Lantronix, Inc. is a global leader in Edge AI and Industrial IoT solutions that power National Defense Authorization Act (NDAA)-compliant unmanned systems, critical infrastructure, and resilient enterprise networks. The company delivers intelligent computing, secure connectivity, and remote management for mission-critical applications, with a portfolio spanning hardware, software, and services. Lantronix focuses on three vertical markets: unmanned aerial systems (UAS or drones), critical infrastructure monitoring, and resilient enterprise networks. The industry is highly competitive and characterized by rapid technological advances and evolving industry standards, with competition based on product features, software capabilities, company reputation, brand recognition, technical support, relationships with partners, quality, reliability, product development capabilities, price, and availability.

Lantronix competes in a market that is intensely competitive, with many competitors and potential competitors possessing greater financial and human resources for marketing and product development, more experience conducting research and development, larger distribution and customer networks, and more established reputations. The company believes its competitive position is strengthened by its NDAA and Trade Agreements Act (TAA) compliant solutions, which are increasingly essential for UAS platforms seeking eligibility for U.S. federal, state, and municipal procurement programs. Lantronix also differentiates through its Qualcomm Dragonwing-based system-on-modules, including the Open-Q 8550 micro SoM and Drone Reference Platform, and its Percepxion cloud software platform. The company's recent acquisition of the Industrial IoT business of Vecima Networks, including the Nero Global Tracking software-as-a-service platform, added an established customer base of approximately 125,000 asset tags under management and increased annual recurring revenue.

Lantronix generates revenue through three product lines: Embedded IoT Solutions, IoT Systems Solutions, and Software and Services. The company sells primarily through distributors, which account for a majority of sales, as well as through resellers, direct sales to larger OEMs and end users, and an e-commerce site. The business model includes a mix of transactional hardware sales and recurring revenue from software-as-a-service offerings, extended warranty, support, and maintenance services. The company's strategy centers on continuous innovation and strategic acquisitions designed to increase scale, broaden scope, and enhance value proposition, positioning Lantronix as a strategic partner rather than just a vendor. The company manages its sales teams by three geographic regions: the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific Japan (APJ).

Embedded IoT Solutions net revenue increased 15.6% to $53,607,000 in fiscal 2026, representing 44.3% of net revenue, driven by higher unit sales of embedded compute products, including drone and aerospace and defense products, in the Americas and EMEA regions, and higher unit sales of embedded wired connectivity products across all regions. This product line includes a broad range of Compute SoM and System-in-Package solutions, together with wired and wireless connectivity products, with compute modules now providing the ability to run advanced AI and machine learning applications directly at the device level. IoT Systems Solutions net revenue decreased 15.2% to $58,270,000 in fiscal 2026, representing 48.2% of net revenue, primarily due to reduced sales to Gridspertise, with no revenue recognized from this customer during fiscal 2026 compared to just over $11 million in the prior year, partially offset by increased unit sales of network switches in the Americas and APJ regions and higher unit sales of gateways in the Americas and EMEA regions.

Software and Services net revenue increased 15.5% to $9,022,000 in fiscal 2026, representing 7.5% of net revenue, driven by higher SaaS solutions in the Americas and EMEA regions and higher design services revenue in the EMEA region, partially offset by a decrease in extended warranty services in the Americas. The Percepxion SaaS platform offers comprehensive single-pane-of-glass management for Out-of-Band and Industrial IoT deployments, enabling customers to deploy, monitor, manage, and automate across global deployments from a single platform login. Following the August 2026 acquisition of the Nero Global Tracking software-as-a-service platform, the Software and Services portfolio also includes GPS-based vehicle and asset tracking capabilities for fleet, municipal, and industrial asset tracking customers, further broadening the recurring revenue base. The company also provides extended warranty, support, and maintenance services related to its Out-of-Band and certain other product families, which, together with SaaS offerings, support the recurring revenue model.

