Open the filing on EDGARLantronix Reports Fiscal First-Quarter 2027 Financial Results
- Net Revenue Increased over 8% Year-over-Year to $32.4 Million
- Embedded IoT Solutions Revenue Increased 37% Year-over-Yea
- GAAP Net Loss Improved to $463 Thousand, or ($0.01) per Share
- Non-GAAP Net Income Increased 50% to $2.2 Million, or $0.05 per Share
- Company Reaffirms Expectation for Double-Digit Revenue Growth in Fiscal 2027
IRVINE, Calif., Nov. 9, 2026 - Lantronix Inc. (Nasdaq: LTRX), a global provider of Edge Intelligence and Industrial IoT solutions that power NDAA-compliant unmanned systems, critical infrastructure and resilient enterprise networks, today reported results for the fiscal first quarter ended September 30, 2026.
Management Commentary
“We entered fiscal 2027 from a position of strength, delivering 8% year-over-year revenue growth, non-GAAP gross margins above 45%, and a 50% increase in year-over-year non-GAAP net income,” said Saleel Awsare, president and CEO of Lantronix. “Our Embedded IoT Solutions revenue grew 37% year-over-year, driven by continued momentum across unmanned systems. Importantly, we're translating that success into opportunities beyond drones and defense. Recent design wins in advanced surveying and smart security monitoring for jobsite safety demonstrate how we're leveraging our edge computing and computer vision expertise across a broader range of commercial and industrial applications.
“The strategic tuck-in acquisition of Nero Global Tracking has expanded our pro forma software and services mix above 10% of total revenue, supporting our strategy of building a more predictable, higher-margin revenue base. We are also seeing growing interest in our out-of-band management solutions from customers deploying AI and data center infrastructure. Together, these developments reinforce our confidence in delivering double-digit revenue growth in fiscal 2027.”
Q1 FY2027 Financial Results
- Net Revenue: $32.4 million
- GAAP Net Loss: $463 thousand, or ($0.01) per share
- Non-GAAP Net Income: $2.2 million, or $0.05 per share
Q1 FY2027 and Recent Business Highlights
- Added the Open-Q 8550CS SOM to the U.S. Department of War’s Blue UAS Framework, giving drone OEMs a pre-vetted compute module that can reduce component-level qualification effort for defense and government programs.
- Introduced Spotter at AUSA 2026, a compact robotics platform with onboard AI, vision, sensing and flight control for drones and mobile robots, expected to be available in the fourth quarter of calendar 2026.
- Secured two design wins for Lantronix’s edge compute solutions in commercial and industrial computer vision. Trimble Inc. selected Lantronix to power its advanced surveying equipment, which incorporates multiple cameras and laser technology, while a leading provider of jobsite security solutions chose Lantronix to enable smart security cameras with 360-degree jobsite intelligence.
- Launched MediaTek-based system-on-modules, making Lantronix the only North American supplier of MediaTek-based SOMs. The NDAA/TAA-compliant modules deliver 10 TOPS of AI performance at less than 4 watts for high-volume commercial drone, industrial and robotics programs.
- Welcomed Jason Lamb as an independent director. Lamb is a former U.S. Navy SEAL officer and defense technology executive with more than 20 years of experience across special operations, technology development and investing, providing valuable insight as the Company scales in unmanned systems.
- Launched the FOX5 Edge-to-Cloud intelligent serial gateway, which pairs with Percepxion™ to give critical asset operators real-time monitoring and predictive maintenance without a truck roll.
Q2 FY2027 Financial Outlook
- Net Revenue: $32.5 million to $34.5 million
- Non-GAAP Net Income: $1.8 million to $2.7 million, or $0.04 to $0.06 per share
Conference Call and Webcast
Management will host an investor conference call and audio webcast today (Monday, Nov. 9, 2026) at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss its results for the fiscal first quarter of 2027. To access the live conference call, investors should dial 1-844-802-2442 (U.S./Canada) or 1-412-317-5135 (international) and indicate they are participating in the Lantronix fiscal 2027 first-quarter call. The webcast will also be available simultaneously via the investor relations section of the Company’s website.
