# EDGAR Filing Document

**Accession Number:** 0000854775
**File Stem:** 0000854775-26-000005
**Filing Date:** 2026-2
**Character Count:** 119568
**Document Hash:** 3180fadb417be64cd3943f570ffa7d9e
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000854775-26-000005.hdr.sgml**: 20260204

**ACCESSION NUMBER**: 0000854775-26-000005

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 80

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260204

**DATE AS OF CHANGE**: 20260204

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** DIGI INTERNATIONAL INC
- **CENTRAL INDEX KEY:** 0000854775
- **STANDARD INDUSTRIAL CLASSIFICATION:** COMPUTER COMMUNICATIONS EQUIPMENT [3576]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 411532464
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-34033
- **FILM NUMBER:** 26598252

**BUSINESS ADDRESS:**
- **STREET 1:** 9350 EXCELSIOR BLVD.
- **STREET 2:** SUITE 700
- **CITY:** HOPKINS
- **STATE:** MN
- **ZIP:** 55343
- **BUSINESS PHONE:** (952) 912-3444

**MAIL ADDRESS:**
- **STREET 1:** 9350 EXCELSIOR BLVD.
- **STREET 2:** SUITE 700
- **CITY:** HOPKINS
- **STATE:** MN
- **ZIP:** 55343

?xml version='1.0' encoding='ASCII'? dgii-20251231

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q** 

---

| | |
|:---|:---|
| ☑ | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

---

**For the quarterly period ended: December 31, 2025**

**OR**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> to <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>.**

**Commission file number: 001-34033**![digilogoregistered2a02.jpg](dgii-20251231_g1.jpg)

**DIGI INTERNATIONAL INC.** 

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Delaware** | **41-1532464** |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |

---

---

| | | |
|:---|:---|:---|
| **9350 Excelsior Blvd.**<br>**Hopkins** | **Suite 700**<br>**Minnesota** | **55343** |
| (Address of principal executive offices) | (Address of principal executive offices) | (Zip Code) |

---

**(952) 912-3444** 

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol** | **Name of each exchange on which registered** |
| Common Stock, par value $.01 per share | DGII | The Nasdaq Stock Market LLC |

---

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☑ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| Emerging growth company | ☐ | | |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

On January 29, 2026, there were 37,611,160 shares of the registrant's $.01 par value Common Stock outstanding.

------

INDEX

---

| | |
|:---|:---|
| | Page |
| <u>[PART I. FINANCIAL INFORMATION](#i87e5e641db4049af9f72650ba6f5aefb_10)</u> | |
| <u>[ITEM 1. Unaudited Financial Statements:](#i87e5e641db4049af9f72650ba6f5aefb_13)</u> | |
| &nbsp;&nbsp;<u>[Condensed Consolidated Statements of Operations](#i87e5e641db4049af9f72650ba6f5aefb_16)</u> | <u>[1](#i87e5e641db4049af9f72650ba6f5aefb_16)</u> |
| &nbsp;&nbsp;<u>[Condensed Consolidated Statements of Comprehensive Income](#i87e5e641db4049af9f72650ba6f5aefb_19)</u> | <u>[2](#i87e5e641db4049af9f72650ba6f5aefb_19)</u> |
| &nbsp;&nbsp;<u>[Condensed Consolidated Balance Sheets](#i87e5e641db4049af9f72650ba6f5aefb_22)</u> | <u>[3](#i87e5e641db4049af9f72650ba6f5aefb_22)</u> |
| &nbsp;&nbsp;<u>[Condensed Consolidated Statements of Cash Flows](#i87e5e641db4049af9f72650ba6f5aefb_25)</u> | <u>[4](#i87e5e641db4049af9f72650ba6f5aefb_25)</u> |
| &nbsp;&nbsp;<u>[Condensed Consolidated Statements of Stockholders' Equity](#i87e5e641db4049af9f72650ba6f5aefb_28)</u> | <u>[5](#i87e5e641db4049af9f72650ba6f5aefb_28)</u> |
| &nbsp;&nbsp;<u>[Notes to Condensed Consolidated Financial Statements](#i87e5e641db4049af9f72650ba6f5aefb_31)</u> | <u>[6](#i87e5e641db4049af9f72650ba6f5aefb_31)</u> |
| <u>[ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](#i87e5e641db4049af9f72650ba6f5aefb_70)</u> | <u>[18](#i87e5e641db4049af9f72650ba6f5aefb_70)</u> |
| <u>[ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](#i87e5e641db4049af9f72650ba6f5aefb_79)</u> | <u>[26](#i87e5e641db4049af9f72650ba6f5aefb_79)</u> |
| <u>[ITEM 4. Controls and Procedures](#i87e5e641db4049af9f72650ba6f5aefb_82)</u> | <u>[27](#i87e5e641db4049af9f72650ba6f5aefb_82)</u> |
| <u>[PART II. OTHER INFORMATION](#i87e5e641db4049af9f72650ba6f5aefb_85)</u> | |
| <u>[ITEM 1. Legal Proceedings](#i87e5e641db4049af9f72650ba6f5aefb_88)</u> | <u>[28](#i87e5e641db4049af9f72650ba6f5aefb_88)</u> |
| <u>[ITEM 1A. Risk Factors](#i87e5e641db4049af9f72650ba6f5aefb_91)</u> | <u>[28](#i87e5e641db4049af9f72650ba6f5aefb_91)</u> |
| <u>[ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](#i87e5e641db4049af9f72650ba6f5aefb_94)</u> | <u>[29](#i87e5e641db4049af9f72650ba6f5aefb_94)</u> |
| <u>[ITEM 3. Defaults Upon Senior Securities](#i87e5e641db4049af9f72650ba6f5aefb_97)</u> | <u>[29](#i87e5e641db4049af9f72650ba6f5aefb_97)</u> |
| <u>[ITEM 4. Mine Safety Disclosures](#i87e5e641db4049af9f72650ba6f5aefb_100)</u> | <u>[29](#i87e5e641db4049af9f72650ba6f5aefb_100)</u> |
| <u>[ITEM 5. Other Information](#i87e5e641db4049af9f72650ba6f5aefb_103)</u> | <u>[29](#i87e5e641db4049af9f72650ba6f5aefb_103)</u> |
| <u>[ITEM 6. Exhibits](#i87e5e641db4049af9f72650ba6f5aefb_106)</u> | <u>[31](#i87e5e641db4049af9f72650ba6f5aefb_106)</u> |

---

i

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**PART I. FINANCIAL INFORMATION**

**ITEM 1. UNAUDITED FINANCIAL STATEMENTS**

**DIGI INTERNATIONAL INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

**(UNAUDITED)**

---

| | | |
|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2024 |
| | (in thousands, except per share data) | (in thousands, except per share data) |
| Revenue: |  |  |
| &nbsp;&nbsp;&nbsp;Product | $81852 | $72785 |
| &nbsp;&nbsp;&nbsp;Service | 40610 | 31081 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total revenue | 122462 | 103866 |
| Cost of sales: |  |  |
| &nbsp;&nbsp;&nbsp;Cost of product | 37181 | 31973 |
| &nbsp;&nbsp;&nbsp;Cost of service | 7573 | 6542 |
| &nbsp;&nbsp;&nbsp;Amortization | 1317 | 953 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of sales | 46071 | 39468 |
| Gross profit | 76391 | 64398 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;Sales and marketing | 25977 | 21757 |
| &nbsp;&nbsp;&nbsp;Research and development | 17154 | 15027 |
| &nbsp;&nbsp;&nbsp;General and administrative | 16934 | 14255 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 60065 | 51039 |
| Operating income | 16326 | 13359 |
| Other expense, net: |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense, net | (2303) | (2294) |
| &nbsp;&nbsp;&nbsp;Other expense, net | (4) | 31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other expense, net | (2307) | (2263) |
| Income before income taxes | 14019 | 11096 |
| Income tax provision | 2308 | 1013 |
| Net income | $11711 | $10083 |
| Net income per common share: |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $0.31 | $0.27 |
| &nbsp;&nbsp;&nbsp;Diluted | $0.31 | $0.27 |
| Weighted average common shares: |  |  |
| &nbsp;&nbsp;&nbsp;Basic | 37352 | 36680 |
| &nbsp;&nbsp;&nbsp;Diluted | 38239 | 37483 |

---

The accompanying notes are an integral part of the condensed consolidated financial statements.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**DIGI INTERNATIONAL INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**

**(UNAUDITED)**

---

| | | |
|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2024 |
| | (in thousands) | (in thousands) |
| Net income | $11711 | $10083 |
| Other comprehensive income (loss): |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | 97 | (1762) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive income (loss) | 97 | (1762) |
| Comprehensive income | $11808 | $8321 |

---

The accompanying notes are an integral part of the condensed consolidated financial statements.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**DIGI INTERNATIONAL INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(UNAUDITED)**

---

| | | |
|:---|:---|:---|
| | December 31, 2025 | September 30, 2025 |
| | (in thousands, except share data) | (in thousands, except share data) |
| ASSETS |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $30932 | $21902 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 59676 | 63453 |
| &nbsp;&nbsp;&nbsp;Inventories | 39567 | 38911 |
| &nbsp;&nbsp;&nbsp;Income taxes receivable | 4471 | 1875 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 6756 | 4558 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 141402 | 130699 |
| Property, equipment and improvements, net | 32903 | 34022 |
| Intangible assets, net | 343519 | 350688 |
| Goodwill | 392094 | 392872 |
| Operating lease right-of-use assets | 7757 | 8430 |
| Deferred tax assets |  | 5131 |
| Other non-current assets | 762 | 804 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $918437 | $922646 |
| LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | 32462 | 35871 |
| &nbsp;&nbsp;&nbsp;Accrued compensation | 9975 | 16261 |
| &nbsp;&nbsp;&nbsp;Unearned revenue | 54698 | 40671 |
| &nbsp;&nbsp;&nbsp;Current portion of operating lease liabilities | 2935 | 3361 |
| &nbsp;&nbsp;&nbsp;Income taxes payable |  | 522 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 13649 | 11124 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 113719 | 107810 |
| Income taxes payable | 3249 | 3261 |
| Deferred tax liabilities | 175 | 164 |
| Long-term debt | 134951 | 159152 |
| Operating lease liabilities | 8198 | 8671 |
| Other non-current liabilities | 8941 | 7511 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 269233 | 286569 |
| Commitments and Contingencies (See <u>[Note 12](#i87e5e641db4049af9f72650ba6f5aefb_64)</u>) |  |  |
| Stockholders' equity: |  |  |
| &nbsp;&nbsp;Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued and outstanding |  |  |
| &nbsp;&nbsp;Common stock, $.01 par value; 60,000,000 shares authorized; 44,218,745 and 43,641,997 shares issued | 442 | 436 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 444988 | 437391 |
| &nbsp;&nbsp;&nbsp;Retained earnings | 299865 | 288154 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (23697) | (23794) |
| &nbsp;&nbsp;Treasury stock, at cost, 6,614,540 and 6,471,074 shares | (72394) | (66110) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 649204 | 636077 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $918437 | $922646 |

