Digi International (DGII) Earnings Date & Reports

Key Takeaways

• Digi International is scheduled to report its third fiscal quarter 2026 results on Wednesday, August 5, after market close.
• Wall Street consensus estimates call for adjusted earnings per share (EPS) of approximately $0.66 and revenue of roughly $132.6 million.
• Company-issued guidance for the quarter projects revenue between $130 million and $134 million, with adjusted EPS in the $0.65 to $0.68 range.
• The company enters this report following back-to-back record revenue quarters, most recently posting $131 million in Q2 FY2026 alongside record ARR (annualized recurring revenue) of $184 million.
• Investors will closely watch ARR momentum, gross margin trajectory, and updates on the integration of the recently acquired Particle platform.
• Analyst sentiment remains positive, with a consensus Strong Buy rating and a 12-month average price target of approximately $72.20.

Earnings Context and Why It Matters

Digi International's fiscal third-quarter report arrives at a pivotal moment for the IoT (Internet of Things) connectivity specialist. The company has been executing a well-defined strategy of shifting its revenue mix toward higher-margin recurring subscription and software-based solutions, and the market has rewarded that discipline. Coming off record revenue and ARR in the second quarter, the Q3 print will test whether Digi can sustain its growth trajectory amid a mixed macroeconomic backdrop. For investors, this report offers a critical read on enterprise IoT spending patterns, the pace of recurring revenue conversion, and the early returns from the company's recent acquisition of Particle — an edge-to-cloud IoT platform — which closed in January 2026 and meaningfully expands Digi's solutions portfolio.

Earnings Expectations

For the third fiscal quarter ended June 30, 2026, Digi International's management has guided for revenue in the range of $130 million to $134 million and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) between $35.5 million and $37.0 million. The company also provided adjusted EPS guidance of $0.65 to $0.68, which notably now includes interest expense following an update to its non-GAAP (Generally Accepted Accounting Principles) calculation methodology introduced earlier this fiscal year.

Wall Street consensus estimates, drawn from four to five analysts covering the stock, land at approximately $0.66 in adjusted EPS on roughly $132.6 million in revenue. These figures sit comfortably within management's guided range. For context, in the same quarter last year, Digi delivered adjusted EPS of $0.53 on revenue of $107.5 million, meaning the market is pricing in roughly 25% earnings growth and 23% revenue growth year-over-year.

Historically, Digi has shown a pattern of beating consensus: the company has topped EPS estimates in seven of its last eight quarters. The most recent Q2 FY2026 report on May 6 delivered adjusted EPS of $0.62, comfortably above the $0.58 consensus, alongside revenue of $130.7 million versus the $125 million Street expectation. The stock responded with a 5.4% gain the following day.

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Market Reaction and Investor Sentiment

Investor sentiment heading into the Q3 FY2026 report appears cautiously optimistic. Digi International shares have posted a remarkable run over the past twelve months, gaining more than 100% and recently trading near $65.50 as of late July 2026. The stock has, however, pulled back from its 52-week high of $76.41, reflecting some pre-earnings positioning and broader technology sector volatility. Analyst coverage remains favorable: five analysts rate the stock a Strong Buy, with price targets ranging from $63 to $78. Key risks to sentiment include potential tariff-related cost pressures, any softening in enterprise IoT spending, and whether the integration of Particle and the earlier Jolt acquisition continues to progress on schedule. Options market data from the prior quarter implied a move of roughly 7.6% around earnings, suggesting traders anticipate a meaningful post-release swing once again.

Forward Outlook and Key Factors to Monitor

Beyond the headline numbers, several forward-looking signals will command attention when Digi reports on August 5.

Annualized Recurring Revenue (ARR) growth remains the single most important metric for understanding Digi's transformation. ARR hit a record $184 million exiting Q2, representing 50% year-over-year growth. Any sequential increase toward or beyond $190 million would reinforce confidence in the recurring revenue flywheel, which drives higher gross margins and more predictable cash flows over time.

Gross margin trends are equally critical. The company posted a gross margin of 64.0% in Q2, up 190 basis points from the prior year. A sustained expansion in this metric would confirm that the mix shift toward software and subscription revenue is delivering the expected profitability uplift.

Investors should also monitor Particle integration milestones. Acquired in January 2026, Particle extends Digi's capabilities in edge computing and cloud-based device management. Any commentary on cross-selling traction, customer retention, or cost synergies will be closely scrutinized.

On the balance sheet side, Digi carried $143 million in debt as of March 31, 2026, following the Particle acquisition, offset by $32 million in cash. Progress on debt reduction and free cash flow generation — which reached a record $41 million from operations in Q2 — will influence how the market assesses financial flexibility for future M&A (mergers and acquisitions) or organic investment.

Looking further ahead, management updated its full-year fiscal 2026 outlook in May, targeting ARR growth of 25%, revenue growth of 20-22%, and adjusted EBITDA growth of 23-26%. The Q3 print will either validate those full-year targets or prompt a reassessment. With the midpoint of guidance implying approximately 20% revenue growth in the second half of the fiscal year, the bar is set high — but Digi's recent execution suggests it is within reach.

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