Exploring Digi International Inc. (DGII) Investor Profile: Who’s Buying and Why?

You're looking at Digi International Inc. (DGII) right now, wondering why the stock is holding its ground, especially after reporting full-year 2025 results that showed only a 1% revenue bump to $430 million. The simple answer is that the institutional money-the smart money-is laser-focused on the productivity gains and the shift to high-margin recurring revenue, not just the top-line growth. With institutional ownership sitting at a massive 95.90%, the narrative is clear: firms like BlackRock, Inc. and Vanguard Group Inc. are buying into the structural change, not the macro environment. For instance, while total revenue was nearly flat, the company's net income soared by an incredible 81% to $41 million, and Annual Recurring Revenue (ARR) grew 31% to $152 million at year-end. Are these giants accumulating shares because they see the Internet of Things (IoT) solutions segment-which saw a 13% revenue increase-as the true, defensible growth engine, or is the recent insider selling a sign that the stock's run up to the mid-$30s is over? We need to dig into who's buying, who's selling, and what their models say about the path to the $50.00 price target some analysts are now setting.

Who Invests in Digi International Inc. (DGII) and Why?

If you're looking at Digi International Inc. (DGII), you're looking at a stock overwhelmingly owned by professional money managers. The direct takeaway is that this is an institutional-grade growth story, driven by a successful pivot to a high-margin recurring revenue model in the Internet of Things (IoT) space.

The investor profile isn't a mix of retail traders and hedge funds; it's a concentration of large asset managers. Institutional investors hold a staggering 95.9% of the company's stock, which means firms like BlackRock, Inc. and The Vanguard Group Inc. are the primary owners, not individual investors. This is defintely a stock where the big players set the tone.

The Institutional-Heavy Investor Breakdown

Digi International Inc.'s ownership structure is a classic example of a technology company that has matured into a stable, high-conviction institutional holding. When institutional ownership is this high, it signals stability, but also means the stock can be less volatile to individual retail investor sentiment, but still susceptible to large block trades by a few major funds.

Here's a quick look at the major investor types and their stake:

• Institutional Investors: Hold approximately 95.9% of shares, including index funds, mutual funds, and pension funds.
• Retail Investors: Hold the small remainder, often through brokerage accounts or smaller retirement funds.
• Insiders: Company executives and directors hold about 5.55%, which is a healthy stake that aligns management's interests with shareholders'.

The top holders are typically passive managers, like Vanguard and BlackRock, who own shares because Digi International Inc. is a component of various small-cap and technology-focused exchange-traded funds (ETFs) and mutual funds. But, you also see active asset managers like Geneva Capital Management Llc, which held over 1.7 million shares as of a recent filing, actively buying into the story. That's a strong vote of confidence.

The Core Investment Motivations: ARR and Profitability

The core attraction for these institutional buyers comes down to two things: the high-margin Annualized Recurring Revenue (ARR) growth and a significant jump in operational efficiency. They aren't buying a hardware company; they're buying a software-driven Internet of Things (IoT) solution provider.

The fiscal year 2025 results show exactly why the big money is interested. The company's strategic pivot to subscription-based services is working, which you can see in the numbers:

Honesty, the most compelling number here is the 81% surge in Net Income to $41 million on a mere 1% increase in total revenue. Here's the quick math: that massive margin expansion tells you the company is successfully transitioning to higher-margin software and services, making more money from each dollar of sales. Plus, the ARR jumped 31% year-over-year to $152 million by the end of Q4 2025, which is the kind of predictable, high-quality revenue growth that institutional funds love for long-term valuation models (like a discounted cash flow or DCF).

You can dive deeper into this performance here: Breaking Down Digi International Inc. (DGII) Financial Health: Key Insights for Investors.

Dominant Investment Strategies: Growth at a Reasonable Price (GARP)

The typical strategy among Digi International Inc. (DGII) investors is a blend of long-term holding and what we call Growth at a Reasonable Price (GARP). Since the company doesn't pay a dividend, it's not a value play in the traditional sense, but the focus on profit growth makes it attractive to value-conscious growth investors.

The strategies in play are clear:

• Long-Term Growth Holding: Major funds are buying and holding based on the belief that the IoT market will continue its secular growth trend, and Digi International Inc. will capture a larger share through its recurring revenue model. They are betting on the long-term compounding of that 31% ARR growth.
• GARP/Productivity Investing: Investors are attracted to the fact that net income is growing significantly faster than revenue. This indicates strong operational productivity and margin expansion, a key signal for a company that can sustain high returns on invested capital over time.
• M&A-Driven Growth: The company uses its strong cash flow from operations, which was $108 million for the full fiscal year 2025, to fund strategic acquisitions, like the Jolt Software deal. Investors are banking on these acquisitions to accelerate the shift to IoT Solutions, which saw a 13% revenue increase in fiscal 2025.

What this estimate hides is the risk that hardware sales, which still make up a large portion of revenue, could slow down faster than the recurring revenue can accelerate. But still, the current trend of increasing profitability and strong cash generation is a powerful magnet for capital.