---

The accompanying notes are an integral part of the condensed consolidated financial statements.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**DIGI INTERNATIONAL INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

---

| | | |
|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2024 |
| | (in thousands) | (in thousands) |
| Operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Net income | $11711 | $10083 |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation of property, equipment and improvements | 3199 | 2735 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization | 7307 | 5832 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 3987 | 3560 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax expense | 5142 | 500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | (300) | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities | 4580 | 7007 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 35626 | 29719 |
| Investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;Acquisition of businesses, net of cash acquired | 524 |  |
| &nbsp;&nbsp;&nbsp;Purchase of property, equipment, improvements and certain other intangible assets | (457) | (577) |
| &nbsp;&nbsp;&nbsp;Proceeds from sale of property, equipment, improvements and certain other intangible assets | 300 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in) provided by investing activities | 367 | (577) |
| Financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;Payments of debt issuance costs | (276) |  |
| &nbsp;&nbsp;&nbsp;Payments on long-term debt | (24000) | (28300) |
| &nbsp;&nbsp;&nbsp;Proceeds from stock option plan transactions | 3311 | 1783 |
| &nbsp;&nbsp;&nbsp;Proceeds from employee stock purchase plan transactions | 610 | 517 |
| &nbsp;&nbsp;&nbsp;Taxes paid for net share settlement of share-based payment options and awards | (6588) | (4540) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities | (26943) | (30540) |
| Effect of exchange rate changes on cash and cash equivalents | (20) | (177) |
| Net increase (decrease) in cash and cash equivalents | 9030 | (1575) |
| Cash and cash equivalents, beginning of period | 21902 | 27510 |
| Cash and cash equivalents, end of period | $30932 | $25935 |
| Supplemental disclosures of cash flow information: |  |  |
| &nbsp;&nbsp;Interest paid | $2430 | $2369 |
| &nbsp;&nbsp;Income taxes paid, net | 300 | 56 |
| Supplemental schedule of non-cash investing and financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;Transfer of inventory to property, equipment and improvements | (1425) | (2098) |
| &nbsp;&nbsp;&nbsp;Accrual for purchase of property, equipment, improvements and certain other intangible assets | $(288) | $(108) |

---

The accompanying notes are an integral part of the condensed consolidated financial statements.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**DIGI INTERNATIONAL INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY**

**(UNAUDITED)**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | | | | | | | Accumulated | |
| | | | | | Additional | | Other | Total |
| | Common Stock | Common Stock | Treasury Stock | Treasury Stock | Paid-In | Retained | Comprehensive | Stockholders' |
| (in thousands) | Shares | Par Value | Shares | Value | Capital | Earnings | (Loss) Income | Equity |
| Balances, September 30, 2024 | 42997 | $430 | 6449 | $(63414) | $420413 | $247350 | $(23744) | $581035 |
| Net income |  |  |  |  |  | 10083 |  | 10083 |
| Other comprehensive loss |  |  |  |  |  |  | (1762) | (1762) |
| Employee stock purchase plan issuances |  |  | (22) | 227 | 290 |  |  | 517 |
| Taxes paid for net share settlement of share-based payment awards |  |  | 100 | (3224) | (1316) |  |  | (4540) |
| Issuance of stock under stock award plans | 419 | 4 |  |  | 1778 |  |  | 1782 |
| Stock-based compensation expense |  |  |  |  | 3560 |  |  | 3560 |
| Balances, December 31, 2024 | 43416 | $434 | 6527 | $(66411) | $424725 | $257433 | $(25506) | $590675 |
| Balances, September 30, 2025 | 43642 | $436 | 6471 | $(66110) | $437391 | $288154 | $(23794) | $636077 |
| Net income |  |  |  |  |  | 11711 |  | 11711 |
| Other comprehensive income |  |  |  |  |  |  | 97 | 97 |
| Employee stock purchase plan issuances |  |  | (20) | 217 | 393 |  |  | 610 |
| Taxes paid for net share settlement of share-based payment options and awards |  |  | 164 | (6501) | (87) |  |  | (6588) |
| Issuance of stock under stock award plans | 577 | 6 |  |  | 3304 |  |  | 3310 |
| Stock-based compensation expense |  |  |  |  | 3987 |  |  | 3987 |
| Balances, December 31, 2025 | 44219 | $442 | 6615 | $(72394) | $444988 | $299865 | $(23697) | $649204 |

---

The accompanying notes are an integral part of the condensed consolidated financial statements.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**DIGI INTERNATIONAL INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

1. BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES

*Basis of Presentation*

The unaudited condensed consolidated financial statements of Digi International Inc. ("we," "us," "our," "Digi" or "the Company") have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission applicable to interim financial statements. While these financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles ("GAAP") for complete financial statements. These financial statements should be read in conjunction with the financial statement disclosures in Part I, Item 1 of our Annual Report on <u>[Form 10-K](https://www.sec.gov/ix?doc=/Archives/edgar/data/0000854775/000085477524000033/dgii-20240930.htm)</u> for the year ended September 30, 2025. We use the same accounting policies in preparing quarterly and annual financial statements. The quarterly results of operations are not necessarily indicative of the results to be expected for the full year.

*Recently Issued Accounting Standards Not Yet Adopted*

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), "Disaggregation of Income Statement Expenses," which requires improved disclosures about a company's expenses and more detailed information about the types of expenses in commonly presented expense captions. This amendment is effective for our fiscal year ending September 30, 2028 and interim periods within our fiscal year ending September 30, 2029. We currently are assessing the impact of this guidance on our disclosures.

In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740), "Improvements to Income Tax Disclosures," which requires enhanced transparency and decision usefulness of income tax disclosures. This amendment is effective for our fiscal year ending September 30, 2026 and interim periods within our fiscal year ending September 30, 2027. We currently are assessing the impact of this guidance on our disclosures.

2. ACQUISITIONS

On August 18, 2025, we acquired Jolt for an estimated $148.5 million in cash. In the first quarter of fiscal 2026, we made net working capital adjustments due to an underage in the net working capital assumed in the transaction. This resulted in a decrease in consideration of $1.1 million and a reduction to goodwill of $0.9 million. This resulted in an estimated consideration of $147.4 million and goodwill of $49.3 million as of December 31, 2025.

The condensed consolidated balance sheet as of December 31, 2025 reflected the preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Purchase price allocations may be subject to future adjustments for the net assets, including intangible assets, acquired working capital balances and income tax assets and liabilities within the one-year measurement period.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

3. EARNINGS PER SHARE

The following table is a reconciliation of the numerators and denominators in the net income per common share calculations (in thousands, except per common share data):

---

| | | |
|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2024 |
| Numerator: |  |  |
| &nbsp;&nbsp;&nbsp;Net income | $11711 | $10083 |
| Denominator: |  |  |
| &nbsp;&nbsp;&nbsp;Denominator for basic net income per common share — weighted average shares outstanding | 37352 | 36680 |
| &nbsp;&nbsp;&nbsp;Effect of dilutive securities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock options and restricted stock units | 887 | 803 |
| &nbsp;&nbsp;&nbsp;Denominator for diluted net income per common share — adjusted weighted average shares | 38239 | 37483 |
| Net income per common share, basic | $0.31 | $0.27 |
| Net income per common share, diluted | $0.31 | $0.27 |

---

Digi excludes certain stock options and restricted stock unit awards that would have an anti-dilutive effect on our diluted net income per share calculation. For the three months ended December 31, 2025 and 2024, 138,789 and 255,054 shares outstanding were excluded, respectively.

4. SELECTED BALANCE SHEET DATA

The following table shows selected balance sheet data (in thousands):

---

| | | |
|:---|:---|:---|
| | December 31,<br>2025 | September 30,<br>2025 |
| Accounts receivable, net: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | $74520 | $78150 |
| &nbsp;&nbsp;&nbsp;Less allowance for credit losses | 6713 | 6417 |
| &nbsp;&nbsp;&nbsp;Less reserve for future credit returns and pricing adjustments | 8131 | 8280 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | $59676 | $63453 |
| Inventories: |  |  |
| &nbsp;&nbsp;&nbsp;Raw materials | $9336 | $10803 |
| &nbsp;&nbsp;&nbsp;Work in process | 763 | 7 |
| &nbsp;&nbsp;&nbsp;Finished goods | 29468 | 28101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | $39567 | $38911 |

---

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

5. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Amortizable intangible assets were (in thousands):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | December 31, 2025 | December 31, 2025 | December 31, 2025 | September 30, 2025 | September 30, 2025 | September 30, 2025 |
| | Gross<br>carrying<br>amount | Accum.<br>amort. | Net | Gross<br>carrying<br>amount | Accum.<br>amort. | Net |
| Purchased and core technology | $101014 | $(68878) | $32136 | $100986 | $(67533) | $33453 |
| License agreements | 112 | (112) |  | 112 | (112) |  |
| Patents and trademarks | 45532 | (25594) | 19938 | 45468 | (24870) | 20598 |
| Customer relationships | 408211 | (116766) | 291445 | 408198 | (111561) | 296637 |
| Non-compete agreements | 600 | (600) |  | 600 | (600) |  |
| Order backlog | 1000 | (1000) |  | 1000 | (1000) |  |
| &nbsp;&nbsp;&nbsp;Total | $556469 | $(212950) | $343519 | $556364 | $(205676) | $350688 |

---

Amortization expense for intangible assets was $7.2 million and $5.8 million for the three months ended December 31, 2025 and 2024, respectively. Amortization expense is recorded on our condensed consolidated statements of operations within cost of sales and in general and administrative expense.

