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Date
Wednesday, Aug. 27, 2025 at 5 p.m. ET
Call participants
Chief Executive Officer — Saleel Awsare
Chief Financial Officer — Brent Stringham
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Takeaways
Revenue-- $28.8 million in the fourth quarter of fiscal 2025, representing sequential growth from $28.5 million in the prior quarter (GAAP revenue, third quarter of fiscal 2025), and approximately 4% higher than the fourth quarter of fiscal 2024, excluding Gridspertise.
Annual revenue-- $123 million for fiscal 2025, reflecting the transition to a normalized base following Gridspertise's reduced contribution.
Non-GAAP EPS-- Non-GAAP EPS of $0.10 in the fourth quarter of fiscal 2025, within guidance, and full-year non-GAAP net income of just under $400,000, or $0.01 per share for fiscal 2025.
GAAP gross margin-- GAAP gross margin was 40% in the fourth quarter of fiscal 2025, compared to 43.5% in the third quarter of fiscal 2025 and 38.1% in the fourth quarter of 2024.
Non-GAAP gross margin-- Non-GAAP gross margin was 40.6% in the fourth quarter of fiscal 2025, down from 44.1% in the third quarter of fiscal 2025, and up from 38.8% in the fourth quarter of 2024; the decline in the fourth quarter of fiscal 2025 was attributed to inventory charges and higher tariffs.
Inventory charges and tariffs impact-- CFO Stringham stated, tariffs likely accounted for about 100 basis points of the margin decline quarter over quarter in the fourth quarter of fiscal 2025, with a large part of the difference due to inventory charges taken during the quarter.
Gross margin guidance-- CEO Awsare said, moving forward, it's going to be closer to 44-45% GAAP gross margin for fiscal 2026, with Stringham adding, "We're trending in that direction going forward."
GAAP net loss-- $2.6 million for the full fiscal year 2025, or $0.07 per share, including $3.5 million in restructuring charges (GAAP) for fiscal 2025.
Operating expenses-- Down from $16 million in the prior quarter, and $18.2 million in the fourth quarter of fiscal 2024 (GAAP).
Operating cash flow-- $7.3 million for the full fiscal year 2025, supported by positive operating cash flow in the fourth quarter of fiscal 2025.
Term debt and refinancing-- $4.5 million of term debt paid down during fiscal 2025, with the remaining $11.8 million as of June 30, 2025, refinanced as an asset-backed line of credit, extending maturity to August 2028, and reducing interest expense.
Net inventories-- $26.4 million as of June 30, 2025, down from $28.2 million in the prior quarter (third quarter of fiscal 2025).
Cash and cash equivalents-- $20.1 million as of June 30, 2025, up from the prior quarter, with a net cash position of $8.3 million as of June 30, 2025.
Fiscal 2026 guidance-- Revenue expected between $28.5 million and $30.5 million for fiscal year 2026; non-GAAP EPS outlook of $0.02 to $0.04 per share for fiscal 2026.
Drone market engagement-- Over 10 drone makers engaged, primarily military and industrial, with shipments having begun in June and "visibility into fiscal 2026 with a few of the 10 drone makers."
Red CAT Steel Drones win-- TAA and NDAA-compliant solution now powers Teal's Black Widow drones for the U.S. Army, initial shipments began in June of fiscal 2025, and classified as a blue UAS approved platform.
Aurora partnership-- Collaboration combining Lantronix compute module, Teledyne FLIR's thermal camera, and Prism AI software, with expected revenue contribution in fiscal 2026.
Major U.S. mobile carrier win-- Multi-year agreement for devices and services to modernize over 50,000 backup power systems; shipments began in June, with additional orders expected, and potential for expansion.
Recurring revenue growth-- ARR beginning to ramp through the carrier win, enabled by deployment of the perception platform, with initial contribution expected to grow as devices come online.
Drone program ASP-- CEO Awsare reported, "approximately around $500" per device for current drone programs, with ASP "give or take" reflecting the range among customers.
Drone revenue opportunity-- Opportunity per drone customer "could be $4 to $5 million annualized, each customer," and drone programs may represent "10% to 15%" of company revenue in fiscal 2027.
