Breaking Down Lantronix, Inc. (LTRX) Financial Health: Key Insights for Investors

You are looking at Lantronix, Inc. (LTRX) and seeing a mixed signal: a company executing a strategic pivot but still navigating a tough financial transition, so figuring out the real value requires a deeper look than just the headline numbers. Honestly, the full fiscal year 2025 results show a company in flux, with net revenue landing at $122.9 million and non-GAAP earnings per share (EPS) at a positive $0.14, which is a testament to their focus on non-GAAP profitability. But to be fair, the GAAP net loss of ($0.29) per share for the year and the year-over-year revenue drop in Q4-even excluding the Gridspertise impact-tell you there's still work to do on the core business model's operating leverage. The good news is they generated $7.3 million in operating cash flow for the year and secured major, multi-year wins in high-margin Edge AI and defense markets, like powering U.S. Army-approved Black Widow™ drones, which is defintely where the future growth lies. This is a classic case of a turnaround story where the strategic wins haven't fully translated into a clean income statement yet, and you need to know exactly how those new contracts will impact the $20.1 million in cash on the balance sheet and the path to consistent GAAP profitability.

Revenue Analysis

You need to know where the money is actually coming from at Lantronix, Inc. (LTRX), especially when the top line is contracting. The direct takeaway here is that while the company's total revenue for the fiscal year 2025 (FY2025) was $122.9 million, the figure represents a significant year-over-year drop of approximately -23.33% from FY2024. This decline is largely due to a sharp contraction in the higher-volume, lower-margin IoT System Solutions segment as the company executes a strategic pivot.

Honestly, a nearly 25% revenue drop is a red flag, but you have to look deeper at the segment mix to see the strategic transformation at play. The company is actively shifting its focus toward higher-value, Edge AI (Artificial Intelligence) solutions and away from some legacy, lower-margin business lines, like the impact from the Gridspertise segment being excluded from core growth.

Breakdown of Primary Revenue Streams (FY2025)

Lantronix, Inc.'s revenue is split across three primary product lines: Embedded IoT Solutions, IoT System Solutions, and Software & Services. The vast majority still comes from the two hardware-focused IoT segments, but the small, high-margin Software & Services segment is critical for long-term valuation.

Here's the quick math on the $122.923 million in total net revenue for the year ended June 30, 2025:

• IoT System Solutions: This segment contributed $68.735 million, making up the largest portion at about 55.9% of total revenue. This includes their high-volume telematics and system-level products.
• Embedded IoT Solutions: This segment brought in $46.380 million, accounting for roughly 37.7% of the total. This is where their modules and System-on-Modules (SoMs) that enable device connectivity sit.
• Software & Services: This is the smallest, but most strategic, segment at $7.808 million, or approximately 6.4% of revenue. This includes their Percepxion platform and other recurring revenue streams.

Year-over-Year Revenue Shift

The -23.33% year-over-year decline is jarring, but it's a story of intentional streamlining and a challenging market. What this estimate hides is the dramatic contraction in the IoT System Solutions segment, which fell from $104.450 million in FY2024 to $68.735 million in FY2025. That's a huge drop, but it's partially offset by the Embedded IoT Solutions segment holding relatively steady ($46.953 million in FY2024 to $46.380 million in FY2025).

The company is actively repositioning to capture multi-year, high-margin opportunities in areas like drones and commercial Edge AI. This strategic shift is why they are focused on key vertical markets like Enterprise, Smart Cities, and Transportation. They are also integrating the recently acquired IoT assets from Netcomm, which should start to contribute more meaningfully to future revenue and margin stability, especially in the Edge IoT growth vector.

To understand the long-term vision behind this transformation, you should review their Mission Statement, Vision, & Core Values of Lantronix, Inc. (LTRX).

The key action item for you is to monitor the Software & Services segment's growth in the coming quarters; it's the bellwether for their high-margin, recurring revenue transition. If that percentage starts climbing, the long-term thesis for Lantronix, Inc. is defintely intact.

Profitability Metrics

When you look at Lantronix, Inc. (LTRX)'s profitability for fiscal year 2025 (FY2025), the picture is one of strategic transition-you see solid gross performance but still a net loss under Generally Accepted Accounting Principles (GAAP). The key takeaway is that the company is profitable on a non-GAAP basis, which is a common but important distinction for growth-focused tech firms, but it's still losing money on the bottom line.