Investors can access a conference call replay starting at approximately 4:00 p.m. Pacific Time on Nov. 9, 2026, on the Lantronix website. A telephonic replay will also be available through Nov. 16, 2026, by dialing 1-855-669-9658 (U.S./Canada) or 1-412-317-0088 (international) and entering passcode 7475247.
About Lantronix
Lantronix Inc. (NASDAQ: LTRX) is a global leader in Edge Intelligence and Industrial IoT solutions that power NDAA-compliant unmanned systems, critical infrastructure and resilient enterprise networks. It delivers intelligent computing, secure connectivity and remote management for mission-critical applications enabling customers to optimize operations, enhance security and accelerate digital transformation. Its comprehensive portfolio of hardware, software and services powers applications ranging from mission-critical autonomous platforms and edge analytics for critical infrastructure to intelligent surveillance and secure network management. By bringing intelligence to the network edge, Lantronix helps organizations achieve efficiency, security and a competitive edge in today’s AI-driven world. For more information, visit the Lantronix website.
Discussion of Non-GAAP Financial Measures
Lantronix believes that the presentation of non-GAAP financial information, when presented in conjunction with the corresponding GAAP measures, provides important supplemental information to management and investors regarding financial and business trends relating to the company’s financial condition and results of operations. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends to gain an understanding of our comparative operating performance. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations of the non-GAAP financial measures to the financial measures calculated in accordance with GAAP should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Non-GAAP net income (loss) is calculated by adjusting GAAP net income (loss) to exclude (i) share-based compensation and the employer portion of withholding taxes on stock grants, (ii) depreciation and amortization, (iii) interest income (expense), (iv) other income (expense), (v) income tax provision (benefit), (vi) restructuring, severance and related charges, (vii) acquisition related costs, (viii) impairment of long-lived assets, (ix) amortization of purchased intangibles, (x) amortization of manufacturing profit in acquired inventory, (xi) fair value remeasurement of earnout consideration, and (xii) loss on extinguishment of debt.
Non-GAAP EPS is calculated by dividing non-GAAP net income by non-GAAP weighted-average shares outstanding (diluted). For purposes of calculating non-GAAP EPS, the calculation of GAAP weighted-average shares outstanding (diluted) is adjusted to exclude share-based compensation, which, for GAAP purposes, is treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.
Guidance for non-GAAP net income is provided without a reconciliation to the most directly comparable GAAP measure due to the inherent difficulty of forecasting the timing or amount of certain items excluded from the forward-looking non-GAAP measure. These items are not reasonably estimable on a forward-looking basis without unreasonable effort and could have a material impact on GAAP net income (loss).
Forward-Looking Statements
Forward-looking statements notice
This news release contains forward-looking statements, including statements concerning our expectations for revenue and earnings for the second quarter of fiscal 2027 and revenue growth for fiscal 2027; our positioning to continue leveraging our edge computing and computer vision expertise across a broader range of commercial and industrial applications and attracting interest in our out-of-band management solutions; the expected benefits of our Nero Global Tracking acquisition; and our expectations regarding the future benefits of our recent collaborations, partnerships and customer and design wins. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. We have based our forward-looking statements on our current expectations and projections about trends affecting our business and industry, and other future events. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statements are subject to substantial risks and uncertainties that could cause our results or experiences, or future business, financial condition, results of operations or performance, to differ materially from our historical results or those expressed or implied in any forward-looking statement contained in this news release. Other factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to: the effects of negative or worsening regional and worldwide economic conditions or market instability on our business, including effects on purchasing decisions by our customers; our ability to mitigate any disruption in our and our suppliers’ and vendors’ supply chains due to changes in U.S. trade policy, including recently