• Digi International recently reported first-quarter 2026 results, posting revenue of US$122.46 million and net income of US$11.71 million, both higher than a year earlier, alongside improved basic and diluted earnings per share from continuing operations of US$0.31.
• The company also issued guidance for the second quarter and full fiscal year 2026 that points to ongoing revenue expansion and stronger annual recurring revenue, highlighting the growing importance of its subscription-based business model.
• Next, we’ll consider how Digi International’s outlook for double-digit annual recurring revenue growth shapes its investment narrative in the connectivity space.

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What Is Digi International's Investment Narrative?

To own Digi International, you need to believe that its connectivity hardware and software can keep shifting toward a higher-margin, subscription-heavy model, without stretching its balance between growth and profitability. The latest quarter helps that story: revenue and earnings improved year over year, and management sharply lifted its outlook for full-year revenue and annual recurring revenue growth, reinforcing the idea that recurring software and services are becoming a more meaningful driver. In the short term, that stronger guidance itself is a key catalyst, especially after the share price’s solid 3‑, 6‑ and 12‑month gains. At the same time, it raises the bar. Execution risk around hitting these new growth targets, and sustaining valuation support if momentum cools, now moves closer to the center of the thesis.

However, one issue in particular could matter more than the new guidance suggests for investors. Digi International's shares have been on the rise but are still potentially undervalued by 46%. Find out what it's worth.

Exploring Other Perspectives

Three Simply Wall St Community fair value estimates span roughly US$37 to just under US$83, showing how far apart private investors can be on Digi’s worth. Set against management’s upgraded growth outlook and the heightened execution risk that now comes with it, these differing views underline why it helps to weigh several perspectives before deciding how Digi might fit in your portfolio.

Explore 3 other fair value estimates on Digi International - why the stock might be worth 17% less than the current price!

Build Your Own Digi International Narrative

Disagree with this assessment? Create your own narrative in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Digi International research is our analysis highlighting 3 key rewards that could impact your investment decision.
• Our free Digi International research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Digi International's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.