LANTRONIX, INC. 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________.

Commission file number: 001-16027

LANTRONIX, INC.

(Exact name of registrant as specified in its charter)

Delaware	33-0362767
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

48 Discovery, Suite 250, Irvine, California

(Address of principal executive offices)

92618

(Zip Code)

(949) 453-3990

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	LTRX	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☒
Non-accelerated filer ☐		Smaller reporting company ☒
Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 1, 2026, there were 39,816,930 shares of the registrant’s common stock outstanding.

LANTRONIX, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED

MARCH 31, 2026

INDEX

		Page

	CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	3

PART I.	FINANCIAL INFORMATION	4

Item 1.	Financial Statements	4

	Unaudited Condensed Consolidated Balance Sheets at March 31, 2026 and June 30, 2025	4

	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2026 and 2025	5

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended March 31, 2026 and 2025	6

	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2026 and 2025	7

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30

Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION	46

Item 1.	Legal Proceedings	46

Item 1A.	Risk Factors	46

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46

Item 3.	Defaults Upon Senior Securities	46

Item 4.	Mine Safety Disclosures	47

Item 5.	Other Information	47

Item 6.	Exhibits	47

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the three months ended March 31, 2026 (the “Report”) contains forward-looking statements within the meaning of the federal securities laws, which statements are subject to substantial risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Report, or incorporated by reference into this Report, are forward-looking statements. Throughout this Report, we have attempted to identify forward-looking statements by using words such as “may,” “believe,” “will,” “could,” “project,” “anticipate,” “expect,” “estimate,” “should,” “continue,” “potential,” “plan,” “forecasts,” “goal,” “seek,” “intend,” other forms of these words or similar words or expressions or the negative thereof. Additionally, statements concerning future matters such as our expected earnings, revenues, expenses and financial condition, our expectations with respect to the development of new products, gross margin, cost savings and other statements regarding matters that are not historical are forward-looking statements.

We have based our forward-looking statements on management’s 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 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 Report. 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, those set forth under “Risk Factors” in Item 1A of Part II of this Report, as such factors may be updated, amended or superseded from time to time by subsequent public filings with the Securities and Exchange Commission. 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.

You should read this Report in its entirety, together with the documents that we file as exhibits to this Report, with the understanding that our future results may be materially different from what we currently expect and should not place undue reliance on the forward-looking statements contained in this Report. 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.

We qualify all of our forward-looking statements by these cautionary statements.

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

LANTRONIX, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)


	March 31,			June 30,
	2026			2025
Assets
Current assets:
Cash and cash equivalents	$	23,515		$	20,098
Accounts receivable, net		23,510			25,092
Inventories, net		26,422			26,371
Contract manufacturers' receivables		884			3,071
Prepaid expenses and other current assets		2,647			2,761
Total current assets		76,978			77,393
Property and equipment, net		1,673			2,456
Goodwill		31,089			31,089
Intangible assets, net		2,327			3,738
Lease right-of-use assets		7,307			8,422
Other assets		643			624
Total assets	$	120,017		$	123,722

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	13,729		$	13,259
Accrued payroll and related expenses		3,860			3,471
Current portion of long-term debt, net		–			3,070
Other current liabilities		10,503			10,622
Total current liabilities		28,092			30,422
Long-term debt, net		8,691			8,684
Other non-current liabilities		8,764			10,238
Total liabilities		45,547			49,344

Commitments and contingencies (Note 8)		–			–

Stockholders' equity:
Common stock		4			4
Additional paid-in capital		312,428			308,397
Accumulated deficit		(238,306	)		(234,394	)
Accumulated other comprehensive income		344			371
Total stockholders' equity		74,470			74,378
Total liabilities and stockholders' equity	$	120,017		$	123,722

See accompanying notes to unaudited condensed consolidated financial statements.

