Lantronix (NASDAQ:LTRX) reported fiscal first-quarter revenue of $32.4 million, up more than 8% from a year earlier, as growth in embedded computing products and unmanned systems helped offset softer sequential sales in its IoT system solutions business.
The company forecast revenue of $32.5 million to $34.5 million for its fiscal second quarter, which ends Dec. 31, 2026. It also said it remains confident it can deliver double-digit revenue growth for the full fiscal year.
Unmanned systems drive embedded growth
Revenue from embedded IoT solutions grew 37% year over year, driven by demand for compute products used in unmanned systems, President and CEO Saleel Awsare said. The company continues to expect unmanned systems to account for approximately 15% to 20% of total revenue for fiscal 2027. First-quarter revenue from the business was within that range, he said.
Four months into the fiscal year, Lantronix had secured orders from 29 customers for fiscal 2027, including 14 international customers, Awsare said. He added that more customers were in the design phase and that orders already received were noncancelable and nonreturnable.
Awsare said Lantronix is seeing activity in Eastern Europe, Australia and Japan, alongside demand in North America. The company is working with one participant in the deep-strike category and two in the close-quarters category of the Drone Dominance Gauntlet 2 competition, he said.
Lantronix recently introduced Spotter, a board that combines edge AI computing, vision processing, sensor fusion and flight control for drones and robotics. Awsare said Spotter would be at the higher end of the company’s current $300 to $700 system-on-module price range and is expected to begin shipping at the end of the calendar year. He said it is the first of a planned family of boards.
The CEO also highlighted the addition of the company’s Open-Q 8550CS system-on-module to the Blue UAS Framework, which identifies vetted components for unmanned aircraft. He said the listing can reduce qualification complexity for customers, although it is too early to quantify its effect on design timelines.
Expansion beyond drones
Awsare pointed to two design wins in computer vision as evidence that the company’s edge-computing technology is finding applications beyond unmanned systems. Lantronix is providing a system-on-module and services for Trimble’s advanced surveying equipment, and its technology is being used in smart cameras for a job-site security provider he did not name.
The company also expects sequential revenue growth in IoT system solutions, supported by improving order trends for networking products. Awsare said interest in out-of-band management products is growing among customers deploying AI infrastructure, including SambaNova and other vendors. These products provide access to networking and computing equipment when primary networks are unavailable.
At a Tier 1 mobile network operator customer, substantial volume shipments were completed several quarters ago, Chief Financial Officer Brent Stringham said. Awsare said recurring revenue is increasing as the customer deploys those units, and Lantronix is working with it on an additional design.
Margins and outlook
First-quarter GAAP gross margin was 44.8%, up from 43.7% in the preceding quarter. Non-GAAP gross margin rose to 45.3% from 44.1%. Stringham attributed the sequential improvement in part to higher-margin recurring revenue from the Nero Global acquisition, along with operational initiatives and cost management.
Lantronix paid approximately $10.3 million during the quarter to acquire Nero Global Tracking, with the remaining $1.3 million expected to be paid before the end of December. The acquisition contributed only a partial quarter of revenue, Stringham said. Awsare said Nero increased software and services to more than 10% of company revenue on a pro forma basis.
Stringham said memory availability and pricing remain industrywide challenges as AI infrastructure and data-center demand pressures supplies. Lantronix has largely been able to pass component cost increases on to customers, he said, and expects its companywide gross margin profile to remain in the mid-40% range.
Net inventory rose to approximately $31 million at Sept. 30 from $26 million at June 30 as the company ordered components and built buffer stock in anticipation of longer lead times. Cash, cash equivalents and short-term marketable securities totaled approximately $51.5 million at quarter-end.
For the second quarter, Lantronix expects non-GAAP net income of $1.8 million to $2.7 million, or $0.04 to $0.06 per share.
About Lantronix (NASDAQ:LTRX)
Lantronix, Inc (NASDAQ: LTRX) is a provider of Internet of Things (IoT) and edge-computing solutions that help organizations connect, manage, and secure devices and equipment. The company serves customers in industrial, enterprise, transportation, healthcare, smart-city, and other applications where reliable remote connectivity and device management are required.
Its portfolio includes embedded networking modules, industrial and cellular gateways, routers, out-of-band management products, and software for remotely provisioning, monitoring, and managing connected devices.