increased or future tariffs, a pandemic or similar outbreak, wars and recent conflicts in Europe, Asia and the Middle East, hostilities in the Red Sea, or other causes; our ability to successfully convert our backlog and current demand; the impact of a pandemic or similar outbreak on our business, employees, customers, supply and distribution chains and the global economy; our ability to successfully implement our acquisition strategy or integrate acquired companies; uncertainty as to the future profitability of acquired businesses, and delays in the realization of, or the failure to realize, any accretion from acquisition transactions; acquiring, managing and integrating new operations, businesses or assets, and the associated diversion of management attention or other related costs or difficulties; our ability to continue to generate revenue from products sold into mature markets; our ability to develop, market, and sell new products; our ability to succeed with our new software offerings; our use of AI may result in reputational, competitive or financial harm and liability; fluctuations in our revenue due to the project-based timing of orders from certain customers; unpredictable timing of our revenues due to the lengthy sales cycle for our products and services and potential delays in customer completion of projects; our ability to accurately forecast future demand for our products; delays in qualifying revisions of existing products; constraints or delays in the supply of, or quality control issues with, certain materials or components; difficulties associated with the delivery, quality or cost of our products from our contract manufacturers or suppliers; risks related to the outsourcing of manufacturing and international operations; difficulties associated with our distributors or resellers; intense competition in our industry and resultant downward price pressure; rises in inventory levels and inventory obsolescence; undetected software or hardware errors or defects in our products; cybersecurity risks; our ability to obtain appropriate industry certifications or approvals from governmental regulatory bodies; changes in applicable U.S. and foreign government laws, regulations, and tariffs; potentially shifting legislative, regulatory, and oversight priorities of the U.S. Congress following the November 3, 2026 midterm elections; our ability to protect patents and other proprietary rights and avoid infringement of others’ proprietary technology rights; issues relating to the stability of our financial and banking institutions and relationships; the level of our indebtedness, our ability to service our indebtedness and the restrictions in our debt agreements; the impact of rising interest rates; our ability to attract and retain qualified management; and any additional factors included in our Report on Form 10-K for the fiscal year ended June 30, 2026, filed with the Securities and Exchange Commission (the “SEC”) on Aug. 27, 2026, including in the section entitled “Risk Factors” in Item 1A of Part I of that report; in our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2026, expected to be filed with the SEC on Nov. 9, 2026, including in the section entitled “Risk Factors” in Item 1A of Part II of such report; and in our other public filings with the SEC. In addition, actual results may differ as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business. For these reasons, investors are cautioned not to place undue reliance on any forward-looking statements. The forward-looking statements we make speak only as of the date on which they are made. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations, except as required by applicable law or the rules of the Nasdaq Stock Market LLC. If we do update or correct any forward-looking statements, investors should not conclude that we will make additional updates or corrections.
©2026 Lantronix, Inc. All rights reserved. Lantronix is a registered trademark. Other trademarks and trade names are those of their respective owners.
Lantronix Investor Contact:
Matt Glover and Greg Robles
Gateway Group, Inc.
investors@lantronix.com
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| September 30, | June 30, |
|---|
| 2026 | 2026 |
|---|
| Assets | | |
| Current assets: | | |
| Cash and cash equivalents | $37,620 | $60,466 |
| Marketable securities | 13,836 | - |
| Accounts receivable, net | 28,894 | 25,317 |
| Inventories, net | 31,161 | 25,804 |
| Contract manufacturers' receivables | 4,738 | 3,500 |
| Prepaid expenses and other current assets | 3,218 | 2,347 |
| Total current assets | 119,467 | 117,434 |
| Property and equipment, net | 2,197 | 1,453 |
| Goodwill | 34,383 | 31,089 |
| Intangible assets, net | 8,684 | 2,177 |
| Lease right-of-use assets | 7,192 | 7,428 |
| Other assets | 720 | 755 |
| Total assets | $172,643 | $160,336 |
| Liabilities and stockholders' equity | | |
| Current liabilities: | | |