Estimated amortization expense related to intangible assets for the remainder of fiscal 2026 and the five succeeding fiscal years is (in thousands):

---

| | |
|:---|:---|
| 2026 (nine months) | $21421 |
| 2027 | 28555 |
| 2028 | 28347 |
| 2029 | 26579 |
| 2030 | 26175 |
| 2031 | 26122 |

---

The changes in the carrying amount of goodwill by reportable segments are (in thousands):

---

| | | | |
|:---|:---|:---|:---|
| | Three months ended December 31, 2025 | Three months ended December 31, 2025 | Three months ended December 31, 2025 |
| | IoT<br>Products & Services | IoT<br>Solutions | Total |
| Balance on September 30, 2025 | $175266 | $217606 | $392872 |
| Adjustment (see <u>[Note 2](#i87e5e641db4049af9f72650ba6f5aefb_960)</u>) |  | (923) | (923) |
| Foreign currency translation adjustment | (1) | 146 | 145 |
| Balance on December 31, 2025 | $175265 | $216829 | $392094 |

---

Goodwill represents the excess of cost over the fair value of net identifiable assets acquired. Goodwill is tested quantitatively for impairment on an annual basis as of June 30, or more frequently if events or circumstances occur which could indicate impairment. We have two reportable segments that are also reporting units, IoT Products & Services and IoT Solutions (see <u>[Note 7](#i87e5e641db4049af9f72650ba6f5aefb_49)</u>). Each of these reporting units was tested individually for impairment during our annual impairment test completed as of the end of the third fiscal quarter of fiscal 2025.

Assumptions and estimates to determine fair values under the income and market approaches are complex and often subjective. They can be affected by a variety of factors. These include external factors such as industry and economic trends. They also include internal factors such as changes in our business strategy and our internal forecasts. Changes in circumstances or a potential event could affect the estimated fair values negatively. If our future operating results do not meet current forecasts or if we experience a sustained decline in our market capitalization that is determined to be indicative of a reduction in fair value of one or more of our reporting units within either of our segments, we may be required to record future impairment charges for goodwill.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

5. GOODWILL AND OTHER INTANGIBLE ASSETS, NET (CONTINUED)

*Results of our Fiscal 2025 Annual Impairment Test*

As of June 30, 2025, we had a total of $175.5 million of goodwill for the IoT Products & Services reporting unit and $167.6 million of goodwill for the IoT Solutions reporting unit. At June 30, 2025, the fair value of goodwill exceeded the carrying value for each reporting unit and no impairment was recorded.

6. INDEBTEDNESS

On December 23, 2025, Digi entered into a First Amendment to Revolving Credit Agreement (the "Amendment") with BMO Bank N.A. ("BMO"), as administrative and collateral agent, certain subsidiaries of Digi as guarantors ("Guarantors") and the several banks and other financial institutions or entities party thereto as lenders (the "Lenders"). This amended our Revolving Credit Agreement , dated as of December 7, 2023 (as amended by the Amendment, the "Credit Agreement") among Digi, BMO, the Guarantors party thereto and the Lenders from time to time party thereto.

The Credit Agreement provides Digi with a senior secured credit facility (the "Credit Facility"). The Credit Facility includes a $250 million senior secured revolving credit facility (the "Revolving Loan"), with an uncommitted accordion feature that provides for additional borrowing capacity of up to the greater of $105 million or one hundred percent of trailing twelve month adjusted earnings before interest, taxes, depreciation, and amortization ("EBITDA"). The Credit Facility also contains a $10 million letter of credit sublimit and $10 million swingline sub-facility. Digi may use the proceeds of the Credit Facility in the future for general corporate purposes.

Borrowings under the Credit Facility bear interest at a rate per annum equal to Term Secured Overnight Financing Rate ("SOFR") with a floor of 0.00% for an interest period of one, three, or six months as selected by Digi, reset at the end of the selected interest period (or a replacement benchmark rate if Term SOFR is no longer available) plus the applicable margin or a base rate plus the applicable margin. The base rate is determined by reference to the highest of BMO's prime rate, the rate determined by BMO to be the average rate of Federal funds in the secondary market plus 0.50%, or one-month SOFR plus 1.00%. The applicable margin for loans under the Credit Facility is in a range of 1.35% to 3.10% for Term SOFR loans and 0.35% to 2.10% for base rate loans, depending on Digi's total net leverage ratio. All borrowings in the period were made at Term SOFR for a one-month interest election period Our weighted average Revolving Loan applicable margin of 1.85% as of December 31, 2025. Our weighted average interest rate for our Credit Facility was 5.62% as of December 31, 2025.

In addition to paying interest on the outstanding principal, Digi is required to pay a commitment fee on the unutilized commitments under the Credit Facility. The commitment fee is between 0.20% and 0.35% depending on Digi's total net leverage ratio. Our weighted average Revolving Loan commitment fee was 0.25% as of December 31, 2025. The Credit Facility is secured by substantially all of the property of Digi and its domestic subsidiaries.

In the first quarter of fiscal 2024, Digi incurred $1.3 million in debt issuance costs upon entry into the Credit Agreement, with this amount amortized over the term of the Credit Agreement and reported in interest expense. In the first quarter of fiscal 2026, Digi incurred an additional $0.3 million in debt issuance costs upon entry into the Credit Agreement, with this amount amortized over the remaining term of the Credit Agreement and reported in interest expense.

The Revolving Loan is due in a lump sum payment at maturity December 7, 2028, if any amounts are drawn. The fair value of the Revolving Loan approximated carrying value at December 31, 2025.

The following table is a summary of our long-term indebtedness at December 31, 2025 and September 30, 2025 (in thousands):

---

| | | |
|:---|:---|:---|
| | Balance on December 31, 2025 | Balance on September 30, 2025 |
| Revolving Loan | $136000 | $160000 |
| Less unamortized issuance costs | (1049) | (848) |
| &nbsp;&nbsp;&nbsp;Total long-term debt, net of unamortized issuance costs | $134951 | $159152 |

---

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

6. INDEBTEDNESS (CONTINUED)

*Covenants and Security Interest*

The Credit Agreement requires Digi to maintain a minimum interest coverage ratio of 3.00 to 1.00 and a total net leverage ratio not to exceed 3.00 to 1.00, with certain exceptions for a covenant holiday of up to 3.50 to 1.00 after certain material acquisitions. The total net leverage ratio is defined as the ratio of Digi's consolidated total funded indebtedness minus unrestricted cash as of such date up to a maximum amount not to exceed $50 million, to consolidated EBITDA for such period. The Credit Agreement also contains other customary affirmative and negative covenants, including covenants that restrict the ability of Digi and its subsidiaries to incur additional indebtedness, dispose of significant assets, make certain investments, (including, among other items) any acquisitions other than permitted acquisitions, make certain restricted payments, enter into sale and leaseback transactions or grant additional liens on its assets, subject to certain limitations. Amounts borrowed under the Credit Facility are secured by substantially all of our assets.

7. SEGMENT INFORMATION

We have two reportable segments that also serve as our operating segments: (i) IoT Products & Services and (ii) IoT Solutions. This determination was made by considering both qualitative and quantitative information. The qualitative information included, but was not limited to, the following: each segment is led by a single segment manager that reports to the Chief Operating Decision Maker (CODM), the nature of the products and services and customers differ between the two segments, discrete financial information is available including revenue and operating income for both segments and the CODM is reviewing both segments' financial information separately to make decisions about the allocation of resources. IoT Products & Services derives revenue from the sale of products and services that help original equipment manufacturers ("OEMs"), enterprise and government customers create and deploy, secure IoT connectivity solutions. IoT Solutions derives revenue from the sale of software-based services that are enabled through the use of connected devices that utilize cellular communications. Our CEO is our CODM. In the fourth quarter of fiscal 2025, the metric he uses to measure profitability within each of our reportable segments was changed from segment gross profit to operating income.

Summary operating results for each of our segments were (in thousands):

---

| | | |
|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2024 |
| **Revenue** |  |  |
| &nbsp;&nbsp;&nbsp;IoT Products & Services | $86354 | $77823 |
| &nbsp;&nbsp;&nbsp;IoT Solutions | 36108 | 26043 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total revenue | $122462 | $103866 |
| **Depreciation and amortization** |  |  |
| &nbsp;&nbsp;&nbsp;IoT Products & Services | $2934 | $3427 |
| &nbsp;&nbsp;&nbsp;IoT Solutions | 7519 | 5073 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total depreciation and amortization | $10453 | $8500 |
| **Other segment items\*** |  |  |
| &nbsp;&nbsp;&nbsp;IoT Products & Services | $71734 | $63439 |
| &nbsp;&nbsp;&nbsp;IoT Solutions | 23949 | 18568 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total other segment items | $95683 | $82007 |
| **Operating income** |  |  |
| &nbsp;&nbsp;&nbsp;IoT Products & Services | $11686 | $10957 |
| &nbsp;&nbsp;&nbsp;IoT Solutions | 4640 | 2402 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating income | $16326 | $13359 |

---

\*IoT Products & Services other segment items include cost of sales and operating expenses. IoT Solutions other segment items include cost of sales and operating expenses.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

7. SEGMENT INFORMATION (CONTINUED)

The following table provides a reconciliation of segment operating income to consolidated income before taxes:

---

| | | |
|:---|:---|:---|
|  | Three months ended December 31, | Three months ended December 31, |
|  | 2025 | 2024 |
| Total segment operating income | $16326 | $13359 |
| Total other expense, net | (2307) | (2263) |
| Income before income taxes | $14019 | $11096 |

---

\*Total other expense, net primarily includes interest expense, net in three months ended December 31, 2025 and 2024, respectively.

Total expended for property, plant and equipment was (in thousands):

---

| | | |
|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2024 |
| &nbsp;&nbsp;&nbsp;IoT Products & Services | $338 | $366 |
| &nbsp;&nbsp;&nbsp;IoT Solutions\* | 56 | 141 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total expended for property, plant and equipment | $394 | $507 |

---

\* Excluded from these amounts are $1,425 and $2,098 of transfers of inventory to property plant and equipment for subscriber assets for the three months ended December 31, 2025 and 2024, respectively.

Total assets for each of our segments were (in thousands):

---

| | | |
|:---|:---|:---|
| | December 31,<br>2025 | September 30,<br>2025 |
| IoT Products & Services | $333986 | $338454 |
| IoT Solutions | 553519 | 562290 |
| &nbsp;&nbsp;&nbsp;Segment assets | 887505 | 900744 |
| Unallocated\* | 30932 | 21902 |
| &nbsp;&nbsp;&nbsp;Total assets | $918437 | $922646 |

---

\*Unallocated consists of cash and cash equivalents.

8. REVENUE

**Revenue Disaggregation**

The following table summarizes our revenue by geographic location of our customers (in thousands):

---

| | | |
|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2024 |
| North America, primarily the United States | $101261 | $79012 |
| Europe, Middle East & Africa | 12894 | 18010 |
| Rest of world | 8307 | 6844 |
| &nbsp;&nbsp;&nbsp;Total revenue | $122462 | $103866 |

---

The following table summarizes our revenue by the timing of revenue recognition (in thousands):

---

| | | |
|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2024 |
| Transferred at a point in time | $83351 | $74603 |
| Transferred over time | 39111 | 29263 |
| &nbsp;&nbsp;&nbsp;Total revenue | $122462 | $103866 |

---

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

8. REVENUE (CONTINUED)

We had two distributor customers of Digi's IoT Products & Services segment that represented 12% and 11% of consolidated revenue for the three months ended December 31, 2025.

