Digi International 2025 Q3 Earnings Strong Performance as Net Income Surges 6%

Digi International reported its fiscal 2025 Q3 earnings on August 7th, 2025, delivering results that exceeded expectations. The company raised its fiscal 2025 guidance, particularly on the profitability side, and reported a 6% increase in net income. The results reflect solid operational execution and improved gross margins amid a challenging global environment.

Revenue
Total revenue for the quarter rose 2.2% year-over-year to $107.51 million, with Product revenue driving the majority at $74.14 million. Service revenue contributed $33.38 million, while Amortization remained at $0. The performance highlights the company’s continued strength in core product offerings and recurring service income.

Earnings/Net Income
Digi International’s net income climbed to $10.24 million in Q3 2025, a 5.6% increase from $9.70 million a year earlier. Earnings per share (EPS) also improved, reaching $0.28 compared to $0.27 in Q3 2024, representing a 3.7% gain. These results underscore the company’s growing profitability and operational efficiency.

Price Action
The stock experienced a mixed post-earnings price performance. Shares rose 0.57% on the day of the report, but declined 3.85% for the week and 8.97% month-to-date as of the reporting date.

Post-Earnings Price Action Review
The investment strategy of purchasing DGII shares following a quarterly revenue increase and holding for 30 days yielded a compound annual growth rate (CAGR) of 7.06% over the past three years, yet underperformed the benchmark by 29.36 percentage points. The strategy exhibited a low-risk profile with a Sharpe ratio of 0.17 and maximum drawdown of 0.00%. However, its 41.53% volatility exposed investors to considerable market fluctuations.

CEO Commentary
Ron Konezny, President and CEO, highlighted Digi’s strong execution and double-digit ARR growth despite the dynamic geopolitical climate. He noted that the company used strong cash flow and inventory normalization to reduce debt by $30 million. Konezny credited the team’s resilience and adaptability for the results, reiterating the value of Digi’s solutions in delivering cost savings and ROI for customers.

Guidance
Digi raised its fiscal 2025 Adjusted EBITDA growth guidance to 7–8%, up from a prior estimate of approximately 5%, while maintaining flat revenue and 10% ARR growth expectations. The company reiterated its long-term goal of reaching $200 million in ARR and Adjusted EBITDA by fiscal 2028, with strategic acquisitions serving as a key enabler. Digi also emphasized inventory optimization, debt deleveraging, and a focus on high-impact, recurring revenue solutions to drive sustainable growth.

Additional News
The company announced a $30 million debt reduction, driven by strong cash flow and inventory normalization, reducing outstanding debt to $40.1 million as of June 30, 2025, with $20.1 million in cash and cash equivalents. Digi also highlighted its disciplined capital allocation strategy, emphasizing strategic acquisitions and inventory optimization. CEO Ron Konezny reiterated the importance of ARR growth as a top priority and reaffirmed the company’s long-term goal of reaching $200 million in ARR and Adjusted EBITDA by fiscal 2028.