| Accounts payable | $22,989 | $16,971 |
| Accrued payroll and related expenses | 3,799 | 4,820 |
| Current portion of long-term debt, net | 250 | - |
| Other current liabilities | 12,901 | 10,284 |
| Total current liabilities | 39,939 | 32,075 |
| Long-term debt, net | 4,541 | - |
| Other non-current liabilities | 8,728 | 8,985 |
| Total liabilities | 53,208 | 41,060 |
| Commitments and contingencies | | |
| Stockholders' equity: | | |
| Common stock | 5 | 5 |
| Additional paid-in capital | 358,131 | 357,502 |
| Accumulated deficit | (239,038) | (238,575) |
| Accumulated other comprehensive income | 337 | 344 |
| Total stockholders' equity | 119,435 | 119,276 |
| Total liabilities and stockholders' equity | $172,643 | $160,336 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| Three Months Ended |
|---|
| September 30, | June 30, | September 30, |
|---|
| 2026 | 2026 | 2025 |
|---|
| Net revenue | $32,369 | $31,154 | $29,794 |
| Cost of revenue | 17,856 | 17,549 | 16,448 |
| Gross profit | 14,513 | 13,605 | 13,346 |
| Operating expenses: | | | |
| Selling, general and administrative | 10,010 | 9,334 | 9,542 |
| Research and development | 4,336 | 4,187 | 4,598 |
| Restructuring, severance and related charges | 89 | 142 | 93 |
| Acquisition-related costs | 245 | 184 | 43 |
| Amortization of intangible assets | 391 | 150 | 597 |
| Total operating expenses | 15,071 | 13,997 | 14,873 |
| Loss from operations | (558) | (392) | (1,527) |
| Interest income (expense), net | 340 | 159 | (15) |
| Other income (expense), net | (51) | (76) | 183 |
| Loss before income taxes | (269) | (309) | (1,359) |
| Provision (benefit) for income taxes | 194 | (40) | 42 |
| Net loss | $(463) | $(269) | $(1,401) |
| Net loss per share - basic and diluted | $(0.01) | $(0.01) | $(0.04) |
| Weighted-average common shares - basic and diluted | 46,743 | 42,186 | 39,188 |
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
(In thousands, except per share data)
| Three Months Ended |
|---|
| September 30, | June 30, | September 30, |
|---|
| 2026 | 2026 | 2025 |
|---|
| GAAP net loss | $(463) | $(269) | $(1,401) |
| Non-GAAP adjustments: | | | |
| Cost of revenue: | | | |
| Share-based compensation | 31 | 41 | 35 |
| Employer portion of withholding taxes on stock grants | 1 | 2 | 2 |
| Amortization of manufacturing profit in acquired inventory | 12 | - | 18 |
| Depreciation and amortization | 97 | 102 | 106 |
| Total adjustments to cost of revenue | 141 | 145 | 161 |
| Selling, general and administrative: | | | |
| Share-based compensation | 1,372 | 1,067 | 1,454 |
| Employer portion of withholding taxes on stock grants | 55 | 36 | 27 |
| Depreciation and amortization | 230 | 211 | 290 |
| Total adjustments to selling, general and administrative | 1,657 | 1,314 | 1,771 |
| Research and development: | | | |
| Share-based compensation | 205 | 208 | 284 |
| Employer portion of withholding taxes on stock grants | 9 | 7 | 6 |
| Depreciation and amortization | 41 | 41 | 50 |
| Total adjustments to research and development | 255 | 256 | 340 |
| Restructuring, severance and related charges | 89 | 142 | 93 |
| Acquisition related costs | 245 | 184 | 43 |
| Amortization of purchased intangible assets | 391 | 150 | 597 |
| Total non-GAAP adjustments to operating expenses | 2,637 | 2,046 | 2,844 |
| Interest (income) expense, net | (340) | (159) | 15 |
| Other expense (income), net | 51 | 76 | (183) |
| Provision (benefit) for income taxes | 194 | (40) | 42 |
| Total non-GAAP adjustments | 2,683 | 2,068 | 2,879 |
| Non-GAAP net income | $2,220 | $1,799 | $1,478 |
| Non-GAAP net income per share - diluted | $0.05 | $0.04 | $0.04 |
| Denominator for GAAP net income (loss) per share - diluted | 46,743 | 42,186 | 39,188 |
| Non-GAAP adjustment | 1,617 | 2,040 | 2,214 |
| Denominator for non-GAAP net income per share - diluted | 48,360 | 44,226 | 41,402 |
| GAAP cost of revenue | $17,856 | $17,549 | $16,448 |
| Non-GAAP adjustments to cost of revenue | (141) | (145) | (161) |
| Non-GAAP cost of revenue | 17,715 | 17,404 | 16,287 |
| Non-GAAP gross profit | $14,654 | $13,750 | $13,507 |
| Non-GAAP gross margin | 45.3% | 44.1% | 45.3% |
UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION
(In thousands)
| Three Months Ended |
|---|
| September 30, 2026 | June 30, 2026 | September 30, 2025 |
|---|
| Embedded IoT Solutions | $15,680 | $13,659 | $11,467 |
| IoT System Solutions | 14,074 | 15,301 | 16,459 |
| Software and Services | 2,615 | 2,194 | 1,868 |
| $32,369 | $31,154 | $29,794 |
| Three Months Ended |
|---|
| September 30, 2026 | June 30, 2026 | September 30, 2025 |
|---|
| Americas | $23,302 | $22,896 | $20,651 |
| EMEA | 5,602 | 5,155 | 5,087 |
| Asia Pacific Japan | 3,465 | 3,103 | 4,056 |
| $32,369 | $31,154 | $29,794 |
Open the filing on EDGARIntro: Brent Stringham
Good afternoon everyone and thank you for joining our fiscal first quarter earnings call. Joining me today is our President and Chief Executive Officer Saleel Awsare.