**Contract Balances**

*Contract Related Assets*

Our contract related assets consist of subscriber assets. Subscriber assets are equipment that we provide to customers pursuant to subscription-based contracts. In these cases, we retain the ownership of the equipment a customer uses and charge the customer subscription fees to receive our end-to-end solutions. The total net book value of subscriber assets of $22.0 million and $22.9 million as of December 31, 2025 and September 30, 2025, respectively, are included in property, equipment and improvements, net. Depreciation expense for these subscriber assets, which is included in cost of sales, was $2.4 million and $1.9 million for the three months ended December 31, 2025 and 2024, respectively.

*Contract Assets*

Contract assets at Digi consist of products and services that have been fulfilled, but for which revenue has not yet been recognized. Our contract asset balances were immaterial as of December 31, 2025 and September 30, 2025.

*Contract Liabilities*

Contract liabilities consist of unearned revenue related to annual or multi-year contracts for subscription services and related implementation fees, as well as product sales that have been invoiced, but not yet fulfilled. The timing of revenue recognition may differ from the timing of invoicing to customers. Customers are invoiced for subscription services on a monthly, quarterly or annual basis.

Our contract liabilities were $63.6 million and $41.6 million at December 31, 2025 and 2024, respectively.

There were contract liability balances of $48.2 million and $36.8 million as of September 30, 2025 and 2024, respectively. Of these balances, Digi recognized $20.9 million and $9.3 million as revenue in the three months ended December 31, 2025 and 2024, respectively.

**Remaining Performance Obligation**

As of December 31, 2025, we had approximately $214.9 million of remaining performance obligations on contracts with an original duration of one year or more. We expect to recognize revenue on approximately $99.8 million of remaining performance obligations over the next 12 months. We expect to recognize revenue from the remaining performance obligations over a range of two to five years.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

9. INCOME TAXES

Our income tax expense was $2.3 million for the three months ended December 31, 2025. Included in this was a net tax benefit of $0.8 million discretely related to the three months ended December 31, 2025.

Our effective tax rate will vary based on a variety of factors. These factors include our overall profitability, the geographical mix of income before taxes and related statutory tax rate in each jurisdiction, and tax items discretely related to the period, such as tax impacts of stock compensation. We may record other benefits or expenses in the future that are specific to a particular quarter such as expiration of statutes of limitation, the completion of tax audits, or legislation that is enacted in both U.S. and foreign jurisdictions.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses such as the permanent extension of certain expiring provisions of the Tax Cuts and Job Act, restoration of favorable tax treatment for certain businesses provisions including the expensing of domestic research and development expenditures, and modifications to the international tax framework. The legislation has multiple effective dates, with certain provisions effective in fiscal year 2026 and others implemented through fiscal year 2027. We have incorporated the impact of the new legislation into the year-to-date effective tax rate and continue to assess the impact on the consolidated financial statements.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is (in thousands):

---

| | |
|:---|:---|
| Unrecognized tax benefits as of September 30, 2025 | $4312 |
| Decreases related to: |  |
| &nbsp;&nbsp;&nbsp;Settlements | (32) |
| &nbsp;&nbsp;&nbsp;Expiration of statute of limitations | (63) |
| Unrecognized tax benefits as of December 31, 2025 | $4217 |

---

The total amount of unrecognized tax benefits at December 31, 2025 that, if recognized, would affect our effective tax rate was $4.1 million, after considering the impact of interest and deferred benefit items. We expect that the total amount of unrecognized tax benefits will decrease by approximately $0.4 million over the next 12 months.

10. PRODUCT WARRANTY OBLIGATION

The following tables summarize the activity associated with the product warranty accrual (in thousands) and is included on our condensed consolidated balance sheets within other current liabilities:

---

| | | |
|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2024 |
| Balance at beginning of period | $1247 | $933 |
| Warranties accrued | 121 | 207 |
| Net settlements | (147) | (36) |
| Balance at end of period | $1221 | $1104 |

---

11. LEASES

All of our leases are operating leases and primarily consist of leases for office space. For any lease with an initial term in excess of 12 months, the related lease assets and lease liabilities are recognized on the condensed consolidated balance sheets as either operating or financing leases at the inception of an agreement where it is determined that a lease exists. We have lease agreements that contain both lease and non-lease components. We have elected to combine lease and non-lease components for all classes of assets. Leases with an expected term of 12 months or less are not recorded on the condensed consolidated balance sheets. Instead we recognize lease expense for these leases on a straight-line basis over the lease term.

Operating lease assets represent the right to use an underlying asset for the lease term and operating lease liabilities represent the obligation to make lease payments. These assets and liabilities are recognized based on the present value of future payments over the lease term at the commencement date. We generally use a collateralized incremental borrowing rate based on information available at the commencement date, including the lease term, in determining the present value of future payments. When determining our right-of-use assets, we generally do not include options to extend or terminate the lease unless it is reasonably certain that the option will be exercised.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

11. LEASES (CONTINUED)

Our leases typically require payment of real estate taxes and common area maintenance and insurance. These components comprise the majority of our variable lease cost and are excluded from the present value of our lease obligations. Fixed payments may contain predetermined fixed rent escalations. We recognize the related rent expense on a straight-line basis from the commencement date to the end of the lease term.

The following table shows the supplemental balance sheet information related to our leases (in thousands):

---

| | | | |
|:---|:---|:---|:---|
| | Balance Sheet Location | December 31, 2025 | September 30, 2025 |
| **Assets** |  |  |  |
| Operating leases | Operating lease right-of-use assets | $7757 | $8430 |
| &nbsp;&nbsp;&nbsp;Total lease assets |  | $7757 | $8430 |
| **Liabilities** |  |  |  |
| Operating leases | Current portion of operating lease liabilities | $2935 | $3361 |
| Operating leases | Operating lease liabilities | 8198 | 8671 |
| &nbsp;&nbsp;&nbsp;Total lease liabilities |  | $11133 | $12032 |

---

The following were the components of our lease cost which is recorded in both cost of goods sold and selling, general and administrative expense (in thousands):

---

| | | |
|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2024 |
| Operating lease cost | $858 | $872 |
| Variable lease cost | 344 | 285 |
| Short-term lease cost | 85 | 29 |
| &nbsp;&nbsp;&nbsp;Total lease cost | $1287 | $1186 |

---

At December 31, 2025, the weighted average remaining lease term of our operating leases was 5.2 years and the weighted average discount rate for these leases was 4.6%.

The table below reconciles the undiscounted cash flows for each of the first five years as well as all the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet as of December 31, 2025 (in thousands):

---

| | |
|:---|:---|
| Fiscal year | Amount |
| 2026 (nine months) | $2705 |
| 2027 | 2103 |
| 2028 | 1900 |
| 2029 | 1840 |
| 2030 | 1880 |
| 2031 | 1520 |
| Thereafter | 465 |
| Total future undiscounted lease payments | 12413 |
| Less imputed interest | (1280) |
| Total reported lease liability | $11133 |

---

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

12. COMMITMENTS AND CONTINGENCIES

We lease certain of our buildings and equipment under non-cancelable lease agreements. Please refer to <u>[Note 11](#i87e5e641db4049af9f72650ba6f5aefb_61)</u> to our condensed consolidated financial statements for additional information.

In the normal course of business, we presently are, and expect in the future to be, subject to various claims and litigation with third parties such as non-practicing intellectual property entities as well as customers, vendors and/or employees. There can be no assurance that any claims by third parties, if proven to have merit, will not materially adversely affect our business, liquidity or financial condition.

13. STOCK-BASED COMPENSATION

Stock-based awards granted in the first three months of fiscal 2025 and 2024 were granted under the Digi International Inc. 2021 Omnibus Incentive Plan (as amended and restated, the "2021 Plan"). Shares subject to awards under the 2021 Plan or any prior plans that are forfeited, canceled, returned to us for failure to satisfy vesting requirements, settled in cash or otherwise terminated without payment also will be available for grant under the 2021 Plan. The authority to grant options under the 2021 Plan and set other terms and conditions rests with the Compensation Committee of the Board of Directors.

As of December 31, 2025, there were approximately 2,846,474 shares available for future grants under the 2021 Plan.

Cash received from the exercise of stock options was $3.3 million and $1.8 million for the three months ended December 31, 2025 and 2024, respectively.

Our equity plans and corresponding forms of award agreements generally have provisions allowing employees to elect to satisfy tax withholding obligations through the delivery of shares. When employees make this election, we retain a portion of shares issuable under the award. Tax withholding obligations are otherwise fulfilled by the employee paying cash to us for the withholding. During the three months ended December 31, 2025 and 2024, our employees forfeited 163,304 shares and 100,011 shares, respectively, in order to satisfy withholding tax obligations of $6.5 million and $3.2 million, respectively. We sponsor an Employee Stock Purchase Plan as amended and restated as of December 10, 2019, October 29, 2013, December 4, 2009 and November 27, 2006 (the "ESPP"), covering all domestic employees with at least 90 days of continuous service and who are customarily employed at least 20 hours per week. The ESPP allows eligible participants the right to purchase common stock on a quarterly basis at the lower of 85% of the market price at the beginning or end of each three-month offering period. The most recent amendments to the ESPP, ratified by our stockholders on January 29, 2020, increased the total number of shares that may be purchased under the ESPP to 3,425,000. ESPP contributions by employees were $0.6 million and $0.5 million for the three months ended December 31, 2025 and 2024. Pursuant to the ESPP, 19,838 and 22,311 common shares were issued to employees during the three months ended December 31, 2025 and 2024, respectively. Shares are issued under the ESPP from treasury stock. As of December 31, 2025, 256,865 common shares were available for future issuances under the ESPP.

