Digi International Inc

Digi International reported record third-quarter fiscal 2026 results, with revenue rising 29% to $138.7 million and adjusted EBITDA climbing 47% to $40.4 million. Annualized recurring revenue reached $191 million, up 52%, driven by high software attach rates and the Particle acquisition. The company raised its full-year revenue guidance to $529 million to $533 million and adjusted EBITDA guidance to $146 million to $147.5 million. Management highlighted the successful integration of Jolt and Particle, a new generative AI tool called DANI, and a capital allocation strategy focused on debt reduction and acquisitions.

Digi International shares moved higher after the company reported record revenue and continued progress shifting toward a more recurring revenue-oriented business model. Annualized recurring revenue increased 50%, reinforcing management's expectation that higher-quality revenue will continue supporting margin expansion and earnings growth. Conestoga Capital Advisors highlighted the industrial IoT connectivity provider as a notable contributor in its second-quarter 2026 investor letter. The stock closed at $72.75 per share on August 5, 2026, with a market capitalization of $2.74 billion, and has gained 126.64% over the past 52 weeks.

Digi International reported quarterly earnings of $0.75 per share, topping the Zacks Consensus Estimate of $0.67 per share by 11.94%. Revenue came in at $138.67 million, surpassing the consensus estimate by 4.57% and up from $107.51 million a year ago. The company has now beaten consensus EPS and revenue estimates in each of the last four quarters. Shares have gained about 66.6% year to date, compared with a 13% rise for the S&P 500. The current Zacks Rank for Digi International is 3, or Hold, with consensus estimates for the coming quarter at $0.62 per share on $135.8 million in revenues.

Zacks Equity Research has identified Cisco Systems, Extreme Networks, and Digi International as stocks to consider within the computer networking industry, which faces near-term headwinds from cautious IT spending and fierce competition but is expected to benefit long-term from AI-driven infrastructure upgrades. The Zacks Computer-Networking industry has gained 67.4% over the past year, outperforming the S&P 500's 18.4% rise, though it currently trades at a forward price-to-earnings ratio of 28.78, above the broader market. Cisco is seeing strong AI infrastructure demand, with hyperscaler AI orders reaching $1.9 billion in its fiscal third quarter and full-year expectations raised to $9 billion in orders and about $4 billion in revenues. Extreme Networks reported 11% revenue growth in its fiscal third quarter, driven by its Platform ONE launch and a 29% increase in SaaS annual recurring revenue to $236 million. Digi International expects annual recurring revenue to grow 25% in fiscal 2026 to around $190 million and recently introduced an AI network operations agent called DANI.