A “live” and archived webcast of today’s call will be available on the Company’s website. In addition, you can find the call-in details for the phone replay in today’s earnings release.
During this call, we may make forward-looking statements which involve risks and uncertainties that could cause our results to differ materially from current expectations.
We encourage you to review the cautionary statements and risk factors contained in today’s earnings release, which was furnished to the SEC and is available on our website, and other SEC filings such as our 10-K and 10-Qs. Lantronix undertakes no obligation to revise or update publicly any forward-looking statements to reflect future events or circumstances.
Additionally, during the call, we will discuss non-GAAP financial measures. Today's earnings release, which is posted in the Investor Relations section of our website, describes the differences between our non-GAAP and GAAP reporting and presents reconciliations for the non-GAAP financial measures that we use.
With that, I will now turn the call over to Saleel.
Saleel Awsare (Section 1):
Thanks, Brent, and thank you, everyone, for joining today’s call.
We entered fiscal 2027 from a position of strength, and our first-quarter results reflect that momentum. Revenue grew over 8% year-over-year to $32.4 million, non-GAAP gross margin expanded above 45%, and non-GAAP net income increased 50% to $2.2 million, or $0.05 per share, reflecting continued solid execution across the business.
Embedded IoT Solutions revenue grew 37% year-over-year in the first quarter, driven by continued strength in unmanned systems, a high-growth market where our edge compute platforms are gaining traction. We remain on track for unmanned systems to comprise approximately 15% to 20% of total revenue this fiscal year.
Our confidence is supported by new design wins across a growing number of applications. As an enabling technology provider, we're positioned to participate in multiple customer programs and platforms rather than relying on the success of any single deployment.
Combined with our status as a Western supplier and our NDAA- and TAA-compliant solutions, this positions Lantronix as a long-term platform partner.
Reinforcing that platform position, we added our Open-Q 8550CS SOM to the Blue UAS Framework last month, which identifies vetted components for use in unmanned aircraft systems. This is a key competitive differentiator and gives customers an independently vetted compute platform that simplifies qualification and accelerates deployment.
For current and prospective customers, this reduces qualification complexity and program risk while strengthening our position as a trusted technology partner. It also lays the foundation for bringing additional Blue UAS-ready platforms to market.
Building on that momentum, we recently launched Spotter at AUSA in Washington, D.C., where we also met with existing and prospective partners. Spotter brings edge AI compute, vision processing, sensor fusion and vehicle flight control onto one low-power board. By consolidating functions that OEMs might otherwise source and integrate separately, it can simplify system development for autonomous drones and robotics.
Instead of piecing together separate flight controllers, vision boards, and compute units, OEMs get an all-in-one, off-the-shelf reference and deployment platform that supports open-source robotics stacks. Importantly, the underlying technology also positions us to address unmanned systems beyond our current drone class across air, sea and ground.
Beyond the hardware, our deep camera and software integration expertise gives us another key competitive advantage. Advanced computer vision and autonomous platforms require more than processing power. Customers need cameras and sensors to work together reliably - not just connect to a processor. We bring years of experience tuning cameras, fusing sensors, and integrating complex software for demanding imaging and vision applications. Our work across the software stack allows us to integrate a range of customer-selected sensors.
This creates opportunities for high-margin engineering services and software revenue as their programs evolve. When a customer designs a Lantronix SOM into their platform and integrates our custom firmware and software, we become deeply embedded in their product architecture, supporting longer-term customer relationships and next-generation platforms across both commercial and defense markets.