The following table shows stock-based compensation expense that is included in the consolidated results of operations (in thousands):

---

| | | |
|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2024 |
| Cost of sales | $212 | $187 |
| Sales and marketing | 1406 | 1261 |
| Research and development | 628 | 546 |
| General and administrative | 1741 | 1566 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation before income taxes | 3987 | 3560 |
| Income tax benefit | (862) | (761) |
| &nbsp;&nbsp;&nbsp;Stock-based compensation after income taxes | $3125 | $2799 |

---

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

13. STOCK-BASED COMPENSATION (CONTINUED)

*Stock Options*

The following table summarizes our stock option activity (in thousands, except per common share amounts):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | Options Outstanding | Weighted Average Exercise Price | Weighted Average Contractual Term (in years) | Aggregate Intrinsic Value (1) |
| Balance on September 30, 2025 | 857 | $21.66 |  |  |
| Granted | 45 | 40.01 |  |  |
| Exercised | (204) | 21.37 |  |  |
| Forfeited / Canceled | (9) | 27.02 |  |  |
| Balance on December 31, 2025 | 689 | $22.86 | 2.9 | $14064 |
| Exercisable on December 31, 2025 | 551 | $20.34 | 2.2 | $12655 |

---

(1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $43.29 as of December 31, 2025, which would have been received by the option holders had all option holders exercised their options as of that date.

The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. The total intrinsic value of all options exercised during the three months ended December 31, 2025 and 2024 was $3.2 million and $7.8 million, respectively.

The following table shows the weighted average fair value, which was determined based upon the fair value of each option on the grant date utilizing the Black-Scholes option-pricing model and the related assumptions:

---

| | | |
|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2024 |
| Weighted average per option grant date fair value | $20.42 | $16.22 |
| Assumptions used for option grants: |  |  |
| &nbsp;&nbsp;&nbsp;Risk free interest rate | 3.72% - 3.81% | 4.31% |
| &nbsp;&nbsp;&nbsp;Expected term | 6.00 years | 6.00 years |
| &nbsp;&nbsp;&nbsp;Expected volatility | 49% | 48% |
| &nbsp;&nbsp;&nbsp;Weighted average volatility | 49% | 48% |
| &nbsp;&nbsp;&nbsp;Expected dividend yield |  |  |

---

The fair value of each option award granted during the periods presented was estimated using the Black-Scholes option valuation model that uses the assumptions noted in the above table. Expected volatilities are based on the historical volatility of our stock. We use historical data to estimate option exercise and employee termination information within the valuation model. The expected term of options granted is derived from the vesting period and historical information and represents the period of time that options granted are expected to be outstanding. The risk-free rate used is the zero-coupon U.S. Treasury bond rate in effect at the time of the grant whose maturity equals the expected term of the option.

As of December 31, 2025, the total unrecognized compensation cost related to non-vested stock options was $2.2 million and the related weighted average period over which it is expected to be recognized is approximately 2.3 years.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

13. STOCK-BASED COMPENSATION (CONTINUED)

*Non-vested Stock Units*

The following table presents a summary of our non-vested restricted stock units and performance stock units as of December 31, 2025 and changes during the three months then ended (in thousands, except per common share amounts):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | RSUs | RSUs | PSUs | PSUs |
| | **Number of Awards** | Weighted Average Grant Date Fair Value | Number of Awards | Weighted Average Grant Date Fair Value |
| Nonvested on September 30, 2025 | 966 | $31.99 | 324 | $31.71 |
| Granted | 379 | 40.08 | 157 | 40.02 |
| Vested | (328) | 32.88 | (82) | 32.02 |
| Canceled | (18) | 33.29 | (40) | 40.66 |
| Nonvested on December 31, 2025 | 999 | $34.75 | 359 | $34.27 |

---

As of December 31, 2025, the total unrecognized compensation cost related to non-vested restricted stock units and performance stock units was $32.1 million and $2.5 million, respectively. The related weighted average period over which these costs are expected to be recognized was approximately 2.4 years and 0.8 years, respectively.

14. SUBSEQUENT EVENT

On January 27, 2025 Digi announced the acquisition of Particle Industries, Inc. ("Particle") for $50 million net of cash and debt assumed. Particle is a leading provider of application infrastructure for intelligent devices. The acquisition was funded through a combination of cash on hand and debt financing under a draw of $34 million from our existing credit facility committed by BMO Harris Bank N.A.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

Our management's discussion and analysis should be read in conjunction with our Annual Report on <u>[Form 10-K](https://www.sec.gov/ix?doc=/Archives/edgar/data/0000854775/000085477524000033/dgii-20240930.htm)</u> for the fiscal year ended September 30, 2025, as well as our subsequent reports on Form 10-Q and Form 8-K and any amendments to such reports.

**SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995**

This Quarterly Report on Form 10-Q contains certain statements that are "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995, and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

***Forward-Looking Statements***

This report contains forward-looking statements that are based on management's current expectations and assumptions. These statements often can be identified by the use of forward-looking terminology such as "assume," "believe," "continue," "estimate," "expect," "intend," "may," "plan," "potential," "project," "should," or "will" or the negative thereof or other variations thereon or similar terminology. Among other items, these statements relate to expectations of the business environment in which Digi operates, projections of future performance, including but not limited to expectations regarding the Company's profitability and net cash position, inventory levels, supply chain normalization, perceived marketplace opportunities, debt repayments, attributions of potential acquisitions and statements regarding our mission and vision. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions. Among others, these include risks related to our ability to realize synergies and operating benefits from acquisitions, like our recent acquisitions of Jolt completed in August 2025, and Particle completed in January 2026, ongoing and varying inflationary and deflationary pressures around the world and the monetary and trade policies of governments globally as well as present and ongoing concerns about a potential recession, the potential for longer than expected sales cycles, the ability of companies like us to operate a global business in such conditions as well as negative effects on product demand and the financial solvency of customers and suppliers in such conditions, risks related to ongoing supply chain challenges that continue to impact businesses globally, regulatory risks that include, but are not limited to, the potential expansion of tariffs and potential changes to regulations impacting the functionality or compliance of our products, risks related to cybersecurity, data breaches and data privacy, risks arising from military conflicts such as those in Ukraine and the Middle East, the highly competitive market in which we operate, rapid changes in technologies that may displace products sold by us, declining prices of networking products, our reliance on distributors and other third parties to sell our products, the potential for significant purchase orders to be canceled or changed, delays in product development efforts, uncertainty in user acceptance of our products, the ability to integrate our products and services with those of other parties in a commercially accepted manner, potential liabilities that can arise if any of our products have design or manufacturing defects, our ability to integrate and realize the expected benefits of acquisitions, our ability to defend or settle satisfactorily any litigation, the impact of natural disasters and other events beyond our control that could negatively impact our supply chain and customers, potential unintended consequences associated with restructuring, reorganizations or other similar business initiatives that may impact our ability to retain important employees or otherwise impact our operations in unintended and adverse ways, and changes in our level of revenue or profitability which can fluctuate for many reasons beyond our control.

These and other risks, uncertainties and assumptions identified from time to time in our filings with the United States Securities and Exchange Commission, including without limitation, those set forth in Item 1A, Risk Factors, of our Annual Report on <u>[Form 10-K](https://www.sec.gov/ix?doc=/Archives/edgar/data/0000854775/000085477524000033/dgii-20240930.htm)</u> for the year ended September 30, 2025, and any other subsequent filings, could cause our actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf. Many of such factors are beyond our ability to control or predict. These forward-looking statements speak only as of the date for which they are made. Except to the extent required by law, we do not undertake, and expressly disclaim, any intent or obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, the disclosure of contingent assets and liabilities and the values of purchased assets and assumed liabilities in acquisitions. We base our estimates on historical experience and various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

A description of our critical accounting estimates was provided in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of our <u>[Annual Report](https://www.sec.gov/ix?doc=/Archives/edgar/data/0000854775/000085477524000033/dgii-20240930.htm)</u> on <u>[Form 10-K](https://www.sec.gov/ix?doc=/Archives/edgar/data/0000854775/000085477524000033/dgii-20240930.htm)</u> for the fiscal year ended September 30, 2025.

**OVERVIEW**

We are a leading global provider of business and mission-critical IoT connectivity products, services and solutions. Our business is comprised of two reporting segments: IoT Products & Services and IoT Solutions.

In fiscal 2026, our key operating objectives are to continue driving growth in Annualized Recurring Revenue (ARR), Adjusted Net Income, Adjusted EBITDA and cash flow generation.

We utilize many financial, operational, and other metrics to evaluate our financial condition and financial performance. Below we highlight the metrics for the first quarter of fiscal 2026 that we feel are most important in these evaluations, with comparisons to the first quarter of fiscal 2025:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Revenue was $122 million, an increase of 18%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Gross profit margin was 62.4%, an increase of 40 basis points.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Operating margin was 13.3%, an increase of 40 basis points.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Net income was $12 million, an increase of 16%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Net income per diluted share was $0.31, an increase of 15%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjusted net income was $21 million, an increase of 27%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjusted net income per diluted share was $0.56, an increase of 24%, including a $0.06 impact from interest expense in both periods.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjusted EBITDA was $32 million, an increase of 23%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Annualized Recurring Revenue ("ARR") was $157 million at quarter end, an increase of 31%.

(1) Fiscal 2026 results include the results of Jolt.

Reconciliations of non-GAAP financial measures to their closest GAAP analogs appear at the end of this release, as well as a discussion of recent changes to the method of calculating adjusted net income and adjusted net income per share.

***Key trends regarding our existing business***

We believe the following trends will continue to impact our business in fiscal 2026 and beyond:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We believe the market for Industrial IoT products and services is in the midst of a long-term expansion across a broad range of industries and solutions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As recurring revenue from subscription and cloud monitoring services becomes a greater portion of our overall revenue, delivering at higher operating margins rates than one-time revenue, we expect operating margin rates to expand.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Technology infrastructure necessary to support the deployment of artificial intelligence and other innovations has seen a significant increase in spending on datacenters and other related infrastructure and we have been and expect to be a beneficiary of this ongoing trend.

In addition to the above trends, there are a number of macro circumstances globally that we continue to monitor for potential impacts on our business. These include evolving international trade policies, global economic conditions, and political tensions that may have the potential to disrupt our business or those of our vendors or customers.

Both tariffs imposed by various governments globally as well as extremely high demand for certain components associated with technology capital spending on AI and other global business initiatives have the potential to disrupt existing supply chains and impose additional costs on our business.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

Monetary and fiscal policies continue to fluctuate globally in response to inflationary and deflationary pressures. These situations could all lead to potential adverse impacts on a wide range of businesses and could affect the businesses of our vendors and customers in ways that could harm our business. Due to the war in Ukraine, sanctions remain imposed on trade with Russia and Belarus which has the potential to disrupt the supply of raw materials needed to make components. Political tensions between China and other nations have intensified, which could lead to similar issues. Additionally, geopolitical risk in the Middle East region remains volatile, which could all lead to disruptions in shipping routes and elevated oil prices that could impact our transportation costs.

