Financial Data and Key Metrics Changes - The company reported revenue of $29.8 million for Q1 2026, reflecting a 3% increase sequentially and year-over-year, excluding GRIT's fatigue [4][11] - Non-GAAP EPS improved to $0.04 from $0.01 in Q4 2025, driven by gross margin expansion and operating leverage from cost optimization initiatives [4][13] - GAAP gross margin increased to 44.8% from 40% in the previous quarter and 42.1% a year ago, while non-GAAP gross margin rose to 45.3% from 40.6% in Q4 2025 [11][12] Business Line Data and Key Metrics Changes - The OEM engagements grew from 10 to 17, indicating accelerating customer adoption in the drone business [6] - The company introduced edge AI drone solutions and partnered with Red Cat, leading to follow-on orders and enhanced customer confidence [5][6] - The asset monitoring segment launched compress.ai, targeting the $27 billion global industrial air compressor market, which is expected to create high-margin recurring revenue [9] Market Data and Key Metrics Changes - The overall market environment remains favorable, with record defense funding and strong demand for networking and connectivity solutions [4][5] - The company is experiencing strong demand in the drone sector, with expectations for continued growth throughout fiscal 2026 [8][19] Company Strategy and Development Direction - The company aims to scale high-growth verticals, expand software-enabled recurring revenue, and drive operating leverage from a leaner cost structure [9][15] - The introduction of edgefabric.ai is designed to simplify AI application deployment, enhancing customer engagement and creating a foundation for recurring revenue [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory ahead, expecting nearly 20% year-over-year growth in Q2 2026, excluding GRIT's fatigue [15][41] - The company anticipates continued strong performance in its core network infrastructure business, supported by healthy demand [15][41] Other Important Information - The company ended Q1 with cash and cash equivalents of $22.2 million, an increase of over $2 million from the prior quarter [13] - Positive operating cash flow of approximately $3.6 million was generated during the first quarter [13] Q&A Session Summary Question: Drone opportunities and competitive landscape - Management noted that they are working with 17 OEMs, with some already in design and shipping phases, indicating accelerating momentum in the drone business [18][19] Question: Update on generator win with a major service provider - The generator win is progressing well, expanding beyond diesel generators to other equipment for asset tracking [20][21] Question: Sales and fulfillment model for compress.ai - Compress.ai is an AI-powered SaaS solution aimed at generating long-term high-margin recurring revenue, with Vodafone providing connectivity [22] Question: Growth in out-of-band management - Management confirmed growth in out-of-band management and plans to introduce a new product targeting new markets [26][29] Question: Recurring revenue opportunities - Management expects software and services revenue to grow from 5-7% to 10% in the future, with significant opportunities in adjacent markets like robotics and security [31] Question: Timeline for drone revenue contribution - Management anticipates that drone revenue could reach 10-15% of total revenue by fiscal year 2027 [33] Question: Revenue recognition from tier one telecom service provider - Revenue from the $8 million-$10 million win was recognized in the September quarter, with expectations for continued revenue recognition in the December quarter [34] Question: Gross margin outlook - Management expects gross margins to remain in the low 40s, consistent with previous quarters [39][40]