We're also seeing new opportunities in counter-UAS applications, where operators are increasingly repurposing low-cost First-Person View, or FPV, drones to detect and intercept hostile drones. These missions require onboard compute to process sensor data and support real-time, edge-based decision-making, including in contested environments, directly supporting our NDAA-compliant platforms.
We’re also seeing increasing traction in unmanned systems outside North America, with activity progressing across Eastern Europe, Australia, and Japan.
Importantly, the opportunity for our technology extends well beyond drones and defense. We're increasingly leveraging these same capabilities across commercial and industrial computer vision applications, and we're seeing that traction translate into new design wins.
Two recent wins for our edge compute solutions highlight this expanding opportunity. The first is with Trimble, where we power their advanced surveying equipment that incorporates multiple cameras and laser technology. The second is with a leading provider of jobsite security solutions, where our solution enables smart security cameras providing 360-degree jobsite intelligence.
Both opportunities highlight the importance of delivering high-performance computing in compact form factors. Our technology helps customers extend battery life and reduce operating costs while directly supporting jobsite security and safety.
In addition, we’re providing higher-margin design services for this engagement, driven by our deep knowledge and expertise in computer vision, expanding the opportunity beyond the hardware.
Together, these wins show how we're translating our unmanned-systems success into opportunities across adjacent markets. The same computing capabilities driving our success in unmanned systems are increasingly relevant across industrial, construction, and other edge AI applications, expanding our addressable market and creating additional pathways for growth.
Turning to IoT System Solutions, we’re expecting sequential revenue growth driven by strength in our networking products, supported by improving order trends.
In out-of-band management, we're building on our SambaNova win and seeing growing interest from other customers deploying AI infrastructure. As these deployments expand, reliable remote access to critical networking and compute equipment is becoming increasingly important, particularly when primary networks are unavailable. We believe this is a broader opportunity for our out-of-band solutions as customers manage more complex AI and data center environments while reducing costly on-site service visits.
Turning to critical infrastructure and software and services, we closed the Nero Global acquisition during the first quarter.
Importantly, Nero's high-margin recurring revenue has increased our software and services mix to more than 10% of total company revenue on a pro forma basis, further advancing our strategy of building a more predictable, higher-margin revenue base.
Finally, before turning the call over to Brent, I’d like to highlight a couple of additional steps we're taking to strengthen our position across key markets, including adding relevant expertise to our Board and expanding our engagement with industry and government stakeholders.
We recently welcomed Jason Lamb as an independent director. Jason is a former U.S. Navy SEAL officer and defense technology executive, with over 20 years of experience across special operations, technology development, and investing. His perspective at the intersection of national security, autonomous systems and commercialization will be valuable as we scale our unmanned systems business.
Alongside this addition to our Board, we're also taking steps to strengthen our presence in Washington and deepen our engagement with government and industry stakeholders. We've engaged a government advocacy firm to elevate Lantronix's profile and increase awareness of our broader portfolio of differentiated technologies and solutions, including the edge compute and networking products we provide to federal customers.
In summary, I am encouraged by our strong start to fiscal 2027. Our success in unmanned systems continues to validate our technology and execution, while new design wins in computer vision and other intelligent edge applications demonstrate the opportunity to extend that success into additional markets.
And, with software and services above 10% of pro forma revenue, we benefit from more predictable, higher-quality revenue.
With that, I’ll turn the call back to Brent to cover the financial results.
Brent Stringham:
Thanks, Saleel.
As we mentioned, our business is off to a strong start as we begin fiscal 2027. I’ll start by discussing our first-quarter financial results, including key drivers of our performance, and then provide our outlook for the second quarter ending December 31, 2026.
Revenue for the first quarter was $32.4 million, up sequentially and year over year. The growth in our Embedded products was driven by strength in our compute family, with unmanned systems revenue performing strongly this quarter.
IoT Systems Solutions was softer sequentially in the first quarter, although we continue to see encouraging demand indicators in parts of the business, specifically around networking and enterprise AI.
It's also important to put the year-over-year comparison in context. Last year’s results benefited primarily from meaningful shipments to our lead Tier-1 mobile network operator customer. As we’ve previously discussed, those volume shipments were substantially completed several quarters ago.