**CONSOLIDATED RESULTS OF OPERATIONS**

The following table sets forth selected information derived from our interim condensed consolidated statements of operations:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | % incr. |
| ($ in thousands) | 2025 | 2025 | 2024 | 2024 | (decr.) |
| Revenue | $122462 | 100.0% | $103866 | 100.0% | 17.9% |
| Cost of sales | 46071 | 37.6 | 39468 | 38.0 | 16.7 |
| Gross profit | 76391 | 62.4 | 64398 | 62.0 | 18.6 |
| Operating expenses | 60065 | 49.1 | 51039 | 49.1 | 17.7 |
| Operating income | 16326 | 13.3 | 13359 | 12.9 | 22.2 |
| Other expense, net | (2307) | (1.9) | (2263) | (2.2) | 1.9 |
| Income before income taxes | 14019 | 11.5 | 11096 | 10.7 | 26.3 |
| Income tax expense | 2308 | 1.9 | 1013 | 1.0 | NM |
| Net income | $11711 | 9.6% | $10083 | 9.7% | 16.1 |

---

NM means not meaningful

REVENUE BY SEGMENT

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | % incr. |
| ($ in thousands) | 2025 | 2025 | 2024 | 2024 | (decr.) |
| **Revenue** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;IoT Products & Services | $86354 | 70.5% | $77823 | 74.9% | 11.0% |
| &nbsp;&nbsp;&nbsp;IoT Solutions | 36108 | 29.5 | 26043 | 25.1 | 38.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total revenue | $122462 | 100.0% | $103866 | 100.0% | 17.9% |

---

*IoT Products & Services*

IoT Products & Services revenue increased $8.5 million for the three months ended December 31, 2025, as compared to the same period in the prior fiscal year. This was driven by increased customer demand and consisted of a $6.3 million increase in one-time sales and $2.2 million of recurring revenue growth, with no material impact from pricing.

*IoT Solutions*

IoT Solutions revenue increased $10.1 million for the three months ended December 31, 2025, as compared to the same period in the prior fiscal year. The increase consisted of a $7.6 million increase in recurring revenue and a $2.5 million increase in one-time sales, both primarily driven by the Jolt acquisition.

ARR

ARR was $157 million as of December 31, 2025, compared to $120 million as of December 31, 2024. IoT Products & Services ARR was $34 million as of December 31, 2025, compared to $27 million as of December 31, 2024. This increase was due to growth in the subscription base across remote management platforms, extended warranty offerings and technical support. IoT Solutions ARR was $123 million as of December 31, 2025, compared to $93 million as of December 31, 2024, driven by the acquisition of Jolt, as well as growth in both SmartSense and Ventus.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

COST OF GOODS SOLD AND GROSS PROFIT BY SEGMENT

Below are our segments' cost of goods sold and gross profit as a percentage of their respective total revenue:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | Basis point |
| ($ in thousands) | 2025 | 2025 | 2024 | 2024 | inc. (decr.) |
| Cost of sales | $46071 | 37.6% | $39468 | 38.0% | (40) |
| Gross profit | $76391 | 62.4% | $64398 | 62.0% | 40 |

---

Gross profit margin of 62.4% increased 40 basis points the first quarter of fiscal 2026 as compared to first quarter of the prior fiscal year. This increase was the result of favorable margin mix within product sales and a higher proportion of volume from recurring revenue, which has a higher margin. This was partially offset by higher inventory related expenses.

OPERATING EXPENSES

Below are our operating expenses and operating expenses as a percentage of total revenue:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | $% |
| <u>($ in thousands)</u> | 2025 | 2025 | 2024 | 2024 | incr.<br>(decr.) |
| **Operating Expenses** |  |  |  |  |  |
| Sales and marketing | $25977 | 21.2% | $21757 | 20.9% | 19.4% |
| Research and development | 17154 | 14.0 | 15027 | 14.5 | 14.2 |
| General and administrative | 16934 | 13.8 | 14255 | 13.7 | 18.8 |
| &nbsp;&nbsp;&nbsp;Total operating expenses | $60065 | 49.0% | $51039 | 49.1% | 17.7% |

---

The $9.0 million increase in operating expenses for the three months ended December 31, 2025, as compared to the same period in the prior fiscal year was due to a $4.7 million increase in labor expense and a $4.5 million increase in non-labor expense, partially offset by a $0.2 million in net gains on intangible asset sales.

OPERATING INCOME

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | Basis point increase (decrease) |
| ($ in thousands) | 2025 | 2025 | 2024 | 2024 | Basis point increase (decrease) |
| **Operating Income** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;IoT Products & Services | $11686 | 13.5% | $10957 | 14.1% | (60) |
| &nbsp;&nbsp;&nbsp;IoT Solutions | 4640 | 12.9% | 2402 | 9.2% | 370 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating income | $16326 | 13.3% | $13359 | 12.9% | 40 |

---

*IoT Products & Services*

IoT Products & Services operating income decreased 60 basis points for the first quarter of fiscal 2026, as compared to the first quarter of fiscal 2025. This decrease was due to higher inventory related expenses offset by favorable product margin mix and operating expense leverage.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

*IoT Solutions*

IoT Solutions operating income increased 370 basis points for the first quarter of fiscal 2026, as compared to the first quarter of fiscal 2025. This increase was the result of favorable operating expense leverage and a higher proportion of volume from recurring revenue, which has a higher margin.

OTHER EXPENSE, NET

Below are our other expenses, net, and other expenses, net as a percentage of total revenue:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | $% |
| <u>($ in thousands)</u> | 2025 | 2025 | 2024 | 2024 | incr.<br>(decr.) |
| **Other expense, net** |  |  |  |  |  |
| Interest expense, net | $(2303) | (1.9)% | $(2294) | (2.2)% | 0.4% |
| Other expense, net | (4) |  | 31 |  | (112.9)% |
| &nbsp;&nbsp;&nbsp;Total other expense, net | $(2307) | (1.9)% | $(2263) | (2.2)% | 1.9% |

---

NM means not meaningful

Other expense, net, was flat for the three months ended December 31, 2025, as compared to the same period in the prior fiscal year.

INCOME TAXES

See <u>[Note 9](#i87e5e641db4049af9f72650ba6f5aefb_55)</u> to the condensed consolidated financial statements for discussion of income taxes.

KEY BUSINESS METRIC

Annualized Recurring Revenue (ARR) represents the annualized monthly value of all billable subscription contracts, measured at the end of any fiscal period. ARR should be viewed independently of revenue and deferred revenue and is not intended to replace or forecast either of these items. Digi management uses ARR to manage and assess the growth of our subscription revenue business. We believe ARR is an indicator of the scale of our subscription business.

GOODWILL

If our future operating results do not meet current forecasts or if we experience a sustained decline in our market capitalization that is determined to be indicative of a reduction in fair value of one or more of our reporting units within either of our segments, we may be required to record future impairment charges for goodwill.

See <u>[Note 5](#i87e5e641db4049af9f72650ba6f5aefb_43)</u> to the condensed consolidated financial statements for additional discussion of goodwill.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

NON-GAAP FINANCIAL INFORMATION

This report includes adjusted net income, adjusted net income per diluted share and adjusted earnings before interest, taxes and amortization ("Adjusted EBITDA"), each of which is a non-GAAP financial measure.

During the first fiscal quarter of 2026, Digi modified its method of calculating adjusted net income and adjusted net income per share to include the impact of interest expense. This change was primarily driven by the continued use of financing by the Company to fund cash flow needs and therefore including the recurring nature of interest presents a better metric that management believes provides a more representative view of operating performance and cash-generating capability. Accordingly, we evaluated the impact of this change on prior-period disclosures and have recast adjusted net income and adjusted net income per share for all periods to conform to this presentation.

Non-GAAP measures are not substitutes for GAAP measures for the purpose of analyzing financial performance. The disclosure of these measures does not reflect all charges and gains that actually were recognized by Digi. These non-GAAP measures are not in accordance with, or, an alternative for measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies or presented by us in prior reports. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. We believe these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. Additionally, Adjusted EBITDA does not reflect our cash expenditures, the cash requirements for the replacement of depreciated and amortized assets, or changes in or cash requirements for our working capital needs. We believe that providing historical and adjusted net income and adjusted net income per diluted share, respectively, exclusive of such items as reversals of tax reserves, discrete tax benefits, restructuring charges and reversals, intangible amortization, stock-based compensation, other non-operating income/expense, adjustments to estimates of contingent consideration and acquisition-related expenses related to acquisition permits investors to compare results with prior periods that did not include these items. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends and to gain an understanding of our comparative operating performance. In addition, certain of our stockholders have expressed an interest in seeing financial performance measures exclusive of the impact of these matters, which while important, are not central to the core operations of our business. Management believes that Adjusted EBITDA, defined as EBITDA adjusted for stock-based compensation expense, acquisition-related expenses, restructuring charges and reversals and changes in fair value of contingent consideration, is useful to investors to evaluate our core operating results and financial performance because it excludes items that are significant non-cash or non-recurring expenses reflected in the consolidated statements of operations. We believe that the presentation of Adjusted EBITDA as a percentage of revenue is useful to investors because it provides a reliable and consistent approach to measuring our performance from year to year and in assessing our performance against that of other companies. We believe this information helps compare operating results and corporate performance exclusive of the impact of our capital structure and the method by which assets were acquired.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

Below are reconciliations from GAAP to non-GAAP information that we feel are important to our business:

**Reconciliation of Net Income to Adjusted EBITDA**

(In thousands)

---

| | | | | |
|:---|:---|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2025 | 2024 | 2024 |
| | | % of total<br>revenue | | % of total<br>revenue |
| Total revenue | $122462 | 100.0% | $103866 | 100.0% |
| Net income | $11711 |  | $10083 |  |
| Interest expense, net | 2303 |  | 2294 |  |
| Income tax provision | 2308 |  | 1013 |  |
| Depreciation and amortization | 10455 |  | 8500 |  |
| Stock-based compensation | 3987 |  | 3560 |  |
| Gain on asset sale | (200) |  |  |  |
| Restructuring charge | 457 |  | 159 |  |
| Acquisition expense, net | 543 |  |  |  |
| Adjusted EBITDA | $31564 | 25.8% | $25609 | 24.7% |

---

**Reconciliation of Net Income and Net Income per Diluted Share to** 

**Adjusted Net Income and Adjusted Net Income per Diluted Share**

(In thousands, except per share amounts)

---

| | | | | |
|:---|:---|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, | Three months ended December 31, |
| | 2025 | 2025 | 2024 | 2024 |
| Net income and net income per diluted share | $11711 | $0.31 | $10083 | $0.27 |
| Amortization | 7256 | 0.19 | 5765 | 0.15 |
| Stock-based compensation expense | 3987 | 0.10 | 3560 | 0.09 |
| Other non-operating income (expense) | 4 |  | (31) |  |
| Acquisition expense, net | 543 | 0.01 |  |  |
| Gain on asset sale | (200) | (0.01) |  |  |
| Restructuring charge | 457 | 0.01 | 159 |  |
| Tax effect from the above adjustments (1) | (1622) | (0.03) | (2323) | (0.05) |
| Discrete tax benefits (2) | (762) | (0.02) | (362) | (0.01) |
| Adjusted net income and adjusted net income per diluted share (3) | $21374 | $0.56 | $16851 | $0.45 |
| Diluted weighted average common shares |  | 38239 |  | 37483 |

---

(1)The tax effect from the above adjustments assumes an estimated effective tax rate of 18.0% for fiscal 2026 and fiscal 2025 based on adjusted net income.