Financial Performance - First Quarter 2026 net revenue reached $29.8 million, aligning with the high end of guidance[5] - First Quarter 2026 Non-GAAP EPS was $0.04, while GAAP EPS reported a loss of ($0.04)[5] - Q2 FY2026 revenue guidance is set between $28 million and $32 million, with a midpoint of $30 million[11] - Non-GAAP EPS guidance for Q2 FY2026 is projected between $0.02 and $0.04, with a midpoint of $0.03[11] - Net revenue for the three months ended September 30, 2025, was $29,794,000, a decrease of 13.5% compared to $34,423,000 for the same period in 2024[22] - Gross profit for the same period was $13,346,000, resulting in a gross margin of 44.8%[22] - The company reported a net loss of $1,401,000, which is an improvement from a net loss of $2,502,000 in the same quarter last year[22] - Non-GAAP net income for the three months ended September 30, 2025, was $1,478,000, compared to $2,337,000 for the same period in 2024[24] - Non-GAAP gross profit was $13,507,000, with a non-GAAP gross margin of 45.3%[24] Asset and Liability Management - Total current assets decreased from $77.4 million in June 2025 to $74.4 million in September 2025[21] - Total liabilities decreased from $49.3 million in June 2025 to $45.1 million in September 2025[21] - Stockholders' equity increased slightly from $74.4 million in June 2025 to $74.5 million in September 2025[21] Market Engagement and Product Development - Increased Drone OEM engagements from 10 in Q4 to 17 in Q1, indicating strong demand in the UAS market[6] - Launched EdgeFabric.ai™ platform to enhance Edge AI deployment, facilitating integration and management of visual AI workloads[6] - Introduced Kompress.ai, an AI-powered optimization platform aimed at improving performance and energy efficiency in industrial environments[11] Revenue Breakdown - Embedded IoT Solutions generated $11,467,000 in revenue, while IoT System Solutions contributed $16,459,000 for the quarter[26] - Revenue from the Americas region was $20,651,000, representing an increase from $17,420,000 in the same quarter last year[26] Operating Expenses - Total operating expenses for the quarter were $14,873,000, slightly higher than $14,671,000 in the previous quarter[22] - Research and development expenses were $4,598,000, compared to $4,956,000 in the same quarter last year[22] - The company incurred restructuring, severance, and related charges of $93,000 during the quarter[22]

Core Insights - Lantronix Inc. reported strong fiscal first-quarter results for 2026, with revenue and earnings per share at the high end of guidance ranges, reflecting margin expansion and disciplined cost management [2][4]. Financial Performance - The company achieved net revenue of $29.8 million for Q1 FY2026, compared to $28.8 million in the previous quarter and $34.4 million in the same quarter last year [4][19]. - GAAP EPS was reported at ($0.04), while Non-GAAP EPS was $0.04, indicating a significant improvement in operational performance [4][19]. - The number of OEM engagements in the drone sector increased from 10 in Q4 to 17 in Q1, highlighting growing demand in the Unmanned Aircraft Systems (UAS) market [4][5]. Business Highlights - Lantronix integrated Gremsy and Teledyne FLIR technologies into its Edge AI drone solution, enhancing flight endurance and imaging performance [5]. - The launch of EdgeFabric.ai™ and Kompress.ai platforms aims to accelerate Edge AI deployment and optimize performance in industrial environments [5]. - The company expanded its Power-over-Ethernet (PoE) portfolio and enhanced Out-of-Band Management solutions for next-generation GPU-as-a-Service infrastructure [5]. Market Positioning - Lantronix is positioned to benefit from record defense funding and regulatory momentum in the UAS market, which supports long-term growth opportunities [2]. - The company received multiple industry awards for innovation in Edge AI and IoT, including the Product of the Year Award for advanced drone development solutions [5]. Regional Performance - Revenue from the Americas was $20.7 million, up from $19.8 million in the previous quarter, while EMEA and Asia Pacific Japan contributed $5.1 million and $4.1 million, respectively [23].

Financial Performance & Metrics - Lantronix reported FY25 revenue of $123 million[15] - The company achieved a gross margin of 42% in FY25[15] - Adjusted EBITDA for FY25 was $55 million[15] - Net cash for FY25 stood at $83 million[15] Market Positioning & Growth - Lantronix is targeting a ~$60 billion Edge AI market by 2030[14] - The company is engaged with 10 defense and commercial drone vendors globally[29] - Aerospace market SAM is expected to grow from $37 billion in 2024 to $48 billion in 2027[18] - Smart Cities SAM is projected to increase from $39 billion in 2024 to $55 billion in 2027[20] Strategic Initiatives - Drones could potentially contribute 10-15% of Lantronix's total sales with full rollout[32]