LANTRONIX, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)


	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2026			2025			2026			2025
Net revenue	$	30,177		$	28,500		$	89,745		$	94,084
Cost of revenue		17,172			16,097			50,427			53,922
Gross profit		13,005			12,403			39,318			40,162
Operating expenses:
Selling, general and administrative		9,432			8,959			27,714			27,237
Research and development		4,149			4,463			13,367			14,403
Restructuring, severance and related charges		288			1,581			424			2,674
Acquisition-related costs		48			100			131			337
Amortization of intangible assets		216			879			1,411			3,378
Total operating expenses		14,133			15,982			43,047			48,029
Loss from operations		(1,128	)		(3,579	)		(3,729	)		(7,867	)
Interest expense, net		(2	)		(159	)		(26	)		(404	)
Other income (expense), net		(17	)		(19	)		162			(48	)
Loss before income taxes		(1,147	)		(3,757	)		(3,593	)		(8,319	)
Provision for income taxes		34			111			319			423
Net loss	$	(1,181	)	$	(3,868	)	$	(3,912	)	$	(8,742	)

Net loss per share - basic and diluted	$	(0.03	)	$	(0.10	)	$	(0.10	)	$	(0.23	)

Weighted-average common shares - basic and diluted		39,731			38,820			39,472			38,493

See accompanying notes to unaudited condensed consolidated financial statements.

LANTRONIX, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)


	Three Months Ended March 31, 2026
											Accumulated
					Additional						Other			Total
	Common Stock				Paid-In			Accumulated			Comprehensive			Stockholders'
	Shares		Amount		Capital			Deficit			Income			Equity
Balance at December 31, 2025		39,682	$	4	$	311,171		$	(237,125	)	$	371		$	74,421
Shares issued pursuant to stock awards, net		134		–		15			–			–			15
Tax withholding paid on behalf of employees for restricted shares		–		–		(359	)		–			–			(359	)
Share-based compensation		–		–		1,601			–			–			1,601
Reclassification of foreign currency translation adjustments		–		–		–			–			(27	)		(27	)
Net loss		–		–		–			(1,181	)		–			(1,181	)
Balance at March 31, 2026		39,816	$	4	$	312,428		$	(238,306	)	$	344		$	74,470

	Three Months Ended March 31, 2025
											Accumulated
					Additional						Other		Total
	Common Stock				Paid-In			Accumulated			Comprehensive		Stockholders'
	Shares		Amount		Capital			Deficit			Income		Equity
Balance at December 31, 2024		38,788	$	4	$	305,433		$	(227,895	)	$	371	$	77,913
Shares issued pursuant to stock awards, net		102		–		–			–			–		–
Tax withholding paid on behalf of employees for restricted shares		–		–		(92	)		–			–		(92	)
Share-based compensation		–		–		1,517			–			–		1,517
Net loss		–		–		–			(3,868	)		–		(3,868	)
Balance at March 31, 2025		38,890	$	4	$	306,858		$	(231,763	)	$	371	$	75,470

	Nine Months Ended March 31, 2026
											Accumulated
					Additional						Other			Total
	Common Stock				Paid-In			Accumulated			Comprehensive			Stockholders'
	Shares		Amount		Capital			Deficit			Income			Equity
Balance at June 30, 2025		39,102	$	4	$	308,397		$	(234,394	)	$	371		$	74,378
Shares issued pursuant to stock awards, net		714		–		439			–			–			439
Tax withholding paid on behalf of employees for restricted shares		–		–		(1,362	)		–			–			(1,362	)
Share-based compensation		–		–		4,954			–			–			4,954
Reclassification of foreign currency translation adjustments		–		–		–			–			(27	)		(27	)
Net loss		–		–		–			(3,912	)		–			(3,912	)
Balance at March 31, 2026		39,816	$	4	$	312,428		$	(238,306	)	$	344		$	74,470

	Nine Months Ended March 31, 2025
											Accumulated
					Additional						Other		Total
	Common Stock				Paid-In			Accumulated			Comprehensive		Stockholders'
	Shares		Amount		Capital			Deficit			Income		Equity
Balance at June 30, 2024		37,872	$	4	$	304,001		$	(223,021	)	$	371	$	81,355
Shares issued pursuant to stock awards, net		1,018		–		220			–			–		220
Tax withholding paid on behalf of employees for restricted shares		–		–		(1,993	)		–			–		(1,993	)
Share-based compensation		–		–		4,630			–			–		4,630
Net loss		–		–		–			(8,742	)		–		(8,742	)
Balance at March 31, 2025		38,890	$	4	$	306,858		$	(231,763	)	$	371	$	75,470

See accompanying notes to unaudited condensed consolidated financial statements.

