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Digi International Inc. (DGII)
NASDAQ:DGII
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Digi International (DGII) AI Stock Analysis

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DGII

Digi International

(NASDAQ:DGII)

Rating:78Outperform
Price Target:
$39.00
▲(12.33% Upside)
Digi International's strong financial performance and positive earnings call highlights are the most significant factors driving the score. The technical analysis supports a positive trend, while valuation concerns slightly temper the outlook. The acquisition of Jolt Software is a positive strategic move but is already accounted for in the earnings analysis.

Digi International (DGII) vs. SPDR S&P 500 ETF (SPY)

Digi International Business Overview & Revenue Model

Company DescriptionDigi International (DGII) is a leading provider of IoT (Internet of Things) connectivity solutions and embedded systems. The company operates in various sectors, including industrial automation, smart cities, transportation, and healthcare. Digi's core products and services include cellular and wireless networking devices, IoT management software, and embedded solutions designed to facilitate seamless communication between devices and applications in diverse environments.
How the Company Makes MoneyDigi International generates revenue through multiple streams, primarily by selling hardware products such as routers, gateways, and other connectivity devices. Additionally, the company offers subscription-based services that provide ongoing revenue through its IoT management platform, which enables customers to monitor and manage their IoT deployments effectively. Key revenue streams also include providing professional services, such as installation and technical support. Partnerships with major telecommunications companies and technology providers bolster Digi's market presence and enhance its product offerings, contributing significantly to its earnings.

Digi International Earnings Call Summary

Earnings Call Date:Aug 06, 2025
(Q3-2025)
|
% Change Since: |
Next Earnings Date:Nov 13, 2025
Earnings Call Sentiment Positive
Digi International demonstrated strong financial performance with a return to revenue growth, record EBITDA margins, and significant debt reduction. However, challenges in the renewable market, APAC weakness, and macroeconomic volatility present concerns. Overall, the positive achievements slightly outweigh the challenges.
Q3-2025 Updates
Positive Updates
Return to Year-Over-Year Revenue Growth
Digi International returned to year-over-year revenue growth in Q3 2025, with annual recurring revenue (ARR) growing double digits for the third consecutive quarter, now representing approximately 30% of trailing 12-month revenues.
Record Adjusted EBITDA Margins
Adjusted EBITDA margins hit a record 25.6%, driven by improved profitability from ARR and favorable product mix.
Debt Reduction and Positive Cash Flow
The company retired $30 million in debt, reducing net debt to $20 million, and is on track to be net cash positive by the end of fiscal 2025. A 9% free cash flow yield underscores the efficiency of their business model.
Strong Demand in Key Segments
Increased demand was noted in the utility, water, mass transit, Edge, and data center segments, including growth in AI-related deployments.
Negative Updates
Challenges in the Renewable Market
The renewable market demand was not as strong as traditionally, posing challenges for Digi International.
APAC Market Weakness
APAC region showed softer performance than expected, although this was offset by stronger results in North America.
Flat Sequential Sales Guidance
Guidance for the fourth quarter indicates flat sequential sales and a slight decrease in EBITDA dollars, driven by cautious mix assumptions.
Tariff and Macro Volatility
There was some impact from tariff and macroeconomic volatility, though it was managed through strategic buying and supply chain adjustments.
Company Guidance
During the Q3 2025 earnings call for Digi International Inc., the company highlighted a return to year-over-year revenue growth with annual recurring revenue (ARR) increasing by double digits for the third consecutive quarter, now accounting for a record 30% of trailing 12-month revenues. Adjusted EBITDA margins reached a record 25.6%, and free cash flow yield stood at 9%. The company reduced its net debt to $20 million after retiring $30 million in debt and expects to be net cash positive by the end of fiscal 2025. Looking ahead to the fourth quarter, Digi anticipates flat sequential sales and slightly lower EBITDA dollars, influenced primarily by product mix and gross margin. The company remains focused on strategic acquisitions that align with its ARR and growth objectives, while emphasizing its diversified global supply chain and continued inventory optimization.