Supply chain realignment-- Majority of U.S.-bound products now manufactured outside of China, lowering cost and tariff exposure.
Core business excluding Gridspertise-- Stabilized and grew approximately 4% year over year, with guidance and management commentary confirming no Gridspertise revenue is expected going forward for fiscal 2026.
Edge AI and Edge IoT focus-- Management confirmed "encouraging traction," and ongoing investment in Edge AI and Edge IoT as key strategic growth drivers.
Summary
Lantronix(LTRX 1.63%) reported sequential revenue growth in its core business in the fourth quarter of fiscal 2025, led by diversification away from Gridspertise and expanding design wins in defense and telecom verticals. The newly secured multi-year U.S. mobile carrier contract includes hardware and high-margin recurring revenue from its perception platform, while drone engagements with over 10 manufacturers signal a rising contribution from the unmanned systems market. Debt refinancing, a leaner cost structure, and manufacturing shifts outside China collectively enhanced capital flexibility and reduced risk entering the next fiscal period.
Drone customer opportunity size is expected to be $4 million to $5 million annually per customer, with management citing the potential for drone programs to contribute up to 15% of total company revenue by fiscal 2027.
Management anticipates gross margin (GAAP) will be "closer to 44-45%" for fiscal 2026, rebounding from temporary impacts related to inventory charges and tariffs in the fourth quarter of fiscal 2025.
The company's overall strategic transition is characterized by a move toward higher-margin, stickier platform solutions, evidenced by growing annual recurring revenue, and direct integration of its technology into large customer deployments in fiscal 2025.
Industry glossary
TAA: Trade Agreements Act; U.S. federal law requiring certain products and services to be produced in designated countries to qualify for government procurement.
NDAA: National Defense Authorization Act; U.S. federal law imposing restrictions on procurement of products and components from specific countries for defense purposes.
ASP: Average selling price; updated expected value per device or unit in large-scale product programs.
Blue UAS: Department of Defense-approved unmanned aircraft system platform meeting specific U.S. security and manufacturing criteria.
Out-of-band management: Network management technique that uses separate, dedicated channels for device monitoring and control, independent of the main data network.
ARR: Annual recurring revenue; the value of contracted recurring revenue components that occur on a yearly basis.
Full Conference Call Transcript
Saleel Awsare: Thanks, Brent, and thank you everyone for joining today's call. Fiscal 2025 marked a turning point for Lantronix, Inc. A year of disciplined execution, meaningful transformation, and building the foundation for sustainable long-term growth. The progress was evident in our fourth quarter results with revenue of $28.8 million and a non-GAAP EPS of $0.10, both well within our quarterly guidance range. These results reflect a return to growth in our core revenue base, excluding the impact of Gridspertise, our EMEA smart grid customer. As we enter the new fiscal year, we see powerful industry dynamics creating significant opportunities for Lantronix, Inc.
We believe we are entering a multiyear growth cycle for unmanned aerial systems supported by record defense funding and favorable regulatory momentum. According to the U.S. Department of Defense, more than $13 billion is earmarked for unmanned platforms in 2026. That increased focus on secure U.S.-made technologies. We believe the demand environment for our solutions has never been stronger. Against this backdrop of growing demand, we are beginning to see meaningful traction in the market highlighted by our most recent win with Red CAT steel drones, which we formally announced last week. We've been collaborating with their team for some time and our TAA and NDAA compliance solution now powers Teal's Black Widow drones for the U.S.
Army's short-range reconnaissance program. As a blue UAS approved platform, this program highlights both the rigor of the qualification process and the mission-critical role of our technology. We began shipments in June, generating initial revenue and strengthening visibility into fiscal 2026. We believe our competitive edge lies in our deep camera expertise. Military and other high-performance drone requirements include advanced camera tuning, sensor fusion, and complex software integration. Capabilities we have refined over many years. Equally important, being North America-based and fully compliant with NDAA and TAA regulations further positions us as a trusted supplier to OEMs and defense contractors engaged in U.S. Government programs.
