Earnings Recap — Q3 FY2026
CY Q3 2026 · Reported August 5, 2026 · Beat 6 of last 6 quarters
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Digi's record quarter and raised guidance underscore the strength of the AI infrastructure buildout, particularly in data center and edge applications where Opengear's console servers are in demand. The company's AI agent (DANI) and improving sales funnel signal continued momentum in IoT connectivity and management, which are critical to the buildout. Supply chain urgency around memory and other components could create near-term tailwinds for Digi and its distribution partners.
Digi delivered record Q3 results with revenue of $139M, up 29% YoY, and gross margin of 64.8%. Adjusted EBITDA reached $40M (29.1% margin) and cash flow from operations was $33M, up 38% YoY. ARR hit a record $191M, with balanced contributions from both IoT Products & Services and IoT Solutions segments. The company reduced net debt to $81M, leverage below 1x. Management highlighted the successful integration of recent acquisitions (Jolt Software and Particle) and the launch of DANI, an AI-powered natural language interface for device management.
Management raised Q4 and full-year guidance. Q4 revenue is expected between $138M and $142M, adjusted EBITDA between $40M and $41.5M, and adjusted EPS between $0.75 and $0.78. Full-year revenue is now projected at $529M to $533M (up 23.5% YoY), adjusted EBITDA of $146M to $147.5M (up 35.5% YoY), and adjusted EPS of $2.67 to $2.70. ARR is expected to grow at least 27% YoY, reaching at least $193M, approaching the $200M long-term target. Management highlighted improving sales cycle times, pipeline growth across all stages, and continued operating leverage with profits growing faster than revenue. They also noted supply chain urgency (memory and other components) is driving customers to place orders earlier, which is positively impacting the funnel.
“We are so excited to share an update on our progress and what we expect in the current quarter.”
on Opening remarks
“We committed early on that we were going to see ARR and profits growing faster than revenue, and that continues to be the trend that you see here with our ARR and our adjusted EBITDA growing faster than our revenue number is on a revenue number that is actually very strong.”
on Financial performance and operating leverage
“There will always be a human at the wheel, but we can make managing your system much easier with the advent of AI.”
on DANI AI agent
A question for you on the sales funnel and the days to win, which is an important KPI I know you monitor. You exceeded expectations this quarter and have guided revenues up sequentially. And so I'm just curious what insight you could give us on the sales funnel and how fast deals are converting.
Jamie Loch noted improvement in days-to-win as customers make decisions faster, though not yet at normalized levels. Ron Konezny added that strong PMI, the AI wave impacting data centers and utilities, and supply chain urgency (memory and other components) are driving customers to place orders earlier, which is showing up in pipeline data.
Follow-up for you on the data center theme. Ron, Opengear has an existing presence in that vertical. I'm interested in any update you can give us there in general? And then specifically on the hyperscale side, I know that historically, you have not sold directly there, but have any of the tectonic plates maybe shifted in your favor?
Ron Konezny said Opengear has been a great performer with widespread strength across edge campus and data center applications. They have been the solution of choice for neo clouds, and they are knocking on hyperscaler doors, but those are longer sales cycles and hard to predict. They remain optimistic but do not embed hyperscaler expectations into guidance.
ARR kind of accelerated nicely quarter-over-quarter here. I was just hoping you could talk about any areas of strength that you are seeing, anything specific to call out?
Ron Konezny highlighted balanced contributions from product and services and solutions. On the product side, increased volume with high attach rates drove results. On the solutions side, strong contributions from Ventus and SmartSense, with enterprise deals helping move the needle on ARR.