Digi International reported first fiscal quarter 2026 revenue of $122 million, up 18% year-over-year, driven by the integration of Jolt and organic demand for IoT connectivity solutions. Gross profit margin expanded by 40 basis points to 62.4%, while operating margin improved by the same measure to 13.3%. Net income rose 16% to $12 million, translating to $0.31 per diluted share, and adjusted net income climbed 27% to $21 million, or $0.56 per diluted share, despite a $0.06 per share impact from interest expense under the new non-GAAP definition. Adjusted EBITDA increased 23% to $32 million, underscoring strong underlying cash-generative profitability.

The company paid down $24 million on its revolving credit facility, reducing total debt to $135 million and maintaining $31 million in cash and equivalents, resulting in net debt of $104 million. Cash flow from operations rose to $36 million from $30 million in the prior-year quarter, notwithstanding a $5.1 million decrease in deferred income tax benefits. This robust cash generation supports Digi’s strategy of deleveraging and funding strategic acquisitions without dilutive equity issuance.

In the IoT Product & Services segment, revenue grew 11% to $86 million, including $2.2 million of recurring-revenue expansion and a 26% increase in annualized recurring revenue (ARR) to $34 million. Operating margin of 13.5% was slightly down by 60 basis points due to higher inventory costs offset by favorable product mix. The IoT Solutions segment delivered 39% revenue growth to $36 million, fueled by a $7.6 million increase in recurring revenue and the Jolt acquisition, lifting ARR by 32% to $123 million. Operating margin expanded 370 basis points to 12.9%, reflecting operating-expense leverage and a higher share of recurring-revenue volume.

Digi forecasts second fiscal quarter revenue of $124 million to $128 million and adjusted EBITDA of $31.5 million to $33.0 million. Adjusted net income per diluted share is projected between $0.56 and $0.59, including an expected $0.04 to $0.05 per share impact from interest expense. For full fiscal 2026, the company targets ARR growth of 23%, revenue growth of 14%–18%, and adjusted EBITDA expansion of 17%–21%, assuming Particle acquisition synergies contribute approximately $20 million to $22 million in ARR, $13 million to $14 million in revenue, and $1 million to $2 million in adjusted EBITDA.