Red CAT steel drones exemplify our secure edge compute solutions drive long-term growth opportunities in the drone market. Beyond defense, our partnership with Aurora highlights our ability to deliver high-performance HII solutions for commercial drone applications. By combining our compute module with Teledyne FLIR's thermal camera and Prism AI software, we enable more intelligent real-time decision-making for applications like autonomous flight, surveillance, and industrial inspection. Early market feedback has been very positive. And we expect revenue contribution from these solutions to begin in 2026. Looking ahead, we see broader industry trends including government investment and rising demand for U.S.-based suppliers creating a strong runway for both defense and commercial growth.
Moving to our next win, we recently signed a multi-year agreement with a major U.S. Mobile carrier to provide devices and services as they modernize over 50,000 backup power systems at wireless cell sites nationwide. This win is a strong validation of our edge infrastructure strategy enabling resilient network uptime, improved lifecycle management, and real-time operational visibility across thousands of distributed locations. So far, we booked nearly all the initial units and have begun shipping in June. With additional orders expected as the rollout continues, we believe this is a long-term opportunity with this customer. And expect additional volume beyond this initial deployment reflecting the depth of our relationship and the strategic nature of the program.
In addition to the sizable hardware deployment, this design win also incorporates our perception platform enabling remote monitoring and ongoing management of connected assets. As these devices are brought online, we expect they will contribute to our growing base of high-margin annual recurring revenue. This win also opens the door to broader collaboration with the carrier over time including additional software-enabled services and potential expansion across their larger network footprint. These types of wins highlight our transition from a traditional hardware supplier to a strategic platform partner helping customers accelerate intelligence at the edge. This evolution positions us to capture a larger share of customer wallet, deepen long-term relationships, and embed our solution more directly into their critical operations.
By moving up the value chain, we are not only expanding revenue opportunities but also creating stickier high-margin business over time. Turning to our growth outlook. As we turn the corner into a new fiscal year, we are seeing growing momentum fueled by recent design wins that are expanding our customer base and enhancing the predictability of our business. This diversification marks an important step forward as we move past the impact of Gridspertise and underscores the underlying strength of our core platform. Q1 is off to a strong start. With healthy engagement from both new and existing customers across multiple verticals. Our core business has stabilized and is now positioned to deliver growth over the longer term.
At the same time, we are beginning to see encouraging traction in our Edge AI strategy. Looking ahead, our visibility in fiscal 2026 has improved supported by momentum across these two strategic pillars of our platform. Edge IoT, spanning compute and connectivity, and network infrastructure encompassing out-of-band management and networking solutions. The momentum is driven by recent design wins in Edge IoT and our continued investment in product innovation, expanding relationships across our distribution and technology partner ecosystems. Together, these initiatives reinforce our ability to scale profitably and capture long-term opportunities at the intelligent edge. With that, I turn the call over to Brent to provide more detail on our financial performance. Brent?
Brent Stringham: Thanks, Saleel. Building on that strategic context, I'll now walk through our fourth quarter and fiscal 2025 financial results. Highlight the key drivers behind our performance provide our outlook for 2026. Looking back on fiscal 2025, we delivered revenue of $123 million reflecting the transition from a record fiscal 2024 to a more normalized revenue base. As we have noted before, fiscal 2024 included a significant contribution from Gridspertise which accounted for roughly 25% of revenue that year. In fiscal 2025, we recognized just over $11 million from Gridspertise in the first half, with minimal revenue contribution in the second half of the year as the customer continued to work through its prior deployments.
Excluding this customer, our core revenue base stabilized in the second half of the year and the operational discipline we've driven over the last twelve months positions us for more sustainable and diversified growth in fiscal 2026. In 2025, we delivered revenue of $28.8 million, a sequential increase from $28.5 million in the prior quarter. And approximately 4% higher than fiscal Q4 2024 when excluding the impact of Gridspertise. This growth, driven by continued momentum in our Edge IoT products, underscores the strength of our core platform and the benefits of a more diversified revenue base. Turning to margins. In the fourth quarter, GAAP gross margin was 40%.
Compared to 43.5% in the prior quarter and 38.1% in the year-ago period. On a non-GAAP basis, gross margin was 40.6% versus 44.1% last quarter and 38.8% in the year-ago quarter. The sequential decline primarily reflects inventory charges for aged inventory and higher duties and tariffs incurred in the quarter. Despite these temporary impacts, margins remain above the year-ago period, reflecting benefits from our ongoing cost and supply chain initiatives as well as a favorable product mix. As we continue to carefully manage our inventories and the impact of tariffs, we expect gross margins to recover to the levels we achieved in the first half of fiscal 2025.
