Digi International (DGII) investor relations material

Executive summary

• Achieved record quarterly revenue of $122–$122.5 million, up 18% year-over-year, and annualized recurring revenue (ARR) of $157 million, up 31%, with strong growth in recurring revenue and adjusted profitability metrics.

• Adjusted EBITDA reached $31.6–$32 million, up 23% year-over-year, with a record 25.8% margin; adjusted net income rose 27% to $21–$21.4 million.

• Net income increased 16% to $11.7–$12 million; cash flow from operations reached $35.4–$36 million, supporting deleveraging and acquisitions.

• Integration of Jolt and acquisition of Particle are progressing well, enhancing platform offerings and cross-selling opportunities.

• ARR now represents 35% of total revenue, driven by a shift to subscription-based solutions and disciplined acquisitions.

Financial highlights

• Gross profit margin improved by 40 basis points year-over-year to 62.4%; operating margin up 40 basis points to 13.3%.

• Adjusted EBITDA margin reached 25.8%; net income margin for the quarter was approximately 9.8%.

• Free cash flow increased 22% year-over-year to $35.4 million; cash and cash equivalents stood at $31 million.

• Net debt/Adjusted EBITDA ratio at 0.9x, with total net leverage ratio maintained below 3.0x.

• Stockholders’ equity increased to $649.2 million; total assets were $918.4 million as of December 31, 2025.

Outlook and guidance

• Fiscal 2026 guidance: ARR growth of 23%, revenue growth of 14–18%, adjusted EBITDA growth of 17–21%.

• Q2 revenue expected between $124–$128 million; adjusted EBITDA between $31.5–$33.0 million.

• Particle acquisition expected to add $20–$22 million in ARR and $13–$14 million in revenue for fiscal 2026.

• Long-term targets include reaching $200 million in both ARR and adjusted EBITDA within three years.

• No annual guidance raise after Q1; prudent approach due to timing and market variability.