Core Insights - Lantronix, Inc. showcased new automated out-of-band innovations at Cisco Live 2026, aimed at enhancing network reliability and efficiency, reinforcing its leadership in the network solutions sector [1][6] - Needham upgraded Lantronix's stock to a "Buy" rating on February 5, 2026, with the stock priced at $5.82, indicating confidence in the company's growth potential despite a negative price-to-earnings (P/E) ratio of -26.62 [2][6] - The company's price-to-sales ratio is approximately 2.12, suggesting a reasonable valuation in relation to its sales, which could be appealing to investors [3][6] Financial Metrics - Lantronix's enterprise value to operating cash flow ratio is around 24.86, indicating a focus on cash flow management while investing in innovations [4] - The debt-to-equity ratio is about 0.34, suggesting a relatively low level of debt compared to equity, which is a positive sign for financial stability [4] - The current ratio is approximately 2.75, indicating a strong ability to cover short-term liabilities with short-term assets, supporting ongoing innovations [5][6]

Core Insights - Lantronix Inc. will showcase its Out-of-Band (OOB) management solutions at Cisco Live 2026 in Amsterdam, aimed at reducing unscheduled downtime through automated management and recovery [1][2] Company Overview - Lantronix is a global leader in Edge AI and Industrial IoT solutions, providing intelligent computing, secure connectivity, and remote management for mission-critical applications [3] - The company serves high-growth markets such as smart cities, enterprise IT, and unmanned systems, including drones, enabling customers to optimize operations and accelerate digital transformation [3] Product Features - The OOB solutions offer end-to-end workflows that connect console access, centralized administration, and operational automation across distributed sites and large-scale environments [2] - Key benefits include reduced downtime, quicker incident response, and faster recovery, maintaining secure access to remote infrastructure during outages or security incidents [6] - The solutions also aim to reduce manual work in Network Operations Centers (NOCs) and field operations by standardizing common tasks [6] Event Details - Lantronix will conduct a speaking session titled "Out-of-Band Everywhere," focusing on how OOB advancements enhance network infrastructure management and security while generating new business options [2][6] - The session is scheduled for February 10, 2026, at 15:20, featuring Ryan Hogg, the director of Product Strategy [6]

Core Insights - Lantronix Inc. (NASDAQ:LTRX) is collaborating with Safe Pro Group to develop AI-driven edge intelligence for defense and autonomous systems [1][3] - The partnership focuses on integrating Safe Pro's Object Threat Detection algorithms with Lantronix's Qualcomm-based Open-Q SOM solutions [1][2] Group 1: Partnership and Technology Development - The collaboration aims to create embeddable chipsets for real-time, on-device threat detection in drones and unmanned aerial systems without cloud connectivity [2] - The technical integration utilizes the Open-Q 5165RB SOM, which employs the Qualcomm Dragonwing QRB5165 System on Chip for high-performance, power-efficient computing [2] - By processing AI models locally, the architecture enhances latency, resilience, and mission-critical security [2] Group 2: Market Applications and Strategic Goals - The design is optimized for identifying landmines and small threats, supporting advanced machine vision and neural network capabilities at the network edge [3] - The partnership targets high-growth opportunities in the global drone market, collaborating on programs like Red Cat Holding's Teal Black Widow quadcopters for the US Army [3] - The initiative includes integrating AI outputs into the Android Tactical Assault Kit platform via secure gateways, aligning with Lantronix's Edge AI strategy [3] Group 3: Company Overview - Lantronix Inc. develops, markets, and sells industrial and enterprise IoT products and services across various regions including the Americas, Europe, the Middle East, Africa, and the Asia Pacific Japan [4]

Revenue Performance - In the three months ended December 31, 2025, net revenue decreased by $1,387,000 or 4.5% compared to the same period in 2024, driven by a 28.6% decrease in IoT System Solutions revenue, partially offset by a 28.6% increase in Embedded IoT Solutions and a 47.2% increase in Software and Services [87]. - For the three months ended December 31, 2025, net revenue by product line was $13,865,000 (46.6%) for Embedded IoT Solutions, $13,281,000 (44.6%) for IoT System Solutions, and $2,628,000 (8.8%) for Software and Services [88]. - For the six months ended December 31, 2025, net revenue decreased by $6,016,000 or 9.2%, driven by a 20.4% decrease in IoT System Solutions revenue, partially offset by increases in Embedded IoT