Institutional Ownership and Major Shareholders of Digi International Inc. (DGII)

You're looking at Digi International Inc. (DGII) and wondering who the big money players are and what they're doing. The short answer is, institutional investors are heavily committed, owning approximately 56.53% of the company's stock, and their recent activity shows a nuanced, but defintely bullish, sentiment.

This high level of institutional ownership-where professional money managers control the majority of shares-means that the stock's movement and the company's long-term strategy are largely influenced by a few major players. It's a double-edged sword: stability from committed capital, but also volatility if a large fund decides to exit. High institutional ownership, sometimes cited as high as 95.9%, also signals that the company's business model is generally well-understood and validated by sophisticated investors.

Top Institutional Investors: Who Holds the Keys?

The investor profile for Digi International Inc. is dominated by some of the largest asset managers in the world, primarily those focused on index tracking or quantitative strategies. These firms hold massive positions, and their presence provides a strong foundation for the stock. The top holders, based on recent 2025 filings, are a mix of passive index funds and active managers.

Here's a quick look at the top-tier institutional shareholders as of the 2025 fiscal year data:

• iShares: Holds the largest stake, with approximately 4.19 million shares, representing 11.29% ownership.
• Vanguard Group: A close second, with about 2.79 million shares, translating to a 7.51% stake.
• Conestoga Funds: Holds around 2.50 million shares, or 6.72% of the company.

These top three alone account for a significant chunk of the outstanding shares. When you see names like Vanguard and iShares, you know a substantial portion of ownership is passive, tied to index funds like the iShares Core S&P Small-Cap ETF (IJR), which holds 2,208K shares.

Recent Shifts: Are Institutions Buying or Selling?

Institutional buying and selling activity for Digi International Inc. in the 2025 fiscal year was a mixed bag, but the overall sentiment leans toward accumulation, especially from active managers. Total shares owned by institutions saw a slight decrease of 0.99% in the last three months, totaling 49,923K shares.

But here's the key: the number of funds reporting positions actually increased by 2.52% (or 12 new owners) in the last quarter, meaning more institutions are initiating positions, even if some large holders trimmed their stakes. Average portfolio weight dedicated to DGII also increased by 9.68%.

Some smaller, active funds are making big bets. For example, Pacer Advisors Inc. dramatically boosted its position by an incredible 2,297.0% in the first quarter of 2025, acquiring an additional 228,089 shares, demonstrating a strong conviction in the company's Internet of Things (IoT) strategy. That's a huge vote of confidence.

Impact on Stock Price and Strategy: What It Means for You

The heavy institutional backing is a critical component of Digi International Inc.'s valuation. These large investors aren't just passive shareholders; they exert influence on corporate governance and strategic direction, especially as the company focuses on high-margin recurring revenue. You can see this focus reflected in the full fiscal 2025 results, where Net income climbed 81% to $41 million, and Adjusted net income per diluted share hit $2.10.

The institutional confidence is directly tied to the company's growth outlook. Analysts are forecasting strong future earnings growth, which is why the stock is trading at a higher price-to-earnings (P/E) ratio than the broader market. This expectation of superior earnings is the main driver of the stock's price support. The consensus average one-year price target was recently revised up to $47.43 per share, an increase of 13.41% from the prior estimate.

The institutional interest validates the company's strategic pivot toward high-margin software and services, especially its Annualized Recurring Revenue (ARR), which increased 31% to $152 million at the end of fiscal 2025. This shift to recurring revenue is what institutional investors love, as it makes future earnings more predictable. To see how this ties into the long-term vision, check out the Mission Statement, Vision, & Core Values of Digi International Inc. (DGII).

So, the buying action and high ownership percentage are essentially a stamp of approval on management's execution. Your clear action here is to monitor the quarterly 13F filings (institutional ownership reports) for any major shifts by the top three holders. If Vanguard or iShares starts selling in bulk, that's a signal to watch closely. But for now, the institutional money is betting on continued strong execution in the Industrial IoT (IIoT) space.

Key Investors and Their Impact on Digi International Inc. (DGII)

The investor profile for Digi International Inc. (DGII) is overwhelmingly institutional, meaning large funds and asset managers hold the vast majority of the stock. This is a critical point: institutions own a staggering 95.9% of the company's shares, a level that signals strong, broad-based conviction in the long-term strategy.

The sheer size of these institutional positions means their collective buying and selling dictates the stock's price action and validates the company's strategic direction. When you see this level of concentration, it suggests the market is comfortable with management's focus on high-margin, recurring revenue growth.

Notable Investors and Their Recent Moves

The top shareholders are dominated by the world's largest index and asset managers, which is typical for a mid-cap growth stock. These firms primarily invest passively via Exchange-Traded Funds (ETFs) and mutual funds, but their massive capital flows still exert significant influence.

• iShares (part of BlackRock) is a top holder, with a stake valued at approximately $160.09 million as of late 2025.
• The Vanguard Group, Inc. holds a substantial position, valued at around $106.43 million.
• Conestoga Funds is another key institutional investor, with a holding valued at approximately $95.36 million.

