Lantronix Q4 Earnings Call Highlights

Key Points

• Lantronix delivered improved fiscal 2026 results: Fourth-quarter revenue rose 8% to $31.2 million, non-GAAP EPS increased 300% to $0.04, and the GAAP net loss narrowed significantly. The company also ended the year debt-free with more than $60 million in cash.
• Unmanned systems became a key growth driver, generating $12.6 million in fiscal 2026 revenue and expanding to more than 30 engagements. Management expects the business to generate more than $25 million and represent 15% to 20% of total revenue in fiscal 2027, supported by demand for compliant domestic drone technology.
• The $11.7 million Vecima Industrial IoT acquisition added the Nero tracking platform, approximately $5 million in annual revenue and higher-margin recurring software sales. Lantronix forecast first-quarter fiscal 2027 revenue of $31 million to $33 million and expects double-digit revenue growth for the full year.

Lantronix NASDAQ: LTRX reported fiscal fourth-quarter revenue of $31.2 million, up 8% from a year earlier, as growth in embedded IoT solutions and unmanned systems helped the company finish fiscal 2026 with higher sales, improved profitability and a debt-free balance sheet.

Non-GAAP earnings per share rose 300% year over year to $0.04, within the company’s guidance range. GAAP net loss narrowed to $269,000, or $0.01 per share, from a loss of $2.6 million, or $0.07 per share, in the prior-year quarter.

For the full fiscal year, Lantronix reported nearly $121 million in revenue, representing 8% growth from fiscal 2025 revenue of just over $111 million excluding Gridspertise. The company said embedded IoT solutions revenue rose more than 15% for the year, led by its unmanned systems business.

Unmanned Systems Becomes a Larger Growth Driver

President and CEO Saleel Awsare said unmanned systems progressed during fiscal 2026 from an early-stage opportunity into a “meaningful growth engine” for the company. Unmanned systems revenue reached $12.6 million for the year, above the midpoint of Lantronix’s prior $10 million to $14 million outlook.

The company’s drone business includes its Edge Compute platform and systems-on-modules, or SOMs, used in applications requiring onboard computing, camera processing, sensor fusion and autonomous operations. Awsare said Lantronix expanded its broader unmanned systems engagements from roughly 10 in the first fiscal quarter to more than 30 by year-end, and had shipped to more than a dozen customers.

Lantronix cited its work with Red Cat’s Teal Drones Black Widow platform for the U.S. Army’s short-range reconnaissance program, as well as customer and partner relationships with Sightline, Trillium Engineering, DoD Solution, AVT Australia and Swarmer.

The company said U.S. regulatory actions affecting foreign-made drones and components could support demand for domestic suppliers. Awsare pointed to the FCC’s December 2025 restrictions on China-based DJI introducing new products in the U.S. market, as well as a more recent Section 232 proclamation imposing tariffs on foreign-made drones and components.

CFO Brent Stringham said the tariffs are a “structural tailwind” for Lantronix’s drone business because of its NDAA- and TAA-compliant offerings. He said the company does not currently expect a meaningful direct tariff impact on its imported components because they are brought in as general-purpose modules rather than drone-specific components.

For fiscal 2027, Lantronix expects unmanned systems to account for 15% to 20% of total revenue. In response to an analyst question, Awsare said unmanned systems revenue should be in the “$25 million-plus range” for the year.

IoT Systems Revenue Rebounds, Software Mix Expands

IoT system solutions revenue exceeded $15 million in the fourth quarter, aided by a 16% sequential increase as ordering patterns improved following federal government shutdowns in late calendar 2025 and early 2026. The company said the rebound was driven by recovery in its out-of-band management portfolio, network switch demand and early stabilization in its federal business.

Lantronix also highlighted an out-of-band management design win with SambaNova Systems. Its solution is deployed in SambaNova’s DataScale platform, providing remote access to networking and computing infrastructure in AI-focused data center racks. Awsare said Lantronix believes the addressable market for its SLC 9000 out-of-band product could exceed $500 million.

During the current quarter, Lantronix closed its $11.7 million acquisition of Vecima Networks’ Industrial IoT business, including the Nero Global Tracking platform. The acquired business contributes approximately $5 million in annual revenue, with most of that tied to annual recurring revenue and gross margins in the mid- to high-60% range, according to the company.

Lantronix said the acquisition is immediately accretive to earnings and raises its software and services revenue mix above 10% of total revenue on a pro forma basis. Nero has an installed base of about 125,000 device tags across fleet, municipal, restoration and industrial asset-tracking markets. Management said it sees cross-selling opportunities for Lantronix cellular gateways, modems, Edge Compute products and connectivity offerings.

Margins, Cash Position and Outlook

Fourth-quarter GAAP gross margin was 43.7%, compared with 40% a year earlier, while non-GAAP gross margin was 44.1%, up from 40.6%. Stringham attributed the improvement to favorable revenue mix, stronger system solutions performance and supply-chain execution.

The company said memory availability has tightened and prices have risen amid demand from AI infrastructure and hyperscale data centers. Lantronix said it had prepared by securing supply through its fabless model and diversified manufacturing partners. Stringham said the company is working with customers regarding cost pass-throughs where appropriate.

• Fourth-quarter GAAP operating expenses were $14 million, down from $14.7 million a year earlier.
• Fiscal-year operating cash flow was approximately $9.9 million, while fourth-quarter operating cash flow was about $1.9 million.
• Year-end cash exceeded $60 million after Lantronix raised more than $44 million in net proceeds through public and at-the-market offerings.
• The company repaid its remaining $8.7 million of debt and ended fiscal 2026 debt-free.

For the fiscal first quarter ending Sept. 30, 2026, Lantronix forecast revenue of $31 million to $33 million and non-GAAP EPS of $0.04 to $0.06. Management said it expects double-digit revenue growth for the full fiscal year, while Stringham said gross margins could remain near current levels and may have room to improve as higher-margin recurring revenue and other businesses expand.

About Lantronix (NASDAQ:LTRX)

Lantronix, Inc is a provider of secure data access and management solutions designed to simplify the deployment, monitoring and control of devices and equipment across a wide range of industries. Headquartered in Irvine, California, the company develops hardware and software products that enable connectivity for smart devices, industrial machinery, IT infrastructure and other systems in the Internet of Things (IoT) ecosystem.

Founded in 1989, Lantronix was among the early innovators in serial-to-Ethernet device networking and has since expanded its portfolio to include secure console servers, device servers, gateways and embedded modules.

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