GET DAILY SIGNALSDigi International (DGII) Delivers Record Q4 with +25% Revenue Growth
Key Takeaways
- Fourth fiscal quarter revenue rose 25% year over year to a record $143.3 million, topping the consensus estimate of $140.3 million.
- Adjusted earnings per share (EPS) came in at $0.78, $0.02 above the analyst consensus of $0.76.
- Annualized recurring revenue (ARR) reached $197 million at year end, up 30% year over year.
- Shares fell roughly 11% in after-hours trading, as investors weighed the company's forward guidance against the quarter's beat.
- For the first quarter of fiscal 2027, Digi guided revenue of $140 million to $144 million and adjusted EPS of $0.71 to $0.75.
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Why This Quarter Matters
Digi International (DGII) provides Internet of Things connectivity products, services, and software solutions that help customers build connected devices and manage critical communications infrastructure. The fourth-quarter report wraps up a fiscal year that included a major acquisition and an ongoing shift toward recurring, higher-margin software revenue. For investors, the update provides a clear view of how effectively the company is translating that strategy into sustainable ARR growth while maintaining margins and handling the post-acquisition balance sheet. The accompanying guidance is just as relevant, as it reflects management's outlook for demand in the industrial IoT space heading into fiscal 2027.
The Quarter's Reported Numbers
For the fourth fiscal quarter ended September 30, 2026, Digi International (DGII) posted record revenue of $143.3 million, up 25% from $114.3 million a year earlier and ahead of the $140.3 million consensus estimate. Adjusted earnings per share reached $0.78, $0.02 above the $0.76 that analysts had projected. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
On a GAAP basis, net income totaled $14.94 million, or $0.38 per diluted share, compared with $9.98 million, or $0.26 per share, in the prior-year period. Gross profit margin stood at 63.7%, while operating margin widened by 400 basis points to 16.5%. Annualized recurring revenue rose to $197 million at year end, a 30% increase year over year. Operating cash flow reached $42 million, up from $28 million a year ago.
For the full fiscal year, revenue came in at approximately $535.2 million, with GAAP net income of $53.7 million, or $1.38 per diluted share.
How the Market Reacted
Even with the top- and bottom-line beat, Digi International (DGII) shares declined roughly 11% in after-hours trading. The drop appeared driven by investor focus on the forward outlook rather than the quarter's headline results. Some market participants viewed the revenue guidance, while centered on consensus at the midpoint, as somewhat conservative given the elevated expectations that had built up after the stock's prior gains. This reaction underscores how sentiment in high-growth software and IoT names can shift quickly when guidance falls short of an already optimistic bar.
Forward Outlook and Factors to Watch
Guidance remains the key focus for upcoming quarters. For the first quarter of fiscal 2027, management expects revenue between $140 million and $144 million, adjusted EBITDA of $39.5 million to $41 million, and adjusted net income per share of $0.71 to $0.75.
For the full fiscal year, the company projects revenue growth of 10% to 15%, adjusted EBITDA growth of 12.5% to 17.5%, and ARR growth of at least 15%. Investors will want to monitor whether ARR momentum holds, given that recurring revenue sits at the core of the software-focused strategy and supports higher margins.
Additional areas to track include the integration and contribution from recent acquisitions, gross margin trends, and the pace of debt reduction. Supply-chain normalization, industrial customer demand, and data center activity could also affect product sales. The central question remains whether Digi International (DGII) can sustain double-digit growth while preserving profitability and its recurring-revenue base.
Tools That Support My Analysis
When evaluating results like these, I find Tickeron's AI Screener particularly useful for quickly scanning technical patterns, fundamentals, and industry comparisons. It helps surface additional context without replacing my own review of the numbers and guidance.
Disclaimer
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
DGII in upward trend: price may ascend as a result of having broken its lower Bollinger Band on November 05, 2026
DGII may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options. In 29 of 38 cases where DGII's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are 76%.
Technical Analysis (Indicators)
Bullish Trend Analysis
The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where DGII's RSI Oscillator exited the oversold zone, 15 of 22 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are 68%.
The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 5 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.
Following a +7.68% 3-day Advance, the price is estimated to grow further. Considering data from situations where DGII advanced for three days, in 237 of 323 cases, the price rose further within the following month. The odds of a continued upward trend are 73%.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on November 02, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on DGII as a result. In 51 of 73 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 70%.
The Moving Average Convergence Divergence Histogram (MACD) for DGII turned negative on November 02, 2026. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 43 similar instances when the indicator turned negative. In 34 of the 43 cases the stock turned lower in the days that followed. This puts the odds of success at 79%.
DGII moved below its 50-day moving average on October 30, 2026 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for DGII crossed bearishly below the 50-day moving average on November 06, 2026. This indicates that the trend has shifted lower and could be considered a sell signal. In 7 of 14 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are 50%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where DGII declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 68%.
Fundamental Analysis (Ratings)
The Tickeron PE Growth Rating for this company is 9 (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 20 (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 81, placing this stock better than average.
The Tickeron Seasonality Score of 50 (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is 51 (best 1 - 100 worst), indicating steady price growth. DGII’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of 74 (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (3.501) is normal, around the industry mean (5.210). P/E Ratio (49.000) is within average values for comparable stocks, (3.688). Projected Growth (PEG Ratio) (0.981) is also within normal values, averaging (0.778). Dividend Yield (0.000) settles around the average of (0.067) among similar stocks. P/S Ratio (5.330) is also within normal values, averaging (11.937).
The Tickeron SMR rating for this company is 78 (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
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General Information
a provider of communications adapters that enable open systems, server-based applications
Industry TelecommunicationsEquipment
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