Lantronix(LTRX) - 2025 Q4 - Annual Results

Executive Summary Management Commentary Lantronix underwent strategic transformation in FY2025, streamlining operations and securing design wins for multi-year, high-margin growth in FY2026 - Fiscal 2025 marked a strategic transformation for Lantronix, characterized by disciplined execution, operational streamlining, and targeted investments in high-value markets[2] - The company strengthened its foundation for sustainable, profitable growth by aligning resources with high-impact opportunities, enhancing supply chain resilience, and advancing platform capabilities[2] - Recent design wins in drones, commercial Edge AI solutions, and network infrastructure highlight Lantronix's evolution into a strategic platform partner, accelerating intelligence at the edge[2] - Lantronix enters fiscal 2026 well-positioned to capture multi-year, high-margin opportunities due to expanding customer engagements, growing momentum in Edge IoT and Network Infrastructure, and increasing operating leverage[2] Q4 FY2025 Financial Highlights Lantronix reported its financial results for the fourth quarter of fiscal year 2025, with net revenue of $28.8 million and a GAAP EPS of ($0.07), while achieving a non-GAAP EPS of $0.01 Q4 FY2025 Key Financials | Metric | Value | | :------------ | :------------ | | Net Revenue | $28.8 Million | | GAAP EPS | ($0.07) | | Non-GAAP EPS | $0.01 | Full Year FY2025 Financial Highlights For the full fiscal year 2025, Lantronix reported net revenue of $122.9 million, a GAAP EPS of ($0.29), and a non-GAAP EPS of $0.14 FY2025 Key Financials | Metric | Value | | :------------ | :------------- | | Net Revenue | $122.9 Million | | GAAP EPS | ($0.29) | | Non-GAAP EPS | $0.14 | Recent Business Highlights Lantronix secured key contracts, partnered for Edge AI, launched new 5G routers, and expanded its leadership team to accelerate growth - Secured a multi-year contract with a Tier-1 U.S. wireless operator to digitally manage nationwide backup power systems using Lantronix Edge gateways and the Percepxion platform, enhancing network resilience and reducing operational costs[5] - Selected by Red Cat's Teal Drones to power U.S. Army-approved Black Widow™ drones with Lantronix's TAA- and NDAA-compliant System on Module (SoM), initiating June-quarter shipments and positioning for multi-year, high-margin growth in the secure defense drone market[5] - Partnered with Aerora to deliver Edge AI-enabled solutions for autonomous navigation in drones, robotics, and surveillance, leveraging Open-Q SoMs and Teledyne FLIR imaging to accelerate AI development[5] - Launched NTC-500 Series industrial-grade 5G routers for private 5G, edge computing, and industrial IoT, offering cost-effective, high-performance wireless connectivity with global certifications[5] - Expanded leadership team with three strategic hires: Todd Rychecky (head of Out-of-Band Management), Eric Johnson (leader of Compute Ecosystem strategy), and Scott Wallace (head of Project Management Office) to accelerate growth in Edge IoT and Network Infrastructure[13] Q1 FY2026 Financial Outlook Lantronix provided its financial outlook for the first fiscal quarter of 2026, projecting revenue between $28.5 million and $30.5 million, and non-GAAP EPS between $0.02 and $0.04 Q1 FY2026 Financial Outlook | Metric | Guidance Range | | :------------ | :------------------- | | Revenue | $28.5M to $30.5M | | Non-GAAP EPS | $0.02 to $0.04 | Company Overview About Lantronix Lantronix is a global leader in Edge AI and Industrial IoT, providing intelligent computing, secure connectivity, and remote management for mission-critical applications - Lantronix Inc. is a global leader in Edge AI and Industrial IoT solutions[8] - The company delivers intelligent computing, secure connectivity, and remote management for mission-critical applications[8] - Lantronix serves high-growth markets including smart cities, enterprise IT, and commercial and defense unmanned systems[8] - Its comprehensive portfolio of hardware, software, and services powers applications from secure video surveillance to resilient out-of-band network management[8] Discussion of Non-GAAP Financial Measures Non-GAAP measures offer supplemental insights into Lantronix's financial trends, used by management to evaluate operating results by excluding specific non-recurring items - Non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends[10] - Management uses non-GAAP measures to monitor and evaluate ongoing operating results and trends for comparative operating performance[10] - Non-GAAP net loss excludes items such as share-based compensation, depreciation and amortization, interest income/expense, income tax provision/benefit, restructuring charges, acquisition-related costs, impairment of long-lived assets, amortization of purchased intangibles, and fair value remeasurement of earnout consideration[11] - Non-GAAP EPS is calculated by dividing non-GAAP net income by non-GAAP weighted-average shares outstanding (diluted), adjusted for share-based compensation[12] Financial Statements Unaudited Consolidated Balance Sheets Total assets and liabilities decreased in FY2025, primarily due to reductions in cash, accounts receivable, and long-term debt Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Cash and cash equivalents | $20,098 | $26,237 | | Accounts receivable, net | $25,092 | $31,279 | | Inventories, net | $26,371 | $27,698 | | Total current assets | $77,393 | $88,950 | | Total assets | $123,722 | $136,208 | | Accounts payable | $13,259 | $10,347 | | Total current liabilities | $30,422 | $30,156 | | Long-term debt, net | $8,684 | $13,219 | | Total liabilities | $49,344 | $54,853 | | Total stockholders' equity | $74,378 | $81,355 | - Total assets decreased by approximately $12.5 million from June 30, 2024, to June 30, 2025, primarily due to decreases in cash and cash equivalents and accounts receivable[19] - Total liabilities decreased by approximately $5.5 million, driven by a reduction in long-term debt, net[19] Unaudited Consolidated Statements of Operations Lantronix reported a significant GAAP net loss increase in FY2025, with net revenue declining year-over-year for both Q4 and the full fiscal year Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :---------------------------- | :----------- | :----------- | :----------- | :----------- | | Net revenue | $28,839 | $49,075 | $122,923 | $160,327 | | Gross profit | $11,537 | $18,722 | $51,699 | $64,354 | | Income (loss) from operations | ($3,134) | $565 | ($11,001) | ($2,862) | | Net income (loss) | ($2,631) | $386 | ($11,373) | ($4,516) | | Net income (loss) per share - basic | ($0.07) | $0.01 | ($0.29) | ($0.12) | - Net revenue decreased significantly year-over-year, from $49.1 million in Q4 FY2024 to $28.8 million in Q4 FY2025, and from $160.3 million in FY2024 to $122.9 million in FY2025[21] - The company reported a GAAP net loss of ($2.6 million) in Q4 FY2025, compared to a net income of $0.4 million in Q4 FY2024. For the full year, GAAP net loss widened to ($11.4 million) in FY2025 from ($4.5 million) in FY2024[21] Unaudited Reconciliation of Non-GAAP Adjustments Non-GAAP adjustments converted GAAP net losses into positive non-GAAP net income for both Q4 and full-year FY2025, with improved gross margins Non-GAAP Reconciliation Highlights (in thousands, except per share data) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :---------------------------- | :----------- | :----------- | :----------- | :----------- | | GAAP net income (loss) | ($2,631) | $386 | ($11,373) | ($4,516) | | Total Non-GAAP adjustments | $2,994 | $5,389 | $16,891 | $19,945 | | Non-GAAP net income | $363 | $5,775 | $5,518 | $15,429 | | Non-GAAP net income per share (diluted) | $0.01 | $0.15 | $0.14 | $0.40 | | Non-GAAP gross margin | 40.6% | 38.8% | 42.6% | 41.1% | - Non-GAAP adjustments for Q4 FY2025 totaled $3.0 million, leading to a positive non-GAAP net income despite a GAAP net loss[23] - For the full year FY2025, non-GAAP adjustments of $16.9 million converted a GAAP net loss into a non-GAAP net income of $5.5 million[23] - Non-GAAP gross margin improved to 40.6% in Q4 FY2025 from 38.8% in Q4 FY2024, and to 42.6% for FY2025 from 41.1% in FY2024[23] Unaudited Net Revenues by Product Line and Region IoT System Solutions and EMEA revenue saw significant declines in FY2025, while Americas remained the largest regional contributor Net Revenues by Product Line (in thousands) | Product Line | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :-------------------- | :-------- | :-------- | :-------- | :-------- | | Embedded IoT Solutions| $10,219 | $11,364 | $46,380 | $46,953 | | IoT System Solutions | $16,654 | $35,603 | $68,735 | $104,450 | | Software & Services | $1,966 | $2,108 | $7,808 | $8,924 | | Total Net Revenue | $28,839 | $49,075 | $122,923 | $160,327 | Net Revenues by Region (in thousands) | Region | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :-------------------- | :-------- | :-------- | :-------- | :-------- | | Americas | $19,823 | $17,126 | $70,126 | $78,203 | | EMEA | $5,330 | $26,194 | $30,898 | $64,025 | | APJ | $3,686 | $5,755 | $21,899 | $18,099 | | Total Net Revenue | $28,839 | $49,075 | $122,923 | $160,327 | - IoT System Solutions revenue decreased significantly from $35.6 million in Q4 FY2024 to $16.7 million in Q4 FY2025, and from $104.5 million in FY2024 to $68.7 million in FY2025[25] - EMEA revenue experienced a substantial decline from $26.2 million in Q4 FY2024 to $5.3 million in Q4 FY2025, and from $64.0 million in FY2024 to $30.9 million in FY2025[25] Additional Information Conference Call and Webcast Lantronix hosted an investor conference call and audio webcast on August 27, 2025, to discuss its fiscal fourth quarter and full year 2025 results - An investor conference call and audio webcast was held on Wednesday, August 27, 2025, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time)[6] - Live conference call access: 1-844-802-2442 (U.S.) or 1-412-317-5135 (international)[6] - A conference call replay was available on the Lantronix website and via telephonic replay until September 3, 2025, using passcode 3326088[7] Forward-Looking Statements This release contains forward-looking statements on future expectations, subject to substantial risks like economic conditions and supply chain disruptions, with no obligation to update - The news release contains forward-looking statements concerning revenue and earnings expectations for Q1 FY2026, positioning for sustainable growth, and benefits from strategic transformation, design wins, and hires[15] - Forward-looking statements are subject to substantial risks and uncertainties, including negative economic conditions, supply chain disruptions, challenges in implementing acquisition strategy, intense competition, and cybersecurity risks[15] - Investors are cautioned not to place undue reliance on forward-looking statements, and the company expressly disclaims any obligation to update them after the date of the release, except as required by law[15] Investor Contact For investor inquiries, Lantronix provides a dedicated email contact - Lantronix Analyst and Investor Contact: investors@lantronix.com[17]