Digi Plans Subscription Shift For Sensor Target — Customers Will Move Gradually

Digi International, which sells technology for connecting and remotely managing devices, plans to turn its pending sensor purchase into a subscription business. President and Chief Executive Officer Ron Konezny outlined the shift on Wednesday's earnings call, but cautioned that customers would migrate gradually during a 2027 transition year.

A European Sensor Base To Convert

Digi agreed on September 30 to a $130 million cash purchase of Disruptive Technologies, a Norway-based sensing business, according to the company's results release. The target has deployed over 250,000 sensors, mostly in Europe and often through channel partners.

Konezny described the target's calendar 2025 business as weighted toward individual sensor purchases, accompanied by smaller subscription charges. Digi intends to include the sensors in subscriptions: "recurring revenue will be the focus," he said.

The approach follows an option Digi already offers customers: hardware, software, connectivity and services for a monthly fee with no upfront payment. "In some cases, the customer never owns the equipment," Konezny said.

Digi also lets customers buy equipment and manage it themselves. Its businesses span routers, wireless modules and network-management tools, alongside subscription services for temperature monitoring, employee tasks, labeling and managed networks.

2027 Is The Migration Year

A B. Riley analyst asked how quickly Disruptive Technologies customers could move to the SmartSense subscription model, Digi's monitoring offering. Konezny said the work would involve both end users and channel partners in Europe and the U.S.

"We're patient. We're long-term thinkers," he said. Teams are discussing integration plans, but the purchase remains pending, and management expects conversion to take time.

Konezny expects the acquisition to add to earnings particularly in fiscal 2028, when much of the integration should be behind Digi. He said revenue would shift away from the target's historical emphasis on one-time sales toward recurring payments.

Chief Financial Officer Jamie Loch said Digi expects to reach its $200 million annual recurring-revenue goal in 2027, ahead of its original 2028 deadline. Guidance includes Disruptive Technologies and projects at least 15% growth in annual recurring revenue for fiscal 2027, alongside revenue growth of 10% to 15%.

SmartSense Expands Beyond Food And Healthcare

Disruptive Technologies would take SmartSense into Europe and bring Digi into building automation and occupancy monitoring, while extending its food and healthcare work. Konezny said the target also offers sensing capabilities Digi currently obtains from third parties or does not offer itself.

Digi plans to put the technology in the hands of its cellular, Opengear and Particle teams to explore further uses. Konezny cited monitoring access to ATM safes and tracking temperature, water and humidity around data-center equipment as potential applications.

The purchase builds on earlier acquisitions: Jolt in August 2025 and Particle in January 2026. Konezny said Digi had integrated both into shared systems and processes; its approach uses cash generation to repay acquisition debt and support further purchases.

Management anticipates closing the Disruptive Technologies purchase on November 30. The customer conversion is planned for a gradual transition through 2027.

Sources

• Digi International: Fiscal Q4 Earnings Snapshot | wusa9.com — Associated Press
• Digi International Reports Fourth Fiscal Quarter and Full Year Fiscal 2026 Results — businesswire.com