(2)For the three ended December 31, 2025 and 2024, discrete tax benefits are a result of changes in excess tax benefits recognized on stock compensation.

(3)Adjusted net income per diluted share may not add due to the use of rounded numbers.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

**LIQUIDITY AND CAPITAL RESOURCES**

Historically we have financed our operations and capital expenditures principally with funds generated from operations. In fiscal 2022 we issued debt to fund our acquisition of Ventus and in fiscal 2023 we extinguished the debt, replacing it with a revolving credit facility. Our liquidity requirements arise from our working capital needs, and to a lesser extent, our need to fund capital expenditures to support our current operations and facilitate growth and expansion.

On December 23, 2025, we amended our Credit Agreement. The Credit Agreement provides Digi with a $250 million senior secured revolving credit facility, with an uncommitted accordion feature that provides for additional borrowing capacity of up to the greater of $105 million or one hundred percent of trailing twelve month adjusted earnings before interest, taxes, depreciation, and amortization. The Credit Facility also contains a $10 million letter of credit sublimit and $10 million swingline sub-facility. For additional information regarding the terms of our Credit Facility, including the Revolving Loan and its sub-facilities, see <u>[Note 6](#i87e5e641db4049af9f72650ba6f5aefb_46)</u> to our condensed consolidated financial statements.

We expect positive cash flows from operations for the foreseeable future. We believe that our current cash and cash equivalents balances, cash generated from operations and our ability to borrow under our credit facility will be sufficient to fund our business operations and capital expenditures for the next 12 months and beyond.

Our condensed consolidated statements of cash flows for the three months ended December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
| | Three months ended December 31, | Three months ended December 31, |
| ($ in thousands) | 2025 | 2024 |
| Operating activities | $35626 | $29719 |
| Investing activities | 367 | (577) |
| Financing activities | (26943) | (30540) |
| Effect of exchange rate changes on cash and cash equivalents | (20) | (177) |
| Net decrease in cash and cash equivalents | $9030 | $(1575) |

---

*Cash flows from operating activities increased $5.9 million as a result of:*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a $5.1 million decrease in deferred income tax benefit in the first quarter of fiscal 2026 compared to a $0.5 million increase in the first quarter of fiscal 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a $1.9 million increase in depreciation and amortization expense,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a $1.6 million increase in net income in the first quarter of fiscal 2026,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• and an increase in stock based compensation expense.

*These were partially offset by:*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*•* a $4.6 million decrease in net operating assets for the first quarter of fiscal 2026 compared to a $7.0 million increase in the first quarter of fiscal 2025.

*Cash flows from investing activities increased $0.9 million as a result of:*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• $0.5 million in net working capital adjustments relating to our acquisition of Jolt,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a $0.3 million in proceeds from the sale of an intangible asset,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• and a $0.1 million decrease in purchases of property, equipment, improvements and certain other intangible assets.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

*Cash flows used in financing activities decreased $3.6 million as a result of:*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• debt payments of $24.0 million in the first quarter of fiscal 2026, compared to debt payments of $28.3 million in the first quarter of fiscal 2025,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a $1.6 million increase in proceeds from stock option exercises and employee stock purchase plan transactions,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• and a $0.3 million payment of debt issuance costs relating to the December revolving credit agreement modification.

*These were partially offset by:*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a $2.0 million increase in taxes paid to satisfy tax withholding obligations of holders of options to purchase common shares and restricted stock unit awards in connections with net share settlements.

CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual obligations at December 31, 2025:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Payments due by fiscal period | Payments due by fiscal period | Payments due by fiscal period | Payments due by fiscal period | Payments due by fiscal period |
| ($ in thousands) | Total | Less than 1 year | 1-3 years | 3-5 years | Thereafter |
| Operating leases | $12413 | $3231 | $3937 | $3640 | $1605 |
| Revolving loan | 136000 |  |  | 136000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $148413 | $3231 | $3937 | $139640 | $1605 |

---

The operating leases included above primarily relate to office space. The table above does not include possible payments for uncertain tax positions. Our reserve for uncertain tax positions, including accrued interest and penalties, was $0.2 million as of December 31, 2025. Due to the nature of the underlying liabilities and the extended time often needed to resolve income tax uncertainties, we cannot make reliable estimates of the amount or timing of future cash payments that may be required to settle these liabilities. The table above also does not include those obligations for royalties under license agreements as these royalties are calculated based on future sales of licensed products and we cannot make reliable estimates of the amount of cash payments.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

None.

**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

We are exposed to ongoing market risk related to changes in interest rates and foreign currency exchange rates.

INTEREST RATE RISK

We are exposed to market risks related to fluctuations in interest rates on amounts borrowed under the Credit Facility. As of December 31, 2025, we had $136.0 million outstanding under our Revolving Loan. Borrowings under the Credit Facility bear interest at a rate per annum equal to Term SOFR with a floor of 0.00% for an interest period of one, three, or six months as selected by Digi, reset at the end of the selected interest period (or a replacement benchmark rate if Term SOFR is no longer available) plus the applicable margin or a base rate plus the applicable margin. The base rate is determined by reference to the highest of BMO's prime rate, the rate determined by BMO to be the average rate of Federal funds in the secondary market plus 0.50%, or one-month SOFR plus 1.00%. The applicable margin for loans under the Credit Facility is in a range of 1.35% to 3.10% for Term SOFR loans and 0.35% to 2.10% for base rate loans, depending on Digi's total net leverage ratio. All borrowings in the period were made at Term SOFR for a one-month interest election period Our weighted average Revolving Loan applicable margin of 1.85% as of December 31, 2025. Our weighted average interest rate for our Credit Facility was 5.62% as of December 31, 2025.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

Digi bases the interest period election described above on an assessment of the interest rate environment conducted on a monthly basis. Based on the balance sheet position for the Revolving Loan at December 31, 2025, the annualized effect of a 25 basis point change in interest rates would increase or decrease our interest expense by $0.3 million. For additional information, see <u>[Note 6](#i87e5e641db4049af9f72650ba6f5aefb_46)</u> to our condensed consolidated financial statements. For our Credit Facility, interest rate changes generally do not affect the fair value of the debt instruments, but do impact future earnings and cash flows, assuming other factors are held constant. If interest rates remain elevated, we will continue to see interest expenses that are higher than historical amounts.

FOREIGN CURRENCY RISK

We are not exposed to foreign currency transaction risk associated with sales transactions as the majority of our sales are denominated in U.S. Dollars. We are exposed to foreign currency translation risk as the financial position and operating results of our foreign subsidiaries are translated into U.S. Dollars for consolidation. We manage our net asset or net liability position for non-functional currency accounts, primarily the U.S. Dollar accounts in our foreign locations to reduce our foreign currency risk. We have not implemented a formal hedging strategy.

A 10% change in the average exchange rate for the Euro, British Pound, Australian Dollar and Canadian Dollar to the U.S. Dollar during the first three months of fiscal 2026 would have resulted in a 0.9% increase or decrease in stockholders' equity due to foreign currency translation.

CREDIT RISK

We have exposure to credit risk related to our accounts receivable portfolio. Exposure to credit risk is controlled through regular monitoring of customer financial status, credit limits and collaboration with sales management and customer contacts to facilitate payment.

**ITEM 4. CONTROLS AND PROCEDURES**

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**PART II. OTHER INFORMATION**

**ITEM 1. LEGAL PROCEEDINGS**

The disclosure set forth in <u>[Note 12](#i87e5e641db4049af9f72650ba6f5aefb_64)</u> to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q is incorporated herein by reference.

**ITEM 1A. RISK FACTORS**

Except as set forth below, there have been no material changes in our risk factors from those previously disclosed in Item 1A of Part I of our Annual Report on <u>[Form 10-K](https://www.sec.gov/ix?doc=/Archives/edgar/data/0000854775/000085477524000033/dgii-20240930.htm)</u> for the year ended September 30, 2025.

*We depend on manufacturing relationships and a broad set of suppliers, some of whom provide us with limited-source components and parts, and disruptions in these relationships may cause damage to our customer relationships or otherwise negatively impact our business.*

We procure all parts and certain services involved in the production of our products and subcontract most of our product manufacturing to outside firms that specialize in such services. Although most of the components of our products are available from multiple vendors, we have several single-source supplier relationships, either because alternative sources are not available or because the relationship is advantageous to us. Further, in recent years supply chains globally have experienced stress due to a range of factors. This has impacted our own ability to procure certain inventory and services. These disruptions also caused us to order significant amounts of inventory as we were uncertain whether we would otherwise be able to procure necessary parts and components to meet customer needs. As a result, at times we held elevated levels of inventory compared to historical norms. The impacts of these circumstances driven by supply chain stress were material in some instances and it is possible additional material impacts could occur in the future. There can be no assurance that our suppliers will be able to meet our future requirements for products and components in a timely fashion. In addition, the availability of many of the components we need is dependent in part on our ability to provide our suppliers with accurate forecasts of our future requirements. Delays or lost revenue could be caused by other factors beyond our control, including late deliveries by vendors of components, or force majeure events. As an example of force majeure, a fire many years ago disrupted the operations at one of our contract manufacturers in Thailand. If we are required to identify alternative suppliers for any of our required components, qualification and pre-production periods could be lengthy and may cause an increase in component costs and delays in providing products to customers. Any extended interruption in the supply of any of the key components or the availability of manufacturing services that currently are obtained from limited sources could disrupt our operations and have a material adverse effect on our customer relationships and profitability.

