Our management's discussion and analysis should be read in conjunction with our Annual Report on Form 10-K 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" 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, 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," "remain," "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, perceived marketplace opportunities, debt repayments, attributions of actual or 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 completed 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, fiscal and trade policies of governments globally as well as present and ongoing concerns about a potential economic slowdown, 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, 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, the Middle East,and geopolitical tensions including those involving China and Taiwan, 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 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 Form 10-K for the year ended September 30, 2025, and any other subsequent filings, including, but not limited to, this filing, 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 19 Table of Contents 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 Annual Report on Form 10-K 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 third quarter of fiscal 2026 that we feel are most important in these evaluations, with comparisons to the third quarter of fiscal 2025: •Revenue was $139 million, an increase of 29%. •Gross profit margin was 64.8%, an increase of 130 basis points. •Operating margin was 16.5%, an increase of 260 basis points. •Net income was $16 million, an increase of 54%. •Net income per diluted share was $0.40, an increase of 48%. •Adjusted net income was $29 million, an increase of 50%. •Adjusted net income per diluted share was $0.75, an increase of 47%. •Adjusted EBITDA was $40 million, an increase of 47%. •Annualized Recurring Revenue ("ARR") was $191 million at quarter end, an increase of 52%. (1) Fiscal 2026 results include the results of Jolt Software, Inc. ("Jolt") for the full quarter and nine-month period and Particle Industries, Inc. ("Particle") following the January 2026 acquisition date. Fiscal 2025 results include Jolt for the period following the August acquisition date and do not include Particle. Reconciliations of non-GAAP financial measures to their closest GAAP analogs appear in this document, 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: •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. •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. •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, military conflicts and political tensions that may have the potential to disrupt our business or those of our vendors or customers. 20 Table of Contents ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) 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. 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, the military conflict with Iran that began in late February has created volatility in both the price of oil and other commodities as well as shipping that has impacted 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 June 30, % incr. ($ in thousands) 2026 2025 (decr.) Revenue $ 138,670 100.0 % $ 107,514 100.0 % 29.0 % Cost of sales 48,744 35.2 39,246 36.5 24.2 Gross profit 89,926 64.8 68,268 63.5 31.7 Operating expenses 67,031 48.3 53,345 49.6 25.7 Operating income 22,895 16.5 14,923 13.9 53.4 Other expense, net (1,637) (1.2) (963) (0.9) 70.0 Income before income taxes 21,258 15.3 13,960 13.0 52.3 Income tax expense 5,518 3.9 3,717 3.5 48.5 Net income $ 15,740 11.4 % $ 10,243 9.5 % 53.7 Nine months ended June 30, % incr. ($ in thousands) 2026 2025 (decr.) Revenue $ 391,875 100.0 % $ 315,883 100.0 % 24.1 % Cost of sales 141,883 36.2 118,284 37.4 20.0 Gross profit 249,992 63.8 197,599 62.6 26.5 Operating expenses 193,698 49.4 155,590 49.3 24.5 Operating income 56,294 14.4 42,009 13.3 34.0 Other expense, net (6,208) (1.6) (4,605) (1.5) 34.8 % Income before income taxes 50,086 12.8 37,404 11.8 33.9 Income tax expense 11,332 2.9 6,581 2.0 72.2 Net income $ 38,754 9.9 % $ 30,823 9.8 % 25.7 NM means not meaningful 21 Table of Contents ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) REVENUE BY SEGMENT Three months ended June 30, % incr. ($ in thousands) 2026 2025 (decr.) Revenue IoT Products & Services $ 99,793 72.0 % $ 80,032 74.4 % 24.7 % IoT Solutions 38,877 28.0 27,482 25.6 41.5 Total revenue $ 138,670 100.0 % $ 107,514 100.0 % 29.0 % Nine months ended June 30, % incr. 2026 2025 (decr.) Revenue IoT Products & Services $ 279,778 71.4 % $ 235,638 74.6 % 18.7 % IoT Solutions 112,097 28.6 80,245 25.4 39.7 Total revenue $ 391,875 100.0 % $ 315,883 100.0 % 24.1 % IoT Products & Services IoT Products & Services revenue increased $19.8 million for the three months ended June 30, 2026, as compared to the