Core Insights - Lantronix Inc. has partnered with Sightline Intelligence to integrate its compliant solutions into advanced video processors for defense and commercial drone platforms, enhancing its market presence in the rapidly growing drone sector [1][3] - The global drone and defense technology market is projected to reach $57.8 billion by 2030, indicating significant growth opportunities for Lantronix [1] Company Developments - The collaboration with Sightline validates Lantronix's differentiated edge AI technology and expands its footprint in the high-growth defense and UAV sectors, which have high entry barriers [3] - Lantronix's CEO highlighted that this strategic partnership demonstrates the company's accelerating growth momentum in the edge AI drone market and affirms its technological leadership [2] Technology Advantages - The new Sightline platforms, 4100-OEM and 4100-SOM, utilize Lantronix's Open-Q 7230CS and 5165RB system-on-modules (SOM), powered by Qualcomm® Dragonwing™ processors, designed for next-gen drone and ISR systems [2] - Key features include full HD performance, H.265 encoding, dual-channel processing, and compliance with 4K/30, MISB/KLV standards, providing flexibility for ISR and defense-grade system deployments [2] Market Positioning - Lantronix aims to leverage its hardware and integrated computing solutions to capitalize on the rapid adoption of drones in commercial and military applications [3] - The company's solutions are designed to enable real-time decision-making at the sensor level, reducing latency and enhancing reliability, which is critical for defense applications [5]

Group 1: Core Insights - Lantronix Inc. has entered a strategic partnership with Vodafone IoT to develop a platform aimed at optimizing business performance and creating recurring revenue opportunities [1] - The partnership will launch Kompress.ai, an AI-powered subscription platform targeting the $27 billion global industrial air compressor market, focusing on cost reduction and minimizing downtime [2][3] - Kompress.ai integrates Lantronix's Edge hardware and cloud intelligence with Vodafone's global IoT connectivity, providing real-time insights and automation for compressor fleets [3] Group 2: Market Positioning - The Kompress.ai platform is designed as a scalable SaaS solution that aims to generate long-term, high-margin recurring revenue while addressing market needs in industrial efficiency and sustainability [4] - Lantronix positions itself as a global provider of Edge AI and Industrial IoT solutions, offering a variety of hardware, software, and engineering services to facilitate secure and connected devices across multiple industries [4]

Core Insights - Lantronix Inc. has been selected by Sightline Intelligence to integrate its NDAA/TAA-compliant solution into Sightline's high-performance video processor for drone platforms, enhancing its presence in the drone and defense technology markets [1][2][5] 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 [9] - The company focuses on high-growth markets, including smart cities, enterprise IT, and unmanned systems for both commercial and defense sectors [9] Industry Context - The global drone and defense technology markets are projected to reach $57.8 billion by 2030, indicating significant growth potential [2] - The collaboration with Sightline Intelligence positions Lantronix to capitalize on the accelerating adoption of drones in both commercial and military domains [5] Technology and Product Features - The new solution enables real-time AI-based object detection, classification, and tracking, supporting autonomous applications in defense and ISR sectors [2][3] - Lantronix's technology is built on Qualcomm® Dragonwing™ processors, offering full HD performance, dual-channel processing, and support for various standards, making it suitable for scalable, mission-critical deployments [4][7] Strategic Importance - The partnership with Sightline validates Lantronix's technology leadership and opens long-term opportunities in the defense and commercial sectors [3][5] - The design win enhances Lantronix's footprint in high-growth, high-barrier-to-entry markets, positioning the company favorably for future growth [5]