We've made strong progress on our ninety-day plan to further improve our cost structure and supply chain efficiency. As of today, the vast majority of U.S.-bound products are now manufactured outside of China, reducing costs and minimizing potential tariff exposure going forward. Turning to expenses and profitability. GAAP operating expenses in 2025 were $14.7 million, down from $16 million in the prior quarter and $18.2 million in the year-ago period. GAAP net loss for 2025 was $2.6 million or $0.07 per share compared to GAAP net income of $400,000 or $0.01 per share in the year-ago quarter.
GAAP results for both the fiscal fourth quarter and full year include restructuring charges of $900,000 and $3.5 million respectively, related to the cost reduction initiatives we executed during the year. On a non-GAAP basis, we reported net income of just under $400,000 or $0.01 per share compared to non-GAAP net income of $1.1 million or $0.03 per share in the prior quarter. Cost reductions that we have discussed in recent quarters continue to benefit our P&L. With non-GAAP operating expenses down by just under $200,000 from the prior quarter. And approximately $1.9 million compared to the year-ago quarter.
Importantly, the proactive steps we took have reduced just over $4 million of costs relative to fiscal 2024 and the implemented efficiency measures have created a leaner operating structure and meaningful leverage in our model. We streamlined our operations, optimized our supply chain, and reduced operating expenses while continuing to invest in strategic growth initiatives. These actions allowed us to maintain profitability on a non-GAAP basis despite the year-over-year revenue decline. Turning to the balance sheet. Net inventories decreased to $26.4 million as of 06/30/2025, compared to $28.2 million in the prior quarter. And $27.7 million at the end of fiscal 2024. We ended June with cash and cash equivalents of $20.1 million, up from the prior quarter.
For the quarter, we generated positive operating cash flow bringing our full-year fiscal 2025 operating cash flow to $7.3 million. During the year, we paid down approximately $4.5 million of term debt, or 28% of our outstanding balance. As of 06/30/2025, our remaining debt was approximately $11.8 million resulting in a net cash position of $8.3 million, providing us with a stronger balance sheet entering fiscal 2026. We also recently refinanced this term debt into an asset-backed line of credit, with the same lending partner. This refinancing reduces interest expense, provides greater flexibility on principal repayments, and extends the maturity to August 2028.
Together with our debt reduction efforts, these actions strengthen liquidity and improve the efficiency of our capital structure. Now turning to our outlook for 2026, which ends 09/30/2025. We expect revenue to be in the range of $28.5 million to $30.5 million. Non-GAAP EPS is expected to be in the range of $0.02 to $0.04 per share. With that, I'll turn the call back to Saleel for closing remarks.
Saleel Awsare: Thanks, Brent. To close, fiscal 2025 was a year of transformation for Lantronix, Inc. One in which we built a strong foundation for profitable growth and positioned the company to capitalize on high-value opportunities in edge AI and infrastructure modernization. We reshaped our global operations, established four centers of excellence, streamlined our cost structure, and strengthened our balance sheet. We successfully integrated the NetComm IoT acquisition and deepened our strategic partnership with Qualcomm, expanding our capabilities in edge IoT and AI-driven innovation. On top of this, we proactively mitigated tariff exposure and realigned our supply chain actions that reduce risk and support improved gross margin performance going forward.
Collectively, these initiatives have focused our resources on the highest impact opportunities, embedded meaningful operating leverage into our model, and strategically repositioned Lantronix, Inc. to scale with sustained profitability as we enter fiscal 2026. With that, we now open the call for your questions.
Operator: Thank you. We will now begin the question and answer session. And your first question today will come from Jaeson Schmidt with Lake Street. Please go ahead.
Jaeson Schmidt: Hey, guys. Thanks for taking my questions. Just want to start with the drone opportunity. Obviously, a massive market and you guys are seeing some really nice traction here out of the gate. How should we think about the potential for you guys here in the near term, both with Redcat and what you potentially have in the pipeline?