LANTRONIX, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Nine Months Ended
	March 31,
	2026			2025
Operating activities
Net loss	$	(3,912	)	$	(8,742	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Share-based compensation		4,954			4,630
Depreciation and amortization		1,248			1,618
Amortization of intangible assets		1,411			3,378
Amortization of manufacturing profit in acquired inventory associated with acquisitions		18			44
Amortization of deferred debt issuance costs		43			35
Gain on reversal of foreign currency translation		(27	)		–
Changes in operating assets and liabilities, net of assets and liabilities acquired:
Accounts receivable		1,582			7,631
Inventories		(69	)		300
Contract manufacturers' receivables		2,187			(236	)
Prepaid expenses and other current assets		114			(694	)
Lease right-of-use assets		1,206			1,389
Other assets		(19	)		16
Accounts payable		408			650
Accrued payroll and related expenses		389			(1,972	)
Other liabilities		(1,583	)		(1,814	)
Net cash provided by operating activities		7,950			6,233

Investing activities
Purchases of property and equipment		(403	)		(362	)
Cash payment for acquisition		–			(6,458	)
Net cash used in investing activities		(403	)		(6,820	)

Financing activities
Net proceeds from issuances of common stock		439			220
Tax withholding paid on behalf of employees for restricted shares		(1,362	)		(1,993	)
Borrowings on debt		8,800			–
Payments on debt		(11,906	)		(3,735	)
Payment of lease liabilities		(101	)		(143	)
Net cash used in financing activities		(4,130	)		(5,651	)
Increase (decrease) in cash and cash equivalents		3,417			(6,238	)
Cash and cash equivalents at beginning of period		20,098			26,237
Cash and cash equivalents at end of period	$	23,515		$	19,999

See accompanying notes to unaudited condensed consolidated financial statements.

LANTRONIX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2026

1.	Company and Significant Accounting Policies

Company

Lantronix, Inc., which we refer to herein as the Company, Lantronix, we, our, or us, is a global leader in Edge AI and Industrial Internet of Things (“IoT”) solutions, delivering intelligent computing, secure connectivity, and remote management for mission-critical applications. Serving high-growth markets, including smart cities, enterprise IT, and commercial and defense unmanned systems (including drones), we enable customers to optimize operations and accelerate digital transformation. Our comprehensive portfolio of hardware, software, and services powers applications from secure video surveillance and intelligent utility infrastructure to resilient out-of-band network management. By bringing intelligence to the network edge, we help organizations achieve efficiency, security, and a competitive edge in today’s AI-driven world.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Lantronix have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Securities and Exchange Commission (the “SEC”) Regulation S-X. Accordingly, they should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, which was filed with the SEC on August 29, 2025. The unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the consolidated financial position of Lantronix at March 31, 2026, the consolidated results of our operations for the three and nine months ended March 31, 2026 and our consolidated cash flows for the nine months ended March 31, 2026. All intercompany accounts and transactions have been eliminated.

Significant Accounting Policies

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end.

The results of operations for the three and nine months ended March 31, 2026 are not necessarily indicative of the results to be expected for the full year or any future interim periods.

Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”), who is our Chief Executive Officer, in deciding how to allocate resources and assess our financial and operational performance. Our CODM evaluates our financial information, such as revenue, gross profit and net income (loss), and resources, and assesses the performance of these resources on a consolidated and aggregated basis. As a result, we have determined that our business operates in a single operating segment: the development, marketing, and sale of industrial and enterprise IoT products and services.

