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1. Company Snapshot

1.a. Company Description

Lantronix, Inc.provides software as a service (SaaS), engineering services, and hardware for edge computing, the Internet of Things (IoT), and remote environment management (REM) in the Americas, Europe, the Middle East, Africa, and the Asia Pacific Japan.The company's IoT products include IoT Connectivity, which provide wired and wireless connections that enhance the value and utility of modern electronic systems and equipment through secure network connectivity, power for IoT end devices through Power over Ethernet, application hosting, protocol conversion, media conversion, secure access for distributed IoT deployments, and various other functions; IoT Compute, such as application processing delivering compute to meet customer needs for data transformation, computer vision, machine learning, augmented/virtual reality, audio/video aggregation and distribution, and custom applications; and IoT Telematics, which provides power efficient products designed to support communications across interfaces and industrial protocols for vehicle, fleet, and asset tracking and management.


It also offers network switches, media converters, power over ethernet, NICS and optical SFPs, system on modules, single board computers, and development kits; and services for mechanical, hardware, and software engineering for camera, audio, and artificial intelligence/machine learning development, as well as xPrintServer.In addition, the company's REM products include out-of-band management, console management, power management, and IP connected keyboard-video-mouse products that offers remote access to IT and networking infrastructure deployed in test labs, data centers, branch offices, remote sites, and server rooms.Further, its SaaS platform enables customers to deploy, monitor, manage, and automate across their global deployments through a single platform login.


Lantronix, Inc.was founded in 1989 and is headquartered in Irvine, California.

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1.b. Last Insights on LTRX

Lantronix's recent performance has been hindered by ongoing issues in its IoT System Solutions and Software & Services segments. Despite its unique portfolio and innovation, the company continues to grapple with challenges in these areas. The recent 27% decline in stock value over the past month has raised concerns among investors.

1.c. Company Highlights

2. Lantronix's Edge AI Strategy Fuels Growth Momentum

Lantronix reported revenue of $29.8 million for the second quarter, driven by strength in embedded compute and solid contributions from network infrastructure switch products. The company's non-GAAP EPS came in at $0.04, beating estimates of $0.03. The revenue growth was supported by the ongoing ramp of its critical infrastructure monitoring deployment with a Tier 1 US Mobile network operator, resulting in higher SaaS-based Annual Recurring Revenue (ARR). Lantronix's gross margin profile is expected to remain near its corporate average in the near term but is likely to increase slightly as software services become a bigger part of its business.

Publication Date: Mar -08

📋 Highlights
  • Revenue & Non-GAAP EPS:: Q2 revenue reached $29.8M, with non-GAAP EPS of $0.04, driven by embedded compute and network infrastructure growth.
  • Drone Revenue Outlook:: Fiscal 2026 drone revenue raised to $8M–$12M, projected to grow to $20M–$30M (15–20% of total revenue) by fiscal 2027.
  • Drone Program Scale:: A multi-quarter 300,000-drones program with 6–8 cameras per drone, targeting FPV drones with ASP increasing beyond $400–$500.
  • Strategic Positioning:: Collaborating with 15+ OEMs, leveraging Qualcomm partnerships, and SWaP advantages to dominate the drone market.
  • Financial Discipline:: Q3 revenue guidance of $28.5M–$32.5M and non-GAAP EPS of $0.03–$0.04, with OpEx capped at $11.8M–$12.3M per quarter.

Drone Dominance Program Gains Traction

Lantronix is making significant strides in its drone dominance program, working with over 15 OEMs and positioning itself to capture a substantial share of the opportunity. The company's unique positioning in the drone stack, long-term relationship with Qualcomm, and ability to meet the requirements of Size, Weight, and Power (SWaP) are key differentiators. As Saleel Awsare, President and Chief Executive Officer, noted, "We're providing a system solution for drones, which is a differentiator in the market." The drone revenue is expected to grow to $20 million to $30 million in fiscal 2027, representing approximately 15% to 20% of total revenue.

Outlook and Valuation

Lantronix expects revenue to be in the range of $28.5 million to $32.5 million in the third quarter ending March 31, 2026, with non-GAAP EPS expected to be in the range of $0.03 to $0.04 per share. The company's disciplined cost structure and expanding recurring revenue position it well to scale efficiently as demand accelerates. With a P/S Ratio of 1.92 and an expected revenue growth rate of 15.9% next year, the stock appears reasonably valued. However, the P/E Ratio of -24.08 and EV/EBITDA of -51.4 indicate that the market is pricing in significant future growth, and any shortfall could lead to a revaluation.

Growth Drivers and M&A Opportunities

The defense budget passing and the FCC banning new Chinese drones are expected to benefit American manufacturers, including Lantronix. The company is also exploring M&A opportunities in subsystems and critical infrastructure monitoring to drive higher gross margins and software revenues. With a strong pipeline of opportunities and a disciplined approach to execution, Lantronix is well-positioned to continue its growth momentum. The company's ROIC of -9.29% and ROE of -12.36% indicate that it still has a way to go in terms of delivering returns on investment, but the growth prospects are promising.