For the full fiscal year 2025, Lantronix, Inc. reported $122.9 million in net revenue. Here's a quick look at the core margins, which tell a story of cost pressures and non-cash expenses:

The GAAP net loss for the full year, roughly ($4.30 million) based on the -3.5% net margin, [cite: 17 in step 1] is a clear signal. While non-GAAP earnings per share (EPS) was positive at $0.14, the GAAP EPS of ($0.29) shows that non-cash items like stock-based compensation and amortization of intangibles are still eating into reported profits. You need to defintely account for that gap.

Operational Efficiency and Margin Trends

The trend in gross margin is where you see the immediate operational risk. Lantronix, Inc.'s GAAP Gross Margin for the fourth quarter of FY2025 was 40.0%, [cite: 3, 5 in step 1] which is a sequential drop from the third quarter's 43.5%. [cite: 5, 6 in step 1] Management pointed to two specific factors for this margin pressure: inventory charges for aged inventory and higher duties and tariffs. [cite: 3 in step 1] That's a classic sign of supply chain and inventory management challenges that need tightening up.

The company is trying to offset this with cost management and a shift in focus. The move toward Edge AI and Network Infrastructure is a play for higher-margin opportunities, and they are actively streamlining operations. But until those higher-margin products fully kick in, the gross margin is under pressure. The positive operating cash flow of $7.3 million for the full fiscal year 2025 is a good sign that the core business is generating cash, even if net income is negative. [cite: 2 in step 1]

Industry Comparison: A Mixed Bag

When you stack Lantronix, Inc. against the broader Communication Equipment industry, the results are mixed, but generally favorable on the gross side. The average Gross Profit Margin for the Communication Equipment industry is around 41.1%. [cite: 1 in step 2] Lantronix, Inc.'s Q4 GAAP Gross Margin of 40.0% [cite: 3, 5 in step 1] is right in line with the industry average, which is a good anchor for the core business model.

However, the real difference is at the bottom line:

• Gross Margin: Lantronix, Inc. at 40.0% (Q4) is nearly on par with the industry average of 41.1%. [cite: 1 in step 2, 3, 5 in step 1]
• Net Margin: Lantronix, Inc. at -3.5% [cite: 17 in step 1] is worse than the industry average Net Profit Margin of -1.0%. [cite: 1 in step 2]

The wider negative net margin for Lantronix, Inc. tells you the company's operating expenses (OpEx) and non-cash charges are disproportionately higher than its peers relative to its revenue. This confirms that the path to consistent GAAP profitability hinges on two clear actions: better cost control on the operating expense side, and scaling revenue from the new, higher-margin Edge AI products to absorb those fixed costs. For more on the market's view of this growth strategy, check out Exploring Lantronix, Inc. (LTRX) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

You want to know how Lantronix, Inc. (LTRX) is funding its growth, and the short answer is: mostly through equity, with a very manageable and recently optimized debt load. Their capital structure is defintely conservative, which is typical for a growth-focused technology company that needs flexibility.

As of the end of fiscal year 2025 (June 30, 2025), Lantronix, Inc.'s total outstanding debt was approximately $11.829 million. This is a low figure relative to their total shareholder equity, which stood at roughly $74.45 million. The company has been actively reducing its leverage, paying down approximately $4.5 million of term debt during fiscal 2025 alone.

• Short-Term Debt (Current Portion): $3.070 million
• Long-Term Debt (Non-Current Portion): $8.684 million
• Total Net Carrying Debt: $11.754 million

The Debt-to-Equity (D/E) ratio is the key metric here, showing how much debt a company uses to finance its assets relative to the value of its shareholders' equity (the capital structure). Lantronix, Inc.'s D/E ratio for fiscal year 2025 was a low 0.28. This means for every dollar of shareholder equity, the company uses only 28 cents of debt to finance its operations. That's a strong, low-risk position.

To put that in context, the average D/E ratio for the US Computer Hardware industry is around 0.24, and for Communication Equipment, it's about 0.48. Lantronix, Inc.'s ratio of 0.28 places it squarely in a healthy, slightly-above-average-debt position for a hardware-focused tech firm, but still far below the risk threshold. A low D/E ratio suggests the company relies on internal capital and equity funding, not aggressive borrowing.

