Lantronix (LTRX) Q2 2025 earnings summary

Executive summary

• Q2 FY2025 revenue was $31.2M, with non-GAAP EPS of $0.04 and GAAP EPS of ($0.06), both within guidance; revenue declined 15.9–16% YoY due to lower volumes across key verticals and regions.

• NetComm/Netcomm acquisition completed for $6.5M, expanding Connect business and enterprise IoT offerings with 4G/5G gateways; integration progressing well.

• Cost reduction initiatives substantially completed, consolidating operations into four Centers of Excellence and reducing FY2025 Opex by $4.5M.

• Strategic focus on edge AI, with collaboration with Qualcomm and new design wins in banking, manufacturing, agriculture, datacenter, drone, and critical infrastructure markets.

• Workforce reduction announced in January 2025, with $1.3M–$1.5M in severance charges expected in Q3 FY2025.

Financial highlights

• Q2 FY2025 revenue: $31.2M (down 15.9–16% YoY); GAAP net loss: $2.4M ($0.06/share); non-GAAP net income: $1.8M ($0.04/share).

• GAAP gross margin improved to 42.6% (from 40.6% YoY); non-GAAP gross margin at 43.2% (from 41.6% YoY).

• Operating expenses reduced to $15.4M GAAP, mainly from lower SG&A and share-based compensation.

• Cash and equivalents at quarter end: $19.2M, after $6.5M Netcomm acquisition; positive operating cash flow of $3M for six months ended Dec 31, 2024.

• Americas revenue: $16.4M (down 20.5% YoY); EMEA: $9.0M (down 29.9% YoY); APJ: $5.7M (up 61.6% YoY).

Outlook and guidance

• Q3 FY2025 revenue expected between $27M–$31M, with non-GAAP EPS of $0.01–$0.05.

• Sequential revenue decline anticipated due to slower rollout by a large smart grid customer in Europe, partially offset by organic growth in Gateways, Routers, and Out-of-Band Management.

• Gross margin expected to be slightly higher in Q3, with longer-term improvement toward 45%.

• Multi-year growth rate targeted at 12%, with potential acceleration as edge AI ramps.

• Netcomm acquisition expected to add $300K–$400K in quarterly costs going forward.