10-Q · May 15, 2026
Franklin Wireless reported a significant decline in revenue for Q3 2026, with net sales dropping 57.0% to $3,444,183 compared to $8,009,619 in Q3 2025. The company suffered a diluted EPS loss of -$0.02, expanding from a…
Earnings analysis · 10-K
FKWL earnings analysis
Filed September 28, 2026 · Our reading of the company's report
The latest report
Franklin Wireless faces a deteriorating earnings trajectory: FY2026 revenue fell 20.8% to $36.5 million, operating margin was negative 7.4%, diluted EPS declined to negative $0.40 from negative $0.02, and operating cash…
Read full summary
Franklin Wireless faces a deteriorating earnings trajectory: FY2026 revenue fell 20.8% to $36.5 million, operating margin was negative 7.4%, diluted EPS declined to negative $0.40 from negative $0.02, and operating cash flow swung to a $6.3 million use. Management is repositioning toward fixed wireless routers and telecommunications modules, but those products are in earlier commercialization stages and have not yet offset the loss of a major legacy hotspot program. Liquidity of $32.0 million provides near-term runway, but the $4.3 million FTI litigation accrual, concentrated customer and supplier base, and continued cash burn create substantial execution risk.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $-0.4
What stood out
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Stable Gross Margin Despite Revenue Decline
FY2026 net sales declined 20.8% to $36.5 million from $46.1 million, while gross margin was broadly stable at 17.1% versus 17.2% in FY2025. Operating expenses fell 17.1% to $8.9 million, but the company still recorded a $2.7 million operating loss.
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Strategic Shift Toward Routers and Modules
Management began shifting away from legacy mobile hotspots toward fixed wireless routers and telecommunications modules during the six months ended June 30, 2026. Sigbeat, in which Franklin owns 60%, is intended to support worldwide sales, marketing, and operations for telecommunications modules.
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$32 Million Liquidity Cushion
The company ended FY2026 with $13.4 million of cash and $18.6 million of short-term investments, totaling $32.0 million. Management believes this liquidity is sufficient for the next 12 months, including anticipated spending in excess of $2 million on capital expenditures, software licenses, and product testing.
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Liquidity Supported by Investment Sales
Operating cash flow deteriorated from $1.8 million provided in FY2025 to $6.3 million used in FY2026, primarily reflecting increases of $3.0 million in inventories and $1.8 million in accounts receivable. Investing cash flow was positive $5.5 million, mainly because of $6.0 million of short-term investment sales.
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Dividend Maintained Despite Losses
The company paid a $471,371 cash dividend, or $0.04 per share, during FY2026. It made no stock repurchases during the year, and common shares outstanding remained 11,784,280.
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Product Roadmap Includes AI Hardware
Franklin continues to invest in product development: FY2026 capitalized product-development costs were $462,136, while capitalized development costs in progress declined to $22,582 from $452,676. The company also says it intends to integrate AI-compatible hardware, although AI has not yet been commercially implemented in current products.
What to watch
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New $4.3 Million FTI Litigation Liability
A South Korean court ruling against 66.3%-owned FTI resulted in a $4,345,104 accrued litigation liability, comprising a $3,673,336 principal award and $671,768 of interest. FTI appealed on August 6, 2026; the loss contributed to FY2026 net loss attributable to Franklin shareholders of $4,743,808 versus $243,101 in FY2025.
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Major Customer Product Discontinuation
Customer and product concentration materially worsened after a major carrier discontinued a key product, and the company does not expect material future sales of that product to the customer. In FY2026, the two largest customers represented approximately 61% and 28% of consolidated net sales, while total North American sales fell 20.8% to $36,478,002.
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Extreme Manufacturing and Supply Concentration
Supplier concentration increased: one major supplier accounted for $27,135,655, or 83.8% of total purchases, and 83.2% of accounts payable, versus two major suppliers representing 85.3% of purchases in FY2025. The filing also cites component constraints and potential supplier capacity reallocation toward higher-margin AI components, which could delay shipments or cause order cancellations.
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Foreign Subsidiary Losses and Tax Allowance
Foreign operating performance deteriorated sharply: FTI reported a FY2026 net loss of $6,297,734, including approximately $1.1 million of foreign-exchange losses and the litigation-related charge. Management recorded a 100% valuation allowance against all foreign deferred tax assets, compared with no foreign valuation allowance in FY2025.
Management's outlook
No quantitative annual revenue or EPS guidance was provided in the 10-K. Management expects to require in excess of $2 million over the next 12 months for capital expenditures, software licenses, and testing and certification of new products, and believes $32.0 million of cash, cash equivalents, and short-term investments will be sufficient for those requirements.
Earlier filings 4
10-Q · February 17, 2026
Franklin Wireless reported Q2 net sales of $11,928,864 (down 33.1% vs $17,827,098 a year earlier) and diluted EPS of $0.05 (up from $0.02). Operating margin compressed to 0.4% (income from operations $48,717) while net…
10-Q · May 15, 2023
Franklin Wireless reported a strong rebound in quarterly revenue to $11,851,971 (up 77.2% YoY) and returned to net income for the quarter ($211,639 consolidated; $247,629 attributable to the parent), producing diluted…
10-Q · November 14, 2022
Franklin Wireless reported a strong topline recovery for the quarter with net sales rising 142.5% to $8,108,940 and gross margin expanding to 19.7% from 14.7% a year ago. Operating loss narrowed materially to $(615,893)…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.