same period in the prior fiscal year. This consisted of a $12.4 million increase in one-time sales and $7.4 million of recurring revenue growth, with no material impact from pricing. A significant majority of the increase in revenue was driven by organic growth from increased customer demand and supported by the Particle acquisition. IoT Products & Services revenue increased $44.1 million for the nine months ended June 30, 2026, as compared to the same period in the prior fiscal year. This consisted of a $29.0 million increase in one-time sales and $15.1 million of recurring revenue growth, with no material impact from pricing. A significant majority of the increase in revenue was driven by organic growth from increased customer demand and supported by the Particle acquisition. IoT Solutions IoT Solutions revenue increased $11.4 million for the three months ended June 30, 2026, as compared to the same period in the prior fiscal year. The increase consisted of an $8.9 million increase in recurring revenue and a $2.5 million increase in one-time sales, with the significant majority of both driven by the Jolt acquisition. IoT Solutions revenue increased $31.9 million for the nine months ended June 30, 2026, as compared to the same period in the prior fiscal year. The increase consisted of a $24.4 million increase in recurring revenue and a $7.5 million increase in one-time sales, with the significant majority of both driven by the Jolt acquisition. ARR ARR was $191 million as of June 30, 2026, compared to $126 million as of June 30, 2025. IoT Products & Services ARR was $60 million as of June 30, 2026, compared to $30 million as of June 30, 2025. This increase was driven primarily by the acquisition of Particle and supported by growth in the subscription base across remote management platforms, extended warranty offerings and technical support. IoT Solutions ARR was $131 million as of June 30, 2026, compared to $96 million as of June 30, 2025, driven by the acquisition of Jolt, as well as growth in our existing Solutions businesses. 22 Table of Contents ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) COST OF GOODS SOLD AND GROSS PROFIT Below are cost of goods sold and gross profit as a percentage of their respective total revenue: Three months ended June 30, Basis point ($ in thousands) 2026 2025 inc. (decr.) Cost of sales $ 48,744 35.2 % $ 39,246 36.5 % (130) Gross profit $ 89,926 64.8 % $ 68,268 63.5 % 130 Nine months ended June 30, Basis point ($ in thousands) 2026 2025 inc. (decr.) Cost of sales $ 141,883 36.2 % $ 118,284 37.4 % (120) Gross profit $ 249,992 63.8 % $ 197,599 62.6 % 120 Gross profit margin of 64.8% increased 130 basis points in the third quarter of fiscal 2026 as compared to the third quarter of the prior fiscal year. This increase was the result of heightened inventory-related costs in the prior year that did not repeat. Gross profit margin of 63.8% increased 120 basis points in the nine months ended June 30, 2026, as compared to the same period in the prior fiscal year. The majority of this increase was the result of heightened inventory-related costs in the prior year that did not repeat, with a lesser impact from favorable product margin mix. OPERATING EXPENSES Below are our operating expenses and operating expenses as a percentage of total revenue: Three months ended June 30, $ % ($ in thousands) 2026 2025 incr. (decr.) incr. (decr.) Operating Expenses Sales and marketing $ 29,061 21.0 % $ 23,019 21.4 % $ 6,042 26.2 % Research and development 20,325 14.7 16,227 15.1 4,098 25.3 General and administrative 17,645 12.6 14,099 13.1 3,546 25.2 Total operating expenses $ 67,031 48.3 % $ 53,345 49.6 % $ 13,686 25.7 % Nine months ended June 30, $ % ($ in thousands) 2026 2025 incr. (decr.) incr. (decr.) Operating Expenses Sales and marketing $ 82,564 21.1 % $ 66,817 21.2 % $ 15,747 23.6 % Research and development 56,759 14.5 46,579 14.7 10,180 21.9 General and administrative 54,375 13.8 42,194 13.4 12,181 28.9 Total operating expenses $ 193,698 49.4 % $ 155,590 49.3 % $ 38,108 24.5 % The $13.7 million increase in operating expenses for the three months ended June 30, 2026, as compared to the same period in the prior fiscal year, was due to a $9.2 million increase in labor expense and a $4.5 million increase in non-labor expense. These increases were driven by incremental costs from Jolt and Particle, including an increase in amortization expense due to acquisition-related intangibles, and higher labor costs among existing employees. 