Solutions (4.8%) and Software and Services (10.7%) [100]. - Net revenue for the six months ended December 31, 2025, was $59,568,000, a decrease of 9.2% compared to $65,584,000 in 2024 [1]. Profitability - The company reported a net loss of $1,330,000 for the three months ended December 31, 2025, an improvement from a net loss of $2,372,000 in the same period in 2024, primarily due to a decrease in operating expenses [87]. - Gross profit for the three months ended December 31, 2025, was $12,967,000, representing a gross margin of 43.6%, an increase from 42.6% in the prior year [94]. - Gross profit for the six months ended December 31, 2025, was $27,759,000, with a gross margin of 42.3%, down from 44.2% in 2024 [5]. Expenses - Research and development expenses decreased by 7.3% to $4,620,000 for the three months ended December 31, 2025, primarily due to lower personnel-related expenses and reduced share-based compensation [98]. - Selling, general and administrative expenses slightly decreased to $8,740,000, representing 29.4% of net revenue, due to lower legal fees and professional services costs [97]. - Selling, general and administrative expenses remained consistent at $18,282,000, accounting for 30.7% of net revenue in 2025 [7]. - Research and development expenses decreased to $9,218,000, representing 15.5% of net revenue, down from $9,940,000 in 2024 [8]. Cash Flow and Financial Position - Cash and cash equivalents increased to $22,964,000 as of December 31, 2025, up by $2,866,000 from June 30, 2025 [14]. - Net cash provided by operating activities increased to $5,783,000 for the six months ended December 31, 2025, compared to $3,003,000 in 2024 [20]. - Accounts receivable decreased by $1,831,000, or 7.3%, from June 30, 2025, indicating improved collections [22]. - Net cash used in investing activities was $166,000, significantly lower than $6,699,000 in 2024, which included an acquisition [23]. - The company incurred restructuring charges of $136,000 for the six months ended December 31, 2025, compared to $1,093,000 in 2024 [9]. Strategic Focus - The company continues to focus on enhancing its product portfolio, particularly in Embedded IoT Solutions and Software as a Service offerings, to drive future growth [77]. - The company expects gross margin to fluctuate based on changes in product mix, average selling prices, and manufacturing costs [95].

分组1 - Lantronix, Inc. reported quarterly earnings of $0.04 per share, exceeding the Zacks Consensus Estimate of $0.03 per share, with an earnings surprise of +33.33% [1] - The company posted revenues of $29.77 million for the quarter ended December 2025, missing the Zacks Consensus Estimate by 1.41%, and a decrease from $31.16 million year-over-year [2] - Lantronix shares have increased by approximately 22.9% since the beginning of the year, outperforming the S&P 500's gain of 1.1% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $0.05 on revenues of $30.9 million, and for the current fiscal year, it is $0.19 on revenues of $124.1 million [7] - The Computer - Networking industry, to which Lantronix belongs, is currently ranked in the bottom 14% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Financial Data and Key Metrics Changes - The company reported revenue of $29.8 million for the second quarter, with a Non-GAAP EPS of $0.04, both within guidance range [4][15] - Year-over-year growth was noted when excluding the major Smart Grid customer, Gridspertise, with profitability supported by gross margin expansion and cost optimization initiatives [4][15] - GAAP gross margin was 43.6%, down from 44.8% in the previous quarter but up from 42.6% a year ago [15][16] - GAAP net loss improved to $1.3 million, or $0.03 per share, compared to a loss of $2.4 million, or $0.06 per share in the prior year [17] Business Line Data and Key Metrics Changes - The drone business showed significant growth, with revenue expectations raised to $8 million-$12 million for fiscal 2026, up from $5 million-$10 million [11][20] - The company is focusing on unmanned systems, with a strong pipeline of customer engagements moving from development to broader deployment [6][10] - Critical infrastructure monitoring is also a key area, with ongoing deployments expected to expand into additional high-value applications [12][13] Market Data and Key Metrics Changes - The U.S. defense budget for fiscal 2026 includes over $13 billion allocated for unmanned systems, indicating a favorable environment for the company's drone initiatives [5][6] - The company is positioned to capture a growing share of defense modernization spending, particularly in unmanned and AI-enabled platforms [6][10] Company Strategy and Development Direction - The company is transitioning from a component supplier to a platform partner, focusing on reducing integration complexity and development risk for customers [8][10] - The Edge AI strategy is central to the company's growth, with