3. NewsRoom

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Lantronix at Roth Conference: CEO Touts Shift to Full-Stack Edge AI, Drone Revenue Set to Double

Mar -26

Source: defenseworld.net

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Lantronix and Unusual Machines Partner to Deliver NDAA-Compliant AI-Autonomous Drone Components for U.S. Defense Programs

Mar -19

Source: globenewswire.com

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Lantronix to Showcase Intelligent PoE Infrastructure and Edge AI Solutions for Autonomous Systems at ISC West 2026

Mar -18

Source: globenewswire.com

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Lantronix to Participate in 38th Annual ROTH Conference

Mar -12

Source: globenewswire.com

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Lantronix Advances Platform Scaling Strategy With MediaTek-Based Embedded Compute Expansion

Mar -05

Source: globenewswire.com

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Brokerages Set Lantronix, Inc. (NASDAQ:LTRX) PT at $7.38

Mar -05

Source: defenseworld.net

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Lantronix Expands European Distribution Footprint Through Strategic Partnership With Melchioni Electronics

Mar -03

Source: globenewswire.com

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Lantronix espande la propria distribuzione in Europa attraverso una partnership strategica con Melchioni Electronics

Mar -03

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (13.69%)

6. Segments

Embedded Internet of Things Solutions

Expected Growth: 13.9%

Lantronix's 13.9% growth in Embedded Internet of Things (IoT) Solutions is driven by increasing demand for industrial automation, remote monitoring, and smart city infrastructure. Growing adoption of IoT devices in industries such as manufacturing, healthcare, and transportation, coupled with the need for secure and reliable connectivity, are key growth drivers.

Internet of Things Solutions

Expected Growth: 14.03%

Lantronix's 14.03% growth in IoT solutions is driven by increasing demand for industrial automation, remote monitoring, and smart city infrastructure. Growing adoption of IoT devices in industries such as manufacturing, healthcare, and transportation, coupled with the need for secure and efficient data management, are key growth catalysts.

Software and Services

Expected Growth: 10.43%

Lantronix's 10.43% growth in Software and Services is driven by increasing demand for IoT-enabled solutions, expansion into new markets, and strategic partnerships. The company's focus on edge computing, artificial intelligence, and cybersecurity also contributes to growth. Additionally, the rising need for remote monitoring and management of devices fuels demand for Lantronix's software and services.

7. Detailed Products

Console Servers

Lantronix's console servers provide secure, remote access to IT equipment, enabling IT professionals to manage and troubleshoot infrastructure from anywhere.

Device Servers

Lantronix's device servers enable network connectivity for serial devices, allowing users to access and manage devices remotely.

IoT Gateways

Lantronix's IoT gateways provide secure, reliable connectivity for IoT devices, enabling data collection, processing, and analysis.

Out-of-Band Management

Lantronix's out-of-band management solutions provide secure, remote access to IT equipment, enabling IT professionals to troubleshoot and manage infrastructure even when the network is down.

Switches

Lantronix's switches provide reliable, high-performance networking for industrial, medical, and other applications.

Software

Lantronix's software solutions provide remote access, management, and analytics for IoT devices and IT infrastructure.

8. Lantronix, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Lantronix, Inc. faces moderate threat from substitutes due to the presence of alternative products and services in the IoT and networking markets.

Bargaining Power Of Customers

Lantronix, Inc. has a diverse customer base, which reduces the bargaining power of individual customers, giving the company an upper hand in negotiations.

Bargaining Power Of Suppliers

Lantronix, Inc. relies on a few key suppliers for components and materials, giving them some bargaining power, but the company's size and reputation mitigate this risk.

Threat Of New Entrants

The IoT and networking markets are attractive to new entrants, and Lantronix, Inc. faces a high threat from new competitors that could disrupt the market with innovative products and services.

Intensity Of Rivalry

The IoT and networking markets are highly competitive, with many established players and new entrants vying for market share, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 19.65%
Debt Cost 7.18%
Equity Weight 80.35%
Equity Cost 14.22%
WACC 12.83%
Leverage 24.45%

11. Quality Control: Lantronix, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Franklin Wireless

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Value: 6.7

Growth: 3.8

Quality: 5.2

Yield: 1.0

Momentum: 8.5

Volatility: 5.3

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Lantronix

A-Score: 4.4/10

Value: 6.2

Growth: 4.9

Quality: 4.3

Yield: 0.0

Momentum: 9.0

Volatility: 2.0

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Growth: 4.1

Quality: 2.2

Yield: 0.0

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Value: 1.1

Growth: 3.9

Quality: 4.8

Yield: 0.0

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A-Score: 3.1/10

Value: 8.7

Growth: 2.3

Quality: 4.5

Yield: 0.0

Momentum: 0.5

Volatility: 2.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

5.99$

Current Price

5.99$

Potential

-0.00%

Expected Cash-Flows