Key Highlights

  • Digi International fell 12.72% on November 12, 2026, after dropping as much as 17.38% earlier in the session.
  • Fiscal fourth quarter Revenue came to USD 143 million, up 25%, and Net Income reached USD 15 million, up 50%, with diluted Earnings of USD 0.38 per share.
  • Annual Recurring Revenue climbed 30% to USD 197 million, while fiscal 2026 revenue hit USD 535 million, up 24%.
  • Management now projects fiscal 2027 sales growth of 10% to 15% and adjusted EBITDA growth between 12.5% and 17.5%, markedly below the prior year's pace.

Solid Quarter, Cooler Guidance

The shares had been priced for rapid growth, which explains much of the reaction. Digi International (NASDAQ:DGII) released its results on the afternoon of November 11, 2026, and shares sold off in the following regular trading session. Quarterly revenue of USD 143 million rose 25%, net income climbed 50% to USD 15 million, and Operating Cash Flow hit USD 42 million, up from USD 28 million a year earlier. Annual recurring revenue jumped 30% to USD 197 million, the metric investors weigh most heavily because it points to durable software and services income. Gross Margin of 63.7% eased 20 basis points. None of these readings were weak, yet the stock lost 12.72%, since guidance for fiscal 2027 calls for only 10% to 15% expansion, under half of the 24% achieved in fiscal 2026. Shares priced for acceleration can fall sharply when growth slows, even from a healthy level, and the intraday low near 17% down showed how quickly sellers moved.

Acquisitions Shape the Base Behind the Guidance

Fiscal 2026 revenue reached USD 535 million, a 24% increase, while net income of USD 54 million, equal to USD 1.38 per diluted share, reflects a year of solid delivery across connectivity hardware, remote management software and offerings for industrial, energy and public safety customers. Acquisitions contributed part of that growth, which means underlying organic momentum counts for more than the headline rate. Against that, the fiscal 2027 range (sales up 10% to 15%, adjusted EBITDA up 12.5% to 17.5%) also contends with a harder comparison. A pending transaction adds another variable, since Digi International (NASDAQ:DGII) has entered an agreement to buy Disruptive Technologies, paying USD 130 million in cash, and closing is anticipated before November 30, 2026 pending regulatory sign-off. Investors will want to know if the outlook includes the transaction's full contribution, a point likely to come up on the next call. The wider market offered no help, as the Russell 2000 fell 1.66% while Treasury yields jumped and weighed on growth multiples.

Margin Pressure and Deal Execution Risks

Execution hinges on folding in acquisitions while keeping gross margin around 64%. Industrial and infrastructure buyers may hold off on purchases when borrowing costs rise, and slower growth in recurring revenue would strain the premium multiple. Bulls will point to cash generation, a larger base of recurring income and a Balance Sheet capable of funding more deals. Investors in Digi International (NASDAQ:DGII) will look for the Disruptive Technologies closing, quarterly recurring revenue growth that holds near 30%, and any revision to the guidance band. A stock that loses more than 12% in a quarter where revenue rose 25% often draws buyers after the numbers settle, but upcoming catalysts will determine whether the slower growth path reshapes its valuation.

Where Things Stand

Digi International (NASDAQ:DGII) lost 12.72% on November 12, 2026, even though revenue for the fiscal fourth quarter grew 25%. The projection for fiscal 2027 calls for 10% to 15% expansion. Annual recurring revenue of USD 197 million and solid cash generation underpin the business, while the USD 130 million Disruptive Technologies Acquisition still pending and the speed of recurring growth will steer investor mood.