Saleel Awsare: Jaeson, thank you for that question. We are extremely excited about the drone market and the drone opportunity. Just to give you a frame of reference, we announced Redcat about a week ago, but as of this quarter, we have over 10 different drone makers that we're working on. Mainly military or industrial applications. We see this market growing really nicely into fiscal 2026 representing a meaningful portion of our business longer term. And again, it's fueled by programs like the SRR with Redcat, and, you know, as more funding comes, we are well suited there. And I think the key is our competitive edge is our expertise in cameras. We've been working around cameras for a long time.
And that's really what a drone requires. The camera tuning, the fusion, the software integration, and then us being North American based NDAA and TAA certified really allows us to win these contracts. So we have shipped, as I said last quarter, I mean, in June, we have visibility into fiscal 2026 with a few of the 10 drone makers. And as we get into early 2026 calendar, we'll be seeing more of these companies going into production. So we are feeling really good as I sit here today.
Jaeson Schmidt: Okay. That's really helpful. And then just as a follow-up if you could comment on sort of what you're seeing from a bookings or order perspective so far here in September? If I look back at the past few years, usually, September is sequentially down. But obviously, the midpoint of your guidance, for September here is for growth sequentially. Just curious if you could provide some additional color around the dynamics driving that growth?
Saleel Awsare: Yes. Jaeson, another great question. You're right. In the past, last year or the year before, we might have been down sequentially. We are seeing momentum in our business. We are seeing new customers that we've acquired, and the momentum is really broad-based. Throughout our core business, including our Edge IoT, which is some of it is new, and then even our networking business. And out of band, also is growing nicely into this quarter. So it builds a lot of confidence as you think about fiscal 2026.
Jaeson Schmidt: Perfect. Thanks a lot, guys.
Saleel Awsare: Thank you, Jaeson.
Operator: Your next question today will come from Ryan Koontz with Needham and Company. Please go ahead.
Ryan Koontz: Great, thanks. You had some real interesting comments there on gross margin. I just want to make sure I'm not losing the forest through the trees here, so to speak. Can you maybe unpack that, Saleel, in terms of how you think about gross margins evolving over the next twelve months?
Saleel Awsare: Ryan, great question. I think, not I think, I know in June, we had some one-off gross margin-related items like tariffs and some inventory. But moving forward, it's gonna be closer to 44, 45% for the fiscal year. But I'll pass the mic to Brent to add a little bit more color to that.
Brent Stringham: Yeah. I think, Ryan, as we talked about in the prepared remarks, we're seeing gross margins for the upcoming quarters here in fiscal 2026 returning to what we saw a year ago. Saleel mentioned 44%. We're trending in that direction going forward.
Ryan Koontz: Great. Super. Thanks for that clarification. And then maybe all these opportunities in the drone market around defense and unmanned vehicles, can you talk a little bit about is that a new channel for you? Are you working direct? Are you working through integrators? I mean, maybe walk through some of the commercial side of these drone opportunities. Are they very similar to your business of the past? Or is it or somewhat new kind of market motion?
Saleel Awsare: Yeah. Ryan, another great question. And you and I have spoken before, we kind of started on this journey of unmanned UAS or drones in calendar '24. And into that, we've kinda worked with Teledyne FLIR, which was a very important announcement that we did. They are the leader in thermal imaging cameras, which is what this market's all about. They gave us, hey. We are a great partner for them. So that helped us. And we worked with them on major designs. And then just having this camera expertise working with some of the integrators that are out there.
And we've increased our understanding of the market, what we can do for the market, and that's how we've really gotten to winning somebody like Redcat on one of their big programs. And this one, we pretty much got done in eight months from beginning to end. So it was really all systems go, all hands on deck to get them ready. So we are very proud of what we've done there.
Ryan Koontz: That's great. So Teledyne sounds like somebody they're pulling you into some of these deals. A kind of a partner ecosystem?
Saleel Awsare: Yeah. But Teledyne FLIR is pulling us to quite a few. And, you know, they're a big company with a lot of access, so it's been very out there.