23 Table of Contents ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) The $38.1 million increase in operating expenses for the nine months ended June 30, 2026, as compared to the same period in the prior fiscal year, was due to a $25.4 million increase in labor expense and a $12.7 million increase in non-labor expense. These increases were driven by incremental costs from Jolt and Particle, including an increase in amortization expense due to acquisition-related intangibles, and higher labor costs among existing employees. OPERATING INCOME Three months ended June 30, Basis point increase (decrease) ($ in thousands) 2026 2025 Operating Income IoT Products & Services $ 16,784 16.8 % $ 12,181 15.2 % 160 IoT Solutions 6,111 15.7 % 2,742 10.0 % 570 Total operating income $ 22,895 16.5 % $ 14,923 13.9 % 260 Nine months ended June 30, Basis point increase (decrease) ($ in thousands) 2026 2025 Operating Income IoT Products & Services $ 42,450 15.2 % $ 34,436 14.6 % 60 IoT Solutions 13,844 12.4 % 7,573 9.4 % 300 Total operating income $ 56,294 14.4 % $ 42,009 13.3 % 110 IoT Products & Services IoT Products & Services operating margin increased 160 basis points for the third quarter of fiscal 2026, as compared to the third quarter of fiscal 2025. This increase was primarily due to heightened inventory-related costs in the prior year that did not repeat and improved operating expense efficiencies as volume expanded at a greater rate than operating expenses. IoT Products & Services operating margin increased 60 basis points for the nine months ended June 30, 2026, as compared to the same period in the prior fiscal year. This increase was due to heightened inventory-related costs in the prior year that did not repeat and favorable product margin mix, partially offset by an increase in amortization expense, due to the addition of acquisition-related intangibles. IoT Solutions IoT Solutions operating margin increased 570 basis points for the third quarter of fiscal 2026, as compared to the third quarter of fiscal 2025. This increase was the result of improved operating expense efficiencies as volume expanded at a greater rate than operating expenses. IoT Solutions operating margin increased 300 basis points for the nine months ended June 30, 2026, as compared to the same period in the prior fiscal year. This increase was the result of improved operating margin efficiencies as volume expanded at a greater rate than operating expenses. 24 Table of Contents ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) OTHER EXPENSE, NET Below are our other expenses, net, and other expenses, net as a percentage of total revenue: Three months ended June 30, $ % ($ in thousands) 2026 2025 incr. (decr.) incr. (decr.) Other expense, net Interest expense, net $ (1,606) (1.2) % $ (932) (0.9) % $ (674) 72.3 % Other expense, net (31) — (31) — — — % Total other expense, net $ (1,637) (1.2) % $ (963) (0.9) % $ (674) 70.0 % Nine months ended June 30, $ % ($ in thousands) 2026 2025 incr. (decr.) incr. (decr.) Other expense, net Interest expense, net $ (6,129) (1.6) % $ (4,562) (1.5) % $ (1,567) 34.3 % Other expense, net (79) — (43) — (36) 83.7 % Total other expense, net $ (6,208) (1.6) % $ (4,605) (1.5) % $ (1,603) 34.8 % Other expense, net, increased for the three and nine months ended June 30, 2026, as compared to the same periods in the prior fiscal year due to increased interest expense, as the amount of outstanding debt increased due to the acquisition of Particle in the second quarter of fiscal 2026. INCOME TAXES See Note 9 to the condensed consolidated financial statements for discussion of income taxes. KEY BUSINESS METRIC 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. 25 Table of Contents ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) 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 Note 5 to the condensed consolidated financial statements for additional discussion of goodwill. NON-GAAP FINANCIAL INFORMATION This report includes adjusted net income, adjusted net income per diluted share and adjusted earnings before interest, taxes, depreciation 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. We understand that there are material limitations on the use of non-GAAP measures. Non-GAAP measures are not substitutes for GAAP measures, such as net income, 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, generally accepted accounting principles 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 and Adjusted EBITDA Margin do 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 and acquisition-related expenses related to acquisitions 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 and restructuring charges and reversals, 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 items reflected in the Condensed Consolidated Statements of Operations. We believe that presenting Adjusted EBITDA as a percentage of revenue (i.e., Adjusted EBITDA Margin) is useful because it provides a reliable and consistent approach to measuring our performance year over 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. 