Franklin Wireless Posts Increased FY25 Sales, Narrower Y/Y Loss

Shares of Franklin Wireless Corp. FKWL have gained 6.6% since reporting results for fiscal 2025. This compares favorably with the S&P 500 index’s 1.2% growth over the same period. Over the past month, the FKWL stock has risen 8.4%, outpacing the S&P 500’s 3.6% advance, suggesting investor confidence in the company’s latest financial performance and strategic initiatives.Revenue & Earnings PerformancesFor the fiscal year ended June 30, 2025, Franklin Wireless reported net sales of $46.09 million, representing a substantial 49.7% increase from $30.80 million in fiscal 2024. The company posted a net loss of $243,101, narrower than the $3.96-million loss recorded in the prior year. Correspondingly, basic and diluted loss per share was 2 cents compared with a 34-cent loss per share in fiscal 2024, underscoring significant operational recovery.Gross profit surged to $7.92 million from $3.51 million a year ago, driven by stronger sales and a more favorable product mix. The gross margin improved from 11.4% to 17.2%, reflecting better cost control and possibly improved sourcing through its joint venture partnership. Selling, general and administrative expenses increased to $6.25 million from $5.06 million due to higher personnel costs, and increased legal and professional fees associated with ongoing litigation settlements.Franklin Wireless Corp. Price, Consensus and EPS Surprise  Franklin Wireless Corp. price-consensus-eps-surprise-chart | Franklin Wireless Corp. QuoteOther Key Business MetricsThe balance sheet remained solid. Cash and cash equivalents increased to $14.74 million from $12.27 million, while short-term investments moved up to $25.89 million. Total assets rose to $51.33 million from $46.72 million a year earlier, reflecting higher inventory levels and the addition of receivables tied to related-party transactions. Total liabilities stood at $13.44 million compared with $10.34 million in fiscal 2024 due to accrued officer bonuses and related payables.Inventories rose sharply to $2.36 million from $1.43 million, suggesting preparation for increased sales volumes in fiscal 2026. Shareholders’ equity increased modestly to $37.89 million, supported by non-controlling interests linked to the new joint venture, Sigbeat. Overall liquidity remained strong, with ample cash reserves and no long-term debt obligations disclosed.Management CommentaryManagement underscored operational improvements, particularly the successful restructuring of supplier relationships and the positive impacts of product introductions in wireless connectivity solutions. The company noted that the formation of the Sigbeat joint venture with Forge International Co., Ltd. — in which Franklin holds a 60% stake — aims to expand its global reach in telecommunications modules and hardware solutions.This partnership contributed to the sharp increase in electronic manufacturing service purchases, which totaled $13.7 million in fiscal 2025 compared with only $177,000 in the prior year.Management emphasized that the improvement in operating results was due to recovering demand from telecommunications partners and stronger inventory alignment following earlier disruptions tied to the Verizon Jetpack recall and subsequent litigation. The narrower net loss, coupled with increased sales and gross profit, suggests that the turnaround strategy is beginning to yield tangible results.Factors Influencing ResultsA significant factor influencing the fiscal 2025 performance was the resolution of multiple legal matters that had weighed on the prior-year results. The company paid a $2.4-million class-action settlement in May 2024 related to shareholder litigation stemming from the fiscal 2021 product recall. However, subsequent derivative lawsuits resulted in minimal damages — a jury awarded nominal damages of only 99 cents against one director in December 2024, effectively reducing future litigation exposure.Cost of goods sold increased to $38.17 million from $27.29 million, reflecting higher production volumes and sourcing costs from contract manufacturers, but this was more than offset by the growth in top-line sales. Research and development expenses of $1.47 million were down from $3.40 million, showing tighter control over development costs after a period of product retooling. Legal and settlement charges, while still present, were substantially lower than the year before.ViewManagement signaled optimism for continued growth based on its strengthened supply chain, recent product developments and the ramp-up of its Sigbeat venture. The company also highlighted ongoing efforts to improve profitability through operational efficiencies and a focus on higher-margin products. Its stable cash position and low leverage provide a buffer to navigate potential macroeconomic headwinds and competitive pressures in the wireless connectivity market.Other DevelopmentsIn fiscal 2025, Franklin Wireless entered several notable agreements. In May 2025, it repurchased certain vested stock options from CEO OC Kim for $746,067, with proceeds offset against a receivable balance, avoiding a cash outlay. In May 2024, the company formed the Sigbeat joint venture with Forge International, contributing $3 million toward capitalization, while Forge contributed $2 million to its 40% stake. This collaboration is expected to serve as a cornerstone of Franklin’s renewed manufacturing and distribution strategy.Additionally, the company maintained compliance with all reporting and internal control obligations under the Sarbanes-Oxley Act, with management and auditors both concluding that internal control over financial reporting remained effective as of June 30, 2025.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.See "2nd Wave" AI stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Franklin Wireless Corp. 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