Recent Accounting Pronouncements

Credit Losses

In July 2025, the Financial Accounting Standards Board (“FASB”) issued a final Accounting Standards Update (“ASU”) amending Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses, to allow all entities to elect a practical expedient when determining the expected credit losses on trade accounts receivable. The practical expedient allows companies to assume that the current conditions as of the balance sheet date will remain unchanged through the remaining life of the asset. The standard will be effective for Lantronix beginning with our interim financial statements for the fiscal year ending June 30, 2027. The impact of adopting this guidance is not expected to have a material effect on our consolidated financial statements.

Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures. The new standard provides that a business entity disclose (i) a tabular income tax rate reconciliation, using both percentages and amounts, (ii) separate disclosure of any individual reconciling items that are equal to or greater than 5% of the amount computed by multiplying the income (loss) from continuing operations before income taxes by the applicable statutory income tax rate, and disaggregation of certain items that are significant and (iii) amount of income taxes paid (net of refunds received) disaggregated by federal, state and foreign jurisdictions, including separate disclosure of any individual jurisdictions greater than 5% of total income taxes paid. Lantronix will adopt the standard on a prospective basis beginning with our annual financial statements for the fiscal year ending June 30, 2026. The impact of adopting this guidance is not expected to have a material effect on our consolidated financial statements, since it requires only enhancements to existing income tax disclosures in the footnotes to our consolidated financial statements.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures: Disaggregation of Instatement Expenses, which will require disclosure, in the notes to financial statements, of specified information about certain costs and expenses, including disclosure of amounts for (i) purchases of inventory, (ii) employee compensation, (iii) depreciation and (iv) intangible asset amortization, included in each relevant expense caption. In January 2025, the FASB issued ASU 2025-01, which clarified the effective date of ASU 2024-03. The standard will be effective for our annual financial statements beginning with our fiscal year ending June 30, 2028. We are currently evaluating the impact of this accounting standard on our financial statement presentation and its related disclosures.

2.	Revenue

Revenue is recognized upon the transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We apply the following five-step approach in determining the amount and timing of revenue to be recognized: (i) identifying the contract with a customer, (ii) identifying the performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations in the contract and (v) recognizing revenue when the performance obligations are satisfied. On occasion we enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations.

Revenue is recognized exclusive of (i) any taxes collected from customers, which are subsequently remitted to governmental authorities and (ii) shipping and handling costs collected from customers.

Products

Most of our product revenue is recognized as a distinct single performance obligation when products are tendered to a carrier for delivery, which represents the point in time that our customer obtains control of the promised products. A smaller portion of our product revenue is recognized when our customer receives delivery of the promised products.

A significant portion of our products are sold to distributors under agreements which contain (i) limited rights to return unsold products and (ii) price adjustment provisions, both of which are accounted for as variable consideration when estimating the amount of revenue to recognize. We base our estimates for returns and price adjustments primarily on historical experience; however, we also consider contractual allowances, approved pricing adjustments and other known or anticipated returns and price adjustments in a given period. Such estimates are generally made at the time of shipment to the customer and updated at the end of each reporting period as additional information becomes available and only to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Our estimates of accrued variable consideration are included in other current liabilities in the accompanying unaudited condensed consolidated balance sheets.

Services

Revenues from our extended warranty, technical support and maintenance services are generally recognized ratably over the applicable service period. Revenues from sales of our software-as-a-service (“SaaS”) solutions are recognized ratably over the applicable service period as well.

We prepay sales commissions related to certain of these contracts, which are incremental costs of obtaining the contract. We capitalize these costs and expense them ratably on a straight-line basis over the life of the contract. At March 31, 2026, prepaid sales commissions included in prepaid expenses and other current assets totaled $125,000 and those included in other assets totaled $149,000.

Engineering Services

We derive a portion of our revenues from engineering and related consulting service contracts with customers. Revenues from professional engineering services are generally recognized as services are performed. These contracts generally include performance obligations in which control is transferred over time because the customer either simultaneously receives and consumes the benefits provided or our performance on the contract creates or enhances an asset that the customer controls. These contracts typically provide services on the following basis:

	·	Time & Materials (“T&M”) – services consist of revenues from software modification, consulting implementation, training and integration services. These services are set forth separately in the contractual arrangements such that the total price of the customer arrangement is expected to vary depending on the actual time and materials incurred based on the customer’s needs.