26 Table of Contents 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 June 30, Nine months ended June 30, 2026 2025 2026 2025 % of total revenue % of total revenue % of total revenue % of total revenue Total revenue $ 138,670 100.0 % $ 107,514 100.0 % $ 391,875 100.0 % $ 315,883 100.0 % Net income $ 15,740 $ 10,243 $ 38,754 $ 30,823 Interest expense, net 1,606 932 6,129 4,562 Income tax provision 5,518 3,717 11,332 6,581 Depreciation and amortization 11,470 8,301 32,997 24,963 Stock-based compensation 4,917 3,874 13,411 11,378 Gain on asset sale 50 (181) (150) (181) Restructuring charge 274 76 772 460 Acquisition expense, net 813 597 3,119 597 Adjusted EBITDA $ 40,388 29.1 % $ 27,559 25.6 % $ 106,364 27.1 % $ 79,183 25.1 % 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 June 30, Nine months ended June 30, 2026 2025 2026 2025 Net income and net income per diluted share $ 15,740 $ 0.40 $ 10,243 $ 0.27 $ 38,754 $ 1.00 $ 30,823 $ 0.82 Amortization 8,166 0.21 5,241 0.14 23,243 0.60 16,241 0.43 Stock-based compensation expense 4,917 0.13 3,874 0.10 13,411 0.35 11,378 0.30 Other non-operating income 31 — 31 — 79 — 43 — Acquisition expense, net 813 0.02 597 0.02 3,119 0.08 597 0.02 Loss (gain) on asset sale 50 — (181) — (150) — (181) — Restructuring charge 274 0.01 76 — 772 0.02 460 0.01 Tax effect from the above adjustments (1) (853) (0.02) (1,339) (0.04) (3,930) (0.10) (5,585) (0.15) Discrete tax benefits (2) (22) — 809 0.02 (1,040) (0.03) 298 0.01 Adjusted net income and adjusted net income per diluted share (3) $ 29,116 $ 0.75 $ 19,351 $ 0.51 $ 74,258 $ 1.92 $ 54,074 $ 1.44 Diluted weighted average common shares 38,919 37,653 38,646 37,623 (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 and nine months ended June 30, 2026 and 2025, 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. 27 Table of Contents 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. We made draws on this credit facility to fund our acquisitions of Jolt in August 2025 and Particle in January 2026. Our liquidity requirements arise from our working capital needs, and, to a lesser extent, from 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 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 $10 million swingline sub-facility. For additional information regarding the terms of our Credit Facility, including the Revolving Loan and its sub-facilities, see Note 6 to our condensed consolidated financial statements. We expect positive cash flows from operations for the foreseeable future. We believe that our current cash and cash equivalents balances, cash generated from operations and our ability to borrow under our credit facility will be sufficient to fund our business operations and capital expenditures for the next 12 months and beyond. We intend to continue to deleverage the Company's balance sheet. Acquisitions remain a top capital priority for Digi as reflected by our acquisition of Particle announced on January 27. We will continue to be disciplined in our approach and act when we believe an opportunity is appropriate to execute in the context of prevailing market conditions. Below our condensed consolidated statements of cash flows for the nine months ended June 30, 2026 and 2025 are summarized: Nine months ended June 30, ($ in thousands) 2026 2025 Operating activities $ 110,419 $ 79,958 Investing activities (50,568) (2,148) Financing activities (53,553) (85,291) Effect of exchange rate changes on cash and cash equivalents (228) 75 Net increase (decrease) in cash and cash equivalents $ 6,070 $ (7,406) Cash flows from operating activities increased $30.5 million. This was largely driven by a $11.4 million decrease in deferred income tax benefit in the first nine months of fiscal 2026, primarily relating to accelerated utilization of tax assets caused by the One Big Beautiful Bill Act, compared to a $2.5 million increase in the first nine months of fiscal 2025, a $7.9 million increase in net income, a $7.1 million increase in amortization expense and a smaller increase in stock based compensation expense. Cash flows used for investing activities increased $48.4 million almost entirely caused by the net cash paid for the acquisition of Particle. Cash flows used in financing activities decreased $31.7 million. This was driven by a $34.0 million draw on our revolving credit agreement to fund the acquisition of Particle, partially offset by an increase in debt payments in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025. 28 Table of Contents ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) CONTRACTUAL OBLIGATIONS The following table summarizes our contractual obligations at June 30, 2026: Payments due by fiscal period ($ in thousands) Total Less than 1 year 1-3 years 3-5 years Thereafter Operating leases $ 11,338 $ 2,129 $ 4,315 $ 3,668 $ 1,226 Revolving loan 109,000 — 109,000 — — Total $ 120,338 $ 2,129 $ 113,315 $ 3,668 $ 1,226 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 June 30, 2026. 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 See Note 1.