In March 2026, the U.S. Court of International Trade issued a ruling indicating that importers that paid tariffs under the International Emergency Economic Powers Act may be entitled to refunds, though as of June 30, 2026, the company has not recognized any amounts related to the potential recovery of such tariff-related costs. On July 7, 2026, Lantronix entered into an asset purchase agreement to acquire the industrial IoT business of Vecima Networks Inc., including its Nero Global Tracking software-as-a-service platform, for aggregate consideration of approximately $11.7 million, excluding working capital adjustments, and closed the transaction on August 1, 2026. On May 29, 2026, the company sold approximately 4,800,000 shares of common stock in an underwritten public offering, receiving net cash proceeds of approximately $31,750,000. On May 8, 2026, the company entered into an at-the-market offering program under which it may offer and sell shares with an aggregate offering price of up to $30,000,000, and during fiscal 2026 sold approximately 1.8 million shares generating approximately $12,340,000 in net proceeds. During fiscal 2026, the company incurred restructuring, severance and related charges of $566,000 and acquisition-related costs of approximately $315,000.

For fiscal 2026, net revenue decreased by $2,024,000, or 1.6%, to $120,899,000, compared to $122,923,000 in fiscal 2025. The company reported a net loss of $4,181,000 for fiscal 2026, compared to a net loss of $11,373,000 for fiscal 2025, with the decrease in net loss primarily driven by a reduction in operating expenses of $5,656,000 combined with an increase in gross profit. Gross profit increased 2.4% to $52,923,000, with gross margin improving to 43.8% from 42.1% in the prior year, primarily due to product sales mix, including the absence of lower-margin revenue from Gridspertise and a slightly higher percentage of revenue derived from software and services. Cash and cash equivalents increased to $60,466,000 at June 30, 2026, from $20,098,000 at June 30, 2025, and working capital increased to $85,359,000 from $46,971,000.

A primary growth vector is the unmanned aerial systems market, where Lantronix has increased its position through Qualcomm Dragonwing-based system-on-modules, including the Open-Q 8550 micro SoM and Drone Reference Platform, which integrates edge compute, sensing, and flight control into a single NDAA and TAA compliant solution designed to move customers from concept to flight-ready prototype in weeks rather than months. The company has expanded engagement with UAS manufacturers by delivering high-performance edge compute for flight control, real-time video processing, autonomous navigation, and AI-enabled situational awareness, and has extended its platform into counter UAS use cases. Demand for NDAA- and TAA-compliant supply chains has accelerated across defense, public safety, and critical-infrastructure customers, and the company believes this differentiation will become more pronounced as the US Department of War and Allied governments increasingly prioritize investment in unmanned systems and trusted supply chains, positioning Lantronix to compete for a growing share of defense related procurement.

Another significant growth vector is critical infrastructure monitoring, highlighted by a partnership with a Tier-1 U.S. mobile network operator delivering a nationwide solution for backup-power management across more than 50,000 cell sites, enabling remote oversight and 24/7 monitoring with automated alerts for outages, tampering, or security threats. The recent acquisition of the Industrial IoT business of Vecima Networks, including the Nero Global Tracking software-as-a-service platform, added an established customer base of approximately 125,000 asset tags under management and increased annual recurring revenue, furthering the strategic shift towards higher margin, recurring software and services revenue within the critical infrastructure monitoring vertical. In the enterprise sector, the company provides Out-of-Band Management offerings to a Tier 1 banking customer to enhance network resiliency, providing secure alternative pathways for critical infrastructure including servers, networks, and routers. The company plans to capitalize on market opportunities by further enhancing product offerings, expanding geographically, and pursuing targeted acquisitions that align with long-term growth objectives.

