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- **Revenue resilience**: $29.8M Q1 revenue (+3% YoY), non-GAAP EPS $0.04, driven by drones and network infrastructure.
- **Drone growth engine**: 17 OEMs, 10-15% revenue target by 2027, with $0.04 EPS margin expansion.
- **Recurring revenue play**: Kompress.ai SaaS, 5-7% software/services contribution, 24-month ARR ramp.
- **Financial strength**: 45.3% gross margin, $22.2M cash, $10.7M net debt, Q2 guidance for $28-32M revenue.

**【CEO Summary Section】**
- Q1 2026 revenue of $29.8 million, up 3% sequentially and 3% year-over-year (excluding Gridspertise), with non-GAAP EPS of $0.04, up from $0.01 in Q4.
- Drone business momentum: 17 OEM engagements (up from 10 in Q4), follow-on orders for Red Cat's Teal drones, and Edge AI solutions with Gremsy and Teledyne FLIR.
- New platforms: EdgeFabric.ai for Edge AI deployment, Kompress.ai (with Vodafone IoT) targeting $27B industrial compressor market.
- Long-term strategy: Scale drones (10-15% of revenue by 2027), expand recurring software/services (5-7% of revenue), and leverage cost-optimized operations.

**【CFO Financial Commentary】**
- GAAP gross margin 44.8%, non-GAAP 45.3% (highest in recent years), driven by premium product mix and cost control.
- Sequential cash flow positive ($3.6M), cash balance $22.2M, net debt $10.7M after $1M debt reduction.
- Q2 2026 guidance: Revenue $28-32M, non-GAAP EPS $0.02-0.04.

**【Q&A Key Highlights】**
- Drone adoption timeline: 10-15% revenue contribution by 2027, with 3x growth potential in existing MNO partnerships.
- Kompress.ai model: Vodafone provides connectivity, Lantronix delivers hardware/SaaS, targeting 24-month ARR ramp.
- Out-of-band management growth: New product launch late 2025, expanding into adjacent markets like robotics and surveillance.
- Recurring revenue: Software/services at 5-7% of revenue, expected to expand to 10%+ with drone and asset monitoring scale.
- Risk mitigation: Defense funding stability, minimal impact from government shutdown on multiyear contracts.

Lantronix, Inc. (LTRX) Q1 2026 Earnings Call Transcript

- **Drone market momentum**: 10+ partnerships, $500 ASP, and Q1 2026 shipments for U.S. Army program.
- **Carrier deal ARR**: $50 million+ annual recurring revenue from 50,000 backup power systems.
- **Gross margin recovery**: Targeting 44-45% in FY2026, up from 40% in FY2025, with U.S. manufacturing reducing tariff risk.
- **Cost optimization**: $1.9 million reduction in non-GAAP operating expenses year-over-year.

**【Management Opening Remarks】**
- Lantronix reported Q4 revenue of $28.8 million, up 4% sequentially, with stabilization in core business post-Gridspertise exit.
- FY2025 gross margin improved to 40.6% (non-GAAP), driven by cost reductions and U.S.-based manufacturing.
- $20.1 million cash balance and $7.3 million annualized free cash flow reflect financial discipline.

**【CEO Commentary】**
- Drone market leadership: 10+ partnerships, $500 ASP, and Q1 2026 shipments for U.S. Army's short-range reconnaissance program.
- Carrier deal: $50 million+ annual recurring revenue (ARR) from remote monitoring of 50,000 backup power systems.
- AI/Edge strategy: PRISM software adoption in 10+ drone makers, expanding into robotics and surveillance.

**【CFO Commentary】**
- FY2025 GAAP net loss of $2.6 million vs. $0.4 million in Q4, with non-GAAP EPS of $0.01.
- Gross margin target of 44-45% for FY2026, up from 40% in FY2025, with tariffs and supply chain improvements.
- $1.9 million reduction in non-GAAP operating expenses year-over-year, reflecting cost optimization.

**【Q&A Highlights】**
- Drone market: 10+ customers in pipeline, $500 ASP, and potential for 10-15% revenue contribution by FY2027.
- Carrier deal: ARR ramping as devices come online, with long-term potential to expand into broader network management.
- Margins: 44-45% target for FY2026, with focus on U.S. manufacturing and reduced China exposure.

Lantronix, Inc. (LTRX) Q4 2025 Earnings Call Transcript

- **Revenue Resilience**: Q3 revenue of $28.5M maintained despite macro challenges, with 44.1% non-GAAP gross margin reflecting cost optimization.
- **AI Growth Driver**: First AI camera solution entering production in Q4, with 2026 revenue ramp expected from edge computing products.
- **Balance Sheet Strength**: $20M cash, $12.5M debt, and $3.2M Q3 operating cash flow demonstrate financial discipline.
- **Tariff Mitigation Progress**: <5% China-manufactured products for U.S. by Q1 2026, reducing supply chain risk.
- **Q4 Caution**: Revenue guidance reflects macro uncertainty, but stable bookings and design activity support long-term growth.

