Lantronix(US:LTRX)2025-05-08 21:30Financial Data and Key Metrics Changes - The company reported revenue of $28.5 million for Q3 2025, which was down both sequentially and year-over-year due to no shipments to a large smart grid customer in Europe [9][10] - GAAP gross margin increased to 43.5% in Q3 2025 from 42.6% in the prior quarter and 40.1% in the year-ago quarter [10] - Non-GAAP gross margin was 44.1% in Q3 2025 compared to 43.2% in the prior quarter and 41% in the year-ago quarter [10] - GAAP net loss was $3.9 million or $0.10 per share, compared to a GAAP net loss of $0.4 million or $0.01 per share in the year-ago quarter [11] - Non-GAAP net income was $1.1 million or $0.03 per share, down from $4.2 million or $0.11 per share in the year-ago quarter [12] - Cash and cash equivalents totaled $20 million at the end of Q3 2025, slightly up from the prior quarter [12] Business Line Data and Key Metrics Changes - Revenue decline was partially offset by organic growth in embedded connectivity and switch products, as well as growth in gateways and routers from the NetComm acquisition [10] - The integration of NetComm products has been successful, leading to increased customer engagement and cross-selling opportunities [7] Market Data and Key Metrics Changes - The company is expanding its distribution network in the European Union and Asia Pacific, leveraging partnerships with TD SYNNEX and the acquired channel network from NetComm [7] - The company is focused on edge AI solutions, which are gaining traction among customers moving towards hybrid architectures [8] Company Strategy and Development Direction - The company is closely monitoring the operating environment and has established a task force to manage tariff impacts and supply chain disruptions [6] - There is a strong focus on developing edge intelligence solutions and expanding distribution channels [5][8] - The company aims to grow its channel distribution and has announced new AI-powered products, including a camera solution and a system using Qualcomm's processor [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the macroeconomic environment but noted positive cash flow and a strong balance sheet [15] - Customer design activity is reportedly growing, and the company is optimistic about future revenue from AI initiatives [15][30] - For Q4 2025, revenue is expected to be in the range of $26.5 million to $30.5 million, with some pressure on gross margins anticipated [13] Other Important Information - The company paid down $2 million of its existing term debt, reducing interest expenses [13] - The remaining debt balance is approximately $12.5 million, giving the company a net cash position of $7.5 million [13] Q&A Session Summary Question: What was the NetComm contribution in March and its growth potential? - Management expects NetComm revenue to be $6 million to $7 million on an annualized basis, tracking to exceed that run rate [18][19] Question: What is the current quoting activity and order patterns in Q4? - Management reported no cancellations or unusual customer behavior, with design activity remaining strong [21][22] Question: How is the edge compute side developing? - The company is seeing traction in edge AI initiatives, with expected revenue from AI activities in fiscal 2026 [30] Question: What visibility is there for June guidance and growth into fiscal 2026? - Management is cautious but optimistic about double-digit growth in fiscal 2026, driven by design activity and new product releases [36][46] Question: Is the company still the sole supplier to Gridspertise? - Yes, the company remains the single source for Gridspertise, continuing to engage with them on deployments [48]