Lantronix (LTRX) Q2 2026 earnings summary

Executive summary

• Q2 revenue was $29.8 million with non-GAAP EPS of $0.04 and GAAP net loss of $1.3 million, reflecting strong drone and Embedded IoT growth but a decline in IoT System Solutions.

• Gross margin improved to 43.6% from 42.6% year-over-year, supported by favorable product mix and higher software/services contribution.

• Profitability benefited from operating leverage and cost optimizations, with operating expenses down 6% sequentially and 9% year-over-year.

• Edge AI strategy and new partnerships are driving customer adoption and expansion into public safety and threat detection.

• Drone business momentum led to an upward revision of fiscal 2026 drone revenue guidance to $8M-$12M.

Financial highlights

• Q2 revenue: $29.8 million; non-GAAP net income: $1.6 million ($0.04/share); GAAP net loss: $1.3 million ($0.03/share).

• GAAP gross margin: 43.6% (up from 42.6% YoY); non-GAAP gross margin: 44% (up from 43.2% YoY).

• Cash and equivalents: $23 million at quarter end, up $2.9 million from June 30, 2025.

• Operating expenses for Q2: $14.0 million, down from $15.4 million year-over-year.

• Working capital improved to $49.5 million from $47.0 million at fiscal year-end.

Outlook and guidance

• Q3 revenue expected between $28.5 million and $32.5 million; non-GAAP EPS guidance: $0.03-$0.06.

• Fiscal 2026 drone revenue guidance raised to $8M-$12M (from $5M-$10M); drones expected to contribute 15%-20% of total revenue in fiscal 2027.

• Management expects gross margin to fluctuate due to product mix, pricing, and manufacturing costs.

• Current liquidity, cash flow from operations, and available credit are expected to be sufficient for at least the next 12 months.

• Continued growth anticipated in drones and recurring software/services revenue.