	·	Fixed Price – arrangements to render specific consulting and software modification services which tend to be more complex.

Performance obligations for T&M contracts qualify for the “Right to Invoice” practical expedient within the revenue guidance. Under this practical expedient, we may recognize revenue, over time, in the amount to which we have a right to invoice. In addition, we are not required to estimate variable consideration upon inception of the contract and reassess the estimate each reporting period. We have determined that this method best represents the transfer of services as, upon billing, we have a right to consideration from a customer in an amount that directly corresponds with the value to the customer of our performance completed to date.

We recognize revenue on fixed price contracts, over time, using an input method based on the proportion of our actual costs incurred (generally labor hours expended) to the total costs expected to complete the contract performance obligation. We have determined that this method best represents the transfer of services as the proportion closely depicts the efforts or inputs completed towards the satisfaction of a fixed price contract performance obligation.

Multiple Performance Obligations

From time to time, we may enter into contracts with customers that include promises to transfer multiple deliverables that may include sales of products, professional engineering services and other product qualification or certification services. Determining whether the deliverables in such arrangements are considered distinct performance obligations that should be accounted for separately versus together often requires judgment. We consider performance obligations to be distinct when the customer can benefit from the promised good or service on its own or by combining it with other resources readily available and when the promised good or service is separately identifiable from other promised goods or services in the contract. In such arrangements, we allocate revenue on a relative standalone selling price basis by maximizing the use of observable inputs to determine the standalone selling price for each performance obligation.

Net Revenue by Product Line and Geographic Region

We organize our products and solutions into three product lines: Embedded IoT Solutions, IoT System Solutions, and Software & Services. Our Embedded IoT products are normally embedded into new designs. These products include application processing that delivers compute to meet customer needs for data transformation, computer vision, machine learning, augmented / virtual reality, audio / video aggregation and distribution, and custom applications at the edge. Our IoT System products include wired and wireless connections that enhance the value and utility of modern electronic systems and equipment by providing secure network connectivity, power for IoT end devices through Power over Ethernet (“PoE”), application hosting, protocol conversion, media conversion, secure access for distributed IoT deployments and many other functions. Our Software & Services products can be classified as either (i) our SaaS platform, which enables customers to easily deploy, monitor, manage, and automate across their global deployments, all from a single platform login, virtually connected as though directly on each device, (ii) engineering services, which is a flexible business model that allows customers to select from turnkey product development or team augmentation for accelerating complex areas of product development or (iii) extended warranty, support and maintenance.

We conduct our business globally and manage our sales teams by three geographic regions: the Americas; Europe, Middle East, and Africa (“EMEA”); and Asia Pacific Japan (“APJ”).

The following tables present our net revenue by product line and by geographic region. We present net revenues by geographic region generally based on the “ship-to” location of our customers for product sales and the “bill-to” location for services.


	Three Months Ended March 31,				Nine Months Ended March 31,
	2026		2025		2026		2025
	(In thousands)
Embedded IoT Solutions	$	14,616	$	11,990	$	39,948	$	36,161
IoT System Solutions		13,229		14,730		42,969		52,081
Software & Services		2,332		1,780		6,828		5,842
	$	30,177	$	28,500	$	89,745	$	94,084


	Three Months Ended March 31,				Nine Months Ended March 31,
	2026		2025		2026		2025
	(In thousands)
Americas	$	20,268	$	16,497	$	61,400	$	50,303
EMEA		6,175		6,048		16,400		25,568
Asia Pacific Japan		3,734		5,955		11,945		18,213
	$	30,177	$	28,500	$	89,745	$	94,084

The following table presents product revenues and service revenues as a percentage of our total net revenue:


	Three Months Ended March 31,				Nine Months Ended March 31,
	2026		2025		2026		2025

Product revenues		92%		94%		92%		94%
Service revenues		8%		6%		8%		6%

Service revenues are comprised primarily of SAAS solutions, professional services, and extended warranties.

