://longbridge.com/en/news/295509679.md) - [08:17 ETRouteware Named No. 200 on the 2026 Inc. 5000 List of Fastest-Growing Software Companies](https://longbridge.com/en/news/295535910.md) - [Why ServiceNow soared 12% higher last month](https://longbridge.com/en/news/295456564.md)