a focus on combining embedded compute and connectivity across various markets [14][20] - The company aims to leverage its position in the drone market to create deeper customer relationships and capture long-term growth opportunities [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a short-term slowdown in purchasing activity due to a government shutdown but expressed confidence in the company's execution and recovery [5][44] - The company anticipates continued growth in the drone business and expects it to represent 15%-20% of total revenue in fiscal 2027 [20][27] - Management is optimistic about the future, citing a disciplined approach and a clear path for growth across multiple verticals [20][21] Other Important Information - The company generated positive operating cash flow of nearly $2.2 million during the quarter and reduced outstanding debt to approximately $9.7 million [18][19] - The company is actively exploring M&A opportunities to enhance margins and expand its software offerings [55] Q&A Session Summary Question: What happened with IoT systems and solutions? - Management noted a sequential decline in IoT systems due to a government shutdown affecting federal purchasing, but they executed well to mitigate the impact [23][32] Question: Can you provide insights on drone revenue contribution? - The company raised its drone revenue outlook for fiscal 2026 to $8 million-$12 million, with expectations for continued growth in fiscal 2027 [26][27] Question: What is the impact of the government shutdown and supply constraints? - Management indicated that the government shutdown caused some friction but did not significantly hinder overall performance, and they are proactively managing supply chain issues [44][45] Question: How should we think about gross margin profiles moving forward? - Management expects gross margins to slightly increase in the long term as software services become a larger part of the business, but no significant changes are anticipated in the near term [46][47]

Financial Data and Key Metrics Changes - The company reported revenue of $29.8 million for the second quarter, with a Non-GAAP EPS of $0.04, both within guidance range [4][16] - Year-over-year growth was experienced when excluding the MER Smart Grid customer, Gridspertise, with profitability supported by gross margin expansion and cost optimization initiatives [4][16] - GAAP gross margin was 43.6%, down from 44.8% in the previous quarter but up from 42.6% a year ago [16][17] - Non-GAAP gross margin was 44%, compared to 45.3% last quarter and 43.2% in the prior year quarter [17] - GAAP net loss improved to $1.3 million, or $0.03 per share, compared to a loss of $2.4 million, or $0.06 per share in the year-ago quarter [18] Business Line Data and Key Metrics Changes - The drone business showed significant growth, with revenue expectations raised to $8 million-$12 million for fiscal 2026, up from $5 million-$10 million [11][21] - The company is focusing on Group One and Two short-range reconnaissance drones, which align with current unmanned funding [7][11] - The critical infrastructure monitoring segment is progressing, with a focus on expanding applications beyond monitoring generators [12][13] Market Data and Key Metrics Changes - The U.S. defense budget for fiscal 2026 includes over $13 billion allocated for unmanned systems, indicating a supportive funding environment for the drone market [5][6] - The company is positioned to capture a growing share of defense modernization spending, particularly in unmanned and AI-enabled platforms [6][10] Company Strategy and Development Direction - The company is transitioning from a component supplier to a platform partner, focusing on reducing integration complexity and development risk for customers [8][10] - The Edge AI strategy is driving customer adoption across multiple end markets, with a focus on drones, critical infrastructure, and enterprise connectivity [14][15] - The company aims to create a unified platform for real-time video analytics and intelligent connectivity, expanding its addressable market [14] Management's Comments on Operating Environment and Future Outlook - Management noted a short-term slowdown in purchasing activity due to a government shutdown but expressed confidence in the company's execution and results [5][21] - The company anticipates continued growth through fiscal 2027, with drones expected to represent 15%-20% of total revenue [21][22] - Management highlighted the importance of maintaining a disciplined cost structure while expanding recurring revenue [21] Other Important Information - The company generated positive operating cash flow of nearly $2.2 million during the quarter and paid down approximately $1 million of outstanding debt [19][20] - The company is actively working to mitigate supply chain issues related to memory shortages, ensuring product availability for customers [48] Q&A