Ryan Koontz: That's great. Maybe one last one if I can squeeze it in. You talked about this backup generator for cell site opportunities. Great to finally get that deal closed. Any more you can tell us about that? And are there other opportunities similar to that in the pipeline that you can address? Thank you.
Saleel Awsare: Yeah. Thanks, Ryan. Another great question. Right? We announced a big Tier one mobile win with about 50,000 of our gateways, our FOX gateways in that. And we anticipate longer term, this should be at least three times what it is, as we progress over the next couple of years. So the good news is we booked most of the order. We started to ship in June, which we did. We'll continue to ship throughout this fiscal year. I do want to make one point of clarification, Ryan, which is I think very important. Not only are we selling hardware, but we are also incorporating our perception platform. Enabling remote monitoring and device management.
And as these devices come online, we are starting to get our first real ARR or annual recurring revenue. So that's another great thing. So that's gonna start at it's not starting at a big number, but as they move more and more devices come online, it's gonna do that. So it shows the investments that we were making in the last eighteen months in these areas where giving a platform giving a solution has enabled us to be successful. So I'm optimistic just with this vendor could get bigger and there are more that we're working on.
Ryan Koontz: Great. That's all I got. Thanks so much, Saleel.
Operator: Thank you, Ryan. And your next question today will come from Christian Schwab with Craig Hallum Capital Group. Please go ahead.
Christian Schwab: Great. Thanks for taking my question. Just as it relates to the drone opportunity, can you give an idea of what your average dollar content would be per device? Not specifically to Redcat itself, but the entire 10 customers you're dealing with just kind of to give us an idea of what your dollar content is, please?
Saleel Awsare: Yes, great question, Christian. It's approximately around $500. So it's pretty very good from a perspective. So as you know, the volumes get into the many thousands or tens of thousands, this is meaningful revenue for the company as you think about moving forward.
Christian Schwab: Great. And then in your prepared comments, you talked about a meaningful revenue opportunity. I assume some customers, of course, have different volumes that they would be planning on shipping over a multiyear time frame. When you think of that market, could you give us a broad range of revenue? Is this a $5 million business in two years? Is this $20 million business that, you know, some guidepost for us to be thinking about?
Saleel Awsare: Yes. Great question again, Christian. I would say the opportunity per customer and, again, some are gonna be bigger, some are gonna be smaller. The customer size could be $4 to $5 million annualized, each customer. Again, as I said, the ones that we're working with today, if they're a bit smaller ones, they could be smaller. But again, they're going to come online and as they win their sockets. So could this be a 10% to 15% of Lantronix, Inc. revenue in fiscal 2027? There's a probability it could get there. But we're working through all that and working through all the customers.
But the opportunity size on some of the early ones are, you know, $3 million to $5 million each.
Christian Schwab: Great. No other questions. Thank you, guys. Good quarter.
Saleel Awsare: Thank you.
Operator: Your next question today will come from Scott Searle with ROTH Capital. Please go ahead.
Scott Searle: Hey, good afternoon. Thanks for taking my questions. Looks like I back clean up. Maybe just quick clarification, Brent, on the inventory write-down. I'm wondering if you could quantify that. I'm not sure if I missed that. And then a couple of the segments there, I just want to clarify, what are you seeing in terms of out-of-band management in terms of in the June quarter and as we're going into the back half of the calendar year here? And I just want to clarify in terms of the September guidance that there's no Gridspertise in those numbers. And then I had a couple of follow-ups.
Brent Stringham: Yes. Thanks, Scott. On the inventory, one way to maybe look at it is based on the margins that we disclosed here in the quarter, we said that tariffs were a part of that. The tariffs probably made up about 100 basis points of the decline in margin quarter over quarter. With a large part of the difference being some of the inventory charges that we took in the quarter. Could you repeat the second part of your question?
Scott Searle: Out-of-band management contribution in the quarter, what kind of growth were you seeing in June? What are you guys seeing in terms of the focus to build the business as we're looking into the second half?
Brent Stringham: Yeah. Out-of-band, over quarter, obviously, we break out the details at that level. But out-of-band was up quarter over quarter from our third quarter and we're seeing pretty solid momentum in that business with some of the resources and other things we have going on in that product line. And then you had asked about what was the third part of your question?
Scott Searle: Yeah. Just in terms of the guidance.