Turning to our gross margins…
GAAP gross margin for the first quarter was 44.8%, up from 43.7% in the prior quarter and flat with Q1 last year. On a non-GAAP basis, gross margin was 45.3%, up from 44.1% in the prior quarter, and consistent with the year-ago period.
Although our product mix this quarter was more heavily weighted toward our embedded solutions and compute products, gross margins improved sequentially, reflecting higher-margin recurring revenue from Nero, operational initiatives and disciplined cost management. Based on these trends and our forecasted product mix, we expect gross margins to remain at or near recent levels in the near term.
As we discussed in last quarter’s call, we continue to monitor our overall supply environment, where demand from AI infrastructure and data centers is pressuring memory availability and pricing across the embedded-compute market. This remains an industry-wide dynamic. Through our production model and diversified manufacturing partnerships, we believe we are well-positioned with our supply needs over the near and medium term.
Looking at our expenses and profitability…
GAAP operating expenses in the first quarter of fiscal 2027 were $15.1 million, up from $14.0 million in the prior quarter and nearly flat versus the year-ago quarter. On a sequential basis, we saw a predictable uptick in our GAAP Opex driven by (i) stock-based compensation, (ii) amortization of new intangibles and acquisition expenses from the Nero acquisition, as well as (iii) modest increases in certain go-to-market and R&D costs.
GAAP net loss for the first quarter of fiscal 2027 was $463 thousand, or 1 cent per share, compared to GAAP net loss of $1.4 million, or 4 cents per share, in the year-ago quarter. On a non-GAAP basis, net income was $2.2 million, or 5 cents per share, an improvement compared to $1.8 million, or 4 cents per share, in the prior quarter, and $1.5 million, or 4 cents per share, in the year-ago quarter.
Turing to our balance sheet…
In the fourth quarter of fiscal 2026, we raised a little over $44 million in net proceeds through our public and ATM offerings. We continue to focus on efficiently allocating capital in R&D, go-to-market, and strategic M&A in a disciplined and opportunistic manner. Additionally, as of the current quarter-end we have invested a portion of the proceeds into highly liquid, government-backed short-term marketable securities to improve the yield on these assets.
During the current quarter we outlaid approximately $10.3 million for the purchase of Nero Global Tracking, with the $1.3 million remaining purchase price expected to be paid before the end of December 2026. As of September 30, 2026, our total cash and cash equivalents plus short-term marketable securities approximated $51.5 million.
During the current quarter, our net inventories increased from approximately $26 million as of June 30, 2026, to $31 million as of September 30, 2026. This reflects a strategic decision we made in anticipation of extended lead times, to place orders for SOMs and memory, as well as to build buffer stock, positioning us to meet expected demand in upcoming quarters.
Finally, let me provide our outlook for the second quarter of our fiscal 2027, which ends December 31, 2026:
- We expect revenue to be in the range of $32.5 million to $34.5 million, reflecting double-digit year-over-year growth.
- Non-GAAP net income is expected to be in the range of $1.8 million to $2.7 million, or $0.04 to $0.06 cents per share.
With that, I’ll now turn it back to Saleel for closing remarks.
Saleel Awsare (Section 2):
Thanks, Brent.
In closing, we’re off to a solid start to fiscal 2027. We grew revenue over 8% year-over-year and non-GAAP net income increased 50%.
We continue to execute on our strategic transformation, advancing further up the technology stack and combining compute, connectivity, computer vision, Physical AI, and software and services to create differentiated, higher-value solutions at the intelligent edge.
Our success in unmanned systems is increasingly catalyzing expansion into adjacent growth markets, including industrial automation, autonomous robotics, and edge AI applications. We believe our capabilities position us to capture a growing share of these large and expanding opportunities.
We're also strengthening our software and services portfolio, which is helping us build deeper customer relationships, increase recurring revenue, and improve the predictability and quality of our business over time.
While it's still early in the fiscal year, continued execution, the diversity of our business, and a growing pipeline of customer opportunities reinforce our confidence in the trajectory of the business. We believe we're well positioned to deliver double-digit revenue growth this year while continuing to build a more scalable and profitable company.
With that, operator, let's open the line for questions.