Session Summary Question: Commentary on IoT systems and drone contribution - Management acknowledged a sequential decline in IoT systems due to a government shutdown but expressed optimism about future transitions and drone revenue contributions [24][33] Question: Details on the Drone Dominance Program - Management confirmed participation in the Drone Dominance Program and highlighted strong positioning with multiple partners [25][32] Question: Impact of government shutdown and supply constraints - Management indicated that the government shutdown affected IoT system sales but noted successful execution despite challenges [45][47] Question: Gross margin outlook with increasing software revenue - Management expects gross margins to improve in the long term as software services grow, but no significant near-term changes are anticipated [49][50]

Financial Data and Key Metrics Changes - The company reported revenue of $29.8 million for Q2 2026, with a Non-GAAP EPS of $0.04, both within guidance range [4][16] - Year-over-year growth was experienced when excluding the MER Smart Grid customer, Gridspertise, indicating strong underlying performance [4][16] - GAAP gross margin was 43.6%, slightly down from 44.8% in the previous quarter but up from 42.6% a year ago [16][17] - Non-GAAP gross margin was 44%, compared to 45.3% last quarter and 43.2% in the prior year quarter [17] - GAAP net loss improved to $1.3 million, or $0.03 per share, compared to a loss of $2.4 million, or $0.06 per share in the year-ago quarter [18] Business Line Data and Key Metrics Changes - The drone business saw significant growth, with revenue expectations raised to $8 million-$12 million for fiscal 2026, up from $5 million-$10 million [11][21] - The company is focusing on Group One and Two short-range reconnaissance drones, aligning with current unmanned funding [7][11] - The critical infrastructure monitoring segment is progressing, with revenue recognized from a tier one U.S. mobile network operator [12][14] Market Data and Key Metrics Changes - The U.S. defense budget for fiscal 2026 includes over $13 billion allocated for unmanned systems, indicating a favorable environment for the company's drone initiatives [5][6] - The company is positioned to capture a growing share of future defense modernization spending, particularly in unmanned and AI-enabled platforms [6][10] Company Strategy and Development Direction - The company is transitioning from a component supplier to a platform partner, focusing on reducing integration complexity and development risk for customers [8][10] - The Edge AI strategy is driving customer adoption across multiple end markets, with a focus on drones, critical infrastructure, and enterprise connectivity [15][21] - The company aims to create a unified platform for real-time video analytics and intelligent connectivity, expanding its addressable market [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the government shutdown caused a short-term slowdown in purchasing activity from federal agency customers, but solid execution led to strong results [5][19] - The company expects continued growth through the remainder of fiscal 2026 and into fiscal 2027, with drones projected to represent 15%-20% of total revenue in fiscal 2027 [21][28] - Management expressed confidence in the durability and scale of the drone opportunity, supported by a disciplined cost structure and expanding recurring revenue [21][28] Other Important Information - The company generated positive operating cash flow of nearly $2.2 million during the quarter and paid down approximately $1 million of outstanding debt [19] - The company is actively working to mitigate supply chain issues related to memory shortages, ensuring adequate product supply for new business areas [46][47] Q&A Session Summary Question: Can you provide commentary on IoT systems and the December quarter's contribution? - Management acknowledged a sequential decline in IoT systems due to the government shutdown but noted strong execution in other areas [24][33] Question: What is the expected growth rate for the core business in fiscal 2027? - Management indicated that the overall business is expected to grow, with the drone business showing high double-digit growth rates [40] Question: What impact did the government shutdown have in the December quarter? - Management stated that the shutdown caused some friction but overall execution was strong, allowing the company to make up for lost time [45][46] Question: How should we think about the gross margin profile moving forward? - Management expects margins to remain near current levels in the near term but anticipates slight increases as software services grow [48][49]