Gross margin is expected to fluctuate in the future from period-to-period based on changes in product mix, average selling prices, and average manufacturing costs. The company's gross margin improved to 43.8% in fiscal 2026 from 42.1% in fiscal 2025, primarily driven by the absence of lower-margin revenue from Gridspertise and a slightly higher percentage of revenue derived from software and services. The company may incur additional restructuring, severance and related charges in future periods as it continues to identify cost savings and efficiencies related to its business. Operating expenses decreased by $5,656,000 in fiscal 2026 compared to fiscal 2025, with selling, general and administrative expenses increasing 2.2% to $37,048,000 and research and development expenses decreasing 5.6% to $17,554,000.

The company outsources substantially all of its manufacturing to third-party contract manufacturers, primarily Hana Microelectronics in Thailand and Tailyn, Info-Tek and Rubytech in Taiwan, with Marvell Technology Inc. managing the manufacture of large-scale integration chips in Taiwan and assembly and test performed by Amkor Technology in the Philippines and South Korea. Certain products are manufactured with final assembly in the U.S. to meet trade compliance requirements. In connection with increased tariffs imposed by the U.S. against China, the company has transitioned its contract manufacturing out of China for U.S.-bound products. The company's manufacturing operations are conducted through third-party contract manufacturers, and it does not have long-term supply arrangements with most vendors, purchasing components on a purchase order basis. As of August 21, 2026, the company had 330 total employees including 327 full-time employees, none of whom is represented by a labor union.

Research and development expenses were $17,554,000 in fiscal 2026, a decrease of 5.6% from $18,597,000 in fiscal 2025, with the decrease primarily due to lower personnel-related expenses in the engineering team resulting from restructuring activities, reduced share-based compensation costs, and lower facilities-related equipment and software costs, partially offset by higher spending on outside services. The company's capital expenditures were $612,000 in fiscal 2026, primarily for computer hardware and tooling at contract manufacturers, business analysis tools, and certain research and development equipment. The company did not repurchase any shares of its common stock during fiscal 2026, and it has never declared or paid cash dividends on its common stock, with no intention to pay any cash dividends in the foreseeable future. The company has a Form S-3 shelf registration statement on file with the SEC and an at-the-market offering program with approximately $17,000,000 remaining of the aggregate offering capacity as of June 30, 2026.

The company faces headwinds from the lengthy sales cycle for its products, which generally extends between six and 24 months and sometimes longer due to customer evaluation and approval processes, making the timing of revenues difficult to predict. The company also faces risks from supply constraints, including memory supply shortages that have led to higher costs and constrained availability of memory components, and from its dependence on a relatively small number of distributors and end-user customers for a large portion of revenue, with sales through the top five distributors accounting for approximately 32% of net revenue in fiscal 2026. The company's business related to government contracts is subject to risks including the uncertainty of U.S. government program funding, which is dependent on continued congressional appropriations and an annual budgeting process, and the ability of customers to win government contracts and subcontracts.

The company faces headwinds from the potential imposition of tariffs and changes to international trade agreements, with recent judicial rulings and changes in tariff policies introducing uncertainty regarding the applicability, scope, and duration of certain U.S. tariffs and the availability of refunds for invalidated tariffs. The company also faces risks from its international operations, including geopolitical events, fluctuations in currency exchange rates, import restrictions, and other trade barriers. The company's cash balances are concentrated at a small number of financial institutions, and its loan agreement with Silicon Valley Bank requires it to hold 75% of its US cash balances at SVB, which could limit its ability to manage cash holdings effectively and expose it to risk if that bank were to fail.