The most significant recent activity was the refinancing of their debt. In August 2025, the remaining debt of about $11.8 million was converted from a term loan into an asset-backed revolving line of credit, which provides access to up to $15 million. This move is smart because it reduces interest expense, offers greater flexibility on principal repayments, and extends the maturity date to August 2028. This shift from a fixed term loan to a flexible credit facility shows a clear preference for liquidity and lower cost of capital over simply taking on more debt. They are balancing growth with financial prudence.

If you are interested in who exactly is providing that equity funding, you should read Exploring Lantronix, Inc. (LTRX) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if Lantronix, Inc. (LTRX) has the cash on hand to cover its near-term bills, especially as the company navigates its strategic shift into Edge AI. The quick takeaway is that Lantronix, Inc. has a strong liquidity position, with current assets covering short-term obligations by more than two-and-a-half times. That's defintely a good cushion.

Assessing Lantronix, Inc.'s Liquidity Ratios

Lantronix, Inc.'s liquidity ratios for the fiscal year ended June 30, 2025, signal a healthy ability to meet its current obligations. A Current Ratio above 2.0 is generally considered very solid, and Lantronix, Inc. is comfortably in that territory. The Quick Ratio, which strips out inventory, is also very strong, showing the company's reliance on quick-converting assets like cash and receivables.

Here's the quick math on the key liquidity metrics for FY 2025 (in thousands of US dollars):

• Current Ratio: Current Assets ($77,393) / Current Liabilities ($30,422) = 2.54.
• Quick Ratio (Acid-Test): (Current Assets - Inventories) / Current Liabilities = ($77,393 - $26,371) / $30,422 = 1.68.

A Quick Ratio of 1.68 means that even if Lantronix, Inc. couldn't sell a single item of its $26.4 million in inventory, it could still cover its short-term debts 1.68 times over. This is a clear strength, mitigating the risk from the company's recent net losses.

Working Capital Trends and Cash Flow Overview

While the ratios are strong, the working capital trend shows a slight tightening. Working capital (Current Assets minus Current Liabilities) fell from approximately $58.8 million in FY 2024 to $47.0 million in FY 2025. This decrease of nearly $11.8 million is something to monitor, suggesting a greater use of current assets or a shift in the current liability structure, even as the overall liquidity remains robust.

Looking at the cash flow statement overview, the company's cash and cash equivalents decreased by $6.1 million during FY 2025, moving from $26.2 million to $20.1 million. This net decrease is the result of the three main cash flow activities:

The core challenge is the negative cash flow from operations, which stems from the $11.4 million GAAP Net Loss for FY 2025. This means the day-to-day business is still consuming cash, not generating it. The high liquidity ratios, however, provide a long cash runway (the time until the company runs out of cash) to execute their turnaround strategy. You can learn more about the strategic context in Exploring Lantronix, Inc. (LTRX) Investor Profile: Who's Buying and Why?.

Potential Liquidity Concerns and Strengths

The primary strength is the company's liquidity buffer. The 2.54 Current Ratio is excellent, and the $20.1 million in cash and cash equivalents provides flexibility. The main concern is the sustainability of the cash burn from operations. Management is focused on 'increasing operating leverage,' which is analyst-speak for generating more profit from each dollar of revenue, so the CFO line should be a key focus for investors in the coming quarters. They have the capital to weather this, but the clock is ticking for the operational improvements to take hold.

Valuation Analysis

You're looking at Lantronix, Inc. (LTRX) and asking the crucial question: Is the market pricing this company correctly? The direct takeaway for investors is that, as of November 2025, Lantronix, Inc. appears to be undervalued by a significant margin based on intrinsic value models, but its valuation multiples reflect the company's current unprofitability.

The stock's current price of approximately $4.55 is well below the calculated intrinsic value of $5.96, suggesting an undervaluation of about 24%. This discrepancy is your opportunity, but you must understand the underlying metrics that are keeping the price down. The stock has seen a strong run over the last year, still. It's up roughly +65.69% in the last 52 weeks, but it's trading near the middle of its 52-week range of $1.91 to $5.74.

Decoding Valuation Multiples: P/E, P/B, and EV/EBITDA

When we look at the core valuation ratios, the picture gets complex, which is typical for a growth-focused technology company like Lantronix, Inc. (LTRX). The numbers show a company still in a transitional phase, prioritizing market share over immediate GAAP profitability.