Core Viewpoint - Lantronix Inc. is set to release its financial results for the first quarter of fiscal 2026 on November 5, 2025, after market close [1] Financial Results Announcement - The financial results will cover the period ended September 30, 2025 [1] - An investor conference call and audio webcast will be held on the same day at 1:30 p.m. Pacific Time [2] - Investors can access the live conference call by dialing specific numbers for U.S. and international participants [2] Conference Call Details - A replay of the conference call will be available starting at approximately 5:00 p.m. Pacific Time on November 5, 2025 [3] - Telephonic replay options will be available until November 13, 2025, with specific dialing instructions provided [3] Company Overview - Lantronix Inc. is recognized as a global leader in Edge AI and Industrial IoT solutions [4] - The company focuses on delivering intelligent computing, secure connectivity, and remote management for mission-critical applications [4] - It serves high-growth markets such as smart cities, enterprise IT, and defense unmanned systems, facilitating digital transformation [4]

Core Insights - Lantronix Inc. and Vodafone IoT have partnered to launch Kompress.ai, an AI-powered subscription platform aimed at optimizing performance and generating recurring revenue in the industrial air compressor market, valued at over $27 billion globally [1][2][5] - The platform integrates Lantronix's Edge hardware and cloud intelligence with Vodafone's IoT connectivity, providing real-time insights and automation for compressor fleets [1][2] Company Overview - Lantronix is a leader in Edge AI and Industrial IoT solutions, focusing on intelligent computing and secure connectivity for mission-critical applications [7] - Vodafone IoT is a global leader in managed IoT connectivity services, with over 215 million devices connected across more than 180 countries [9] Product Features - Kompress.ai is designed to address significant energy consumption in industrial environments, particularly air compressors, which account for over 10% of electricity use and 4.3 million tons of CO₂ emissions annually [3][5] - The platform offers predictive analytics, energy optimization, and compliance automation for industrial air compressor fleets, regardless of brand or age [2][5] Market Opportunities - The air compressor sector presents growth potential through both brownfield upgrades and greenfield projects, driven by industrial automation trends and sustainability initiatives [5] - Kompress.ai has shown energy savings of up to 30%, reducing unplanned downtime and service costs, making it a critical solution for cost-conscious industrial buyers [5] Revenue Model - Kompress.ai operates on a subscription basis, expected to enhance Lantronix's recurring revenue stream and improve business model predictability [5] - The partnership with Vodafone IoT enables secure and reliable connectivity, facilitating rapid deployment and scalability of the platform [5] Strategic Alignment - The platform aligns with global energy and ESG trends, addressing urgent market needs in industrial efficiency and sustainability [4] - It supports ISO 50001 compliance and CO₂ emissions reduction goals, helping customers achieve sustainability KPIs [5]

Core Insights - Lantronix Inc. is showcasing its Edge AI solutions at the AUSA Annual Meeting, emphasizing its role in the U.S. Army's Short-Range Reconnaissance (SRR) Program and partnerships with Gremsy and Teledyne FLIR [1][5][10] Company Overview - Lantronix Inc. is a leader in Edge AI and Industrial IoT solutions, focusing on intelligent computing, secure connectivity, and remote management for critical applications [6] - The company serves high-growth markets, including smart cities, enterprise IT, and defense unmanned systems, aiming to optimize operations and accelerate digital transformation [6] Strategic Partnerships - Lantronix's partnerships with Qualcomm, Teledyne FLIR, and Gremsy enhance its drone platforms, ensuring NDAA compliance and improving flight times and ISR capabilities [5][7] - The integration of Lantronix's Edge AI solution with Gremsy's Lynx ISR payload and Teledyne FLIR's Hadron 640R camera positions the company for long-term growth in the UAV market [7] Technology Advantages - The Open-Q™ 5165RB System on Module, based on the Qualcomm® Dragonwing™ processor, enables low-power, high-performance AI computing essential for UAV applications [4] - The Edge AI solutions are designed to provide real-time data processing and improved power efficiency, crucial for defense and industrial UAV applications [7][8] Market Engagement - Lantronix is actively engaging with UAV developers and investors at the AUSA 2025 event, which attracts over 44,000 attendees from the defense sector [2][10] - The company is in production with Teal Drones, providing early revenue visibility and reinforcing its position as a trusted partner in defense systems [7]