Key Highlights

  • Fiscal 2026 Revenue rose 24% to $535 million.
  • Adjusted Net Income per diluted share rose 38% to $2.70 for the year.
  • Annualized Recurring Revenue reached $197 million at year end, up 30%.
  • Acquisitions of Jolt Software and Particle Industries contributed to the year's results.

Digi International Inc. (NASDAQ:DGII) reported fourth-quarter and full-year fiscal 2026 results for the period ended September 30, 2026. Fourth-quarter revenue was $143 million, up 25%, and full-year revenue reached $535 million, up 24%. Adjusted net income per diluted share rose 38% to $2.70 for the year, and the company's annualized recurring revenue reached $197 million at year end. Industrial connectivity and IoT providers often grow through acquisitions that add software and recurring revenue, which makes the mix of organic and acquired growth an important part of any annual comparison.

Fourth-Quarter Performance

Fourth-quarter Gross Profit Margin was 63.7%, down 20 basis points, while Operating Margin rose 400 basis points to 16.5%. Net income increased 50% to $15 million, and diluted EPS rose 46% to $0.38.

Adjusted net income reached $30 million, up 53%, and adjusted EBITDA was $42 million, up 43%. The company's adjusted figures remove items it treats as outside its core results.

Gross margin measures how much of revenue is left after the direct cost of products and services. A small change in fourth-quarter gross margin suggests that pricing and cost of sales were broadly steady in the period.

Full-Year Results

For fiscal 2026, gross margin was 63.8%, up 90 basis points, and operating margin improved 180 basis points to 14.9%. Net income was $54 million, up 32%, and diluted EPS was $1.38, up 28%.

Adjusted EBITDA reached $148 million, up 37%, and adjusted net income per diluted share was $2.70, up 38%. The gap between GAAP and adjusted EPS narrowed compared with the prior year, which suggests that adjustments were a smaller share of results.

Operating margin improved on a larger revenue base, which suggests that operating costs grew more slowly than sales. Operating Leverage of this kind is a sign that a company can add revenue without a matching increase in spending.

Recurring Revenue and Acquisitions

Annualized recurring revenue was $197 million at year end, up 30%. The company treats recurring revenue as a central measure of the quality of its revenue base, and its 30% growth outpaced total revenue growth of 24%.

Fiscal 2026 results include Jolt Software for the full year and Particle Industries from its January 2026 Acquisition date. Fiscal 2025 included Jolt only from its August 2025 acquisition, which means part of the year-over-year growth reflects purchased businesses.

Recurring revenue gives investors visibility because subscriptions and service contracts renew over time. A 30% rise in ARR indicates that the company is adding recurring customers at a faster pace than its overall sales growth.

Open Questions

Acquisitions add to reported growth, and the update does not separate organic growth from acquired revenue. Fourth-quarter gross margin moved only slightly, while the full-year margin gain came from operating leverage, which can be sensitive to spending and integration costs.

Future quarters will show whether ARR growth stays near 30% and how the company deploys cash between acquisitions and other uses.

The company's adjusted figures remove items it treats as non-core, including some acquisition-related costs. The gap between GAAP and adjusted results is a reminder that reported profit depends on how those items are classified.

Final Word

Digi International closed fiscal 2026 with revenue of $535 million, rising recurring revenue and higher adjusted earnings. Acquisitions contributed to the year's growth, so the trend in organic revenue and in ARR will be the measures to watch as the company moves into fiscal 2027. The split between organic and acquired growth will be clearer as fiscal 2027 results come in.