May 6th, 2026

The call conveyed strong operational and financial progress: revenue and EPS were in-line with guidance, Embedded IoT grew 22% YoY, margins remained healthy above 43%, cash generation improved, debt was reduced, software recurring revenue increased, and the company significantly expanded its unmanned systems footprint with new design wins, partnerships, and international shipments. Key near-term challenges include slower federal procurement timing impacting IoT systems, a still-present GAAP net loss (albeit improved), slight YoY pressure on non-GAAP gross margin, and uncertainty around timing and magnitude of drone revenue despite an increased outlook. On balance, the positive execution, momentum in higher-growth areas (drones, edge AI, software), improving cash/ leverage metrics, and strategic partnerships outweigh the operational and timing risks.

Company Guidance

Management reported Q3 revenue of $30.2M and non‑GAAP EPS of $0.04 (GAAP gross margin 43.1%, non‑GAAP gross margin 43.6%), with GAAP operating expense $14.1M, a GAAP net loss of $1.2M ($0.03/sh) and non‑GAAP net income $1.5M ($0.04/sh); balance sheet highlights included cash & equivalents $23.5M (net cash ~ $14.8M), operating cash flow ~ $2.2M for the quarter ($7.9M YTD), inventories $26.4M and debt $8.7M (down ~$1M this quarter, nearly $4M Y/Y). For Q4 they guided revenue $29M–$33M and non‑GAAP EPS $0.03–$0.05, raised FY26 drone revenue to $10M–$14M (midpoint $12M) with drones expected to roughly double in FY27 to ~15%–20% of revenue, noted Embedded IoT grew ~22% YoY, software & services rose from ~5%–6% to ~8%–9% of revenue with a path to double‑digits, cited typical ASPs of $400–$700, and said they aim to sustain margins near current levels and push above 45% as they pursue double‑digit revenue growth in FY27.