**【CEO Summary Section】**
- **Revenue Performance**: Q3 2025 revenue of $28.5 million, within guidance, driven by embedded connectivity and NetComm product growth. Gross margins improved to 44.1% (non-GAAP) due to cost reductions.
- **Tariff Mitigation**: Established 90-day action plan to manage supply chain disruptions, with <5% China-manufactured products destined for the U.S. by Q1 2026.
- **Distribution Expansion**: Expanded EU partnership with TD SYNNEX and APAC distribution via NetComm acquisition, enabling cross-selling opportunities.
- **AI Product Wins**: Launched AI-powered camera solution with Teledyne/FLIR and Dragonwing 8550-based SoM, targeting drones, surveillance, and edge computing. First drone customer expected to enter production in Q4.
- **Financial Health**: Sequential cash increase to $20 million, $2 million debt reduction, and positive operating cash flow of $3.2 million in Q3.

**【CFO Financial Commentary】**
- **Q3 Financials**: GAAP net loss of $3.9 million (-$0.10 EPS), non-GAAP net income of $1.1 million ($0.03 EPS). Non-GAAP OpEx down $1.2 million YoY to $14.8 million.
- **Gross Margin Expansion**: GAAP/Non-GAAP gross margins improved to 43.5%/44.1%, up 3.4/3.1ppt YoY.
- **Q4 Outlook**: Revenue $26.5M-$30.5M (down 6%-14% YoY), non-GAAP EPS $0.00-$0.02. Expect gross margin pressure due to macro uncertainty.

**【Q&A Highlights】**
- **NetComm Contribution**: Exceeding $6M-$7M annualized run rate, with 15%-20%+ growth potential. Cross-selling opportunities driving incremental revenue.
- **Macro Environment**: No customer cancellations; design activity stable. Positive bookings in Q3 and Q4, with focus on edge AI and 5G products.
- **Gridspertise Update**: No Q4 revenue; ongoing deployment discussions, but no visibility on future orders.
- **Out-of-Band Business**: New GM appointed, with plans to stabilize recurring revenue and improve project execution in H2 2026.

Lantronix, Inc. (LTRX) Q3 2025 Earnings Call Transcript

- **Strategic Acquisition Payoff**: NetComm deal adds $6.5M in gateway tech, with Vodafone pilots and new leadership driving expansion.
- **Edge AI Market Dominance**: $76B market by 2031; Lantronix-Qualcomm partnership secures projects in banking, manufacturing, and farming.
- **Cost Efficiency Boost**: $4.5M OpEx savings and 43.2% gross margin highlight operational turnaround.
- **Growth Outlook**: 12%+ Edge AI growth and 10-12% out-of-band management expansion, with Q3 margin improvement signaling recovery.

**【CEO Summary Section】**
- Acquired NetComm for $6.5 million, expanding the Connect business with 4G/5G gateways. Integration is progressing well, with key customers like Vodafone and new leadership from Daniel Quant.
- Edge AI market poised for growth: Gartner predicts 70% of data processed at the edge by 2025, with a $76 billion market by 2031. Lantronix is positioning as a key supplier with hardware, software, and services.
- Strategic collaboration with Qualcomm: integrating AI frameworks into Lantronix systems for real-time analytics, with projects in banking, manufacturing, and agriculture.
- Cost-cutting initiatives completed, reducing OpEx by $4.5 million annually. Consolidated operations into 4 centers of excellence to streamline growth.

**【CFO Financial Commentary】**
- Q2 2025 revenue: $31.2 million (down 16% YoY). Non-GAAP EPS: $0.04, within guidance.
- Gross margin improved to 43.2% (Non-GAAP), driven by higher-margin system solutions.
- OpEx reduced by $700,000 YoY, with Q3 2025 non-GAAP EPS expected in $0.01-$0.05 range.
- Cash balance: $19.2 million post-NETCOMM acquisition. Q3 revenue impacted by delayed smart grid rollout, but margin trends positive.

**【Q&A Key Points】**
- Smart grid customer: rollout delays in Europe, but long-term commitment remains. Pilots ongoing in Carolinas and Northeast.
- Gross margin outlook: Q3 2025 expected to be slightly higher than Q2, with long-term target of 45%.
- Supply chain resilience: transitioning manufacturing out of China to mitigate tariffs.
- Growth drivers: Edge AI (12%+ CAGR) and out-of-band management (10-12% CAGR) as key growth engines.

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