*We are dependent on third parties to manufacture our products which could have adverse impacts on our business if such manufacturers encounter operating restraints or if we do not properly forecast customer demand.*

We are reliant on third parties to manufacture our products in countries such as Mexico, Thailand, Taiwan, Cambodia and China. The ability of these manufacturers to provide us with the timely provision of finished products is subject to a number of disruptions beyond their control such as, among others: the availability of components from suppliers, labor shortages, energy shortages such as those from time to time encountered in China, changes in government regulations, tensions with foreign governments or other factors. If we do not properly forecast customer demands for products any lengthening in lead times or disruptions in service could result in lost revenues and adversely impact our business, results of operation, financial condition and prospects.

*We face risks associated with our international operations that could impair our ability to grow our revenue abroad as well as our overall financial condition.*

Our future growth may be dependent in part upon our ability to increase sales in international markets. These sales are subject to a variety of risks, including fluctuations in currency exchange rates, tariffs, import restrictions and other trade barriers, geopolitical tensions, unexpected or very burdensome changes in regulatory requirements, longer accounts receivable payment cycles, potentially adverse tax consequences, and export license requirements. In addition, we are subject to the risks inherent in conducting business internationally, including political and economic instability and unexpected changes in diplomatic and trade relationships. In many markets where we operate business and cultural norms are different than those in the United States and practices that may violate laws and regulations applicable to us like the Foreign Corrupt Practices Act ("FCPA") and the UK Anti-Bribery Act ("UKBA") are more commonplace. Although we have implemented policies and procedures with the intention of ensuring compliance with these laws and regulations, our employees, contractors and agents, as well as channel partners involved in our international sales, may take actions in violation of our policies. Many of our vendors and strategic business allies also have international operations and are subject to the above-described risks. Even if we are able to successfully manage the risks of international operations, our business may be adversely affected if one or more of our business

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

relations are not able to successfully manage these risks. There can be no assurance that one or more of these factors will not have a material adverse effect on our business strategy and financial condition.

In addition to these risks, our offices and employees in foreign jurisdictions, including Australia, Belgium, Canada, China, France, Germany, Japan, Mexico, Poland, Spain, Singapore, Sweden and United Kingdom, create additional operational and compliance risks. Local labor, employment, tax and benefits laws may increase our operating costs, limit our ability to adjust staffing levels, or expose us to unexpected liabilities. Government inspections, audits, or investigations could disrupt operations or result in fines or penalties. Employees in these jurisdictions may also face heightened personal security, regulatory, or compliance risks. Evolving data-security, cybersecurity, and data-localization requirements in foreign jurisdictions may impose additional compliance obligations and operational constraints. Changes in U.S. relations with these foreign jurisdictions could also result in new restrictions that impair our ability to operate or support employees there.

**ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

The following table presents the information with respect to purchases made by or on behalf of Digi or any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange Act), of our common stock during the first quarter of fiscal 2026:

---

| | | | | |
|:---|:---|:---|:---|:---|
| Period | Total Number of Shares Purchased<sup>(1)</sup> | Average Price Paid per Share | Total Number of Shares Purchased as Part of a Publicly Announced Program | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program |
| October 1, 2025 - October 31, 2025 |  | $— |  | $— |
| November 1, 2025 - November 30, 2025 | 163304 | 39.81 |  |  |
| December 1, 2025 - December 31, 2025 |  |  |  |  |
|  | 163304 | $39.81 |  | $— |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;All shares reported were forfeited by employees in connection with the satisfaction of tax withholding obligations related to the vesting of restricted stock units.

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES**

None.

**ITEM 4. MINE SAFETY DISCLOSURES**

None.

**ITEM 5. OTHER INFORMATION**

During the three months ended December 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**Item 5.07 Submission of Matters to a Vote of Security Holders.**

Our annual meeting of stockholders was held on January 30, 2026. Of the 37,589,332 shares of our common stock eligible to vote at the meeting, 35,968,134 shares were present at the meeting by proxy or in person (virtually). The stockholders voted on the following matters:

---

| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;Satbir Khanuja, PhD. and Ronald E. Konezny were elected as directors for three-year terms. Voting for each of their elections was as follows: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;Satbir Khanuja, PhD. and Ronald E. Konezny were elected as directors for three-year terms. Voting for each of their elections was as follows: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;Satbir Khanuja, PhD. and Ronald E. Konezny were elected as directors for three-year terms. Voting for each of their elections was as follows: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;Satbir Khanuja, PhD. and Ronald E. Konezny were elected as directors for three-year terms. Voting for each of their elections was as follows: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;Satbir Khanuja, PhD. and Ronald E. Konezny were elected as directors for three-year terms. Voting for each of their elections was as follows: |
| <u>Name</u> | <u>Votes For</u> | <u>Votes Against</u> | <u>Abstain</u> | <u>Broker</u><br><u>Non-Votes</u> |
| Satbir Khanuja, PhD. | 31251078 | 2638872 | 10749 | 2067435 |
| Ronald E. Konezny | 32981918 | 909156 | 9625 | 2067435 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;A non-binding advisory vote to approve the executive compensation disclosed in our proxy statement for the annual meeting received advisory approval based on 32,477,945 "for" votes and 1,402,149 "against" votes. 20,605 shares abstained from voting and there were 2,067,435 broker non-votes on this proposal. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;A non-binding advisory vote to approve the executive compensation disclosed in our proxy statement for the annual meeting received advisory approval based on 32,477,945 "for" votes and 1,402,149 "against" votes. 20,605 shares abstained from voting and there were 2,067,435 broker non-votes on this proposal. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;A non-binding advisory vote to approve the executive compensation disclosed in our proxy statement for the annual meeting received advisory approval based on 32,477,945 "for" votes and 1,402,149 "against" votes. 20,605 shares abstained from voting and there were 2,067,435 broker non-votes on this proposal. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;A non-binding advisory vote to approve the executive compensation disclosed in our proxy statement for the annual meeting received advisory approval based on 32,477,945 "for" votes and 1,402,149 "against" votes. 20,605 shares abstained from voting and there were 2,067,435 broker non-votes on this proposal. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;A non-binding advisory vote to approve the executive compensation disclosed in our proxy statement for the annual meeting received advisory approval based on 32,477,945 "for" votes and 1,402,149 "against" votes. 20,605 shares abstained from voting and there were 2,067,435 broker non-votes on this proposal. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;The stockholders ratified the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2026, with 35,884,011 shares voting for the proposal and 59,198 shares voting against the proposal. 24,925 shares abstained from voting on this proposal. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;The stockholders ratified the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2026, with 35,884,011 shares voting for the proposal and 59,198 shares voting against the proposal. 24,925 shares abstained from voting on this proposal. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;The stockholders ratified the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2026, with 35,884,011 shares voting for the proposal and 59,198 shares voting against the proposal. 24,925 shares abstained from voting on this proposal. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;The stockholders ratified the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2026, with 35,884,011 shares voting for the proposal and 59,198 shares voting against the proposal. 24,925 shares abstained from voting on this proposal. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;The stockholders ratified the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2026, with 35,884,011 shares voting for the proposal and 59,198 shares voting against the proposal. 24,925 shares abstained from voting on this proposal. |

---

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

**ITEM 6. EXHIBITS**

---

| | | | |
|:---|:---|:---|:---|
| Exhibit No. | Exhibit No. | Description | Method of Filing |
| 3 | (a) | Restated Certificate of Incorporation of the Company, as amended (1) | Incorporated by Reference |
| 3 | (b) | <u>[Amended and Restated By-Laws of the Company](https://www.sec.gov/Archives/edgar/data/854775/000110465920054438/tm2018116d1_ex3-1.htm)</u> (2) | Incorporated by Reference |
| 10 | (a) | <u>[Digi International Inc. 2021 Omnibus Incentive Plan (as amended and restated on February 3, 2025)](https://www.sec.gov/Archives/edgar/data/854775/000110465925046108/tm2514264d1_ex99-a.htm)</u> (3) | Incorporated by Reference |
| 10 | (b) | <u>[First Amendment to Revolving Credit Agreement dated December 23, 2025, by and among Digi International Inc. as the borrower, certain subsidiaries party thereto as guarantors, BMO Bank, N.A., as administrative and collateral agent, and the lenders from time-to-time party thereto](https://www.sec.gov/Archives/edgar/data/854775/000085477525000029/digiinternational-firstame.htm)</u> (4) | Incorporated by Reference |
| 31 | (a) | <u>[Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer](dgii-ex31a_20251231x10q.htm)</u> | Filed Electronically |
| 31 | (b) | <u>[Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer](dgii-ex31b_20251231x10q.htm)</u> | Filed Electronically |
| 32 |  | <u>[Section 1350 Certification](dgii-ex32_20251231x10q.htm)</u> | Furnished Electronically |
| 101 |  | The following materials from Digi International Inc.'s Quarterly Report on Form 10-Q for the fiscal period ended December 31, 2025, as filed with the Security and Exchange Commission, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; (v) Condensed Consolidated Statements of Stockholders' Equity; (vi) the Notes to the Condensed Consolidated Financial Statements; and (vii) the information set forth in Part II, Item 5. | Filed Electronically |
| 104 |  | The cover page from Digi International Inc.'s Quarterly Report on Form 10-Q for the period ended December 31, 2025 is formatted in iXBRL (included in Exhibit 101). |  |

---

____________

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Incorporated by reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended September 30, 1993.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on April 30, 2020.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)Incorporated by reference to Exhibit 99(a) to the Company's Registration Statement on Form S-8 filed on May 8, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on December 30, 2025.

------

<u>[**Table of Contents**](#i87e5e641db4049af9f72650ba6f5aefb_7)</u>

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
| | | DIGI INTERNATIONAL INC. | DIGI INTERNATIONAL INC. |
| Date: | February 4, 2026 | By: | /s/ James J. Loch |
|  |  |  | James J. Loch |
|  |  |  | Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Authorized Officer) |

---

## Ex-31.A

**Exhibit No. 31(a)**

**CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Ronald E. Konezny, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Digi International Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| February 4, 2026 | /s/ Ronald E. Konezny |
| | Ronald E. Konezny |
| | President and Chief Executive Officer |

---

## Ex-31.B

**Exhibit No. 31(b)**

**CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, James J. Loch, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Digi International Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| February 4, 2026 | /s/ James J. Loch |
| | James J. Loch |
| | Senior Vice President, Chief Financial Officer and Treasurer |

---

## Ex-32

**Exhibit No. 32**

**CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of Digi International Inc. (the Registrant) on Form 10-Q for the fiscal quarter ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof, each of the undersigned certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Quarterly Report on Form 10-Q complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

---

| | |
|:---|:---|
| February 4, 2026 | |
| | /s/ Ronald E. Konezny |
| | Ronald E. Konezny |
| | President and Chief Executive Officer |
| | /s/ James J. Loch |
| | James J. Loch |
| | Senior Vice President, Chief Financial Officer and Treasurer |

---

<br>