• Price-to-Earnings (P/E) Ratio: The trailing twelve months (TTM) P/E ratio is -15.90. Here's the quick math: A negative P/E means the company is currently unprofitable, so the ratio isn't useful for a direct comparison. Instead, the forward P/E is a more relevant metric, sitting around 20.64, which is what analysts expect the P/E to be once the company returns to profitability.
• Price-to-Book (P/B) Ratio: The P/B ratio is 2.39. This is a reasonable multiple for a technology firm, meaning the stock trades at just over two times the value of its net assets. It suggests investors see value in the company's intellectual property and future growth, not just its physical book value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio is high, sitting at approximately 62.81 as of November 2025, based on an Enterprise Value of $173.48 million and a small TTM EBITDA of $2.76 million. Honestly, this elevated number signals that the market is paying a premium for the company's core operating cash flow (EBITDA), which is very low right now. This is a red flag that you defintely need to track, as it shows high risk if the expected earnings growth doesn't materialize.

Analyst Consensus and Dividend Profile

Wall Street's collective view is cautiously optimistic. The consensus rating from analysts is a Moderate Buy. This isn't a 'Strong Buy,' but it shows that the majority of analysts see more upside than downside from the current price level. The average 12-month price target is $5.50, which implies a forecasted upside of about 20.88% from the recent price.

The company does not currently offer a dividend. Lantronix, Inc.'s dividend yield is 0.00%, as it has not paid a dividend in the past 12 months. This is not a concern for a growth-focused tech stock, as the company is wisely reinvesting all available capital back into the business to fuel future expansion, especially in the Edge AI and IoT segments.

Here is a quick snapshot of the key valuation metrics:

What this estimate hides is the execution risk. The high EV/EBITDA ratio confirms that the stock's valuation is heavily dependent on future earnings growth and a successful pivot to higher-margin solutions. Your next step should be to look deeper into the institutional ownership and market sentiment to understand who is driving the buying and why. You can start by reading Exploring Lantronix, Inc. (LTRX) Investor Profile: Who's Buying and Why?

Risk Factors

You're looking at Lantronix, Inc. (LTRX) and seeing the push into Edge AI and drones, which is exciting, but you must anchor your view in the financial realities and the risks they face. The biggest near-term takeaway is that the strategic transformation in fiscal year 2025 came with a significant revenue hit, and the company is still navigating intense market pressures.

For fiscal 2025, Lantronix reported net revenue of $122.9 million, a sharp drop of 23.3% compared to the prior year, so you need to understand what drove that and what could cause further volatility. While Non-GAAP EPS was positive at $0.14, the GAAP EPS was a loss of ($0.29). That gap shows you the real cost of their strategic shifts and non-cash expenses, which you can't ignore.

External Headwinds: Geopolitics and Market Volatility

The external risks for Lantronix are classic for a global technology company, but they're amplified by their reliance on Asia-based contract manufacturing. Geopolitical risks, including rising international tariffs and trade policy changes, could materially hurt their operations and results. Also, the IoT market is defintely not immune to global economic conditions.

We're seeing two clear financial exposures here:

• Foreign Currency and Interest Rates: Fluctuations in foreign currencies can adversely affect operating results, and high interest rates globally may reduce customer spending on new projects and products.
• Intense Competition: The Edge AI and Industrial IoT (Internet of Things) space is highly competitive, characterized by rapid technological advances. Lantronix has to constantly innovate just to keep pace, which is expensive.

Honestly, every tech company battles competition, but when your revenue is contracting, the pressure to win high-margin deals is immense. This is why their focus on defense/security and Edge AI is a strategic necessity.

Operational and Strategic Risks from Filings

Digging into the fiscal 2025 Form 10-K, a few internal factors stand out that could derail their turnaround. The company has a heavy reliance on a small number of distributors and end-user customers for a large part of its revenue. Losing one of those major accounts would be a serious blow.

Here's the quick math on their recent strategic moves and the associated risks:

The acquisition of Netcomm Wireless Pty Ltd. for over $6.4 million is a strategic bet on Enterprise and Smart City vertical markets, but integrating acquired businesses always carries the risk of unanticipated liabilities or simply not delivering the forecasted revenue. You need to watch for updates on the synergy realization from this deal.