Management's message emphasizes Lantronix's position as a global leader in Edge AI and Industrial IoT solutions, with a strategy focused on three vertical markets: unmanned aerial systems, critical infrastructure monitoring, and resilient enterprise networks. The company's growth strategy centers on continuous innovation and strategic acquisitions designed to increase scale, broaden scope, and enhance value proposition, positioning Lantronix as a strategic partner rather than just a vendor. Management highlights the recent acquisition of the Industrial IoT business of Vecima Networks, including the Nero Global Tracking software-as-a-service platform, which added an established customer base of approximately 125,000 asset tags under management and increased annual recurring revenue, furthering the strategic shift towards higher margin, recurring software and services revenue. Looking ahead, management plans to capitalize on market opportunities by further enhancing product offerings, expanding geographically, and pursuing targeted acquisitions that align with long-term growth objectives. The company believes that current cash holdings, net cash provided by operating activities, and expected availability under its bank borrowing agreement will be sufficient to fund material requirements for working capital, capital expenditures, and other financial commitments for at least the next 12 months and beyond.

Total net revenue for fiscal 2026 was $120,899,000 , compared to $122,923,000 in fiscal 2025, a decrease of $2,024,000 or 1.6% . Net loss for fiscal 2026 was $4,181,000 , compared to a net loss of $11,373,000 ⁶ in fiscal 2025. The company reported a basic and diluted net loss per share of $0.09 ⁷ for fiscal 2026, compared to a basic and diluted net loss per share of $0.27 ⁸ for fiscal 2025. Gross profit increased to $52,923,000 ⁹ in fiscal 2026 from $51,699,000 ¹⁰ in fiscal 2025, with gross margin improving to 43.8% ¹¹ from 42.1% ¹². Operating expenses decreased to $54,602,000 ¹³ in fiscal 2026 from $60,258,000 ¹⁴ in fiscal 2025, a reduction of $5,656,000 ¹⁵. Cash and cash equivalents were $60,466,000 ¹⁶ at June 30, 2026, compared to $20,098,000 ¹⁷ at June 30, 2025. Net cash provided by operating activities was $9,877,000 ¹⁸ in fiscal 2026, compared to $7,285,000 ¹⁹ in fiscal 2025. The company incurred restructuring, severance and related charges of $566,000 ²⁰ in fiscal 2026 and $3,535,000 ²¹ in fiscal 2025, and amortization of intangible assets of $1,561,000 ²² in fiscal 2026 and $3,951,000 ²³ in fiscal 2025. Provision for income taxes was $279,000 ²⁴ in fiscal 2026, compared to a benefit of $239,000 ²⁵ in fiscal 2025, with an effective tax rate of (7.2%) ²⁶ in fiscal 2026 and 2.1% ²⁷ in fiscal 2025. By product line, Embedded IoT Solutions net revenue was $53,607,000 ²⁸ in fiscal 2026 versus $46,380,000 ²⁹ in fiscal 2025, IoT Systems Solutions net revenue was $58,270,000 ³⁰ versus $68,735,000 ³¹, and Software and Services net revenue was $9,022,000 ³² versus $7,808,000 ³³. By geographic region, Americas net revenue was $84,296,000 ³⁴ in fiscal 2026 versus $70,126,000 ³⁵ in fiscal 2025, EMEA net revenue was $21,555,000 ³⁶ versus $30,898,000 ³⁷, and APJ net revenue was $15,048,000 ³⁸ versus $21,899,000 ³⁹.

The company depends on a relatively small number of distributors and end-user customers for a large portion of revenue, with sales through the top five distributors accounting for approximately 32% of net revenue in fiscal 2026 ¹, and a decline in sales to these major customers would materially adversely affect the business. The company relies on third-party contract manufacturers in Asia for substantially all of its manufacturing, and some integrated circuits are only available from a single source, with the market currently experiencing memory supply shortages that have led to higher costs and constrained availability ². The company's business related to government contracts is subject to risks including the uncertainty of U.S. government program funding, which is dependent on continued congressional appropriations and an annual budgeting process, and the U.S. government can terminate contracts without prior notice at its convenience ³. The company maintains cash deposits in excess of federally insured limits, and its loan agreement with Silicon Valley Bank requires it to hold 75% of its US cash balances at SVB, exposing it to risk if that bank were to fail ⁴. The company has a history of losses and there can be no assurance that it will generate net profits in future periods ⁵.