Contract Balances

In certain instances, the timing of revenue recognition may differ from the timing of invoicing to our customers. We record a contract asset receivable when revenue is recognized prior to invoicing, and a contract or deferred revenue liability when revenue is recognized subsequent to invoicing. With respect to product shipments, we expect to fulfill contract obligations within one year and so we have elected not to separately disclose the amount nor the timing of recognition of these remaining performance obligations. For contract balances related to contracts that include services and multiple performance obligations, refer to the deferred revenue discussion below.

Deferred Revenue

Deferred revenue is primarily comprised of unearned revenue related to our extended warranty, support and maintenance services and certain software services. These services are generally invoiced at the beginning of the contract period and revenue is recognized ratably over the service period. Current and non-current deferred revenue balances represent revenue allocated to the remaining unsatisfied performance obligations at the end of a reporting period and are respectively included in other current liabilities and other non-current liabilities in the accompanying unaudited condensed consolidated balance sheets.

The following table presents the changes in our deferred revenue balance for the nine months ended March 31, 2026 (in thousands):


Balance, June 30, 2025	$	5,556
New performance obligations		3,427
Recognition of revenue from satisfying performance obligations		(3,956	)
Balance, March 31, 2026		5,027
Less: non-current portion of deferred revenue		1,922
Current portion, March 31, 2026	$	3,105

During the nine months ended March 31, 2026, approximately $2,320,000 of the revenue recognized as a result of satisfying performance obligations was included in the contract liability balance at the beginning of the period.

We currently expect to recognize substantially all of the non-current portion of deferred revenue over the next 2 to 5 years.

3.	Supplemental Financial Information

Inventories

Schedule of inventories
	March 31,		June 30,
	2026		2025
	(In thousands)
Finished goods	$	15,291	$	15,603
Raw materials		11,131		10,768
Inventories	$	26,422	$	26,371

Other Liabilities

The following table presents details of our other liabilities:

Schedule of other liabilities
	March 31,		June 30,
	2026		2025
	(In thousands)
Current
Accrued variable consideration	$	1,783	$	2,557
Customer deposits and refunds		334		321
Accrued raw materials purchases		292		204
Deferred revenue		3,105		3,301
Lease liability		1,546		1,594
Taxes payable		151		103
Warranty reserve		647		663
Other accrued operating expenses		2,645		1,879
Total other current liabilities	$	10,503	$	10,622

Non-current
Lease liability	$	6,638	$	7,811
Deferred tax liability		204		172
Deferred revenue		1,922		2,255
Total other non-current liabilities	$	8,764	$	10,238

Computation of Net Loss per Share

Basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the applicable period.

The following table presents the computation of net loss per share:


	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2026			2025			2026			2025
	(In thousands, except per share data)
Numerator:
Net loss	$	(1,181	)	$	(3,868	)	$	(3,912	)	$	(8,742	)
Denominator:
Weighted-average common shares outstanding - basic and diluted		39,731			38,820			39,472			38,493

Net loss per share - basic and diluted	$	(0.03	)	$	(0.10	)	$	(0.10	)	$	(0.23	)

The following table presents the common stock equivalents excluded from the diluted net loss per share calculation, because they were anti-dilutive for the periods presented. These excluded common stock equivalents could be dilutive in the future.

Schedule of anti-dilutive securities
	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2026		2025		2026		2025
	(In thousands)
Common stock equivalents		1,080		579		1,002		577

Intangible Assets

The following table presents details of intangible assets:

Schedule of intangible assets
	March 31, 2026							June 30, 2025
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
	(In thousands)
Developed technology	$	6,793	$	(6,244	)	$	549	$	6,793	$	(6,066	)	$	727
Customer relationships		19,115		(17,371	)		1,744		19,116		(16,321	)		2,795
Order backlog		297		(297	)		–		297		(149	)		148
Trademark and trade name		91		(57	)		34		1,516		(1,448	)		68
	$	26,296	$	(23,969	)	$	2,327	$	27,722	$	(23,984	)	$	3,738

We do not currently have any intangible assets with indefinite useful lives.

As of March 31, 2026, future estimated amortization expense is as follows:

SEC Form 10-Q filed by Lantronix Inc.