Mitigation and Actionable Insights

Lantronix's management is not blind to these issues; they call fiscal 2025 a year of strategic transformation. Their mitigation strategy is to pivot hard into high-growth, high-margin areas like Edge AI Intelligence and defense. They are strengthening their foundation by aligning resources with high-impact opportunities and advancing platform capabilities, which is a good sign.

They are also managing their balance sheet, making principal payments of $4,512,000 on their term debt and retaining future earnings for business expansion. Still, the core action for you is to monitor their execution on new product launches, like the Qualcomm Dragonwing-based system-on-modules for industrial drone applications, because that's where the future revenue growth has to come from. If you want a deeper dive into who is betting on this pivot, you should check out Exploring Lantronix, Inc. (LTRX) Investor Profile: Who's Buying and Why?

Growth Opportunities

You're looking for the clear path forward for Lantronix, Inc. (LTRX) after a year of strategic refocus, and the takeaway is simple: the future growth is tied directly to their pivot into high-margin Edge Artificial Intelligence (Edge AI) and mission-critical connectivity. Fiscal Year 2025 (FY2025) was a transitional year, but it built the foundation for a projected revenue growth rate of over 10% in the near-term, driven by key product wins in defense and infrastructure.

The company's strategic transformation in FY2025 resulted in a total Net Revenue of $122.9 million and a Non-GAAP Earnings Per Share (EPS) of $0.14. This is a realist's view: the company is investing heavily in future high-growth areas, which is why the GAAP EPS was a loss of ($0.29). You have to look past the current GAAP loss to the strategic investment.

Key Growth Drivers: Edge AI and Defense Wins

Lantronix is defintely repositioning itself as a strategic platform partner, accelerating intelligence at the edge. The biggest near-term opportunities are concentrated in three high-growth vectors: Edge IoT, Network Infrastructure, and Unmanned Systems. This isn't corporate fluff; it's where the concrete contracts are landing.

For example, Lantronix secured a multi-year contract with a Tier-1 U.S. wireless operator to manage nationwide backup power systems using their Edge gateways and the Percepxion platform. That's a clear, high-value, recurring revenue stream. Also, their TAA- and NDAA-compliant products are a major competitive advantage, evidenced by their selection to power Red Cat's Teal Drones for the U.S. Army-approved Black Widow™ program. This compliance is a massive barrier to entry for competitors in the defense space.

• Secured U.S. defense contracts with TAA/NDAA compliance.
• Launched NTC-500 Series 5G routers for industrial IoT.
• Expanded Edge AI portfolio with Open-Q™ 8550CS SoM.
• Integrated NetComm Wireless IoT assets for market expansion.

Financial Projections and Strategic Initiatives

The analyst consensus points to a clear path to profitability in the next fiscal year. While the revenue growth rate is forecast at a solid 10.37% for 2026-2027, the real story is the expected earnings turnaround. Analysts forecast Lantronix's earnings for fiscal year 2026 to be approximately $7.93 million. This suggests that the cost-control measures and the shift toward higher-margin Edge AI solutions are starting to pay off.

Here's the quick math on the 2025 base, showing where the growth starts:

What this estimate hides is the potential for a massive design-win ramp. Initial production for new AI-driven products, like the Teledyne FLIR thermal camera solution, was slated for Q4 FY2025, with the full ramp expected in fiscal year 2026. This is the kind of product cycle that can quickly accelerate revenue beyond the consensus forecast.

Competitive Positioning in Edge Intelligence

Lantronix's competitive advantage lies in its complete Intelligent Edge Computing offering: they provide the compute modules (like the Open-Q SoMs), the connectivity (5G routers, gateways), and the management platform (Percepxion). This full-stack approach makes them a sticky partner for Original Equipment Manufacturers (OEMs) in markets like Smart Cities, Enterprise IT, and Transportation.

They are actively advancing their Edge AI solutions, integrating the acquired NetComm IoT assets to expand their channel network into Europe and Asia Pacific, Australia, and New Zealand. This is smart, low-cost market expansion. The launch of new software platforms like Kompress.ai and EdgeFabric.ai further solidifies their asset monitoring strategy, moving them up the value chain toward software-as-a-service (SaaS) revenue, which typically commands higher valuations.

You can read more about the financial details in Breaking Down Lantronix, Inc. (LTRX) Financial Health: Key Insights for Investors.

Finance: Track the Q1 FY2026 results for the new product ramp impact by the end of this week.