Financial Performance - Net revenue for Q2 FY2026 was $29.8 million, with a GAAP EPS of ($0.03) and a non-GAAP EPS of $0.04[6] - Net revenue for the three months ended December 31, 2025, was $29,774,000, a decrease of 4.4% compared to $31,161,000 for the same period in 2024[22] - Gross profit for the six months ended December 31, 2025, was $26,313,000, down from $27,759,000 in the prior year, representing a decline of 5.2%[22] - The net loss for the three months ended December 31, 2025, was $1,330,000, compared to a net loss of $1,401,000 for the same period in 2024, indicating a 5.1% improvement[22] - Non-GAAP net income for the three months ended December 31, 2025, was $1,648,000, compared to $1,478,000 for the same period in 2024, reflecting an increase of 11.5%[24] - The company reported a diluted net loss per share of $0.03 for the three months ended December 31, 2025, an improvement from a loss of $0.04 per share in the same period last year[22] Revenue Expectations and Growth - The company increased its FY26 drone revenue expectation to a range of $8 million to $12 million, up from the prior range of $5 million to $10 million[6] - Embedded IoT Solutions revenue increased to $13,865,000 for the three months ended December 31, 2025, up 21.0% from $11,467,000 in the previous quarter[27] - Americas region revenue for the six months ended December 31, 2025, was $41,132,000, a significant increase of 21.5% compared to $33,806,000 in the same period last year[27] Assets and Liabilities - Cash and cash equivalents as of December 31, 2025, were $23.0 million, an increase from $20.1 million as of June 30, 2025[7] - Lantronix's total assets as of December 31, 2025, were $121.7 million, a slight decrease from $123.7 million as of June 30, 2025[21] - Total liabilities as of December 31, 2025, were $47.3 million, down from $49.3 million as of June 30, 2025[21] - The company reported a total stockholders' equity of $74.4 million as of December 31, 2025, compared to $74.4 million as of June 30, 2025[21] Operational Efficiency - Operating expenses for the three months ended December 31, 2025, totaled $14,041,000, a decrease of 5.6% from $14,873,000 in the previous quarter[22] - Research and development expenses for the six months ended December 31, 2025, were $9,218,000, a decrease of 7.3% from $9,940,000 in the previous year[22] - Total non-GAAP adjustments for the six months ended December 31, 2025, amounted to $5,857,000, down from $8,968,000 in the prior year, indicating a reduction of 34.5%[24] Strategic Initiatives - Lantronix secured a design win with Flock Safety in the Drone-as-First Responder category, indicating growing demand for AI-enabled situational awareness[10] - The company launched a Drone Reference Platform, enabling OEMs to accelerate UAV prototyping and reduce integration timelines from months to weeks[10] - Management expressed confidence in the platform-led strategy to drive profitable growth amid accelerating demand in core markets[3] - Lantronix was recognized as a Top 100 Edge Computing Leader by CRN for 2025, reflecting its momentum in delivering AI-enabled edge intelligence[10]

Core Insights - Lantronix Inc. reported strong financial results for Q2 FY2026, with net revenue of $29.8 million and a non-GAAP EPS of $0.04, reflecting continued momentum in their Edge AI strategy and customer engagement [4][5]. Management Commentary - The company emphasized disciplined execution and the advancement of customer programs from development to initial production, particularly in the unmanned systems industry [2]. - Lantronix's technology is increasingly being relied upon by OEMs in defense and autonomous applications, positioning the company as a platform partner rather than just a component supplier [2]. - The inclusion of partners in the Department of War's Drone Dominance initiative highlights the relevance of Lantronix's platform in the defense ecosystem [2]. Financial Results - Q2 FY2026 highlights include: - Net Revenue: $29.8 million - GAAP EPS: ($0.03) - Non-GAAP EPS: $0.04 - Cash and Cash Equivalents: $23.0 million - Increased FY26 Drone Revenue Expectation: $8 million-$12 million, up from $5 million-$10 million [4][5]. Product and Partnership Developments - Lantronix partnered with Trillium Engineering for gimbaled imaging systems, validating the performance of its Edge AI architecture [5]. - The company secured a design win with Flock Safety in the Drone-as-First Responder category, expanding its Edge AI capabilities into public safety applications [5]. - Collaboration with Safe Pro Group aims to enhance AI-enabled threat detection for real-time identification of hazards [5]. Industry Recognition - Lantronix received several awards for innovation in Edge AI and IoT, including being named a Top 100 Edge Computing Leader by CRN for 2025 [6]. - The company won the 2025 IoT Edge Computing Excellence Award for its Open-Q™ System-on-Module portfolio [6]. Financial Outlook - The company provided guidance for Q3 FY2026, projecting revenue between $28.5 million and $32.5 million, with a midpoint of $30.5 million and non-GAAP EPS between $0.03 and $0.06 [6].