Digi International Financial Statement Overview

Summary
Digi International demonstrates strong financial health with robust profitability and operational efficiency. The balance sheet is well-managed with low leverage, and the company generates substantial cash flows. However, the recent revenue decline needs attention to sustain growth.
Income Statement
78
Positive
Digi International shows a strong income statement with consistent profitability improvements. The TTM gross profit margin is 59.85%, and the net profit margin is 10.06%, indicating efficient cost management and a healthy bottom line. However, the revenue growth has slowed, with a slight decline of 1.28% compared to the previous year. EBIT and EBITDA margins are robust at 13.11% and 19.12%, respectively, highlighting operational efficiency.
Balance Sheet
82
Very Positive
The company's balance sheet is strong with a low debt-to-equity ratio of 0.14, reflecting conservative leverage. Return on equity is solid at 6.96%, demonstrating effective use of shareholders' funds. The equity ratio stands at 77.48%, suggesting a stable financial structure with a substantial equity base. Overall, the balance sheet indicates low financial risk and strong capital management.
Cash Flow
85
Very Positive
Digi International's cash flow statements indicate strong cash generation capabilities. The free cash flow grew by 29.61% year-over-year, and the operating cash flow to net income ratio is a robust 2.55, indicating strong operational cash flow relative to net income. Furthermore, the free cash flow to net income ratio is an impressive 2.49, underscoring the company's ability to convert earnings into cash efficiently.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue420.94M424.05M444.85M388.23M308.63M279.27M
Gross Profit261.83M249.91M252.20M216.29M166.66M143.97M
EBITDA90.72M71.34M84.11M72.17M38.77M33.38M
Net Income42.69M22.50M24.77M19.38M10.37M8.41M
Balance Sheet
Total Assets770.34M815.08M835.53M853.89M619.53M528.68M
Cash, Cash Equivalents and Short-Term Investments20.10M27.51M31.69M34.90M152.43M54.13M
Total Debt52.34M137.39M220.91M15.52M66.80M79.67M
Total Liabilities148.83M234.04M295.04M352.38M147.01M157.18M
Stockholders Equity621.51M581.03M540.49M501.51M472.52M371.50M
Cash Flow
Free Cash Flow103.30M80.87M32.41M35.77M55.47M33.58M
Operating Cash Flow106.39M83.09M36.75M37.74M57.72M34.48M
Investing Cash Flow-3.09M3.00K-4.34M-349.53M-21.36M-137.00M
Financing Cash Flow-111.72M-89.05M-34.50M192.78M62.24M63.60M

Digi International Technical Analysis

Technical Analysis Sentiment
Positive
Last Price34.72
Price Trends
50DMA
33.71
Positive
100DMA
32.23
Positive
200DMA
31.60
Positive
Market Momentum
MACD
0.30
Negative
RSI
50.63
Neutral
STOCH
67.14
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DGII, the sentiment is Positive. The current price of 34.72 is above the 20-day moving average (MA) of 33.42, above the 50-day MA of 33.71, and above the 200-day MA of 31.60, indicating a bullish trend. The MACD of 0.30 indicates Negative momentum. The RSI at 50.63 is Neutral, neither overbought nor oversold. The STOCH value of 67.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DGII.

Digi International Risk Analysis

Digi International disclosed 40 risk factors in its most recent earnings report. Digi International reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Digi International Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$1.29B30.457.21%-2.37%147.46%
78
Outperform
$1.09B16.4416.36%24.14%16.17%
70
Outperform
$788.16M12.6112.97%0.76%
61
Neutral
$35.45B8.20-10.08%1.91%8.56%-9.51%
60
Neutral
$4.34B-12.48%-1.43%43.14%
59
Neutral
$3.55B17.08%-11.03%91.98%
55
Neutral
$623.18M-9.14%119.36%86.58%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DGII
Digi International
33.74
5.34
18.80%
HLIT
Harmonic
9.60
-4.46
-31.72%
AIOT
Powerfleet
4.54
-0.09
-1.94%
NTGR
Netgear
26.90
10.18
60.89%
VSAT
ViaSat
31.02
15.86
104.62%
COMM
CommScope Holding
15.92
12.06
312.44%

Digi International Corporate Events

M&A Transactions
Digi International Acquires Jolt Software for $145.5M
Positive
Aug 19, 2025

On August 18, 2025, Digi International Inc. announced the acquisition of Jolt Software, Inc. for approximately $145.5 million in cash. This acquisition aims to enhance Digi’s SmartSense offerings by integrating Jolt’s software platform, which is designed to improve team accountability and digital food safety compliance. The acquisition is expected to accelerate Digi’s annual recurring revenue growth and strengthen its market position in various verticals, including foodservice and healthcare. The transaction is anticipated to be immediately accretive to Digi’s adjusted earnings per share and is expected to generate significant synergies by 2026.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 23, 2025