Beyond the passive giants, you see active managers making notable, high-conviction moves. For instance, in the first quarter of fiscal year 2025, Pacer Advisors Inc. boosted its position by an eye-opening 2,297.0%, purchasing an additional 228,089 shares. Jones Financial Companies Lllp also grew its stake by a massive 9,344.7% in the same quarter. These moves show a defintely strong appetite for the stock as it executes its strategic pivot.

The Influence of a High Institutional Float

The high institutional ownership-nearly 96%-means that the company's strategic stability is high. There are no major activist investors publicly driving a contentious agenda, which is a good sign for management's focus. The influence is more subtle: institutional investors are essentially voting with their dollars in favor of the company's transition to a software-driven, Annualized Recurring Revenue (ARR) model.

This institutional backing is a direct result of the company's strong fiscal performance. For the full fiscal year 2025, Digi International Inc. reported total revenue of $430 million and a net income surge of 81% to $41 million. That kind of bottom-line efficiency, driven by ARR growth that hit $152 million at the close of Q4 2025, is exactly what large funds want to see. They are buying into the predictable, high-margin future of the Internet of Things (IoT) Solutions segment.

The fact that the company's full-year cash flow from operations was $108 million in fiscal 2025 also gives management the capital flexibility to continue its strategy of using mergers and acquisitions (M&A) to bolster growth, like the recent Jolt Software acquisition. The institutional support is a green light for this capital allocation strategy. You can dive deeper into this performance here: Breaking Down Digi International Inc. (DGII) Financial Health: Key Insights for Investors.

What this estimate hides, however, is the risk of a coordinated institutional exit if the ARR growth stalls. But for now, the money is flowing in, not out. Insider ownership, by comparison, is a modest but important 2.95%, aligning management's interests with shareholders.

Market Impact and Investor Sentiment

You're looking at Digi International Inc. (DGII) and wondering if the smart money is still buying, and the short answer is a defintely yes. The sentiment among major shareholders is overwhelmingly positive, leaning toward a 'Moderate Buy' or even 'Strong Buy' consensus from analysts as of late 2025. This isn't just optimism; it's grounded in the company's successful pivot toward a higher-margin, recurring revenue model.

Digi International Inc. (DGII)'s institutional ownership is remarkably high, sitting at approximately 95.9% of the stock, which signals a strong conviction from large funds and institutions like BlackRock, Inc., The Vanguard Group, Inc., and State Street Global Advisors, Inc. This kind of heavy institutional backing is a clear vote of confidence in the company's long-term Internet of Things (IoT) strategy, particularly its focus on the IoT Solutions segment.

Why Major Investors are Buying: The Financial Shift

The core reason for the positive sentiment is Digi International Inc. (DGII)'s ability to grow its bottom line faster than its top line, proving that their focus on productivity and recurring revenue is working. For the full fiscal year 2025, the company reported total revenue of $430 million, only a 1% increase year-over-year. But here's the quick math:

• Net Income jumped by a massive 81% to $41 million.
• Adjusted EBITDA grew by 11% to $108 million.
• Net Income per diluted share hit $1.08, a 77% increase over the prior year.

The company's Annualized Recurring Revenue (ARR)-the predictable part of the business-ended the fourth fiscal quarter of 2025 at $152 million, a robust 31% jump year-over-year. This shift to subscription-based revenue is what's driving the margin expansion, even with some flat hardware sales in the IoT Products & Services segment.

If you want to understand the foundational shift in their business model, you can check out Digi International Inc. (DGII): History, Ownership, Mission, How It Works & Makes Money.

Recent Market Reactions to Ownership Moves

The stock market has reacted very favorably to Digi International Inc. (DGII)'s recent financial beats, which are often the catalyst for large investor moves and price target adjustments. When the company reported its Q4 2025 results, for instance, the stock jumped approximately 8.2% to $38.94 because the earnings per share (EPS) of $0.56 significantly beat the analyst consensus of $0.51.

This pattern of positive reaction to earnings surprises has been consistent throughout fiscal 2025:

The market is clearly rewarding the company for consistently delivering on its transition strategy. Large institutional inflows, like Pacer Advisors Inc. boosting its position, reinforce the idea that the 'smart money' is actively accumulating shares.

Analyst Perspectives on Key Investor Impact

The analyst community views the strong institutional presence as a stabilizing force and an endorsement of management's strategic direction. The consensus rating is a 'Moderate Buy,' with an average 12-month price target hovering around $46.80. That suggests a solid upside from the current trading range.

Key analysts have recently increased their targets, which is a strong signal. Roth Capital, for example, raised its target to $50.00, while B. Riley Securities moved its target to $48.00. Craig Hallum even upgraded the stock from a 'Hold' to a 'Buy,' setting a target of $45.00. This isn't just about a good quarter; it's about validating the long-term thesis that the recurring revenue growth will continue to expand margins and drive earnings per share (EPS) growth, even if overall revenue growth remains modest.

The analysts' confidence is tied directly to the success of the IoT Solutions segment, which is seen as a key differentiator. The high institutional ownership means that any future strategic moves-acquisitions, major product launches, or even a potential take-private bid-will have a deeply engaged and well-capitalized shareholder base to contend with. That's a powerful position for the company.