Brent Stringham: Yeah. We don't currently have any Gridspertise estimates in our guidance.
Saleel Awsare: Scott, just to put it right, we've had no Gridspertise since January 1. Right? So we've taken it out. So as I said, the core business is growing nicely.
Scott Searle: Great. Now just wanted to clarify. Now Saleel, the drone opportunity really starting to perk up for you. It seems like there's an incredible backlog of opportunities. Is there a number that you're comfortable with in fiscal 2026? You talked about fiscal 2027 maybe being 10% to 15% of revenues. What is that what do you think that looks like in fiscal 2026? And when does it start to become meaningful in terms of contribution on a quarterly basis in fiscal 2026?
Saleel Awsare: We don't specifically call out the details, but it's definitely going to be meaningful in this year and it's in the millions of dollars for the fiscal year. Scott. It's not tens of millions this year. It's in the millions of dollars. And as I said, these guys are just starting to launch. And our ASP is pretty good at around $400. It's $500 approximately, give or take. We're feeling good about that. Does that kinda give you a goal post for this year?
Scott Searle: Absolutely does. Just trying to calibrate, you know, where we are in the ramp and maybe, Saleel, to follow-up on that front, I wanna make sure I understand in terms of your software content versus what FLIR brings to the equation? And then as you look at the characteristics of why you're being adopted in drones being low power, right, I think you're leveraging off of Qualcomm processors. As well as your computer vision and AI capabilities. There are other markets related to security surveillance, etcetera that fit into that as well.
So I'm wondering if there are I'll call them tethered opportunities as opposed to drones and UAV that are starting to perk up in your backlog or opportunity pipeline?
Saleel Awsare: Yeah. So a bunch of questions there. Right? So FLIR is a partner, but it's not for everyone. Want to be clear about that, right? FLIR is with some of the customers that we're working with. The recent announced win we did does not use FLIR, so we had to provide some camera tuning, some of the software that they we had. And they also had some software. So it was a kind of a combination of both teams. Remember, we did some services work for them, so it was kinda getting together on this. So FLIR is great. It's doing well for us, but we also are doing independent programs, Scott, on that.
The other area that this is gonna go into is robotics. It's think about it. Right? Because robotics needs cameras. Those are very on the early days, I think you'll see opportunities percolating probably, you know, calendar Q1, calendar Q2 that we are looking at. But right now, we are laser-focused on the drone area. As you know, the US government is making a big push Secretary of Defense, HEXA, talked about two drones per platoon. The smaller ones. And hit the key point. We have worked with our customer to make sure that they have enough range. And there's a whole and you and I can talk offline. Of what the range means and how that needs to be.
So right now, it's all hands on deck to get these guys multiple guys over the hub.
Scott Searle: Gotcha. And lastly, if I could, I'll just slip one in on the carrier opportunity. There's a nice recurring revenue component that goes along with it. I'm not sure if you quantify that, I'd love to get your thoughts. And then just in terms of RFP pipeline, sounds like you think that could be three exercise of where it is today. I'm just kind of wondering if you're actually those opportunities are currently percolating or you know, with a formal RFP or if you guys are just you know, continuing to knock on other doors? Thanks.
Saleel Awsare: So two questions. We do call out software and services, so the ARR will be part of that. But we also have a service portion of that. So it's going to be shown in that line as you think about the future. As for the carrier one, there is one RFP that we are bidding on, and we believe we have a good high probability of getting that. But this carrier company now sent us to the Generacs and these other guys who made these control these you know, backup power generators and they've kinda told us we are the approved vendor for that. So that also is in motion as you think about it.
So, therefore, we believe in the next, you know, few years, next couple of years, this should be a larger portion, as I said, could be as high as three times of what we announced already.
Scott Searle: Perfect. Thanks so much.
Operator: Thank you, Scott. This will conclude our question and answer session. I would like to turn the conference back over to Saleel Awsare for any closing remarks.
Saleel Awsare: I want to thank everyone for joining us. I know it's Labor Day coming up, so please enjoy the weekend and Lantronix, Inc. will be at the Gateway Conference next week in San Francisco. Please, hopefully, you can join us there. Thank you so much.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.