Lantronix (LTRX) The 38th Annual Roth Conference summary

Strategic transformation and market positioning

• Transitioned from a hardware-focused company to a systems and solutions provider, emphasizing Edge Intelligence and Compute & Connect platforms.

• Entered high-growth markets such as aerospace and defense, particularly in drones, and expanded into critical infrastructure monitoring and networking.

• Achieved stronger financials with net cash on the balance sheet and consistent quarterly cash generation and non-GAAP EPS.

• Focused on enabling Edge AI and Physical AI, positioning as a first mover in U.S. Group 1 and Group 2 drones, and building a defensible ecosystem with partners like Teledyne FLIR.

• Broadened silicon supplier base by adding MediaTek to target industrial and commercial applications, complementing existing Qualcomm-based solutions.

Growth drivers and revenue outlook

• Drone business grew from near zero to $8–$12 million in fiscal 2025, with expectations to double to $20+ million in fiscal 2026 and reach $27 million by mid-fiscal 2026.

• Engaged with over 15 drone vendors, with significant partnerships such as Unusual Machines and Red Cat Holdings, and positioned to benefit from $1.1 billion in U.S. drone program funding over 24 months.

• Strategy includes serving a broad range of drone market segments, from low-cost attritable drones to high-end models with advanced Edge AI capabilities.

• Robotics identified as the next major vertical, with meaningful revenue expected in fiscal 2028, leveraging early partnerships and MediaTek’s ecosystem.

• ARR (annual recurring revenue) from software and services increased from 5% to 8% of revenue, targeting 10–12% within 24 months, driven by critical infrastructure and device-as-a-service offerings.

Vertical expansion and product innovation

• Expanded into critical infrastructure monitoring, winning a top-three MNO for cell site diagnostics and launching POCs for power banks and other equipment.

• Announced partnership with Vodafone for Kompress.ai, enabling device-as-a-service for compressors, with initial POCs in the Midwest and plans to expand into Europe.

• Pursuing opportunities in smart cities and security, aiming to upgrade millions of existing cameras with edge analytics and AI.

• Product strategy includes modular, scalable solutions for diverse customer needs, supporting both hardware and software integration.

• Focused on land-and-expand approach in both hardware and recurring software, with a strong emphasis on customer stickiness and ecosystem development.